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EXHIBIT 10.01
ZOLTAR ACQUISITION, INC.
SUBLEASE AGREEMENT
160 Gibraltar Court
Sunnyvale, California 94089
December 29, 2000
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TABLE OF CONTENTS
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Page
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1 Demise of Premises..........................................................................................1
2 Certain Definitions.........................................................................................1
3 Title and Condition.........................................................................................8
4 Use of Leased Premises; Quiet Enjoyment....................................................................10
5 Term.......................................................................................................10
6 Basic Rent.................................................................................................11
7 Additional Rent............................................................................................12
8 Net Lease; Non-Terminability...............................................................................13
9. Payment of Impositions.....................................................................................14
10. Compliance with Laws and Easement Agreements; Environmental Matters........................................15
11. Liens; Recording...........................................................................................16
12. Maintenance and Repair.....................................................................................17
13. Alterations and Improvements...............................................................................17
14. Permitted Contests.........................................................................................18
15. Indemnification............................................................................................19
16. Insurance..................................................................................................22
17. Casualty and Condemnation..................................................................................26
18. Termination Events.........................................................................................27
19. Restoration................................................................................................29
20. Procedures Upon Purchase...................................................................................30
21. Assignment and Subletting; Prohibition against Leasehold Financing.........................................30
22. Events of Default..........................................................................................32
23. Remedies and Damages Upon Default..........................................................................33
24. Notices....................................................................................................36
25. Estoppel Certificate.......................................................................................36
26. Surrender..................................................................................................37
27. No Merger of Title.........................................................................................37
28. Books and Records..........................................................................................37
29. Determination of Value.....................................................................................38
30. Non-Recourse as to Landlord................................................................................40
31. Financing..................................................................................................41
32. Subordination..............................................................................................41
33. Financial Covenants........................................................................................41
34. Right to Vacate; Rejectable Offer Upon Vacation............................................................41
35. Tax Treatment; Reporting...................................................................................42
36. Right of First Refusal.....................................................................................42
37. Security Deposit...........................................................................................42
38. Miscellaneous..............................................................................................43
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<TABLE>
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EXHIBITS
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Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "B-1" - Tenant's Property
Exhibit "C" - Schedule of Permitted Encumbrances
Exhibit "D" - Rent Schedule
Exhibit "E" - Acquisition Costs
Exhibit "F" - Approved Investments
Exhibit "G" - Covenants
Exhibit "H" - Form of Guaranty of Lease
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This SUBLEASE AGREEMENT (this "Sublease") is made as of December 29,
2000, between SPECTRIAN CORPORATION, a California corporation ("Landlord"), with
an address at 350 West Java Drive, Sunnyvale, California 94089, and ZOLTAR
ACQUISITION, INC., a North Carolina corporation to be known as UltraRF, Inc.
("Tenant"), with an address of 160 Gibraltar Court, Sunnyvale, California 94089.
RECITALS
A. SPEC (CA) QRS 12-20, INC., a California corporation ("Master
Landlord") and Landlord are parties to that certain Spectrian Lease Agreement
dated November 19, 1996, as amended by that certain First Amendment to Lease
dated March 26, 1997 (as amended, the "Master Lease"), with regard to certain
premises comprised of two (2) distinct parcels of real property, one of which is
located at 350 W. Java Drive, Sunnyvale, California 94089 (as more particularly
described in the Master Lease, the "West Java Premises"), and the other located
at 160 Gibraltar Court, Sunnyvale, California 94089 (as more particularly
described in the Master Lease, the "Gibraltar Premises").
