32
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- - - -- Exchange Act of 1934
For the period ended December 24, 1994
Transition report pursuant to Section 13 or 15(d) of the Securities
- - - -- Exchange Act of 1934
For the transition period from to
Commission File Number 0-14016
MAXTOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 770123732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
211 River Oaks Parkway, San Jose, CA 95134
(Address of principal executive offices) (Zip Code)
(408) 432-1700
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X Yes No
--- ---
32,131,773 shares of Common Stock and 19,480,000 shares of Class A
Common Stock were issued and outstanding as of February 3, 1995.
This quarterly report on Form 10-Q contains 187 pages of which this is
page number 1.
MAXTOR CORPORATION
FORM 10-Q
December 24, 1994
INDEX
Part I. Financial Information Page
- - - -------------------------------- ----
Item 1. Consolidated Financial Statements
Consolidated Statements of Loss-
Three Months and Nine Months Ended
December 24, 1994 and December 25, 1993 3
Consolidated Balance Sheets-
December 24, 1994 and March 26, 1994 4-5
Consolidated Statements of Cash Flows-
Nine Months Ended December 24, 1994
and December 25, 1993 6-7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11 - 17
Part II. Other Information
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Stockholders 18
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
PART I. FINANCIAL INFORMATION
---------------------------------
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
-------------------- --------------------
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
-------- -------- -------- --------
Revenue $ 238,174 $ 318,098 $ 630,852 $ 892,218
Cost of revenue 216,846 371,731 602,196 974,313
---------- ---------- ---------- ----------
Gross margin 21,328 (53,633) 28,656 (82,095)
Operating expenses:
Research and
development 15,791 25,751 44,416 83,111
Selling, general and
administrative 20,078 19,849 62,560 60,086
Restructuring - 19,500 - 19,500
---------- ---------- ---------- ----------
Total operating
expenses 35,869 65,100 106,976 162,697
---------- ---------- ---------- ----------
Loss from operations (14,541) (118,733) (78,320) (244,792)
Interest expense (2,083) (2,228) (6,499) (8,070)
Interest income 789 156 3,278 1,255
---------- ---------- ---------- ----------
Loss before income
taxes (15,835) (120,805) (81,541) (251,607)
Provision for income
taxes 600 500 1,800 1,500
---------- ---------- ---------- ----------
Net loss $ (16,435) $(121,305) $ (83,341) $(253,107)
========== ========== ========== ==========
Net loss per share $ (0.32) $ (4.12) $ (1.66) $ (8.65)
========== ========== ========== ==========
Shares used in
computing net
loss per share 50,668 29,474 50,283 29,255
========== ========== ========== ==========
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 24, March 26,
1994 1994
------------- -------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 87,270 $ 144,520
Short-term investments 47,016 74,911
Accounts receivable, net of
allowance for doubtful accounts
of $4,202 at Dec. 24, 1994 and
$3,653 at March 26, 1994 84,251 99,806
Inventories:
Raw materials 40,811 51,419
Work-in-process 15,678 19,196
Finished goods 29,538 25,408
------------ ------------
86,027 96,023
Prepaid expenses and other 7,131 7,936
------------ ------------
Total current assets 311,695 423,196
Property, plant and equipment,
at cost:
Buildings 21,978 21,387
Machinery and equipment 154,521 195,820
Furniture and fixtures 16,201 18,195
Leasehold improvements 10,186 17,506
------------ ------------
202,886 252,908
Less accumulated depreciation
and amortization (152,579) (191,750)
------------ ------------
Net property, plant and
equipment 50,307 61,158
Other assets 6,910 8,021
------------ ------------
$ 368,912 $ 492,375
============ ============
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Continued)
Dec. 24, March 26,
1994 1994
------------ ------------
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 30,000 $ 30,000
Accounts payable 110,062 137,566
Income taxes payable 8,193 7,530
Accrued payroll and payroll-
related expenses 13,182 11,720
Accrued warranty 25,102 27,281
Accrued special and restructuring 3,777 21,777
Accrued expenses 29,517 25,700
Long-term debt and capital lease
obligations due within one year 2,943 4,155
------------ ------------
Total current liabilities 222,776 265,729
Long-term debt and capital lease
obligations due after one year 105,283 107,393
Deferred tax liabilities 66 66
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
5,000,000 shares authorized;
no shares issued or outstanding - -
Class A common stock (convertible),
$0.01 par value, 19,480,000
shares authorized, issued and
outstanding 195 195
Common stock, $0.01 par value,
180,520,000 shares authorized;
issued and outstanding:
Dec. 24, 1994 - 31,695,108 shares;
March 26, 1994 -30,425,242 shares 317 304
Additional paid-in capital 325,368 320,564
Accumulated deficit (285,090) (201,749)
------------ -----------
40,790 119,314
Less notes receivable from
stockholders (3) (127)
------------ -----------
Total stockholders' equity 40,787 119,187
------------ -----------
$ 368,912 $ 492,375
============ ===========
See accompanying notes.
MAXTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
--------------------------
Dec. 24, Dec. 25,
1994 1993
----------- -----------
Increase (decrease) in cash and cash
equivalents
Cash flows from operating activities:
Net loss $ (83,341) $ (253,107)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 28,177 74,063
Loss on disposal of property, plant
and equipment 1,496 1,327
Change in assets and liabilities:
Accounts receivable 15,555 48,473
Inventories 9,996 70,186
Prepaid expenses and other 805 898
Accounts payable (27,504) 10,314
Income taxes payable 663 2,240
Accrued payroll and payroll-
related expenses 1,462 (2,069)
Accrued warranty (2,179) 9,292
Accrued special and restructuring (18,000) 37,491
Accrued expenses 3,817 5,246
----------- -----------
Total adjustments 14,288 257,461
----------- -----------
Net cash provided by (used in)
operating activities (69,053) 4,354
Cash flows from investing activities:
Purchases of short-term investments (30,091) -
Proceeds from maturity of short-term
investments 57,986 -
Purchase of property, plant and equipment (19,947) (26,109)
Proceeds from disposal of property,
plant and equipment 2,653 940
Other (255) 312
----------- -----------
Net cash provided by (used in)
investing activities 10,346 (24,857)
Cash flows from financing activities:
Proceeds from issuance of short-term
borrowings, net of payments - 7,182
Proceeds from issuance of debt 194 5,810
Principal payments on debt (3,298) (28,563)
Principal payments under capital lease
obligations (380) (868)
Proceeds from issuance of common stock,
net of notes receivable, stock
repurchases and tax benefits 4,941 3,715
----------- -----------
Net cash provided by (used in)
financing activities 1,457 (12,724)
----------- -----------
Net change in cash and cash equivalents (57,250) (33,227)
Cash and cash equivalents at beginning
of period 144,520 135,324
----------- -----------
Cash and cash equivalents at end of period $ 87,270 $ 102,097
=========== ===========
Supplemental disclosures of cash flow information:
(In thousands) Nine Months Ended
- - - -----------------------------------------------------------------------
Dec. 24, Dec. 25,
1994 1993
- - - -----------------------------------------------------------------------
Cash paid (received) for: (Unaudited)
Interest $ 3,614 $ 6,771
Income taxes 611 1,142
Income tax refunds (11) (1,824)
- - - -----------------------------------------------------------------------
Supplemental information on non cash investing and financing activities:
Capital lease obligations approximating $ 162,000 and $ 115,000 were
incurred during the nine-month periods ended December 24, 1994 and
December 25, 1993, respectively.
MAXTOR CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
1. Consolidated financial statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
consolidated financial statements include the accounts of Maxtor
Corporation (Maxtor or the Company), its wholly-owned subsidiaries, and
Maxoptix Corporation (Maxoptix), a corporation jointly-owned by Maxtor
(67%) and Kubota Corporation of Japan (33%). In connection with the
sale of the assets of Storage Dimensions, Inc. (SDI), formerly a wholly-
owned subsidiary of the Company, Maxtor acquired a 32.8% interest in the
company formed for the purpose of purchasing the net assets of SDI.
Maxtor accounts for its investment under the equity method. All
significant intercompany transactions have been eliminated in
consolidation. All adjustments consisting only of a normal recurring
nature which, in the opinion of management, are necessary for a fair
statement of the results for the interim periods have been made. It is
recommended that the interim financial statements be read in conjunction
with the Company's consolidated financial statements and notes thereto
for the fiscal year ended March 26, 1994. Interim results are not
necessarily indicative of the operating results expected for later
quarters or the full fiscal year.
2. Short-term borrowings
In September 1993, the Company obtained a secured, asset-based revolving
line of credit. The original committed line of credit provided for
borrowings up to $76.0 million based on eligible receivables at various
interest rates over a two-year term and is secured by receivables,
certain inventories and other assets. On June 17, 1994, the Company
received an amendment to its line of credit for a certain financial
ratio which is measured at the end of each quarter. With such
amendment, the Company was in compliance with all financial ratios
during the quarter ended June 25, 1994. On October 11, 1994, the
Company received an unconditional waiver of certain covenant defaults
that occurred as of the fiscal quarter ended September 24, 1994. On
October 31, 1994, the Company received another amendment to its line of
credit with respect to each of the financial covenants that are measured
at the end of each fiscal quarter and fiscal year end. The amendment
extended the commitment on the revolving line of credit for an
additional year, thereby providing for borrowings over a two-year term,
ending September 1996. The Company also elected to reduce its line of
credit from $76.0 million to $50.0 million. The Company was in
compliance with its financial covenants for the quarter ended December
24, 1994. As of December 24, 1994, $30.0 million of borrowings and $1.3
million of letters of credit were outstanding. The $30.0 million of
borrowings were fully repaid during the first fiscal week of January
1995. The balance available for additional borrowings under this line
of credit at December 24, 1994 was approximately $3.5 million using the
December 24, 1994 borrowing base. Borrowings are subject to
availability based on eligible receivables and the Company meeting
financial covenants.
3. Special & Restructuring
During the third quarter of fiscal year 1994, the Company decided to
discontinue certain products and manufacturing activities, and recorded
special charges amounting to $68.9 million in cost of revenue. As of
December 24, 1994, current liabilities included accruals related to
these special charges totaling approximately $8.2 million. The Company
anticipates that the net expenditure of approximately $1.6 million of
cash will be required during the remainder of fiscal year 1995 to fund
the remaining expenses accrued. Such expenditures are expected to be
funded by cash flows from operations and investments.
The decisions described above reduced the scope of the Company's product
and manufacturing activities and, as a result, the Company then
initiated a restructuring plan which provides for the consolidation and
streamlining of certain operations and administration. The Company
recorded a restructuring charge of $19.5 million in the third quarter of
fiscal year 1994 related to these activities which are expected to be
completed before the end of fiscal year 1995. As of December 24, 1994,
approximately $1.2 million of the $19.5 million charge remained in
current liabilities and is primarily associated with facility
consolidations, including lease and other obligations on certain
facility leases. The Company anticipates that the completion of
restructuring actions will require the expenditure of approximately $1.2
million of cash during the remainder of fiscal year 1995, which is
expected to be funded by cash flows from operations and investments.
4. Net loss per share
Net loss per share is based upon the weighted average number of shares
of all classes of common stock outstanding during the quarters and nine-
month periods ended December 24, 1994 and December 25, 1993.
5. Contingencies
As part of the acquisition of the MiniScribe business in June 1990, the
Company was assigned a patent license agreement between MiniScribe and
Rodime plc (Rodime) covering patents related to 3.5-inch disk drives.
The Company believes that the assignment was valid; however, Rodime has
taken the position that the assignment was invalid and would not in any
event cover 3.5-inch drives manufactured and sold by the Company before
the acquisition of MiniScribe's assets. In February 1993, Maxtor
commenced an action for declaratory relief in the U. S. Bankruptcy Court
in Denver, Colorado seeking a judgment that the assignment was valid.
Rodime filed a denial and counterclaim for patent infringement. In
April 1994, the relevant claims of the Rodime patent at issue in
Rodime's counterclaims were declared invalid in litigation between
Rodime and another disk drive manufacturer. The Company's litigation
with Rodime has been stayed pending Rodime's appeal of the finding of
invalidity. Certain other claims, including other patent infringement
claims, against the Company have arisen in the course of its business.
There is presently no litigation involving such claims, and the Company
believes the outcome of these claims and the claim concerning Rodime
described above will not have a material adverse effect, if any, on the
Company's financial position or results of operations.
6. Subsequent events
Announcement of Memorandum of Understanding for Manufacturing
Partnership
On January 24, 1995, the Company announced it had signed a memorandum of
understanding for creation of a manufacturing partnership with Hyundai
Electronics Industries Co., Ltd., Seoul, Korea (Hyundai). Upon
completion of the transaction, Hyundai will manufacture Maxtor-designed
hard disk drives for the Company. The two companies plan to complete a
definitive agreement before the end of June 1995 and plan to begin
volume production within several months thereafter at a Korean
manufacturing site currently under consideration by Hyundai. The
additional manufacturing capacity provided by Hyundai is intended to
supplement current production capacity at the Company's manufacturing
plant in Singapore. The two companies plan to participate in an ongoing
exchange of technology to enable Hyundai to assume a leadership role in
disk drive manufacturing and to enable Maxtor to obtain high-quality,
low-cost manufacturing capacity.
Maxoptix Corporation
The accompanying consolidated financial statements do not include this
transaction. The impact of this transaction is expected to be recorded
in the fourth quarter of fiscal year 1995.
On December 26, 1994, the Company entered into a stock purchase
agreement for the sale of the Company's shares and other equity
interests of Maxoptix, a majority owned joint venture, to Kubota
Electronics America Corporation, a Delaware company, whose ultimate
parent is Kubota Corporation (Kubota), a Japanese company. Prior to the
sale, Maxtor and Kubota owned 67% and 33% interests in Maxoptix,
respectively. Under the terms of the agreement, Maxtor is to receive
$1.5 million cash and be relieved of certain liabilities. Maxtor
expects to recognize a gain upon completion of the transaction. The
transaction, which is expected to be concluded during February 1995, is
subject to the fulfillment of certain conditions, including approval of
the U.S. and Japanese governments.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto.
(Tabular information: Dollars in millions, except per share amounts)
RESULTS OF OPERATIONS
General
Since its inception in 1982, Maxtor Corporation (Maxtor or the Company)
has been subject to the highly cyclical nature of the disk drive
industry. In fiscal year 1993, as a result of an industry-wide increase
in demand and the related stabilization in prices, the Company grew its
revenue to over $1.4 billion. However, during the last four months of
fiscal year 1993 and continuing into the third quarter of fiscal year
1994, the disk drive industry experienced intense price competition and
excess industry capacity, which resulted in lower revenue for the
Company. In the fourth quarter of fiscal year 1994 revenue declined in
connection with the Company's decision in the third quarter of fiscal
year 1994 to discontinue certain unprofitable products. In fiscal year
1994, the Company reported revenue of approximately $1.2 billion. The
Company experienced further sequential declines in quarterly revenue in
the first and second quarters of fiscal year 1995. The first quarter's
decline was primarily a result of the Company's inability to obtain
required volumes of a key component for its 7000 Series product line
supplied by a sole source vendor who was experiencing production
problems. The component shortage was resolved prior to the end of the
first quarter. Revenue for the second quarter of fiscal year 1995
declined primarily as a result of industry-wide pricing pressures
coupled with the Company's product mix of predominantly lower capacity
products which were nearing end of life. During the same quarter, the
industry began transitioning to new, higher capacity products. Revenue
increased during the third quarter of fiscal year 1995 primarily as a
result of an improvement in product mix to the Company's newer, higher
capacity products, as well as a substantial increase in unit volumes.
The Company has incurred quarterly losses in each of the eight
consecutive quarters beginning with the fourth quarter of fiscal year
1993 and continuing through the third quarter of fiscal year 1995. Such
losses through the third quarter of fiscal year 1994 were primarily the
result of negative industry conditions and the Company's inability to
bring certain products to market in a timely and cost effective manner.
The negative industry conditions were primarily the result of intense
price competition and excess industry capacity. In addition, the
Company's losses were the result of insufficient differentiation between
the products of the Company and its competitors, and efforts by its
competitors to increase market share. The Company began to experience
an increase in demand in the third quarter of fiscal year 1994, with
most products in short supply, concurrent easing of price reductions and
price increases on certain products. Although general industry
conditions improved during the latter half of fiscal year 1994 and
continued into the third quarter of fiscal year 1995, the Company
continued to incur losses in part as a result of continuing cost and
time-to-market issues with regard to its new products. In addition, as
noted above, the Company was unable to obtain required volumes of a key
component in the first quarter of fiscal year 1995 which, although
resolved before the second quarter of fiscal year 1995, contributed to
lower revenue and losses in the second quarter when the products were
sold. As noted above, the disk drive industry was transitioning to new,
higher-capacity products during the second quarter of fiscal year 1995
while the Company was shipping the lower-capacity products which were
delayed by the component shortage. This unanticipated shift in market
demand created additional pricing pressures on the Company's lower-
capacity products. The high start-up costs associated with developing
and commencing volume production on the new 1.8-inch form factor
products also contributed to the quarterly losses during that period.
Although general industry conditions improved during the latter half of
fiscal year 1994 and continued into the third quarter of fiscal year
1995 and most of the Company's competitors were profitable during that
period of time, the Company has not been profitable, and does not expect
to be profitable until the Company is successful in bringing new
products to market in a timely and cost effective manner. While the
level of price competition increased again in the last month of the
first quarter of fiscal year 1995 and continued through the third
quarter of fiscal year 1995, price erosion in the third quarter was less
than the magnitude experienced in the previous quarters of fiscal year
1995. Although the Company expects that price erosion will continue
through the remainder of fiscal year 1995 at the moderate level
experienced in the third quarter, there can be assurance that price
erosion will not increase substantially. Given the uncertainties
confronting the Company including pricing pressures, cost and time-to-
market issues with regard to its new products, and general industry
conditions, the Company's disk drive operations may not be profitable
during the fourth quarter of fiscal year 1995.
The disk drive industry is subject to rapid technological change and
short product life cycles as data storage manufacturers continually
strive for smaller form factors, larger storage capacities, higher
performance and lower cost. Shorter product life cycles also increase
the importance of the Company's ability to successfully manage product
transitions. The failure to adequately manage product transitions has
in the past and could in the future result in the loss of market
opportunities, decreased sales of existing products, cancellation of
products or product lines, the accumulation of obsolete and excess
inventory and unanticipated charges related to obsolete capital
equipment.
The Company's financial results continue to be heavily dependent on the
success of certain products, particularly the 7000 Series of desktop
product offerings. The Company's strategy in part is focused on
accelerating the end-of-life of certain older desktop products and
replacing them with new products developed on lower-cost platforms.
During the second quarter of fiscal year 1995, the Company announced
several new products, including new lower-cost, inch-high, 3.5-inch 7000
Series product offerings intended to replace certain older 7000 Series
product offerings, as well as high capacity, 3.5-inch, 1.0 and 1.2
gigabyte product offerings. The latter product offerings have not
contributed significantly to revenue but the Company expects to commence
volume production during the fourth quarter of fiscal year 1995. The
Company's ability to anticipate market trends and to successfully
develop, manufacture in volume and sell new products in a timely manner
and at favorable gross margins will be important factors affecting the
Company's future results and there can be no assurance that the Company
will be successful in such efforts. The Company has been less
successful than its competitors in managing product transitions, and
successful new products introduced by competitors have tended to
displace older products, including the Company's products.
The disk drive industry is intensely competitive and significant price
erosion is typical during the life of a product. Industry participants
include both independent suppliers and large computer manufacturers that
both supply their own internal requirements and sell disk drives to
third parties. Sales by such large computer manufacturers to third
parties are an increasingly important factor in the market. Bringing
new products to market on a timely basis has become increasingly
critical to competing in this market environment. When a new product is
not brought to market on a timely basis, the selling price of older
products must be reduced in order to compete effectively with
competitors' new products, which are being produced at lower costs. If
competitors introduce products which offer greater capacity, better
performance, lower prices or any combination of these factors, or if
certain customers produce more disk drives for internal use, the
Company's results of operations would be adversely affected.
As a result of volatile business conditions in the personal computer
(PC) industry, including the trend toward consolidation among PC
manufacturers, sales to original equipment manufacturers (OEMs) have
become increasingly important to the success of the disk drive industry
participants. During the third quarter of fiscal year 1995 the Company
increased its OEM revenue to 53% of total revenue, an improvement over
the three previous quarterly periods for which OEM revenue was in the
range of 44% - 46% of total revenue. Although the Company intends to
continue in its efforts to increase its share of this large OEM market,
particularly in the marketing of its new products, there can be no
assurance that the Company will be successful in such efforts. Despite
the increase in OEM revenue during the third quarter of fiscal year
1995, the Company continues to be heavily dependent on the distribution
channel, which subjects the Company to pricing pressures and other
factors unique to that channel.
The Company's manufacturing process requires large volumes of high
quality components supplied by outside suppliers. The Company
periodically receives communication from vendors that they may be unable
to supply required volumes of certain key components. During the first
two months of fiscal year 1995, the Company was unable to obtain
required volumes of a key component for its 7000 Series product line
supplied by a sole source vendor who was experiencing production
problems. As previously mentioned, this shortage adversely affected the
Company's operating results for the first quarter of fiscal year 1995.
While the Company has qualified and continues to qualify multiple
sources for many components, it is reliant on, and will continue to be
reliant on, single sources for many semi-custom and custom integrated
circuits and other key components. The Company does not have long-term
supply contracts with most of its single source vendors, some of which
are companies with limited financial and operational resources. The
Company intends to continue to pursue qualification of alternative
sources for single source components where practicable; the Company
believes, however, that it will have to continue to utilize leading edge
components which may only be available from a single source. With the
expansion of production experienced by the disk drive industry during
the last quarter of fiscal year 1994 and continuing into the third
quarter of fiscal year 1995, shortages of certain key components for the
disk drive industry have increased, and the Company expects it is likely
that industry shortages of key components may continue into future
quarters. The Company will continue to aggressively work with its
vendor base to minimize its component supply exposure. There can be no
assurance, however, that the Company will be successful in such efforts
or that in the future the Company's vendors will meet the Company's
requirements for required volumes of high-quality components in a timely
and cost effective manner.
- - - ------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
- - - ------------------------------------------------------------------------
Revenue $ 238.2 $ 318.1 $ 630.9 $ 892.2
Gross margin $ 21.3 $ (53.6) $ 28.7 $ (82.1)
As a percentage of revenue 9.0% (16.9%) 4.5% (9.2%)
Net loss $ (16.4) $(121.3) $ (83.3) $(253.1)
As a percentage of revenue (6.9%) (38.1%) (13.2%) (28.4%)
Net loss per share $ (0.32) $ (4.12) $ (1.66) $ (8.65)
- - - ------------------------------------------------------------------------
Revenue
Revenue for the Company's third quarter of fiscal year 1995 decreased by
25.1% from the same quarter of the prior fiscal year, primarily in
connection with the Company's decision in the third quarter of the prior
fiscal year to discontinue certain unprofitable products. In addition,
while there was a significant shift in product mix during that period
from the older, lower capacity products to the higher capacity 7000
Series product offerings, average unit selling prices, in terms of
megabyte per dollar, dropped substantially between the third quarters of
fiscal year 1994 and fiscal year 1995. Although revenue declined, unit
volumes increased slightly in the third quarter of fiscal year 1995 as
compared to the same quarter of the prior fiscal year. The increase in
unit volumes was primarily attributable to the strong demand for the
Company's 7000 Series disk drives, which accounted for nearly all of the
units sold in the third quarter of fiscal year 1995 as compared to
approximately 60% of the units sold in the same period of the prior
year. Although unit volumes increased, the Company's revenue also was
adversely affected in the third quarter of fiscal year 1995 by a shift
in market demand to higher capacity products which began during the
preceding quarter, as well as continuing industry-wide pricing
pressures. Approximately one-third of the units shipped during the
third quarter of fiscal year 1995 were older, lower capacity products
which had remained in inventory at the end of the previous quarter; the
remaining two-thirds of units were newer, higher capacity products to
which the industry is transitioning. In terms of pricing pressures, the
rate of decline in average unit selling prices was approximately 5% - 8%
during the third quarter of fiscal year 1995, which was an improvement
from the low double-digit rate of decline experienced in the previous
several quarters.
Comparing the nine month period ended December 24, 1994 with the nine
month period ended December 25, 1993, both revenue and unit volume
declined. Revenue was lower than expected during the first quarter of
fiscal year 1995 in particular as a result of a significant shortage in
required volumes of a key component as described previously. In
addition, revenue declined as a result of industry-wide pricing
pressures and a product mix comprised primarily of lower capacity
products nearing end of life at the same time as the industry was
transitioning to new, higher capacity products.
During the third quarter of fiscal year 1995, the Company did not have
any customer which accounted for 10% or greater of the Company's
revenue. During the third quarter of fiscal year 1994 one customer
accounted for approximately 29% of the Company's revenue.
As noted earlier, the Company continues to be heavily dependent on the
success of certain products. During fiscal year 1994, the Company
announced several new products, including additions to the MobileMax
family of PCMCIA-compatible storage products for mobile computing
applications. These new products in particular did not contribute
significantly to revenue in the first nine months of fiscal year 1995,
and the Company anticipates that these products will not contribute
significantly to revenue during the remainder of fiscal year 1995. As
discussed earlier, the Company also announced several new products
during the second quarter of fiscal year 1995. The high capacity 3.5-
inch product offerings have not contributed significantly to revenue but
the Company expects to commence volume production during the fourth
quarter of fiscal year 1995. The Company's ability to increase revenue
is dependent on its ability to anticipate market trends and to
successfully develop, manufacture in volume and sell new products in a
timely manner. There can be no assurance that the Company will be
successful in such efforts.
Gross Margin
Gross margin as a percentage of revenue increased to 9.0% for the third
quarter of fiscal year 1995 from (16.9%) for the third quarter of fiscal
year 1994. For the first nine months of fiscal year 1995, gross margin
as a percentage of revenue increased to 4.5% from (9.2%) for the first
nine months of the prior fiscal year. The Company recorded special
charges amounting to $68.9 million in cost of revenue in the third
quarter of fiscal year 1994. The charges consisted of estimated costs
associated with the termination of certain products, a reduction in
manufacturing capacity, write downs of inventory and equipment that were
no longer productive, and related future commitments to third parties.
Excluding the special charges of $68.9 million, gross margins for the
third quarter of fiscal year 1994 and the first nine months of fiscal
year 1994 were 4.8% and (1.5%), respectively.
The increase in gross margin for the third quarter of fiscal year 1995
as compared to the same period of the prior fiscal year, excluding
special charges of $68.9 million, was primarily attributable to a shift
in product mix to higher capacity products coupled with a slight
increase in unit volume. The Company's product mix for the third
quarter of fiscal year 1995 primarily was comprised of its new, value-
line 7000 Series one-inch drives, which were developed on a lower cost
platform. A lesser portion of the Company's unit volume in the third
quarter of fiscal year 1995 was comprised of the Company's older, lower
capacity products which were nearing end of life and generally
contributing at a zero gross margin. The increase in gross margin for
the first nine months of fiscal year 1995 as compared to the same period
of the prior fiscal year was primarily the result of the Company's
decision in the third quarter of the prior fiscal year to discontinue
certain unprofitable products, as well as the industry transition in
fiscal year 1995 to higher capacity products and the margin contribution
of the new one-inch drives mentioned above which were developed on a
lower cost platform.
The Company will continue its efforts to reduce its average unit
manufacturing costs and to introduce and produce in volume new higher
margin products in an effort to improve gross margin during the
remainder of fiscal year 1995. However, there can be no assurance that
average unit selling prices will not decline at a more rapid rate or
that the Company will be successful in its efforts to improve gross
margin. In addition, given the cyclical nature of the disk drive
industry and the Company's dependence on the success of certain
products, as discussed earlier, there can be no assurance that the
Company will be able to improve or maintain its current gross margin.
Operating expenses
- - - ------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
- - - ------------------------------------------------------------------------
Research and development $ 15.8 $ 25.8 $ 44.4 $ 83.1
As a percentage of revenue 6.6% 8.1% 7.0% 9.3%
Selling, general and
administrative $ 20.1 $ 19.8 $ 62.6 $ 60.1
As a percentage of revenue 8.4% 6.2% 9.9% 6.7%
- - - ------------------------------------------------------------------------
Research and development (R&D) expenses for the third quarter and first
nine months of fiscal year 1995 decreased from the same periods of the
prior fiscal year primarily due to the consolidation of the Company's
R&D activities in Longmont, Colorado during the fourth quarter of fiscal
year 1994 in connection with the Company's restructuring plan. This
consolidation eliminated the need for certain facilities in San Jose,
California, and also resulted in a substantial reduction in headcount
associated with R&D and related activities previously conducted in San
Jose. R&D spending in absolute dollars is expected to increase during
the remainder of fiscal year 1995 because the Company believes that it
must continue to make substantial investments in R&D since the timely
introduction and transition to volume production of new products is
essential to its future success. In addition, R&D expenses may
fluctuate in the future resulting from the cost of acquiring rights to
new technologies.
Selling, general and administrative (SG&A) expenses increased as a
percentage of revenue for the third quarter and first nine months of
fiscal year 1995 compared to the same periods of the prior fiscal year
primarily due to the decline in the revenue base. SG&A spending in
absolute dollars was relatively flat for both the third quarter and nine
month periods of fiscal year 1995 compared to the same periods of the
prior fiscal year.
Interest expense and interest income
- - - ------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
- - - ------------------------------------------------------------------------
Interest expense $ 2.1 $ 2.2 $ 6.5 $ 8.1
Interest income $ .8 $ .2 $ 3.3 $ 1.3
- - - ------------------------------------------------------------------------
Interest expense decreased as a result of lower average borrowings
outstanding during the third quarter and first nine months of fiscal
year 1995 as compared to the same periods of the prior fiscal year.
Interest income increased as a result of higher cash and short-term
investments balances during the third quarter and first nine months of
fiscal year 1995 as compared to the prior fiscal year periods.
Provision for income taxes
- - - ------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
- - - ------------------------------------------------------------------------
Provision for income taxes $ .6 $ .5 $ 1.5 $ 1.8
- - - ------------------------------------------------------------------------
The provision for income taxes consists primarily of foreign taxes. The
Company's effective tax rates for fiscal year 1995 and fiscal year 1994
differ from the combined federal and state rates due to the Company's
U.S. operating losses not providing current tax benefits, repatriation
of foreign earnings absorbed by current year losses, and valuation of
temporary differences, offset in part by the tax benefits associated
with the Company's Singapore operations. Income from the Singapore
operations is not taxable in Singapore as a result of the Company's
pioneer tax status, and those earnings which are permanently reinvested
outside the United States are not taxable in the United States.
LIQUIDITY AND CAPITAL RESOURCES
- - - -----------------------------------------------------------------
Nine Months Ended
Dec. 24, 1994
- - - -----------------------------------------------------------------
Cash and cash equivalents $ 87.3
Short-term investments $ 47.0
Net cash used by operating activities $ 69.1
Net cash provided by investing activities $ 10.3
Net cash provided by financing activities $ 1.5
- - - -----------------------------------------------------------------
As of December 24, 1994, the Company had cash and cash equivalents of
$87.3 million as compared to $144.5 million as of March 26, 1994, a
decrease of $57.2 million. The Company had short-term investments of
$47.0 million as of December 24, 1994 as compared to $74.9 million as of
March 26, 1994, a decrease of $27.9 million. The combined decrease in
the Company's cash and cash equivalents, and short-term investments of
$85.1 million was primarily the result of operating losses, including a
reduction in accounts payable and accrued special and restructuring
charges.
Of the net cash used in operating activities during the first nine
months of fiscal year 1995, net loss less non-cash depreciation and
amortization accounted for approximately $55.2 million. In addition,
the decreases in accounts receivable, inventory and current liabilities
together accounted for net uses of cash of approximately $16.2 million.
The decrease in accounts receivable primarily reflects lower sales
levels in the quarter ended December 24, 1994 than in the quarter ended
March 26, 1994. The decrease in inventories primarily reflects the
Company's ongoing efforts to balance production with demand and control
inventory purchases. Despite the Company's efforts to tightly control
inventory levels, inventories may increase in the future based on
changes in market demand or industry-wide production. Current
liabilities decreased by approximately $41.7 million primarily as a
result of a decrease in accounts payable related to managing the timing
of inventory purchases and payments, and the reduction of accrued
special and restructuring charges recorded by the Company in the third
quarter of fiscal year 1994.
Net cash provided by investing activities was primarily attributable to
$27.9 million of short-term investment maturities, net of purchases, and
$19.9 million of capital expenditures. A significant portion of the
capital expenditure activity was related to the acquisition of
manufacturing equipment. Depending on business conditions, the Company
currently expects to make additional capital expenditures of
approximately $15 million during the fourth quarter of fiscal year 1995,
or a total of $35 million for fiscal year 1995 as compared to
approximately $30 million during fiscal year 1994.
Net cash provided by financing activities primarily reflects proceeds
from the issuance of common stock under the Company's stock purchase
plan and stock option plans, offset in part by cash used to reduce
outstanding debt.
In September 1993, the Company obtained a secured, asset-based revolving
line of credit. The original committed line of credit provided for
borrowings up to $76.0 million based on eligible receivables at various
interest rates over a two-year term and is secured by receivables,
certain inventories and other assets. On June 17, 1994, the Company
received an amendment to its line of credit for a certain financial
ratio which is measured at the end of each quarter. With such
amendment, the Company was in compliance with all financial ratios
during the quarter ended June 25, 1994. On October 11, 1994, the
Company received an unconditional waiver of certain covenant defaults
that occurred as of the fiscal quarter ended September 24, 1994. On
October 31, 1994, the Company received another amendment to its line of
credit with respect to each of the financial covenants that are measured
at the end of each fiscal quarter and fiscal year end. The amendment
extended the commitment on the revolving line of credit for an
additional year, thereby providing for borrowings over a two-year term,
ending September 1996. The Company also elected to reduce its line of
credit from $76.0 million to $50.0 million. The Company was in
compliance with its financial covenants for the quarter ended December
24, 1994. As of December 24, 1994, $30.0 million of borrowings and $1.3
million of letters of credit were outstanding. The $30.0 million of
borrowings were fully repaid during the first fiscal week of January
1995. The balance available for additional borrowings under this line
of credit at December 24, 1994 was approximately $3.5 million using the
December 24, 1994 borrowing base. Borrowings are subject to availability
based on eligible receivables and the Company meeting financial
covenants.
On December 26, 1994, the Company entered into a stock purchase
agreement for the sale of the Company's shares and other equity
interests of Maxoptix, a majority owned joint venture, to Kubota
Electronics America Corporation, a Delaware company, whose ultimate
parent is Kubota Corporation (Kubota), a Japanese company. Prior to the
sale, Maxtor and Kubota owned 67% and 33% interests in Maxoptix,
respectively. Under the terms of the agreement, Maxtor is to receive
$1.5 million cash and be relieved of certain liabilities. Maxtor
expects to recognize a gain upon completion of the transaction. The
transaction, which is expected to be concluded during February 1995, is
subject to the fulfillment of certain conditions, including approval of
the U.S. and Japanese governments. The accompanying consolidated
financial statements do not include this transaction. The impact of
this transaction is expected to be recorded in the fourth quarter of
fiscal year 1995.
The Company believes that its balances of cash, cash equivalents, and
short-term investments, together with expected cash flow from
operations, equipment financing and line of credit borrowing
capabilities will be sufficient to fund the Company's working capital
and capital expenditure requirements through fiscal year 1995.
DIVIDEND POLICY
The Company has never paid cash dividends on its capital stock. It is
the present policy of the Board of Directors to retain earnings for use
in the business. The Company does not anticipate paying cash dividends
in the near future. Under the terms of the Company's line of credit and
term loan facilities, the Company may not declare or pay any dividends
without the prior consent of its lenders.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
As part of the acquisition of the MiniScribe business in June 1990, the
Company was assigned a patent license agreement between MiniScribe and
Rodime plc (Rodime) covering patents related to 3.5-inch disk drives.
The Company believes that the assignment was valid; however, Rodime has
taken the position that the assignment was invalid and would not in any
event cover 3.5-inch drives manufactured and sold by the Company before
the acquisition of MiniScribe's assets. In February 1993, Maxtor
commenced an action for declaratory relief in the U.S. Bankruptcy Court
in Denver, Colorado seeking a judgment that the assignment was valid.
Rodime filed a denial and counterclaim for patent infringement. In
April 1994, the relevant claims of the Rodime patent at issue in
Rodime's counterclaims were declared invalid in litigation between
Rodime and another disk drive manufacturer. The Company's litigation
with Rodime has been stayed pending Rodime's appeal of the finding of
invalidity. Certain other claims, including other patent infringement
claims, against the Company have arisen in the course of its business.
There is presently no litigation involving such claims, and the Company
believes the outcome of these claims and the claim concerning Rodime
described above will not have a material adverse effect, if any, on the
Company's financial position or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
At the annual meeting of stockholders held on August 18, 1994, the
following persons were reelected to serve as Class I directors: Gregory
M. Gallo and I. B. Jeon.
The following matters were submitted to a vote of the stockholders with
the results of the voting being as shown:
Broker
"Non-
For Against Abstain
Votes"
---------- ---------- -------- ---------
Approval of the Maxtor
Corporation 1995 Stock
Option Plan, under which
2,000,000 shares of
Common Stock are reserved
for issuance to employees
of the Company 25,123,510 4,896,120 156,550 11,016,114
Approval and ratification of
the appointment of Ernst &
Young LLP as the Company's
independent auditors 40,995,514 73,384 123,396 -
Effective August 18, 1994, director Juan A. Rodriguez resigned.
Following his resignation, the remaining members of the Board adopted
not to reduce the authorized number of Class I directors, but to appoint
J. Larry Smart to fill this vacancy.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
b) Reports on Form 8-K:
None
c) Exhibits:
See Index to Exhibits on pages 20 to 28 hereof.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAXTOR CORPORATION
Date: February 7 , 1995 By: /s/ Walter D. Amaral
--------------------------
Walter D. Amaral
Chief Financial Officer
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered Pages
- - - ----------- ---------------------------------------- --------------
3.1 (6) Certificate of Incorporation
3.2 (8) Certificate of Amendment of Certificate of
Incorporation of Maxtor Corporation, dated
December 23, 1987
3.3 (8) By-Laws as amended July 21, 1987
3.4 (21) Amended and Restated By-Laws of Maxtor
Corporation, A Delaware Company, effective
February 3, 1994
3.5 (21) Restated Certificate of Incorporation of Maxtor
Corporation effective February 3, 1994
4.1 (3) Form of Certificate of Shares of Registrant's
Common Stock
4.2 (7) Maxtor Corporation Rights Plan
4.3 (22) Amendment to Rights Agreement between
Registrant and the First National Bank of
Boston, dated September 10, 1993
10.1 (1) Omnilease Corporation Master Lease Agreement
No. 300362, dated as of January 14, 1983 and
addenda thereof
10.2 (1) Lease Agreement between Orchard Investment
Company No. 801, formerly Nelo, a California
general partnership and Registrant, dated March
23, 1984
10.3 (1) Lease Commitment between Walter E. Heller &
Company and Registrant, dated as of March 11,
1985
10.4 (1) Stock Purchase Agreement between Steven P.
Kitrosser and Registrant, dated May 21, 1985
10.5 (1) Stock Purchase Agreement between James McCoy
and Registrant, dated May 21, 1985
10.6 (1) Equipment Lease Agreement between Pacific
Western (formerly Pacific Valley) Bank and
Registrant, dated June 26, 1985
10.7 (1) Continuing Guaranty between Maxtor Singapore
Limited and Bank of America N.T. & S.A., dated
July 27, 1985
10.8 (9) Lease Agreement between John Arrillaga,
Separate Property Trust, Richard T. Perry,
Separate Property Trust and Registrant, dated
August 27, 1986
10.9 (3) Marketing and Distribution Agreement between
Ricoh Company, Ltd. and Registrant, dated
October 14, 1986
10.10 (3) Land Lease Agreement between Housing and
Development Board, Singapore and Maxtor
Singapore Limited, dated December 22, 1986
10.11 (3) Indenture dated February 16, 1987
10.12 (8) Stock Bonus Plan and Cash Bonus Plan between
Storage Dimensions, Inc. and Registrant dated
June 15, 1987
10.13 (8) Merger Agreement between MAXSUB II, Inc., and
Storage Dimensions, Inc. dated October 26, 1987
10.14 (3) 1986 Outside Directors' Stock Option Plan
10.15 (3) Commitment from Union Bank to Registrant
regarding letters of credit for the benefit of
the officers and directors of the Registrant
10.16 (4) Agreement and Plan of Reorganization
10.17 (9) Revised Equipment Lease Agreement between
Capital Associates International, Inc. and
Registrant, dated September 28, 1988
10.18 (9) Credit Agreement between Bank of America
National Trust and Savings Association and
Registrant, dated October 18, 1988
10.19 (9) Equipment Lease Agreement between Pitney Bowes
Credit Corporation and Registrant, dated
November 2, 1988
10.20 (9) Equipment Lease Agreement between Concord
Leasing (Asia) Pte Ltd. and Maxtor Singapore,
Limited, dated November 16, 1988
10.21 (9) Lease Agreement between Maxtor Singapore,
Limited and Jurong Town Corporation, dated
November 16, 1988
10.22 (9) Lease Agreement between Greylands Business Park
Phase II and Storage Dimensions, Inc., dated
December 14, 1988
10.23 (8) Stock Purchase Agreement among Registrant,
Storage Dimensions, Inc., David A. Eeg, Gene E.
Bowles, Jr., David P. Williams and David Lance
Robinson
10.24 (8) Fiscal 1988 Stock Option Plan
10.25 (8) Employee Stock Purchase Plan
10.26 (8) Dual Currency Loan Agreement between Maxtor
Singapore Limited, Maxtor Delaware, Maxtor
California and American Express Bank Limited
10.27 (8) Amended and Restated Fiscal 1985 Stock Option
Plan, including the Immediately Exercisable
Incentive Stock Option Agreement and the
Immediately Exercisable Nonqualified Stock
Option Agreement
10.28 (9) Loan Agreement between Probo Pacific Pte Ltd.
and Maxtor Singapore Limited, dated March 20,
1989
10.29 (9) Loan Agreement between Concord Leasing (Asia)
Pte, Ltd. and Maxtor Singapore Limited, dated
April 14, 1989
10.30 (10) Product Discontinuance Agreement between
Matsushita Communication Industrial Co., Ltd.
(MCI) and Registrant, dated August 23, 1989
10.31 (10) Equipment Lease Agreement between Capital
Associates International, Inc. and Registrant,
dated October 17, 1989
10.32 (10) Maxoptix Corporation 1989 Stock Option Plan
10.33 (9) Forms for Promissory Note and Amended and
Restated Promissory Note
10.34 (10) Amended and Restated Credit Agreement between
Bank of America National Trust and Savings
Association and Registrant, dated January 31,
1990
10.35 (10) Amendment to Lease Agreement between Orchard
Investment Company No. 801, formerly Nelo, a
California general partnership, and Registrant,
dated February 15, 1990
10.36 (10) Sublease Agreement between RACAL-VADIC, a
Division of Racal Data Communications, Inc.
("Sublessor"), and Storage Dimensions, Inc.
("Sublessee"), dated February 16, 1990
10.37 (10) Collateral Sharing and Subordination Agreement
between Registrant and Standard Chartered Bank,
dated April 5, 1990
10.38 (10) Loan and Security Agreement between Registrant
and MiniScribe Corporation, dated April 5, 1990
10.39 (11) Agreement for the Sale and Purchase of Shares
in Tratford Pte. Ltd. between the Registrant,
MiniScribe Peripherals (Pte) Ltd. and certain
Individuals, dated May 8, 1990
10.40 (11) Agreement for the Sale and Purchase of Shares
in Silkmount Limited between MaxSub Corporation,
Silkmount Limited and certain Individuals,
dated May 18, 1990
10.41 (11) Assignment of Debt between Registrant,
MiniScribe (Hong Kong) Limited and certain
Individuals, dated May 18, 1990
10.42 (10) Asset Purchase Agreement between Registrant,
MiniScribe Corporation and Standard Chartered
Bank, dated May 30, 1990
10.43 (14) License Agreement with Rodime PLC, dated
December 8, 1987 assigned to Registrant on June
29, 1990
10.44 (14) Patent Cross License Agreement with IBM dated
October 1, 1984 assigned to Registrant
effective June 30, 1990
10.45 (14) Lease Agreement between MiniScribe Corporation
and 345 Partnership dated June 6, 1990, assigned
to the Registrant effective June 30, 1990
10.46 (14) Lease Agreement between Maxtor Colorado and
Pratt Partnership (Lot 1A), dated July 5, 1990
10.47 (14) Lease Agreement between Maxtor Colorado and
Pratt Partnership (Lot 1C), dated July 5, 1990
10.48 (14) Lease Agreement between Maxtor Colorado and
Pratt Partnership (Lot 4), dated July 5, 1990
10.49 (14) Agreement for the Purchase of Land and
Improvements between Registrant and Nixdorf,
dated August 16, 1990
10.50 (15) Grant Agreement dated 25 October 1990 between
the Industrial Development Authority, Maxtor
Ireland Limited and Registrant
10.51 (12) Amendment of Agreement between Registrant,
Maxtor Colorado, Maxtor California and Standard
Chartered Bank, dated November 6, 1990
10.52 (14) Guarantee for Dastek between Registrant, Dastek
and Silicon Valley Bank, dated November 30, 1990
10.53 (10) Judgment, William Lubliner vs. Maxtor
Corporation, James M. McCoy, William J. Dobbin,
B.J. Cassin, W. Charles Hazel and George M.
Scalise
10.54 (10) Settlement Agreement, William Lubliner vs.
Maxtor Corporation, et al
10.55 (10) Fiscal 1991 Profit Sharing Plan Document
10.56 (10) Board of Director Compensation Approved for
Fiscal 1991
10.57 (14) Resignation Agreement and General Release of
Claims between Alexander E. Malaccorto and the
Registrant, dated January 11, 1991
10.58 (14) Employment Agreement between James M. McCoy and
Registrant, dated January 17, 1991
10.59 (14) Resignation Agreement and General Release of
Claims between James N. Miler and the
Registrant, dated January 20, 1991
10.60 (14) Letter Agreement between George Scalise and the
Registrant, dated February 22, 1991
10.61 (14) Resignation Agreement and General Release of
Claims between Steven Strain and the
Registrant, dated February 22, 1991
10.62 (14) Foothill Capital Credit Facility between
Registrant, Certain of its Subsidiaries and
Foothill Capital Corporation, dated April 22,
1991
10.63 (14) Employment Agreement between Laurence Hootnick
and Registrant, dated May 3, 1991
10.64 (14) Employment Agreement between Roger Nordby and
Registrant, dated May 7, 1991
10.65 (14) Employment Agreement between Thomas F. Burniece
and the Registrant, dated May 12, 1991
10.66 (15) Amendment of the Registrant's Continuing
Guarantee in favor of Foothill Capital
Corporation, dated July 10, 1991
10.67 (15) Settlement, Resignation and General Release of
Claims between Registrant and Taroon C. Kamdar,
dated August 2, 1991
10.68 (15) Amendment of Registrant's Continuing Guarantee
in favor of Foothill Capital Corporation, dated
August 9, 1991
10.69 (15) Amendment No. 1 to Lease by and between John
Arrillaga, Trustee, and Richard T. Peery,
Trustee, and Registrant, dated August 23, 1991
10.70 (15) Amendment of Registrant's Continuing Guarantee
in favor of Foothill Capital Corporation, dated
September 20, 1991
10.71 (13) Amendment of Agreement between Registrant,
Maxtor Colorado, Maxtor California and Standard
Chartered Bank, dated December 27, 1990, and
further amended July 26, 1991 and October 4, 1991
10.72 (15) Lease Agreement between Registrant and Devcon
Associates 31, dated December 6, 1991
10.73 (15) Deed of Partial Discharge and Release between
Barclays Bank PLC and Maxtor Singapore Limited,
dated December 19, 1991
10.74 (15) Agreement for Purchase and Sale of Assets among
Registrant, Read-Rite International, Read-Rite
Corporation and Maxtor Singapore Limited, dated
November 14, 1991, and amended December 20, 1991
10.75 (15) Asset Purchase Agreement among Registrant,
Storage Dimensions, Inc. and USD Acquisition,
Inc., dated December 27, 1991
10.76 (15) Resignation Agreement and General Release of
Claims between Registrant and David S. Dury,
dated January 31, 1992
10.77 (15) Sublease between Registrant and Hauser Chemical
Research, Inc., dated March 23, 1992
10.78 (15) First Amendment to Lease Agreement between PCA
San Jose Associates and Registrant, dated March
25, 1992
10.79 (15) Asset Purchase Agreement among Registrant,
Maxtor Singapore LTD., and Sequel, Inc., dated
March 12, 1992, and amended March 25, 1992
10.80 (5) Fiscal 1992 Stock Option Plan
10.81 (15) Form of Indemnity Agreement between the
Registrant and each of its Directors and
Executive Officers
10.82 (15) Maxtor/Sequel 8K/Panther Subcontract
Manufacturing and Warranty Services Agreement,
dated March 23, 1992
10.83 (15) Maxtor Corporation 1992 Employee Stock Purchase
Plan
10.84 (15) Maxtor Corporation 1991 Employee Stock Purchase
Plan
10.85 (15) Maxtor Corporation FY'93 Incentive Plan Summary
10.86 (15) Fiscal 1992 Profit Sharing Plan Document
10.87 (17) Security Agreement between Registrant and
Chrysler Capital Corporation, dated April 14, 1992
10.88 (17) Subordination, Non-Disturbance, Estoppel and
Attornment Agreement between Loma Mortgage USA,
Inc. and Registrant, dated June 4, 1992
10.89 (17) Office Lease between Cabot Associates and
Registrant, dated July 23, 1992
10.90 (17) Revolving Credit Agreement among Registrant,
Barclays Bank PLC and The First National
Bank of Boston, dated as of September 9, 1992
10.91 (17) Security Agreement between Registrant and the
CIT Group/Equipment Financing, Inc., dated
September 18, 1992
10.92 (17) Deed of Priorities among Maxtor (Hong Kong)
Limited, Registrant and General Electric
Capital Corporation, dated September 25, 1992
10.93 (17) Lease among Dares Developments (Woking)
Limited, Maxtor Europe Limited and Registrant,
dated October 1992
10.94 (16) Stock Purchase and Asset Acquisition Agreement
among David A. Eeg, Gene E. Bowles, Jr., CP
Acquisition, L.P. No. 4A, CP Acquisition, L.P.
No. 4B, Capital Partners, Inc., FGS, Inc.,
Registrant, Storage Dimensions, Inc. and SDI
Acquisition Corporation, dated December 4, 1992
10.95 (17) Loan and Security Agreement between Registrant
and Household Bank, f.s.b., dated December 11, 1992
10.96 (17) Global Master Rental Agreement between
Comdisco, Inc. and Registrant, dated December
16, 1992
10.97 (17) Amendment No. 1 to Lease between Devcon
Associates 31 and Registrant, dated December
21, 1992
10.98 (17) Continuing Guaranty among Maxtor Peripherals
(S) Pte., Ltd., Barclays Bank PLC and
Registrant, dated January 26, 1993
10.99 (17) Amendment No. 2 to Lease between Devcon
Associates 31 and Registrant, dated February 1,
1993
10.100 (17) Instrument of Resignation, Appointment and
Acceptance among Registrant, The First National
Bank of Boston and Bank of America National
Trust and Savings, dated as of March 22, 1993
10.101 (17) Waiver and First Amendment to Credit Agreement
among Registrant, Barclays Bank PLC and the
First National Bank of Boston, dated as of
April 16, 1993
10.102 (17) Waiver and First Amendment to Continuing
Guaranty Among Registrant, Barclays Bank PLC
and the Lenders dated as of April 19, 1993
10.103 (17) Security Agreement between Registrant and
Barclays Bank PLC, dated April 16, 1993
10.104 (17) Lease Agreement between Registrant and Pratt
Partnership, dated April 30, 1993
10.105 (17) Agreement for Stock Transfer Services between
Registrant and The First National Bank of
Boston, dated May 6, 1993
10.106 (17) Maxtor Corporation CY93 Profit Sharing Plan
10.107 (17) Maxtor Corporation Management Incentive Plan
for CY93
10.108 (18) Production Agreement between International
Business Machines Corporation and Registrant,
dated July 27, 1993 (with certain information
deleted and indicated by blackout text)
10.109 (19) Letter of Intent between Registrant and Hyundai
Electronics Co., Ltd., dated August 18, 1993
10.110 (20) Financing Agreement between Registrant and The
CIT Group/Business Credit, Inc., dated
September 16, 1993
10.111 (21) Form Letter Agreement between Registrant and
All of its Named Executive Officers, except
Laurence Hootnick, dated November 17, 1993
10.112 (21) Waiver to Financing Agreement among Registrant
and The CIT Group/Business Credit, Inc., dated
January 12, 1994
10.113 (21) Stock Purchase Agreement between Registrant
and Hyundai Electronics Industries Co., Ltd.,
Hyundai Heavy Industries Co., Ltd., Hyundai
Corporation, and Hyundai Merchant Marine Co.,
Ltd., dated September 10, 1993
10.114 (22) Confidential Resignation Agreement and General
Release of Claims between Registrant and Thomas
F. Burniece III, dated February 4, 1994
10.115 (22) License Agreement between Registrant and
MiniStor Peripherals Corporation, dated
February 23, 1994
10.116 (22) Confidential Resignation Agreement and General
Release of Claims between Registrant and John
P. Livingston, dated April 8, 1994
10.117 (22) Tenancy Agreement between Barinet Company
Limited and Maxtor (Hong Kong) Limited, dated
April 26, 1994
10.118 (23) Confidential Resignation Agreement and General
Release of Claims between Registrant and
Laurence R. Hootnick, dated June 14, 1994
10.119 (23) Confidential Resignation Agreement and General
Release of Claims between Registrant and Mark
Chandler, dated June 28, 1994
10.120 (24) Amendment No.2 to Lease between John Arrillaga
& Richard T. Peery and Registrant, dated June
28, 1994
10.121 (24) Amendment No. 3 to Lease between Devcon
Associates 31 and Registrant, dated June 28,
1994
10.122 (24) Confidential Resignation Agreement and General
Release of Claims between Registrant and Skip
Kilsdonk, dated September 7, 1994
10.123 (24) Confidential Resignation Agreement and General
Release of Claims between Registrant and Sallee
Peterson, dated September 23, 1994
10.124 (24) Waiver to Financing Agreement among Registrant
and The CIT Group/Business Credit, Inc., dated
October 11, 1994
10.125 (24) Amendment No. 1 to Financing Agreement between
Registrant and The CIT Group/Business Credit,
Inc., dated October 31, 1994
10.126 License agreement between Registrant and NEC
Corporation, dated October 18, 1994 29 - 34
10.127 Lease Agreement for Premises Located at 1821
Lefthand Circle, Suite D, between Registrant
and Pratt Land Limited Liability Company, dated
October 19, 1994 35 - 57
10.128 Lease Agreement for Premises Located at 1841
Lefthand Circle between Registrant and Pratt
Land Limited Liability Company, dated October
19, 1994 58 - 80
10.129 Lease Agreement for Premises Located at 1851
Lefthand Circle between Registrant and Pratt
Land Limited Liability Company, dated October
19, 1994 81 - 103
10.130 Lease Agreement for Premises Located at 2121
Miller Drive between Registrant and Pratt Land
Limited Liability Company, dated October 19,
1994 104 - 126
10.131 Lease Agreement for Premises Located at 2190
Miller Drive between Registrant and Pratt Land
Limited Liability Company, dated October 19,
1994 127 - 149
10.132 Confidential Resignation Agreement and General
Release of Claims between Registrant and
Patricia M. Roboostoff, dated November 30, 1994 150 - 154
10.133 Stock Purchase Agreement between Registrant,
Maxoptix Corporation and Kubota Electronics
America Corporation, dated December 26, 1994 155 - 184
10.1 (25) Maxtor Corporation 1995 Stock Option Plan
10.2 (25) Maxtor Corporation Individual Stock Option
Agreement, dated November 8, 1994
11.1 Computation of Net Loss Per Share 185 - 186
27 Financial Data Schedule 187
- - - ----------------------------------------------------------------------
(1) Incorporated by reference to exhibits to Registration Statement
No. 2-98568 effective August 7, 1985
(2) Incorporated by reference to exhibits to Registration Statement
No. 33-4092 effective April 2, 1986
(3) Incorporated by reference to exhibits to Registration Statement
No. 33-12123 effective February 26, 1987
(4) Incorporated by reference to exhibits to Registration Statement
No. 33-12768 effective April 23, 1987
(5) Incorporated by reference to exhibits to Registration Statement
No. 33-43172 effective October 7, 1992
(6) Incorporated by reference to exhibits to Registration Statement
No. 33-8607 effective September 10, 1986
(7) Incorporated by reference to exhibits of Form 8-K filed February
8, 1988
(8) Incorporated by reference to exhibits to Annual Report on Form
10-K effective June 24, 1988
(9) Incorporated by reference to exhibits to Annual Report on Form
10-K effective June 24, 1989
(10) Incorporated by reference to exhibits to Annual Report on Form
10-K effective June 1, 1990
(11) Incorporated by reference to exhibits of Form 8-K filed July 13,
1990
(12) Incorporated by reference to exhibits of Form 8 filed November 13,
1990
(13) Incorporated by reference to exhibits of Form 8 filed January 8,
1991
(14) Incorporated by reference to exhibits to Annual Report on Form
10-K effective July 15, 1991
(15) Incorporated by reference to exhibits to Annual Report on Form
10-K effective June 25, 1992
(16) Incorporated by reference to exhibits of Form 8-K filed January 8,
1993
(17) Incorporated by reference to exhibits to Annual Report on Form
10-K effective May 27, 1993
(18) Incorporated by reference to exhibits of Form 10-Q filed August
10, 1993
(19) Incorporated by reference to exhibits of Form 8-K filed August 19,
1993
(20) Incorporated by reference to exhibits of Form 10-Q filed November
8, 1993
(21) Incorporated by reference to exhibits of Form 10-Q filed February
7, 1994
(22) Incorporated by reference to exhibits of Form 10-K filed June 24,
1994
(23) Incorporated by reference to exhibits of Form 10-Q filed August 5,
1994
(24) Incorporated by reference to exhibits of Form 10-Q filed November
8, 1994
(25) Incorporated by reference to Forms S-8 filed on November 10, 1994
SETTLEMENT AGREEMENT
THIS AGREEMENT entered into and effective on the date that it has
been executed by all the parties is between NEC Corporation, a
corporation organized and existing under the laws of Japan and having a
place of business at 7-1, Shiba 5-chome, Minato-ku, Tokyo 108-01, Japan,
NEC Technologies, Inc., a corporation organized and existing under the
laws of the state of Delaware and having a place of business at 1414
Massachusetts Avenue, Boxborough, Massachusetts 01719-2288, and Maxtor
Corporation, a corporation organized and existing under the laws of the
state of Delaware and having a place of business at 211 River Oaks
Parkway, San Jose, California 95134.
RECITALS
WHEREAS, Maxtor Corporation is the holder of the following patents:
United States Letters Patent No. 4,999,720; United States Letters Patent
No. 4,894,734, United States Letters Patent No. 4,870,525; United States
Letters Patent No. 4,814,652; United States Letters Patent No.
4,658,308; United States Letters Patent No. 4,418,369; and all foreign
counterparts.
WHEREAS, there is currently pending in the United States District
Court for the District of Massachusetts a civil action entitled NEC
Corporation and NEC Technologies, Inc., Plaintiffs, Counterdefendants,
v. Maxtor Corporation, Defendant, Counterplaintiff, designated as Civil
Action No. 93-10338 PBS ("the Civil Action").
WHEREAS, the parties desire to terminate the Civil Action on the
terms and conditions set forth below.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants of the
parties hereto and other good and valuable consideration, the parties
hereto agree as follows:
1. DEFINITIONS
a. "The Patents" shall mean United States Letters Patent No.
4,999,720; United States Letters Patent No. 4,894,734; United States
Letters Patent No. 4,870,525; United States Letters Patent No.
4,814,652; United States Patent No. 4,658,308; United States Letters
Patent No. 4,418,369; any and all foreign counterparts; and any and all
divisionals, continuations, continuations-in-part, extensions, reissues,
reexaminations, and renewals thereof.
b. "Subsidiary" shall mean (1) a corporation, company or other
entity more than fifty percent (50%) of whose outstanding shares or
securities are, now or hereafter, owned or controlled, directly or
indirectly, by a party hereto, but such corporation, company or other
entity shall be deemed to be a Subsidiary only so long as such ownership
or control exists; or (2) an entity which does not have outstanding
shares or securities, as may be the. case in a partnership, joint
venture or unincorporated association, but more than fifty percent (50%)
of whose ownership interest is, now or hereafter, owned or controlled,
directly or indirectly, by a party hereto, but such entity shall be
deemed to be a Subsidiary only so long as such ownership or control
exists.
c. "NEC" shall mean NEC Corporation and/or its Subsidiaries,
including without limitation NEC Technologies, Inc.
d. "Maxtor" shall mean Maxtor Corporation and/or its
Subsidiaries.
2. RELEASE AND COVENANT NOT TO SUE
Maxtor releases and covenants not to sue or otherwise assert
against NEC, its officers, directors, employees, agents,
representatives, customers, direct or indirect, suppliers or attorneys
with respect to any claims or action of any nature whatsoever for any
infringement of the Patents by NEC or for any infringement of the
Patents based on the manufacture of any products solely for the use,
sale or other transfer by NEC or based entirely on any products sold or
otherwise transferred by NEC. Said release and covenant shall become
irrevocable upon the payment specified in paragraph 3.a. below.
3. PAYMENT
a. Within seven (7) business days after execution by all parties
and receipt of a fully executed copy of this Agreement by all parties,
NEC Corporation agrees to pay to Maxtor (I) the sum of $470,000 (United
States Dollars) for the release and covenant hereunder for the Patents
in the United States of America, and (ii) the sum of $30.000 (United
States Dollars) for the release and covenant hereunder for the Patents
outside the United States of America by wire transfer to the following
bank account of Maxtor:
ABA No.: 121000385 (Domestic)
SWIFT CODE: BOFAUS6S (International)
Bank of America
1850 Gateway Boulevard
Concord, CA 94520
ACCOUNT NO.: 14842004218
Maxtor Corporation
211 River Oaks Parkway
San Jose, CA 95134
b. Both parties agree that the payment specified in (i) of
paragraph 3.a. above will not be subject to a Japanese withholding tax.
With respect to the payment specified in (ii) of paragraph 3.a. above,
NEC shall be responsible for a 10% Japanese withholding tax imposed on
such payment under Article 14 of the "Convention Between the United
States of America and Japan for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income." Upon
execution of this Agreement, Maxtor shall submit to NEC duly executed
Application Form For Income Tax Convention (Form 3) in duplicate with
respect to the payment specified in (ii) of paragraph 3.a. above.
4. TERMINATION OF LITIGATION
The parties shall join in filing with the United States District
Court for the District of Massachusetts a "STIPULATION OF DISMISSAL AND
ORDER" in the form of Appendix A attached hereto providing for the
dismissal with prejudice of the entire Civil Action. The Stipulation
shall be filed within seven (7) business days after execution by all of
the parties and receipt of a fully executed copy of this Agreement by
all of the parties. Each party shall pay its own costs and attorneys
fees in respect to the Civil Action and settlement thereof.
5. GENERAL PROVISIONS
a. Maxtor agrees that the release and covenant provided for in
paragraph 2. above shall run with title to the Patents and shall bind
any assignee (including any exclusive licensee) or other transferee of
the Patents.
b. The validity, construction, and performance of this Agreement
shall be governed by the laws of the Commonwealth of Massachusetts
without regard to principles of conflict of laws.
c. This Agreement shall be executed in triplicate originals.
Each party shall have its signatures on this Agreement notarized or
legalized.
d. This Agreement is the entire understanding of the parties
with respect to the subject matter hereof. It may not be changed
orally, but only in writing, signed by the party to be bound.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in triplicate originals by its duly authorized
representatives on the respective dates indicated below.
NEC CORPORATION MAXTOR CORPORATION
By: /s/ Kenichi Hashimoto By: /s/ Glenn H, Stevens
--------------------- --------------------
Signature Signature
Kenichi Hashimoto Glenn H. Stevens
--------------------- --------------------
Print Name Print Name
Its: General Manager, Storage Its: Vice-President,
Products Division - 1st General Counsel
Computers Operations Unit and Secretary
---------------------------- --------------------
Title Title
Date: October 18, 1994 Date: September 27, 1994
---------------------------- --------------------
Subscribed before me at Tokyo, SUBSCRIBED AND SWORN to before
Japan, this 18th day of October, to me in the County of Boulder,
1994. State of Colorado, this 27th day
of September, 1994.
/s/ Ikuo Onishi /s/ Patricia M. Lyon
--------------------------------- --------------------------
IKUO ONISHI Notary Public
NOTARY
My commission Expires: October 24, 1996
----------------
NEC TECHNOLOGIES, INC.
By: /s/ Thomas G. Ruane
--------------------
Signature
Thomas G. Ruane
--------------------
Print name
Its: Sr. Vice President & Treasurer
------------------------------
Title
Date: October 6, 1994
-------------------
SUBSCRIBED AND SWORN to before me in
the County of Middlesex, State of
Massachusetts, this 6th day of October,
1994.
/s/ Paul John
-----------------
Notary Public
My Commission Expires: January 26, 2001
------------------
LEASE AGREEMENT
FOR PREMISES LOCATED AT
1821 Lefthand Circle,
Suite D
BETWEEN
MAXTOR CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. PRESENT CONDITION OF PROPERTY
3. TERM
3.1 Initial Term
3.2 Option to Extend
3.3 Tenant Improvement Construction
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and
HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN
ROOF - NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
26. ASSIGNMENT OR SUBLETTING
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD
29. GOVERNMENTAL ACQUISITION OF THE PREMISES
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES
31. TENANT'S GUARANTEE AND FINANCIAL STATEMENTS
32. MEMORANDUM OF LEASE - RECORDING
33. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT
34. CONTROLLING LAW
35. INUREMENTS
36. TIME
37. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE
38. PARAGRAPH HEADINGS; GRAMMAR
39. ADDITIONAL PROVISIONS
EXHIBIT A: SITE PLAN
EXHIBIT B: TENANT FINISH
LEASE
THIS LEASE, made and entered into this 19th day of October, 1994 by
and between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited
liability company, hereinafter referred to as "Landlord," and MAXTOR
CORPORATION, hereinafter referred to as "Tenant,"
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements,
and payments as hereinafter set forth, the parties hereto covenant and
agree as follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto
Tenant the following described premises containing approximately 5,000
square feet of building floor space measured to the outside of the
walls, including overhangs, canopies and loading docks, and to
approximately 1/2 the thickness of common walls; commonly known as 1821
Lefthand Circle, Suite D, in the City of Longmont, County of Boulder,
State of Colorado, a more detailed description of which is Lot 4, Longs
Peak Industrial Park-Minor Subdivision "A", County of Boulder, State of
Colorado, a diagram of which is attached as Exhibit B (hereinafter
referred to as the "premises"); the leasing of which is made according
to the terms of this Agreement; together with all appurtenances thereto,
and all fixtures attached thereto, in present condition, and together
with nonexclusive reasonable access across any other land owned by
Landlord as may be required for use of the premises by Tenant, with such
access to be on such roadways, sidewalks, and other common areas of
which the premises are a part, or of any such adjacent lands owned by
Landlord, as Landlord may from time to time designate.
2. PRESENT CONDITION OF PROPERTY. Tenant has examined, and
accepts the building, improvements, and any fixtures on the premises, in
present condition, subject to the construction of Tenant Improvements as
detailed on the plans and specifications labeled Exhibit "A," attached
hereto and made a part hereof by reference. No representation,
statement, or warranty, express or implied, has been made by or on
behalf of Landlord as to the condition of the premises, or as to the use
that may be made of same. In no event shall Landlord be liable for any
defect in the premises which are discernible by Tenant's examination
thereof or for any limitation on the use of the premises. Tenant shall
not be deemed to have accepted the Tenant improvements to be constructed
by Landlord until it shall have had a reasonable opportunity to inspect
the same.
3. TERM.
3.1 Initial Term. The term of this lease shall commence at
12:00 noon on December 31st, 1994 (the "Commencement Date"), and unless
terminated as herein provided for, shall end at 12:00 noon on the 31st
day of December, 1999. The Commencement Date as set forth in this
Paragraph 3.1 shall be subject to those adjustments of the Commencement
Date, if any, set forth in Paragraph 3.3 which relate to the performance
of construction on the premises.
3.2 Option to Extend. Upon full and complete performance of
all the terms, covenants, and conditions herein contained by Tenant and
payment of all rental due under the terms hereof, Tenant shall be given
the option to renew this lease for 3 additional terms of 5 years each.
Each such option shall be exercisable only by delivery of Tenant's
signed written notice of extension to Landlord not less than 180 days
prior to the expiration of the then-existing lease term. In the event of
such exercise, this lease shall be deemed to be extended for the
additional period pursuant to all the terms and conditions set forth
herein, including (but not as a limitation) those provisions for
increase of the base rental set forth in Paragraph 4.2.2. In the event
of exercise of said Option, any funds held by Landlord pursuant hereto
shall continue to be so held subject to the terms and conditions
relating to same.
3.3 Tenant Improvement Construction. The Commencement Date of
this lease shall be delayed until the substantial completion of the
tenant improvements described on Exhibit "A" attached hereto and
delivery of possession to Tenant, if such occurs after the Commencement
Date, as follows: If for any reason Landlord does not substantially
complete such construction prior to the Commencement Date, such failure
will not affect the validity of this lease, but in such case Tenant
shall not be obligated to pay rent until such construction is
substantially completed and possession of the premises is delivered to
Tenant. Provided, however, if Landlord shall not have substantially
completed and delivered possession of the premises within sixty (60)
days after the Commencement Date, Tenant may, at Tenant's option, upon
notice in writing to Landlord delivered within ten (10) days after the
end of the 60-day period, cancel this lease. Landlord shall have no
liability to Tenant for failure to substantially complete construction
prior to any date or dates. Tenant's only remedy shall be cancellation
of the lease. Landlord will, however, use its best efforts to complete
the Tenant improvements on or before the commencement date.
Should construction of the tenant improvements be completed to such
an extent as to permit the issuance of a partial certificate of
occupancy by the governing authority, Tenant may occupy the portion of
the premises so permitted prior to (or after) the Commencement Date and
shall pay rent for the occupied portion, prorated in proportion to the
number of square feet of building space occupied, beginning on date of
delivery of possession. Rent adjustments shall be similarly prorated.
In no event shall Tenant take possession prior to satisfaction of the
requirements for Tenant's insurance set forth below.
3.4 Delivery of Possession. Except as above provided with
respect to construction of Tenant Improvements, Tenant shall be entitled
to possession of the premises at noon on the Commencement Date, as
defined in Paragraph 3.1. Tenant may, with approval by Landlord in its
sole discretion, have access to the premises during tenant improvement
construction for the purpose of moving in Tenant-owned furniture,
fixtures, equipment and inventory. This access and the items so moved
in shall not in any way impede the construction of the tenant
improvements, nor shall Landlord, its agent, employees, sub-contractors,
or any other person on the premises whether invited or not invited, be
liable for the protection, care or security of Tenant owned items. This
paragraph shall not be construed so as to permit Tenant to occupy the
premises prior to the satisfaction of all requirements for Tenant's
insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of
Landlord as herein set forth, the following as rental for the premises:
4.1 Base Rental.
The base rental for the full term hereof shall be EIGHTY-SEVEN
THOUSAND, FIVE HUNDRED Dollars ($87,500.00), payable in monthly
installments [basic monthly rental of ONE THOUSAND FOUR HUNDRED FIFTY-
EIGHT Dollars AND 33/100THS ($1,458.33)] in advance on the first day of
each month during the term hereof.
4.2 Escalation of Base Rental.
4.2.1 On the first anniversary of the commencement date of this
lease, and annually thereafter, the base rental payable by Tenant shall
be increased to an amount determined by multiplying the basic monthly
rental by a fraction, the denominator of which shall be the most recent
Consumer Price Index figure, as hereinafter defined, published prior to
the Commencement Date, and the numerator of which shall be the most
recent Consumer Price Index figure published prior to the particular
anniversary date; provided, however, that in no event shall the rent for
any month after such anniversary be less than the rent for the month
immediately preceding such anniversary. As used herein, the term
"Consumer Price Index" shall mean the Consumer Price Index, All Urban
Consumers, All Items, Denver, Colorado (1982-84 = 100), or the successor
of that Index, as published by the Bureau of Labor Statistics, U.S.
Department of Labor. Should Landlord lack sufficient data to make the
proper determination on the date of any adjustment, Tenant shall
continue to pay the monthly rent payable immediately prior to the
adjustment date. As soon as Landlord obtains the necessary data,
Landlord shall determine the rent payable from and after such adjustment
date and shall notify Tenant of the adjustment in writing. Should the
monthly rent for the period following the adjustment date exceed the
amount previously paid by Tenant for that period, Tenant shall forthwith
pay the difference to Landlord. Should the Consumer Price Index as
above described cease to be published, a reasonably comparable successor
index shall be selected by Landlord. If Tenant objects to the successor
index, the dispute will be resolved and a successor index designated by
arbitration pursuant to the rules and procedures of the American
Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the
increase in base rental for each year shall be not less than two and one-
half percent (2.5%) nor more than seven percent (7%) of the base rental
for the previous year, each year for such purposes to commence on the
anniversary of the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation
provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular
year, years, or part of a year. No such waiver shall preclude Landlord
from applying the escalation to any subsequent year or part of a year,
and from making the subsequent application as if all subsequent
escalations had been duly made to the maximum permissible extent.
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior
and HVAC. Tenant shall pay the cost of having Landlord maintain the HVAC
systems and the exterior of the premises including parking lots, green
areas, sidewalks, entrances, and corridors (but not the exterior
surfaces of the building, other than glass). Cost of maintaining such
areas shall include, but shall not be limited to, repairs, preventative
maintenance, HVAC filters and compressors, sealing, striping, lawn
mowing, snow removal (Tenant is responsible for snow removal of less
than 2"), gardening, shrub care and replacements, lawn watering, parking
area maintenance, electricity for lighting, sign maintenance,
depreciation of equipment used for the foregoing purposes and other
costs related to the premises or common areas. Landlord shall perform
such maintenance and charge the cost thereof to Tenant, which shall be
paid as additional rent within 10 days after delivery of Landlord's
invoice. Landlord shall keep reasonable records of such cost, which
shall be available for Tenant's inspection during normal business hours.
Certain items of such maintenance (such as landscape maintenance and
snow removal) are performed by Landlord on numerous areas owned and/or
maintained by Landlord, in addition to the premises, and the cost
thereof cannot be precisely ascribed to the premises. As to such
services which are performed on areas in addition to the premises, the
cost for all areas so serviced shall be allocated to the premises in
proportion to the square feet of building floor space in the premises
compared to the square feet of building floor space in the entire area
to which such services are provided.
For the first year of the lease, Landlord agrees that the total of
the maintenance fees referred to in this paragraph will not exceed $0
per square foot annually.
4.4 Private Security Service. Landlord may engage a private
security service, as an independent contractor, to patrol an area which
includes the premises. Tenant shall be included in the selection
process. If Landlord does so employ a private security service, which
the tenant has approved, the cost thereof shall be treated in the same
manner as Maintenance Expense and paid by Tenant as Additional Rent
under the same provisions as are applicable to Maintenance Expense.
Tenant shall have no obligation to participate under this Section 4.4,
if Tenant's portion of the cost of such services is more than the amount
that Tenant has been paying for such service.
Landlord shall have absolutely no obligation to engage a private
security service and shall not be liable for any damages or loss which
might have been averted had a private security service been engaged. If
Landlord does engage a private security service, Landlord shall not be
liable for any damages or loss which may result from actions, inactions,
non-performance or quality of performance by the security service. If
the Tenant desires a higher level of security services than Landlord
provides, or wishes to obtain an agreement that there will be liability
for actions, inactions, non-performance or quality of performance by a
security service, Tenant may itself engage such security service as
Tenant chooses, at Tenant's sole expense.
Nothing herein shall limit any action by Tenant against any person
or entity providing private security service, provided that Landlord
shall not be party to, or liable for any judgment entered in such an
action, as a defendant, cross defendant, third-party .defendant, or
otherwise.
4.5 Late Charges. Tenant will pay a late charge equal to five
percent of any monthly rental payment or other payment not paid when
due, which payment shall be in addition to any interest elsewhere
provided for.
4.6 Security Deposit. Landlord acknowledges receipt of the
sum of ONE THOUSAND THREE HUNDRED THIRTY-EIGHT Dollars AND 75/100THS
($1,338.75) paid by Tenant upon the execution hereof or a letter of
credit for the same amount, to be retained by Landlord as security for
the performance of all of the terms and conditions of this lease
Agreement to be performed by Tenant, including payment of all rental due
under the terms hereof. Landlord shall not owe Tenant any interest on
the deposit. At Landlord's election, deductions may be made by Landlord
from the amount so retained for the reasonable cost of repairs to the
premises which should have been performed by Tenant, for any rental
payment or other sum delinquent under the terms hereof, and for any sum
used by Landlord in any manner to cure any default in the performance of
Tenant under the terms of this lease. In the event deductions are so
made during the rental term, upon notice by Landlord, Tenant shall
redeposit such amounts so expended so as to maintain the security
deposit in the amount as herein provided for, within 10 days after
receipt of such written demand from Landlord. Nothing herein contained
shall limit the liability of Tenant as to any repairs or maintenance of
the premises; and nothing herein shall limit the obligation of Tenant
promptly to pay all sums otherwise due under this lease and to comply
with all the terms and conditions hereof. The security deposit, less
any sums withheld by Landlord pursuant to the terms hereof, shall be
repaid to Tenant within sixty days after the date of termination of the
lease.
4.7 Proration of Rent for Partial Months. If the lease term
begins on other than the first day of a month, base rent and additional
rent from such date until the first day of the next succeeding calendar
month shall be prorated on the basis of the actual number of days in
such calendar month and shall be payable in advance. If the lease term
terminates on other than the last day of the calendar month, rent from
the first day of such calendar month until such termination date shall
be prorated on the basis of the actual number of days in such month, and
shall be payable in advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant
shall pay as additional rent, all real estate taxes and assessments, as
shall, from and after the date hereof, be assessed upon the premises and
any appurtenances or improvements thereto. Tenant shall pay one-twelfth
(1/12) of such estimated additional rent, in advance, with each monthly
rental payment. Landlord shall reasonably estimate such taxes and
advise Tenant in writing of the amount to be paid each month. Such
payments shall be separately accounted for by Landlord, (and may be
deposited with any holder of a mortgage or deed of trust on the
premises) and shall be used to make prompt payment of such taxes as they
come due. If the estimated payments made by Tenant are not sufficient
to fully pay such taxes as they come due, Tenant shall pay to Landlord
any amount necessary to make up the deficiency within ten (10) days of
notice from Landlord. Landlord shall have no obligation to pay any
interest to Tenant on such additional rent, but Landlord shall give
Tenant an annual accounting showing credit for such payments made by
Tenant, and debits for payments made by Landlord or Landlord's lender.
If Tenant fails to make any required payment to Landlord, Landlord may,
but shall not be required to, pay any such tax and shall become entitled
to repayment from Tenant without demand, together with interest thereon
as elsewhere provided. The real estate taxes and assessments for the
year in which the term of this lease shall begin, as well as for the
year in which the lease shall end, shall be apportioned so that Tenant
shall pay only the portions that correspond with the portions of such
years as are within such lease term. In the event that the premises are
assessed for tax purposes as a part of a larger parcel, the tax on the
entire parcel shall be prorated in proportion to the number of square
feet of building floor space on each portion of the entire parcel.
Upon written request from Tenant, Landlord shall protest the tax
assessment on the premises, to the extent that Landlord, in good faith,
believes that such protest is justifiable and likely to be successful.
In the event of any such protest Tenant shall nevertheless pay to
Landlord the taxes as assessed, and Tenant shall be entitled to the
appropriate share of any refund. Tenant shall not protest any real
property tax assessment on the premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant
shall be responsible for and timely pay any and all personal property
taxes assessed against any furniture, fixtures, equipment and items of a
similar nature installed and/or located in or about the premises by
Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. Landlord shall
not be required to furnish to Tenant any utility services of any kind,
such as but not limited to, water, hot water, heat, gas, electricity,
light, telephone, cable TV and power. Tenant shall obtain and pay all
charges for gas, electricity, light, heat, power, water (and lawn
watering), and telephone, cable TV or other communication services or
other utilities used, rendered, or supplied, upon or in connection with
the premises. Tenant irrevocably appoints Landlord as Tenant's attorney-
in-fact solely for the purpose of terminating Tenant's account with any
provider of such utilities, if the premises are abandoned by Tenant or
if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this
lease, Tenant shall remain in possession of the premises and continue to
pay rent without a written agreement as to such possession, then Tenant
shall be deemed a month-to-month Tenant and the rental rate during such
holdover tenancy shall be equivalent to one hundred fifteen percent
(115%) the monthly rental paid for the last month of tenancy under this
lease. Such month-to-month tenancy may be terminated by the Landlord at
noon on any day which is more than twenty-nine (29) days after date of
delivery of Landlord's written notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant
shall operate to renew or extend this lease without the written consent
of Landlord. No modification of this lease shall be binding unless
endorsed hereon or otherwise written and signed by the respective
parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO
HOLES IN ROOF - NO NEW EQUIPMENT ON ROOF. Tenant may, during the term
of this lease, at Tenant's expense, erect inside partitions, add to
existing electric power service, add telephone outlets or other
communication services, add light fixtures, install additional heating
and/or air conditioning or make such other changes or alterations as
Tenant may desire, provided that prior to commencement of any such work,
Tenant shall submit to Landlord a set of fully detailed working drawings
and specifications for the proposed alteration, prepared by a licensed
architect or engineer. If Tenant so requests, Landlord will have the
drawings and specifications prepared for Tenant, at Tenant's expense,
utilizing Landlord's in-house staff. Tenant will pay Landlord's
customary hourly charges for such services, as additional rent, to be
paid within 10 days after delivery of invoice. In particular, but not
as a limitation, the working drawings must fully detail changes to
mechanical, wiring and electrical, lighting, plumbing and HVAC systems
to Landlord's satisfaction. Landlord may refuse to consent to the
alterations because of the inadequacy of the drawings and
specifications. Tenant may not commence the alterations until
Landlord's written consent has been given. If the drawings and
specifications are adequate, to Landlord's sole satisfaction, then
Landlord will not unreasonably withhold its consent to the alterations,
except that Landlord may withhold its consent to new or altered openings
(holes) in the roof, or placement of additional equipment on the roof,
as follows. Landlord may withhold its consent to new openings in the
roof or placement of additional equipment on the roof unless Landlord,
in its sole discretion, is satisfied that the risk of increased leakage
or risk of more frequent repairs or maintenance of the roof is
acceptable to Landlord. Any new or altered opening in the roof, or
placement of additional equipment thereon, shall be considered an
alteration which requires the prior written consent of Landlord. If
within thirty (30) days after such plans and specifications are
submitted by Tenant to Landlord for such approval, Landlord shall have
not given Tenant notice of disapproval, stating the reason for such
disapproval, such plans and specifications shall be considered approved
by Landlord. As a condition of approval for such alternations, Landlord
shall have the right to require Tenant to furnish adequate bond or other
security acceptable to Landlord for performance of and payment for the
work to be performed. At the end of this lease, all such fixtures,
equipment, additions and/or alterations (except trade fixtures installed
by Tenant) shall be and remain the property of Landlord, provided,
however, Landlord shall have the option to require Tenant to remove any
or all such fixtures, equipment, additions, and/or alterations and
restore the premises to the condition existing immediately prior to such
change and/or installation, normal wear and tear excepted, all at
Tenant's cost and expense. All work done by Tenant shall conform to
appropriate city, county and state building codes and health standards
and OSHA standards and Tenant shall be responsible for obtaining and
paying for building permits.
If any such work done by Tenant causes damage to the structural
portion, exterior finish or roof of the premises, then the costs of
repair of such damage, and of all further maintenance and repairs to
such structural portion, exterior finish or roof during the term of the
lease shall thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by
Landlord, nor Landlord's actual knowledge of any alteration accomplished
or in progress shall constitute a waiver of Landlord's rights concerning
alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for
construction done by it or caused to be done by it on the premises as
permitted by this lease. Tenant shall keep the building, other
improvements and land of which the premises are a part free and clear of
all mechanic's liens resulting from construction by or for Tenant.
Tenant shall have the right to contest the correctness or validity of
any such lien if, immediately on demand by Landlord, Tenant deposits
with Landlord and/or any appropriate court or title insurance company a
bond or sum of money sufficient to allow issuance of title insurance
against the lien and/or to comply with the statutory requirements for
discharge of the lien found in 38-22-130 and 131, Colorado Revised
Statutes, or any successor statutory provision. Landlord shall have the
right to require Tenant's contractor(s), subcontractors and materialmen
to furnish to both Tenant and Landlord adequate lien waivers on work or
materials paid for, in connection with all periodic or final payments,
by endorsement on checks, making of joint checks, or otherwise, and
Landlord shall have the right to review invoices prior to payment.
Landlord reserves the right to post notices on the premises that
Landlord is not responsible for payment of work performed and that
Landlord's interest is not subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent
to maintain uniformity of signs throughout the area where signs may be
controlled by Landlord. Tenant shall place no signs on the premises
(except inside Tenant's portion of the building on the premises) without
prior written consent of Landlord, which consent shall not be
unreasonably withheld.
Tenant may not put any signs on the premises indicating that the
same are for rent, or available for assignment or sublease, and may put
no signs of real estate brokers on the premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance
and repairs of the structural portions, the roof and the exterior finish
of the building (other than glass) on the premises at the sole cost and
expense of Landlord; provided, however, that if any such maintenance or
repairs are necessitated by the acts of Tenant or its employees, agents,
contractors, sub-contractors, licensees, invitees or guests, Tenant
shall reimburse Landlord for the cost of same, as additional rent, to be
paid within 10 days after delivery of invoice. All other maintenance,
repairs and replacements shall be performed by Tenant, at its own
expense, including all necessary maintenance, repairs and replacements
to pipes, plumbing systems, electrical systems, window or other glass,
doors, fixtures, interior decorations, and all other appliances and
appurtenances. Such repairs and replacements, interior and exterior,
ordinary as well as extraordinary, shall be made promptly, as and when
necessary, so that the premises are maintained in first class condition.
All such maintenance, repairs and replacements shall be in quality and
class at least equal to the original work. On default of Tenant in
making such maintenance, repairs or replacements, Landlord may, but
shall not be required to, make such repairs and replacements for
Tenant's account, and the expense shall constitute and be collectable as
additional rent, together with interest thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in
this lease, under no circumstances shall Landlord be liable for damage
to the contents of the building or consequential damages to Tenant
resulting from roof or window leaks or failure, or leakage of any water
pipe or gas pipe, failure of any communications system or alarm, failure
or leakage or discharge by any sprinkler system or other fire
suppression system, power surges, power shortages or outage, sewer
failure or sewage backup, or failure or malfunction of any heating or
cooling system. The term "contents" shall include, but shall not be
limited to, improvements made by Tenant, and data bases and other
information stored or contained in computers, hard or floppy disks,
tapes, computer chips and other memory or storage devices. The term
"consequential damages" shall include, but not be limited to, Tenant's
inability to perform any contract on which Tenant is bound, loss of
sales, loss of profit, or loss of business reputation or goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall
vacate the premises in the same condition as when received on the date
hereof, ordinary wear and tear excepted, and shall remove all of
Tenant's property, so that Landlord can repossess the premises not later
than noon on the day upon which this lease or any extension hereof ends,
whether upon notice, holdover or otherwise. The Landlord shall have the
same rights to enforce this covenant by ejectment and for damages or
otherwise as for the breach of any other conditions or covenant of this
lease. Upon termination of the lease, Tenant shall deliver to Landlord
keys which operate all locks on the exterior or interior of the
premises, including, without limitation, keys to locks on cupboards and
closets. Tenant shall retrieve all keys to the premises which Tenant
has delivered to employees or others, and include same with the keys
delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant
shall use the premises for research
and development, office, light manufacturing and other uses appurtenant
thereto. Except as otherwise provided herein, Tenant will maintain the
grounds which are part of the premises, keeping them free from
accumulation of trash or debris and will be responsible for snow removal
up to two inches of snow. Tenant shall conform to all present and
future laws and ordinances of any governmental authority having
jurisdiction over the premises, and will make no use in violation of
same. No outside storage shall be allowed unless first approved by
Landlord in writing and then only in such areas as are designated as
storage areas by Landlord. Tenant shall not commit or suffer any waste
on the premises. Tenant shall not permit any nuisance to be maintained
on the premises nor permit any disorderly conduct, noise or other
activity having a tendency to annoy or to disturb occupants of any other
part of the property of which the premises are a part and/or of any
adjoining property.
As part of a common scheme for orderly development, use and
protection, of its various properties and those properties adjacent to
the premises, Landlord may impose upon Tenant reasonable rules and
regulations concerning parking and vehicle traffic; locations at which
deliveries are to be made and access thereto; trash disposal; use of
common areas such as recreation areas, corridors, and sidewalks; signs
and directories; use of communication wires or cables which are used in
common but which may be inadequate fully to serve all the demands placed
upon them; provided that such rules and regulations shall be uniform in
their application and shall not violate the express terms of this lease
elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost
of any damage to the premises or the building or the sidewalks and
pavements adjoining the same which results from the movement of heavy
articles or heavy vehicles or utility cuts made by or on behalf of
Tenant. Tenant shall not overload the floors or any other part of the
premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES.
Tenant shall make no use of the premises which would void or make
voidable any insurance upon the premises.
18. INSURANCE.
18.1 All Risk Insurance. Tenant shall keep the building and
improvements insured throughout the term of this lease against losses
covered by an "All Risk" policy, as defined in the insurance industry,
which shall also cover 1) loss of rental and 2) deposit of Hazardous
Materials on the premises by those acts of third parties which
constitute vandalism. The deductible amount shall not exceed $50,000.
18.2 General Liability Insurance. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of
ONE MILLION Dollars ($1,000,000.00 ) for each occurrence of bodily
injury and ONE MILLION Dollars ($1,000,000.00) for each occurrence of
property damage. Tenant shall supply to Landlord certificates of
insurance as provided in Paragraph 18.6. In the event Tenant fails to
secure such insurance or to give evidence to Landlord of such insurance
by depositing with Landlord certificates as provided below, Landlord may
purchase such insurance in Tenant's name and charge Tenant the premiums
therefor. Bills for the premiums therefor shall be deemed and paid as
additional rent due within 10 days after delivery of invoice. The
Landlord shall be an additional named insured on the policy.
18.3 Tenant Improvements. Tenant agrees to carry insurance
covering all of Tenant's leasehold improvements, alterations, additions
or improvements, trade fixtures, merchandise and personal property from
time to time in, on or upon the premises, in an amount not less than one
hundred percent (100%) of the full replacement cost of such items from
time to time during the term of this lease, providing protection against
any peril included within an "All-Risk" policy, with a deductible amount
not to exceed $10,000. Any policy proceeds shall be used for the repair
or replacement of the property damaged or destroyed unless this lease
shall cease and terminate due to destruction of the premises as provided
below.
18.4 Other Insurance. Tenant agrees to carry insurance against
such other hazards and in such amounts as the holder of any mortgage or
deed of trust to which the lease is subordinate may require from time to
time.
18.5 Waiver of Subrogation. Landlord and Tenant grant to each
other on behalf of any insurer providing fire and extended insurance
coverage to either of them covering the premises, improvements thereon,
and contents thereof, a waiver of any right of subrogation or recovery
of any payments of loss under such insurance, such waiver to be
effective so long as each is empowered to grant such waiver under the
terms of its insurance policy, and to give all necessary notice of such
waiver to its insurance carriers.
18.6 Other Provisions Regarding Tenant's Insurance. All
insurance required of Tenant in this lease shall be effected under
enforceable policies issued by insurers of recognized good financial
condition licensed to do business in this State. At least fifteen (15)
days prior to the expiration date of any such policy, a certificate
evidencing a new or renewal policy shall be delivered by Tenant to
Landlord. Within fifteen (15) days after the premium on any policy
shall become due and payable, Landlord shall be furnished with
satisfactory evidence of its payment. To the extent obtainable, all
policies shall contain an agreement that notwithstanding any act or
negligence of Tenant which might otherwise result in forfeiture of such
insurance, such policies shall not be canceled except upon ten (10) days
prior written notice to Landlord, and that the coverage afforded thereby
shall not be affected by the performance of any work in or about the
premises.
If Tenant provides any insurance required of Tenant by this lease
in the form of a blanket policy, Tenant shall furnish satisfactory proof
that such blanket policy complies in all respects with the provisions of
this lease, and that the coverage thereunder is at least equal to the
coverage which would be provided under a separate policy covering only
the premises.
18.7 Changes in Standard Policies. If the definition of
insurance industry policy language relating to "All-Risk" insurance or
other term changes, the insurance requirements hereunder shall be
modified to conform to the existing insurance industry language;
however, the dollar amount of the coverages required under this lease
shall not be less than those existing at the time of the effective
beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be
Tenant's sole and exclusive responsibility to meet all fire regulations
of any governmental unit having jurisdiction over the premises to the
extent such regulations affect Tenant's operations, at Tenant's sole
expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the premises
are damaged or destroyed by fire or other cause at any time after the
date of commencement of this lease, Landlord shall proceed with due
diligence to repair or restore the same to the same condition as existed
before such damage or destruction, and as soon as possible thereafter
but in no event more than 180 days from the date of damage or
destruction will give possession to the Tenant of the premises without
diminution or change of location. If Landlord does not complete all
repairs and restoration within 180 days, Tenant may at its reasonable
discretion terminate the lease. Provided, however, that in case of
total destruction of the premises by fire, or in case the premises are
so badly damaged that, in the opinion of the Landlord, it is not
feasible to repair or rebuild the same, then, either Tenant or Landlord
shall have the right to terminate this lease instead of rebuilding the
improvements; provided, however, that the terminating party shall give
the other party written notice of its intention to terminate, said
notice to be served not later than thirty (30) days after the occurrence
of the damage to the property. In the event the premises are rendered
temporarily untenantable because of fire or other casualty, base monthly
rent shall abate on the untenantable area until the premises are
restored to their former condition, abatement to be based on the square
feet of building floor space in the untenantable area compared to the
total square feet of building floor space on the premises. Provided,
however, that to the extent the damage or destruction results from the
negligence or other action of Tenant or its employees, agents,
contractors, subcontractors, invitees, guests or licensees, Tenant shall
pay for the restoration or repair, to the extent the cost of same is not
covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 Definitions.
21.1.1 Hazardous Material. Hazardous Material means any
substance:
(a) the presence of which requires investigation, notice or
remediation under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material,"
"hazardous waste," "hazardous substance," "regulated substance,"
"pollutant" or "contaminant" under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), Toxic Substances Control Act
(15 U.S.C. _ 2601 et seq.), the Colorado Underground Storage Tank Act
(Colo. Rev. Stat. 25-18-101 et seq.), and/or the Resource Conservation
and Recovery Act (42 U.S.C. _ 6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous
and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United
States, the State of Colorado or any political subdivision thereof; or
(d) the presence of which on the premises causes or threatens
to cause a nuisance upon the premises or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or
about the premises; or
(e) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos
or urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 Environmental Requirements. Environmental Requirements
means all applicable present and future statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of
human health or the environment, including, without limitation:
(a) All requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or threatened releases
of Hazardous Materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid,
liquid, or gaseous in nature, into the air, surface water, groundwater,
or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature; and
(b) All requirements pertaining to the protection of the
health and safety of employees or the public.
21.1.3 Environmental Damages. Environmental Damages means all
claims, judgments, damages, losses, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs, and expenses
of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement or judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' and witnesses' fees,
any of which are incurred at any time as a result of the existence of
Hazardous Material upon, about, beneath the premises or migrating or
threatening to migrate to or from the premises, or the existence of a
violation of Environmental Requirements pertaining to the premises,
including without limitation:
(a) Damages for personal injury, or injury to property or
natural resources occurring upon or off of the premises, foreseeable or
unforeseeable, including, without limitation, lost profits,
consequential damages, the cost of demolition and rebuilding of any
improvements on real property, interest and penalties including but not
limited to claims brought by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements including, but
not limited to, the preparation of any feasibility studies or reports or
the performance of any cleanup, remediation, removal, response,
abatement, containment, closure, restoration or monitoring work required
by any federal, state or local governmental agency or political
subdivision or court, or reasonably necessary to make full economic use
of the premises and any other property in a manner consistent with its
current use or otherwise expended in connection with such conditions,
and including without limitation any attorneys' fees, costs and expenses
incurred in enforcing this agreement or collecting any sums due
hereunder;
(c) Liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with
the items referenced herein; and
(d) Diminution in the value of the premises and adjoining
property, and damages for the loss of business and restriction on the
use of or adverse impact on the marketing of rentable or usable space or
of any amenity of the premises and adjoining property.
21.2 Tenant's Obligation to Indemnify, Defend and Hold
Harmless. Tenant, its successors, assigns and guarantors, agree to
indemnify, defend, reimburse and hold harmless the following persons
from and against any and all Environmental Damages arising from
activities of Tenant or its employees, agents, contractors,
subcontractors, or guests, licensees, or invitees which (1) result in
the presence of Hazardous Materials upon, about or beneath the premises
or migrating to or from the premises, or (2) result in the violation of
any Environmental Requirements pertaining to the premises and the
activities thereon:
21.2.1 Landlord;
21.2.2 any other person who acquires an interest in the
premises in any manner, including but not limited to purchase at a
foreclosure sale or otherwise; and
21.2.3 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns, guests and invitees of such persons.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Tenant, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
the indemnified parties.
21.3 Tenant's Obligation to Remediate. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement,
Tenant shall, upon demand of Landlord, and at its sole cost and expense,
promptly take all actions to remediate the premises which are reasonably
necessary to mitigate Environmental Damages or to allow full economic
use of the premises, or are required by Environmental Requirements,
which remediation is necessitated by the 1) introduction of a Hazardous
Material upon, about or beneath the premises or 2) a violation of
Environmental Requirements, either of which is caused by the actions of
Tenant, its employees, agents, contractors, subcontractors, guests,
invitees or licensees. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the premises,
the preparation of any feasibility studies, reports or remedial plans,
and the performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or restoration work, whether on or off of the
premises. Tenant shall take all actions necessary to restore the
premises to the condition existing prior to the introduction of
Hazardous Material upon, about or beneath the premises, notwithstanding
any lesser standard of remediation allowable under applicable law or
governmental policies. All such work shall be performed by one or more
contractors, selected by Tenant and approved in advance and in writing
by Landlord. Tenant shall proceed continuously and diligently with such
investigatory and remedial actions, provided that in all cases such
actions shall be in accordance with all applicable requirements of
governmental entities. Any such actions shall be performed in a good,
safe and workmanlike manner and shall minimize any impact on the
business conducted at the premises. Tenant shall pay all costs in
connection with such investigatory and remedial activities, including
but not limited to all power and utility costs, and any and all taxes or
fees that may be applicable to such activities. Tenant shall promptly
provide to Landlord copies of testing results and reports that are
generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities.
Promptly upon completion of such investigation and remediation, Tenant
shall permanently seal or cap all monitoring wells and test holes to
industrial standards in compliance with applicable federal, state and
local laws and regulations, remove all associated equipment, and restore
the premises to the maximum extent possible, which shall include,
without limitation, the repair of any surface damage, including paving,
caused by such investigation or remediation hereunder. Provided,
however, that Tenant shall not be obligated to remediate environmental
damages which result from seepage of Hazardous Materials onto the
premises from adjacent property unless the presence on the adjacent
property was caused by Tenant or its employees, agents, contractors,
subcontractors, guests, invitees or licensees.
21.4 Notification. If Tenant shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected
or threatened violation of Environmental Requirements, or liability of
Tenant for Environmental Damages in connection with the premises or past
or present activities of any person thereon, or that any representation
set forth in this agreement is not or is no longer accurate, including
but not limited to notice or other communication concerning any actual
or threatened investigation, inquiry, lawsuit, claim, citation,
directive, summons, proceeding, complaint, notice, order, writ, or
injunction, relating to same, then Tenant shall deliver to Landlord,
within ten days of the receipt of such notice or communication by
Landlord, a written description of said violation, liability, correcting
information, or actual or threatened event or condition, together with
copies of any such notice or communication. Receipt of such notice
shall not be deemed to create any obligation on the part of Landlord to
defend or otherwise respond to any such notification or communication.
21.5 Negative Covenants.
21.5.1 No Hazardous Material on Premises. Except in strict
compliance with all Environmental Requirements, Tenant shall not cause,
permit or suffer any Hazardous Material to be brought upon, treated,
kept, stored, disposed of, discharged, released, produced, manufactured,
generated, refined or used upon, about or beneath the premises by
Tenant, its agents, employees, contractors, subcontractors, guests,
licensees or invitees, or any other person. Tenant shall deliver to
Landlord copies of all documents which Tenant provides to any
governmental body in connection with compliance with Environmental
Requirements with respect to the premises, such delivery to be
contemporaneous with provision of the documents to the governmental
agency.
21.5.2 No Violations of Environmental Requirements. Tenant
shall not cause, permit or suffer the existence or the commission by
Tenant, its agents, employees, contractors, subcontractors or guests,
licensees or invitees, or by any other person of a violation of any
Environmental Requirements upon, about or beneath the premises or any
portion thereof.
21.5.3 No Environmental or Other Liens. Tenant shall not
create or suffer or permit to exist with respect to the premises, any
lien, security interest or other charge or encumbrance of any kind,
including without limitation, any lien imposed pursuant to section
107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42
U.S.C. section 9607(1) or any similar state statute to the extent that
such lien arises out of the actions of Tenant, its agents, employees,
contractors, subcontractors or guests, licensees or invitees.
21.6 Landlord's Right to Inspect and to Audit Tenant's Records.
Landlord shall have the right in its sole and absolute discretion, but
not the duty, to enter and conduct an inspection of the premises and to
inspect and audit Tenant's records concerning Hazardous Materials at any
reasonable time to determine whether Tenant is complying with the terms
of the lease, including but not limited to the compliance of the
premises and the activities thereon with Environmental Requirements and
the existence of Environmental Damages as a result of the condition of
the premises or surrounding properties and activities thereon. If
Landlord has reasonable cause to believe Tenant is in default with
respect to any of the provisions of this lease related to Hazardous
Materials, Environmental Requirements or Environmental Damages, then
Landlord shall have the right, but not the duty, to retain at the sole
expense of Tenant an independent professional consultant to enter the
premises to conduct such an inspection and to inspect and audit any
records or reports prepared by or for Tenant concerning such compliance.
Tenant hereby grants to Landlord the right to enter the premises and to
perform such tests on the premises as are reasonably necessary in the
opinion of Landlord to assist in such audits and investigations.
Landlord shall use reasonable efforts to minimize interference with the
business of Tenant by such tests inspections and audits, but Landlord
shall not be liable for any interference caused thereby.
21.7 Landlord's Right to Remediate. Should Tenant fail to
perform or observe any of its obligations or agreements pertaining to
Hazardous Materials or Environmental Requirements, then Landlord shall
have the right, but not the duty, without limitation upon any of the
rights of Landlord pursuant to this agreement, to enter the premises
personally or through its agents, consultants or contractors and perform
the same. Tenant agrees to indemnify Landlord for the costs thereof and
liabilities therefrom as set forth in Paragraph 21.2.
21.8 Landlord's Obligation to Remediate. Landlord agrees to
remediate all Environmental Damages 1) caused by Landlord, its agents,
employees, contractors, subcontractors, guests, licensees or invitees,
or 2) not so caused but arising prior to Commencement Date hereof and
not caused by Tenant, its agents, employees, contractors,
subcontractors, guests, licensees or invitees.
21.9 Landlord's Obligation to Indemnify, Defend and Hold
Harmless Concerning Environmental Matters. Landlord, its successors,
assigns and guarantors, agree to indemnify, defend, reimburse and hold
harmless the following persons from and against any and all
Environmental Damages arising from activities of Landlord or its
employees, agents, contractors, subcontractors or guests, licensees,
invitees; or which occurred prior to the Commencement Date (and were not
caused by Tenant, its agents, employees, contractors, subcontractors,
guests, licensees or invitees) which (1) result in the presence of
Hazardous Materials upon, about or beneath the premises or migrating to
or from the premises, or (2) result in the violation of any
Environmental Requirements pertaining to the premises and the activities
thereon:
21.9.1 Tenant;
21.9.2 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns and invitees of Tenant.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Landlord, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
Tenant.
21.10 Survival of Environmental Obligations. The obligations
of Landlord and Tenant as set forth in Paragraph 21 and all of its
subparagraphs shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized
representative, and/or any lender or prospective lender, shall have the
right to enter the premises during the lease term at all reasonable
times during usual business hours for purposes of inspection, and/or the
performance of any maintenance, repairs or replacement therein.
Landlord shall give Tenant such advance notice of entry as is reasonable
in light of the purpose for the entry. Landlord shall have the right to
enter the premises and show the same to a prospective tenant during the
last 180 days of this lease or any extended term, unless the term shall
have been extended by mutual written agreement or delivery of notice of
exercise of any option to extend. In all circumstances, Landlord shall
use its best efforts to conduct its business while in Tenant premises as
not to interfere with Tenant's operations or use of the premises.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 Default Defined. Any one or more of the following events
(each of which is herein sometimes called "event of default") shall
constitute a default:
23.1.1 Tenant defaults in the due and punctual payment of any
rent, taxes, tax deposits, insurance premiums, maintenance fees or other
sums required to be paid by Tenant under this lease when and as the same
shall become due and payable;
23.1.2 Tenant abandons the premises;
23.1.3 Tenant defaults in the performance of or compliance
with any of the covenants, agreements, terms and conditions contained in
this lease other than those referred to in the foregoing Paragraph
23.1.1, and such default shall continue for a period of 30 days after
written notice thereof from Landlord to Tenant, and shall not be cured
as permitted by Paragraph 23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or takes the benefit of any
relevant legislation that may be in force for bankrupt or insolvent
debtors or files any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief for itself under any present or future federal, state or
other statute, law or regulation, or proceedings are taken by Tenant
under any relevant Bankruptcy Act in force in any jurisdiction available
to Tenant, or Tenant seeks or consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties or of the premises, or makes
any general assignment for the benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state
or other statute, law or regulation, and shall remain undismissed for an
aggregate of 120 days, or if any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the
premises is appointed without the consent or acquiescence of Tenant and
such appointment remains unvacated for an aggregate of 120 days.
23.2 Landlord's Remedies in the Event of Default. In the event
of any event of default, Landlord shall have the option, without further
notice to Tenant or further demand for performance exercise any one or
more of the following remedies (and any other remedy available at law or
in equity):
23.2.1 If Tenant has been late in payment of rent or other
sums due on four or more occasions during any period of one year,
Landlord, without terminating this lease, may 1) require that all future
payments be made by bank cashier's check, and/or 2) require an
additional security deposit in the amount of the then-current base rent
for two months, and/or 3) require that rent for each month be paid on or
before the 15th day of the preceding month. Such requirement shall be
imposed by Landlord's written notice delivered to Tenant. The
additional security deposit shall be paid within 10 days after delivery
of the notice. The Landlord may or may not exercise the remedies
provided in this Paragraph 23.2.1, in its sole discretion. The exercise
of the remedies provided in this Paragraph 23.2.1 shall not be required
prior to the exercise of any other available remedy.
23.2.2 To institute suit against Tenant to collect each
installment of rent or other sum as it becomes due or to enforce any
other obligation under this lease even though the premises be left
vacant subject to Landlord's obligation to mitigate damages.
23.2.3 As a matter of right, to procure the appointment of a
receiver for the premises by any court of competent jurisdiction upon ex
parte application. All rents, issues and profits, income and revenue
from the premises shall be applied by such receiver to the payment of
the rent, together with any other obligations of the Tenant under this
lease.
23.2.4 To re-enter and take possession of the premises and all
personal property therein and to remove Tenant and Tenant's agents and
employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach
of the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet
the premises and personal property, as the agent and for the account of
Tenant in the name of Landlord or otherwise, upon the terms and
conditions Landlord deems fit with the new Tenant for such period (which
may be greater or less than the period which would otherwise have
constituted the balance of the term of this lease) as Landlord may deem
best, and collect any rent due upon any such reletting providing that if
the new lease term shall be greater than Tenant's original term, Tenant
shall be released from any and all further obligation upon the
expiration of Tenant's original term save for amounts accrued upon the
expiration of Tenant's original term. In this event, the rents received
on any such reletting shall be applied first to the expenses of
reletting and collecting, including, without limitation, all
repossession costs, reasonable attorneys' fees, and real estate brokers'
commissions, alteration costs and expenses of preparing said premises
for reletting, and thereafter toward payment of the rental and of any
other amounts payable by Tenant to Landlord. If the sum realized shall
not be sufficient to pay the rent and other charges due from Tenant,
then within five days after demand, Tenant will pay to Landlord any
deficiency as it accrues. Landlord may sue therefor as each deficiency
shall arise if Tenant shall fail to pay such deficiency within the time
limited.
23.3 Tenant to Surrender Peaceably. In the event Landlord
elects to re-enter or take possession of the premises, Tenant shall quit
and peaceably surrender the premises to Landlord, and Landlord may enter
upon and re-enter the premises and possess and repossess itself thereof,
by force, summary proceedings, ejectment or otherwise, and may
dispossess and remove Tenant and may have, hold and enjoy the premises
and the right to receive all rental income of and from the same.
23.4 No Termination by Re-Entry. No re-entry or taking of
possession by Landlord shall be construed as an election on Landlord's
part to terminate or accept surrender of this lease unless Landlord's
written notice of such intention is delivered to Tenant.
23.5 Injunction. In the event of any breach by Tenant of any
of the agreements, terms, conditions or covenants contained in this
lease, Landlord, in addition to any and all other rights, shall be
entitled to enjoin such breach and shall have the right to invoke any
right and remedy allowed at law or in equity or by statute or otherwise
for such breach as though re-entry, summary proceedings, and other
remedies were not provided for in this lease.
23.6 Remedies Listed are Cumulative and Non-Exclusive. The
enumeration of the foregoing remedies does not exclude any other
remedy, but all remedies are cumulative and shall be in addition to
every other remedy now or hereafter existing at law or in equity,
including, but not limited to, the remedies provided in Paragraph 24
concerning Landlord's security interest in Tenant's personalty and
Landlord's right to remove same.
23.7 Interest on Sums Past Due. All rent and all other amounts
due from Tenant hereunder shall bear interest at the rate of twelve
(12%) percent per annum compounded quarter-annually from their
respective due dates until paid, provided that this shall in no way
limit, lessen or affect any claim for damages by Landlord for any breach
or default by Tenant.
23.8 Attorneys' Fees. Reasonable attorneys' fees, expert
witness fees, consulting fees and other expenses incurred by either
party by reason of the breach by either party in complying with any of
the agreements, terms, conditions or covenants of this lease shall
constitute additional sums to be paid to the prevailing party on
demand.
23.9 Time to Cure Certain Non-Monetary Defaults. In the event
of any default other than failure to pay a sum of money, for which
notice has been given as provided herein, which because of its nature
can be cured but not within the period of grace heretofore allowed, then
such default shall be deemed remedied, if the correction thereof shall
have been commenced within said grace period or periods and shall, when
commenced, be diligently prosecuted to completion.