B. Pursuant to that certain Asset Purchase Agreement dated as of
November 20, 2000 (the "Asset Purchase Agreement"), by and among Landlord,
Tenant and Cree, Inc., a North Carolina corporation ("Cree"), Landlord has
agreed to sell a portion of its business and assets to Tenant and Cree. As part
of such contemplated sale (the "Sale Transaction"), Landlord intends to sublease
to Tenant, and Tenant intends to sublease from Landlord, all of Landlord's
right, title and interest under the Master Lease in and to the Gibraltar
Premises, all in accordance with the terms of this Sublease.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and
Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property (hereinafter
referred to as the "Leased Premises", which premises is more particularly
described in the applicable description in Exhibit "A" attached hereto and made
a part hereof and shall include the portions of items (a), (b) and (c) of this
Paragraph 1 located thereon or therein and appertaining thereto): (a) the
premises described in Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the buildings, structures and other improvements
now or hereafter constructed on the Land (collectively, the "Improvements"); and
(c) the fixtures, machinery, equipment and other property described in Exhibit
"B" hereto (collectively, the "Equipment").
2. Certain Definitions.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.
"Adjoining Property" shall mean all sidewalks, driveways,
curbs, gores and vault spaces adjoining the Leased Premises.
"Alterations" shall mean all changes, additions, improvements
or repairs to, all alterations, reconstructions, renewals, replacements or
removals of and all substitutions or
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replacements for any of the Improvements or Equipment, both interior and
exterior, structural and non-structural, and ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.
"Assignment" shall mean any assignment of rents and leases
from Landlord or Master Landlord to a Lender which (a) encumbers any of the
Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the
same may be amended, supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Adjustment Date" shall mean Basic Rent Adjustment
Date as defined in Exhibit "D" hereto.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.
"Commencement Date" shall mean December 29, 2000.
"Condemnation" shall mean a Taking.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Covenants" shall mean the covenants and agreements described
on Exhibit "G" hereto.
"CPI" shall mean CPI as defined in Exhibit "D" hereto.
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(v).
"Default Termination Amount" shall mean the greater of (a)
Fair Market Value or (b) the sum of the Floor Amount and any Prepayment Premium
which Landlord will be required to pay in prepaying any Loan with the proceeds
of the Default Termination Amount.
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"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may, hereafter affect any Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous Condition
or Hazardous Activity, in each case as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations or
injuries or damages due to or threatened as a result of the presence of,
exposure to, or ingestion of, any Hazardous Substance. The term Environmental
Law includes, without limitation, the federal Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act, the federal Clean
Air Act, the federal Clean Water Act, the federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to
RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control
Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal
Occupational Safety and Health Act of 1970, the federal National Environmental
Policy Act and the federal Hazardous Materials Transportation Act, each as
amended and as now or hereafter in effect and any similar state or local Law.
"Environmental Violation" shall mean (a) any direct or
indirect discharge, disposal, spillage, emission, escape, pumping, pouring,
injection, leaching, release, seepage, filtration or transporting of any
Hazardous Substance at, upon, under, onto or within the Leased Premises, or from
the Leased Premises to the environment, in violation of any Environmental Law or
which results in any liability to or any claim against Landlord, Tenant or
Lender, any Federal, state or local government or any other Person for the costs
of any removal or remedial action or natural resources damage or for bodily
injury or property damage, (b) any deposit, storage, dumping, placement or use
of any Hazardous Substance at, upon, under or within the Leased Premises or
which extends to any Adjoining Property in violation of any Environmental Law or
which results in any claim or liability to any Federal, state or local
government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding of any barrels, containers or other receptacles
containing any Hazardous Substances in violation of any Environmental Laws, (d)
any activity, occurrence or condition which results in any claim, liability,
cost or expense to Landlord or Lender or any other owner or occupier of the
Leased Premises, or which could result in a creation of a lien on the Leased
Premises (or any portion thereof or interest therein) under any Environmental
Law or (e) any violation of or noncompliance with any Environmental Law.
"Equipment" shall mean the Equipment as defined in Paragraph
1.
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"Escrow Holder" shall mean a nationally recognized title
insurance company or any Person that would otherwise qualify as a Lender.
"Event of Default" shall mean an Event of Default as defined
in Paragraph 22(a).