23.10 Landlord Default. If Landlord is in default under any of
its obligations and the default continues for thirty (30) days after
written notice from Tenant (subject to extension pursuant to 23.9),
Tenant may pursue all remedies at law or in equity. Tenant may, but
shall not be required to, correct such default for the Landlord's
account , and the expense shall be promptly paid within ten (10) days
by Landlord; however, in no event shall Tenant have the right to rental
abatement, offset of expenses against rental, or the right to terminate
this lease, subject to Tenant's legal or equitable remedies.
Tenant may not offset any sum due or assertedly due from Landlord
to Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord
arising out of Landlord's obligations under this lease, such judgment
may be satisfied only by execution and sale of Landlord's interest in
the premises leased hereby. Tenant may not seek execution against other
property of Landlord, nor pursue any judgment, execution or other remedy
against the partners or other owners of Landlord or any of their
property. Immediately upon receipt of Landlord's written request,
Tenant will release any property (other than the premises leased hereby)
from the lien of any judgment obtained by Tenant against Landlord
arising out of Landlord's obligations under this lease.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES. In the event of any proceeding at law or in equity
wherein Landlord, without being in default as to its covenants under the
terms hereof, shall be made a party to any litigation by reason of
Tenant's interest in the premises, or, in the event Landlord shall be
required to commence any legal proceedings relating to the premises and
Tenant's occupancy thereof and Tenant's relation thereto, but only after
notice to and consent by Tenant, Landlord shall be allowed and Tenant
shall be liable for and shall pay all costs and expenses incurred by
Landlord, including reasonable attorneys' fees, expert witness fees and
consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall
indemnify and save harmless Landlord of and from liability for damages
or claims against Landlord, including costs, attorneys' fees and
expenses of Landlord in defending against the same, on account of
injuries to any person or property, if the injuries are caused by the
negligence or willful misconduct of Tenant, its agents, servants or
employees, or of any other person entering upon the premises under
express or implied invitation of Tenant or if such injuries are the
result of the violation by Tenant, its agents, servants, or employees,
of laws, ordinances, other governmental regulations, or of the terms of
this lease.
The Landlord shall indemnify and save harmless Tenant of and from
liability for damages or claims against Tenant, including costs,
attorneys' fees and expenses of Tenant in defending against the same, on
account of injuries to any person or property, if the injuries are
caused by the negligence or willful misconduct of Landlord, its agents,
servants or employees, or of any other person entering upon the premises
under express or implied invitation of Landlord or where such injuries
are the result of the violation by Landlord, its agents, servants or
employees, of laws, ordinances, other governmental regulations, or of
the terms of this lease..
Landlord provides recreation facilities for the use of employees of
Tenant and other occupants within the property developed by Landlord,
which property presently includes LONG'S PEAK INDUSTRIAL PARK, FIRST,
SECOND and THIRD FILINGS, and portions of ST. VRAIN CENTRE, both in the
City of Longmont and County of Boulder, Colorado, and will include such
additional property in the immediate vicinity thereof as may be
developed by Landlord. The term "recreation facilities" includes, at
present, a fitness trail with 34 exercise stations, volleyball courts,
basketball courts, and a park, and will include such additional
facilities as Landlord may provide.
Tenant shall indemnify and save harmless Landlord of and from
Liability for damages or claims against Landlord, including costs,
attorneys' fees and expenses of Landlord in defending against the same,
on account of any injury to (or death of) an employee of Tenant arising
out of use of the recreation facilities, unless such death or injury is
caused by Landlord's gross negligence or willful misconduct
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign,
mortgage, or encumber this lease, nor sublet or permit the premises or
any part thereof to be used by others, without the prior written consent
of Landlord in each instance, which consent shall not be unreasonably
withheld.
In connection with an assignment, sublease or encumbrance Landlord
may require the submittal of detailed financial information about the
prospective subtenant or assignee, to be reviewed by Landlord, and may
require a guarantee of the obligations of the prospective subtenant or
assignee, and may require detailed financial information about the
guarantor, to be reviewed by Landlord; and there may be alterations to
this lease and alterations to the building which are necessary to
consummate the transaction. The Landlord may require Tenant or the
prospective assignee or sub-tenant to pay for the alterations to the
building, and may require that Landlord perform same. In addition,
Landlord may charge a fee of two percent of base rent for the first five
years of the lease, due in full upon Landlord's consent, as payment to
Landlord for such investigations, lease alterations and similar matters.
No two percent fee will be charged in connection with an assignment or
sublease to an assignee or subtenant who is "affiliated" with Tenant.
"Affiliated" means under common voting control, directly or indirectly.
A sale or transfer of control of a majority of the votes which may
be cast to elect Tenant's board of directors or other governing body
shall be deemed to be an assignment of this lease, requiring Landlord's
consent if the sale or transfer is essentially accomplished in a single
transaction.
If this lease is assigned, or if the premises or any part thereof
is sublet, or occupied by anyone other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, sub-tenant, or
occupant and apply the net amount collected against all rent herein
reserved. No such assignment, subletting, occupancy, or collection
shall be deemed a waiver of this covenant, or the acceptance of the
assignee, sub-tenant, or occupant as tenant, or a release of Tenant from
further performance by Tenant of the covenants in this lease. The
consent by Landlord to an assignment or subletting shall not be
construed to relieve Tenant (or any subsequent tenant) from obtaining
the consent in writing of Landlord to any further assignment or
subletting. This provision shall not apply to a sale or transfer of
control to Hyundai Electronic Industries Co. Ltd. and /or any of it's
affiliates.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord
covenants it has good right to lease the premises in the manner
described herein and that Tenant shall peaceably and quietly have, hold,
occupy, and enjoy the premises during the term of the lease; except as
provided in Paragraph 31 concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD.
Landlord does reserve, during the term of this lease, the right to go
upon and deal with the premises or part thereof for the purpose of
implementing a common development plan for the project of which the
premises are a part, and to install non-exclusive sidewalks, paths,
roadways and other street improvements for use by vehicles, pedestrians,
and for parking; to undertake such drainage programs to handle
underground and surface drainage water and to make any other changes
and/or improvements as Landlord shall deem advisable in the exercise of
its sole discretion; provided, however, any such action by Landlord
shall not unreasonably interfere with the rights of Tenant hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree
that Landlord shall have sole and exclusive authority to negotiate and
settle all matters pertaining to the acquisition of all or part of the
premises by a governmental agency by eminent domain or threat thereof
(condemnation), and to convey all or any part of the premises under
threat of condemnation, and the lease shall terminate as to any area so
conveyed. It is agreed that any compensation for land and/or buildings
to be taken whether resulting from negotiation and agreement or
condemnation proceedings, shall be the exclusive property of Landlord,
and that there shall be no sharing whatsoever between Landlord and
Tenant of any such sum. Such taking of property shall not be
considered as a breach of this lease by Landlord, nor give rise to any
claims in Tenant for damages or compensation from Landlord. Tenant may
separately claim and recover from the condemning authority the value of
any personal property owned by Tenant which is taken, and any relocation
expenses owed to Tenant by the condemning authority. If the taken
portion of the premises consists only of areas where no building is
constructed, and the land area of the premises is reduced by less than
ten percent, and the parking area available for use by Tenant is reduced
by less than five percent, and there is no material change in Tenant's
access to the premises, then there shall be no change in the terms of
the lease. If no building area is taken but the foregoing limits on
parking area reductions are exceeded, then Tenant may terminate the
lease unless Landlord provides sufficient reasonably adjacent parking
area so that the total available parking area is reduced by less than
five percent. If any portion of the building on the premises is taken,
then Landlord, at its election, may replace the square footage taken
with space in the same building, or may provide land and building area
essentially the same as the premises in a reasonably adjacent location,
within 10 days after the conveyance or taking, under the same terms and
conditions as contained in this lease, and this lease shall be in full
force and effect as to the new premises. If Landlord does not so
provide reasonable space, then Tenant shall have two options. First,
Tenant may terminate the lease by written notice delivered to Landlord
within 60 days after the conveyance or taking. Second, Tenant may
retain the remaining portion of the premises, under all the terms and
conditions hereof, but the base rental shall be reduced in proportion to
the number of square feet of building floor space taken compared to the
number of square feet of building floor space on the premises prior to
the taking.
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease
shall be subject and subordinate in priority at all times to the lien of
any existing and/or hereafter executed mortgages and trust deeds
encumbering the premises. Although no instrument or act on the part of
Tenant shall be necessary to effectuate such subordination, Tenant will
execute and deliver such further instruments subordinating this lease to
the lien of any such mortgages or trust deeds as may be desired by the
mortgagee or holder of such trust deeds. Tenant hereby appoints
Landlord as his attorney in fact, irrevocably, to execute and deliver
any such instrument for Tenant. Tenant further agrees at any time and
from time to time upon not less than ten (10) days prior written request
by Landlord, to execute, acknowledge, and deliver to Landlord an
estoppel affidavit in form acceptable to Landlord and the holder of any
existing or contemplated mortgage or deed of trust encumbering the
premises. Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant (1) that this lease is in full force and
effect, without modification except as may be represented by Landlord;
(2) that there are no uncured defaults in Landlord's performance; and
(3) that not more than one (1) month's rent has been paid in advance.
Further, upon request, Tenant shall supply to Landlord a corporate
resolution certifying that the party signing this statement on behalf of
Tenant is properly authorized to do so, if Tenant is a corporation.
Tenant agrees to provide Landlord within ten business days of Landlord's
request, Tenant's most recently completed financial statements and such
other financial information as reasonably requested by Landlord in order
to verify Tenant's financial condition to satisfy requirements of
Landlord's existing or contemplated lender or mortgagee.
Tenant agrees with lender and Landlord that if there is a
foreclosure of any such mortgage or deed of trust and pursuant to such
foreclosure, the Public Trustee or other appropriate officer executes
and delivers a deed conveying the premises to the lender or its
designee, or in the event Landlord conveys the premises to the lender or
its designee in lieu of foreclosure, Tenant will attorn to such grantee
of the premises, rather than to Landlord, to perform all of Tenant's
obligations under the lease, and Tenant shall have no right to terminate
the lease by reason of the foreclosure or deed given in lieu thereof.
Landlord will include in the terms of any mortgage or deed of trust
on the premises a provision that if Tenant is not in default under the
terms of this lease and Tenant is then in possession of the premises,
Tenant's rights of quiet enjoyment arising out of the lease shall not be
affected or disturbed by lender in the event of a default by Landlord
and any sale of the premises through foreclosure of any deed of trust or
otherwise.
31. MEMORANDUM OF LEASE - RECORDING. This lease shall not be
recorded in the office of the County Clerk and Recorder of Boulder
County, except by Landlord as a financing statement. In order to effect
public recordation, the parties hereto may, at the time this lease is
executed, agree to execute a Memorandum of lease incorporating therein
by reference the terms of this lease, but deleting therefrom any
expressed statement or mention of the amount of rent herein reserved,
which instrument may be recorded by either party in the office of the
Clerk and Recorder of Boulder County.
32. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT.
No assent, or waiver expressed or implied, or failure to enforce, as to
any breach of any one or more of the covenants or agreements herein
shall be deemed or taken to be a waiver of any succeeding or additional
breach.
Payment by Tenant or receipt by Landlord of an amount less than the
rent or other payment provided for herein shall not be deemed to be
other than a payment on account of the earliest rent then due, nor shall
any endorsement or statement on any check or any letter accompanying any
check or payment of rent be deemed an accord and satisfaction, and
Landlord may accept such check or other payment without prejudice to
Landlord's right to recover the balance of all rent then due, and/or to
pursue any or all other remedies provided for in this lease, in law,
and/or in equity including, but not limited to, eviction of Tenant.
Specifically, but not as a limitation, acceptance of a partial payment
of rent shall not be a wavier of any default by Tenant.
33. CONTROLLING LAW. The lease, and all terms hereunder shall
be governed by the laws of the State of Colorado, exclusive of its
conflicts of laws rules.
34. INUREMENTS. The covenants and agreements herein contained
shall bind and inure to the benefit of Landlord and Tenant and their
respective successors. This lease shall be signed by the parties in
duplicate, each of which shall be a complete and effective original
lease.
35. TIME. Time is of the essence in this lease in each and all
of its provisions in which performance is a factor.
36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE. The street address of Landlord is 1960 Industrial Circle,
Longmont, CO 80501. The mailing address of Landlord is P. O. Box 1937,
Longmont, CO 80502-1937. All payments, notices and communications which
are sent to Landlord via United States mail shall be addressed to the
mailing address. Only payments, notices and communications which are
hand delivered or delivered by private courier service shall be
addressed to the street address.
Tenant's street address is 1821 Lefthand Circle, Suite D, Longmont,
Colorado, 80501. Tenant's mailing address is 2190 Miller Drive,
Longmont, Colorado, 80501. Any notice to Tenant may be delivered to the
above addresses or to the premises. A copy of any notice should be sent
to the attention of Vice President and General Consul, 211 River Oaks
Parkway, San Jose, California, 95136.
Landlord's current fax number is (303)776-4946. Tenant's current
fax number is (303) 678-2165. Any written notice required hereby may be
delivered by fax, U.S. mail, private courier service, or hand delivery.
Notice shall be effective at time of delivery to the address or fax
number shown.
Either party may change its street or mailing address, or fax
number, for purposes hereof, by written notice delivered to the other.
The federal employer identification number of Landlord is 84 0954 078.
The federal identification number of Tenant is 77-0123732 .
38. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are
made for the purposes of ease of location of terms and shall not affect
or vary the terms hereof. Throughout this lease, wherever the words,
"Landlord" and "Tenant" are used they shall include and imply to the
singular, plural, persons both male and female, and all sorts of
entities and in reading said lease, the necessary grammatical changes
required to make the provisions hereof mean and apply as aforesaid shall
be made in the same manner as though originally included in said lease.
39. ADDITIONAL PROVISIONS:
FLEXIBILITY CLAUSE: In the event Tenant's requirement for space
increases or decreases during the term of this lease, including any
extended term thereof, Tenant may notify Landlord of its adjusted space
requirement, in which event Landlord shall, within 120 days after such
notice, increase or decrease the square footage available to Tenant so
as to reasonably meet the Tenants new needs (as is reasonably devisable
by Landlord), either using the premises or other comparable space of
Landlord reasonably acceptable by Tenant. Tenant may not decrease space
in existing premises leased from the Landlord and lease space in Boulder
County owned by a third party, unless the Landlord cannot accommodate
the Tenant's overall space requirements. In such event, Landlord and
Tenant shall amend this lease accordingly, or enter into a new lease
upon rental rates and other terms which are similar to those of this
Lease and reasonably acceptable to both parties and terminate this
lease. Tenant may exercise the right described in this paragraph
multiple times, but not more than once in any twelve month period. Not
withstanding language to the contrary that might be found elsewhere in
this lease, the Tenant will be allowed to exercise the right described
in this paragraph without incurring of cost or other penalties sometimes
associated with early terminations, Tenant will be expected to return
the premises to Landlord pursuant to the terms and conditions of
Paragraph 14 of this Lease Agreement. This provision shall not apply to
345 S. Francis, Longmont, Colorado.
IN WITNESS WHEREOF, the Parties have executed this lease as of the
date hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY COMPANY
By: /s/ Susan M. Pratt
-----------------------
Susan M. Pratt, Manager
TENANT: MAXTOR CORPORATION
By: /s/ J. Larry Smart
------------------------
J. Larry Smart
Chief Executive Officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this 19th day of
October, 1994 by
Susan Pratt, General Partner, Pratt Partnership.
Witness my hand and official seal.
My commission expires: May 3, 1997
/s/ Elizabeth H. Oram
----------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
The foregoing instrument was acknowledged before me this 17th day of
October, 1994 by
J. Larry Smart, Chief Executive Officer, Maxtor Corporation.
Witness my hand and official seal.
My commission expires: June 5, 1998
/s/ Sharon L. Spehar
--------------------
Notary Public
-5-
LEASE AGREEMENT
FOR PREMISES LOCATED AT
1841 Lefthand Circle
BETWEEN
MAXTOR CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. PRESENT CONDITION OF PROPERTY
3. TERM
3.1 Initial Term
3.2 Option to Extend
3.3 Tenant Improvement Construction
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and
HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES
IN ROOF - NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
26. ASSIGNMENT OR SUBLETTING
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD
29. GOVERNMENTAL ACQUISITION OF THE PREMISES
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES
31. TENANT'S GUARANTEE AND FINANCIAL STATEMENTS
32. MEMORANDUM OF LEASE - RECORDING
33. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT
34. CONTROLLING LAW
35. INUREMENTS
36. TIME
37. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE
38. PARAGRAPH HEADINGS; GRAMMAR
39. ADDITIONAL PROVISIONS
EXHIBIT A: SITE PLAN
EXHIBIT B: TENANT FINISH
LEASE
THIS LEASE, made and entered into this 19th day of October, 1994 by
and between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited
liability company, hereinafter referred to as "Landlord," and MAXTOR
CORPORATION, hereinafter referred to as "Tenant,"
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements,
and payments as hereinafter set forth, the parties hereto covenant and
agree as follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto
Tenant the following described premises containing approximately 29,600
square feet of building floor space measured to the outside of the
walls, including overhangs, canopies and loading docks, and to
approximately 1/2 the thickness of common walls; commonly known as 1841
Lefthand Circle, in the City of Longmont, County of Boulder, State of
Colorado, a more detailed description of which is Lot 1F, Longs Peak
Industrial Park-Minor Subdivision "F", County of Boulder, State of
Colorado, a diagram of which is attached as Exhibit B (hereinafter
referred to as the "premises"); the leasing of which is made according
to the terms of this Agreement; together with all appurtenances thereto,
and all fixtures attached thereto, in present condition, and together
with nonexclusive reasonable access across any other land owned by
Landlord as may be required for use of the premises by Tenant, with such
access to be on such roadways, sidewalks, and other common areas of
which the premises are a part, or of any such adjacent lands owned by
Landlord, as Landlord may from time to time designate.
2. PRESENT CONDITION OF PROPERTY. Tenant has examined, and
accepts the building, improvements, and any fixtures on the premises, in
present condition, subject to the construction of Tenant Improvements as
detailed on the plans and specifications labeled Exhibit "A," attached
hereto and made a part hereof by reference. No representation,
statement, or warranty, express or implied, has been made by or on
behalf of Landlord as to the condition of the premises, or as to the use
that may be made of same. In no event shall Landlord be liable for any
defect in the premises which are discernible by Tenant's examination
thereof or for any limitation on the use of the premises. Tenant shall
not be deemed to have accepted the Tenant improvements to be constructed
by Landlord until it shall have had a reasonable opportunity to inspect
the same.
3. TERM.
3.1 Initial Term. The term of this lease shall commence at
12:00 noon on December 31st, 1994 (the "Commencement Date"), and unless
terminated as herein provided for, shall end at 12:00 noon on the 31st
day of December, 1999. The Commencement Date as set forth in this
Paragraph 3.1 shall be subject to those adjustments of the Commencement
Date, if any, set forth in Paragraph 3.3 which relate to the performance
of construction on the premises.
3.2 Option to Extend. Upon full and complete performance of
all the terms, covenants, and conditions herein contained by Tenant and
payment of all rental due under the terms hereof, Tenant shall be given
the option to renew this lease for 3 additional terms of 5 years each.
Each such option shall be exercisable only by delivery of Tenant's
signed written notice of extension to Landlord not less than 180 days
prior to the expiration of the then-existing lease term. In the event of
such exercise, this lease shall be deemed to be extended for the
additional period pursuant to all the terms and conditions set forth
herein, including (but not as a limitation) those provisions for
increase of the base rental set forth in Paragraph 4.2.2. In the event
of exercise of said Option, any funds held by Landlord pursuant hereto
shall continue to be so held subject to the terms and conditions
relating to same.
3.3 Tenant Improvement Construction. The Commencement Date of
this lease shall be delayed until the substantial completion of the
tenant improvements described on Exhibit "A" attached hereto and
delivery of possession to Tenant, if such occurs after the Commencement
Date, as follows: If for any reason Landlord does not substantially
complete such construction prior to the Commencement Date, such failure
will not affect the validity of this lease, but in such case Tenant
shall not be obligated to pay rent until such construction is
substantially completed and possession of the premises is delivered to
Tenant. Provided, however, if Landlord shall not have substantially
completed and delivered possession of the premises within sixty (60)
days after the Commencement Date, Tenant may, at Tenant's option, upon
notice in writing to Landlord delivered within ten (10) days after the
end of the 60-day period, cancel this lease. Landlord shall have no
liability to Tenant for failure to substantially complete construction
prior to any date or dates. Tenant's only remedy shall be cancellation
of the lease. Landlord will, however, use its best efforts to complete
the Tenant improvements on or before the commencement date.
Should construction of the tenant improvements be completed to such
an extent as to permit the issuance of a partial certificate of
occupancy by the governing authority, Tenant may occupy the portion of
the premises so permitted prior to (or after) the Commencement Date and
shall pay rent for the occupied portion, prorated in proportion to the
number of square feet of building space occupied, beginning on date of
delivery of possession. Rent adjustments shall be similarly prorated.
In no event shall Tenant take possession prior to satisfaction of the
requirements for Tenant's insurance set forth below.
3.4 Delivery of Possession. Except as above provided with
respect to construction of Tenant Improvements, Tenant shall be entitled
to possession of the premises at noon on the Commencement Date, as
defined in Paragraph 3.1. Tenant may, with approval by Landlord in its
sole discretion, have access to the premises during tenant improvement
construction for the purpose of moving in Tenant-owned furniture,
fixtures, equipment and inventory. This access and the items so moved
in shall not in any way impede the construction of the tenant
improvements, nor shall Landlord, its agent, employees, sub-contractors,
or any other person on the premises whether invited or not invited, be
liable for the protection, care or security of Tenant owned items. This
paragraph shall not be construed so as to permit Tenant to occupy the
premises prior to the satisfaction of all requirements for Tenant's
insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of
Landlord as herein set forth, the following as rental for the premises:
4.1 Base Rental.
The base rental for the full term hereof shall be ONE MILLION TWO
HUNDRED FIFTY-EIGHT THOUSAND Dollars ($1,258,000.00), payable in monthly
installments [basic monthly rental of TWENTY THOUSAND NINE HUNDRED SIXTY-
SIX Dollars AND 67/100THS ($20,966.67)] in advance on the first day of
each month during the term hereof.
4.2 Escalation of Base Rental.
4.2.1 On the first anniversary of the commencement date of this
lease, and annually thereafter, the base rental payable by Tenant shall
be increased to an amount determined by multiplying the basic monthly
rental by a fraction, the denominator of which shall be the most recent
Consumer Price Index figure, as hereinafter defined, published prior to
the Commencement Date, and the numerator of which shall be the most
recent Consumer Price Index figure published prior to the particular
anniversary date; provided, however, that in no event shall the rent for
any month after such anniversary be less than the rent for the month
immediately preceding such anniversary. As used herein, the term
"Consumer Price Index" shall mean the Consumer Price Index, All Urban
Consumers, All Items, Denver, Colorado (1982-84 = 100), or the successor
of that Index, as published by the Bureau of Labor Statistics, U.S.
Department of Labor. Should Landlord lack sufficient data to make the
proper determination on the date of any adjustment, Tenant shall
continue to pay the monthly rent payable immediately prior to the
adjustment date. As soon as Landlord obtains the necessary data,
Landlord shall determine the rent payable from and after such adjustment
date and shall notify Tenant of the adjustment in writing. Should the
monthly rent for the period following the adjustment date exceed the
amount previously paid by Tenant for that period, Tenant shall forthwith
pay the difference to Landlord. Should the Consumer Price Index as
above described cease to be published, a reasonably comparable successor
index shall be selected by Landlord. If Tenant objects to the successor
index, the dispute will be resolved and a successor index designated by
arbitration pursuant to the rules and procedures of the American
Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the
increase in base rental for each year shall be not less than two and one-
half percent (2.5%) nor more than seven percent (7%) of the base rental
for the previous year, each year for such purposes to commence on the
anniversary of the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation
provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular
year, years, or part of a year. No such waiver shall preclude Landlord
from applying the escalation to any subsequent year or part of a year,
and from making the subsequent application as if all subsequent
escalations had been duly made to the maximum permissible extent.
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior
and HVAC. Tenant shall pay the cost of having Landlord maintain the HVAC
systems and the exterior of the premises including parking lots, green
areas, sidewalks, entrances, and corridors (but not the exterior
surfaces of the building, other than glass). Cost of maintaining such
areas shall include, but shall not be limited to, repairs, preventative
maintenance, HVAC filters and compressors, sealing, striping, lawn
mowing, snow removal (Tenant is responsible for snow removal of less
than 2"), gardening, shrub care and replacements, lawn watering, parking
area maintenance, electricity for lighting, sign maintenance,
depreciation of equipment used for the foregoing purposes and other
costs related to the premises or common areas. Landlord shall perform
such maintenance and charge the cost thereof to Tenant, which shall be
paid as additional rent within 10 days after delivery of Landlord's
invoice. Landlord shall keep reasonable records of such cost, which
shall be available for Tenant's inspection during normal business hours.
Certain items of such maintenance (such as landscape maintenance and
snow removal) are performed by Landlord on numerous areas owned and/or
maintained by Landlord, in addition to the premises, and the cost
thereof cannot be precisely ascribed to the premises. As to such
services which are performed on areas in addition to the premises, the
cost for all areas so serviced shall be allocated to the premises in
proportion to the square feet of building floor space in the premises
compared to the square feet of building floor space in the entire area
to which such services are provided.
For the first year of the lease, Landlord agrees that the total of
the maintenance fees referred to in this paragraph will not exceed $0.80
per square foot annually.
4.4 Private Security Service. Landlord may engage a private
security service, as an independent contractor, to patrol an area which
includes the premises. Tenant shall be included in the selection
process. If Landlord does so employ a private security service, which
the tenant has approved, the cost thereof shall be treated in the same
manner as Maintenance Expense and paid by Tenant as Additional Rent
under the same provisions as are applicable to Maintenance Expense.
Tenant shall have no obligation to participate under this Section 4.4,
if Tenant's portion of the cost of such services is more than the amount
that Tenant has been paying for such service.
Landlord shall have absolutely no obligation to engage a private
security service and shall not be liable for any damages or loss which
might have been averted had a private security service been engaged. If
Landlord does engage a private security service, Landlord shall not be
liable for any damages or loss which may result from actions, inactions,
non-performance or quality of performance by the security service. If
the Tenant desires a higher level of security services than Landlord
provides, or wishes to obtain an agreement that there will be liability
for actions, inactions, non-performance or quality of performance by a
security service, Tenant may itself engage such security service as
Tenant chooses, at Tenant's sole expense.
Nothing herein shall limit any action by Tenant against any person
or entity providing private security service, provided that Landlord
shall not be party to, or liable for any judgment entered in such an
action, as a defendant, cross defendant, third-party .defendant, or
otherwise.
4.5 Late Charges. Tenant will pay a late charge equal to five
percent of any monthly rental payment or other payment not paid when
due, which payment shall be in addition to any interest elsewhere
provided for.
4.6 Security Deposit. Landlord acknowledges receipt of the
sum of TWENTY THOUSAND NINE HUNDRED SIXTY-SIX Dollars AND 67/100THS
($20,966.67) paid by Tenant upon the execution hereof or a letter of
credit for the same amount, to be retained by Landlord as security for
the performance of all of the terms and conditions of this lease
Agreement to be performed by Tenant, including payment of all rental due
under the terms hereof. Landlord shall not owe Tenant any interest on
the deposit. At Landlord's election, deductions may be made by Landlord
from the amount so retained for the reasonable cost of repairs to the
premises which should have been performed by Tenant, for any rental
payment or other sum delinquent under the terms hereof, and for any sum
used by Landlord in any manner to cure any default in the performance of
Tenant under the terms of this lease. In the event deductions are so
made during the rental term, upon notice by Landlord, Tenant shall
redeposit such amounts so expended so as to maintain the security
deposit in the amount as herein provided for, within 10 days after
receipt of such written demand from Landlord. Nothing herein contained
shall limit the liability of Tenant as to any repairs or maintenance of
the premises; and nothing herein shall limit the obligation of Tenant
promptly to pay all sums otherwise due under this lease and to comply
with all the terms and conditions hereof. The security deposit, less
any sums withheld by Landlord pursuant to the terms hereof, shall be
repaid to Tenant within sixty days after the date of termination of the
lease.
4.7 Proration of Rent for Partial Months. If the lease term
begins on other than the first day of a month, base rent and additional
rent from such date until the first day of the next succeeding calendar
month shall be prorated on the basis of the actual number of days in
such calendar month and shall be payable in advance. If the lease term
terminates on other than the last day of the calendar month, rent from
the first day of such calendar month until such termination date shall
be prorated on the basis of the actual number of days in such month, and
shall be payable in advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant
shall pay as additional rent, all real estate taxes and assessments, as
shall, from and after the date hereof, be assessed upon the premises and
any appurtenances or improvements thereto. Tenant shall pay one-twelfth
(1/12) of such estimated additional rent, in advance, with each monthly
rental payment. Landlord shall reasonably estimate such taxes and
advise Tenant in writing of the amount to be paid each month. Such
payments shall be separately accounted for by Landlord, (and may be
deposited with any holder of a mortgage or deed of trust on the
premises) and shall be used to make prompt payment of such taxes as they
come due. If the estimated payments made by Tenant are not sufficient
to fully pay such taxes as they come due, Tenant shall pay to Landlord
any amount necessary to make up the deficiency within ten (10) days of
notice from Landlord. Landlord shall have no obligation to pay any
interest to Tenant on such additional rent, but Landlord shall give
Tenant an annual accounting showing credit for such payments made by
Tenant, and debits for payments made by Landlord or Landlord's lender.
If Tenant fails to make any required payment to Landlord, Landlord may,
but shall not be required to, pay any such tax and shall become entitled
to repayment from Tenant without demand, together with interest thereon
as elsewhere provided. The real estate taxes and assessments for the
year in which the term of this lease shall begin, as well as for the
year in which the lease shall end, shall be apportioned so that Tenant
shall pay only the portions that correspond with the portions of such
years as are within such lease term. In the event that the premises are
assessed for tax purposes as a part of a larger parcel, the tax on the
entire parcel shall be prorated in proportion to the number of square
feet of building floor space on each portion of the entire parcel.
Upon written request from Tenant, Landlord shall protest the tax
assessment on the premises, to the extent that Landlord, in good faith,
believes that such protest is justifiable and likely to be successful.
In the event of any such protest Tenant shall nevertheless pay to
Landlord the taxes as assessed, and Tenant shall be entitled to the
appropriate share of any refund. Tenant shall not protest any real
property tax assessment on the premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant
shall be responsible for and timely pay any and all personal property
taxes assessed against any furniture, fixtures, equipment and items of a
similar nature installed and/or located in or about the premises by
Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. Landlord shall
not be required to furnish to Tenant any utility services of any kind,
such as but not limited to, water, hot water, heat, gas, electricity,
light, telephone, cable TV and power. Tenant shall obtain and pay all
charges for gas, electricity, light, heat, power, water (and lawn
watering), and telephone, cable TV or other communication services or
other utilities used, rendered, or supplied, upon or in connection with
the premises. Tenant irrevocably appoints Landlord as Tenant's attorney-
in-fact solely for the purpose of terminating Tenant's account with any
provider of such utilities, if the premises are abandoned by Tenant or
if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this
lease, Tenant shall remain in possession of the premises and continue to
pay rent without a written agreement as to such possession, then Tenant
shall be deemed a month-to-month Tenant and the rental rate during such
holdover tenancy shall be equivalent to one hundred fifteen percent
(115%) the monthly rental paid for the last month of tenancy under this
lease. Such month-to-month tenancy may be terminated by the Landlord at
noon on any day which is more than twenty-nine (29) days after date of
delivery of Landlord's written notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant
shall operate to renew or extend this lease without the written consent
of Landlord. No modification of this lease shall be binding unless
endorsed hereon or otherwise written and signed by the respective
parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO
HOLES IN ROOF - NO NEW EQUIPMENT ON ROOF. Tenant may, during the term
of this lease, at Tenant's expense, erect inside partitions, add to
existing electric power service, add telephone outlets or other
communication services, add light fixtures, install additional heating
and/or air conditioning or make such other changes or alterations as
Tenant may desire, provided that prior to commencement of any such work,
Tenant shall submit to Landlord a set of fully detailed working drawings
and specifications for the proposed alteration, prepared by a licensed
architect or engineer. If Tenant so requests, Landlord will have the
drawings and specifications prepared for Tenant, at Tenant's expense,
utilizing Landlord's in-house staff. Tenant will pay Landlord's
customary hourly charges for such services, as additional rent, to be
paid within 10 days after delivery of invoice. In particular, but not
as a limitation, the working drawings must fully detail changes to
mechanical, wiring and electrical, lighting, plumbing and HVAC systems
to Landlord's satisfaction. Landlord may refuse to consent to the
alterations because of the inadequacy of the drawings and
specifications. Tenant may not commence the alterations until
Landlord's written consent has been given. If the drawings and
specifications are adequate, to Landlord's sole satisfaction, then
Landlord will not unreasonably withhold its consent to the alterations,
except that Landlord may withhold its consent to new or altered openings
(holes) in the roof, or placement of additional equipment on the roof,
as follows. Landlord may withhold its consent to new openings in the
roof or placement of additional equipment on the roof unless Landlord,
in its sole discretion, is satisfied that the risk of increased leakage
or risk of more frequent repairs or maintenance of the roof is
acceptable to Landlord. Any new or altered opening in the roof, or
placement of additional equipment thereon, shall be considered an
alteration which requires the prior written consent of Landlord. If
within thirty (30) days after such plans and specifications are
submitted by Tenant to Landlord for such approval, Landlord shall have
not given Tenant notice of disapproval, stating the reason for such
disapproval, such plans and specifications shall be considered approved
by Landlord. As a condition of approval for such alternations, Landlord
shall have the right to require Tenant to furnish adequate bond or other
security acceptable to Landlord for performance of and payment for the
work to be performed. At the end of this lease, all such fixtures,
equipment, additions and/or alterations (except trade fixtures installed
by Tenant) shall be and remain the property of Landlord, provided,
however, Landlord shall have the option to require Tenant to remove any
or all such fixtures, equipment, additions, and/or alterations and
restore the premises to the condition existing immediately prior to such
change and/or installation, normal wear and tear excepted, all at
Tenant's cost and expense. All work done by Tenant shall conform to
appropriate city, county and state building codes and health standards
and OSHA standards and Tenant shall be responsible for obtaining and
paying for building permits.
If any such work done by Tenant causes damage to the structural
portion, exterior finish or roof of the premises, then the costs of
repair of such damage, and of all further maintenance and repairs to
such structural portion, exterior finish or roof during the term of the
lease shall thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by
Landlord, nor Landlord's actual knowledge of any alteration accomplished
or in progress shall constitute a waiver of Landlord's rights concerning
alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for
construction done by it or caused to be done by it on the premises as
permitted by this lease. Tenant shall keep the building, other
improvements and land of which the premises are a part free and clear of
all mechanic's liens resulting from construction by or for Tenant.
Tenant shall have the right to contest the correctness or validity of
any such lien if, immediately on demand by Landlord, Tenant deposits
with Landlord and/or any appropriate court or title insurance company a
bond or sum of money sufficient to allow issuance of title insurance
against the lien and/or to comply with the statutory requirements for
discharge of the lien found in 38-22-130 and 131, Colorado Revised
Statutes, or any successor statutory provision. Landlord shall have the
right to require Tenant's contractor(s), subcontractors and materialmen
to furnish to both Tenant and Landlord adequate lien waivers on work or
materials paid for, in connection with all periodic or final payments,
by endorsement on checks, making of joint checks, or otherwise, and
Landlord shall have the right to review invoices prior to payment.
Landlord reserves the right to post notices on the premises that
Landlord is not responsible for payment of work performed and that
Landlord's interest is not subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent
to maintain uniformity of signs throughout the area where signs may be
controlled by Landlord. Tenant shall place no signs on the premises
(except inside Tenant's portion of the building on the premises) without
prior written consent of Landlord, which consent shall not be
unreasonably withheld.
Tenant may not put any signs on the premises indicating that the
same are for rent, or available for assignment or sublease, and may put
no signs of real estate brokers on the premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance
and repairs of the structural portions, the roof and the exterior finish
of the building (other than glass) on the premises at the sole cost and
expense of Landlord; provided, however, that if any such maintenance or
repairs are necessitated by the acts of Tenant or its employees, agents,
contractors, sub-contractors, licensees, invitees or guests, Tenant
shall reimburse Landlord for the cost of same, as additional rent, to be
paid within 10 days after delivery of invoice. All other maintenance,
repairs and replacements shall be performed by Tenant, at its own
expense, including all necessary maintenance, repairs and replacements
to pipes, plumbing systems, electrical systems, window or other glass,
doors, fixtures, interior decorations, and all other appliances and
appurtenances. Such repairs and replacements, interior and exterior,
ordinary as well as extraordinary, shall be made promptly, as and when
necessary, so that the premises are maintained in first class condition.
All such maintenance, repairs and replacements shall be in quality and
class at least equal to the original work. On default of Tenant in
making such maintenance, repairs or replacements, Landlord may, but
shall not be required to, make such repairs and replacements for
Tenant's account, and the expense shall constitute and be collectable as
additional rent, together with interest thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in
this lease, under no circumstances shall Landlord be liable for damage
to the contents of the building or consequential damages to Tenant
resulting from roof or window leaks or failure, or leakage of any water
pipe or gas pipe, failure of any communications system or alarm, failure
or leakage or discharge by any sprinkler system or other fire
suppression system, power surges, power shortages or outage, sewer
failure or sewage backup, or failure or malfunction of any heating or
cooling system. The term "contents" shall include, but shall not be
limited to, improvements made by Tenant, and data bases and other
information stored or contained in computers, hard or floppy disks,
tapes, computer chips and other memory or storage devices. The term
"consequential damages" shall include, but not be limited to, Tenant's
inability to perform any contract on which Tenant is bound, loss of
sales, loss of profit, or loss of business reputation or goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall
vacate the premises in the same condition as when received on the date
hereof, ordinary wear and tear excepted, and shall remove all of
Tenant's property, so that Landlord can repossess the premises not later
than noon on the day upon which this lease or any extension hereof ends,
whether upon notice, holdover or otherwise. The Landlord shall have the
same rights to enforce this covenant by ejectment and for damages or
otherwise as for the breach of any other conditions or covenant of this
lease. Upon termination of the lease, Tenant shall deliver to Landlord
keys which operate all locks on the exterior or interior of the
premises, including, without limitation, keys to locks on cupboards and
closets. Tenant shall retrieve all keys to the premises which Tenant
has delivered to employees or others, and include same with the keys
delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant
shall use the premises for research and development, office, light
manufacturing and other uses appurtenant thereto. Except as otherwise
provided herein, Tenant will maintain the grounds which are part of the
premises, keeping them free from accumulation of trash or debris and
will be responsible for snow removal up to two inches of snow. Tenant
shall conform to all present and future laws and ordinances of any
governmental authority having jurisdiction over the premises, and will
make no use in violation of same. No outside storage shall be allowed
unless first approved by Landlord in writing and then only in such areas
as are designated as storage areas by Landlord. Tenant shall not commit
or suffer any waste on the premises. Tenant shall not permit any
nuisance to be maintained on the premises nor permit any disorderly
conduct, noise or other activity having a tendency to annoy or to
disturb occupants of any other part of the property of which the
premises are a part and/or of any adjoining property.
As part of a common scheme for orderly development, use and
protection, of its various properties and those properties adjacent to
the premises, Landlord may impose upon Tenant reasonable rules and
regulations concerning parking and vehicle traffic; locations at which
deliveries are to be made and access thereto; trash disposal; use of
common areas such as recreation areas, corridors, and sidewalks; signs
and directories; use of communication wires or cables which are used in
common but which may be inadequate fully to serve all the demands placed
upon them; provided that such rules and regulations shall be uniform in
their application and shall not violate the express terms of this lease
elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost
of any damage to the premises or the building or the sidewalks and
pavements adjoining the same which results from the movement of heavy
articles or heavy vehicles or utility cuts made by or on behalf of
Tenant. Tenant shall not overload the floors or any other part of the
premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES.
Tenant shall make no use of the premises which would void or make
voidable any insurance upon the premises.
18. INSURANCE.
18.1 All Risk Insurance. Tenant shall keep the building and
improvements insured throughout the term of this lease against losses
covered by an "All Risk" policy, as defined in the insurance industry,
which shall also cover 1) loss of rental and 2) deposit of Hazardous
Materials on the premises by those acts of third parties which
constitute vandalism. The deductible amount shall not exceed $50,000.
18.2 General Liability Insurance. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of
ONE MILLION Dollars ($1,000,000.00 ) for each occurrence of bodily
injury and ONE MILLION Dollars ($1,000,000.00) for each occurrence of
property damage. Tenant shall supply to Landlord certificates of
insurance as provided in Paragraph 18.6. In the event Tenant fails to
secure such insurance or to give evidence to Landlord of such insurance
by depositing with Landlord certificates as provided below, Landlord may
purchase such insurance in Tenant's name and charge Tenant the premiums
therefor. Bills for the premiums therefor shall be deemed and paid as
additional rent due within 10 days after delivery of invoice. The
Landlord shall be an additional named insured on the policy.
18.3 Tenant Improvements. Tenant agrees to carry insurance
covering all of Tenant's leasehold improvements, alterations, additions
or improvements, trade fixtures, merchandise and personal property from
time to time in, on or upon the premises, in an amount not less than one
hundred percent (100%) of the full replacement cost of such items from
time to time during the term of this lease, providing protection against
any peril included within an "All-Risk" policy, with a deductible amount
not to exceed $10,000. Any policy proceeds shall be used for the repair
or replacement of the property damaged or destroyed unless this lease
shall cease and terminate due to destruction of the premises as provided
below.
18.4 Other Insurance. Tenant agrees to carry insurance against
such other hazards and in such amounts as the holder of any mortgage or
deed of trust to which the lease is subordinate may require from time to
time.
18.5 Waiver of Subrogation. Landlord and Tenant grant to each
other on behalf of any insurer providing fire and extended insurance
coverage to either of them covering the premises, improvements thereon,
and contents thereof, a waiver of any right of subrogation or recovery
of any payments of loss under such insurance, such waiver to be
effective so long as each is empowered to grant such waiver under the
terms of its insurance policy, and to give all necessary notice of such
waiver to its insurance carriers.
18.6 Other Provisions Regarding Tenant's Insurance. All
insurance required of Tenant in this lease shall be effected under
enforceable policies issued by insurers of recognized good financial
condition licensed to do business in this State. At least fifteen (15)
days prior to the expiration date of any such policy, a certificate
evidencing a new or renewal policy shall be delivered by Tenant to
Landlord. Within fifteen (15) days after the premium on any policy
shall become due and payable, Landlord shall be furnished with
satisfactory evidence of its payment. To the extent obtainable, all
policies shall contain an agreement that notwithstanding any act or
negligence of Tenant which might otherwise result in forfeiture of such
insurance, such policies shall not be canceled except upon ten (10) days
prior written notice to Landlord, and that the coverage afforded thereby
shall not be affected by the performance of any work in or about the
premises.
If Tenant provides any insurance required of Tenant by this lease
in the form of a blanket policy, Tenant shall furnish satisfactory proof
that such blanket policy complies in all respects with the provisions of
this lease, and that the coverage thereunder is at least equal to the
coverage which would be provided under a separate policy covering only
the premises.
18.7 Changes in Standard Policies. If the definition of
insurance industry policy language relating to "All-Risk" insurance or
other term changes, the insurance requirements hereunder shall be
modified to conform to the existing insurance industry language;
however, the dollar amount of the coverages required under this lease
shall not be less than those existing at the time of the effective
beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be
Tenant's sole and exclusive responsibility to meet all fire regulations
of any governmental unit having jurisdiction over the premises to the
extent such regulations affect Tenant's operations, at Tenant's sole
expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the premises
are damaged or destroyed by fire or other cause at any time after the
date of commencement of this lease, Landlord shall proceed with due
diligence to repair or restore the same to the same condition as existed
before such damage or destruction, and as soon as possible thereafter
but in no event more than 180 days from the date of damage or
destruction will give possession to the Tenant of the premises without
diminution or change of location. If Landlord does not complete all
repairs and restoration within 180 days, Tenant may at its reasonable
discretion terminate the lease. Provided, however, that in case of
total destruction of the premises by fire, or in case the premises are
so badly damaged that, in the opinion of the Landlord, it is not
feasible to repair or rebuild the same, then, either Tenant or Landlord
shall have the right to terminate this lease instead of rebuilding the
improvements; provided, however, that the terminating party shall give
the other party written notice of its intention to terminate, said
notice to be served not later than thirty (30) days after the occurrence
of the damage to the property. In the event the premises are rendered
temporarily untenantable because of fire or other casualty, base monthly
rent shall abate on the untenantable area until the premises are
restored to their former condition, abatement to be based on the square
feet of building floor space in the untenantable area compared to the
total square feet of building floor space on the premises. Provided,
however, that to the extent the damage or destruction results from the
negligence or other action of Tenant or its employees, agents,
contractors, subcontractors, invitees, guests or licensees, Tenant shall
pay for the restoration or repair, to the extent the cost of same is not
covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 Definitions.
21.1.1 Hazardous Material. Hazardous Material means any
substance:
(a) the presence of which requires investigation, notice or
remediation under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material,"
"hazardous waste," "hazardous substance," "regulated substance,"
"pollutant" or "contaminant" under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), Toxic Substances Control Act
(15 U.S.C. _ 2601 et seq.), the Colorado Underground Storage Tank Act
(Colo. Rev. Stat. 25-18-101 et seq.), and/or the Resource Conservation
and Recovery Act (42 U.S.C. _ 6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous
and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United
States, the State of Colorado or any political subdivision thereof; or
(d) the presence of which on the premises causes or threatens
to cause a nuisance upon the premises or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or
about the premises; or
(e) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos
or urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 Environmental Requirements. Environmental Requirements
means all applicable present and future statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of
human health or the environment, including, without limitation:
(a) All requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or threatened releases
of Hazardous Materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid,
liquid, or gaseous in nature, into the air, surface water, groundwater,
or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature; and
(b) All requirements pertaining to the protection of the
health and safety of employees or the public.
21.1.3 Environmental Damages. Environmental Damages means all
claims, judgments, damages, losses, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs, and expenses
of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement or judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' and witnesses' fees,
any of which are incurred at any time as a result of the existence of
Hazardous Material upon, about, beneath the premises or migrating or
threatening to migrate to or from the premises, or the existence of a
violation of Environmental Requirements pertaining to the premises,
including without limitation:
(a) Damages for personal injury, or injury to property or
natural resources occurring upon or off of the premises, foreseeable or
unforeseeable, including, without limitation, lost profits,
consequential damages, the cost of demolition and rebuilding of any
improvements on real property, interest and penalties including but not
limited to claims brought by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements including, but
not limited to, the preparation of any feasibility studies or reports or
the performance of any cleanup, remediation, removal, response,
abatement, containment, closure, restoration or monitoring work required
by any federal, state or local governmental agency or political
subdivision or court, or reasonably necessary to make full economic use
of the premises and any other property in a manner consistent with its
current use or otherwise expended in connection with such conditions,
and including without limitation any attorneys' fees, costs and expenses
incurred in enforcing this agreement or collecting any sums due
hereunder;
(c) Liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with
the items referenced herein; and
(d) Diminution in the value of the premises and adjoining
property, and damages for the loss of business and restriction on the
use of or adverse impact on the marketing of rentable or usable space or
of any amenity of the premises and adjoining property.
21.2 Tenant's Obligation to Indemnify, Defend and Hold
Harmless. Tenant, its successors, assigns and guarantors, agree to
indemnify, defend, reimburse and hold harmless the following persons
from and against any and all Environmental Damages arising from
activities of Tenant or its employees, agents, contractors,
subcontractors, or guests, licensees, or invitees which (1) result in
the presence of Hazardous Materials upon, about or beneath the premises
or migrating to or from the premises, or (2) result in the violation of
any Environmental Requirements pertaining to the premises and the
activities thereon:
21.2.1 Landlord;
21.2.2 any other person who acquires an interest in the
premises in any manner, including but not limited to purchase at a
foreclosure sale or otherwise; and
21.2.3 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns, guests and invitees of such persons.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Tenant, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
the indemnified parties.
21.3 Tenant's Obligation to Remediate. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement,
Tenant shall, upon demand of Landlord, and at its sole cost and expense,
promptly take all actions to remediate the premises which are reasonably
necessary to mitigate Environmental Damages or to allow full economic
use of the premises, or are required by Environmental Requirements,
which remediation is necessitated by the 1) introduction of a Hazardous
Material upon, about or beneath the premises or 2) a violation of
Environmental Requirements, either of which is caused by the actions of
Tenant, its employees, agents, contractors, subcontractors, guests,
invitees or licensees. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the premises,
the preparation of any feasibility studies, reports or remedial plans,
and the performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or restoration work, whether on or off of the
premises. Tenant shall take all actions necessary to restore the
premises to the condition existing prior to the introduction of
Hazardous Material upon, about or beneath the premises, notwithstanding
any lesser standard of remediation allowable under applicable law or
governmental policies. All such work shall be performed by one or more
contractors, selected by Tenant and approved in advance and in writing
by Landlord. Tenant shall proceed continuously and diligently with such
investigatory and remedial actions, provided that in all cases such
actions shall be in accordance with all applicable requirements of
governmental entities. Any such actions shall be performed in a good,
safe and workmanlike manner and shall minimize any impact on the
business conducted at the premises. Tenant shall pay all costs in
connection with such investigatory and remedial activities, including
but not limited to all power and utility costs, and any and all taxes or
fees that may be applicable to such activities. Tenant shall promptly
provide to Landlord copies of testing results and reports that are
generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities.
Promptly upon completion of such investigation and remediation, Tenant
shall permanently seal or cap all monitoring wells and test holes to
industrial standards in compliance with applicable federal, state and
local laws and regulations, remove all associated equipment, and restore
the premises to the maximum extent possible, which shall include,
without limitation, the repair of any surface damage, including paving,
caused by such investigation or remediation hereunder. Provided,
however, that Tenant shall not be obligated to remediate environmental
damages which result from seepage of Hazardous Materials onto the
premises from adjacent property unless the presence on the adjacent
property was caused by Tenant or its employees, agents, contractors,
subcontractors, guests, invitees or licensees.
21.4 Notification. If Tenant shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected
or threatened violation of Environmental Requirements, or liability of
Tenant for Environmental Damages in connection with the premises or past
or present activities of any person thereon, or that any representation
set forth in this agreement is not or is no longer accurate, including
but not limited to notice or other communication concerning any actual
or threatened investigation, inquiry, lawsuit, claim, citation,
directive, summons, proceeding, complaint, notice, order, writ, or
injunction, relating to same, then Tenant shall deliver to Landlord,
within ten days of the receipt of such notice or communication by
Landlord, a written description of said violation, liability, correcting
information, or actual or threatened event or condition, together with
copies of any such notice or communication. Receipt of such notice
shall not be deemed to create any obligation on the part of Landlord to
defend or otherwise respond to any such notification or communication.
21.5 Negative Covenants.
21.5.1 No Hazardous Material on Premises. Except in strict
compliance with all Environmental Requirements, Tenant shall not cause,
permit or suffer any Hazardous Material to be brought upon, treated,
kept, stored, disposed of, discharged, released, produced, manufactured,
generated, refined or used upon, about or beneath the premises by
Tenant, its agents, employees, contractors, subcontractors, guests,
licensees or invitees, or any other person. Tenant shall deliver to
Landlord copies of all documents which Tenant provides to any
governmental body in connection with compliance with Environmental
Requirements with respect to the premises, such delivery to be
contemporaneous with provision of the documents to the governmental
agency.
21.5.2 No Violations of Environmental Requirements. Tenant
shall not cause, permit or suffer the existence or the commission by
Tenant, its agents, employees, contractors, subcontractors or guests,
licensees or invitees, or by any other person of a violation of any
Environmental Requirements upon, about or beneath the premises or any
portion thereof.
21.5.3 No Environmental or Other Liens. Tenant shall not
create or suffer or permit to exist with respect to the premises, any
lien, security interest or other charge or encumbrance of any kind,
including without limitation, any lien imposed pursuant to section
107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42
U.S.C. section 9607(1) or any similar state statute to the extent that
such lien arises out of the actions of Tenant, its agents, employees,
contractors, subcontractors or guests, licensees or invitees.
21.6 Landlord's Right to Inspect and to Audit Tenant's Records.
Landlord shall have the right in its sole and absolute discretion, but
not the duty, to enter and conduct an inspection of the premises and to
inspect and audit Tenant's records concerning Hazardous Materials at any
reasonable time to determine whether Tenant is complying with the terms
of the lease, including but not limited to the compliance of the
premises and the activities thereon with Environmental Requirements and
the existence of Environmental Damages as a result of the condition of
the premises or surrounding properties and activities thereon. If
Landlord has reasonable cause to believe Tenant is in default with
respect to any of the provisions of this lease related to Hazardous
Materials, Environmental Requirements or Environmental Damages, then
Landlord shall have the right, but not the duty, to retain at the sole
expense of Tenant an independent professional consultant to enter the
premises to conduct such an inspection and to inspect and audit any
records or reports prepared by or for Tenant concerning such compliance.
Tenant hereby grants to Landlord the right to enter the premises and to
perform such tests on the premises as are reasonably necessary in the
opinion of Landlord to assist in such audits and investigations.
Landlord shall use reasonable efforts to minimize interference with the
business of Tenant by such tests inspections and audits, but Landlord
shall not be liable for any interference caused thereby.
21.7 Landlord's Right to Remediate. Should Tenant fail to
perform or observe any of its obligations or agreements pertaining to
Hazardous Materials or Environmental Requirements, then Landlord shall
have the right, but not the duty, without limitation upon any of the
rights of Landlord pursuant to this agreement, to enter the premises
personally or through its agents, consultants or contractors and perform
the same. Tenant agrees to indemnify Landlord for the costs thereof and
liabilities therefrom as set forth in Paragraph 21.2.
21.8 Landlord's Obligation to Remediate. Landlord agrees to
remediate all Environmental Damages 1) caused by Landlord, its agents,
employees, contractors, subcontractors, guests, licensees or invitees,
or 2) not so caused but arising prior to Commencement Date hereof and
not caused by Tenant, its agents, employees, contractors,
subcontractors, guests, licensees or invitees.
21.9 Landlord's Obligation to Indemnify, Defend and Hold
Harmless Concerning Environmental Matters. Landlord, its successors,
assigns and guarantors, agree to indemnify, defend, reimburse and hold
harmless the following persons from and against any and all
Environmental Damages arising from activities of Landlord or its
employees, agents, contractors, subcontractors or guests, licensees,
invitees; or which occurred prior to the Commencement Date (and were not
caused by Tenant, its agents, employees, contractors, subcontractors,
guests, licensees or invitees) which (1) result in the presence of
Hazardous Materials upon, about or beneath the premises or migrating to
or from the premises, or (2) result in the violation of any
Environmental Requirements pertaining to the premises and the activities
thereon:
21.9.1 Tenant;
21.9.2 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns and invitees of Tenant.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Landlord, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
Tenant.
21.10 Survival of Environmental Obligations. The obligations of
Landlord and Tenant as set forth in Paragraph 21 and all of its
subparagraphs shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized
representative, and/or any lender or prospective lender, shall have the
right to enter the premises during the lease term at all reasonable
times during usual business hours for purposes of inspection, and/or the
performance of any maintenance, repairs or replacement therein.