"Facility Representations" means, collectively, only the
following: (i) each of the express representations and warranties made by
Landlord under Sections 5.10(a) and 5.18 of the Asset Purchase Agreement to the
extent that, under the terms of the Asset Purchase Agreement, they expressly
apply to the Leased Premises, and (ii) each of the express representations and
warranties made by Landlord under Sections 5.5, 5.6(c), 5.9, 5.10, 5.11, 5.18,
5.19 and 5.20 of the Asset Purchase Agreement to the extent that, under the
terms of the Asset Purchase Agreement, they expressly apply to: (A) Equipment,
and (B) that portion of Improvements which constitute leasehold improvements.
"Fair Market Value" shall mean the fair market value of the
Leased Premises as of the Relevant Date as affected and encumbered by this
Sublease. For all purposes of this Sublease, Fair Market Value shall be
determined in accordance with the procedure specified in Paragraph 29.
"Fair Market Rental Value" shall mean the fair market rental
value of the Leased Premises as of the Relevant Date for the relevant Renewal
Term determined in accordance with the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"Floor Amount" shall mean the amount set forth on Exhibit "E"
hereto.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in the release, seepage, spill,
leak, flow, discharge or emission of any Hazardous Substance into the
environment (including the air, ground water, watercourses or water systems),
(iii) involves the containment or storage of any Hazardous Substance; or (iv)
would cause any of the Leased Premises or any portion thereof to become a
hazardous waste treatment, recycling, reclamation, processing, storage or
disposal facility within the meaning of any Environmental Law.
"Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks.
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the
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environment or public health or safety or (ii) any substance supporting a claim
under any Environmental Law, whether or not defined as hazardous as such under
any Environmental Law. Hazardous Substances include, without limitation, any
toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in
Paragraph 9(a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Initial Term" shall mean Initial Term as defined in Paragraph
5(a).
"Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Sublease.
"Land" shall mean the Land as defined in Paragraph 1.
"Landlord Indemnitee" shall mean a Landlord Indemnitee as
defined in Paragraph 15.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, requirement or
administrative, or judicial determination, even if unforeseen or extraordinary,
of every duly constituted governmental authority, court or agency, now or
hereafter enacted or in effect.
"Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean the requirements of all
present and future Laws (including but not limited to Environmental Laws) and
all covenants, restrictions and conditions now or hereafter of record which may
be applicable to Tenant or to any of the Leased Premises, or to the use, manner
of use, occupancy, possession, operation, maintenance, alteration, repair or
restoration of any of the Leased Premises, even if compliance therewith
necessitates structural changes or improvements or results in interference with
the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any person or entity (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or Master Landlord or is the holder of any Note and which is a bank,
insurance company, bank affiliate or wholly-owned subsidiary of any such bank,
credit company, public or private pension plan, investment bank, institutionally
managed fund or any other Person that is in the business of, directly or
indirectly, making commercial mortgage loans and whose Mortgage provides that
any Net Award shall be held and applied in accordance with the terms of this
Sublease.
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"Loan" shall mean any loan made by one or more Lenders to
Landlord or Master Landlord, which loan is secured by a Mortgage and an
Assignment and evidenced by a Note.
"Master Lease" shall mean as defined in Recital A of this
Sublease.
"Master Lease Basic Rent" shall mean, collectively, the sum of
the Basic Rent (as defined in the Master Lease) due from Landlord to Master
Landlord for the Gibraltar Premises and the West Java Premises.
"Master Lease Term" shall mean the term of the Master Lease as
defined in Paragraph 5 and other applicable provisions thereof.
"Monetary Obligations" shall mean Rent and all other sums
payable by Tenant under this Sublease to Landlord, to any third party on behalf
of Landlord or to any Indemnitee.
"Mortgage" shall mean any first leasehold mortgage or
leasehold deed of trust from Landlord and/or Master Landlord to a Lender which
(a) encumbers Landlord's or Master Landlord's interest in the Leased Premises or
this Sublease, and (b) secures Landlord's or Master Landlord's obligation to
repay a Loan, as the same may be amended, supplemented or modified.