Landlord shall give Tenant such advance notice of entry as is reasonable
in light of the purpose for the entry. Landlord shall have the right to
enter the premises and show the same to a prospective tenant during the
last 180 days of this lease or any extended term, unless the term shall
have been extended by mutual written agreement or delivery of notice of
exercise of any option to extend. In all circumstances, Landlord shall
use its best efforts to conduct its business while in Tenant premises as
not to interfere with Tenant's operations or use of the premises.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 Default Defined. Any one or more of the following events
(each of which is herein sometimes called "event of default") shall
constitute a default:
23.1.1 Tenant defaults in the due and punctual payment of any
rent, taxes, tax deposits, insurance premiums, maintenance fees or other
sums required to be paid by Tenant under this lease when and as the same
shall become due and payable;
23.1.2 Tenant abandons the premises;
23.1.3 Tenant defaults in the performance of or compliance with
any of the covenants, agreements, terms and conditions contained in this
lease other than those referred to in the foregoing Paragraph 23.1.1,
and such default shall continue for a period of 30 days after written
notice thereof from Landlord to Tenant, and shall not be cured as
permitted by Paragraph 23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or takes the benefit of any
relevant legislation that may be in force for bankrupt or insolvent
debtors or files any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief for itself under any present or future federal, state or
other statute, law or regulation, or proceedings are taken by Tenant
under any relevant Bankruptcy Act in force in any jurisdiction available
to Tenant, or Tenant seeks or consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties or of the premises, or makes
any general assignment for the benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state
or other statute, law or regulation, and shall remain undismissed for an
aggregate of 120 days, or if any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the
premises is appointed without the consent or acquiescence of Tenant and
such appointment remains unvacated for an aggregate of 120 days.
23.2 Landlord's Remedies in the Event of Default. In the event
of any event of default, Landlord shall have the option, without further
notice to Tenant or further demand for performance exercise any one or
more of the following remedies (and any other remedy available at law or
in equity):
23.2.1 If Tenant has been late in payment of rent or other sums
due on four or more occasions during any period of one year, Landlord,
without terminating this lease, may 1) require that all future payments
be made by bank cashier's check, and/or 2) require an additional
security deposit in the amount of the then-current base rent for two
months, and/or 3) require that rent for each month be paid on or before
the 15th day of the preceding month. Such requirement shall be imposed
by Landlord's written notice delivered to Tenant. The additional
security deposit shall be paid within 10 days after delivery of the
notice. The Landlord may or may not exercise the remedies provided in
this Paragraph 23.2.1, in its sole discretion. The exercise of the
remedies provided in this Paragraph 23.2.1 shall not be required prior
to the exercise of any other available remedy.
23.2.2 To institute suit against Tenant to collect each
installment of rent or other sum as it becomes due or to enforce any
other obligation under this lease even though the premises be left
vacant subject to Landlord's obligation to mitigate damages.
23.2.3 As a matter of right, to procure the appointment of a
receiver for the premises by any court of competent jurisdiction upon ex
parte application. All rents, issues and profits, income and revenue
from the premises shall be applied by such receiver to the payment of
the rent, together with any other obligations of the Tenant under this
lease.
23.2.4 To re-enter and take possession of the premises and all
personal property therein and to remove Tenant and Tenant's agents and
employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach
of the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet
the premises and personal property, as the agent and for the account of
Tenant in the name of Landlord or otherwise, upon the terms and
conditions Landlord deems fit with the new Tenant for such period (which
may be greater or less than the period which would otherwise have
constituted the balance of the term of this lease) as Landlord may deem
best, and collect any rent due upon any such reletting providing that if
the new lease term shall be greater than Tenant's original term, Tenant
shall be released from any and all further obligation upon the
expiration of Tenant's original term save for amounts accrued upon the
expiration of Tenant's original term. In this event, the rents received
on any such reletting shall be applied first to the expenses of
reletting and collecting, including, without limitation, all
repossession costs, reasonable attorneys' fees, and real estate brokers'
commissions, alteration costs and expenses of preparing said premises
for reletting, and thereafter toward payment of the rental and of any
other amounts payable by Tenant to Landlord. If the sum realized shall
not be sufficient to pay the rent and other charges due from Tenant,
then within five days after demand, Tenant will pay to Landlord any
deficiency as it accrues. Landlord may sue therefor as each deficiency
shall arise if Tenant shall fail to pay such deficiency within the time
limited.
23.3 Tenant to Surrender Peaceably. In the event Landlord
elects to re-enter or take possession of the premises, Tenant shall quit
and peaceably surrender the premises to Landlord, and Landlord may enter
upon and re-enter the premises and possess and repossess itself thereof,
by force, summary proceedings, ejectment or otherwise, and may
dispossess and remove Tenant and may have, hold and enjoy the premises
and the right to receive all rental income of and from the same.
23.4 No Termination by Re-Entry. No re-entry or taking of
possession by Landlord shall be construed as an election on Landlord's
part to terminate or accept surrender of this lease unless Landlord's
written notice of such intention is delivered to Tenant.
23.5 Injunction. In the event of any breach by Tenant of any
of the agreements, terms, conditions or covenants contained in this
lease, Landlord, in addition to any and all other rights, shall be
entitled to enjoin such breach and shall have the right to invoke any
right and remedy allowed at law or in equity or by statute or otherwise
for such breach as though re-entry, summary proceedings, and other
remedies were not provided for in this lease.
23.6 Remedies Listed are Cumulative and Non-Exclusive. The
enumeration of the foregoing remedies does not exclude any other
remedy, but all remedies are cumulative and shall be in addition to
every other remedy now or hereafter existing at law or in equity,
including, but not limited to, the remedies provided in Paragraph 24
concerning Landlord's security interest in Tenant's personalty and
Landlord's right to remove same.
23.7 Interest on Sums Past Due. All rent and all other amounts
due from Tenant hereunder shall bear interest at the rate of twelve
(12%) percent per annum compounded quarter-annually from their
respective due dates until paid, provided that this shall in no way
limit, lessen or affect any claim for damages by Landlord for any breach
or default by Tenant.
23.8 Attorneys' Fees. Reasonable attorneys' fees, expert
witness fees, consulting fees and other expenses incurred by either
party by reason of the breach by either party in complying with any of
the agreements, terms, conditions or covenants of this lease shall
constitute additional sums to be paid to the prevailing party on
demand.
23.9 Time to Cure Certain Non-Monetary Defaults. In the event
of any default other than failure to pay a sum of money, for which
notice has been given as provided herein, which because of its nature
can be cured but not within the period of grace heretofore allowed, then
such default shall be deemed remedied, if the correction thereof shall
have been commenced within said grace period or periods and shall, when
commenced, be diligently prosecuted to completion.
23.10 Landlord Default. If Landlord is in default under any of
its obligations and the default continues for thirty (30) days after
written notice from Tenant (subject to extension pursuant to 23.9),
Tenant may pursue all remedies at law or in equity. Tenant may, but
shall not be required to, correct such default for the Landlord's
account , and the expense shall be promptly paid within ten (10) days
by Landlord; however, in no event shall Tenant have the right to rental
abatement, offset of expenses against rental, or the right to terminate
this lease, subject to Tenant's legal or equitable remedies.
Tenant may not offset any sum due or assertedly due from Landlord
to Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord
arising out of Landlord's obligations under this lease, such judgment
may be satisfied only by execution and sale of Landlord's interest in
the premises leased hereby. Tenant may not seek execution against other
property of Landlord, nor pursue any judgment, execution or other remedy
against the partners or other owners of Landlord or any of their
property. Immediately upon receipt of Landlord's written request,
Tenant will release any property (other than the premises leased hereby)
from the lien of any judgment obtained by Tenant against Landlord
arising out of Landlord's obligations under this lease.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES. In the event of any proceeding at law or in equity
wherein Landlord, without being in default as to its covenants under the
terms hereof, shall be made a party to any litigation by reason of
Tenant's interest in the premises, or, in the event Landlord shall be
required to commence any legal proceedings relating to the premises and
Tenant's occupancy thereof and Tenant's relation thereto, but only after
notice to and consent by Tenant, Landlord shall be allowed and Tenant
shall be liable for and shall pay all costs and expenses incurred by
Landlord, including reasonable attorneys' fees, expert witness fees and
consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall
indemnify and save harmless Landlord of and from liability for damages
or claims against Landlord, including costs, attorneys' fees and
expenses of Landlord in defending against the same, on account of
injuries to any person or property, if the injuries are caused by the
negligence or willful misconduct of Tenant, its agents, servants or
employees, or of any other person entering upon the premises under
express or implied invitation of Tenant or if such injuries are the
result of the violation by Tenant, its agents, servants, or employees,
of laws, ordinances, other governmental regulations, or of the terms of
this lease.
The Landlord shall indemnify and save harmless Tenant of and from
liability for damages or claims against Tenant, including costs,
attorneys' fees and expenses of Tenant in defending against the same, on
account of injuries to any person or property, if the injuries are
caused by the negligence or willful misconduct of Landlord, its agents,
servants or employees, or of any other person entering upon the premises
under express or implied invitation of Landlord or where such injuries
are the result of the violation by Landlord, its agents, servants or
employees, of laws, ordinances, other governmental regulations, or of
the terms of this lease..
Landlord provides recreation facilities for the use of employees of
Tenant and other occupants within the property developed by Landlord,
which property presently includes LONG'S PEAK INDUSTRIAL PARK, FIRST,
SECOND and THIRD FILINGS, and portions of ST. VRAIN CENTRE, both in the
City of Longmont and County of Boulder, Colorado, and will include such
additional property in the immediate vicinity thereof as may be
developed by Landlord. The term "recreation facilities" includes, at
present, a fitness trail with 34 exercise stations, volleyball courts,
basketball courts, and a park, and will include such additional
facilities as Landlord may provide.
Tenant shall indemnify and save harmless Landlord of and from
Liability for damages or claims against Landlord, including costs,
attorneys' fees and expenses of Landlord in defending against the same,
on account of any injury to (or death of) an employee of Tenant arising
out of use of the recreation facilities, unless such death or injury is
caused by Landlord's gross negligence or willful misconduct
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign,
mortgage, or encumber this lease, nor sublet or permit the premises or
any part thereof to be used by others, without the prior written consent
of Landlord in each instance, which consent shall not be unreasonably
withheld.
In connection with an assignment, sublease or encumbrance Landlord
may require the submittal of detailed financial information about the
prospective subtenant or assignee, to be reviewed by Landlord, and may
require a guarantee of the obligations of the prospective subtenant or
assignee, and may require detailed financial information about the
guarantor, to be reviewed by Landlord; and there may be alterations to
this lease and alterations to the building which are necessary to
consummate the transaction. The Landlord may require Tenant or the
prospective assignee or sub-tenant to pay for the alterations to the
building, and may require that Landlord perform same. In addition,
Landlord may charge a fee of two percent of base rent for the first five
years of the lease, due in full upon Landlord's consent, as payment to
Landlord for such investigations, lease alterations and similar matters.
No two percent fee will be charged in connection with an assignment or
sublease to an assignee or subtenant who is "affiliated" with Tenant.
"Affiliated" means under common voting control, directly or indirectly.
A sale or transfer of control of a majority of the votes which may
be cast to elect Tenant's board of directors or other governing body
shall be deemed to be an assignment of this lease, requiring Landlord's
consent if the sale or transfer is essentially accomplished in a single
transaction.
If this lease is assigned, or if the premises or any part thereof
is sublet, or occupied by anyone other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, sub-tenant, or
occupant and apply the net amount collected against all rent herein
reserved. No such assignment, subletting, occupancy, or collection
shall be deemed a waiver of this covenant, or the acceptance of the
assignee, sub-tenant, or occupant as tenant, or a release of Tenant from
further performance by Tenant of the covenants in this lease. The
consent by Landlord to an assignment or subletting shall not be
construed to relieve Tenant (or any subsequent tenant) from obtaining
the consent in writing of Landlord to any further assignment or
subletting. This provision shall not apply to a sale or transfer of
control to Hyundai Electronic Industries Co. Ltd. and /or any of it's
affiliates.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord
covenants it has good right to lease the premises in the manner
described herein and that Tenant shall peaceably and quietly have, hold,
occupy, and enjoy the premises during the term of the lease; except as
provided in Paragraph 31 concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD.
Landlord does reserve, during the term of this lease, the right to go
upon and deal with the premises or part thereof for the purpose of
implementing a common development plan for the project of which the
premises are a part, and to install non-exclusive sidewalks, paths,
roadways and other street improvements for use by vehicles, pedestrians,
and for parking; to undertake such drainage programs to handle
underground and surface drainage water and to make any other changes
and/or improvements as Landlord shall deem advisable in the exercise of
its sole discretion; provided, however, any such action by Landlord
shall not unreasonably interfere with the rights of Tenant hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree
that Landlord shall have sole and exclusive authority to negotiate and
settle all matters pertaining to the acquisition of all or part of the
premises by a governmental agency by eminent domain or threat thereof
(condemnation), and to convey all or any part of the premises under
threat of condemnation, and the lease shall terminate as to any area so
conveyed. It is agreed that any compensation for land and/or buildings
to be taken whether resulting from negotiation and agreement or
condemnation proceedings, shall be the exclusive property of Landlord,
and that there shall be no sharing whatsoever between Landlord and
Tenant of any such sum. Such taking of property shall not be
considered as a breach of this lease by Landlord, nor give rise to any
claims in Tenant for damages or compensation from Landlord. Tenant may
separately claim and recover from the condemning authority the value of
any personal property owned by Tenant which is taken, and any relocation
expenses owed to Tenant by the condemning authority. If the taken
portion of the premises consists only of areas where no building is
constructed, and the land area of the premises is reduced by less than
ten percent, and the parking area available for use by Tenant is reduced
by less than five percent, and there is no material change in Tenant's
access to the premises, then there shall be no change in the terms of
the lease. If no building area is taken but the foregoing limits on
parking area reductions are exceeded, then Tenant may terminate the
lease unless Landlord provides sufficient reasonably adjacent parking
area so that the total available parking area is reduced by less than
five percent. If any portion of the building on the premises is taken,
then Landlord, at its election, may replace the square footage taken
with space in the same building, or may provide land and building area
essentially the same as the premises in a reasonably adjacent location,
within 10 days after the conveyance or taking, under the same terms and
conditions as contained in this lease, and this lease shall be in full
force and effect as to the new premises. If Landlord does not so
provide reasonable space, then Tenant shall have two options. First,
Tenant may terminate the lease by written notice delivered to Landlord
within 60 days after the conveyance or taking. Second, Tenant may
retain the remaining portion of the premises, under all the terms and
conditions hereof, but the base rental shall be reduced in proportion to
the number of square feet of building floor space taken compared to the
number of square feet of building floor space on the premises prior to
the taking.
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease
shall be subject and subordinate in priority at all times to the lien of
any existing and/or hereafter executed mortgages and trust deeds
encumbering the premises. Although no instrument or act on the part of
Tenant shall be necessary to effectuate such subordination, Tenant will
execute and deliver such further instruments subordinating this lease to
the lien of any such mortgages or trust deeds as may be desired by the
mortgagee or holder of such trust deeds. Tenant hereby appoints
Landlord as his attorney in fact, irrevocably, to execute and deliver
any such instrument for Tenant. Tenant further agrees at any time and
from time to time upon not less than ten (10) days prior written request
by Landlord, to execute, acknowledge, and deliver to Landlord an
estoppel affidavit in form acceptable to Landlord and the holder of any
existing or contemplated mortgage or deed of trust encumbering the
premises. Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant (1) that this lease is in full force and
effect, without modification except as may be represented by Landlord;
(2) that there are no uncured defaults in Landlord's performance; and
(3) that not more than one (1) month's rent has been paid in advance.
Further, upon request, Tenant shall supply to Landlord a corporate
resolution certifying that the party signing this statement on behalf of
Tenant is properly authorized to do so, if Tenant is a corporation.
Tenant agrees to provide Landlord within ten business days of Landlord's
request, Tenant's most recently completed financial statements and such
other financial information as reasonably requested by Landlord in order
to verify Tenant's financial condition to satisfy requirements of
Landlord's existing or contemplated lender or mortgagee.
Tenant agrees with lender and Landlord that if there is a
foreclosure of any such mortgage or deed of trust and pursuant to such
foreclosure, the Public Trustee or other appropriate officer executes
and delivers a deed conveying the premises to the lender or its
designee, or in the event Landlord conveys the premises to the lender or
its designee in lieu of foreclosure, Tenant will attorn to such grantee
of the premises, rather than to Landlord, to perform all of Tenant's
obligations under the lease, and Tenant shall have no right to terminate
the lease by reason of the foreclosure or deed given in lieu thereof.
Landlord will include in the terms of any mortgage or deed of trust
on the premises a provision that if Tenant is not in default under the
terms of this lease and Tenant is then in possession of the premises,
Tenant's rights of quiet enjoyment arising out of the lease shall not be
affected or disturbed by lender in the event of a default by Landlord
and any sale of the premises through foreclosure of any deed of trust or
otherwise.
31. MEMORANDUM OF LEASE - RECORDING. This lease shall not be
recorded in the office of the County Clerk and Recorder of Boulder
County, except by Landlord as a financing statement. In order to effect
public recordation, the parties hereto may, at the time this lease is
executed, agree to execute a Memorandum of lease incorporating therein
by reference the terms of this lease, but deleting therefrom any
expressed statement or mention of the amount of rent herein reserved,
which instrument may be recorded by either party in the office of the
Clerk and Recorder of Boulder County.
32. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT.
No assent, or waiver expressed or implied, or failure to enforce, as to
any breach of any one or more of the covenants or agreements herein
shall be deemed or taken to be a waiver of any succeeding or additional
breach.
Payment by Tenant or receipt by Landlord of an amount less than the
rent or other payment provided for herein shall not be deemed to be
other than a payment on account of the earliest rent then due, nor shall
any endorsement or statement on any check or any letter accompanying any
check or payment of rent be deemed an accord and satisfaction, and
Landlord may accept such check or other payment without prejudice to
Landlord's right to recover the balance of all rent then due, and/or to
pursue any or all other remedies provided for in this lease, in law,
and/or in equity including, but not limited to, eviction of Tenant.
Specifically, but not as a limitation, acceptance of a partial payment
of rent shall not be a wavier of any default by Tenant.
33. CONTROLLING LAW. The lease, and all terms hereunder shall
be governed by the laws of the State of Colorado, exclusive of its
conflicts of laws rules.
34. INUREMENTS. The covenants and agreements herein contained
shall bind and inure to the benefit of Landlord and Tenant and their
respective successors. This lease shall be signed by the parties in
duplicate, each of which shall be a complete and effective original
lease.
35. TIME. Time is of the essence in this lease in each and all
of its provisions in which performance is a factor.
36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE. The street address of Landlord is 1960 Industrial Circle,
Longmont, CO 80501. The mailing address of Landlord is P. O. Box 1937,
Longmont, CO 80502-1937. All payments, notices and communications which
are sent to Landlord via United States mail shall be addressed to the
mailing address. Only payments, notices and communications which are
hand delivered or delivered by private courier service shall be
addressed to the street address.
Tenant's street address is 1841 Lefthand Circle, Longmont, Colorado,
80501. Tenant's mailing address is 2190 Miller Drive, Longmont,
Colorado, 80501. Any notice to Tenant may be delivered to the above
addresses or to the premises. A copy of any notice should be sent to
Vice President and General Consul, 211 River Oaks Parkway, San Jose,
California, 95136.
Landlord's current fax number is (303)776-4946. Tenant's current
fax number is (303) 678-2165. Any written notice required hereby may be
delivered by fax, U.S. mail, private courier service, or hand delivery.
Notice shall be effective at time of delivery to the address or fax
number shown.
Either party may change its street or mailing address, or fax
number, for purposes hereof, by written notice delivered to the other.
The federal employer identification number of Landlord is 84 0954 078.
The federal identification number of Tenant is 77-0123732 .
38. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are
made for the purposes of ease of location of terms and shall not affect
or vary the terms hereof. Throughout this lease, wherever the words,
"Landlord" and "Tenant" are used they shall include and imply to the
singular, plural, persons both male and female, and all sorts of
entities and in reading said lease, the necessary grammatical changes
required to make the provisions hereof mean and apply as aforesaid shall
be made in the same manner as though originally included in said lease.
39. ADDITIONAL PROVISIONS:
FLEXIBILITY CLAUSE: In the event Tenant's requirement for space
increases or decreases during the term of this lease, including any
extended term thereof, Tenant may notify Landlord of its adjusted space
requirement, in which event Landlord shall, within 120 days after such
notice, increase or decrease the square footage available to Tenant so
as to reasonably meet the Tenants new needs (as is reasonably devisable
by Landlord), either using the premises or other comparable space of
Landlord reasonably acceptable by Tenant. Tenant may not decrease space
in existing premises leased from the Landlord and lease space in Boulder
County owned by a third party, unless the Landlord cannot accommodate
the Tenant's overall space requirements. In such event, Landlord and
Tenant shall amend this lease accordingly, or enter into a new lease
upon rental rates and other terms which are similar to those of this
Lease and reasonably acceptable to both parties and terminate this
lease. Tenant may exercise the right described in this paragraph
multiple times, but not more than once in any twelve month period. Not
withstanding language to the contrary that might be found elsewhere in
this lease, the Tenant will be allowed to exercise the right described
in this paragraph without incurring of cost or other penalties sometimes
associated with early terminations, Tenant will be expected to return
the premises to Landlord pursuant to the terms and conditions of
Paragraph 14 of this Lease Agreement. This provision shall not apply to
345 S. Francis, Longmont, Colorado.
IN WITNESS WHEREOF, the Parties have executed this lease as of the
date hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY COMPANY
By: /s/ Susan M. Pratt
-----------------------
Susan M. Pratt, Manager
TENANT: MAXTOR CORPORATION
By: /s/ J. Larry Smart
-----------------------
J. Larry Smart
Chief Executive Officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this 19th day of
October, 1994 by
Susan Pratt, General Partner, Pratt Partnership.
Witness my hand and official seal.
My commission expires: May 3, 1997
/s/ Elizabeth H. Oram
---------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
The foregoing instrument was acknowledged before me this 17th day of
October, 1994 by
J. Larry Smart, Chief Executive Officer, Maxtor Corporation.
Witness my hand and official seal.
My commission expires: June 5, 1998
/s/ Sharon L. Spehar
--------------------
Notary Public
-31-
LEASE AGREEMENT
FOR PREMISES LOCATED AT
1851 Lefthand Circle
BETWEEN
MAXTOR CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. PRESENT CONDITION OF PROPERTY
3. TERM
3.1 Initial Term
3.2 Option to Extend
3.3 Tenant Improvement Construction
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and
HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES
IN ROOF - NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
26. ASSIGNMENT OR SUBLETTING
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD
29. GOVERNMENTAL ACQUISITION OF THE PREMISES
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES
31. TENANT'S GUARANTEE AND FINANCIAL STATEMENTS
32. MEMORANDUM OF LEASE - RECORDING
33. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT
34. CONTROLLING LAW
35. INUREMENTS
36. TIME
37. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE
38. PARAGRAPH HEADINGS; GRAMMAR
39. ADDITIONAL PROVISIONS
EXHIBIT A: SITE PLAN
EXHIBIT B: TENANT FINISH
LEASE
THIS LEASE, made and entered into this 19th day of October, 1994 by
and between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited
liability company, hereinafter referred to as "Landlord," and MAXTOR
CORPORATION, hereinafter referred to as "Tenant,"
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements,
and payments as hereinafter set forth, the parties hereto covenant and
agree as follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto
Tenant the following described premises containing approximately 29,600
square feet of building floor space measured to the outside of the
walls, including overhangs, canopies and loading docks, and to
approximately 1/2 the thickness of common walls; commonly known as 1851
Lefthand Circle, in the City of Longmont, County of Boulder, State of
Colorado, a more detailed description of which is Lot 3C, Longs Peak
Industrial Park-Minor Subdivision "C", County of Boulder, State of
Colorado, a diagram of which (is) (is not) attached as Exhibit B
(hereinafter referred to as the "premises"); the leasing of which is
made according to the terms of this Agreement; together with all
appurtenances thereto, and all fixtures attached thereto, in present
condition, and together with nonexclusive reasonable access across any
other land owned by Landlord as may be required for use of the premises
by Tenant, with such access to be on such roadways, sidewalks, and other
common areas of which the premises are a part, or of any such adjacent
lands owned by Landlord, as Landlord may from time to time designate.
2. PRESENT CONDITION OF PROPERTY. Tenant has examined, and
accepts the building, improvements, and any fixtures on the premises, in
present condition, subject to the construction of Tenant Improvements as
detailed on the plans and specifications labeled Exhibit "A," attached
hereto and made a part hereof by reference. No representation,
statement, or warranty, express or implied, has been made by or on
behalf of Landlord as to the condition of the premises, or as to the use
that may be made of same. In no event shall Landlord be liable for any
defect in the premises which are discernible by Tenant's examination
thereof or for any limitation on the use of the premises. Tenant shall
not be deemed to have accepted the Tenant improvements to be constructed
by Landlord until it shall have had a reasonable opportunity to inspect
the same.
3. TERM.
3.1 Initial Term. The term of this lease shall commence at
12:00 noon on December 31st, 1994 (the "Commencement Date"), and unless
terminated as herein provided for, shall end at 12:00 noon on the 31st
day of December, 1999. The Commencement Date as set forth in this
Paragraph 3.1 shall be subject to those adjustments of the Commencement
Date, if any, set forth in Paragraph 3.3 which relate to the performance
of construction on the premises.
3.2 Option to Extend. Upon full and complete performance of
all the terms, covenants, and conditions herein contained by Tenant and
payment of all rental due under the terms hereof, Tenant shall be given
the option to renew this lease for 3 additional terms of 5 years each.
Each such option shall be exercisable only by delivery of Tenant's
signed written notice of extension to Landlord not less than 180 days
prior to the expiration of the then-existing lease term. In the event of
such exercise, this lease shall be deemed to be extended for the
additional period pursuant to all the terms and conditions set forth
herein, including (but not as a limitation) those provisions for
increase of the base rental set forth in Paragraph 4.2.2. In the event
of exercise of said Option, any funds held by Landlord pursuant hereto
shall continue to be so held subject to the terms and conditions
relating to same.
3.3 Tenant Improvement Construction. The Commencement Date of
this lease shall be delayed until the substantial completion of the
tenant improvements described on Exhibit "A" attached hereto and
delivery of possession to Tenant, if such occurs after the Commencement
Date, as follows: If for any reason Landlord does not substantially
complete such construction prior to the Commencement Date, such failure
will not affect the validity of this lease, but in such case Tenant
shall not be obligated to pay rent until such construction is
substantially completed and possession of the premises is delivered to
Tenant. Provided, however, if Landlord shall not have substantially
completed and delivered possession of the premises within sixty (60)
days after the Commencement Date, Tenant may, at Tenant's option, upon
notice in writing to Landlord delivered within ten (10) days after the
end of the 60-day period, cancel this lease. Landlord shall have no
liability to Tenant for failure to substantially complete construction
prior to any date or dates. Tenant's only remedy shall be cancellation
of the lease. Landlord will, however, use its best efforts to complete
the Tenant improvements on or before the commencement date.
Should construction of the tenant improvements be completed to such
an extent as to permit the issuance of a partial certificate of
occupancy by the governing authority, Tenant may occupy the portion of
the premises so permitted prior to (or after) the Commencement Date and
shall pay rent for the occupied portion, prorated in proportion to the
number of square feet of building space occupied, beginning on date of
delivery of possession. Rent adjustments shall be similarly prorated.
In no event shall Tenant take possession prior to satisfaction of the
requirements for Tenant's insurance set forth below.
3.4 Delivery of Possession. Except as above provided with
respect to construction of Tenant Improvements, Tenant shall be entitled
to possession of the premises at noon on the Commencement Date, as
defined in Paragraph 3.1. Tenant may, with approval by Landlord in its
sole discretion, have access to the premises during tenant improvement
construction for the purpose of moving in Tenant-owned furniture,
fixtures, equipment and inventory. This access and the items so moved
in shall not in any way impede the construction of the tenant
improvements, nor shall Landlord, its agent, employees, sub-contractors,
or any other person on the premises whether invited or not invited, be
liable for the protection, care or security of Tenant owned items. This
paragraph shall not be construed so as to permit Tenant to occupy the
premises prior to the satisfaction of all requirements for Tenant's
insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of
Landlord as herein set forth, the following as rental for the premises:
4.1 Base Rental.
The base rental for the full term hereof shall be ONE MILLION ONE
HUNDRED TEN THOUSAND Dollars ($1,110,000.00), payable in monthly
installments [basic monthly rental of EIGHTEEN THOUSAND FIVE HUNDRED
Dollars ($18,500.00)] in advance on the first day of each month during
the term hereof.
4.2 Escalation of Base Rental.
4.2.1 On the first anniversary of the commencement date of this
lease, and annually thereafter, the base rental payable by Tenant shall
be increased to an amount determined by multiplying the basic monthly
rental by a fraction, the denominator of which shall be the most recent
Consumer Price Index figure, as hereinafter defined, published prior to
the Commencement Date, and the numerator of which shall be the most
recent Consumer Price Index figure published prior to the particular
anniversary date; provided, however, that in no event shall the rent for
any month after such anniversary be less than the rent for the month
immediately preceding such anniversary. As used herein, the term
"Consumer Price Index" shall mean the Consumer Price Index, All Urban
Consumers, All Items, Denver, Colorado (1982-84 = 100), or the successor
of that Index, as published by the Bureau of Labor Statistics, U.S.
Department of Labor. Should Landlord lack sufficient data to make the
proper determination on the date of any adjustment, Tenant shall
continue to pay the monthly rent payable immediately prior to the
adjustment date. As soon as Landlord obtains the necessary data,
Landlord shall determine the rent payable from and after such adjustment
date and shall notify Tenant of the adjustment in writing. Should the
monthly rent for the period following the adjustment date exceed the
amount previously paid by Tenant for that period, Tenant shall forthwith
pay the difference to Landlord. Should the Consumer Price Index as
above described cease to be published, a reasonably comparable successor
index shall be selected by Landlord. If Tenant objects to the successor
index, the dispute will be resolved and a successor index designated by
arbitration pursuant to the rules and procedures of the American
Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the
increase in base rental for each year shall be not less than two and one-
half percent (2.5%) nor more than seven percent (7%) of the base rental
for the previous year, each year for such purposes to commence on the
anniversary of the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation
provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular
year, years, or part of a year. No such waiver shall preclude Landlord
from applying the escalation to any subsequent year or part of a year,
and from making the subsequent application as if all subsequent
escalations had been duly made to the maximum permissible extent.
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior
and HVAC. Tenant shall pay the cost of having Landlord maintain the HVAC
systems and the exterior of the premises including parking lots, green
areas, sidewalks, entrances, and corridors (but not the exterior
surfaces of the building, other than glass). Cost of maintaining such
areas shall include, but shall not be limited to, repairs, preventative
maintenance, HVAC filters and compressors, sealing, striping, lawn
mowing, snow removal (Tenant is responsible for snow removal of less
than 2"), gardening, shrub care and replacements, lawn watering, parking
area maintenance, electricity for lighting, sign maintenance,
depreciation of equipment used for the foregoing purposes and other
costs related to the premises or common areas. Landlord shall perform
such maintenance and charge the cost thereof to Tenant, which shall be
paid as additional rent within 10 days after delivery of Landlord's
invoice. Landlord shall keep reasonable records of such cost, which
shall be available for Tenant's inspection during normal business hours.
Certain items of such maintenance (such as landscape maintenance and
snow removal) are performed by Landlord on numerous areas owned and/or
maintained by Landlord, in addition to the premises, and the cost
thereof cannot be precisely ascribed to the premises. As to such
services which are performed on areas in addition to the premises, the
cost for all areas so serviced shall be allocated to the premises in
proportion to the square feet of building floor space in the premises
compared to the square feet of building floor space in the entire area
to which such services are provided.
For the first year of the lease, Landlord agrees that the total of
the maintenance fees referred to in this paragraph will not exceed $0.80
per square foot annually.
4.4 Private Security Service. Landlord may engage a private
security service, as an independent contractor, to patrol an area which
includes the premises. Tenant shall be included in the selection
process. If Landlord does so employ a private security service, which
the tenant has approved, the cost thereof shall be treated in the same
manner as Maintenance Expense and paid by Tenant as Additional Rent
under the same provisions as are applicable to Maintenance Expense.
Tenant shall have no obligation to participate under this Section 4.4,
if Tenant's portion of the cost of such services is more than the amount
that Tenant has been paying for such service.
Landlord shall have absolutely no obligation to engage a private
security service and shall not be liable for any damages or loss which
might have been averted had a private security service been engaged. If
Landlord does engage a private security service, Landlord shall not be
liable for any damages or loss which may result from actions, inactions,
non-performance or quality of performance by the security service. If
the Tenant desires a higher level of security services than Landlord
provides, or wishes to obtain an agreement that there will be liability
for actions, inactions, non-performance or quality of performance by a
security service, Tenant may itself engage such security service as
Tenant chooses, at Tenant's sole expense.
Nothing herein shall limit any action by Tenant against any person
or entity providing private security service, provided that Landlord
shall not be party to, or liable for any judgment entered in such an
action, as a defendant, cross defendant, third-party .defendant, or
otherwise.
4.5 Late Charges. Tenant will pay a late charge equal to five
percent of any monthly rental payment or other payment not paid when
due, which payment shall be in addition to any interest elsewhere
provided for.
4.6 Security Deposit. Landlord acknowledges receipt of the
sum of SIXTEEN THOUSAND THIRTY-THREE Dollars AND 33/100THS ($16,033.33)
paid by Tenant upon the execution hereof or a letter of credit for the
same amount, to be retained by Landlord as security for the performance
of all of the terms and conditions of this lease Agreement to be
performed by Tenant, including payment of all rental due under the terms
hereof. Landlord shall not owe Tenant any interest on the deposit. At
Landlord's election, deductions may be made by Landlord from the amount
so retained for the reasonable cost of repairs to the premises which
should have been performed by Tenant, for any rental payment or other
sum delinquent under the terms hereof, and for any sum used by Landlord
in any manner to cure any default in the performance of Tenant under the
terms of this lease. In the event deductions are so made during the
rental term, upon notice by Landlord, Tenant shall redeposit such
amounts so expended so as to maintain the security deposit in the amount
as herein provided for, within 10 days after receipt of such written
demand from Landlord. Nothing herein contained shall limit the
liability of Tenant as to any repairs or maintenance of the premises;
and nothing herein shall limit the obligation of Tenant promptly to pay
all sums otherwise due under this lease and to comply with all the terms
and conditions hereof. The security deposit, less any sums withheld by
Landlord pursuant to the terms hereof, shall be repaid to Tenant within
sixty days after the date of termination of the lease.
4.7 Proration of Rent for Partial Months. If the lease term
begins on other than the first day of a month, base rent and additional
rent from such date until the first day of the next succeeding calendar
month shall be prorated on the basis of the actual number of days in
such calendar month and shall be payable in advance. If the lease term
terminates on other than the last day of the calendar month, rent from
the first day of such calendar month until such termination date shall
be prorated on the basis of the actual number of days in such month, and
shall be payable in advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant
shall pay as additional rent, all real estate taxes and assessments, as
shall, from and after the date hereof, be assessed upon the premises and
any appurtenances or improvements thereto. Tenant shall pay one-twelfth
(1/12) of such estimated additional rent, in advance, with each monthly
rental payment. Landlord shall reasonably estimate such taxes and
advise Tenant in writing of the amount to be paid each month. Such
payments shall be separately accounted for by Landlord, (and may be
deposited with any holder of a mortgage or deed of trust on the
premises) and shall be used to make prompt payment of such taxes as they
come due. If the estimated payments made by Tenant are not sufficient
to fully pay such taxes as they come due, Tenant shall pay to Landlord
any amount necessary to make up the deficiency within ten (10) days of
notice from Landlord. Landlord shall have no obligation to pay any
interest to Tenant on such additional rent, but Landlord shall give
Tenant an annual accounting showing credit for such payments made by
Tenant, and debits for payments made by Landlord or Landlord's lender.
If Tenant fails to make any required payment to Landlord, Landlord may,
but shall not be required to, pay any such tax and shall become entitled
to repayment from Tenant without demand, together with interest thereon
as elsewhere provided. The real estate taxes and assessments for the
year in which the term of this lease shall begin, as well as for the
year in which the lease shall end, shall be apportioned so that Tenant
shall pay only the portions that correspond with the portions of such
years as are within such lease term. In the event that the premises are
assessed for tax purposes as a part of a larger parcel, the tax on the
entire parcel shall be prorated in proportion to the number of square
feet of building floor space on each portion of the entire parcel.
Upon written request from Tenant, Landlord shall protest the tax
assessment on the premises, to the extent that Landlord, in good faith,
believes that such protest is justifiable and likely to be successful.
In the event of any such protest Tenant shall nevertheless pay to
Landlord the taxes as assessed, and Tenant shall be entitled to the
appropriate share of any refund. Tenant shall not protest any real
property tax assessment on the premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant
shall be responsible for and timely pay any and all personal property
taxes assessed against any furniture, fixtures, equipment and items of a
similar nature installed and/or located in or about the premises by
Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. Landlord shall
not be required to furnish to Tenant any utility services of any kind,
such as but not limited to, water, hot water, heat, gas, electricity,
light, telephone, cable TV and power. Tenant shall obtain and pay all
charges for gas, electricity, light, heat, power, water (and lawn
watering), and telephone, cable TV or other communication services or
other utilities used, rendered, or supplied, upon or in connection with
the premises. Tenant irrevocably appoints Landlord as Tenant's attorney-
in-fact solely for the purpose of terminating Tenant's account with any
provider of such utilities, if the premises are abandoned by Tenant or
if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this
lease, Tenant shall remain in possession of the premises and continue to
pay rent without a written agreement as to such possession, then Tenant
shall be deemed a month-to-month Tenant and the rental rate during such
holdover tenancy shall be equivalent to one hundred fifteen percent
(115%) the monthly rental paid for the last month of tenancy under this
lease. Such month-to-month tenancy may be terminated by the Landlord at
noon on any day which is more than twenty-nine (29) days after date of
delivery of Landlord's written notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant
shall operate to renew or extend this lease without the written consent
of Landlord. No modification of this lease shall be binding unless
endorsed hereon or otherwise written and signed by the respective
parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO
HOLES IN ROOF - NO NEW EQUIPMENT ON ROOF. Tenant may, during the term
of this lease, at Tenant's expense, erect inside partitions, add to
existing electric power service, add telephone outlets or other
communication services, add light fixtures, install additional heating
and/or air conditioning or make such other changes or alterations as
Tenant may desire, provided that prior to commencement of any such work,
Tenant shall submit to Landlord a set of fully detailed working drawings
and specifications for the proposed alteration, prepared by a licensed
architect or engineer. If Tenant so requests, Landlord will have the
drawings and specifications prepared for Tenant, at Tenant's expense,
utilizing Landlord's in-house staff. Tenant will pay Landlord's
customary hourly charges for such services, as additional rent, to be
paid within 10 days after delivery of invoice. In particular, but not
as a limitation, the working drawings must fully detail changes to
mechanical, wiring and electrical, lighting, plumbing and HVAC systems
to Landlord's satisfaction. Landlord may refuse to consent to the
alterations because of the inadequacy of the drawings and
specifications. Tenant may not commence the alterations until
Landlord's written consent has been given. If the drawings and
specifications are adequate, to Landlord's sole satisfaction, then
Landlord will not unreasonably withhold its consent to the alterations,
except that Landlord may withhold its consent to new or altered openings
(holes) in the roof, or placement of additional equipment on the roof,
as follows. Landlord may withhold its consent to new openings in the
roof or placement of additional equipment on the roof unless Landlord,
in its sole discretion, is satisfied that the risk of increased leakage
or risk of more frequent repairs or maintenance of the roof is
acceptable to Landlord. Any new or altered opening in the roof, or
placement of additional equipment thereon, shall be considered an
alteration which requires the prior written consent of Landlord. If
within thirty (30) days after such plans and specifications are
submitted by Tenant to Landlord for such approval, Landlord shall have
not given Tenant notice of disapproval, stating the reason for such
disapproval, such plans and specifications shall be considered approved
by Landlord. As a condition of approval for such alternations, Landlord
shall have the right to require Tenant to furnish adequate bond or other
security acceptable to Landlord for performance of and payment for the
work to be performed. At the end of this lease, all such fixtures,
equipment, additions and/or alterations (except trade fixtures installed
by Tenant) shall be and remain the property of Landlord, provided,
however, Landlord shall have the option to require Tenant to remove any
or all such fixtures, equipment, additions, and/or alterations and
restore the premises to the condition existing immediately prior to such
change and/or installation, normal wear and tear excepted, all at
Tenant's cost and expense. All work done by Tenant shall conform to
appropriate city, county and state building codes and health standards
and OSHA standards and Tenant shall be responsible for obtaining and
paying for building permits.
If any such work done by Tenant causes damage to the structural
portion, exterior finish or roof of the premises, then the costs of
repair of such damage, and of all further maintenance and repairs to
such structural portion, exterior finish or roof during the term of the
lease shall thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by
Landlord, nor Landlord's actual knowledge of any alteration accomplished
or in progress shall constitute a waiver of Landlord's rights concerning
alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for
construction done by it or caused to be done by it on the premises as
permitted by this lease. Tenant shall keep the building, other
improvements and land of which the premises are a part free and clear of
all mechanic's liens resulting from construction by or for Tenant.
Tenant shall have the right to contest the correctness or validity of
any such lien if, immediately on demand by Landlord, Tenant deposits
with Landlord and/or any appropriate court or title insurance company a
bond or sum of money sufficient to allow issuance of title insurance
against the lien and/or to comply with the statutory requirements for
discharge of the lien found in 38-22-130 and 131, Colorado Revised
Statutes, or any successor statutory provision. Landlord shall have the
right to require Tenant's contractor(s), subcontractors and materialmen
to furnish to both Tenant and Landlord adequate lien waivers on work or
materials paid for, in connection with all periodic or final payments,
by endorsement on checks, making of joint checks, or otherwise, and
Landlord shall have the right to review invoices prior to payment.
Landlord reserves the right to post notices on the premises that
Landlord is not responsible for payment of work performed and that
Landlord's interest is not subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent
to maintain uniformity of signs throughout the area where signs may be
controlled by Landlord. Tenant shall place no signs on the premises
(except inside Tenant's portion of the building on the premises) without
prior written consent of Landlord, which consent shall not be
unreasonably withheld.
Tenant may not put any signs on the premises indicating that the
same are for rent, or available for assignment or sublease, and may put
no signs of real estate brokers on the premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance
and repairs of the structural portions, the roof and the exterior finish
of the building (other than glass) on the premises at the sole cost and
expense of Landlord; provided, however, that if any such maintenance or
repairs are necessitated by the acts of Tenant or its employees, agents,
contractors, sub-contractors, licensees, invitees or guests, Tenant
shall reimburse Landlord for the cost of same, as additional rent, to be
paid within 10 days after delivery of invoice. All other maintenance,
repairs and replacements shall be performed by Tenant, at its own
expense, including all necessary maintenance, repairs and replacements
to pipes, plumbing systems, electrical systems, window or other glass,
doors, fixtures, interior decorations, and all other appliances and
appurtenances. Such repairs and replacements, interior and exterior,
ordinary as well as extraordinary, shall be made promptly, as and when
necessary, so that the premises are maintained in first class condition.
All such maintenance, repairs and replacements shall be in quality and
class at least equal to the original work. On default of Tenant in
making such maintenance, repairs or replacements, Landlord may, but
shall not be required to, make such repairs and replacements for
Tenant's account, and the expense shall constitute and be collectable as
additional rent, together with interest thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in
this lease, under no circumstances shall Landlord be liable for damage
to the contents of the building or consequential damages to Tenant
resulting from roof or window leaks or failure, or leakage of any water
pipe or gas pipe, failure of any communications system or alarm, failure
or leakage or discharge by any sprinkler system or other fire
suppression system, power surges, power shortages or outage, sewer
failure or sewage backup, or failure or malfunction of any heating or
cooling system. The term "contents" shall include, but shall not be
limited to, improvements made by Tenant, and data bases and other
information stored or contained in computers, hard or floppy disks,
tapes, computer chips and other memory or storage devices. The term
"consequential damages" shall include, but not be limited to, Tenant's
inability to perform any contract on which Tenant is bound, loss of
sales, loss of profit, or loss of business reputation or goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall
vacate the premises in the same condition as when received on the date
hereof, ordinary wear and tear excepted, and shall remove all of
Tenant's property, so that Landlord can repossess the premises not later
than noon on the day upon which this lease or any extension hereof ends,
whether upon notice, holdover or otherwise. The Landlord shall have the
same rights to enforce this covenant by ejectment and for damages or
otherwise as for the breach of any other conditions or covenant of this
lease. Upon termination of the lease, Tenant shall deliver to Landlord
keys which operate all locks on the exterior or interior of the
premises, including, without limitation, keys to locks on cupboards and
closets. Tenant shall retrieve all keys to the premises which Tenant
has delivered to employees or others, and include same with the keys
delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant
shall use the premises for research and development, office, light
manufacturing and other uses appurtenant thereto. Except as otherwise
provided herein, Tenant will maintain the grounds which are part of the
premises, keeping them free from accumulation of trash or debris and
will be responsible for snow removal up to two inches of snow. Tenant
shall conform to all present and future laws and ordinances of any
governmental authority having jurisdiction over the premises, and will
make no use in violation of same. No outside storage shall be allowed
unless first approved by Landlord in writing and then only in such areas
as are designated as storage areas by Landlord. Tenant shall not commit
or suffer any waste on the premises. Tenant shall not permit any
nuisance to be maintained on the premises nor permit any disorderly
conduct, noise or other activity having a tendency to annoy or to
disturb occupants of any other part of the property of which the
premises are a part and/or of any adjoining property.
As part of a common scheme for orderly development, use and
protection, of its various properties and those properties adjacent to
the premises, Landlord may impose upon Tenant reasonable rules and
regulations concerning parking and vehicle traffic; locations at which
deliveries are to be made and access thereto; trash disposal; use of
common areas such as recreation areas, corridors, and sidewalks; signs
and directories; use of communication wires or cables which are used in
common but which may be inadequate fully to serve all the demands placed
upon them; provided that such rules and regulations shall be uniform in
their application and shall not violate the express terms of this lease
elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost
of any damage to the premises or the building or the sidewalks and
pavements adjoining the same which results from the movement of heavy
articles or heavy vehicles or utility cuts made by or on behalf of
Tenant. Tenant shall not overload the floors or any other part of the
premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES.
Tenant shall make no use of the premises which would void or make
voidable any insurance upon the premises.
18. INSURANCE.
18.1 All Risk Insurance. Tenant shall keep the building and
improvements insured throughout the term of this lease against losses
covered by an "All Risk" policy, as defined in the insurance industry,
which shall also cover 1) loss of rental and 2) deposit of Hazardous
Materials on the premises by those acts of third parties which
constitute vandalism. The deductible amount shall not exceed $50,000.
18.2 General Liability Insurance. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of
ONE MILLION Dollars ($1,000,000.00 ) for each occurrence of bodily
injury and ONE MILLION Dollars ($1,000,000.00) for each occurrence of
property damage. Tenant shall supply to Landlord certificates of
insurance as provided in Paragraph 18.6. In the event Tenant fails to
secure such insurance or to give evidence to Landlord of such insurance
by depositing with Landlord certificates as provided below, Landlord may
purchase such insurance in Tenant's name and charge Tenant the premiums
therefor. Bills for the premiums therefor shall be deemed and paid as
additional rent due within 10 days after delivery of invoice. The
Landlord shall be an additional named insured on the policy.
18.3 Tenant Improvements. Tenant agrees to carry insurance
covering all of Tenant's leasehold improvements, alterations, additions
or improvements, trade fixtures, merchandise and personal property from
time to time in, on or upon the premises, in an amount not less than one
hundred percent (100%) of the full replacement cost of such items from
time to time during the term of this lease, providing protection against
any peril included within an "All-Risk" policy, with a deductible amount
not to exceed $10,000. Any policy proceeds shall be used for the repair
or replacement of the property damaged or destroyed unless this lease
shall cease and terminate due to destruction of the premises as provided
below.
18.4 Other Insurance. Tenant agrees to carry insurance against
such other hazards and in such amounts as the holder of any mortgage or
deed of trust to which the lease is subordinate may require from time to
time.
18.5 Waiver of Subrogation. Landlord and Tenant grant to each
other on behalf of any insurer providing fire and extended insurance
coverage to either of them covering the premises, improvements thereon,
and contents thereof, a waiver of any right of subrogation or recovery
of any payments of loss under such insurance, such waiver to be
effective so long as each is empowered to grant such waiver under the
terms of its insurance policy, and to give all necessary notice of such
waiver to its insurance carriers.
18.6 Other Provisions Regarding Tenant's Insurance. All
insurance required of Tenant in this lease shall be effected under
enforceable policies issued by insurers of recognized good financial
condition licensed to do business in this State. At least fifteen (15)
days prior to the expiration date of any such policy, a certificate
evidencing a new or renewal policy shall be delivered by Tenant to
Landlord. Within fifteen (15) days after the premium on any policy
shall become due and payable, Landlord shall be furnished with
satisfactory evidence of its payment. To the extent obtainable, all
policies shall contain an agreement that notwithstanding any act or
negligence of Tenant which might otherwise result in forfeiture of such
insurance, such policies shall not be canceled except upon ten (10) days
prior written notice to Landlord, and that the coverage afforded thereby
shall not be affected by the performance of any work in or about the
premises.
If Tenant provides any insurance required of Tenant by this lease
in the form of a blanket policy, Tenant shall furnish satisfactory proof
that such blanket policy complies in all respects with the provisions of
this lease, and that the coverage thereunder is at least equal to the
coverage which would be provided under a separate policy covering only
the premises.
18.7 Changes in Standard Policies. If the definition of
insurance industry policy language relating to "All-Risk" insurance or
other term changes, the insurance requirements hereunder shall be
modified to conform to the existing insurance industry language;
however, the dollar amount of the coverages required under this lease
shall not be less than those existing at the time of the effective
beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be
Tenant's sole and exclusive responsibility to meet all fire regulations
of any governmental unit having jurisdiction over the premises to the
extent such regulations affect Tenant's operations, at Tenant's sole
expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the premises
are damaged or destroyed by fire or other cause at any time after the
date of commencement of this lease, Landlord shall proceed with due
diligence to repair or restore the same to the same condition as existed
before such damage or destruction, and as soon as possible thereafter
but in no event more than 180 days from the date of damage or
destruction will give possession to the Tenant of the premises without
diminution or change of location. If Landlord does not complete all
repairs and restoration within 180 days, Tenant may at its reasonable
discretion terminate the lease. Provided, however, that in case of
total destruction of the premises by fire, or in case the premises are
so badly damaged that, in the opinion of the Landlord, it is not
feasible to repair or rebuild the same, then, either Tenant or Landlord
shall have the right to terminate this lease instead of rebuilding the
improvements; provided, however, that the terminating party shall give
the other party written notice of its intention to terminate, said
notice to be served not later than thirty (30) days after the occurrence
of the damage to the property. In the event the premises are rendered
temporarily untenantable because of fire or other casualty, base monthly
rent shall abate on the untenantable area until the premises are
restored to their former condition, abatement to be based on the square
feet of building floor space in the untenantable area compared to the
total square feet of building floor space on the premises. Provided,
however, that to the extent the damage or destruction results from the
negligence or other action of Tenant or its employees, agents,
contractors, subcontractors, invitees, guests or licensees, Tenant shall
pay for the restoration or repair, to the extent the cost of same is not
covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 Definitions.
21.1.1 Hazardous Material. Hazardous Material means any
substance:
(a) the presence of which requires investigation, notice or
remediation under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material,"
"hazardous waste," "hazardous substance," "regulated substance,"
"pollutant" or "contaminant" under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), Toxic Substances Control Act
(15 U.S.C. _ 2601 et seq.), the Colorado Underground Storage Tank Act
(Colo. Rev. Stat. 25-18-101 et seq.), and/or the Resource Conservation
and Recovery Act (42 U.S.C. _ 6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous
and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United
States, the State of Colorado or any political subdivision thereof; or
(d) the presence of which on the premises causes or threatens
to cause a nuisance upon the premises or to adjacent properties or poses
or threatens to pose a hazard to the health or safety of persons on or
about the premises; or
(e) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos
or urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 Environmental Requirements. Environmental Requirements
means all applicable present and future statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of
human health or the environment, including, without limitation:
(a) All requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or threatened releases
of Hazardous Materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid,
liquid, or gaseous in nature, into the air, surface water, groundwater,
or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature; and
(b) All requirements pertaining to the protection of the
health and safety of employees or the public.
21.1.3 Environmental Damages. Environmental Damages means all
claims, judgments, damages, losses, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs, and expenses
of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement or judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' and witnesses' fees,
any of which are incurred at any time as a result of the existence of
Hazardous Material upon, about, beneath the premises or migrating or
threatening to migrate to or from the premises, or the existence of a
violation of Environmental Requirements pertaining to the premises,
including without limitation:
(a) Damages for personal injury, or injury to property or
natural resources occurring upon or off of the premises, foreseeable or
unforeseeable, including, without limitation, lost profits,
consequential damages, the cost of demolition and rebuilding of any
improvements on real property, interest and penalties including but not
limited to claims brought by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements including, but
not limited to, the preparation of any feasibility studies or reports or
the performance of any cleanup, remediation, removal, response,
abatement, containment, closure, restoration or monitoring work required
by any federal, state or local governmental agency or political
subdivision or court, or reasonably necessary to make full economic use
of the premises and any other property in a manner consistent with its
current use or otherwise expended in connection with such conditions,
and including without limitation any attorneys' fees, costs and expenses
incurred in enforcing this agreement or collecting any sums due
hereunder;
(c) Liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with
the items referenced herein; and
(d) Diminution in the value of the premises and adjoining
property, and damages for the loss of business and restriction on the
use of or adverse impact on the marketing of rentable or usable space or
of any amenity of the premises and adjoining property.
21.2 Tenant's Obligation to Indemnify, Defend and Hold
Harmless. Tenant, its successors, assigns and guarantors, agree to
indemnify, defend, reimburse and hold harmless the following persons
from and against any and all Environmental Damages arising from
activities of Tenant or its employees, agents, contractors,
subcontractors, or guests, licensees, or invitees which (1) result in
the presence of Hazardous Materials upon, about or beneath the premises
or migrating to or from the premises, or (2) result in the violation of
any Environmental Requirements pertaining to the premises and the
activities thereon:
21.2.1 Landlord;
21.2.2 any other person who acquires an interest in the premises
in any manner, including but not limited to purchase at a foreclosure
sale or otherwise; and
21.2.3 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns, guests and invitees of such persons.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Tenant, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
the indemnified parties.
21.3 Tenant's Obligation to Remediate. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement,
Tenant shall, upon demand of Landlord, and at its sole cost and expense,
promptly take all actions to remediate the premises which are reasonably
necessary to mitigate Environmental Damages or to allow full economic
use of the premises, or are required by Environmental Requirements,
which remediation is necessitated by the 1) introduction of a Hazardous
Material upon, about or beneath the premises or 2) a violation of
Environmental Requirements, either of which is caused by the actions of
Tenant, its employees, agents, contractors, subcontractors, guests,
invitees or licensees. Such actions shall include, but not be limited
to, the investigation of the environmental condition of the premises,
the preparation of any feasibility studies, reports or remedial plans,
and the performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or restoration work, whether on or off of the
premises. Tenant shall take all actions necessary to restore the
premises to the condition existing prior to the introduction of
Hazardous Material upon, about or beneath the premises, notwithstanding
any lesser standard of remediation allowable under applicable law or
governmental policies. All such work shall be performed by one or more
contractors, selected by Tenant and approved in advance and in writing
by Landlord. Tenant shall proceed continuously and diligently with such
investigatory and remedial actions, provided that in all cases such
actions shall be in accordance with all applicable requirements of
governmental entities. Any such actions shall be performed in a good,
safe and workmanlike manner and shall minimize any impact on the
business conducted at the premises. Tenant shall pay all costs in
connection with such investigatory and remedial activities, including
but not limited to all power and utility costs, and any and all taxes or
fees that may be applicable to such activities. Tenant shall promptly
provide to Landlord copies of testing results and reports that are
generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities.
Promptly upon completion of such investigation and remediation, Tenant
shall permanently seal or cap all monitoring wells and test holes to
industrial standards in compliance with applicable federal, state and
local laws and regulations, remove all associated equipment, and restore
the premises to the maximum extent possible, which shall include,
without limitation, the repair of any surface damage, including paving,
caused by such investigation or remediation hereunder. Provided,
however, that Tenant shall not be obligated to remediate environmental
damages which result from seepage of Hazardous Materials onto the
premises from adjacent property unless the presence on the adjacent
property was caused by Tenant or its employees, agents, contractors,
subcontractors, guests, invitees or licensees.
21.4 Notification. If Tenant shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected
or threatened violation of Environmental Requirements, or liability of
Tenant for Environmental Damages in connection with the premises or past
or present activities of any person thereon, or that any representation
set forth in this agreement is not or is no longer accurate, including
but not limited to notice or other communication concerning any actual
or threatened investigation, inquiry, lawsuit, claim, citation,
directive, summons, proceeding, complaint, notice, order, writ, or
injunction, relating to same, then Tenant shall deliver to Landlord,
within ten days of the receipt of such notice or communication by
Landlord, a written description of said violation, liability, correcting
information, or actual or threatened event or condition, together with
copies of any such notice or communication. Receipt of such notice
shall not be deemed to create any obligation on the part of Landlord to
defend or otherwise respond to any such notification or communication.
21.5 Negative Covenants.
21.5.1 No Hazardous Material on Premises. Except in strict
compliance with all Environmental Requirements, Tenant shall not cause,
permit or suffer any Hazardous Material to be brought upon, treated,
kept, stored, disposed of, discharged, released, produced, manufactured,
generated, refined or used upon, about or beneath the premises by
Tenant, its agents, employees, contractors, subcontractors, guests,
licensees or invitees, or any other person. Tenant shall deliver to
Landlord copies of all documents which Tenant provides to any
governmental body in connection with compliance with Environmental
Requirements with respect to the premises, such delivery to be
contemporaneous with provision of the documents to the governmental
agency.
21.5.2 No Violations of Environmental Requirements. Tenant
shall not cause, permit or suffer the existence or the commission by
Tenant, its agents, employees, contractors, subcontractors or guests,
licensees or invitees, or by any other person of a violation of any
Environmental Requirements upon, about or beneath the premises or any
portion thereof.
21.5.3 No Environmental or Other Liens. Tenant shall not create
or suffer or permit to exist with respect to the premises, any lien,
security interest or other charge or encumbrance of any kind, including
without limitation, any lien imposed pursuant to section 107(f) of the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. section
9607(1) or any similar state statute to the extent that such lien arises
out of the actions of Tenant, its agents, employees, contractors,
subcontractors or guests, licensees or invitees.
21.6 Landlord's Right to Inspect and to Audit Tenant's Records.
Landlord shall have the right in its sole and absolute discretion, but
not the duty, to enter and conduct an inspection of the premises and to
inspect and audit Tenant's records concerning Hazardous Materials at any
reasonable time to determine whether Tenant is complying with the terms
of the lease, including but not limited to the compliance of the
premises and the activities thereon with Environmental Requirements and
the existence of Environmental Damages as a result of the condition of
the premises or surrounding properties and activities thereon. If
Landlord has reasonable cause to believe Tenant is in default with
respect to any of the provisions of this lease related to Hazardous
Materials, Environmental Requirements or Environmental Damages, then
Landlord shall have the right, but not the duty, to retain at the sole
expense of Tenant an independent professional consultant to enter the
premises to conduct such an inspection and to inspect and audit any
records or reports prepared by or for Tenant concerning such compliance.
Tenant hereby grants to Landlord the right to enter the premises and to
perform such tests on the premises as are reasonably necessary in the
opinion of Landlord to assist in such audits and investigations.
Landlord shall use reasonable efforts to minimize interference with the
business of Tenant by such tests inspections and audits, but Landlord
shall not be liable for any interference caused thereby.
21.7 Landlord's Right to Remediate. Should Tenant fail to
perform or observe any of its obligations or agreements pertaining to
Hazardous Materials or Environmental Requirements, then Landlord shall
have the right, but not the duty, without limitation upon any of the
rights of Landlord pursuant to this agreement, to enter the premises
personally or through its agents, consultants or contractors and perform
the same. Tenant agrees to indemnify Landlord for the costs thereof and
liabilities therefrom as set forth in Paragraph 21.2.
21.8 Landlord's Obligation to Remediate. Landlord agrees to
remediate all Environmental Damages 1) caused by Landlord, its agents,
employees, contractors, subcontractors, guests, licensees or invitees,
or 2) not so caused but arising prior to Commencement Date hereof and
not caused by Tenant, its agents, employees, contractors,
subcontractors, guests, licensees or invitees.
21.9 Landlord's Obligation to Indemnify, Defend and Hold
Harmless Concerning Environmental Matters. Landlord, its successors,
assigns and guarantors, agree to indemnify, defend, reimburse and hold
harmless the following persons from and against any and all
Environmental Damages arising from activities of Landlord or its
employees, agents, contractors, subcontractors or guests, licensees,
invitees; or which occurred prior to the Commencement Date (and were not
caused by Tenant, its agents, employees, contractors, subcontractors,
guests, licensees or invitees) which (1) result in the presence of
Hazardous Materials upon, about or beneath the premises or migrating to
or from the premises, or (2) result in the violation of any
Environmental Requirements pertaining to the premises and the activities
thereon:
21.9.1 Tenant;
21.9.2 the directors, officers, shareholders, employees,
partners, agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees, successors,
assigns and invitees of Tenant.
This obligation shall include, but not be limited to, the burden
and expense of the indemnified parties in defending all claims, suits
and administrative proceedings, including attorneys' fees and expert
witness and consulting fees, even if such claims, suits or proceedings
are groundless, false or fraudulent, and conducting all negotiations of
any description, and paying and discharging, when and as the same become
due, any and all judgments, penalties or other sums due against such
indemnified persons, and all such expenses incurred in enforcing the
obligation to indemnify. Landlord, at its sole expense, may employ
additional counsel of its choice to associate with counsel representing
Tenant.
21.10 Survival of Environmental Obligations. The obligations
of Landlord and Tenant as set forth in Paragraph 21 and all of its
subparagraphs shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized
representative, and/or any lender or prospective lender, shall have the
right to enter the premises during the lease term at all reasonable
times during usual business hours for purposes of inspection, and/or the
performance of any maintenance, repairs or replacement therein.
Landlord shall give Tenant such advance notice of entry as is reasonable
in light of the purpose for the entry. Landlord shall have the right to
enter the premises and show the same to a prospective tenant during the
last 180 days of this lease or any extended term, unless the term shall
have been extended by mutual written agreement or delivery of notice of
exercise of any option to extend. In all circumstances, Landlord shall
use its best efforts to conduct its business while in Tenant premises as
not to interfere with Tenant's operations or use of the premises.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 Default Defined. Any one or more of the following events
(each of which is herein sometimes called "event of default") shall
constitute a default:
23.1.1 Tenant defaults in the due and punctual payment of any
rent, taxes, tax deposits, insurance premiums, maintenance fees or other
sums required to be paid by Tenant under this lease when and as the same
shall become due and payable;
23.1.2 Tenant abandons the premises;
23.1.3 Tenant defaults in the performance of or compliance with
any of the covenants, agreements, terms and conditions contained in this
lease other than those referred to in the foregoing Paragraph 23.1.1,
and such default shall continue for a period of 30 days after written
notice thereof from Landlord to Tenant, and shall not be cured as
permitted by Paragraph 23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or takes the benefit of any
relevant legislation that may be in force for bankrupt or insolvent
debtors or files any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief for itself under any present or future federal, state or
other statute, law or regulation, or proceedings are taken by Tenant
under any relevant Bankruptcy Act in force in any jurisdiction available
to Tenant, or Tenant seeks or consents to or acquiesces in the
appointment of any trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties or of the premises, or makes
any general assignment for the benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state
or other statute, law or regulation, and shall remain undismissed for an
aggregate of 120 days, or if any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the
premises is appointed without the consent or acquiescence of Tenant and
such appointment remains unvacated for an aggregate of 120 days.
23.2 Landlord's Remedies in the Event of Default. In the event
of any event of default, Landlord shall have the option, without further
notice to Tenant or further demand for performance exercise any one or
more of the following remedies (and any other remedy available at law or
in equity):
23.2.1 If Tenant has been late in payment of rent or other sums
due on four or more occasions during any period of one year, Landlord,
without terminating this lease, may 1) require that all future payments
be made by bank cashier's check, and/or 2) require an additional
security deposit in the amount of the then-current base rent for two
months, and/or 3) require that rent for each month be paid on or before
the 15th day of the preceding month. Such requirement shall be imposed
by Landlord's written notice delivered to Tenant. The additional
security deposit shall be paid within 10 days after delivery of the
notice. The Landlord may or may not exercise the remedies provided in
this Paragraph 23.2.1, in its sole discretion. The exercise of the
remedies provided in this Paragraph 23.2.1 shall not be required prior
to the exercise of any other available remedy.
23.2.2 To institute suit against Tenant to collect each
installment of rent or other sum as it becomes due or to enforce any
other obligation under this lease even though the premises be left
vacant subject to Landlord's obligation to mitigate damages.
23.2.3 As a matter of right, to procure the appointment of a
receiver for the premises by any court of competent jurisdiction upon ex
parte application. All rents, issues and profits, income and revenue
from the premises shall be applied by such receiver to the payment of
the rent, together with any other obligations of the Tenant under this
lease.
23.2.4 To re-enter and take possession of the premises and all
personal property therein and to remove Tenant and Tenant's agents and
employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach
of the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet
the premises and personal property, as the agent and for the account of
Tenant in the name of Landlord or otherwise, upon the terms and
conditions Landlord deems fit with the new Tenant for such period (which
may be greater or less than the period which would otherwise have
constituted the balance of the term of this lease) as Landlord may deem
best, and collect any rent due upon any such reletting providing that if
the new lease term shall be greater than Tenant's original term, Tenant
shall be released from any and all further obligation upon the
expiration of Tenant's original term save for amounts accrued upon the
expiration of Tenant's original term. In this event, the rents received
on any such reletting shall be applied first to the expenses of
reletting and collecting, including, without limitation, all
repossession costs, reasonable attorneys' fees, and real estate brokers'
commissions, alteration costs and expenses of preparing said premises
for reletting, and thereafter toward payment of the rental and of any
other amounts payable by Tenant to Landlord. If the sum realized shall
not be sufficient to pay the rent and other charges due from Tenant,
then within five days after demand, Tenant will pay to Landlord any
deficiency as it accrues. Landlord may sue therefor as each deficiency
shall arise if Tenant shall fail to pay such deficiency within the time
limited.
23.3 Tenant to Surrender Peaceably. In the event Landlord
elects to re-enter or take possession of the premises, Tenant shall quit
and peaceably surrender the premises to Landlord, and Landlord may enter
upon and re-enter the premises and possess and repossess itself thereof,
by force, summary proceedings, ejectment or otherwise, and may
dispossess and remove Tenant and may have, hold and enjoy the premises
and the right to receive all rental income of and from the same.
23.4 No Termination by Re-Entry. No re-entry or taking of
possession by Landlord shall be construed as an election on Landlord's
part to terminate or accept surrender of this lease unless Landlord's
written notice of such intention is delivered to Tenant.
23.5 Injunction. In the event of any breach by Tenant of any
of the agreements, terms, conditions or covenants contained in this
lease, Landlord, in addition to any and all other rights, shall be
entitled to enjoin such breach and shall have the right to invoke any
right and remedy allowed at law or in equity or by statute or otherwise
for such breach as though re-entry, summary proceedings, and other
remedies were not provided for in this lease.
23.6 Remedies Listed are Cumulative and Non-Exclusive. The
enumeration of the foregoing remedies does not exclude any other
remedy, but all remedies are cumulative and shall be in addition to
every other remedy now or hereafter existing at law or in equity,
including, but not limited to, the remedies provided in Paragraph 24
concerning Landlord's security interest in Tenant's personalty and
Landlord's right to remove same.
23.7 Interest on Sums Past Due. All rent and all other amounts
due from Tenant hereunder shall bear interest at the rate of twelve
(12%) percent per annum compounded quarter-annually from their
respective due dates until paid, provided that this shall in no way
limit, lessen or affect any claim for damages by Landlord for any breach
or default by Tenant.
23.8 Attorneys' Fees. Reasonable attorneys' fees, expert
witness fees, consulting fees and other expenses incurred by either
party by reason of the breach by either party in complying with any of
the agreements, terms, conditions or covenants of this lease shall
constitute additional sums to be paid to the prevailing party on
demand.
23.9 Time to Cure Certain Non-Monetary Defaults. In the event
of any default other than failure to pay a sum of money, for which
notice has been given as provided herein, which because of its nature
can be cured but not within the period of grace heretofore allowed, then
such default shall be deemed remedied, if the correction thereof shall
have been commenced within said grace period or periods and shall, when
commenced, be diligently prosecuted to completion.
23.10 Landlord Default. If Landlord is in default under any of
its obligations and the default continues for thirty (30) days after
written notice from Tenant (subject to extension pursuant to 23.9),
Tenant may pursue all remedies at law or in equity. Tenant may, but
shall not be required to, correct such default for the Landlord's
account , and the expense shall be promptly paid within ten (10) days
by Landlord; however, in no event shall Tenant have the right to rental
abatement, offset of expenses against rental, or the right to terminate
this lease, subject to Tenant's legal or equitable remedies.
Tenant may not offset any sum due or assertedly due from Landlord
to Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord
arising out of Landlord's obligations under this lease, such judgment
may be satisfied only by execution and sale of Landlord's interest in
the premises leased hereby. Tenant may not seek execution against other
property of Landlord, nor pursue any judgment, execution or other remedy
against the partners or other owners of Landlord or any of their
property. Immediately upon receipt of Landlord's written request,
Tenant will release any property (other than the premises leased hereby)
from the lien of any judgment obtained by Tenant against Landlord
arising out of Landlord's obligations under this lease.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES. In the event of any proceeding at law or in equity
wherein Landlord, without being in default as to its covenants under the
terms hereof, shall be made a party to any litigation by reason of
Tenant's interest in the premises, or, in the event Landlord shall be
required to commence any legal proceedings relating to the premises and
Tenant's occupancy thereof and Tenant's relation thereto, but only after
notice to and consent by Tenant, Landlord shall be allowed and Tenant
shall be liable for and shall pay all costs and expenses incurred by
Landlord, including reasonable attorneys' fees, expert witness fees and
consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall
indemnify and save harmless Landlord of and from liability for damages
or claims against Landlord, including costs, attorneys' fees and
expenses of Landlord in defending against the same, on account of
injuries to any person or property, if the injuries are caused by the
negligence or willful misconduct of Tenant, its agents, servants or
employees, or of any other person entering upon the premises under
express or implied invitation of Tenant or if such injuries are the
result of the violation by Tenant, its agents, servants, or employees,
of laws, ordinances, other governmental regulations, or of the terms of
this lease.
The Landlord shall indemnify and save harmless Tenant of and from
liability for damages or claims against Tenant, including costs,
attorneys' fees and expenses of Tenant in defending against the same, on
account of injuries to any person or property, if the injuries are
caused by the negligence or willful misconduct of Landlord, its agents,
servants or employees, or of any other person entering upon the premises
under express or implied invitation of Landlord or where such injuries
are the result of the violation by Landlord, its agents, servants or
employees, of laws, ordinances, other governmental regulations, or of
the terms of this lease..
Landlord provides recreation facilities for the use of employees of
Tenant and other occupants within the property developed by Landlord,
which property presently includes LONG'S PEAK INDUSTRIAL PARK, FIRST,
SECOND and THIRD FILINGS, and portions of ST. VRAIN CENTRE, both in the
City of Longmont and County of Boulder, Colorado, and will include such
additional property in the immediate vicinity thereof as may be
developed by Landlord. The term "recreation facilities" includes, at
present, a fitness trail with 34 exercise stations, volleyball courts,
basketball courts, and a park, and will include such additional
facilities as Landlord may provide.
Tenant shall indemnify and save harmless Landlord of and from
Liability for damages or claims against Landlord, including costs,
attorneys' fees and expenses of Landlord in defending against the same,
on account of any injury to (or death of) an employee of Tenant arising
out of use of the recreation facilities, unless such death or injury is
caused by Landlord's gross negligence or willful misconduct
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign,
mortgage, or encumber this lease, nor sublet or permit the premises or
any part thereof to be used by others, without the prior written consent
of Landlord in each instance, which consent shall not be unreasonably
withheld.
In connection with an assignment, sublease or encumbrance Landlord
may require the submittal of detailed financial information about the
prospective subtenant or assignee, to be reviewed by Landlord, and may
require a guarantee of the obligations of the prospective subtenant or
assignee, and may require detailed financial information about the
guarantor, to be reviewed by Landlord; and there may be alterations to
this lease and alterations to the building which are necessary to
consummate the transaction. The Landlord may require Tenant or the
prospective assignee or sub-tenant to pay for the alterations to the
building, and may require that Landlord perform same. In addition,
Landlord may charge a fee of two percent of base rent for the first five
years of the lease, due in full upon Landlord's consent, as payment to
Landlord for such investigations, lease alterations and similar matters.
No two percent fee will be charged in connection with an assignment or
sublease to an assignee or subtenant who is "affiliated" with Tenant.
"Affiliated" means under common voting control, directly or indirectly.
A sale or transfer of control of a majority of the votes which may
be cast to elect Tenant's board of directors or other governing body
shall be deemed to be an assignment of this lease, requiring Landlord's
consent if the sale or transfer is essentially accomplished in a single
transaction.
If this lease is assigned, or if the premises or any part thereof
is sublet, or occupied by anyone other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, sub-tenant, or
occupant and apply the net amount collected against all rent herein
reserved. No such assignment, subletting, occupancy, or collection
shall be deemed a waiver of this covenant, or the acceptance of the
assignee, sub-tenant, or occupant as tenant, or a release of Tenant from
further performance by Tenant of the covenants in this lease. The
consent by Landlord to an assignment or subletting shall not be
construed to relieve Tenant (or any subsequent tenant) from obtaining
the consent in writing of Landlord to any further assignment or
subletting. This provision shall not apply to a sale or transfer of
control to Hyundai Electronic Industries Co. Ltd. and /or any of it's
affiliates.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord
covenants it has good right to lease the premises in the manner
described herein and that Tenant shall peaceably and quietly have, hold,
occupy, and enjoy the premises during the term of the lease; except as
provided in Paragraph 31 concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD.
Landlord does reserve, during the term of this lease, the right to go
upon and deal with the premises or part thereof for the purpose of
implementing a common development plan for the project of which the
premises are a part, and to install non-exclusive sidewalks, paths,
roadways and other street improvements for use by vehicles, pedestrians,
and for parking; to undertake such drainage programs to handle
underground and surface drainage water and to make any other changes
and/or improvements as Landlord shall deem advisable in the exercise of
its sole discretion; provided, however, any such action by Landlord
shall not unreasonably interfere with the rights of Tenant hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree
that Landlord shall have sole and exclusive authority to negotiate and
settle all matters pertaining to the acquisition of all or part of the
premises by a governmental agency by eminent domain or threat thereof
(condemnation), and to convey all or any part of the premises under
threat of condemnation, and the lease shall terminate as to any area so
conveyed. It is agreed that any compensation for land and/or buildings
to be taken whether resulting from negotiation and agreement or
condemnation proceedings, shall be the exclusive property of Landlord,
and that there shall be no sharing whatsoever between Landlord and
Tenant of any such sum. Such taking of property shall not be
considered as a breach of this lease by Landlord, nor give rise to any
claims in Tenant for damages or compensation from Landlord. Tenant may
separately claim and recover from the condemning authority the value of
any personal property owned by Tenant which is taken, and any relocation
expenses owed to Tenant by the condemning authority. If the taken
portion of the premises consists only of areas where no building is
constructed, and the land area of the premises is reduced by less than
ten percent, and the parking area available for use by Tenant is reduced
by less than five percent, and there is no material change in Tenant's
access to the premises, then there shall be no change in the terms of
the lease. If no building area is taken but the foregoing limits on
parking area reductions are exceeded, then Tenant may terminate the
lease unless Landlord provides sufficient reasonably adjacent parking
area so that the total available parking area is reduced by less than
five percent. If any portion of the building on the premises is taken,
then Landlord, at its election, may replace the square footage taken
with space in the same building, or may provide land and building area
essentially the same as the premises in a reasonably adjacent location,
within 10 days after the conveyance or taking, under the same terms and
conditions as contained in this lease, and this lease shall be in full
force and effect as to the new premises. If Landlord does not so
provide reasonable space, then Tenant shall have two options. First,
Tenant may terminate the lease by written notice delivered to Landlord
within 60 days after the conveyance or taking. Second, Tenant may
retain the remaining portion of the premises, under all the terms and
conditions hereof, but the base rental shall be reduced in proportion to
the number of square feet of building floor space taken compared to the
number of square feet of building floor space on the premises prior to
the taking.
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease
shall be subject and subordinate in priority at all times to the lien of
any existing and/or hereafter executed mortgages and trust deeds
encumbering the premises. Although no instrument or act on the part of
Tenant shall be necessary to effectuate such subordination, Tenant will
execute and deliver such further instruments subordinating this lease to
the lien of any such mortgages or trust deeds as may be desired by the
mortgagee or holder of such trust deeds. Tenant hereby appoints
Landlord as his attorney in fact, irrevocably, to execute and deliver
any such instrument for Tenant. Tenant further agrees at any time and
from time to time upon not less than ten (10) days prior written request
by Landlord, to execute, acknowledge, and deliver to Landlord an
estoppel affidavit in form acceptable to Landlord and the holder of any
existing or contemplated mortgage or deed of trust encumbering the
premises. Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant (1) that this lease is in full force and
effect, without modification except as may be represented by Landlord;
(2) that there are no uncured defaults in Landlord's performance; and
(3) that not more than one (1) month's rent has been paid in advance.
Further, upon request, Tenant shall supply to Landlord a corporate
resolution certifying that the party signing this statement on behalf of
Tenant is properly authorized to do so, if Tenant is a corporation.
Tenant agrees to provide Landlord within ten business days of Landlord's
request, Tenant's most recently completed financial statements and such
other financial information as reasonably requested by Landlord in order
to verify Tenant's financial condition to satisfy requirements of
Landlord's existing or contemplated lender or mortgagee.
Tenant agrees with lender and Landlord that if there is a
foreclosure of any such mortgage or deed of trust and pursuant to such
foreclosure, the Public Trustee or other appropriate officer executes
and delivers a deed conveying the premises to the lender or its
designee, or in the event Landlord conveys the premises to the lender or
its designee in lieu of foreclosure, Tenant will attorn to such grantee
of the premises, rather than to Landlord, to perform all of Tenant's
obligations under the lease, and Tenant shall have no right to terminate
the lease by reason of the foreclosure or deed given in lieu thereof.
Landlord will include in the terms of any mortgage or deed of trust
on the premises a provision that if Tenant is not in default under the
terms of this lease and Tenant is then in possession of the premises,
Tenant's rights of quiet enjoyment arising out of the lease shall not be
affected or disturbed by lender in the event of a default by Landlord
and any sale of the premises through foreclosure of any deed of trust or
otherwise.
31. MEMORANDUM OF LEASE - RECORDING. This lease shall not be
recorded in the office of the County Clerk and Recorder of Boulder
County, except by Landlord as a financing statement. In order to effect
public recordation, the parties hereto may, at the time this lease is
executed, agree to execute a Memorandum of lease incorporating therein
by reference the terms of this lease, but deleting therefrom any
expressed statement or mention of the amount of rent herein reserved,
which instrument may be recorded by either party in the office of the
Clerk and Recorder of Boulder County.
32. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT.
No assent, or waiver expressed or implied, or failure to enforce, as to
any breach of any one or more of the covenants or agreements herein
shall be deemed or taken to be a waiver of any succeeding or additional
breach.
Payment by Tenant or receipt by Landlord of an amount less than the
rent or other payment provided for herein shall not be deemed to be
other than a payment on account of the earliest rent then due, nor shall
any endorsement or statement on any check or any letter accompanying any
check or payment of rent be deemed an accord and satisfaction, and
Landlord may accept such check or other payment without prejudice to
Landlord's right to recover the balance of all rent then due, and/or to
pursue any or all other remedies provided for in this lease, in law,
and/or in equity including, but not limited to, eviction of Tenant.
Specifically, but not as a limitation, acceptance of a partial payment
of rent shall not be a wavier of any default by Tenant.
33. CONTROLLING LAW. The lease, and all terms hereunder shall
be governed by the laws of the State of Colorado, exclusive of its
conflicts of laws rules.
34. INUREMENTS. The covenants and agreements herein contained
shall bind and inure to the benefit of Landlord and Tenant and their
respective successors. This lease shall be signed by the parties in
duplicate, each of which shall be a complete and effective original
lease.
35. TIME. Time is of the essence in this lease in each and all
of its provisions in which performance is a factor.
36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE. The street address of Landlord is 1960 Industrial Circle,
Longmont, CO 80501. The mailing address of Landlord is P. O. Box 1937,
Longmont, CO 80502-1937. All payments, notices and communications which
are sent to Landlord via United States mail shall be addressed to the
mailing address. Only payments, notices and communications which are
hand delivered or delivered by private courier service shall be
addressed to the street address.
Tenant's street address is 1851 Lefthand Circle, Longmont, Colorado,
80501. Tenant's mailing address is 2190 Miller Drive, Longmont,
Colorado, 80501. Notice to Tenant may be delivered to the above
addresses or to the premises. A copy of any notice should be sent to
the Vice President and General Consul, 211 River Oaks Parkway, San Jose,
California, 95136.
Landlord's current fax number is (303)776-4946. Tenant's current
fax number is (303) 651-2165. Any written notice required hereby may be
delivered by fax, U.S. mail, private courier service, or hand delivery.
Notice shall be effective at time of delivery to the address or fax
number shown.
Either party may change its street or mailing address, or fax
number, for purposes hereof, by written notice delivered to the other.
The federal employer identification number of Landlord is 84 0954 078.
The federal identification number of Tenant is 77-0123732.
38. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are
made for the purposes of ease of location of terms and shall not affect
or vary the terms hereof. Throughout this lease, wherever the words,
"Landlord" and "Tenant" are used they shall include and imply to the
singular, plural, persons both male and female, and all sorts of
entities and in reading said lease, the necessary grammatical changes
required to make the provisions hereof mean and apply as aforesaid shall
be made in the same manner as though originally included in said lease.
39. ADDITIONAL PROVISIONS:
FLEXIBILITY CLAUSE: In the event Tenant's requirement for space
increases or decreases during the term of this lease, including any
extended term thereof, Tenant may notify Landlord of its adjusted space
requirement, in which event Landlord shall, within 120 days after such
notice, increase or decrease the square footage available to Tenant so
as to reasonably meet the Tenants new needs (as is reasonably devisable
by Landlord), either using the premises or other comparable space of
Landlord reasonably acceptable by Tenant. Tenant may not decrease space
in existing premises leased from the Landlord and lease space in Boulder
County owned by a third party, unless the Landlord cannot accommodate
the Tenant's overall space requirements. In such event, Landlord and
Tenant shall amend this lease accordingly, or enter into a new lease
upon rental rates and other terms which are similar to those of this
Lease and reasonably acceptable to both parties and terminate this
lease. Tenant may exercise the right described in this paragraph
multiple times, but not more than once in any twelve month period. Not
withstanding language to the contrary that might be found elsewhere in
this lease, the Tenant will be allowed to exercise the right described
in this paragraph without incurring of cost or other penalties sometimes
associated with early terminations, Tenant will be expected to return
the premises to Landlord pursuant to the terms and conditions of
Paragraph 14 of this Lease Agreement. This provision shall not apply to
345 S. Francis, Longmont, Colorado.
IN WITNESS WHEREOF, the Parties have executed this lease as of the
date hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY COMPANY
By: /s/ Susan M. Pratt
-----------------------
Susan M. Pratt, Manager
TENANT: MAXTOR CORPORATION
By: /s/ J. Larry Smart
------------------------
J. Larry Smart
Chief Executive Officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this 19th day of
September, 1994 by
Susan Pratt, General Partner, Pratt Partnership.
Witness my hand and official seal.
My commission expires: May 3, 1997
/s/ Elizabeth H. Oram
---------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
The foregoing instrument was acknowledged before me this.17th day of
October, 1994 by
J. Larry Smart, Chief Executive Officer, Maxtor Corporation.
Witness my hand and official seal.
My commission expires: June 5, 1998
/s/ Sharon L. Spehar
--------------------
Notary Public
-30-
LEASE AGREEMENT
FOR PREMISES LOCATED AT
2121 Miller Drive
BETWEEN
MAXTOR CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. PRESENT CONDITION OF PROPERTY
3. TERM
3.1 Initial Term
3.2 Option to Extend
3.3 Tenant Improvement Construction
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN
ROOF - NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
26. ASSIGNMENT OR SUBLETTING
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD
29. GOVERNMENTAL ACQUISITION OF THE PREMISES
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES
31. TENANT'S GUARANTEE AND FINANCIAL STATEMENTS
32. MEMORANDUM OF LEASE - RECORDING
33. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT
34. CONTROLLING LAW
35. INUREMENTS
36. TIME
37. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE
38. PARAGRAPH HEADINGS; GRAMMAR
39. ADDITIONAL PROVISIONS
EXHIBIT A: SITE PLAN
EXHIBIT B: TENANT FINISH
LEASE
THIS LEASE, made and entered into this 19th day of October, 1994 by and
between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited liability
company, hereinafter referred to as "Landlord," and MAXTOR CORPORATION,
hereinafter referred to as "Tenant,"
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements, and
payments as hereinafter set forth, the parties hereto covenant and agree as
follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto Tenant
the following described premises containing approximately 92,396 square
feet of building floor space measured to the outside of the walls,
including overhangs, canopies and loading docks, and to approximately 1/2
the thickness of common walls; commonly known as 2121 Miller Drive, in the
City of Longmont, County of Boulder, State of Colorado, a more detailed
description of which is Lot 1C, Longs Peak Industrial Park-Second Filing-
Replat "C", County of Boulder, State of Colorado, a diagram of which (is)
(is not) attached as Exhibit B (hereinafter referred to as the "premises");
the leasing of which is made according to the terms of this Agreement;
together with all appurtenances thereto, and all fixtures attached thereto,
in present condition, and together with nonexclusive reasonable access
across any other land owned by Landlord as may be required for use of the
premises by Tenant, with such access to be on such roadways, sidewalks, and
other common areas of which the premises are a part, or of any such
adjacent lands owned by Landlord, as Landlord may from time to time
designate.
2. PRESENT CONDITION OF PROPERTY. Tenant has examined, and accepts
the building, improvements, and any fixtures on the premises, in present
condition, subject to the construction of Tenant Improvements as detailed
on the plans and specifications labeled Exhibit "A," attached hereto and
made a part hereof by reference. No representation, statement, or
warranty, express or implied, has been made by or on behalf of Landlord as
to the condition of the premises, or as to the use that may be made of
same. In no event shall Landlord be liable for any defect in the premises
which are discernible by Tenant's examination thereof or for any limitation
on the use of the premises. Tenant shall not be deemed to have accepted
the Tenant improvements to be constructed by Landlord until it shall have
had a reasonable opportunity to inspect the same.
3. TERM.
3.1 Initial Term. The term of this lease shall commence at 12:00
noon on December 31st, 1994 (the "Commencement Date"), and unless
terminated as herein provided for, shall end at 12:00 noon on the 31st day
of December, 1999. The Commencement Date as set forth in this Paragraph
3.1 shall be subject to those adjustments of the Commencement Date, if any,
set forth in Paragraph 3.3 which relate to the performance of construction
on the premises.
3.2 Option to Extend. Upon full and complete performance of all the
terms, covenants, and conditions herein contained by Tenant and payment of
all rental due under the terms hereof, Tenant shall be given the option to
renew this lease for 3 additional terms of 5 years each. Each such option
shall be exercisable only by delivery of Tenant's signed written notice of
extension to Landlord not less than 180 days prior to the expiration of the
then-existing lease term. In the event of such exercise, this lease shall
be deemed to be extended for the additional period pursuant to all the
terms and conditions set forth herein, including (but not as a limitation)
those provisions for increase of the base rental set forth in Paragraph
4.2.2. In the event of exercise of said Option, any funds held by
Landlord pursuant hereto shall continue to be so held subject to the terms
and conditions relating to same.
3.3 Tenant Improvement Construction. The Commencement Date of this
lease shall be delayed until the substantial completion of the tenant
improvements described on Exhibit "A" attached hereto and delivery of
possession to Tenant, if such occurs after the Commencement Date, as
follows: If for any reason Landlord does not substantially complete such
construction prior to the Commencement Date, such failure will not affect
the validity of this lease, but in such case Tenant shall not be obligated
to pay rent until such construction is substantially completed and
possession of the premises is delivered to Tenant. Provided, however, if
Landlord shall not have substantially completed and delivered possession of
the premises within sixty (60) days after the Commencement Date, Tenant
may, at Tenant's option, upon notice in writing to Landlord delivered
within ten (10) days after the end of the 60-day period, cancel this lease.
Landlord shall have no liability to Tenant for failure to substantially
complete construction prior to any date or dates. Tenant's only remedy
shall be cancellation of the lease. Landlord will, however, use its best
efforts to complete the Tenant improvements on or before the commencement
date.
Should construction of the tenant improvements be completed to such an
extent as to permit the issuance of a partial certificate of occupancy by
the governing authority, Tenant may occupy the portion of the premises so
permitted prior to (or after) the Commencement Date and shall pay rent for
the occupied portion, prorated in proportion to the number of square feet
of building space occupied, beginning on date of delivery of possession.
Rent adjustments shall be similarly prorated. In no event shall Tenant
take possession prior to satisfaction of the requirements for Tenant's
insurance set forth below.
3.4 Delivery of Possession. Except as above provided with respect
to construction of Tenant Improvements, Tenant shall be entitled to
possession of the premises at noon on the Commencement Date, as defined in
Paragraph 3.1. Tenant may, with approval by Landlord in its sole
discretion, have access to the premises during tenant improvement
construction for the purpose of moving in Tenant-owned furniture, fixtures,
equipment and inventory. This access and the items so moved in shall not
in any way impede the construction of the tenant improvements, nor shall
Landlord, its agent, employees, sub-contractors, or any other person on the
premises whether invited or not invited, be liable for the protection, care
or security of Tenant owned items. This paragraph shall not be construed
so as to permit Tenant to occupy the premises prior to the satisfaction of
all requirements for Tenant's insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of Landlord as
herein set forth, the following as rental for the premises:
4.1 Base Rental.
The base rental for the full term hereof shall be THREE MILLION FIVE
HUNDRED EIGHTY THOUSAND THREE HUNDRED FORTY-FIVE Dollars ($3,580,345.00),
payable in monthly installments [basic monthly rental of FIFTY-NINE
THOUSAND SIX HUNDRED SEVENTY-TWO Dollars AND 42/100THS ($59,672.42)] in
advance on the first day of each month during the term hereof.
4.2 Escalation of Base Rental.
4.2.1 On the first anniversary of the commencement date of this
lease, and annually thereafter, the base rental payable by Tenant shall be
increased to an amount determined by multiplying the basic monthly rental
by a fraction, the denominator of which shall be the most recent Consumer
Price Index figure, as hereinafter defined, published prior to the
Commencement Date, and the numerator of which shall be the most recent
Consumer Price Index figure published prior to the particular anniversary
date; provided, however, that in no event shall the rent for any month
after such anniversary be less than the rent for the month immediately
preceding such anniversary. As used herein, the term "Consumer Price
Index" shall mean the Consumer Price Index, All Urban Consumers, All Items,
Denver, Colorado (1982-84 = 100), or the successor of that Index, as
published by the Bureau of Labor Statistics, U.S. Department of Labor.
Should Landlord lack sufficient data to make the proper determination on
the date of any adjustment, Tenant shall continue to pay the monthly rent
payable immediately prior to the adjustment date. As soon as Landlord
obtains the necessary data, Landlord shall determine the rent payable from
and after such adjustment date and shall notify Tenant of the adjustment in
writing. Should the monthly rent for the period following the adjustment
date exceed the amount previously paid by Tenant for that period, Tenant
shall forthwith pay the difference to Landlord. Should the Consumer Price
Index as above described cease to be published, a reasonably comparable
successor index shall be selected by Landlord. If Tenant objects to the
successor index, the dispute will be resolved and a successor index
designated by arbitration pursuant to the rules and procedures of the
American Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the
increase in base rental for each year shall be not less than two and one-
half percent (2.5%) nor more than seven percent (7%) of the base rental for
the previous year, each year for such purposes to commence on the
anniversary of the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation
provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular year,
years, or part of a year. No such waiver shall preclude Landlord from
applying the escalation to any subsequent year or part of a year, and from
making the subsequent application as if all subsequent escalations had been
duly made to the maximum permissible extent.
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and
HVAC. Tenant shall pay the cost of having Landlord maintain the HVAC
systems and the exterior of the premises including parking lots, green
areas, sidewalks, entrances, and corridors (but not the exterior surfaces
of the building, other than glass). Cost of maintaining such areas shall
include, but shall not be limited to, repairs, preventative maintenance,
HVAC filters and compressors, sealing, striping, lawn mowing, snow removal
(Tenant is responsible for snow removal of less than 2"), gardening, shrub
care and replacements, lawn watering, parking area maintenance, electricity
for lighting, sign maintenance, depreciation of equipment used for the
foregoing purposes and other costs related to the premises or common areas.
Landlord shall perform such maintenance and charge the cost thereof to
Tenant, which shall be paid as additional rent within 10 days after
delivery of Landlord's invoice. Landlord shall keep reasonable records of
such cost, which shall be available for Tenant's inspection during normal
business hours. Certain items of such maintenance (such as landscape
maintenance and snow removal) are performed by Landlord on numerous areas
owned and/or maintained by Landlord, in addition to the premises, and the
cost thereof cannot be precisely ascribed to the premises. As to such
services which are performed on areas in addition to the premises, the cost
for all areas so serviced shall be allocated to the premises in proportion
to the square feet of building floor space in the premises compared to the
square feet of building floor space in the entire area to which such
services are provided.
For the first year of the lease, Landlord agrees that the total of the
maintenance fees referred to in this paragraph will not exceed $0.80 per
square foot annually. The aforementioned HVAC maintenance does not include
systems for the clean room on this facility.
4.4 Private Security Service. Landlord may engage a private
security service, as an independent contractor, to patrol an area which
includes the premises. Tenant shall be included in the selection process.
If Landlord does so employ a private security service, which the tenant has
approved, the cost thereof shall be treated in the same manner as
Maintenance Expense and paid by Tenant as Additional Rent under the same
provisions as are applicable to Maintenance Expense. Tenant shall have no
obligation to participate under this Section 4.4, if Tenant's portion of
the cost of such services is more than the amount that Tenant has been
paying for such service.
Landlord shall have absolutely no obligation to engage a private
security service and shall not be liable for any damages or loss which
might have been averted had a private security service been engaged. If
Landlord does engage a private security service, Landlord shall not be
liable for any damages or loss which may result from actions, inactions,
non-performance or quality of performance by the security service. If the
Tenant desires a higher level of security services than Landlord provides,
or wishes to obtain an agreement that there will be liability for actions,
inactions, non-performance or quality of performance by a security service,
Tenant may itself engage such security service as Tenant chooses, at
Tenant's sole expense.
Nothing herein shall limit any action by Tenant against any person or
entity providing private security service, provided that Landlord shall not
be party to, or liable for any judgment entered in such an action, as a
defendant, cross defendant, third-party .defendant, or otherwise.
4.5 Late Charges. Tenant will pay a late charge equal to five
percent of any monthly rental payment or other payment not paid when due,
which payment shall be in addition to any interest elsewhere provided for.
4.6 Security Deposit. Landlord acknowledges receipt of the sum of
FIFTY-TWO THOUSAND NINE HUNDRED FORTY-SEVEN Dollars AND 61/100THS
($52,947.61) paid by Tenant upon the execution hereof or a letter of credit
for the same amount, to be retained by Landlord as security for the
performance of all of the terms and conditions of this lease Agreement to
be performed by Tenant, including payment of all rental due under the terms
hereof. Landlord shall not owe Tenant any interest on the deposit. At
Landlord's election, deductions may be made by Landlord from the amount so
retained for the reasonable cost of repairs to the premises which should
have been performed by Tenant, for any rental payment or other sum
delinquent under the terms hereof, and for any sum used by Landlord in any
manner to cure any default in the performance of Tenant under the terms of
this lease. In the event deductions are so made during the rental term,
upon notice by Landlord, Tenant shall redeposit such amounts so expended so
as to maintain the security deposit in the amount as herein provided for,
within 10 days after receipt of such written demand from Landlord. Nothing
herein contained shall limit the liability of Tenant as to any repairs or
maintenance of the premises; and nothing herein shall limit the obligation
of Tenant promptly to pay all sums otherwise due under this lease and to
comply with all the terms and conditions hereof. The security deposit,
less any sums withheld by Landlord pursuant to the terms hereof, shall be
repaid to Tenant within sixty days after the date of termination of the
lease.
4.7 Proration of Rent for Partial Months. If the lease term begins
on other than the first day of a month, base rent and additional rent from
such date until the first day of the next succeeding calendar month shall
be prorated on the basis of the actual number of days in such calendar
month and shall be payable in advance. If the lease term terminates on
other than the last day of the calendar month, rent from the first day of
such calendar month until such termination date shall be prorated on the
basis of the actual number of days in such month, and shall be payable in
advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant shall
pay as additional rent, all real estate taxes and assessments, as shall,
from and after the date hereof, be assessed upon the premises and any
appurtenances or improvements thereto. Tenant shall pay one-twelfth (1/12)
of such estimated additional rent, in advance, with each monthly rental
payment. Landlord shall reasonably estimate such taxes and advise Tenant
in writing of the amount to be paid each month. Such payments shall be
separately accounted for by Landlord, (and may be deposited with any holder
of a mortgage or deed of trust on the premises) and shall be used to make
prompt payment of such taxes as they come due. If the estimated payments
made by Tenant are not sufficient to fully pay such taxes as they come due,
Tenant shall pay to Landlord any amount necessary to make up the deficiency
within ten (10) days of notice from Landlord. Landlord shall have no
obligation to pay any interest to Tenant on such additional rent, but
Landlord shall give Tenant an annual accounting showing credit for such
payments made by Tenant, and debits for payments made by Landlord or
Landlord's lender. If Tenant fails to make any required payment to
Landlord, Landlord may, but shall not be required to, pay any such tax and
shall become entitled to repayment from Tenant without demand, together
with interest thereon as elsewhere provided. The real estate taxes and
assessments for the year in which the term of this lease shall begin, as
well as for the year in which the lease shall end, shall be apportioned so
that Tenant shall pay only the portions that correspond with the portions
of such years as are within such lease term. In the event that the
premises are assessed for tax purposes as a part of a larger parcel, the
tax on the entire parcel shall be prorated in proportion to the number of
square feet of building floor space on each portion of the entire parcel.
Upon written request from Tenant, Landlord shall protest the tax
assessment on the premises, to the extent that Landlord, in good faith,
believes that such protest is justifiable and likely to be successful. In
the event of any such protest Tenant shall nevertheless pay to Landlord the
taxes as assessed, and Tenant shall be entitled to the appropriate share of
any refund. Tenant shall not protest any real property tax assessment on
the premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant shall
be responsible for and timely pay any and all personal property taxes
assessed against any furniture, fixtures, equipment and items of a similar
nature installed and/or located in or about the premises by Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. Landlord shall not be
required to furnish to Tenant any utility services of any kind, such as but
not limited to, water, hot water, heat, gas, electricity, light, telephone,
cable TV and power. Tenant shall obtain and pay all charges for gas,
electricity, light, heat, power, water (and lawn watering), and telephone,
cable TV or other communication services or other utilities used, rendered,
or supplied, upon or in connection with the premises. Tenant irrevocably
appoints Landlord as Tenant's attorney-in-fact solely for the purpose of
terminating Tenant's account with any provider of such utilities, if the
premises are abandoned by Tenant or if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this lease,
Tenant shall remain in possession of the premises and continue to pay rent
without a written agreement as to such possession, then Tenant shall be
deemed a month-to-month Tenant and the rental rate during such holdover
tenancy shall be equivalent to one hundred fifteen percent (115%) the
monthly rental paid for the last month of tenancy under this lease. Such
month-to-month tenancy may be terminated by the Landlord at noon on any day
which is more than twenty-nine (29) days after date of delivery of
Landlord's written notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant shall
operate to renew or extend this lease without the written consent of
Landlord. No modification of this lease shall be binding unless endorsed
hereon or otherwise written and signed by the respective parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN
ROOF - NO NEW EQUIPMENT ON ROOF. Tenant may, during the term of this
lease, at Tenant's expense, erect inside partitions, add to existing
electric power service, add telephone outlets or other communication
services, add light fixtures, install additional heating and/or air
conditioning or make such other changes or alterations as Tenant may
desire, provided that prior to commencement of any such work, Tenant shall
submit to Landlord a set of fully detailed working drawings and
specifications for the proposed alteration, prepared by a licensed
architect or engineer. If Tenant so requests, Landlord will have the
drawings and specifications prepared for Tenant, at Tenant's expense,
utilizing Landlord's in-house staff. Tenant will pay Landlord's customary
hourly charges for such services, as additional rent, to be paid within 10
days after delivery of invoice. In particular, but not as a limitation,
the working drawings must fully detail changes to mechanical, wiring and
electrical, lighting, plumbing and HVAC systems to Landlord's satisfaction.
Landlord may refuse to consent to the alterations because of the inadequacy
of the drawings and specifications. Tenant may not commence the
alterations until Landlord's written consent has been given. If the
drawings and specifications are adequate, to Landlord's sole satisfaction,
then Landlord will not unreasonably withhold its consent to the
alterations, except that Landlord may withhold its consent to new or
altered openings (holes) in the roof, or placement of additional equipment
on the roof, as follows. Landlord may withhold its consent to new openings
in the roof or placement of additional equipment on the roof unless
Landlord, in its sole discretion, is satisfied that the risk of increased
leakage or risk of more frequent repairs or maintenance of the roof is
acceptable to Landlord. Any new or altered opening in the roof, or
placement of additional equipment thereon, shall be considered an
alteration which requires the prior written consent of Landlord. If within
thirty (30) days after such plans and specifications are submitted by
Tenant to Landlord for such approval, Landlord shall have not given Tenant
notice of disapproval, stating the reason for such disapproval, such plans
and specifications shall be considered approved by Landlord. As a
condition of approval for such alternations, Landlord shall have the right
to require Tenant to furnish adequate bond or other security acceptable to
Landlord for performance of and payment for the work to be performed. At
the end of this lease, all such fixtures, equipment, additions and/or
alterations (except trade fixtures installed by Tenant) shall be and remain
the property of Landlord, provided, however, Landlord shall have the option
to require Tenant to remove any or all such fixtures, equipment, additions,
and/or alterations and restore the premises to the condition existing
immediately prior to such change and/or installation, normal wear and tear
excepted, all at Tenant's cost and expense. All work done by Tenant shall
conform to appropriate city, county and state building codes and health
standards and OSHA standards and Tenant shall be responsible for obtaining
and paying for building permits.
If any such work done by Tenant causes damage to the structural portion,
exterior finish or roof of the premises, then the costs of repair of such
damage, and of all further maintenance and repairs to such structural
portion, exterior finish or roof during the term of the lease shall
thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by
Landlord, nor Landlord's actual knowledge of any alteration accomplished or
in progress shall constitute a waiver of Landlord's rights concerning
alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for construction
done by it or caused to be done by it on the premises as permitted by this
lease. Tenant shall keep the building, other improvements and land of
which the premises are a part free and clear of all mechanic's liens
resulting from construction by or for Tenant. Tenant shall have the right
to contest the correctness or validity of any such lien if, immediately on
demand by Landlord, Tenant deposits with Landlord and/or any appropriate
court or title insurance company a bond or sum of money sufficient to allow
issuance of title insurance against the lien and/or to comply with the
statutory requirements for discharge of the lien found in 38-22-130 and
131, Colorado Revised Statutes, or any successor statutory provision.
Landlord shall have the right to require Tenant's contractor(s),
subcontractors and materialmen to furnish to both Tenant and Landlord
adequate lien waivers on work or materials paid for, in connection with all
periodic or final payments, by endorsement on checks, making of joint
checks, or otherwise, and Landlord shall have the right to review invoices
prior to payment. Landlord reserves the right to post notices on the
premises that Landlord is not responsible for payment of work performed and
that Landlord's interest is not subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent to
maintain uniformity of signs throughout the area where signs may be
controlled by Landlord. Tenant shall place no signs on the premises
(except inside Tenant's portion of the building on the premises) without
prior written consent of Landlord, which consent shall not be unreasonably
withheld.
Tenant may not put any signs on the premises indicating that the same
are for rent, or available for assignment or sublease, and may put no signs
of real estate brokers on the premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE FOR
DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance and
repairs of the structural portions, the roof and the exterior finish of the
building (other than glass) on the premises at the sole cost and expense of
Landlord; provided, however, that if any such maintenance or repairs are
necessitated by the acts of Tenant or its employees, agents, contractors,
sub-contractors, licensees, invitees or guests, Tenant shall reimburse
Landlord for the cost of same, as additional rent, to be paid within 10
days after delivery of invoice. All other maintenance, repairs and
replacements shall be performed by Tenant, at its own expense, including
all necessary maintenance, repairs and replacements to pipes, plumbing
systems, electrical systems, window or other glass, doors, fixtures,
interior decorations, and all other appliances and appurtenances. Such
repairs and replacements, interior and exterior, ordinary as well as
extraordinary, shall be made promptly, as and when necessary, so that the
premises are maintained in first class condition. All such maintenance,
repairs and replacements shall be in quality and class at least equal to
the original work. On default of Tenant in making such maintenance,
repairs or replacements, Landlord may, but shall not be required to, make
such repairs and replacements for Tenant's account, and the expense shall
constitute and be collectable as additional rent, together with interest
thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in this
lease, under no circumstances shall Landlord be liable for damage to the
contents of the building or consequential damages to Tenant resulting from
roof or window leaks or failure, or leakage of any water pipe or gas pipe,
failure of any communications system or alarm, failure or leakage or
discharge by any sprinkler system or other fire suppression system, power
surges, power shortages or outage, sewer failure or sewage backup, or
failure or malfunction of any heating or cooling system. The term
"contents" shall include, but shall not be limited to, improvements made by
Tenant, and data bases and other information stored or contained in
computers, hard or floppy disks, tapes, computer chips and other memory or
storage devices. The term "consequential damages" shall include, but not
be limited to, Tenant's inability to perform any contract on which Tenant
is bound, loss of sales, loss of profit, or loss of business reputation or
goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall vacate
the premises in the same condition as when received on the date hereof,
ordinary wear and tear excepted, and shall remove all of Tenant's property,
so that Landlord can repossess the premises not later than noon on the day
upon which this lease or any extension hereof ends, whether upon notice,
holdover or otherwise. The Landlord shall have the same rights to enforce
this covenant by ejectment and for damages or otherwise as for the breach
of any other conditions or covenant of this lease. Upon termination of the
lease, Tenant shall deliver to Landlord keys which operate all locks on the
exterior or interior of the premises, including, without limitation, keys
to locks on cupboards and closets. Tenant shall retrieve all keys to the
premises which Tenant has delivered to employees or others, and include
same with the keys delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant shall
use the premises for research and development, office, light manufacturing
and other uses appurtenant thereto. Except as otherwise provided herein,
Tenant will maintain the grounds which are part of the premises, keeping
them free from accumulation of trash or debris and will be responsible for
snow removal up to two inches of snow. Tenant shall conform to all present
and future laws and ordinances of any governmental authority having
jurisdiction over the premises, and will make no use in violation of same.
No outside storage shall be allowed unless first approved by Landlord in
writing and then only in such areas as are designated as storage areas by
Landlord. Tenant shall not commit or suffer any waste on the premises.
Tenant shall not permit any nuisance to be maintained on the premises nor
permit any disorderly conduct, noise or other activity having a tendency to
annoy or to disturb occupants of any other part of the property of which
the premises are a part and/or of any adjoining property.
As part of a common scheme for orderly development, use and protection,
of its various properties and those properties adjacent to the premises,
Landlord may impose upon Tenant reasonable rules and regulations concerning
parking and vehicle traffic; locations at which deliveries are to be made
and access thereto; trash disposal; use of common areas such as recreation
areas, corridors, and sidewalks; signs and directories; use of
communication wires or cables which are used in common but which may be
inadequate fully to serve all the demands placed upon them; provided that
such rules and regulations shall be uniform in their application and shall
not violate the express terms of this lease elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost of
any damage to the premises or the building or the sidewalks and pavements
adjoining the same which results from the movement of heavy articles or
heavy vehicles or utility cuts made by or on behalf of Tenant. Tenant
shall not overload the floors or any other part of the premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES. Tenant
shall make no use of the premises which would void or make voidable any
insurance upon the premises.
18. INSURANCE.
18.1 All Risk Insurance. Tenant shall keep the building and
improvements insured throughout the term of this lease against losses
covered by an "All Risk" policy, as defined in the insurance industry,
which shall also cover 1) loss of rental and 2) deposit of Hazardous
Materials on the premises by those acts of third parties which constitute
vandalism. The deductible amount shall not exceed $50,000.
18.2 General Liability Insurance. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of
ONE MILLION Dollars ($1,000,000.00 ) for each occurrence of bodily injury
and ONE MILLION Dollars ($1,000,000.00) for each occurrence of property
damage. Tenant shall supply to Landlord certificates of insurance as
provided in Paragraph 18.6. In the event Tenant fails to secure such
insurance or to give evidence to Landlord of such insurance by depositing
with Landlord certificates as provided below, Landlord may purchase such
insurance in Tenant's name and charge Tenant the premiums therefor. Bills
for the premiums therefor shall be deemed and paid as additional rent due
within 10 days after delivery of invoice. The Landlord shall be an
additional named insured on the policy.
18.3 Tenant Improvements. Tenant agrees to carry insurance covering
all of Tenant's leasehold improvements, alterations, additions or
improvements, trade fixtures, merchandise and personal property from time
to time in, on or upon the premises, in an amount not less than one hundred
percent (100%) of the full replacement cost of such items from time to time
during the term of this lease, providing protection against any peril
included within an "All-Risk" policy, with a deductible amount not to
exceed $10,000. Any policy proceeds shall be used for the repair or
replacement of the property damaged or destroyed unless this lease shall
cease and terminate due to destruction of the premises as provided below.
18.4 Other Insurance. Tenant agrees to carry insurance against such
other hazards and in such amounts as the holder of any mortgage or deed of
trust to which the lease is subordinate may require from time to time.
18.5 Waiver of Subrogation. Landlord and Tenant grant to each other
on behalf of any insurer providing fire and extended insurance coverage to
either of them covering the premises, improvements thereon, and contents
thereof, a waiver of any right of subrogation or recovery of any payments
of loss under such insurance, such waiver to be effective so long as each
is empowered to grant such waiver under the terms of its insurance policy,
and to give all necessary notice of such waiver to its insurance carriers.
18.6 Other Provisions Regarding Tenant's Insurance. All insurance
required of Tenant in this lease shall be effected under enforceable
policies issued by insurers of recognized good financial condition licensed
to do business in this State. At least fifteen (15) days prior to the
expiration date of any such policy, a certificate evidencing a new or
renewal policy shall be delivered by Tenant to Landlord. Within fifteen
(15) days after the premium on any policy shall become due and payable,
Landlord shall be furnished with satisfactory evidence of its payment. To
the extent obtainable, all policies shall contain an agreement that
notwithstanding any act or negligence of Tenant which might otherwise
result in forfeiture of such insurance, such policies shall not be canceled
except upon ten (10) days prior written notice to Landlord, and that the
coverage afforded thereby shall not be affected by the performance of any
work in or about the premises.