"Net Award" shall mean (a) the entire award payable to Master
Landlord, Landlord or Lender by reason of a Condemnation whether pursuant to a
judgment or by agreement or otherwise, or (b) the entire proceeds of any
insurance required under clauses (i), (ii) (to the extent payable to Master
Landlord, Landlord or Lender), (iv), (v) or (vi) of Paragraph 16(a), as the case
may be, less any expenses incurred by Master Landlord, Landlord and Lender in
collecting such award or proceeds.
"Note" shall mean any promissory note evidencing Landlord's or
Master Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a
payment of principal and/or interest) which Landlord or Master Landlord is
required to make under a Note or a Mortgage by reason of any prepayment by
Landlord or Master Landlord of any principal up to and including but not in
excess of Ten Million Dollars ($10,000,000), due under a Note or
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Mortgage, and which may be (in lieu of such prepayment premium or prepayment
penalty) a "make whole" clause requiring a prepayment premium in an amount
sufficient to compensate the Lender for the loss of the benefit of the Loan due
to prepayment.
"Prime Rate" shall mean the interest rate per annum as
published, from time to time, in the Wall Street Journal as the "Prime Rate" in
its column entitled "Money Rate". The Prime Rate may not be the lowest rate of
interest charged by any "large U.S. money center commercial banks" and Landlord
makes no representations or warranties to that effect. In the event the Wall
Street Journal ceases publication or ceases to publish the "Prime Rate" as
described above, the Prime Rate shall be the "Prime Rate" as published by Bank
of America, or if not published, the "Prime Rate" shall be the average per annum
discount rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury
Bills") issued from time to time by the United States Treasury at its most
recent auction, plus three hundred (300) basis points. If no such 91-day
Treasury Bills are then being issued, the Discount Rate shall be the discount
rate on Treasury Bills then being issued for the period of time closest to
ninety-one (91) days.
"Relevant Date" shall mean (a) the date immediately prior to
the event which gives rise to an Event of Default for the purpose of determining
the Default Termination Amount under Paragraph 23, (b) the date when Fair Market
Value is redetermined, in the event of a redetermination of Fair Market Value
pursuant to Paragraph 20(c), and (c) the first day of the applicable Renewal
Term.
"Renewal Term" shall mean Renewal Term as defined in Paragraph
5.
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Security Deposit" shall mean Security Deposit as defined in
Paragraph 37.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
"State" shall mean the State of California.
"Surviving Obligations" shall mean any obligations of Tenant
or Landlord under this Sublease, actual or contingent, which arise on or prior
to the expiration or prior termination of this Sublease or which survive such
expiration or termination by their own terms.
"Taking" shall mean any taking or damaging of all or a portion
of any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means.
The Taking shall be considered to have taken place as of the later of the date
actual physical possession is taken by the condemnor, or the date on which the
right to compensation and damages accrues under the law applicable to the Leased
Premises.
"Tenant Indemnitee" shall mean a Tenant Indemnitee as defined
in Paragraph 15.
"Tenant's Property" shall mean the Tenant's Property as
defined in Exhibit B-1.
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"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the sum of the Floor Amount
and any Prepayment Premium which Landlord will be required to pay in its or the
Master Landlord's prepaying of any Loan with proceeds of the Termination Amount.
"Termination Date" shall mean the Termination Date as defined
in Paragraph 18.
"Termination Event" shall mean a Termination Event as defined
in Paragraph 18.
"Termination Notice" shall mean Termination Notice as defined
in Paragraph 18(a).