If Tenant provides any insurance required of Tenant by this lease in the
form of a blanket policy, Tenant shall furnish satisfactory proof that such
blanket policy complies in all respects with the provisions of this lease,
and that the coverage thereunder is at least equal to the coverage which
would be provided under a separate policy covering only the premises.
18.7 Changes in Standard Policies. If the definition of insurance
industry policy language relating to "All-Risk" insurance or other term
changes, the insurance requirements hereunder shall be modified to conform
to the existing insurance industry language; however, the dollar amount of
the coverages required under this lease shall not be less than those
existing at the time of the effective beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be Tenant's
sole and exclusive responsibility to meet all fire regulations of any
governmental unit having jurisdiction over the premises to the extent such
regulations affect Tenant's operations, at Tenant's sole expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the premises are
damaged or destroyed by fire or other cause at any time after the date of
commencement of this lease, Landlord shall proceed with due diligence to
repair or restore the same to the same condition as existed before such
damage or destruction, and as soon as possible thereafter but in no event
more than 180 days from the date of damage or destruction will give
possession to the Tenant of the premises without diminution or change of
location. If Landlord does not complete all repairs and restoration within
180 days, Tenant may at its reasonable discretion terminate the lease.
Provided, however, that in case of total destruction of the premises by
fire, or in case the premises are so badly damaged that, in the opinion of
the Landlord, it is not feasible to repair or rebuild the same, then,
either Tenant or Landlord shall have the right to terminate this lease
instead of rebuilding the improvements; provided, however, that the
terminating party shall give the other party written notice of its
intention to terminate, said notice to be served not later than thirty (30)
days after the occurrence of the damage to the property. In the event the
premises are rendered temporarily untenantable because of fire or other
casualty, base monthly rent shall abate on the untenantable area until the
premises are restored to their former condition, abatement to be based on
the square feet of building floor space in the untenantable area compared
to the total square feet of building floor space on the premises.
Provided, however, that to the extent the damage or destruction results
from the negligence or other action of Tenant or its employees, agents,
contractors, subcontractors, invitees, guests or licensees, Tenant shall
pay for the restoration or repair, to the extent the cost of same is not
covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 Definitions.
21.1.1 Hazardous Material. Hazardous Material means any
substance:
(a) the presence of which requires investigation, notice or
remediation under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material,"
"hazardous waste," "hazardous substance," "regulated substance,"
"pollutant" or "contaminant" under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), Toxic Substances Control Act (15
U.S.C. _ 2601 et seq.), the Colorado Underground Storage Tank Act (Colo.
Rev. Stat. 25-18-101 et seq.), and/or the Resource Conservation and
Recovery Act (42 U.S.C. _ 6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or
becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the
State of Colorado or any political subdivision thereof; or
(d) the presence of which on the premises causes or threatens to
cause a nuisance upon the premises or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about
the premises; or
(e) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos or
urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 Environmental Requirements. Environmental Requirements
means all applicable present and future statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial, administrative, and regulatory
decrees, judgments, and orders relating to the protection of human health
or the environment, including, without limitation:
(a) All requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or threatened releases of
Hazardous Materials, chemical substances, pollutants, contaminants, or
hazardous or toxic substances, materials or wastes whether solid, liquid,
or gaseous in nature, into the air, surface water, groundwater, or land, or
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of chemical substances,
pollutants, contaminants, or hazardous or toxic substances, materials, or
wastes, whether solid, liquid, or gaseous in nature; and
(b) All requirements pertaining to the protection of the health and
safety of employees or the public.
21.1.3 Environmental Damages. Environmental Damages means all
claims, judgments, damages, losses, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs, and expenses of
investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement or judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable
attorneys' fees and disbursements and consultants' and witnesses' fees, any
of which are incurred at any time as a result of the existence of Hazardous
Material upon, about, beneath the premises or migrating or threatening to
migrate to or from the premises, or the existence of a violation of
Environmental Requirements pertaining to the premises, including without
limitation:
(a) Damages for personal injury, or injury to property or natural
resources occurring upon or off of the premises, foreseeable or
unforeseeable, including, without limitation, lost profits, consequential
damages, the cost of demolition and rebuilding of any improvements on real
property, interest and penalties including but not limited to claims
brought by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements including, but not
limited to, the preparation of any feasibility studies or reports or the
performance of any cleanup, remediation, removal, response, abatement,
containment, closure, restoration or monitoring work required by any
federal, state or local governmental agency or political subdivision or
court, or reasonably necessary to make full economic use of the premises
and any other property in a manner consistent with its current use or
otherwise expended in connection with such conditions, and including
without limitation any attorneys' fees, costs and expenses incurred in
enforcing this agreement or collecting any sums due hereunder;
(c) Liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with the
items referenced herein; and
(d) Diminution in the value of the premises and adjoining
property, and damages for the loss of business and restriction on the use
of or adverse impact on the marketing of rentable or usable space or of any
amenity of the premises and adjoining property.
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless.
Tenant, its successors, assigns and guarantors, agree to indemnify, defend,
reimburse and hold harmless the following persons from and against any and
all Environmental Damages arising from activities of Tenant or its
employees, agents, contractors, subcontractors, or guests, licensees, or
invitees which (1) result in the presence of Hazardous Materials upon,
about or beneath the premises or migrating to or from the premises, or (2)
result in the violation of any Environmental Requirements pertaining to the
premises and the activities thereon:
21.2.1 Landlord;
21.2.2 any other person who acquires an interest in the premises
in any manner, including but not limited to purchase at a foreclosure sale
or otherwise; and
21.2.3 the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees, affiliates,
lessees, mortgagees, trustees, heirs, devisees, successors, assigns, guests
and invitees of such persons.
This obligation shall include, but not be limited to, the burden and
expense of the indemnified parties in defending all claims, suits and
administrative proceedings, including attorneys' fees and expert witness
and consulting fees, even if such claims, suits or proceedings are
groundless, false or fraudulent, and conducting all negotiations of any
description, and paying and discharging, when and as the same become due,
any and all judgments, penalties or other sums due against such indemnified
persons, and all such expenses incurred in enforcing the obligation to
indemnify. Tenant, at its sole expense, may employ additional counsel of
its choice to associate with counsel representing the indemnified parties.
21.3 Tenant's Obligation to Remediate. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement,
Tenant shall, upon demand of Landlord, and at its sole cost and expense,
promptly take all actions to remediate the premises which are reasonably
necessary to mitigate Environmental Damages or to allow full economic use
of the premises, or are required by Environmental Requirements, which
remediation is necessitated by the 1) introduction of a Hazardous Material
upon, about or beneath the premises or 2) a violation of Environmental
Requirements, either of which is caused by the actions of Tenant, its
employees, agents, contractors, subcontractors, guests, invitees or
licensees. Such actions shall include, but not be limited to, the
investigation of the environmental condition of the premises, the
preparation of any feasibility studies, reports or remedial plans, and the
performance of any cleanup, remediation, containment, operation,
maintenance, monitoring or restoration work, whether on or off of the
premises. Tenant shall take all actions necessary to restore the premises
to the condition existing prior to the introduction of Hazardous Material
upon, about or beneath the premises, notwithstanding any lesser standard of
remediation allowable under applicable law or governmental policies. All
such work shall be performed by one or more contractors, selected by Tenant
and approved in advance and in writing by Landlord. Tenant shall proceed
continuously and diligently with such investigatory and remedial actions,
provided that in all cases such actions shall be in accordance with all
applicable requirements of governmental entities. Any such actions shall
be performed in a good, safe and workmanlike manner and shall minimize any
impact on the business conducted at the premises. Tenant shall pay all
costs in connection with such investigatory and remedial activities,
including but not limited to all power and utility costs, and any and all
taxes or fees that may be applicable to such activities. Tenant shall
promptly provide to Landlord copies of testing results and reports that are
generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities.
Promptly upon completion of such investigation and remediation, Tenant
shall permanently seal or cap all monitoring wells and test holes to
industrial standards in compliance with applicable federal, state and local
laws and regulations, remove all associated equipment, and restore the
premises to the maximum extent possible, which shall include, without
limitation, the repair of any surface damage, including paving, caused by
such investigation or remediation hereunder. Provided, however, that
Tenant shall not be obligated to remediate environmental damages which
result from seepage of Hazardous Materials onto the premises from adjacent
property unless the presence on the adjacent property was caused by Tenant
or its employees, agents, contractors, subcontractors, guests, invitees or
licensees.
21.4 Notification. If Tenant shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected or
threatened violation of Environmental Requirements, or liability of Tenant
for Environmental Damages in connection with the premises or past or
present activities of any person thereon, or that any representation set
forth in this agreement is not or is no longer accurate, including but not
limited to notice or other communication concerning any actual or
threatened investigation, inquiry, lawsuit, claim, citation, directive,
summons, proceeding, complaint, notice, order, writ, or injunction,
relating to same, then Tenant shall deliver to Landlord, within ten days of
the receipt of such notice or communication by Landlord, a written
description of said violation, liability, correcting information, or actual
or threatened event or condition, together with copies of any such notice
or communication. Receipt of such notice shall not be deemed to create any
obligation on the part of Landlord to defend or otherwise respond to any
such notification or communication.
21.5 Negative Covenants.
21.5.1 No Hazardous Material on Premises. Except in strict
compliance with all Environmental Requirements, Tenant shall not cause,
permit or suffer any Hazardous Material to be brought upon, treated, kept,
stored, disposed of, discharged, released, produced, manufactured,
generated, refined or used upon, about or beneath the premises by Tenant,
its agents, employees, contractors, subcontractors, guests, licensees or
invitees, or any other person. Tenant shall deliver to Landlord copies of
all documents which Tenant provides to any governmental body in connection
with compliance with Environmental Requirements with respect to the
premises, such delivery to be contemporaneous with provision of the
documents to the governmental agency.
21.5.2 No Violations of Environmental Requirements. Tenant shall
not cause, permit or suffer the existence or the commission by Tenant, its
agents, employees, contractors, subcontractors or guests, licensees or
invitees, or by any other person of a violation of any Environmental
Requirements upon, about or beneath the premises or any portion thereof.
21.5.3 No Environmental or Other Liens. Tenant shall not create
or suffer or permit to exist with respect to the premises, any lien,
security interest or other charge or encumbrance of any kind, including
without limitation, any lien imposed pursuant to section 107(f) of the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. section
9607(1) or any similar state statute to the extent that such lien arises
out of the actions of Tenant, its agents, employees, contractors,
subcontractors or guests, licensees or invitees.
21.6 Landlord's Right to Inspect and to Audit Tenant's Records.
Landlord shall have the right in its sole and absolute discretion, but not
the duty, to enter and conduct an inspection of the premises and to inspect
and audit Tenant's records concerning Hazardous Materials at any reasonable
time to determine whether Tenant is complying with the terms of the lease,
including but not limited to the compliance of the premises and the
activities thereon with Environmental Requirements and the existence of
Environmental Damages as a result of the condition of the premises or
surrounding properties and activities thereon. If Landlord has reasonable
cause to believe Tenant is in default with respect to any of the provisions
of this lease related to Hazardous Materials, Environmental Requirements or
Environmental Damages, then Landlord shall have the right, but not the
duty, to retain at the sole expense of Tenant an independent professional
consultant to enter the premises to conduct such an inspection and to
inspect and audit any records or reports prepared by or for Tenant
concerning such compliance. Tenant hereby grants to Landlord the right to
enter the premises and to perform such tests on the premises as are
reasonably necessary in the opinion of Landlord to assist in such audits
and investigations. Landlord shall use reasonable efforts to minimize
interference with the business of Tenant by such tests inspections and
audits, but Landlord shall not be liable for any interference caused
thereby.
21.7 Landlord's Right to Remediate. Should Tenant fail to perform
or observe any of its obligations or agreements pertaining to Hazardous
Materials or Environmental Requirements, then Landlord shall have the
right, but not the duty, without limitation upon any of the rights of
Landlord pursuant to this agreement, to enter the premises personally or
through its agents, consultants or contractors and perform the same.
Tenant agrees to indemnify Landlord for the costs thereof and liabilities
therefrom as set forth in Paragraph 21.2.
21.8 Landlord's Obligation to Remediate. Landlord agrees to
remediate all Environmental Damages 1) caused by Landlord, its agents,
employees, contractors, subcontractors, guests, licensees or invitees, or
2) not so caused but arising prior to Commencement Date hereof and not
caused by Tenant, its agents, employees, contractors, subcontractors,
guests, licensees or invitees.
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters. Landlord, its successors, assigns and
guarantors, agree to indemnify, defend, reimburse and hold harmless the
following persons from and against any and all Environmental Damages
arising from activities of Landlord or its employees, agents, contractors,
subcontractors or guests, licensees, invitees; or which occurred prior to
the Commencement Date (and were not caused by Tenant, its agents,
employees, contractors, subcontractors, guests, licensees or invitees)
which (1) result in the presence of Hazardous Materials upon, about or
beneath the premises or migrating to or from the premises, or (2) result in
the violation of any Environmental Requirements pertaining to the premises
and the activities thereon:
21.9.1 Tenant;
21.9.2 the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees, affiliates,
lessees, mortgagees, trustees, heirs, devisees, successors, assigns and
invitees of Tenant.
This obligation shall include, but not be limited to, the burden and
expense of the indemnified parties in defending all claims, suits and
administrative proceedings, including attorneys' fees and expert witness
and consulting fees, even if such claims, suits or proceedings are
groundless, false or fraudulent, and conducting all negotiations of any
description, and paying and discharging, when and as the same become due,
any and all judgments, penalties or other sums due against such indemnified
persons, and all such expenses incurred in enforcing the obligation to
indemnify. Landlord, at its sole expense, may employ additional counsel of
its choice to associate with counsel representing Tenant.
21.10 Survival of Environmental Obligations. The obligations of
Landlord and Tenant as set forth in Paragraph 21 and all of its
subparagraphs shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized representative,
and/or any lender or prospective lender, shall have the right to enter the
premises during the lease term at all reasonable times during usual
business hours for purposes of inspection, and/or the performance of any
maintenance, repairs or replacement therein. Landlord shall give Tenant
such advance notice of entry as is reasonable in light of the purpose for
the entry. Landlord shall have the right to enter the premises and show
the same to a prospective tenant during the last 180 days of this lease or
any extended term, unless the term shall have been extended by mutual
written agreement or delivery of notice of exercise of any option to
extend. In all circumstances, Landlord shall use its best efforts to
conduct its business while in Tenant premises as not to interfere with
Tenant's operations or use of the premises.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 Default Defined. Any one or more of the following events (each
of which is herein sometimes called "event of default") shall constitute a
default:
23.1.1 Tenant defaults in the due and punctual payment of any rent,
taxes, tax deposits, insurance premiums, maintenance fees or other sums
required to be paid by Tenant under this lease when and as the same shall
become due and payable;
23.1.2 Tenant abandons the premises;
23.1.3 Tenant defaults in the performance of or compliance with any
of the covenants, agreements, terms and conditions contained in this lease
other than those referred to in the foregoing Paragraph 23.1.1, and such
default shall continue for a period of 30 days after written notice thereof
from Landlord to Tenant, and shall not be cured as permitted by Paragraph
23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or takes the benefit of any relevant
legislation that may be in force for bankrupt or insolvent debtors or files
any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under any present or future federal, state or other statute, law or
regulation, or proceedings are taken by Tenant under any relevant
Bankruptcy Act in force in any jurisdiction available to Tenant, or Tenant
seeks or consents to or acquiesces in the appointment of any trustee,
receiver or liquidator of Tenant or of all or any substantial part of its
properties or of the premises, or makes any general assignment for the
benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state or
other statute, law or regulation, and shall remain undismissed for an
aggregate of 120 days, or if any trustee, receiver or liquidator of Tenant
or of all or any substantial part of its properties or of the premises is
appointed without the consent or acquiescence of Tenant and such
appointment remains unvacated for an aggregate of 120 days.
23.2 Landlord's Remedies in the Event of Default. In the event of
any event of default, Landlord shall have the option, without further
notice to Tenant or further demand for performance exercise any one or more
of the following remedies (and any other remedy available at law or in
equity):
23.2.1 If Tenant has been late in payment of rent or other sums
due on four or more occasions during any period of one year, Landlord,
without terminating this lease, may 1) require that all future payments be
made by bank cashier's check, and/or 2) require an additional security
deposit in the amount of the then-current base rent for two months, and/or
3) require that rent for each month be paid on or before the 15th day of
the preceding month. Such requirement shall be imposed by Landlord's
written notice delivered to Tenant. The additional security deposit shall
be paid within 10 days after delivery of the notice. The Landlord may or
may not exercise the remedies provided in this Paragraph 23.2.1, in its
sole discretion. The exercise of the remedies provided in this Paragraph
23.2.1 shall not be required prior to the exercise of any other available
remedy.
23.2.2 To institute suit against Tenant to collect each
installment of rent or other sum as it becomes due or to enforce any other
obligation under this lease even though the premises be left vacant subject
to Landlord's obligation to mitigate damages.
23.2.3 As a matter of right, to procure the appointment of a
receiver for the premises by any court of competent jurisdiction upon ex
parte application. All rents, issues and profits, income and revenue from
the premises shall be applied by such receiver to the payment of the rent,
together with any other obligations of the Tenant under this lease.
23.2.4 To re-enter and take possession of the premises and all
personal property therein and to remove Tenant and Tenant's agents and
employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach of
the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet the
premises and personal property, as the agent and for the account of Tenant
in the name of Landlord or otherwise, upon the terms and conditions
Landlord deems fit with the new Tenant for such period (which may be
greater or less than the period which would otherwise have constituted the
balance of the term of this lease) as Landlord may deem best, and collect
any rent due upon any such reletting providing that if the new lease term
shall be greater than Tenant's original term, Tenant shall be released from
any and all further obligation upon the expiration of Tenant's original
term save for amounts accrued upon the expiration of Tenant's original
term. In this event, the rents received on any such reletting shall be
applied first to the expenses of reletting and collecting, including,
without limitation, all repossession costs, reasonable attorneys' fees, and
real estate brokers' commissions, alteration costs and expenses of
preparing said premises for reletting, and thereafter toward payment of the
rental and of any other amounts payable by Tenant to Landlord. If the sum
realized shall not be sufficient to pay the rent and other charges due from
Tenant, then within five days after demand, Tenant will pay to Landlord any
deficiency as it accrues. Landlord may sue therefor as each deficiency
shall arise if Tenant shall fail to pay such deficiency within the time
limited.
23.3 Tenant to Surrender Peaceably. In the event Landlord elects to
re-enter or take possession of the premises, Tenant shall quit and
peaceably surrender the premises to Landlord, and Landlord may enter upon
and re-enter the premises and possess and repossess itself thereof, by
force, summary proceedings, ejectment or otherwise, and may dispossess and
remove Tenant and may have, hold and enjoy the premises and the right to
receive all rental income of and from the same.
23.4 No Termination by Re-Entry. No re-entry or taking of
possession by Landlord shall be construed as an election on Landlord's part
to terminate or accept surrender of this lease unless Landlord's written
notice of such intention is delivered to Tenant.
23.5 Injunction. In the event of any breach by Tenant of any of the
agreements, terms, conditions or covenants contained in this lease,
Landlord, in addition to any and all other rights, shall be entitled to
enjoin such breach and shall have the right to invoke any right and remedy
allowed at law or in equity or by statute or otherwise for such breach as
though re-entry, summary proceedings, and other remedies were not provided
for in this lease.
23.6 Remedies Listed are Cumulative and Non-Exclusive. The
enumeration of the foregoing remedies does not exclude any other remedy,
but all remedies are cumulative and shall be in addition to every other
remedy now or hereafter existing at law or in equity, including, but not
limited to, the remedies provided in Paragraph 24 concerning Landlord's
security interest in Tenant's personalty and Landlord's right to remove
same.
23.7 Interest on Sums Past Due. All rent and all other amounts due
from Tenant hereunder shall bear interest at the rate of twelve (12%)
percent per annum compounded quarter-annually from their respective due
dates until paid, provided that this shall in no way limit, lessen or
affect any claim for damages by Landlord for any breach or default by
Tenant.
23.8 Attorneys' Fees. Reasonable attorneys' fees, expert witness
fees, consulting fees and other expenses incurred by either party by reason
of the breach by either party in complying with any of the agreements,
terms, conditions or covenants of this lease shall constitute additional
sums to be paid to the prevailing party on demand.
23.9 Time to Cure Certain Non-Monetary Defaults. In the event of
any default other than failure to pay a sum of money, for which notice has
been given as provided herein, which because of its nature can be cured but
not within the period of grace heretofore allowed, then such default shall
be deemed remedied, if the correction thereof shall have been commenced
within said grace period or periods and shall, when commenced, be
diligently prosecuted to completion.
23.10 Landlord Default. If Landlord is in default under any of its
obligations and the default continues for thirty (30) days after written
notice from Tenant (subject to extension pursuant to 23.9), Tenant may
pursue all remedies at law or in equity. Tenant may, but shall not be
required to, correct such default for the Landlord's account , and the
expense shall be promptly paid within ten (10) days by Landlord; however,
in no event shall Tenant have the right to rental abatement, offset of
expenses against rental, or the right to terminate this lease, subject to
Tenant's legal or equitable remedies.
Tenant may not offset any sum due or assertedly due from Landlord to
Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord arising
out of Landlord's obligations under this lease, such judgment may be
satisfied only by execution and sale of Landlord's interest in the premises
leased hereby. Tenant may not seek execution against other property of
Landlord, nor pursue any judgment, execution or other remedy against the
partners or other owners of Landlord or any of their property. Immediately
upon receipt of Landlord's written request, Tenant will release any
property (other than the premises leased hereby) from the lien of any
judgment obtained by Tenant against Landlord arising out of Landlord's
obligations under this lease.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY
LANDLORD'S FEES. In the event of any proceeding at law or in equity
wherein Landlord, without being in default as to its covenants under the
terms hereof, shall be made a party to any litigation by reason of Tenant's
interest in the premises, or, in the event Landlord shall be required to
commence any legal proceedings relating to the premises and Tenant's
occupancy thereof and Tenant's relation thereto, but only after notice to
and consent by Tenant, Landlord shall be allowed and Tenant shall be liable
for and shall pay all costs and expenses incurred by Landlord, including
reasonable attorneys' fees, expert witness fees and consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall
indemnify and save harmless Landlord of and from liability for damages or
claims against Landlord, including costs, attorneys' fees and expenses of
Landlord in defending against the same, on account of injuries to any
person or property, if the injuries are caused by the negligence or willful
misconduct of Tenant, its agents, servants or employees, or of any other
person entering upon the premises under express or implied invitation of
Tenant or if such injuries are the result of the violation by Tenant, its
agents, servants, or employees, of laws, ordinances, other governmental
regulations, or of the terms of this lease.
The Landlord shall indemnify and save harmless Tenant of and from
liability for damages or claims against Tenant, including costs, attorneys'
fees and expenses of Tenant in defending against the same, on account of
injuries to any person or property, if the injuries are caused by the
negligence or willful misconduct of Landlord, its agents, servants or
employees, or of any other person entering upon the premises under express
or implied invitation of Landlord or where such injuries are the result of
the violation by Landlord, its agents, servants or employees, of laws,
ordinances, other governmental regulations, or of the terms of this lease..
Landlord provides recreation facilities for the use of employees of
Tenant and other occupants within the property developed by Landlord, which
property presently includes LONG'S PEAK INDUSTRIAL PARK, FIRST, SECOND and
THIRD FILINGS, and portions of ST. VRAIN CENTRE, both in the City of
Longmont and County of Boulder, Colorado, and will include such additional
property in the immediate vicinity thereof as may be developed by Landlord.
The term "recreation facilities" includes, at present, a fitness trail with
34 exercise stations, volleyball courts, basketball courts, and a park, and
will include such additional facilities as Landlord may provide.
Tenant shall indemnify and save harmless Landlord of and from Liability
for damages or claims against Landlord, including costs, attorneys' fees
and expenses of Landlord in defending against the same, on account of any
injury to (or death of) an employee of Tenant arising out of use of the
recreation facilities, unless such death or injury is caused by Landlord's
gross negligence or willful misconduct
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign, mortgage, or
encumber this lease, nor sublet or permit the premises or any part thereof
to be used by others, without the prior written consent of Landlord in each
instance, which consent shall not be unreasonably withheld.
In connection with an assignment, sublease or encumbrance Landlord may
require the submittal of detailed financial information about the
prospective subtenant or assignee, to be reviewed by Landlord, and may
require a guarantee of the obligations of the prospective subtenant or
assignee, and may require detailed financial information about the
guarantor, to be reviewed by Landlord; and there may be alterations to this
lease and alterations to the building which are necessary to consummate the
transaction. The Landlord may require Tenant or the prospective assignee
or sub-tenant to pay for the alterations to the building, and may require
that Landlord perform same. In addition, Landlord may charge a fee of two
percent of base rent for the first five years of the lease, due in full
upon Landlord's consent, as payment to Landlord for such investigations,
lease alterations and similar matters. No two percent fee will be charged
in connection with an assignment or sublease to an assignee or subtenant
who is "affiliated" with Tenant. "Affiliated" means under common voting
control, directly or indirectly.
A sale or transfer of control of a majority of the votes which may be
cast to elect Tenant's board of directors or other governing body shall be
deemed to be an assignment of this lease, requiring Landlord's consent if
the sale or transfer is essentially accomplished in a single transaction.
If this lease is assigned, or if the premises or any part thereof is
sublet, or occupied by anyone other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, sub-tenant, or occupant
and apply the net amount collected against all rent herein reserved. No
such assignment, subletting, occupancy, or collection shall be deemed a
waiver of this covenant, or the acceptance of the assignee, sub-tenant, or
occupant as tenant, or a release of Tenant from further performance by
Tenant of the covenants in this lease. The consent by Landlord to an
assignment or subletting shall not be construed to relieve Tenant (or any
subsequent tenant) from obtaining the consent in writing of Landlord to any
further assignment or subletting. This provision shall not apply to a sale
or transfer of control to Hyundai Electronic Industries Co. Ltd. and /or
any of it's affiliates.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord covenants
it has good right to lease the premises in the manner described herein and
that Tenant shall peaceably and quietly have, hold, occupy, and enjoy the
premises during the term of the lease; except as provided in Paragraph 31
concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD. Landlord
does reserve, during the term of this lease, the right to go upon and deal
with the premises or part thereof for the purpose of implementing a common
development plan for the project of which the premises are a part, and to
install non-exclusive sidewalks, paths, roadways and other street
improvements for use by vehicles, pedestrians, and for parking; to
undertake such drainage programs to handle underground and surface drainage
water and to make any other changes and/or improvements as Landlord shall
deem advisable in the exercise of its sole discretion; provided, however,
any such action by Landlord shall not unreasonably interfere with the
rights of Tenant hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree that
Landlord shall have sole and exclusive authority to negotiate and settle
all matters pertaining to the acquisition of all or part of the premises by
a governmental agency by eminent domain or threat thereof (condemnation),
and to convey all or any part of the premises under threat of condemnation,
and the lease shall terminate as to any area so conveyed. It is agreed
that any compensation for land and/or buildings to be taken whether
resulting from negotiation and agreement or condemnation proceedings, shall
be the exclusive property of Landlord, and that there shall be no sharing
whatsoever between Landlord and Tenant of any such sum. Such taking of
property shall not be considered as a breach of this lease by Landlord, nor
give rise to any claims in Tenant for damages or compensation from
Landlord. Tenant may separately claim and recover from the condemning
authority the value of any personal property owned by Tenant which is
taken, and any relocation expenses owed to Tenant by the condemning
authority. If the taken portion of the premises consists only of areas
where no building is constructed, and the land area of the premises is
reduced by less than ten percent, and the parking area available for use by
Tenant is reduced by less than five percent, and there is no material
change in Tenant's access to the premises, then there shall be no change in
the terms of the lease. If no building area is taken but the foregoing
limits on parking area reductions are exceeded, then Tenant may terminate
the lease unless Landlord provides sufficient reasonably adjacent parking
area so that the total available parking area is reduced by less than five
percent. If any portion of the building on the premises is taken, then
Landlord, at its election, may replace the square footage taken with space
in the same building, or may provide land and building area essentially the
same as the premises in a reasonably adjacent location, within 10 days
after the conveyance or taking, under the same terms and conditions as
contained in this lease, and this lease shall be in full force and effect
as to the new premises. If Landlord does not so provide reasonable space,
then Tenant shall have two options. First, Tenant may terminate the lease
by written notice delivered to Landlord within 60 days after the conveyance
or taking. Second, Tenant may retain the remaining portion of the
premises, under all the terms and conditions hereof, but the base rental
shall be reduced in proportion to the number of square feet of building
floor space taken compared to the number of square feet of building floor
space on the premises prior to the taking.
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease shall be
subject and subordinate in priority at all times to the lien of any
existing and/or hereafter executed mortgages and trust deeds encumbering
the premises. Although no instrument or act on the part of Tenant shall be
necessary to effectuate such subordination, Tenant will execute and deliver
such further instruments subordinating this lease to the lien of any such
mortgages or trust deeds as may be desired by the mortgagee or holder of
such trust deeds. Tenant hereby appoints Landlord as his attorney in fact,
irrevocably, to execute and deliver any such instrument for Tenant. Tenant
further agrees at any time and from time to time upon not less than ten
(10) days prior written request by Landlord, to execute, acknowledge, and
deliver to Landlord an estoppel affidavit in form acceptable to Landlord
and the holder of any existing or contemplated mortgage or deed of trust
encumbering the premises. Tenant's failure to deliver such statement
within such time shall be conclusive upon Tenant (1) that this lease is in
full force and effect, without modification except as may be represented by
Landlord; (2) that there are no uncured defaults in Landlord's performance;
and (3) that not more than one (1) month's rent has been paid in advance.
Further, upon request, Tenant shall supply to Landlord a corporate
resolution certifying that the party signing this statement on behalf of
Tenant is properly authorized to do so, if Tenant is a corporation. Tenant
agrees to provide Landlord within ten business days of Landlord's request,
Tenant's most recently completed financial statements and such other
financial information as reasonably requested by Landlord in order to
verify Tenant's financial condition to satisfy requirements of Landlord's
existing or contemplated lender or mortgagee.
Tenant agrees with lender and Landlord that if there is a foreclosure of
any such mortgage or deed of trust and pursuant to such foreclosure, the
Public Trustee or other appropriate officer executes and delivers a deed
conveying the premises to the lender or its designee, or in the event
Landlord conveys the premises to the lender or its designee in lieu of
foreclosure, Tenant will attorn to such grantee of the premises, rather
than to Landlord, to perform all of Tenant's obligations under the lease,
and Tenant shall have no right to terminate the lease by reason of the
foreclosure or deed given in lieu thereof.
Landlord will include in the terms of any mortgage or deed of trust on
the premises a provision that if Tenant is not in default under the terms
of this lease and Tenant is then in possession of the premises, Tenant's
rights of quiet enjoyment arising out of the lease shall not be affected or
disturbed by lender in the event of a default by Landlord and any sale of
the premises through foreclosure of any deed of trust or otherwise.
31. MEMORANDUM OF LEASE - RECORDING. This lease shall not be recorded
in the office of the County Clerk and Recorder of Boulder County, except by
Landlord as a financing statement. In order to effect public recordation,
the parties hereto may, at the time this lease is executed, agree to
execute a Memorandum of lease incorporating therein by reference the terms
of this lease, but deleting therefrom any expressed statement or mention of
the amount of rent herein reserved, which instrument may be recorded by
either party in the office of the Clerk and Recorder of Boulder County.
32. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT. No
assent, or waiver expressed or implied, or failure to enforce, as to any
breach of any one or more of the covenants or agreements herein shall be
deemed or taken to be a waiver of any succeeding or additional breach.
Payment by Tenant or receipt by Landlord of an amount less than the rent
or other payment provided for herein shall not be deemed to be other than a
payment on account of the earliest rent then due, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment
of rent be deemed an accord and satisfaction, and Landlord may accept such
check or other payment without prejudice to Landlord's right to recover the
balance of all rent then due, and/or to pursue any or all other remedies
provided for in this lease, in law, and/or in equity including, but not
limited to, eviction of Tenant. Specifically, but not as a limitation,
acceptance of a partial payment of rent shall not be a wavier of any
default by Tenant.
33. CONTROLLING LAW. The lease, and all terms hereunder shall be
governed by the laws of the State of Colorado, exclusive of its conflicts
of laws rules.
34. INUREMENTS. The covenants and agreements herein contained shall
bind and inure to the benefit of Landlord and Tenant and their respective
successors. This lease shall be signed by the parties in duplicate, each
of which shall be a complete and effective original lease.
35. TIME. Time is of the essence in this lease in each and all of its
provisions in which performance is a factor.
36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE. The street address of Landlord is 1960 Industrial Circle,
Longmont, CO 80501. The mailing address of Landlord is P. O. Box 1937,
Longmont, CO 80502-1937. All payments, notices and communications which
are sent to Landlord via United States mail shall be addressed to the
mailing address. Only payments, notices and communications which are hand
delivered or delivered by private courier service shall be addressed to the
street address.
Tenant's street address is 2121 Miller Drive, Longmont, Colorado, 80501.
Tenant's mailing address is 2190 Miller Drive, Longmont, Colorado, 80501.
Any notice to Tenant may be delivered to the above addresses or to the
premises. A copy of any notice should be sent to the attention of the Vice
President and General Consul, 211 River Oaks Parkway, San Jose, California,
95136.
Landlord's current fax number is (303)776-4946. Tenant's current fax
number is (303) 651-2165. Any written notice required hereby may be
delivered by fax, U.S. mail, private courier service, or hand delivery.
Notice shall be effective at time of delivery to the address or fax number
shown.
Either party may change its street or mailing address, or fax number,
for purposes hereof, by written notice delivered to the other. The federal
employer identification number of Landlord is 84 0954 078. The federal
identification number of Tenant is 77-0123732.
38. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are made for
the purposes of ease of location of terms and shall not affect or vary the
terms hereof. Throughout this lease, wherever the words, "Landlord" and
"Tenant" are used they shall include and imply to the singular, plural,
persons both male and female, and all sorts of entities and in reading said
lease, the necessary grammatical changes required to make the provisions
hereof mean and apply as aforesaid shall be made in the same manner as
though originally included in said lease.
39. ADDITIONAL PROVISIONS:
FLEXIBILITY CLAUSE: In the event Tenant's requirement for space
increases or decreases during the term of this lease, including any
extended term thereof, Tenant may notify Landlord of its adjusted space
requirement, in which event Landlord shall, within 120 days after such
notice, increase or decrease the square footage available to Tenant so as
to reasonably meet the Tenants new needs (as is reasonably devisable by
Landlord), either using the premises or other comparable space of Landlord
reasonably acceptable by Tenant. Tenant may not decrease space in existing
premises leased from the Landlord and lease space in Boulder County owned
by a third party, unless the Landlord cannot accommodate the Tenant's
overall space requirements. In such event, Landlord and Tenant shall amend
this lease accordingly, or enter into a new lease upon rental rates and
other terms which are similar to those of this Lease and reasonably
acceptable to both parties and terminate this lease. Tenant may exercise
the right described in this paragraph multiple times, but not more than
once in any twelve month period. Not withstanding language to the contrary
that might be found elsewhere in this lease, the Tenant will be allowed to
exercise the right described in this paragraph without incurring of cost or
other penalties sometimes associated with early terminations, Tenant will
be expected to return the premises to Landlord pursuant to the terms and
conditions of Paragraph 14 of this Lease Agreement. This provision shall
not apply to 345 S. Francis, Longmont, Colorado.
IN WITNESS WHEREOF, the Parties have executed this lease as of the date
hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY COMPANY
By: /s/ Susan M. Pratt
-------------------------
Susan M. Pratt, Manager
TENANT: MAXTOR CORPORATION
By: /s/ J. Larry Smart
-----------------------
J. Larry Smart
Chief Executive Officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this 19th day of
October, 1994 by Susan Pratt, General Partner, Pratt Partnership.
Witness my hand and official seal.
My commission expires: May 3, 1997
/s/ Elizabeth H. Oram
---------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
The foregoing instrument was acknowledged before me this 17th day of
October, 1994 by J. Larry Smart, Chief Executive Officer, Maxtor
Corporation.
Witness my hand and official seal.
My commission expires: June 5, 1998
/s/ Sharon L. Spehar
--------------------
Notary Public
-30-
LEASE AGREEMENT
FOR PREMISES LOCATED AT
2190 Miller Drive
BETWEEN
MAXTOR CORPORATION
AS TENANT
AND
PRATT LAND LIMITED LIABILITY COMPANY
AS LANDLORD
TABLE OF CONTENTS
LEASE
1. PREMISES LEASED; DESCRIPTION
2. PRESENT CONDITION OF PROPERTY
3. TERM
3.1 Initial Term
3.2 Option to Extend
3.3 Tenant Improvement Construction
3.4 Delivery of Possession
4. RENT
4.1 Base Rental
4.2 Escalation of Base Rental
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and HVAC
4.4 Private Security Service
4.5 Late Charges
4.6 Security Deposit
4.7 Proration of Rent for Partial Months
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR
8. HOLDING OVER
9. MODIFICATIONS OR EXTENSIONS
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN ROOF
- NO NEW EQUIPMENT ON ROOF
11. MECHANIC'S LIENS
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE
FOR DAMAGE TO CONTENTS
14. CONDITION UPON SURRENDER - RETURN OF KEYS
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE, NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS
16. LIABILITY FOR OVERLOAD
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES
18. INSURANCE
18.1 All Risk Insurance
18.2 General Liability Insurance
18.3 Tenant Improvements
18.4 Other Insurance
18.5 Waiver of Subrogation
18.6 Other Provisions Regarding Tenant's Insurance
18.7 Changes in Standard Policies
19. FIRE REGULATIONS - TENANT RESPONSIBILITY
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE
21. ENVIRONMENTAL MATTERS
21.1 Definitions
21.1.1 Hazardous Material
21.1.2 Environmental Requirements
21.1.3 Environmental Damages
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless
21.3 Tenant's Obligation to Remediate
21.4 Notification
21.5 Negative Covenants
21.5.1 No Hazardous Material on Premises
21.5.2 No Violations of Environmental Requirements
21.5.3 No Environmental or Other Liens
21.6 Landlord's Right to Inspect and to Audit Tenant's Records
21.7 Landlord's Right to Remediate
21.8 Landlord's Obligation to Remediate
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters
21.10 Survival of Environmental Obligations
22. ENTRY BY LANDLORD
23. DEFAULT - REMEDIES BY LANDLORD
23.1 Default Defined
23.2 Landlord's Remedies in the Event of Default
23.3 Tenant to Surrender Peaceably
23.4 No Termination by Re-Entry
23.5 Injunction
23.6 Remedies Listed are Cumulative and Non-Exclusive
23.7 Interest on Sums Past Due
23.8 Attorneys' Fees
23.9 Time to Cure Certain Non-Monetary Defaults
23.10 Landlord Default
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO
PAY LANDLORD'S FEES
25. INDEMNIFICATION BY TENANT AND BY LANDLORD
26. ASSIGNMENT OR SUBLETTING
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD
29. GOVERNMENTAL ACQUISITION OF THE PREMISES
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES
31. TENANT'S GUARANTEE AND FINANCIAL STATEMENTS
32. MEMORANDUM OF LEASE - RECORDING
33. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT
34. CONTROLLING LAW
35. INUREMENTS
36. TIME
37. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING NOTICE
38. PARAGRAPH HEADINGS; GRAMMAR
39. ADDITIONAL PROVISIONS
EXHIBIT A: SITE PLAN
EXHIBIT B: TENANT FINISH
LEASE
THIS LEASE, made and entered into this 19th day of October, 1994 by and
between PRATT LAND LIMITED LIABILITY COMPANY, a Colorado limited liability
company, hereinafter referred to as "Landlord," and MAXTOR CORPORATION,
hereinafter referred to as "Tenant,"
W I T N E S S E T H:
In consideration of the covenants, terms, conditions, agreements, and
payments as hereinafter set forth, the parties hereto covenant and agree as
follows:
1. PREMISES LEASED; DESCRIPTION. Landlord hereby leases unto Tenant
the following described premises containing approximately 25,500 square feet
of building floor space measured to the outside of the walls, including
overhangs, canopies and loading docks, and to approximately 1/2 the thickness
of common walls; commonly known as 2190 Miller Drive, in the City of
Longmont, County of Boulder, State of Colorado, a more detailed description
of which is Lot 1A, Longs Peak Industrial Park-Second Filing-Replat "A",
County of Boulder, State of Colorado, a diagram of which is attached as
Exhibit B (hereinafter referred to as the "premises"); the leasing of which
is made according to the terms of this Agreement; together with all
appurtenances thereto, and all fixtures attached thereto, in present
condition, and together with nonexclusive reasonable access across any other
land owned by Landlord as may be required for use of the premises by Tenant,
with such access to be on such roadways, sidewalks, and other common areas of
which the premises are a part, or of any such adjacent lands owned by
Landlord, as Landlord may from time to time designate.
2. PRESENT CONDITION OF PROPERTY. Tenant has examined, and accepts
the building, improvements, and any fixtures on the premises, in present
condition, subject to the construction of Tenant Improvements as detailed on
the plans and specifications labeled Exhibit "A," attached hereto and made a
part hereof by reference. No representation, statement, or warranty, express
or implied, has been made by or on behalf of Landlord as to the condition of
the premises, or as to the use that may be made of same. In no event shall
Landlord be liable for any defect in the premises which are discernible by
Tenant's examination thereof or for any limitation on the use of the
premises. Tenant shall not be deemed to have accepted the Tenant
improvements to be constructed by Landlord until it shall have had a
reasonable opportunity to inspect the same.
3. TERM.
3.1 Initial Term. The term of this lease shall commence at 12:00
noon on December 31st, 1994 (the "Commencement Date"), and unless terminated
as herein provided for, shall end at 12:00 noon on the 31st day of December,
1999. The Commencement Date as set forth in this Paragraph 3.1 shall be
subject to those adjustments of the Commencement Date, if any, set forth in
Paragraph 3.3 which relate to the performance of construction on the
premises.
3.2 Option to Extend. Upon full and complete performance of all
the terms, covenants, and conditions herein contained by Tenant and payment
of all rental due under the terms hereof, Tenant shall be given the option to
renew this lease for 3 additional terms of 5 years each. Each such option
shall be exercisable only by delivery of Tenant's signed written notice of
extension to Landlord not less than 180 days prior to the expiration of the
then-existing lease term. In the event of such exercise, this lease shall be
deemed to be extended for the additional period pursuant to all the terms and
conditions set forth herein, including (but not as a limitation) those
provisions for increase of the base rental set forth in Paragraph 4.2.2. In
the event of exercise of said Option, any funds held by Landlord pursuant
hereto shall continue to be so held subject to the terms and conditions
relating to same.
3.3 Tenant Improvement Construction. The Commencement Date of this
lease shall be delayed until the substantial completion of the tenant
improvements described on Exhibit "A" attached hereto and delivery of
possession to Tenant, if such occurs after the Commencement Date, as follows:
If for any reason Landlord does not substantially complete such construction
prior to the Commencement Date, such failure will not affect the validity of
this lease, but in such case Tenant shall not be obligated to pay rent until
such construction is substantially completed and possession of the premises
is delivered to Tenant. Provided, however, if Landlord shall not have
substantially completed and delivered possession of the premises within sixty
(60) days after the Commencement Date, Tenant may, at Tenant's option, upon
notice in writing to Landlord delivered within ten (10) days after the end of
the 60-day period, cancel this lease. Landlord shall have no liability to
Tenant for failure to substantially complete construction prior to any date
or dates. Tenant's only remedy shall be cancellation of the lease. Landlord
will, however, use its best efforts to complete the Tenant improvements on or
before the commencement date.
Should construction of the tenant improvements be completed to such an
extent as to permit the issuance of a partial certificate of occupancy by the
governing authority, Tenant may occupy the portion of the premises so
permitted prior to (or after) the Commencement Date and shall pay rent for
the occupied portion, prorated in proportion to the number of square feet of
building space occupied, beginning on date of delivery of possession. Rent
adjustments shall be similarly prorated. In no event shall Tenant take
possession prior to satisfaction of the requirements for Tenant's insurance
set forth below.
3.4 Delivery of Possession. Except as above provided with respect
to construction of Tenant Improvements, Tenant shall be entitled to
possession of the premises at noon on the Commencement Date, as defined in
Paragraph 3.1. Tenant may, with approval by Landlord in its sole discretion,
have access to the premises during tenant improvement construction for the
purpose of moving in Tenant-owned furniture, fixtures, equipment and
inventory. This access and the items so moved in shall not in any way impede
the construction of the tenant improvements, nor shall Landlord, its agent,
employees, sub-contractors, or any other person on the premises whether
invited or not invited, be liable for the protection, care or security of
Tenant owned items. This paragraph shall not be construed so as to permit
Tenant to occupy the premises prior to the satisfaction of all requirements
for Tenant's insurance set forth below.
4. RENT. Tenant shall pay to Landlord, at the address of Landlord
as herein set forth, the following as rental for the premises:
4.1 Base Rental.
The base rental for the full term hereof shall be ONE MILLION TWENTY
THOUSAND Dollars ($1,020,000.00), payable in monthly installments [basic
monthly rental of SEVENTEEN THOUSAND Dollars ($17,000.00)] in advance on the
first day of each month during the term hereof.
4.2 Escalation of Base Rental.
4.2.1 On the first anniversary of the commencement date of this
lease, and annually thereafter, the base rental payable by Tenant shall be
increased to an amount determined by multiplying the basic monthly rental by
a fraction, the denominator of which shall be the most recent Consumer Price
Index figure, as hereinafter defined, published prior to the Commencement
Date, and the numerator of which shall be the most recent Consumer Price
Index figure published prior to the particular anniversary date; provided,
however, that in no event shall the rent for any month after such anniversary
be less than the rent for the month immediately preceding such anniversary.
As used herein, the term "Consumer Price Index" shall mean the Consumer Price
Index, All Urban Consumers, All Items, Denver, Colorado (1982-84 = 100), or
the successor of that Index, as published by the Bureau of Labor Statistics,
U.S. Department of Labor. Should Landlord lack sufficient data to make the
proper determination on the date of any adjustment, Tenant shall continue to
pay the monthly rent payable immediately prior to the adjustment date. As
soon as Landlord obtains the necessary data, Landlord shall determine the
rent payable from and after such adjustment date and shall notify Tenant of
the adjustment in writing. Should the monthly rent for the period following
the adjustment date exceed the amount previously paid by Tenant for that
period, Tenant shall forthwith pay the difference to Landlord. Should the
Consumer Price Index as above described cease to be published, a reasonably
comparable successor index shall be selected by Landlord. If Tenant objects
to the successor index, the dispute will be resolved and a successor index
designated by arbitration pursuant to the rules and procedures of the
American Arbitration Association.
4.2.2 Notwithstanding the foregoing, the parties agree that the
increase in base rental for each year shall be not less than two and one-half
percent (2.5%) nor more than seven percent (7%) of the base rental for the
previous year, each year for such purposes to commence on the anniversary of
the Commencement Date.
4.2.3 Landlord may in its sole discretion, waive the escalation
provided for in Paragraph 4.2.1 or Paragraph 4.2.2 for any particular year,
years, or part of a year. No such waiver shall preclude Landlord from
applying the escalation to any subsequent year or part of a year, and from
making the subsequent application as if all subsequent escalations had been
duly made to the maximum permissible extent.
4.3 Maintenance Expense for Grounds, Snow Removal, Exterior and
HVAC. Tenant shall pay the cost of having Landlord maintain the HVAC systems
and the exterior of the premises including parking lots, green areas,
sidewalks, entrances, and corridors (but not the exterior surfaces of the
building, other than glass). Cost of maintaining such areas shall include,
but shall not be limited to, repairs, preventative maintenance, HVAC filters
and compressors, sealing, striping, lawn mowing, snow removal (Tenant is
responsible for snow removal of less than 2"), gardening, shrub care and
replacements, lawn watering, parking area maintenance, electricity for
lighting, sign maintenance, depreciation of equipment used for the foregoing
purposes and other costs related to the premises or common areas. Landlord
shall perform such maintenance and charge the cost thereof to Tenant, which
shall be paid as additional rent within 10 days after delivery of Landlord's
invoice. Landlord shall keep reasonable records of such cost, which shall be
available for Tenant's inspection during normal business hours. Certain
items of such maintenance (such as landscape maintenance and snow removal)
are performed by Landlord on numerous areas owned and/or maintained by
Landlord, in addition to the premises, and the cost thereof cannot be
precisely ascribed to the premises. As to such services which are performed
on areas in addition to the premises, the cost for all areas so serviced
shall be allocated to the premises in proportion to the square feet of
building floor space in the premises compared to the square feet of building
floor space in the entire area to which such services are provided.
For the first year of the lease, Landlord agrees that the total of the
maintenance fees referred to in this paragraph will not exceed $0.80 per
square foot annually.
4.4 Private Security Service. Landlord may engage a private
security service, as an independent contractor, to patrol an area which
includes the premises. Tenant shall be included in the selection process.
If Landlord does so employ a private security service, which the tenant has
approved, the cost thereof shall be treated in the same manner as Maintenance
Expense and paid by Tenant as Additional Rent under the same provisions as
are applicable to Maintenance Expense. Tenant shall have no obligation to
participate under this Section 4.4, if Tenant's portion of the cost of such
services is more than the amount that Tenant has been paying for such
service.
Landlord shall have absolutely no obligation to engage a private
security service and shall not be liable for any damages or loss which might
have been averted had a private security service been engaged. If Landlord
does engage a private security service, Landlord shall not be liable for any
damages or loss which may result from actions, inactions, non-performance or
quality of performance by the security service. If the Tenant desires a
higher level of security services than Landlord provides, or wishes to obtain
an agreement that there will be liability for actions, inactions, non-
performance or quality of performance by a security service, Tenant may
itself engage such security service as Tenant chooses, at Tenant's sole
expense.
Nothing herein shall limit any action by Tenant against any person or
entity providing private security service, provided that Landlord shall not
be party to, or liable for any judgment entered in such an action, as a
defendant, cross defendant, third-party .defendant, or otherwise.
4.5 Late Charges. Tenant will pay a late charge equal to five
percent of any monthly rental payment or other payment not paid when due,
which payment shall be in addition to any interest elsewhere provided for.
4.6 Security Deposit. Landlord acknowledges receipt of the sum of
FIFTEEN THOUSAND FOUR HUNDRED SIX Dollars AND 25/100THS ($15,406.25) paid by
Tenant upon the execution hereof or a letter of credit for the same amount,
to be retained by Landlord as security for the performance of all of the
terms and conditions of this lease Agreement to be performed by Tenant,
including payment of all rental due under the terms hereof. Landlord shall
not owe Tenant any interest on the deposit. At Landlord's election,
deductions may be made by Landlord from the amount so retained for the
reasonable cost of repairs to the premises which should have been performed
by Tenant, for any rental payment or other sum delinquent under the terms
hereof, and for any sum used by Landlord in any manner to cure any default in
the performance of Tenant under the terms of this lease. In the event
deductions are so made during the rental term, upon notice by Landlord,
Tenant shall redeposit such amounts so expended so as to maintain the
security deposit in the amount as herein provided for, within 10 days after
receipt of such written demand from Landlord. Nothing herein contained shall
limit the liability of Tenant as to any repairs or maintenance of the
premises; and nothing herein shall limit the obligation of Tenant promptly to
pay all sums otherwise due under this lease and to comply with all the terms
and conditions hereof. The security deposit, less any sums withheld by
Landlord pursuant to the terms hereof, shall be repaid to Tenant within sixty
days after the date of termination of the lease.
4.7 Proration of Rent for Partial Months. If the lease term begins
on other than the first day of a month, base rent and additional rent from
such date until the first day of the next succeeding calendar month shall be
prorated on the basis of the actual number of days in such calendar month and
shall be payable in advance. If the lease term terminates on other than the
last day of the calendar month, rent from the first day of such calendar
month until such termination date shall be prorated on the basis of the
actual number of days in such month, and shall be payable in advance.
5. TAXES - REAL PROPERTY - PAID BY TENANT - PROTEST. Tenant shall
pay as additional rent, all real estate taxes and assessments, as shall,
from and after the date hereof, be assessed upon the premises and any
appurtenances or improvements thereto. Tenant shall pay one-twelfth (1/12)
of such estimated additional rent, in advance, with each monthly rental
payment. Landlord shall reasonably estimate such taxes and advise Tenant in
writing of the amount to be paid each month. Such payments shall be
separately accounted for by Landlord, (and may be deposited with any holder
of a mortgage or deed of trust on the premises) and shall be used to make
prompt payment of such taxes as they come due. If the estimated payments
made by Tenant are not sufficient to fully pay such taxes as they come due,
Tenant shall pay to Landlord any amount necessary to make up the deficiency
within ten (10) days of notice from Landlord. Landlord shall have no
obligation to pay any interest to Tenant on such additional rent, but
Landlord shall give Tenant an annual accounting showing credit for such
payments made by Tenant, and debits for payments made by Landlord or
Landlord's lender. If Tenant fails to make any required payment to Landlord,
Landlord may, but shall not be required to, pay any such tax and shall become
entitled to repayment from Tenant without demand, together with interest
thereon as elsewhere provided. The real estate taxes and assessments for the
year in which the term of this lease shall begin, as well as for the year in
which the lease shall end, shall be apportioned so that Tenant shall pay only
the portions that correspond with the portions of such years as are within
such lease term. In the event that the premises are assessed for tax
purposes as a part of a larger parcel, the tax on the entire parcel shall be
prorated in proportion to the number of square feet of building floor space
on each portion of the entire parcel.
Upon written request from Tenant, Landlord shall protest the tax
assessment on the premises, to the extent that Landlord, in good faith,
believes that such protest is justifiable and likely to be successful. In
the event of any such protest Tenant shall nevertheless pay to Landlord the
taxes as assessed, and Tenant shall be entitled to the appropriate share of
any refund. Tenant shall not protest any real property tax assessment on the
premises.
6. TAXES - TENANT'S PERSONAL PROPERTY - PAID BY TENANT. Tenant
shall be responsible for and timely pay any and all personal property taxes
assessed against any furniture, fixtures, equipment and items of a similar
nature installed and/or located in or about the premises by Tenant.
7. UTILITIES - TENANT TO OBTAIN AND PAY FOR. Landlord shall not be
required to furnish to Tenant any utility services of any kind, such as but
not limited to, water, hot water, heat, gas, electricity, light, telephone,
cable TV and power. Tenant shall obtain and pay all charges for gas,
electricity, light, heat, power, water (and lawn watering), and telephone,
cable TV or other communication services or other utilities used, rendered,
or supplied, upon or in connection with the premises. Tenant irrevocably
appoints Landlord as Tenant's attorney-in-fact solely for the purpose of
terminating Tenant's account with any provider of such utilities, if the
premises are abandoned by Tenant or if the lease is terminated.
8. HOLDING OVER. If, after expiration of the term of this lease,
Tenant shall remain in possession of the premises and continue to pay rent
without a written agreement as to such possession, then Tenant shall be
deemed a month-to-month Tenant and the rental rate during such holdover
tenancy shall be equivalent to one hundred fifteen percent (115%) the monthly
rental paid for the last month of tenancy under this lease. Such month-to-
month tenancy may be terminated by the Landlord at noon on any day which is
more than twenty-nine (29) days after date of delivery of Landlord's written
notice of termination to Tenant.
9. MODIFICATIONS OR EXTENSIONS. No holding over by Tenant shall
operate to renew or extend this lease without the written consent of
Landlord. No modification of this lease shall be binding unless endorsed
hereon or otherwise written and signed by the respective parties.