"Third Party Purchaser" shall mean the Third Party Purchaser
as defined in Paragraph 21(g).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
Mortgage and Assignment presently in effect, (ii) the rights of any Persons in
possession of the Leased Premises, (iii) the existing state of title of any of
the Leased Premises, including any Permitted Encumbrances, (iv) any state of
facts which an accurate survey or physical inspection of the Leased Premises
might show, (v) all Legal Requirements, including any existing violation of any
thereof, and (vi) the condition of the Leased Premises as of the commencement of
the Term, without representation or warranty by Landlord. In addition, this
Sublease is and shall be at all times subject to all of the terms, covenants and
conditions of the Master Lease and shall in all respects be limited to the
estate granted to Landlord by Master Landlord pursuant to the Lease. Excluding
only the obligations with regard to the payment of Rent (which obligations are
governed by this Sublease), Tenant assumes and agrees to be bound by the terms
of and to perform all of the obligations and duties of Landlord under the Master
Lease with respect to the Leased Premises. Tenant shall not commit or permit to
be committed any act or omission which shall violate any terms, covenants or
conditions of the Lease. Each of Landlord and Tenant agrees that it shall
promptly forward to the other any and all notices or other communications it
receives from the Master Landlord under the Lease. Where any approval or consent
shall be required of Master Landlord pursuant to the provisions of the Lease,
Landlord may, without limitation, condition its approval or consent upon
Landlord's obtaining the approval or consent of the Master Landlord. Landlord
agrees to use commercially reasonable efforts to request such consent from the
Master Landlord; provided, however, that in no event shall Landlord be obligated
to file any judicial, administrative or other proceeding in connection with
requesting or obtaining any consent from Master Landlord. To the extent that the
terms of this Sublease are more restrictive than the terms of the Lease, the
terms of this Sublease shall prevail.
(b) Tenant acknowledges that the Leased Premises are in good
condition and repair at the inception of this Sublease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER
CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE
MADE, ANY WARRANTY OR
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REPRESENTATION; EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR
WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv)
LANDLORD'S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii)
LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii)
DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.
TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS
SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND
ARE SATISFACTORY TO IT. IN AGREEING TO ENTER INTO THIS SUBLEASE, TENANT IS
RELYING SOLELY ON ITS OWN JUDGMENT WITH RESPECT TO THE RESULTS OF ITS INSPECTION
OF THE LEASED PREMISES. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE
LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE
ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM
COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.
(c) Tenant represents to Landlord that Tenant has examined the
title to the Leased Premises prior to the execution and delivery of this
Sublease and has found the same to be satisfactory for the purposes contemplated
hereby. Tenant acknowledges and agrees that (i) Tenant has only the subleasehold
right of possession and use of the Leased Premises as provided herein, (ii) the
Improvements conform to all material Legal Requirements and all Insurance
Requirements, (iii) all easements necessary or appropriate for the use or
operation of the Leased Premises have been obtained, (iv) all contractors and
subcontractors who have performed work on or supplied materials to the Leased
Premises have been fully paid, and all materials and supplies have been fully
paid for, (v) the Improvements have been fully completed in all material
respects in a workmanlike manner, and (vi) all Equipment necessary or
appropriate for the use or operation of the Leased Premises has been installed
and is presently fully operative in all material respects.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar rights
which Landlord may have against any manufacturer, seller, engineer, contractor
or builder in respect of any of the Leased Premises. Such assignment shall
remain in effect until an Event of Default occurs or until the expiration or
earlier termination of this Sublease, whereupon such assignment shall cease and
all of said warranties, guaranties, indemnities and other rights shall
automatically revert to Landlord.
(e) Landlord and Tenant acknowledge and agree that nothing in
this Sublease (including, without limitation, Sections 3(a) through 3(d)) is
intended, nor shall any provision of
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this Sublease be construed, to supersede, limit or otherwise adversely affect or
expand in scope any of the Facility Representations; provided, however, that
each Facility Representation shall, for purposes of this Sublease, cease to have
legal force and effect from and after the expiration of the survival period
applicable to and designated for such Facility Representation under Section 11.3
of the Asset Purchase Agreement.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for office,
research and development, assembly, manufacturing (including without limitation
semi-conductor wafer fabrication and electronics manufacturing), storage,
warehousing and all related uses, and, subject to Landlord's consent, which
consent shall not be unreasonably withheld, any other use permitted by Law.