10. ALTERATION - CHANGES AND ADDITIONS - RESPONSIBILITY - NO HOLES IN
ROOF - NO NEW EQUIPMENT ON ROOF. Tenant may, during the term of this lease,
at Tenant's expense, erect inside partitions, add to existing electric power
service, add telephone outlets or other communication services, add light
fixtures, install additional heating and/or air conditioning or make such
other changes or alterations as Tenant may desire, provided that prior to
commencement of any such work, Tenant shall submit to Landlord a set of fully
detailed working drawings and specifications for the proposed alteration,
prepared by a licensed architect or engineer. If Tenant so requests,
Landlord will have the drawings and specifications prepared for Tenant, at
Tenant's expense, utilizing Landlord's in-house staff. Tenant will pay
Landlord's customary hourly charges for such services, as additional rent, to
be paid within 10 days after delivery of invoice. In particular, but not as
a limitation, the working drawings must fully detail changes to mechanical,
wiring and electrical, lighting, plumbing and HVAC systems to Landlord's
satisfaction. Landlord may refuse to consent to the alterations because of
the inadequacy of the drawings and specifications. Tenant may not commence
the alterations until Landlord's written consent has been given. If the
drawings and specifications are adequate, to Landlord's sole satisfaction,
then Landlord will not unreasonably withhold its consent to the alterations,
except that Landlord may withhold its consent to new or altered openings
(holes) in the roof, or placement of additional equipment on the roof, as
follows. Landlord may withhold its consent to new openings in the roof or
placement of additional equipment on the roof unless Landlord, in its sole
discretion, is satisfied that the risk of increased leakage or risk of more
frequent repairs or maintenance of the roof is acceptable to Landlord. Any
new or altered opening in the roof, or placement of additional equipment
thereon, shall be considered an alteration which requires the prior written
consent of Landlord. If within thirty (30) days after such plans and
specifications are submitted by Tenant to Landlord for such approval,
Landlord shall have not given Tenant notice of disapproval, stating the
reason for such disapproval, such plans and specifications shall be
considered approved by Landlord. As a condition of approval for such
alternations, Landlord shall have the right to require Tenant to furnish
adequate bond or other security acceptable to Landlord for performance of and
payment for the work to be performed. At the end of this lease, all such
fixtures, equipment, additions and/or alterations (except trade fixtures
installed by Tenant) shall be and remain the property of Landlord, provided,
however, Landlord shall have the option to require Tenant to remove any or
all such fixtures, equipment, additions, and/or alterations and restore the
premises to the condition existing immediately prior to such change and/or
installation, normal wear and tear excepted, all at Tenant's cost and
expense. All work done by Tenant shall conform to appropriate city, county
and state building codes and health standards and OSHA standards and Tenant
shall be responsible for obtaining and paying for building permits.
If any such work done by Tenant causes damage to the structural portion,
exterior finish or roof of the premises, then the costs of repair of such
damage, and of all further maintenance and repairs to such structural
portion, exterior finish or roof during the term of the lease shall
thereafter be the responsibility of Tenant.
Neither Landlord's right of entry, nor any actual inspection by
Landlord, nor Landlord's actual knowledge of any alteration accomplished or
in progress shall constitute a waiver of Landlord's rights concerning
alterations by Tenant.
11. MECHANIC'S LIENS. Tenant shall pay all costs for construction
done by it or caused to be done by it on the premises as permitted by this
lease. Tenant shall keep the building, other improvements and land of which
the premises are a part free and clear of all mechanic's liens resulting from
construction by or for Tenant. Tenant shall have the right to contest the
correctness or validity of any such lien if, immediately on demand by
Landlord, Tenant deposits with Landlord and/or any appropriate court or title
insurance company a bond or sum of money sufficient to allow issuance of
title insurance against the lien and/or to comply with the statutory
requirements for discharge of the lien found in 38-22-130 and 131,
Colorado Revised Statutes, or any successor statutory provision. Landlord
shall have the right to require Tenant's contractor(s), subcontractors and
materialmen to furnish to both Tenant and Landlord adequate lien waivers on
work or materials paid for, in connection with all periodic or final
payments, by endorsement on checks, making of joint checks, or otherwise, and
Landlord shall have the right to review invoices prior to payment. Landlord
reserves the right to post notices on the premises that Landlord is not
responsible for payment of work performed and that Landlord's interest is not
subject to any lien.
12. UNIFORM SIGNS; NO "FOR RENT" SIGNS. It is Landlord's intent to
maintain uniformity of signs throughout the area where signs may be
controlled by Landlord. Tenant shall place no signs on the premises (except
inside Tenant's portion of the building on the premises) without prior
written consent of Landlord, which consent shall not be unreasonably
withheld.
Tenant may not put any signs on the premises indicating that the same
are for rent, or available for assignment or sublease, and may put no signs
of real estate brokers on the premises.
13. MAINTENANCE AND REPAIRS OF THE BUILDING; LANDLORD NOT LIABLE FOR
DAMAGE TO CONTENTS. Landlord shall be responsible for maintenance and
repairs of the structural portions, the roof and the exterior finish of the
building (other than glass) on the premises at the sole cost and expense of
Landlord; provided, however, that if any such maintenance or repairs are
necessitated by the acts of Tenant or its employees, agents, contractors, sub-
contractors, licensees, invitees or guests, Tenant shall reimburse Landlord
for the cost of same, as additional rent, to be paid within 10 days after
delivery of invoice. All other maintenance, repairs and replacements shall
be performed by Tenant, at its own expense, including all necessary
maintenance, repairs and replacements to pipes, plumbing systems, electrical
systems, window or other glass, doors, fixtures, interior decorations, and
all other appliances and appurtenances. Such repairs and replacements,
interior and exterior, ordinary as well as extraordinary, shall be made
promptly, as and when necessary, so that the premises are maintained in first
class condition. All such maintenance, repairs and replacements shall be in
quality and class at least equal to the original work. On default of Tenant
in making such maintenance, repairs or replacements, Landlord may, but shall
not be required to, make such repairs and replacements for Tenant's account,
and the expense shall constitute and be collectable as additional rent,
together with interest thereon as hereinafter provided.
Notwithstanding the Landlord's obligations elsewhere set forth in this
lease, under no circumstances shall Landlord be liable for damage to the
contents of the building or consequential damages to Tenant resulting from
roof or window leaks or failure, or leakage of any water pipe or gas pipe,
failure of any communications system or alarm, failure or leakage or
discharge by any sprinkler system or other fire suppression system, power
surges, power shortages or outage, sewer failure or sewage backup, or failure
or malfunction of any heating or cooling system. The term "contents" shall
include, but shall not be limited to, improvements made by Tenant, and data
bases and other information stored or contained in computers, hard or floppy
disks, tapes, computer chips and other memory or storage devices. The term
"consequential damages" shall include, but not be limited to, Tenant's
inability to perform any contract on which Tenant is bound, loss of sales,
loss of profit, or loss of business reputation or goodwill.
14. CONDITION UPON SURRENDER - RETURN OF KEYS. Tenant shall vacate
the premises in the same condition as when received on the date hereof,
ordinary wear and tear excepted, and shall remove all of Tenant's property,
so that Landlord can repossess the premises not later than noon on the day
upon which this lease or any extension hereof ends, whether upon notice,
holdover or otherwise. The Landlord shall have the same rights to enforce
this covenant by ejectment and for damages or otherwise as for the breach of
any other conditions or covenant of this lease. Upon termination of the
lease, Tenant shall deliver to Landlord keys which operate all locks on the
exterior or interior of the premises, including, without limitation, keys to
locks on cupboards and closets. Tenant shall retrieve all keys to the
premises which Tenant has delivered to employees or others, and include same
with the keys delivered to Landlord.
15. CARE OF GROUNDS; STORAGE OUTSIDE THE BUILDING; NO WASTE; NO
NUISANCE; COMPLIANCE WITH LAWS; FUTURE RULES AND REGULATIONS. Tenant shall
use the premises for research and development, office, light manufacturing
and other uses appurtenant thereto. Except as otherwise provided herein,
Tenant will maintain the grounds which are part of the premises, keeping them
free from accumulation of trash or debris and will be responsible for snow
removal up to two inches of snow. Tenant shall conform to all present and
future laws and ordinances of any governmental authority having jurisdiction
over the premises, and will make no use in violation of same. No outside
storage shall be allowed unless first approved by Landlord in writing and
then only in such areas as are designated as storage areas by Landlord.
Tenant shall not commit or suffer any waste on the premises. Tenant shall
not permit any nuisance to be maintained on the premises nor permit any
disorderly conduct, noise or other activity having a tendency to annoy or to
disturb occupants of any other part of the property of which the premises are
a part and/or of any adjoining property.
As part of a common scheme for orderly development, use and protection,
of its various properties and those properties adjacent to the premises,
Landlord may impose upon Tenant reasonable rules and regulations concerning
parking and vehicle traffic; locations at which deliveries are to be made and
access thereto; trash disposal; use of common areas such as recreation areas,
corridors, and sidewalks; signs and directories; use of communication wires
or cables which are used in common but which may be inadequate fully to serve
all the demands placed upon them; provided that such rules and regulations
shall be uniform in their application and shall not violate the express terms
of this lease elsewhere set forth.
16. LIABILITY FOR OVERLOAD. Tenant shall be liable for the cost of
any damage to the premises or the building or the sidewalks and pavements
adjoining the same which results from the movement of heavy articles or heavy
vehicles or utility cuts made by or on behalf of Tenant. Tenant shall not
overload the floors or any other part of the premises.
17. NO USE OF PREMISES IN VIOLATION OF INSURANCE POLICIES. Tenant
shall make no use of the premises which would void or make voidable any
insurance upon the premises.
18. INSURANCE.
18.1 All Risk Insurance. Tenant shall keep the building and
improvements insured throughout the term of this lease against losses covered
by an "All Risk" policy, as defined in the insurance industry, which shall
also cover 1) loss of rental and 2) deposit of Hazardous Materials on the
premises by those acts of third parties which constitute vandalism. The
deductible amount shall not exceed $50,000.
18.2 General Liability Insurance. Tenant agrees to carry
comprehensive general liability insurance in the minimum total amount of ONE
MILLION Dollars ($1,000,000.00 ) for each occurrence of bodily injury and ONE
MILLION Dollars ($1,000,000.00) for each occurrence of property damage.
Tenant shall supply to Landlord certificates of insurance as provided in
Paragraph 18.6. In the event Tenant fails to secure such insurance or to
give evidence to Landlord of such insurance by depositing with Landlord
certificates as provided below, Landlord may purchase such insurance in
Tenant's name and charge Tenant the premiums therefor. Bills for the
premiums therefor shall be deemed and paid as additional rent due within 10
days after delivery of invoice. The Landlord shall be an additional named
insured on the policy.
18.3 Tenant Improvements. Tenant agrees to carry insurance covering
all of Tenant's leasehold improvements, alterations, additions or
improvements, trade fixtures, merchandise and personal property from time to
time in, on or upon the premises, in an amount not less than one hundred
percent (100%) of the full replacement cost of such items from time to time
during the term of this lease, providing protection against any peril
included within an "All-Risk" policy, with a deductible amount not to exceed
$10,000. Any policy proceeds shall be used for the repair or replacement of
the property damaged or destroyed unless this lease shall cease and terminate
due to destruction of the premises as provided below.
18.4 Other Insurance. Tenant agrees to carry insurance against such
other hazards and in such amounts as the holder of any mortgage or deed of
trust to which the lease is subordinate may require from time to time.
18.5 Waiver of Subrogation. Landlord and Tenant grant to each other
on behalf of any insurer providing fire and extended insurance coverage to
either of them covering the premises, improvements thereon, and contents
thereof, a waiver of any right of subrogation or recovery of any payments of
loss under such insurance, such waiver to be effective so long as each is
empowered to grant such waiver under the terms of its insurance policy, and
to give all necessary notice of such waiver to its insurance carriers.
18.6 Other Provisions Regarding Tenant's Insurance. All insurance
required of Tenant in this lease shall be effected under enforceable policies
issued by insurers of recognized good financial condition licensed to do
business in this State. At least fifteen (15) days prior to the expiration
date of any such policy, a certificate evidencing a new or renewal policy
shall be delivered by Tenant to Landlord. Within fifteen (15) days after the
premium on any policy shall become due and payable, Landlord shall be
furnished with satisfactory evidence of its payment. To the extent
obtainable, all policies shall contain an agreement that notwithstanding any
act or negligence of Tenant which might otherwise result in forfeiture of
such insurance, such policies shall not be canceled except upon ten (10) days
prior written notice to Landlord, and that the coverage afforded thereby
shall not be affected by the performance of any work in or about the
premises.
If Tenant provides any insurance required of Tenant by this lease in the
form of a blanket policy, Tenant shall furnish satisfactory proof that such
blanket policy complies in all respects with the provisions of this lease,
and that the coverage thereunder is at least equal to the coverage which
would be provided under a separate policy covering only the premises.
18.7 Changes in Standard Policies. If the definition of insurance
industry policy language relating to "All-Risk" insurance or other term
changes, the insurance requirements hereunder shall be modified to conform to
the existing insurance industry language; however, the dollar amount of the
coverages required under this lease shall not be less than those existing at
the time of the effective beginning date of this lease.
19. FIRE REGULATIONS - TENANT RESPONSIBILITY. It shall be Tenant's
sole and exclusive responsibility to meet all fire regulations of any
governmental unit having jurisdiction over the premises to the extent such
regulations affect Tenant's operations, at Tenant's sole expense.
20. REPLACEMENT OF BUILDING - CASUALTY DAMAGE. If the premises are
damaged or destroyed by fire or other cause at any time after the date of
commencement of this lease, Landlord shall proceed with due diligence to
repair or restore the same to the same condition as existed before such
damage or destruction, and as soon as possible thereafter but in no event
more than 180 days from the date of damage or destruction will give
possession to the Tenant of the premises without diminution or change of
location. If Landlord does not complete all repairs and restoration within
180 days, Tenant may at its reasonable discretion terminate the lease.
Provided, however, that in case of total destruction of the premises by fire,
or in case the premises are so badly damaged that, in the opinion of the
Landlord, it is not feasible to repair or rebuild the same, then, either
Tenant or Landlord shall have the right to terminate this lease instead of
rebuilding the improvements; provided, however, that the terminating party
shall give the other party written notice of its intention to terminate, said
notice to be served not later than thirty (30) days after the occurrence of
the damage to the property. In the event the premises are rendered
temporarily untenantable because of fire or other casualty, base monthly rent
shall abate on the untenantable area until the premises are restored to their
former condition, abatement to be based on the square feet of building floor
space in the untenantable area compared to the total square feet of building
floor space on the premises. Provided, however, that to the extent the
damage or destruction results from the negligence or other action of Tenant
or its employees, agents, contractors, subcontractors, invitees, guests or
licensees, Tenant shall pay for the restoration or repair, to the extent the
cost of same is not covered by insurance.
21. ENVIRONMENTAL MATTERS.
21.1 Definitions.
21.1.1 Hazardous Material. Hazardous Material means any substance:
(a) the presence of which requires investigation, notice or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; or
(b) which is or becomes defined as a "hazardous material,"
"hazardous waste," "hazardous substance," "regulated substance," "pollutant"
or "contaminant" under any federal, state or local statute, regulation, rule
or ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. 9601 et seq.), Toxic Substances Control Act (15 U.S.C. _ 2601 et
seq.), the Colorado Underground Storage Tank Act (Colo. Rev. Stat. 25-18-
101 et seq.), and/or the Resource Conservation and Recovery Act (42 U.S.C. _
6901 et seq.); or
(c) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or
becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the State
of Colorado or any political subdivision thereof; or
(d) the presence of which on the premises causes or threatens to
cause a nuisance upon the premises or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about the
premises; or
(e) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(f) which contains polychlorinated biphenyls (PCBs), asbestos or
urea formaldehyde foam insulation; or
(g) radon gas.
21.1.2 Environmental Requirements. Environmental Requirements means
all applicable present and future statutes, regulations, rules, ordinances,
codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items, of all governmental agencies,
departments, commissions, boards, bureaus, or instrumentalities of the United
States, states and political subdivisions thereof and all applicable
judicial, administrative, and regulatory decrees, judgments, and orders
relating to the protection of human health or the environment, including,
without limitation:
(a) All requirements, including but not limited to those pertaining
to reporting, licensing, permitting, investigation, and remediation of
emissions, discharges, releases, or threatened releases of Hazardous
Materials, chemical substances, pollutants, contaminants, or hazardous or
toxic substances, materials or wastes whether solid, liquid, or gaseous in
nature, into the air, surface water, groundwater, or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of chemical substances, pollutants, contaminants, or
hazardous or toxic substances, materials, or wastes, whether solid, liquid,
or gaseous in nature; and
(b) All requirements pertaining to the protection of the health and
safety of employees or the public.
21.1.3 Environmental Damages. Environmental Damages means all
claims, judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, liens, costs, and expenses of investigation
and defense of any claim, whether or not such claim is ultimately defeated,
and of any good faith settlement or judgment, of whatever kind or nature,
contingent or otherwise, matured or unmatured, foreseeable or unforeseeable,
including without limitation reasonable attorneys' fees and disbursements and
consultants' and witnesses' fees, any of which are incurred at any time as a
result of the existence of Hazardous Material upon, about, beneath the
premises or migrating or threatening to migrate to or from the premises, or
the existence of a violation of Environmental Requirements pertaining to the
premises, including without limitation:
(a) Damages for personal injury, or injury to property or natural
resources occurring upon or off of the premises, foreseeable or
unforeseeable, including, without limitation, lost profits, consequential
damages, the cost of demolition and rebuilding of any improvements on real
property, interest and penalties including but not limited to claims brought
by or on behalf of employees of Tenant;
(b) Fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs incurred in connection
with the investigation or remediation of such Hazardous Materials or
violation of Environmental Requirements including, but not limited to, the
preparation of any feasibility studies or reports or the performance of any
cleanup, remediation, removal, response, abatement, containment, closure,
restoration or monitoring work required by any federal, state or local
governmental agency or political subdivision or court, or reasonably
necessary to make full economic use of the premises and any other property in
a manner consistent with its current use or otherwise expended in connection
with such conditions, and including without limitation any attorneys' fees,
costs and expenses incurred in enforcing this agreement or collecting any
sums due hereunder;
(c) Liability to any third person or governmental agency to
indemnify such person or agency for costs expended in connection with the
items referenced herein; and
(d) Diminution in the value of the premises and adjoining property,
and damages for the loss of business and restriction on the use of or adverse
impact on the marketing of rentable or usable space or of any amenity of the
premises and adjoining property.
21.2 Tenant's Obligation to Indemnify, Defend and Hold Harmless.
Tenant, its successors, assigns and guarantors, agree to indemnify, defend,
reimburse and hold harmless the following persons from and against any and
all Environmental Damages arising from activities of Tenant or its employees,
agents, contractors, subcontractors, or guests, licensees, or invitees which
(1) result in the presence of Hazardous Materials upon, about or beneath the
premises or migrating to or from the premises, or (2) result in the violation
of any Environmental Requirements pertaining to the premises and the
activities thereon:
21.2.1 Landlord;
21.2.2 any other person who acquires an interest in the premises in
any manner, including but not limited to purchase at a foreclosure sale or
otherwise; and
21.2.3 the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees, affiliates, lessees,
mortgagees, trustees, heirs, devisees, successors, assigns, guests and
invitees of such persons.
This obligation shall include, but not be limited to, the burden and
expense of the indemnified parties in defending all claims, suits and
administrative proceedings, including attorneys' fees and expert witness and
consulting fees, even if such claims, suits or proceedings are groundless,
false or fraudulent, and conducting all negotiations of any description, and
paying and discharging, when and as the same become due, any and all
judgments, penalties or other sums due against such indemnified persons, and
all such expenses incurred in enforcing the obligation to indemnify. Tenant,
at its sole expense, may employ additional counsel of its choice to associate
with counsel representing the indemnified parties.
21.3 Tenant's Obligation to Remediate. Notwithstanding the
obligation of Tenant to indemnify Landlord pursuant to this agreement, Tenant
shall, upon demand of Landlord, and at its sole cost and expense, promptly
take all actions to remediate the premises which are reasonably necessary to
mitigate Environmental Damages or to allow full economic use of the premises,
or are required by Environmental Requirements, which remediation is
necessitated by the 1) introduction of a Hazardous Material upon, about or
beneath the premises or 2) a violation of Environmental Requirements, either
of which is caused by the actions of Tenant, its employees, agents,
contractors, subcontractors, guests, invitees or licensees. Such actions
shall include, but not be limited to, the investigation of the environmental
condition of the premises, the preparation of any feasibility studies,
reports or remedial plans, and the performance of any cleanup, remediation,
containment, operation, maintenance, monitoring or restoration work, whether
on or off of the premises. Tenant shall take all actions necessary to
restore the premises to the condition existing prior to the introduction of
Hazardous Material upon, about or beneath the premises, notwithstanding any
lesser standard of remediation allowable under applicable law or governmental
policies. All such work shall be performed by one or more contractors,
selected by Tenant and approved in advance and in writing by Landlord.
Tenant shall proceed continuously and diligently with such investigatory and
remedial actions, provided that in all cases such actions shall be in
accordance with all applicable requirements of governmental entities. Any
such actions shall be performed in a good, safe and workmanlike manner and
shall minimize any impact on the business conducted at the premises. Tenant
shall pay all costs in connection with such investigatory and remedial
activities, including but not limited to all power and utility costs, and any
and all taxes or fees that may be applicable to such activities. Tenant
shall promptly provide to Landlord copies of testing results and reports that
are generated in connection with the above activities, and copies of any
correspondence with any governmental entity related to such activities.
Promptly upon completion of such investigation and remediation, Tenant shall
permanently seal or cap all monitoring wells and test holes to industrial
standards in compliance with applicable federal, state and local laws and
regulations, remove all associated equipment, and restore the premises to the
maximum extent possible, which shall include, without limitation, the repair
of any surface damage, including paving, caused by such investigation or
remediation hereunder. Provided, however, that Tenant shall not be obligated
to remediate environmental damages which result from seepage of Hazardous
Materials onto the premises from adjacent property unless the presence on the
adjacent property was caused by Tenant or its employees, agents, contractors,
subcontractors, guests, invitees or licensees.
21.4 Notification. If Tenant shall become aware of or receive
notice or other communication concerning any actual, alleged, suspected or
threatened violation of Environmental Requirements, or liability of Tenant
for Environmental Damages in connection with the premises or past or present
activities of any person thereon, or that any representation set forth in
this agreement is not or is no longer accurate, including but not limited to
notice or other communication concerning any actual or threatened
investigation, inquiry, lawsuit, claim, citation, directive, summons,
proceeding, complaint, notice, order, writ, or injunction, relating to same,
then Tenant shall deliver to Landlord, within ten days of the receipt of such
notice or communication by Landlord, a written description of said violation,
liability, correcting information, or actual or threatened event or
condition, together with copies of any such notice or communication. Receipt
of such notice shall not be deemed to create any obligation on the part of
Landlord to defend or otherwise respond to any such notification or
communication.
21.5 Negative Covenants.
21.5.1 No Hazardous Material on Premises. Except in strict
compliance with all Environmental Requirements, Tenant shall not cause,
permit or suffer any Hazardous Material to be brought upon, treated, kept,
stored, disposed of, discharged, released, produced, manufactured, generated,
refined or used upon, about or beneath the premises by Tenant, its agents,
employees, contractors, subcontractors, guests, licensees or invitees, or any
other person. Tenant shall deliver to Landlord copies of all documents which
Tenant provides to any governmental body in connection with compliance with
Environmental Requirements with respect to the premises, such delivery to be
contemporaneous with provision of the documents to the governmental agency.
21.5.2 No Violations of Environmental Requirements. Tenant shall
not cause, permit or suffer the existence or the commission by Tenant, its
agents, employees, contractors, subcontractors or guests, licensees or
invitees, or by any other person of a violation of any Environmental
Requirements upon, about or beneath the premises or any portion thereof.
21.5.3 No Environmental or Other Liens. Tenant shall not create or
suffer or permit to exist with respect to the premises, any lien, security
interest or other charge or encumbrance of any kind, including without
limitation, any lien imposed pursuant to section 107(f) of the Superfund
Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1) or any
similar state statute to the extent that such lien arises out of the actions
of Tenant, its agents, employees, contractors, subcontractors or guests,
licensees or invitees.
21.6 Landlord's Right to Inspect and to Audit Tenant's Records.
Landlord shall have the right in its sole and absolute discretion, but not
the duty, to enter and conduct an inspection of the premises and to inspect
and audit Tenant's records concerning Hazardous Materials at any reasonable
time to determine whether Tenant is complying with the terms of the lease,
including but not limited to the compliance of the premises and the
activities thereon with Environmental Requirements and the existence of
Environmental Damages as a result of the condition of the premises or
surrounding properties and activities thereon. If Landlord has reasonable
cause to believe Tenant is in default with respect to any of the provisions
of this lease related to Hazardous Materials, Environmental Requirements or
Environmental Damages, then Landlord shall have the right, but not the duty,
to retain at the sole expense of Tenant an independent professional
consultant to enter the premises to conduct such an inspection and to inspect
and audit any records or reports prepared by or for Tenant concerning such
compliance. Tenant hereby grants to Landlord the right to enter the premises
and to perform such tests on the premises as are reasonably necessary in the
opinion of Landlord to assist in such audits and investigations. Landlord
shall use reasonable efforts to minimize interference with the business of
Tenant by such tests inspections and audits, but Landlord shall not be liable
for any interference caused thereby.
21.7 Landlord's Right to Remediate. Should Tenant fail to perform
or observe any of its obligations or agreements pertaining to Hazardous
Materials or Environmental Requirements, then Landlord shall have the right,
but not the duty, without limitation upon any of the rights of Landlord
pursuant to this agreement, to enter the premises personally or through its
agents, consultants or contractors and perform the same. Tenant agrees to
indemnify Landlord for the costs thereof and liabilities therefrom as set
forth in Paragraph 21.2.
21.8 Landlord's Obligation to Remediate. Landlord agrees to
remediate all Environmental Damages 1) caused by Landlord, its agents,
employees, contractors, subcontractors, guests, licensees or invitees, or 2)
not so caused but arising prior to Commencement Date hereof and not caused by
Tenant, its agents, employees, contractors, subcontractors, guests, licensees
or invitees.
21.9 Landlord's Obligation to Indemnify, Defend and Hold Harmless
Concerning Environmental Matters. Landlord, its successors, assigns and
guarantors, agree to indemnify, defend, reimburse and hold harmless the
following persons from and against any and all Environmental Damages arising
from activities of Landlord or its employees, agents, contractors,
subcontractors or guests, licensees, invitees; or which occurred prior to the
Commencement Date (and were not caused by Tenant, its agents, employees,
contractors, subcontractors, guests, licensees or invitees) which (1) result
in the presence of Hazardous Materials upon, about or beneath the premises or
migrating to or from the premises, or (2) result in the violation of any
Environmental Requirements pertaining to the premises and the activities
thereon:
21.9.1 Tenant;
21.9.2 the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees, affiliates, lessees,
mortgagees, trustees, heirs, devisees, successors, assigns and invitees of
Tenant.
This obligation shall include, but not be limited to, the burden and
expense of the indemnified parties in defending all claims, suits and
administrative proceedings, including attorneys' fees and expert witness and
consulting fees, even if such claims, suits or proceedings are groundless,
false or fraudulent, and conducting all negotiations of any description, and
paying and discharging, when and as the same become due, any and all
judgments, penalties or other sums due against such indemnified persons, and
all such expenses incurred in enforcing the obligation to indemnify.
Landlord, at its sole expense, may employ additional counsel of its choice to
associate with counsel representing Tenant.
21.10 Survival of Environmental Obligations. The obligations of
Landlord and Tenant as set forth in Paragraph 21 and all of its subparagraphs
shall survive termination of this lease.
22. ENTRY BY LANDLORD. Landlord, or its authorized representative,
and/or any lender or prospective lender, shall have the right to enter the
premises during the lease term at all reasonable times during usual business
hours for purposes of inspection, and/or the performance of any maintenance,
repairs or replacement therein. Landlord shall give Tenant such advance
notice of entry as is reasonable in light of the purpose for the entry.
Landlord shall have the right to enter the premises and show the same to a
prospective tenant during the last 180 days of this lease or any extended
term, unless the term shall have been extended by mutual written agreement or
delivery of notice of exercise of any option to extend. In all
circumstances, Landlord shall use its best efforts to conduct its business
while in Tenant premises as not to interfere with Tenant's operations or use
of the premises.
23. DEFAULT - REMEDIES OF LANDLORD.
23.1 Default Defined. Any one or more of the following events (each
of which is herein sometimes called "event of default") shall constitute a
default:
23.1.1 Tenant defaults in the due and punctual payment of any rent,
taxes, tax deposits, insurance premiums, maintenance fees or other sums
required to be paid by Tenant under this lease when and as the same shall
become due and payable;
23.1.2 Tenant abandons the premises;
23.1.3 Tenant defaults in the performance of or compliance with any of
the covenants, agreements, terms and conditions contained in this lease other
than those referred to in the foregoing Paragraph 23.1.1, and such default
shall continue for a period of 30 days after written notice thereof from
Landlord to Tenant, and shall not be cured as permitted by Paragraph 23.9;
23.1.4 Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or takes the benefit of any relevant
legislation that may be in force for bankrupt or insolvent debtors or files
any petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law or regulation, or
proceedings are taken by Tenant under any relevant Bankruptcy Act in force in
any jurisdiction available to Tenant, or Tenant seeks or consents to or
acquiesces in the appointment of any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the
premises, or makes any general assignment for the benefit of creditors;
23.1.5 A petition is filed against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal, state or other statute, law or
regulation, and shall remain undismissed for an aggregate of 120 days, or if
any trustee, receiver or liquidator of Tenant or of all or any substantial
part of its properties or of the premises is appointed without the consent or
acquiescence of Tenant and such appointment remains unvacated for an
aggregate of 120 days.
23.2 Landlord's Remedies in the Event of Default. In the event of
any event of default, Landlord shall have the option, without further notice
to Tenant or further demand for performance exercise any one or more of the
following remedies (and any other remedy available at law or in equity):
23.2.1 If Tenant has been late in payment of rent or other sums due
on four or more occasions during any period of one year, Landlord, without
terminating this lease, may 1) require that all future payments be made by
bank cashier's check, and/or 2) require an additional security deposit in the
amount of the then-current base rent for two months, and/or 3) require that
rent for each month be paid on or before the 15th day of the preceding month.
Such requirement shall be imposed by Landlord's written notice delivered to
Tenant. The additional security deposit shall be paid within 10 days after
delivery of the notice. The Landlord may or may not exercise the remedies
provided in this Paragraph 23.2.1, in its sole discretion. The exercise of
the remedies provided in this Paragraph 23.2.1 shall not be required prior to
the exercise of any other available remedy.
23.2.2 To institute suit against Tenant to collect each installment
of rent or other sum as it becomes due or to enforce any other obligation
under this lease even though the premises be left vacant subject to
Landlord's obligation to mitigate damages.
23.2.3 As a matter of right, to procure the appointment of a
receiver for the premises by any court of competent jurisdiction upon ex
parte application. All rents, issues and profits, income and revenue from
the premises shall be applied by such receiver to the payment of the rent,
together with any other obligations of the Tenant under this lease.
23.2.4 To re-enter and take possession of the premises and all
personal property therein and to remove Tenant and Tenant's agents and
employees therefrom, and either:
1) terminate this lease and sue Tenant for damages for breach of
the obligations of Tenant to Landlord under this lease; or
2) without terminating this lease, relet, assign or sublet the
premises and personal property, as the agent and for the account of Tenant in
the name of Landlord or otherwise, upon the terms and conditions Landlord
deems fit with the new Tenant for such period (which may be greater or less
than the period which would otherwise have constituted the balance of the
term of this lease) as Landlord may deem best, and collect any rent due upon
any such reletting providing that if the new lease term shall be greater than
Tenant's original term, Tenant shall be released from any and all further
obligation upon the expiration of Tenant's original term save for amounts
accrued upon the expiration of Tenant's original term. In this event, the
rents received on any such reletting shall be applied first to the expenses
of reletting and collecting, including, without limitation, all repossession
costs, reasonable attorneys' fees, and real estate brokers' commissions,
alteration costs and expenses of preparing said premises for reletting, and
thereafter toward payment of the rental and of any other amounts payable by
Tenant to Landlord. If the sum realized shall not be sufficient to pay the
rent and other charges due from Tenant, then within five days after demand,
Tenant will pay to Landlord any deficiency as it accrues. Landlord may sue
therefor as each deficiency shall arise if Tenant shall fail to pay such
deficiency within the time limited.
23.3 Tenant to Surrender Peaceably. In the event Landlord elects to
re-enter or take possession of the premises, Tenant shall quit and peaceably
surrender the premises to Landlord, and Landlord may enter upon and re-enter
the premises and possess and repossess itself thereof, by force, summary
proceedings, ejectment or otherwise, and may dispossess and remove Tenant and
may have, hold and enjoy the premises and the right to receive all rental
income of and from the same.
23.4 No Termination by Re-Entry. No re-entry or taking of
possession by Landlord shall be construed as an election on Landlord's part
to terminate or accept surrender of this lease unless Landlord's written
notice of such intention is delivered to Tenant.
23.5 Injunction. In the event of any breach by Tenant of any of the
agreements, terms, conditions or covenants contained in this lease, Landlord,
in addition to any and all other rights, shall be entitled to enjoin such
breach and shall have the right to invoke any right and remedy allowed at law
or in equity or by statute or otherwise for such breach as though re-entry,
summary proceedings, and other remedies were not provided for in this lease.
23.6 Remedies Listed are Cumulative and Non-Exclusive. The
enumeration of the foregoing remedies does not exclude any other remedy, but
all remedies are cumulative and shall be in addition to every other remedy
now or hereafter existing at law or in equity, including, but not limited to,
the remedies provided in Paragraph 24 concerning Landlord's security interest
in Tenant's personalty and Landlord's right to remove same.
23.7 Interest on Sums Past Due. All rent and all other amounts due
from Tenant hereunder shall bear interest at the rate of twelve (12%) percent
per annum compounded quarter-annually from their respective due dates until
paid, provided that this shall in no way limit, lessen or affect any claim
for damages by Landlord for any breach or default by Tenant.
23.8 Attorneys' Fees. Reasonable attorneys' fees, expert witness
fees, consulting fees and other expenses incurred by either party by reason
of the breach by either party in complying with any of the agreements, terms,
conditions or covenants of this lease shall constitute additional sums to be
paid to the prevailing party on demand.
23.9 Time to Cure Certain Non-Monetary Defaults. In the event of
any default other than failure to pay a sum of money, for which notice has
been given as provided herein, which because of its nature can be cured but
not within the period of grace heretofore allowed, then such default shall be
deemed remedied, if the correction thereof shall have been commenced within
said grace period or periods and shall, when commenced, be diligently
prosecuted to completion.
23.10 Landlord Default. If Landlord is in default under any of its
obligations and the default continues for thirty (30) days after written
notice from Tenant (subject to extension pursuant to 23.9), Tenant may pursue
all remedies at law or in equity. Tenant may, but shall not be required to,
correct such default for the Landlord's account , and the expense shall be
promptly paid within ten (10) days by Landlord; however, in no event shall
Tenant have the right to rental abatement, offset of expenses against rental,
or the right to terminate this lease, subject to Tenant's legal or equitable
remedies.
Tenant may not offset any sum due or assertedly due from Landlord to
Tenant against any sum due from Tenant to Landlord.
Tenant agrees that if Tenant obtains a judgment against Landlord arising
out of Landlord's obligations under this lease, such judgment may be
satisfied only by execution and sale of Landlord's interest in the premises
leased hereby. Tenant may not seek execution against other property of
Landlord, nor pursue any judgment, execution or other remedy against the
partners or other owners of Landlord or any of their property. Immediately
upon receipt of Landlord's written request, Tenant will release any property
(other than the premises leased hereby) from the lien of any judgment
obtained by Tenant against Landlord arising out of Landlord's obligations
under this lease.
24. LEGAL PROCEEDINGS AGAINST TENANT BY THIRD PARTIES; TENANT TO PAY
LANDLORD'S FEES. In the event of any proceeding at law or in equity wherein
Landlord, without being in default as to its covenants under the terms
hereof, shall be made a party to any litigation by reason of Tenant's
interest in the premises, or, in the event Landlord shall be required to
commence any legal proceedings relating to the premises and Tenant's
occupancy thereof and Tenant's relation thereto, but only after notice to and
consent by Tenant, Landlord shall be allowed and Tenant shall be liable for
and shall pay all costs and expenses incurred by Landlord, including
reasonable attorneys' fees, expert witness fees and consultant's fees.
25. INDEMNIFICATION BY TENANT AND BY LANDLORD. The Tenant shall
indemnify and save harmless Landlord of and from liability for damages or
claims against Landlord, including costs, attorneys' fees and expenses of
Landlord in defending against the same, on account of injuries to any person
or property, if the injuries are caused by the negligence or willful
misconduct of Tenant, its agents, servants or employees, or of any other
person entering upon the premises under express or implied invitation of
Tenant or if such injuries are the result of the violation by Tenant, its
agents, servants, or employees, of laws, ordinances, other governmental
regulations, or of the terms of this lease.
The Landlord shall indemnify and save harmless Tenant of and from
liability for damages or claims against Tenant, including costs, attorneys'
fees and expenses of Tenant in defending against the same, on account of
injuries to any person or property, if the injuries are caused by the
negligence or willful misconduct of Landlord, its agents, servants or
employees, or of any other person entering upon the premises under express or
implied invitation of Landlord or where such injuries are the result of the
violation by Landlord, its agents, servants or employees, of laws,
ordinances, other governmental regulations, or of the terms of this lease..
Landlord provides recreation facilities for the use of employees of
Tenant and other occupants within the property developed by Landlord, which
property presently includes LONG'S PEAK INDUSTRIAL PARK, FIRST, SECOND and
THIRD FILINGS, and portions of ST. VRAIN CENTRE, both in the City of Longmont
and County of Boulder, Colorado, and will include such additional property in
the immediate vicinity thereof as may be developed by Landlord. The term
"recreation facilities" includes, at present, a fitness trail with 34
exercise stations, volleyball courts, basketball courts, and a park, and will
include such additional facilities as Landlord may provide.
Tenant shall indemnify and save harmless Landlord of and from Liability
for damages or claims against Landlord, including costs, attorneys' fees and
expenses of Landlord in defending against the same, on account of any injury
to (or death of) an employee of Tenant arising out of use of the recreation
facilities, unless such death or injury is caused by Landlord's gross
negligence or willful misconduct
26. ASSIGNMENT OR SUBLETTING. Tenant shall not assign, mortgage, or
encumber this lease, nor sublet or permit the premises or any part thereof to
be used by others, without the prior written consent of Landlord in each
instance, which consent shall not be unreasonably withheld.
In connection with an assignment, sublease or encumbrance Landlord may
require the submittal of detailed financial information about the prospective
subtenant or assignee, to be reviewed by Landlord, and may require a
guarantee of the obligations of the prospective subtenant or assignee, and
may require detailed financial information about the guarantor, to be
reviewed by Landlord; and there may be alterations to this lease and
alterations to the building which are necessary to consummate the
transaction. The Landlord may require Tenant or the prospective assignee or
sub-tenant to pay for the alterations to the building, and may require that
Landlord perform same. In addition, Landlord may charge a fee of two percent
of base rent for the first five years of the lease, due in full upon
Landlord's consent, as payment to Landlord for such investigations, lease
alterations and similar matters. No two percent fee will be charged in
connection with an assignment or sublease to an assignee or subtenant who is
"affiliated" with Tenant. "Affiliated" means under common voting control,
directly or indirectly.
A sale or transfer of control of a majority of the votes which may be
cast to elect Tenant's board of directors or other governing body shall be
deemed to be an assignment of this lease, requiring Landlord's consent if the
sale or transfer is essentially accomplished in a single transaction.
If this lease is assigned, or if the premises or any part thereof is
sublet, or occupied by anyone other than Tenant, Landlord may, after default
by Tenant, collect rent from the assignee, sub-tenant, or occupant and apply
the net amount collected against all rent herein reserved. No such
assignment, subletting, occupancy, or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, sub-tenant, or occupant as
tenant, or a release of Tenant from further performance by Tenant of the
covenants in this lease. The consent by Landlord to an assignment or
subletting shall not be construed to relieve Tenant (or any subsequent
tenant) from obtaining the consent in writing of Landlord to any further
assignment or subletting. This provision shall not apply to a sale or
transfer of control to Hyundai Electronic Industries Co. Ltd. and /or any of
it's affiliates.
27. LANDLORD'S WARRANTY OF TITLE; QUIET ENJOYMENT. Landlord
covenants it has good right to lease the premises in the manner described
herein and that Tenant shall peaceably and quietly have, hold, occupy, and
enjoy the premises during the term of the lease; except as provided in
Paragraph 31 concerning subordination to mortgage lenders.
28. ADDITIONAL DEVELOPMENT OF PROPERTY - RIGHTS OF LANDLORD.
Landlord does reserve, during the term of this lease, the right to go upon
and deal with the premises or part thereof for the purpose of implementing a
common development plan for the project of which the premises are a part, and
to install non-exclusive sidewalks, paths, roadways and other street
improvements for use by vehicles, pedestrians, and for parking; to undertake
such drainage programs to handle underground and surface drainage water and
to make any other changes and/or improvements as Landlord shall deem
advisable in the exercise of its sole discretion; provided, however, any such
action by Landlord shall not unreasonably interfere with the rights of Tenant
hereunder.
29. GOVERNMENTAL ACQUISITION OF THE PREMISES. The parties agree that
Landlord shall have sole and exclusive authority to negotiate and settle all
matters pertaining to the acquisition of all or part of the premises by a
governmental agency by eminent domain or threat thereof (condemnation), and
to convey all or any part of the premises under threat of condemnation, and
the lease shall terminate as to any area so conveyed. It is agreed that any
compensation for land and/or buildings to be taken whether resulting from
negotiation and agreement or condemnation proceedings, shall be the exclusive
property of Landlord, and that there shall be no sharing whatsoever between
Landlord and Tenant of any such sum. Such taking of property shall not be
considered as a breach of this lease by Landlord, nor give rise to any claims
in Tenant for damages or compensation from Landlord. Tenant may separately
claim and recover from the condemning authority the value of any personal
property owned by Tenant which is taken, and any relocation expenses owed to
Tenant by the condemning authority. If the taken portion of the premises
consists only of areas where no building is constructed, and the land area of
the premises is reduced by less than ten percent, and the parking area
available for use by Tenant is reduced by less than five percent, and there
is no material change in Tenant's access to the premises, then there shall be
no change in the terms of the lease. If no building area is taken but the
foregoing limits on parking area reductions are exceeded, then Tenant may
terminate the lease unless Landlord provides sufficient reasonably adjacent
parking area so that the total available parking area is reduced by less than
five percent. If any portion of the building on the premises is taken, then
Landlord, at its election, may replace the square footage taken with space in
the same building, or may provide land and building area essentially the same
as the premises in a reasonably adjacent location, within 10 days after the
conveyance or taking, under the same terms and conditions as contained in
this lease, and this lease shall be in full force and effect as to the new
premises. If Landlord does not so provide reasonable space, then Tenant
shall have two options. First, Tenant may terminate the lease by written
notice delivered to Landlord within 60 days after the conveyance or taking.
Second, Tenant may retain the remaining portion of the premises, under all
the terms and conditions hereof, but the base rental shall be reduced in
proportion to the number of square feet of building floor space taken
compared to the number of square feet of building floor space on the premises
prior to the taking.
30. SUBORDINATION OF THE LEASEHOLD TO MORTGAGES. This lease shall be
subject and subordinate in priority at all times to the lien of any existing
and/or hereafter executed mortgages and trust deeds encumbering the premises.
Although no instrument or act on the part of Tenant shall be necessary to
effectuate such subordination, Tenant will execute and deliver such further
instruments subordinating this lease to the lien of any such mortgages or
trust deeds as may be desired by the mortgagee or holder of such trust deeds.
Tenant hereby appoints Landlord as his attorney in fact, irrevocably, to
execute and deliver any such instrument for Tenant. Tenant further agrees at
any time and from time to time upon not less than ten (10) days prior written
request by Landlord, to execute, acknowledge, and deliver to Landlord an
estoppel affidavit in form acceptable to Landlord and the holder of any
existing or contemplated mortgage or deed of trust encumbering the premises.
Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (1) that this lease is in full force and effect,
without modification except as may be represented by Landlord; (2) that there
are no uncured defaults in Landlord's performance; and (3) that not more than
one (1) month's rent has been paid in advance. Further, upon request, Tenant
shall supply to Landlord a corporate resolution certifying that the party
signing this statement on behalf of Tenant is properly authorized to do so,
if Tenant is a corporation. Tenant agrees to provide Landlord within ten
business days of Landlord's request, Tenant's most recently completed
financial statements and such other financial information as reasonably
requested by Landlord in order to verify Tenant's financial condition to
satisfy requirements of Landlord's existing or contemplated lender or
mortgagee.
Tenant agrees with lender and Landlord that if there is a foreclosure of
any such mortgage or deed of trust and pursuant to such foreclosure, the
Public Trustee or other appropriate officer executes and delivers a deed
conveying the premises to the lender or its designee, or in the event
Landlord conveys the premises to the lender or its designee in lieu of
foreclosure, Tenant will attorn to such grantee of the premises, rather than
to Landlord, to perform all of Tenant's obligations under the lease, and
Tenant shall have no right to terminate the lease by reason of the
foreclosure or deed given in lieu thereof.
Landlord will include in the terms of any mortgage or deed of trust on
the premises a provision that if Tenant is not in default under the terms of
this lease and Tenant is then in possession of the premises, Tenant's rights
of quiet enjoyment arising out of the lease shall not be affected or
disturbed by lender in the event of a default by Landlord and any sale of the
premises through foreclosure of any deed of trust or otherwise.
31. MEMORANDUM OF LEASE - RECORDING. This lease shall not be
recorded in the office of the County Clerk and Recorder of Boulder County,
except by Landlord as a financing statement. In order to effect public
recordation, the parties hereto may, at the time this lease is executed,
agree to execute a Memorandum of lease incorporating therein by reference the
terms of this lease, but deleting therefrom any expressed statement or
mention of the amount of rent herein reserved, which instrument may be
recorded by either party in the office of the Clerk and Recorder of Boulder
County.
32. NO WAIVER OF BREACH; ACCEPTANCE OF PARTIAL PAYMENTS OF RENT. No
assent, or waiver expressed or implied, or failure to enforce, as to any
breach of any one or more of the covenants or agreements herein shall be
deemed or taken to be a waiver of any succeeding or additional breach.
Payment by Tenant or receipt by Landlord of an amount less than the rent
or other payment provided for herein shall not be deemed to be other than a
payment on account of the earliest rent then due, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment of
rent be deemed an accord and satisfaction, and Landlord may accept such check
or other payment without prejudice to Landlord's right to recover the balance
of all rent then due, and/or to pursue any or all other remedies provided for
in this lease, in law, and/or in equity including, but not limited to,
eviction of Tenant. Specifically, but not as a limitation, acceptance of a
partial payment of rent shall not be a wavier of any default by Tenant.
33. CONTROLLING LAW. The lease, and all terms hereunder shall be
governed by the laws of the State of Colorado, exclusive of its conflicts of
laws rules.
34. INUREMENTS. The covenants and agreements herein contained shall
bind and inure to the benefit of Landlord and Tenant and their respective
successors. This lease shall be signed by the parties in duplicate, each of
which shall be a complete and effective original lease.
35. TIME. Time is of the essence in this lease in each and all of
its provisions in which performance is a factor.
36. ADDRESSES; EMPLOYER IDENTIFICATION NUMBERS; METHOD OF GIVING
NOTICE. The street address of Landlord is 1960 Industrial Circle, Longmont,
CO 80501. The mailing address of Landlord is P. O. Box 1937, Longmont, CO
80502-1937. All payments, notices and communications which are sent to
Landlord via United States mail shall be addressed to the mailing address.
Only payments, notices and communications which are hand delivered or
delivered by private courier service shall be addressed to the street
address.
Tenant's street address is 2190 Miller Drive, Longmont, Colorado, 80501.
Tenant's mailing address is 2190 Miller Drive, Longmont, Colorado, 80501.
Any notice to Tenant may be delivered to the above addresses or to the
premises. A copy of any notice should be sent to the attention of the Vice
President and General Consul, 211 River Oaks Parkway, San Jose, California,
95136.
Landlord's current fax number is (303)776-4946. Tenant's current fax
number is (303) 651-2165. Any written notice required hereby may be
delivered by fax, U.S. mail, private courier service, or hand delivery.
Notice shall be effective at time of delivery to the address or fax number
shown.
Either party may change its street or mailing address, or fax number,
for purposes hereof, by written notice delivered to the other. The federal
employer identification number of Landlord is 84 0954 078. The federal
identification number of Tenant is 77-0123732.
38. PARAGRAPH HEADINGS; GRAMMAR. All paragraph headings are made for
the purposes of ease of location of terms and shall not affect or vary the
terms hereof. Throughout this lease, wherever the words, "Landlord" and
"Tenant" are used they shall include and imply to the singular, plural,
persons both male and female, and all sorts of entities and in reading said
lease, the necessary grammatical changes required to make the provisions
hereof mean and apply as aforesaid shall be made in the same manner as though
originally included in said lease.
39. ADDITIONAL PROVISIONS:
FLEXIBILITY CLAUSE: In the event Tenant's requirement for space
increases or decreases during the term of this lease, including any extended
term thereof, Tenant may notify Landlord of its adjusted space requirement,
in which event Landlord shall, within 120 days after such notice, increase or
decrease the square footage available to Tenant so as to reasonably meet the
Tenants new needs (as is reasonably devisable by Landlord), either using the
premises or other comparable space of Landlord reasonably acceptable by
Tenant. Tenant may not decrease space in existing premises leased from the
Landlord and lease space in Boulder County owned by a third party, unless the
Landlord cannot accommodate the Tenant's overall space requirements. In such
event, Landlord and Tenant shall amend this lease accordingly, or enter into
a new lease upon rental rates and other terms which are similar to those of
this Lease and reasonably acceptable to both parties and terminate this
lease. Tenant may exercise the right described in this paragraph multiple
times, but not more than once in any twelve month period. Not withstanding
language to the contrary that might be found elsewhere in this lease, the
Tenant will be allowed to exercise the right described in this paragraph
without incurring of cost or other penalties sometimes associated with early
terminations, Tenant will be expected to return the premises to Landlord
pursuant to the terms and conditions of Paragraph 14 of this Lease Agreement.
This provision shall not apply to 345 S. Francis, Longmont, Colorado.
IN WITNESS WHEREOF, the Parties have executed this lease as of the date
hereof.
LANDLORD: PRATT LAND LIMITED LIABILITY COMPANY
By /s/ Susan M. Pratt
-----------------------
Susan M. Pratt, Manager
TENANT: MAXTOR CORPORATION
By: /s/ J. Larry Smart
-----------------------
J. Larry Smart
Chief Executive Officer
STATE OF COLORADO )
) ss.
COUNTY OF BOULDER )
The foregoing instrument was acknowledged before me this 19th day of October,
1994 by
Susan Pratt, General Partner, Pratt Partnership.
Witness my hand and official seal.
My commission expires: May 3, 1997
/s/ Elizabeth H. Oram
---------------------
Notary Public
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
The foregoing instrument was acknowledged before me this 17th day of October,
1994 by
J. Larry Smart, Chief Executive Officer, Maxtor Corporation.
Witness my hand and official seal.
My commission expires: June 5, 1998
/s/ Sharon L. Spehar
--------------------
Notary Public
3
CONFIDENTIAL RESIGNATION AGREEMENT
AND GENERAL RELEASE OF CLAIMS
1. Patricia M. Roboostoff ("Employee") hereby resigns from her
employment with Maxtor Corporation ("Maxtor"), and from her position as
an officer of Maxtor, effective November 30, 1994.
2. (a) In exchange for the release of claims set forth below,
upon expiration of the seven (7) day revocation period described below
Maxtor shall pay to Employee the sum of $138,750.00. Of this sum, the
parties agree to the following allocation:
(i) $69,375.00 for loss of wages; and
(ii) $69,375.00 for alleged pain, suffering, anxiety,
emotional distress, and personal injury allegedly
suffered and incurred by Employee arising from her tort
claims made against Maxtor.
(b) The payment described in subparagraph 2.(a)(i) shall
be subject to applicable withholding, and Maxtor shall report to
appropriate government agencies the payment of $69,375.00 as wage
related. The payment described in subparagraph 2.(a)(ii) is intended to
fully compensate and fully settle with Employee for the alleged pain,
suffering, anxiety, emotional distress, and personal injury allegedly
suffered and incurred by Employee arising from her tort claims, which
alleged injuries and claims Maxtor denies were incurred by Employee or
caused by Maxtor, its directors, officers, employees or officers.
Employee asserts that such payment is neither taxable nor subject to
withholding, and Maxtor agrees that it will neither withhold any taxes
from such payment, nor issue a W-2 or 1099 for such payment. Employee
understands and agrees that in the event any taxing authority should
reach a contrary determination, and conclude that all or some portion of
the settlement payments constitute taxable income to Employee, she shall
be solely responsible for the payment of any income and other taxes that
may be found to be owing. In the event any taxing authority seeks and
obtains payment or reimbursement from Maxtor for any tax due on such
settlement payments, Employee shall fully reimburse and indemnify Maxtor
for any such taxes, all related interest, penalties and other costs so
assessed or incurred, including attorneys' fees for defending any such
claim and costs related thereto.
(c) After November 30, 1994, Employee will be eligible to
continue her health coverage in accordance with federal law. If
Employee continues to use Maxtor's health insurance program, Maxtor
shall pay her health insurance premiums for a nine-month period after
November 30, 1994. Employee shall also receive from Maxtor all amounts
held by Maxtor for her in her 401(K) account and all amounts withheld to
date for her account under the MaxPurchase 423 Plan. The amounts owing
under the 401(k) and 423 Plans will be paid to Employee in accordance
with Maxtor's customary policy with respect to employees who leave the
company (i.e., 423 Plan funds are distributed promptly following the
date of resignation and 401(k) funds disbursed within 90 days
thereafter). In addition to the above amounts, Employee will receive
payment for her accrued vacation allowance, less applicable
withholdings. Employee shall be entitled to exercise as vested, for a
period of eleven (11) months through October 31, 1995, all of her
outstanding stock options, as shown on the attached Exhibit A, whether
or not otherwise vested as of November 30, 1994.
(d) Maxtor shall arrange, at no cost to Employee, for
Employee to receive executive outplacement services from the firm of
Drake Beam Morin Inc. for a period of sixty consecutive days. Employee
shall be entitled to use such services during any consecutive sixty-day
period within one year of the date of this Agreement.
(e) Employee acknowledges that he shall be entitled to no
compensation or benefits from Maxtor other than those expressly set
forth in this Agreement.
3. In exchange for the benefits described in paragraph 2 above,
Employee does hereby for herself and her respective legal successors and
assignees, release and absolutely discharge Maxtor and its shareholders,
directors, employees, agents, attorneys, legal successors, and assigns
of and from any and all claims, actions and causes of action, whether
now known or unknown, suspected, or unsuspected, which Employee now has,
owns or holds, or at any other time had, owned or held or shall or may
have, own, or hold against Maxtor based upon or arising out of any
matter, cause, fact, thing, act or omission whatsoever occurring or
existing at any time to and including the date hereof, including but not
limited to, any claims of wrongful discharge or age or other
discrimination under the Civil Rights Act, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Fair
Employment and Housing Act, or any other applicable law, or any other
claims or alleged claims (all of which are hereinafter included within
the "Released Matters"). As used herein, "Maxtor" includes any and all
parents, divisions or subsidiaries of Maxtor Corporation.
4. Employee acknowledges that she is familiar with Section 1542
of the California Civil Code which states as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in her favor at the time of
executing the release, which if known by her must have
materially affected her settlement with the debtor.