Tenant shall not use or occupy or permit any of the Leased Premises to be used
or occupied, nor do or permit anything to be done in or on any of the Leased
Premises, in a manner which would (i) violate any Law or Legal Requirement, (ii)
make void or voidable or cause any insurer to cancel any insurance required by
this Sublease, or make it impossible to obtain any such insurance at
commercially reasonable rates, (iii) cause structural injury to any of the
Improvements or (iv) constitute a public or private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall have the right to quietly
hold, occupy and enjoy the Leased Premises throughout the Term, without any
hindrance, ejection or molestation by Landlord with respect to matters that
arise after the date hereof, provided that Landlord or Master Landlord, or their
respective agents may enter upon and examine any of the Leased Premises at such
reasonable times as Landlord or Master Landlord may select and upon reasonable
notice to Tenant (except in the case of any emergency, in which event no notice
shall be required) for the purpose of inspecting the Leased Premises, verifying
compliance or non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof. When showing the Leased Premises to prospective Lenders and purchasers,
Landlord agrees to use reasonable efforts to minimize disruption to Tenant's
business and operations on the Leased Premises. Landlord shall indemnify Tenant
for any damages, losses, and costs and expenses caused directly by Landlord's
failure to use reasonable efforts to minimize disruption to Tenant's business
and operations in connection with Landlord's inspections of the Leased Premises.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and
hold the Leased Premises for an initial term (the "Initial Term") (the Initial
Term, as extended or renewed in accordance with the provisions hereof, being
called the "Term") commencing on the Commencement Date and ending on the date
which is one calendar day prior to the Expiration Date (as defined in the Master
Lease) of the Initial Term (as defined in the Master Lease) of the Master Lease
(the "Expiration Date"). Accordingly, the Expiration Date of the Initial Term
(as defined in this Sublease) is November 29, 2011.
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(b) Provided that if, on or prior to the Expiration Date or
any other Renewal Date (as hereinafter defined) this Sublease shall not have
been terminated pursuant to any provision hereof, then on the Expiration Date
and on the fifth (5th) and tenth (10th) anniversaries of the Expiration Date
(the Expiration Date and each such anniversary being a "Renewal Date"), the Term
shall be extended for an additional period of five (5) years (a "Renewal Term"),
so long as (i) Tenant shall have notified Landlord in writing in recordable form
at least one (1) year prior to the next Renewal Date that Tenant is electing to
so extend this Sublease as of the next Renewal Date, and (ii) on or before the
applicable Renewal Date, Landlord shall have extended the term of the Master
Lease by a period of time that is equal to or greater than the time period of
the applicable Renewal Term, Landlord having the right but not the obligation to
so extend the term of the Master Lease. Any such extension of the Term shall be
subject to all of the provisions of this Sublease, as the same may be amended,
supplemented or modified. Each Renewal Term shall expire one calendar day prior
to the corresponding Renewal Term (as defined in the Master Lease) under the
Master Lease.
(c) If Tenant fails to exercise its option pursuant to
Paragraph 5(b) to extend the Term, or if Landlord fails to extend the term of
the Master Lease by a period of time equal to or greater than any particular
Renewal Term to which Tenant desires to extend the Term under this Sublease, or
if an Event of Default has occurred and is continuing, then Landlord shall have
the right during the remainder of the Term then in effect and, in any event,
Landlord shall have the right during the last year of the Term, to (i) advertise
the availability of any of the Leased Premises for sale or reletting and to
erect upon any of the Leased Premises signs indicating such availability and
(ii) show any of the Leased Premises to prospective purchasers or tenants or
their agents at such reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord in advance, as annual rent
for the Leased