Employee hereby waives any right or benefit which she has or may have
under Section 1542 of the California Civil Code to the full extent that
she may lawfully waive such rights and benefits pertaining to the
subject matter of this General Release of Claims (the "Release").
Employee acknowledges that she may hereafter discover claims or facts in
addition to or different from those that she now knows or believes to
exist with respect to the subject matter of this Release, and that it is
her intention to fully, finally and forever settle all of the Released
Matters in exchange for the benefits set forth above.
5. Employee acknowledges and agrees that she shall continue to
be bound by and comply with the terms of that certain Employee Agreement
Regarding Confidentiality and inventions between Maxtor and Employee
dated September 16, 1991.
6. Employee agrees that she shall not directly or indirectly
disclose any of the terms of this Agreement to anyone other than her
immediate family or counsel except as such disclosure may be necessary
for accounting or tax reporting purposes or as otherwise may be required
by law, provided that, if disclosure is required by law, Employee shall
provide prior written notice to Maxtor of such required disclosure.
7. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all
prior negotiations and agreements, with the exception of the agreement
described in paragraph 5. The prevailing party shall be entitled to
recover from the losing party its attorneys' fees and costs incurred in
any lawsuit or other action brought to enforce any right arising out of
this Agreement. This Agreement may not be altered or amended except by
a written document executed by Maxtor and Employee.
EMPLOYEE UNDERSTANDS THAT SHE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS AGREEMENT AND THAT SHE IS GIVING UP ANY LEGAL CLAIMS SHE
HAS AGAINST MAXTOR BY SIGNING THIS AGREEMENT, THAT SHE MAY CONSIDER THIS
AGREEMENT FOR 21 DAYS AND MAY REVOKE IT AT ANY TIME DURING THE SEVEN
DAYS AFTER SHE SIGNS IT AND THAT IT SHALL NOT BECOME EFFECTIVE UNTIL
THAT SEVEN-DAY PERIOD HAS PASSED. EMPLOYEE FURTHER ACKNOWLEDGES THAT
SHE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN
EXCHANGE FOR THE BENEFITS DESCRIBED IN PARAGRAPH 2.
Dated: 10/29/94 /s/ P. M Roboostoff
-------------- ------------------------
Patricia M. Roboostoff
Dated: 10/28/94 MAXTOR CORPORATION
--------------
By: /s/G. H. Stevens
----------------------
Glenn H. Stevens
Vice President, General
Title: Counsel and Secretary
----------------------
29
.
- - - ---------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
by and among
MAXTOR CORPORATION,
MAXOPTIX CORPORATION
and
KUBOTA ELECTRONICS AMERICA CORPORATION
Dated as of December 26, 1994
TABLE OF CONTENTS
Page
INTRODUCTION.................................................... 1
RECITALS........................................................ 1
ARTICLE I DEFINITIONS...................................... 2
1.01 Defined Terms........................................ 2
1.02 "Best Knowledge of Buyer............................. 2
1.03 "Best Knowledge of Seller............................ 2
ARTICLE II PURCHASE AND SALE OF MAXOPTIX STOCK.............. 3
2.01 Purchase and Sale of Shares.......................... 3
2.02 Purchase Price....................................... 3
2.03 Payment.............................................. 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND
MAXOPTIX......................................... 3
3.01 Due Incorporation; Corporate Authority............... 3
3.02 Authorization........................................ 4
3.03 Effect of Agreement.................................. 4
3.04 Litigation........................................... 4
3.05 Disclosure........................................... 4
3.06 Title to Shares...................................... 5
3.07 Capitalization of Maxoptix........................... 5
3.08 Subsidiaries......................................... 5
3.09 Title to Property.................................... 6
3.10 Defaults............................................. 6
3.11 Compliance with Law.................................. 6
3.12 Toxic Wastes; Employee Safety, etc................... 6
3.13 Employment Contracts................................. 7
3.14 Financial Statements................................. 8
3.15 Contingent Liabilities............................... 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.......... 8
4.01 Due Incorporation; Corporate Authority............... 8
4.02 Authorization........................................ 8
4.03 Effect of Agreement.................................. 9
4.04 Litigation........................................... 9
4.05 Disclosure........................................... 9
4.06 Investment Representations........................... 9
ARTICLE V COVENANTS OF SELLER AND MAXOPTIX................. 10
5.01 Conduct of Business.................................. 10
TABLE OF CONTENTS
(Continued)
Page
----
5.02 Notice of Adverse Changes............................ 11
5.03 Additional Actions Requiring Consent................. 11
5.04 Communications....................................... 12
5.05 Access............................................... 12
5.06 Convertible Stock Option Rights...................... 13
5.07 Regulatory Matters................................... 13
5.08 Related Agreements................................... 13
ARTICLE VI COVENANTS OF BUYER............................... 14
6.01 Communications....................................... 14
6.02 Regulatory Matters................................... 14
6.03 Related Agreements................................... 14
6.04 Payment to Pentax.................................... 14
6.05 Guaranty............................................. 14
ARTICLE VII CONDITIONS TO OBLIGATIONS OF MAXOPTIX AND
SELLER........................................... 15
7.01 Accuracy of Representations and Warranties........... 15
7.02 Fulfillment of Covenants............................. 15
7.03 Approval of Sale..................................... 15
7.04 No Litigation........................................ 15
7.05 Consents Obtained.................................... 15
7.06 Related Agreements................................... 15
7.07 Kubota Guaranty...................................... 15
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER............... 16
8.01 Accuracy of Representations and Warranties........... 16
8.02 Fulfillment of Covenants............................. 16
8.03 Approval of Sale..................................... 16
8.04 No Litigation........................................ 16
8.05 Consents Obtained.................................... 16
8.06 No Adverse Changes................................... 16
8.07 Opinion of Counsel................................... 17
8.08 Related Agreements................................... 17
ARTICLE IX INDEMNIFICATION AND RELEASE....................... 18
9.01 Indemnification...................................... 18
9.02 Mutual Release....................................... 18
9.03 Most................................................. 19
ARTICLE X CLOSING........................................... 19
TABLE OF CONTENTS
(Continued)
Page
----
10.01 Closing Date......................................... 19
10.02 Instruments of Conveyance and Transfer............... 20
10.03 Payment of Purchase Price............................ 20
10.04 Other Documents...................................... 20
10.05 Further Assurances of Seller and Maxoptix............ 20
ARTICLE XI TERMINATION...................................... 20
11.01 Mutual Consent....................................... 20
11.02 Effect of Termination................................ 20
ARTICLE XII PAYMENT OF EXPENSES.............................. 20
12.01 Expenses............................................. 20
12.02 Brokers.............................................. 20
ARTICLE XIII GENERAL PROVISIONS............................... 21
13.01 Notices.............................................. 21
13.02 Headings............................................. 22
13.03 Counterparts......................................... 22
13.04 Binding Nature....................................... 22
13.05 Waiver............................................... 22
13.06 Entire Agreement..................................... 22
13.07 No Third Party Beneficiary Rights.................... 23
13.08 Good Faith........................................... 23
13.09 Applicable Law....................................... 23
13.10 Severability......................................... 23
13.11 Confidentiality...................................... 23
EXECUTION....................................................... 24
Schedules:
Schedule 1 - Exceptions to Representations and Warranties of
Seller and Maxoptix
Schedule 1A - List of Options
Schedule 2 - List of Certain Contracts
Schedule 3 - Financial Statements
Schedule 4 - Exceptions to Representations and Warranties of
Buyer
TABLE OF CONTENTS
(Continued)
Page
----
Exhibits:
Exhibit A - Termination of Exchange Right Notice
Exhibit B - Patent Cross-License Agreement
Exhibit C - Noncompetition Agreement
Exhibit D - Debt Extinguishment Agreement
Exhibit E - Joint Venture Termination Agreement
Exhibit F - Guaranty
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered
into as of the 26th day of December 1994, by and among MAXTOR
CORPORATION, a Delaware corporation ("Seller"), KUBOTA ELECTRONICS
AMERICA CORPORATION, a Delaware corporation ("Buyer"), and MAXOPTIX
CORPORATION, a Delaware corporation ("Maxoptix").
R E C I T A L S
---------------
A. Pursuant to that certain Agreement to Organize a Jointly
Owned Corporation by and between Kubota Corporation, a Japanese
corporation ("Kubota") and Seller, dated as of March 10, 1989 (the
"Joint Venture Agreement"), Kubota and Seller organized Maxoptix to
research, develop, manufacture and distribute certain optical data
storage devices.
B. As of the date hereof, Seller owns Seven Hundred Fourteen
Thousand Five Hundred Eighty Seven (714,587) shares of issued and
outstanding common stock of Maxoptix and Seven Million Four Hundred
Twenty Five Thousand (7,425,000) shares of issued and outstanding
Series B preferred stock of Maxoptix (collectively, the "Shares").
C. As of the date hereof, Kubota owns one hundred percent
(100%) of the outstanding capital stock of Kubota U.S.A., Inc., a
Delaware corporation ("Kubota U.S.A.") and Kubota U.S.A. owns one
hundred percent (100%) of the outstanding capital stock of Buyer.
D. Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, all of Seller's Shares and other equity interests
(or rights to same) in Maxoptix as Seller may hold, if any, all upon
the terms and conditions set forth in this Agreement.
E. Buyer and Seller desire to take certain actions and execute
other agreements and documents, as set forth herein, as may be
necessary or desireable in order to effect an orderly transition to
Buyer, Kubota and Maxoptix of the business contemplated by the Joint
Venture Agreement.
NOW, THEREFORE, in consideration of the premises set forth above
and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 DEFINED TERMS. As used in this Agreement, the following
terms are defined in the respective provisions of this Agreement as
set forth below:
Term Definition
---- ----------
"Closing" . . . . . . . . . . . . . . . . . . . . . . . .10.01
"Closing Date" . . . . . . . . . . . . . . . . . . . . .10.01
"Confidentiality Agreement" . . . . . . . . . . . . . .5.08(e)
"Debt Extinguishment Agreement" . . . . . . . . . . . .5.08(c)
"Exchange Right" . . . . . . . . . . . . . . . . . . . . 5.06
"Exchange Shares" . . . . . . . . . . . . . . . . . . . . 5.06
"Exon-Florio" . . . . . . . . . . . . . . . . . . . . . . 5.07
"Financial Statements". . . . . . . . . . . . . . . . . . 3.14
"Guaranty". . . . . . . . . . . . . . . . . . . . . . . . 7.07
"HSR" . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
"Joint Venture Termination Agreement" . . . . . . . . .5.08(d)
"Noncompetition Agreement" . . . . . . . . . . . . . . 5.08(b)
"Optionee" . . . . . . . . . . . . . . . . . . . . . . . 5.06
"Patent Agreement". . . . . . . . . . . . . . . . . . .5.08(a)
"Pentax". . . . . . . . . . . . . . . . . . . . . . . . . 6.04
"Plan". . . . . . . . . . . . . . . . . . . . . . . . . . 5.06
"Purchase Price" . . . . . . . . . . . . . . . . . . . . 2.02
"Released Claims" . . . . . . . . . . . . . . . . . . . . 9.01
"Seller Shares" . . . . . . . . . . . . . . . . . . . . . 5.06
"Shares" . . . . . . . . . . . . . . . . . . . . . .Recital B
"U.K. Shares" . . . . . . . . . . . . . . . . . . . . . . 3.08
"U.K. Subsidiary" . . . . . . . . . . . . . . . . . . . . 3.08
1.02 "BEST KNOWLEDGE OF BUYER". For purposes of this
Agreement only, the term "Best Knowledge of Buyer" shall mean such
knowledge as may be obtained by Buyer after conducting a reasonable
investigation.
1.03 "BEST KNOWLEDGE OF SELLER". For purposes of this
Agreement only, the term "Best Knowledge of Seller" shall mean, with
respect to information pertaining to Maxoptix or the U.K. Subsidiary,
such knowledge as may be obtained by Seller after reasonable inquiry
of the President and Chief Executive Officer and Corporate Controller
of Maxoptix conducted by Seller, and with respect to information
pertaining to Seller, such knowledge as may be obtained after
conducting a reasonable investigation.
ARTICLE II
PURCHASE AND SALE OF MAXOPTIX STOCK
-----------------------------------
2.01 PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions of this Agreement, on the Closing Date, Seller shall sell
and deliver to Buyer, and Buyer shall purchase and accept from Seller,
all rights, title and interest in and to the Shares and all of
Seller's rights, title and interest in and to any other equity
interest in Maxoptix or other interest convertible into an equity
interest in Maxoptix.
2.02 PURCHASE PRICE. As payment for the Shares and any and
all other interests transferred to Buyer pursuant to, or in connection
with, this Agreement, Buyer shall pay Seller the total amount of One
Million Five Hundred Thousand United States Dollars (US$1,500,000)
(the "Purchase Price").
2.03 PAYMENT. At the Closing, Buyer shall pay the Purchase
Price by wire transfer to Seller's account pursuant to written wire
transfer instructions furnished by Seller to Buyer, or in the absence
of such written instructions, by delivery of a cashiers' check payable
to "Maxtor Corporation."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND MAXOPTIX
-----------------------------------------------------
Except as set forth on the attached Schedule 1, Seller and
Maxoptix, as the case may be, severally represent and warrant to Buyer
that (it is understood that all representations and warranties
contained in this Article III relating to the U.K. Subsidiary shall be
made solely by Maxoptix):
3.01 DUE INCORPORATION; CORPORATE AUTHORITY. Seller and
Maxoptix were duly incorporated and organized and are validly existing
and in good standing under the laws of the State of Delaware. The
U.K. Subsidiary was duly incorporated and organized and is validly
existing and in good standing under the laws of the United Kingdom.
Seller, Maxoptix and the U.K. Subsidiary have all necessary corporate
power and authority to own their respective properties and to carry on
their respective businesses as now being conducted, and possess all
licenses, permits, authorizations, franchises, rights and privileges
necessary to the conduct of their respective businesses. Seller and
Maxoptix are duly qualified to do business and are in good standing in
Delaware and California, and Seller, Maxoptix and the U.K. Subsidiary
are duly qualified to do business and are in good standing in each
state or jurisdiction where such qualification is required by the
nature of their respective business operations.
3.02 AUTHORIZATION. Seller and Maxoptix each have full
corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The Board of
Directors and shareholders of Seller and Maxoptix have taken all
corporate action, if any, required by law and their respective
Articles of Incorporation, Bylaws and other charter documents to
authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by and on behalf of
Seller and Maxoptix, and constitutes the valid and binding obligation
of Seller and Maxoptix, enforceable in accordance with its terms.
3.03 EFFECT OF AGREEMENT. The execution, delivery and
performance by Seller and Maxoptix of this Agreement, and the
consummation by Seller and Maxoptix of the transactions herein
contemplated, will not constitute a violation of any law or regulation
of any governmental authority or result in a breach of the terms of,
or constitute a default under or violation of, any provision of the
Articles of Incorporation, Bylaws or other charter documents of
Seller, Maxoptix or the U.K. Subsidiary, or any agreement or
instrument to which Seller, Maxoptix or the U.K. Subsidiary is a party
or by which Seller, Maxoptix or the U.K. Subsidiary is bound, nor will
it give to any person other than Buyer any interests or rights,
including rights of termination, acceleration or cancellation, in or
with respect to any of the Shares or other interests transferred
pursuant to this Agreement. Except for consents which shall have been
obtained prior to the Closing, no consent of any person not a party to
this Agreement and no consent of any governmental authority is
required to be obtained on the part of Seller, Maxoptix or the U.K.
Subsidiary to permit the consummation of the transactions contemplated
by this Agreement.
3.04 LITIGATION. There are no claims, actions, suits,
investigations or proceedings pending or, to the Best Knowledge of
Seller, threatened against or affecting Seller, Maxoptix or the U.K.
Subsidiary or any of their respective properties or businesses at law
or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which
if determined adversely would have a material adverse effect on (i)
the business of Maxoptix or the U.K. Subsidiary, (ii) the ability of
Buyer, Kubota, Maxoptix or the U.K. Subsidiary to carry on the
business of Maxoptix or the U.K. Subsidiary after the Closing, or
(iii) the ability of Seller or Maxoptix to perform their respective
obligations under this Agreement.
3.05 DISCLOSURE. No information furnished to Buyer or Kubota
by or on behalf of Seller, Maxoptix or the U.K. Subsidiary contains
any untrue statement of a material fact or omits to state a material
fact necessary to make such statement, in light of the
circumstances under which it was made, not misleading. For purposes
of this Section 3.05, material facts include any information which a
reasonably prudent buyer would consider relevant in determining
whether or not to purchase the Shares, or in determining the price to
pay for such Shares. It is specifically understood that neither
Maxoptix nor the U.K. Subsidiary is authorized by Seller to act on
Seller's behalf or to represent Seller in any way.
3.06 TITLE TO SHARES. Seller is the owner of the Shares,
beneficially and of record, free and clear of any liens, encumbrances,
security agreements, pledges, options, claims, charges or restrictions
of any nature whatsoever, except for restrictions on transfer arising
under federal, state and foreign securities laws.
3.07 CAPITALIZATION OF MAXOPTIX. As of the date hereof, (i)
Maxoptix is authorized to issue Fifteen Million (15,000,000) shares of
common stock, Two Million Four Hundred Seventy Five Thousand
(2,475,000) shares of Series A Preferred Stock, Seven Million Four
Hundred Twenty Five Thousand (7,425,000) shares of Series B Preferred
Stock and One Million Six Hundred Thousand (1,600,000) shares of
Series C Preferred Stock, of which Seven Hundred Sixty Eight Thousand
Four Hundred (768,400), Two Million Four Hundred Seventy Five Thousand
(2,475,000), Seven Million Four Hundred Twenty Five Thousand
(7,425,000) and One Million Six Hundred Thousand (1,600,000) shares of
Common, Series A Preferred, Series B Preferred and Series C Preferred,
respectively, are issued and outstanding, (ii) all issued and
outstanding shares have been validly issued, are fully paid and non-
assessable, and were issued in compliance with or pursuant to an
exemption from the registration requirements of all applicable U.S.
federal and state and foreign securities laws and (iii) Maxoptix has
no outstanding subscriptions, contracts, options, warrants or other
obligations to issue, sell, purchase, redeem or otherwise issue,
dispose of or acquire any of its capital stock or other equity
interests, except for the options listed on the attached Schedule 1A.
3.08 SUBSIDIARIES. To the Best Knowledge of Seller, except
for Maxoptix Europe Limited, a corporation formed under the laws of
the United Kingdom and a wholly-owned subsidiary of Maxoptix (the
"U.K. Subsidiary"), Maxoptix does not own a majority or controlling
interest in any other corporation or entity. The U.K. Subsidiary is
authorized to issue one thousand (1,000) shares of common stock, and
no other stock, of which one hundred (100) shares are issued and
outstanding (the "U.K. Shares"). All issued and outstanding U.K.
Shares have been validly issued, are fully paid and non-assessable,
and were issued in compliance with or pursuant to an exemption from
the registration requirements of all applicable U.S. federal and state
and foreign securities laws. Except for the U.K.
Shares, the U.K. Subsidiary has no outstanding subscriptions,
contracts, options, warrants or other obligations to issue, sell,
purchase, redeem or otherwise issue, dispose of or acquire any of its
capital stock or other equity interests. Maxoptix is the owner of the
U.K. Shares, beneficially and of record, free and clear of any liens,
encumbrances, security agreements, pledges, options, claims, charges
or restrictions of any nature whatsoever, except for restrictions on
transfer arising under federal, state and foreign securities laws.
3.09 TITLE TO PROPERTY. To the Best Knowledge of Seller,
Maxoptix has good and marketable title to all of its property, whether
real, personal, tangible or intangible, free and clear of restrictions
on or conditions to transfer or assignment, and free and clear of
mortgages, liens, pledges, encumbrances, claims, or other
restrictions.
3.10 DEFAULTS. To the Best Knowledge of Seller, neither
Seller, Maxoptix nor the U.K. Subsidiary is in material default under
any agreement with or commitment to any third party (or any agreement
with or commitment between or among Seller, Maxoptix and/or the U.K.
Subsidiary), nor is any third party in material default under any
agreement with or commitment to Seller, Maxoptix or the U.K.
Subsidiary. For purposes of this Section 3.10, material defaults
include any default which a reasonably prudent buyer would consider
relevant in determining whether or not to purchase the Shares or in
determining the price to pay for such Shares.
3.11 COMPLIANCE WITH LAW. To the Best Knowledge of Seller,
Maxoptix and the U.K. Subsidiary possess all regulatory consents,
authorizations, approvals, licenses and permits required by federal,
state, local and foreign laws and regulatory agencies in connection
with the conduct of all material aspects of their respective
businesses. The operations of Maxoptix and the U.K. Subsidiary are
conducted in compliance with all such consents, authorizations,
approvals, licenses and permits and with all laws, regulations and
other requirements applicable to their respective businesses.
3.12 TOXIC WASTES; EMPLOYEE SAFETY, ETC. To the Best
Knowledge of Seller, Maxoptix and the U.K. Subsidiary have complied in
all material respects with all applicable laws and regulations
regarding the control, removal, disposal and storage of all toxic or
hazardous substances or wastes generated by their respective
businesses. Neither Maxoptix nor the U.K. Subsidiary is presently in
violation of:
(i) any federal, state or local, regulation or ordinance
governing the protection of the environment or human health with
respect to toxic or hazardous substances or wastes, or
(ii) any provision of OSHA, or any state equivalent, or any
regulation promulgated thereunder.
No action, proceeding, investigation, claim, suit or the like is
pending or, to the Best Knowledge of Seller has been threatened,
against Maxoptix or the U.K. Subsidiary by any governmental agency or
any third party with respect to toxic or hazardous substances or
wastes, occupational health and safety, or environmental damage or
contamination.
3.13 EMPLOYMENT CONTRACTS. To the Best Knowledge of Seller,
the attached Schedule 2 contains a full and complete list of each
partially or totally executory contract or agreement to which Maxoptix
or the U.K. Subsidiary is a party, or by which Maxoptix or the U.K.
Subsidiary is bound in any respect, including, without limitation, any
and all:
(i) material contracts or agreements for the joint
performance of work or services, and all other joint venture or
teaming agreements;
(ii) management or employment contracts, consulting
contracts, or termination and severance agreements;
(iii) employee non-disclosure agreements, proprietary
invention agreements or other contracts or agreements relating
to the confidentiality of any intellectual property of Maxoptix
or the U.K. Subsidiary and rights of Maxoptix or the U.K.
Subsidiary with respect to any such property developed by any of
their respective employees, contractors, servants or agents;
(iv) material contracts or agreements with any director,
officer, employee, consultant or shareholder and
(v) all benefit plans made available to employees of Maxoptix
or the U.K. Subsidiary.
As used in this Section 3.13, the terms "contract" and "agreement"
mean and include every material contract, agreement and commitment,
whether written or oral. To the Best Knowledge of Seller, no
employee, contractor, officer or director of Maxoptix or the U.K.
Subsidiary has given Maxoptix or the U.K. Subsidiary notice of such
party's intent to terminate his or her employment or other
relationship with Maxoptix or the U.K. Subsidiary, nor to the Best
Knowledge of Seller, has any such party threatened to terminate his or
her employment or other relationship with Maxoptix or the U.K.
Subsidiary.
3.14 FINANCIAL STATEMENTS. Attached hereto as Schedule 3 are
the income statements of Maxoptix and the U.K. Subsidiary for the
eight (8) month period ending November 19, 1994 and the years ending
March 26, 1994, March 27, 1993 and March 28, 1992; the balance sheets
for Maxoptix and the U.K. Subsidiary as of November 19, 1994 and March
26, 1994, March 27, 1993 and March 28, 1992; and a statement of cash
flows of Maxoptix and the U.K. Subsidiary for the years ending March
26, 1994, March 27, 1993 and March 28, 1992 (collectively the
"Financial Statements"). The Financial Statements reflect the income
and cash flows of Maxoptix and the U.K. Subsidiary for the periods
reported therein and the financial position of Maxoptix and the U.K.
Subsidiary as of the dates reported therein, all in accordance with
U.S. generally accepted accounting principles consistently applied
(or, with respect to the U.K. Subsidiary, in accordance with U.K.
generally accepted accounting principles consistently applied),
including all footnotes thereto.
3.15 CONTINGENT LIABILITIES. To the Best Knowledge of Seller,
neither Maxoptix nor the U.K. Subsidiary has any material contingent
or fixed liabilities except those disclosed in the Financial
Statements, including, without limitation, contingent liabilities
relating to intellectual property infringement, environmental matters,
federal or state income taxes, property taxes, or other material
liabilities however remote or contingent relating to the business of
Maxoptix or the U.K. Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Except as set forth on the attached Schedule 4, Buyer represents
and warrants to Seller that:
4.01 DUE INCORPORATION; CORPORATE AUTHORITY. Buyer is a
corporation duly incorporated and organized, validly existing and in
good standing under the laws of the State of Delaware and has all
necessary corporate power and authority to own its properties and to
carry on its business as now being conducted.
4.02 AUTHORIZATION. Buyer has full corporate power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Board of Directors and
shareholders of Buyer have taken all corporate action, if any,
required by law and by Buyer's Articles of Incorporation, bylaws and
other charter documents to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by and on behalf of Buyer and constitutes the valid and
binding obligation of Buyer, enforceable in accordance with its terms.
4.03 EFFECT OF AGREEMENT. The execution, delivery and
performance by Buyer of this Agreement, and the consummation by Buyer
of the transactions herein contemplated, will not constitute a
violation of any law or regulation of any governmental authority, or
result in a breach of the terms of, or constitute a default under or
violation of, any provision of the Articles of Incorporation, bylaws
or other charter documents of Buyer, or any agreement or instrument to
which Buyer is a party or by which Buyer is bound. Except for
consents which have been obtained prior to Closing, no consent of any
person not a party to this Agreement and no consent of any
governmental authority is required to be obtained on the part of Buyer
to permit the consummation of the transactions contemplated by this
Agreement.
4.04 LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the Best Knowledge of Buyer, threatened
against or affecting Buyer or any of its properties or businesses, at
law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, which if determined adversely would have a material adverse
effect on Buyer's ability to perform its obligations under this
Agreement.
4.05 DISCLOSURE. No information furnished to Seller by or on
behalf or Buyer contains any untrue statement of a material fact or
omits to state a material fact necessary to make such statement, in
light of the circumstances under which it was made, not misleading.
For purposes of this Section 4.05, material facts include any
information which a reasonably prudent seller would consider relevant
in determining whether or not to sell the Shares or in determining the
price to accept for such Shares.
4.06 INVESTMENT REPRESENTATIONS.
(a) The Shares purchased hereunder will be acquired: (i)
for Buyer's own account, and not with a view to, or for the sale,
transfer or the distribution of any part thereof; (ii) not with any
intention of selling, offering to sell, or otherwise disposing of or
distributing any portion thereof; and (iii) not as a nominee for any
person or entity.
(b) Buyer understands that the Shares will not be
registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of, among other things, reliance upon
certain exemptions therefrom, and that the reliance of Seller on such
exemptions is predicated upon, among other things, the bona fide
nature of Buyer's investment intent as expressed herein.
(c) Buyer understands that the securities being purchased
hereunder are restricted securities within the meaning of Rule 144
under the Securities Act; that such securities are not registered and
must be held indefinitely unless they are subsequently registered or
an exemption from such registration is available.
(d) Buyer understands that no public market exists for any
of the securities issued by Maxoptix and that Maxoptix is under no
obligation to register the Shares or any of its securities under the
Securities Act.
(e) The entire legal and beneficial interest of the Shares
is being acquired solely for the benefit of Buyer and will be held for
its account only and neither in whole nor in part for any other person
or entity.
(f) Buyer is able to bear the economic risk of the
acquisition of the Shares, including a complete loss of Buyer's
investment.
(g) Buyer has been afforded an opportunity to ask such
questions of the officers and employees of Seller and Maxoptix
concerning Maxoptix' business, operations, financial condition,
assets, liabilities, and other relevant matters as Buyer has deemed
necessary or desirable to enable it to evaluate the financial risk
inherent in making an investment in the Shares.
ARTICLE V
COVENANTS OF SELLER AND MAXOPTIX
--------------------------------
5.01 CONDUCT OF BUSINESS. From and after the execution and
delivery of this Agreement and until the Closing or the termination of
the executory obligations under this Agreement, whichever shall first
occur:
(i) Neither Seller, Maxoptix nor the U.K. Subsidiary shall
engage in any activities or transactions related to the business
of Maxoptix or the U.K. Subsidiary which is not contemplated by
this Agreement and which is outside the ordinary course of the
operations of the respective businesses of Maxoptix and the U.K.
Subsidiary, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld or delayed;
(ii) Seller, Maxoptix and the U.K. Subsidiary shall
maintain all existing licenses, franchises, rights and
privileges relating to their respective businesses (as may
pertain to Maxoptix or the U.K. Subsidiary in the case of
Seller);
(iii) Seller, Maxoptix and the U.K. Subsidiary shall maintain
their respective business organizations and preserve the
goodwill of their respective businesses and the relationships of
Seller, Maxoptix and the U.K. Subsidiary with suppliers,
customers, employees and others with whom they deal (as may
pertain to Maxoptix or the U.K. Subsidiary in the case of
Seller);
(iv) Maxoptix shall make no distributions or, except in the
ordinary course of business, other payments to Maxtor, Kubota or
any other party, except the payment to Pentax as described in
Section 6.04 of this Agreement or any payment to Ricoh as
contemplated under Section 2.01 of the Joint Venture Termination
Agreement; and
(v) Neither Maxoptix nor the U.K. Subsidiary shall merge
with another organization, amend their respective Articles of
Incorporation, Bylaws, or other charter documents, or otherwise
effect a restructuring of Maxoptix or the U.K. Subsidiary.
5.02 NOTICE OF ADVERSE CHANGES. To the extent known to
Seller, Maxoptix or the U.K. Subsidiary, Seller, Maxoptix and the U.K.
Subsidiary shall give prompt notice to Buyer of any material adverse
change in the business of Maxoptix or the U.K. Subsidiary or any
notice of default received by Maxoptix or the U.K. Subsidiary
subsequent to the date of this Agreement and prior to the Closing
under any instrument or agreement to which Maxoptix or the U.K.
Subsidiary is a party or by which any of their respective properties
are bound, or of the assertion of any claim which, if upheld, would
render inaccurate any representation of Seller or Maxoptix in this
Agreement.
5.03 ADDITIONAL ACTIONS REQUIRING. Except as contemplated by
this Agreement, between the date hereof and the Closing or the
termination of the pre-Closing executory obligations under this
Agreement, whichever shall first occur, in addition to the
restrictions contained in Section 5.01 hereof, neither Maxoptix nor
the U.K. Subsidiary shall, without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed:
(i) incur any obligations or liabilities (absolute or
contingent) related to the business of Maxoptix or the U.K.
Subsidiary, other than those incurred in the ordinary course of
business;
(ii) make any single capital expenditure, lease or
commitment in excess of Fifty Thousand United States Dollars
(US$50,000) for additions to property, plant, equipment or
intangible capital assets or make aggregate capital
expenditures, leases or commitments for such purposes in excess
of Fifty Thousand United States Dollars (US$50,000);
(iii) mortgage, pledge or subject to lien or other
encumbrance (other than liens for taxes not yet payable) any
assets of Maxoptix or the U.K. Subsidiary, tangible or
intangible, other than in the ordinary course of business;
(iv) sell, lease or transfer any of the assets of Maxoptix
or the U.K. Subsidiary or cancel any debts or claims relating
thereto, other than in the ordinary course of business;
(v) enter into, amend or cancel any contract related to the
business of Maxoptix or the U.K. Subsidiary other than customer
orders and contracts entered into in the ordinary course of
business; or
(vi) agree to do any of the foregoing.
5.04 COMMUNICATIONS. Neither Maxoptix, Seller nor the U.K.
Subsidiary shall make any public announcements concerning the
transactions contemplated by this Agreement or discuss this Agreement
or the transactions contemplated hereby with any third party (other
than to employees and persons whose consent is needed to effectuate
the transactions contemplated by this Agreement) without the prior
approval of Buyer as to the content thereof, which approval shall not
be unreasonably withheld or delayed by Buyer and shall not be withheld
or delayed for any reason where such communication is required by
applicable law.
5.05 ACCESS. Between the date hereof and the Closing or the
termination of the pre-Closing executory obligations under this
Agreement, whichever shall first occur, Seller and Maxoptix shall
afford Buyer's representatives reasonable access to the offices,
records, personnel, and representatives (including independent
accountants) of Maxoptix and the U.K. Subsidiary and to such of the
financial, contractual and other records of Maxoptix and the U.K.
Subsidiary as shall be reasonably necessary for Buyer's investigation
of the business of Maxoptix and the U.K. Subsidiary, except that
Maxoptix shall not be required to provide access to documents whose
disclosure would result in a loss of the attorney-client privilege.
5.06 CONVERTIBLE STOCK OPTION RIGHTS.
(a) Pursuant to the Maxoptix 1989 Stock Option Plan (the
"Plan"), certain Maxoptix employees (the "Optionees") are entitled to
exchange certain shares of common stock of Maxoptix that were acquired
under the Plan ("Exchange Shares") for shares of common stock of
Seller. Under the Plan, Seller will issue one (1) share of common
stock of Seller (which share shall be registered under the Securities
Act of 1933) ("Seller Shares") for every ten (10) Exchange Shares
surrendered for exchange (the "Exchange Right"). Immediately upon
Closing, Seller shall provide the Notice of Termination of Exchange
Right Pursuant to the Maxoptix Corporation 1989 Stock Option Plan,
attached hereto as Exhibit A, to each of the Optionees, notifying the
Optionees that the Optionees shall have One Hundred Twenty (120) days
from the Closing Date to exercise their Exchange Right.
(b) With respect to Optionees who own Exchange Shares or
options to acquire Exchange Shares as of the Closing, such Optionees
shall exercise their Exchange Right, if at all, in accordance with the
terms of the Notice attached hereto as Exhibit A.
5.07 REGULATORY MATTERS. As soon as practicable after the
execution of this Agreement, Seller will cooperate with Buyer and
Kubota to comply with (i) Section 721 et. seq. of the Defense
Production Act of 1950, as amended, ("Exon-Florio"), (ii) the Hart-
Scott-Rodino Anti-Trust Improvement Act of 1976, as amended ("HSR")
and (iii) any notifications required under Japanese law.
5.08 RELATED AGREEMENTS.
(a) Seller and/or Maxoptix, as the case may be, shall
execute and deliver the following agreements prior to or at the
Closing:
(i) A Patent Cross-License Agreement in the form of the
attached Exhibit B (the "Patent Agreement"),
(ii) A Noncompetition Agreement in the form of the
attached Exhibit C (the "Noncompetition Agreement"), and
(iii) A Joint Venture Termination Agreement in the form of
the attached Exhibit E (the "Joint Venture Termination Agreement").
(b) Seller and Maxoptix shall execute and deliver a Debt
Extinguishment Agreement, in the form of the attached Exhibit D, prior
to the Closing.
ARTICLE VI
COVENANTS OF BUYER
------------------
6.01 COMMUNICATIONS. Between the date hereof and the Closing,
Buyer shall not make any announcements concerning the transactions
contemplated by this Agreement or discuss this Agreement or the
transactions contemplated hereby with any third party (other than to
employees and persons whose consent is needed to effectuate the
transactions contemplated by this Agreement, including, without
limitation, Kubota and other affiliates of Buyer) without the prior
approval of Seller as to the content thereof, which approval shall not
be unreasonably withheld or delayed by Seller and shall not be
withheld or delayed where such communication is required by applicable
law.
6.02 REGULATORY MATTERS. As soon as practicable after the
execution of this Agreement, Buyer will take all actions reasonable
and necessary to comply with (i) Section 721 et. seq. of the Defense
Production Act of 1950, as amended, (ii) the Hart-Scott-Rodino Anti-
Trust Improvement Act of 1976, as amended and (iii) any notification
required under Japanese law.
6.03 RELATED AGREEMENTS.
(a) Buyer shall execute and deliver the following
agreements prior to or at the Closing:
(i) A Noncompetition Agreement in the form of the
attached Exhibit C, and
(ii) A Joint Venture Termination Agreement in the form of
the attached Exhibit E.
(b) Buyer shall execute and deliver a Debt Extinguishment
Agreement, in the form of the attached Exhibit D, prior to the
Closing.
6.04 PAYMENT TO PENTAX. Seller has guaranteed the payment of
certain obligations owed by Maxoptix to Asahi Optical, Ltd. ("Pentax")
pursuant to the terms of that certain letter guarantee dated March 10,
1989 from Seller to Pentax. Within one (1) week of the execution of
this Agreement, Maxoptix shall pay One Hundred Million Japanese Yen
(Japanese Yen 100,000,000) to Pentax in partial satisfaction of the amounts
now owed by Maxoptix to Pentax.
6.05 GUARANTY. Contemporaneously with the execution of this
Agreement, Buyer shall deliver a Guaranty in substantially the form of
the attached Exhibit F, executed by Kubota, pursuant to which Kubota
shall guarantee the full and faithful performance of all of Buyer's
obligations under this Agreement and each of the Related Agreements.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF MAXOPTIX AND SELLER
------------------------------------------------
The obligations of Maxoptix and Seller, respectively, to
consummate the Closing are subject to the satisfaction at or prior to
the Closing of the following conditions:
7.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by the Buyer in this Agreement
shall be true in all material respects as of the Closing with the same
force and effect as though such representations and warranties had
been made as of the Closing, and Buyer shall have delivered to Seller
a certificate to such effect dated the Closing Date and signed by
Buyer's President or any executive officer.
7.02 FULFILLMENT OF COVENANTS. All of the terms, covenants
and conditions of this Agreement to be complied with and performed by
Buyer at or before the Closing shall have been duly complied with and
performed and Buyer shall have delivered to Seller a certificate to
such effect dated the Closing Date and signed by Buyer's President or
any executive officer.
7.03 APPROVAL OF SALE. All authorizations, consents and
approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit the
consummation of the transactions contemplated by this Agreement shall
have been obtained including, without limitation, Exon-Florio and HSR.
7.04 NO LITIGATION. There shall be no litigation pending
which has been brought for the purpose of enjoining the purchase and
sale of the Shares, or any part thereof or any other transaction
contemplated by this Agreement.
7.05 CONSENTS OBTAINED. Buyer shall have delivered to Seller
the written consent or approval of each person, organization or other
party whose consent or approval shall be required in order to permit
Buyer to consummate the transactions contemplated by this Agreement.
7.06 RELATED AGREEMENTS. Buyer and Kubota shall have executed
and delivered the Noncompetition Agreement, and Kubota shall have
executed and delivered the Debt Extinguishment Agreement and the Joint
Venture Termination Agreement.
7.07 KUBOTA GUARANTY. Buyer shall deliver a Guaranty in
substantially the form of the attached Exhibit F, executed by Kubota,
pursuant to which Kubota shall guarantee the full and faithful
performance of all of Buyer's obligation under this Agreement and each
of the Related Agreements.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
The obligation of Buyer to consummate the Closing is subject to
the satisfaction at and prior to the Closing of the following
conditions:
8.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made by Maxoptix and/or Seller in this
Agreement shall be true in all material respects as of the Closing
with the same force and effect as though such representations and
warranties had been made as of the Closing, and Seller shall have
delivered to Buyer a certificate to such effect dated the Closing Date
and signed by Seller's President or any executive officer.
8.02 FULFILLMENT OF COVENANTS. All of the terms, covenants
and conditions of this Agreement to be complied with and performed by
Seller or Maxoptix at or before the Closing shall have been duly
complied with and performed, and Seller shall have delivered to Buyer
a certificate to such effect dated the Closing and signed by Seller's
President or any executive officer.
8.03 APPROVAL OF SALE. All authorizations, consents and
approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit the
consummation of the transactions contemplated by this Agreement shall
have been obtained including, without limitation, Exon-Florio and HSR.
8.04 NO LITIGATION. There shall be no litigation pending
which has been brought for the purpose of enjoining the purchase and
sale of the Shares or any part thereof, or any other transaction
contemplated by this Agreement.
8.05 CONSENTS OBTAINED. Seller and Maxoptix shall have
delivered to Buyer the written consent or approval of each person,
organization or other party whose consent or approval shall be
required in order to permit Seller and Maxoptix to consummate the
transactions contemplated by this Agreement.
8.06 NO ADVERSE CHANGES. The respective assets of Maxoptix
and the U.K. Subsidiary shall not have been adversely affected in any
material way as the result of any fire, accident or other casualties
or any labor disturbance or act of God (whether or not covered by
insurance) or to the Best Knowledge of Seller by any
litigation which would have a material adverse impact on Maxoptix'
financial position or results of operations.
8.07 OPINION OF COUNSEL. Buyer shall receive a favorable
opinion of the General Counsel of Seller, dated the Closing Date, to
the effect that:
(i) Seller, Maxoptix and the U.K. Subsidiary were duly
incorporated and organized,
(ii) Seller and Maxoptix are validly existing and in good
standing under the laws of Delaware,
(iii) The U.K. Subsidiary is validly existing and in good
standing under the laws of the United Kingdom.
(iv) Seller, Maxoptix and the U.K. Subsidiary have the
corporate power and authority to own their respective properties
and assets and to carry on their respective businesses as
currently conducted,
(v) Seller and Maxoptix have the corporate power and
authority to enter into and perform this Agreement and the
transactions contemplated herein,
(vi) this Agreement and the transactions contemplated herein
have been duly authorized by all necessary corporate action on
the part of Seller and Maxoptix and have been duly executed and
delivered by Seller and Maxoptix,
(vii) the capitalization of Maxoptix and the U.K. Subsidiary
is as set forth in Article III hereof as of the Closing Date,
and
(vii) the obligations under this Agreement and the
obligations under the Noncompetition Agreement, the Patent
Agreement, the Joint Venture Termination Agreement and the Debt
Extinguishment Agreement are enforceable in accordance with
their terms, except as limited by principles of equity and with
respect to bankruptcy and creditors' rights.
8.08 RELATED AGREEMENTS. Seller and Maxoptix shall have
executed and delivered the Patent Agreement, the Noncompetition
Agreement, the Debt Extinguishment Agreement, and the Joint Venture
Termination Agreement.
ARTICLE IX
INDEMNIFICATION AND RELEASE
---------------------------
9.01 INDEMNIFICATION.
(a) INDEMNIFICATION AND RELEASE. Subject to Section
9.01(b) herein, Seller shall indemnify, defend and hold harmless Buyer
and Buyer's successors and assigns against and with respect to any
damage, loss, cost, expense, or liability (including reasonable
attorney's fees) ("Loss") resulting from any false representation or
breach of warranty on the part of Seller or Maxoptix under this
Agreement or from any false representation in any certificate, list,
schedule, exhibit or other instrument furnished to Buyer in
contemplation of this Agreement. The maximum aggregate liability of
Seller pursuant to the indemnities provided under Section 9.01(a)
shall not exceed $100,000. Seller shall have no obligation to provide
indemnification (i) until the total amount of Losses for which Buyer
has sought indemnification hereunder shall exceed $25,000, (ii) for
any false or inaccurate statement contained in the representation and
warranty provided under Section 3.14 and (iii) for claims submitted by
Buyer more than six months after the Closing Date.
(b) IN NO EVENT SHALL ANY PARTY HERETO BE LIABLE TO ANY
OTHER PARTY HERETO FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES, HOWEVER CAUSED, WHETHER FOR
BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT THE
PARTY MAKING SUCH CLAIM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
(c) EXCLUSIVE REMEDIES. The indemnification provisions
provided under this Article IX are intended to be the exclusive remedy
and recourse of Buyer for any and all claims made by Buyer for any
misrepresentation or breach of any representation, warranty or
covenant by Seller or Maxoptix and Seller shall have no liability
beyond such indemnity for any such misrepresentation or breach under
any theory of law.
9.02 MUTUAL RELEASE.
(a) Effective upon the Closing, Seller hereby waives,
discharges and releases in full, any claims Seller may have now or in
the future against Maxoptix arising out of any liability or obligation
of Maxoptix to Seller arising at or prior to the Closing, excluding
claims arising out of post-closing executory obligations of Maxoptix
pursuant to this Agreement or any exhibit or schedule hereto
("Seller's Released Claims"). This release shall not in any way
affect or diminish Maxoptix' warranty obligations with respect to any
Maxoptix products.
(b) Effective upon the Closing, Maxoptix hereby waives,
discharges and releases in full, any claims Maxoptix may have now or
in the future against Seller arising out of any liability or
obligation of Seller to Maxoptix arising at or prior to the Closing,
excluding claims arising out of post-closing executory obligations of
Seller pursuant to this Agreement or any exhibit or schedule hereto
("Maxoptix' Released Claims").
(c) Seller and Maxoptix acknowledge the provisions of
Section 1542 of the California Civil Code which provides: "A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR." Notwithstanding the foregoing, effective upon the
Closing, Seller and Maxoptix hereby release all known and unknown
claims against the other relating to Seller's Released Claims and
Maxoptix' Released Claims, respectively.
(d) The releases contained in this Section 9.02 shall not
apply to the debt owed by Maxoptix to Seller which is being
contributed to the capital of Maxoptix by Seller prior to the Closing
pursuant to the Debt Extinguishment Agreement. Any capital interest
obtained by Seller upon the contribution of such debt to the capital
of Maxoptix shall become a part of the equity interests being
transferred to Buyer pursuant to the terms and conditions of this
Agreement.
9.03 MOST. Seller acknowledges that it has discussed selling
the Shares to a company known as "Most," an affiliate of Nakamichi
Corporation, a Japanese corporation ("Most"). Seller specifically
represents and warrants that Seller is entitled to sell the Shares to
Buyer pursuant to this Agreement without any restriction in connection
with Seller's prior negotiations with Most. Seller shall indemnify,
defend and hold harmless Maxoptix, Buyer and their respective
successors, affiliates, agents, officers and directors with respect to
any claim made by Most in connection with the transactions
contemplated by this Agreement.
ARTICLE X
CLOSING
-------
10.01 CLOSING DATE. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. on January 23, 1995, or at such other time and date as may
be mutually agreed upon in writing by the parties hereto (the time and
date of closing as so determined being herein called the "Closing
Date"). The Closing shall be held at the offices of Graham & James, 5
Palo Alto Square, Suite 1000, 3000 El Camino Real, Palo Alto,
California 94306, or at such other place as the parties may agree upon
in writing.
10.02 INSTRUMENTS OF CONVEYANCE AND TRANSFER. At the Closing,
Seller and/or Maxoptix shall deliver to Buyer certificates
representing the Shares, duly endorsed for transfer to the Buyer.
10.03 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall
pay the Purchase Price to Seller as required by Section 2.02 of this
Agreement.
10.04 OTHER DOCUMENTS. Buyer, Seller and Maxoptix shall
deliver at the Closing such other documents, certificates, schedules,
agreements and instruments called for by this Agreement to the party
to whom such delivery is required to be made.
10.05 FURTHER ASSURANCES OF SELLER AND MAXOPTIX. Seller and
Maxoptix shall from time to time at the request of Buyer, and without
further consideration, execute and deliver such instruments of
transfer, conveyance and assignment in addition to those issued
pursuant to Section 10.02 hereof, and take such other actions, as may
be reasonably necessary to transfer, convey, assign to and vest in
Buyer, and to put Buyer in possession of, the Shares and other
interests in Maxoptix.
ARTICLE XI
TERMINATION
-----------
11.01 MUTUAL CONSENT. The executory obligations under this
Agreement may be terminated, and the purchase and sale of the Shares
abandoned, at any time before the Closing Date, by mutual written
consent of Buyer and Seller.
11.02 EFFECT OF TERMINATION. Upon any permitted termination
pursuant to the provision of this Article XI, all parties shall be
relieved of all further obligations under this Agreement.
ARTICLE XII
PAYMENT OF EXPENSES
-------------------
12.01 EXPENSES. The parties shall each pay their own legal
and accounting fees and other out-of-pocket expenses incurred incident
to the preparation and carrying out of this Agreement and the
transactions herein contemplated, whether or not such transactions are
consummated.
12.02 BROKERS. Notwithstanding any other provision of this
Agreement, each party agrees to indemnify and hold the other parties
harmless against any and all loss, liability, damage, cost or expense
(including for any fees, commissions, expenses or other
payments to any broker or other person, and the costs and expenses of
defending against such liability or asserted liability) based upon any
claim made by a broker for services rendered to a party in connection
with the sale of Maxoptix' stock, regardless of whether the
transactions contemplated by this Agreement are consummated.
ARTICLE XIII
GENERAL PROVISIONS
------------------
13.01 NOTICES. No notice or other communication shall be
deemed given unless sent in the manner, and to the persons, specified
in this Section 13.01. All notices and other communications hereunder
will be in writing and will be deemed given (a) upon receipt if
delivered personally (unless subject to clause (b)) or if mailed by
registered or certified mail, (b) on the day after dispatch if sent by
overnight courier or (c) upon dispatch if transmitted by telecopy or
other means of facsimile transmission (and confirmed by a copy
delivered in accordance with clause (a) or (b)), addressed to the
parties at the following addresses:
If to Buyer: Kubota Electronics America Corporation
2880 Lakeside Drive, Suite 131
Santa Clara, CA 95054
Attn: President
With a copy to: Graham & James
5 Palo Alto Square, Suite 1000
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert E. Patterson, Esq.
If to Maxoptix: Maxoptix Corporation
2520 Junction Avenue
San Jose, CA 95136
Attn: President
If to Seller: Maxtor Corporation
211 River Oaks Parkway
San Jose, CA 95134
Attn: Mr. Walter D. Amaral
With a copy to: Maxtor Corporation
211 River Oaks Parkway
San Jose, CA 95134
Attn: Vice President, General Counsel
or to such other addresses or other persons as may be designated in
writing by a party, by notice given as aforesaid.
13.02 HEADINGS. The headings contained in this Agreement are
inserted for the convenience of reference only and are not intended to
affect the meaning or interpretation of this Agreement.
13.03 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and when so executed each counterpart shall be
deemed to be an original, and said counterparts together shall
constitute one and the same instrument.
13.04 BINDING NATURE. This Agreement shall be binding upon
and inure to the benefit of the parties hereto. None of the parties
hereto may assign or transfer any rights or obligations under this
Agreement, without the written consent of the other parties, which
consent shall not be withheld unreasonably.
13.05 WAIVER. Buyer, on the one hand, and Seller and
Maxoptix, on the other hand, may, by written notice to the other:
(i) waive any of the conditions to its obligations
hereunder or extend the time for the performance of any of
the obligations or actions of the other;
(ii) waive any inaccuracies in the representations of the
other contained in this Agreement or in any documents
delivered pursuant to this Agreement;
(iii) waive compliance with any of the covenants of the other
contained in this Agreement; or
(iv) waive or modify performance of any of the obligations
of the other.
No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of either party, shall
be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, condition or agreement
contained herein. Waiver of the breach of any one or more provisions
of this Agreement shall not be deemed or construed to be a waiver of
other breaches or subsequent breaches of the same provisions. It is
specifically understood that Maxoptix is not authorized by Seller to
act on Seller's behalf or to represent Seller in any way and has no
authority to grant any waiver on Seller's behalf pursuant to this
Section 13.05.
13.06 ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits hereto) constitutes the entire agreement
between the parties pertaining to the subject matter contained herein
and supersedes all prior and contemporaneous negotiations, agreements,
representations, and understandings of the parties relating to the
subject matter hereof including, without limitation, any and all
rights and obligations arising under that certain letter agreement
regarding Pentax, dated September 15, 1994, between Kubota and Seller.
No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by the party sought to be bound.
The Agreement shall not be modified by subsequent course of conduct of
the parties unless such modification is in writing and signed by the
party sought to be bound.
13.07 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement does
not provide any rights to employees, future investors or any other
parties as third party beneficiaries of this Agreement, but provides
only for the respective rights and obligations of Buyer, Seller and
Maxoptix, as between themselves.
13.08 GOOD FAITH. Each of the parties hereto agrees that it
shall act in good faith in an attempt to cause all the conditions
precedent to its respective obligations to be satisfied and to
transfer the Shares as set forth herein.
13.09 APPLICABLE LAW. This Agreement shall be governed by the
laws of the State of California, without application of principles of
conflicts of law.
13.10 SEVERABILITY. Should any provision of this Agreement be
determined to be invalid, it shall be severed from this Agreement and
the remaining provisions of this Agreement shall remain in full force
and effect.
13.11 CONFIDENTIALITY. The parties acknowledge that they have
acquired substantial information about and belonging to each other,
which information is confidential and proprietary. At all times after
the Closing, without the express written consent of the disclosing
party, no party shall disclose any information of any other party of a
confidential or proprietary nature to any third parties, including,
without limitation, information about customer bases, market
opportunities, business plans and other trade secrets, and including
all information (whether or not protectable as a trade
secret or under other intellectual property laws) regarding the
technical know-how and operational aspects of such parties business,
or use any of the foregoing except as authorized herein.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first written above.
"BUYER" KUBOTA ELECTRONICS AMERICA CORPORATION
By: /s/ Fuyuhiko Usui
----------------------
Its: President
----------------------
"SELLER" MAXTOR CORPORATION
By: /s/ Walter D. Amaral
----------------------
Its: Sr. VP Finance and CFO
----------------------
"MAXOPTIX" MAXOPTIX CORPORATION
By: /s/ R. Gordon Root
----------------------
Its: CEO
----------------------
MAXTOR CORPORATION
EXHIBIT 11.1
COMPUTATION OF NET LOSS PER SHARE
(In thousands, except per share data)
Three Months Ended Nine Months Ended
- - - ---------------------------------------------------------------------------
Dec. 24, Dec. 25, Dec. 24, Dec. 25,
1994 1993 1994 1993
- - - ---------------------------------------------------------------------------
PRIMARY & FULLY DILUTED
Weighted average number of
common shares outstanding
during the period 50,668 29,474 50,283 29,255
========== ========== ========== ==========
Net loss $ (16,435) $(121,305) $ (83,341) $(253,107)
========== ========== ========== ==========
Net loss per share $ (0.32) $ (4.12) $ (1.66) $ (8.65)
========== ========== ========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000711039
<NAME> MAXTOR CORPORATION
<MULTIPLIER> 1000
<CURRENCY> U. S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-26-1994
<PERIOD-START> MAR-27-1994
<PERIOD-END> DEC-24-1994
<EXCHANGE-RATE> 1
<CASH> 134286<F1>
<SECURITIES> 0
<RECEIVABLES> 88453
<ALLOWANCES> 4202
<INVENTORY> 86027
<CURRENT-ASSETS> 311695
<PP&E> 202886
<DEPRECIATION> 152579
<TOTAL-ASSETS> 368912
<CURRENT-LIABILITIES> 222776
<BONDS> 105349
<COMMON> 509<F2>
0
0
<OTHER-SE> 40278<F3>
<TOTAL-LIABILITY-AND-EQUITY> 368912
<SALES> 630852
<TOTAL-REVENUES> 630852
<CGS> 602196
<TOTAL-COSTS> 602196
<OTHER-EXPENSES> 106976
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6499
<INCOME-PRETAX> (81541)
<INCOME-TAX> 1800
<INCOME-CONTINUING> (83341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (83341)
<EPS-PRIMARY> (1.66)
<EPS-DILUTED> (1.66)
<FN>
<F1>CASH INCLUDES CASH AND CASH EQUIVALENTS OF $87,270 AND SHORT-TERM
INVESTMENTS OF $47,016.
<F2>COMMON INCLUDES: $195 FOR $0.01 PAR VALUE CLASS A COMMON (19,480,000
SHARES ISSUED AND OUTSTANDING); $317 FOR $0.01 PAR VALUE COMMON
(31,695,108 SHARES ISSUED AND OUTSTANDING); AND ($3) FOR NOTES
RECEIVABLE FROM STOCKHOLDERS
<F3>OTHER-SE INCLUDES ADDITIONAL PAID-IN CAPITAL OF $325,368 AND ACCUMULATED
DEFICIT OF $285,090.
</FN>
</TABLE>
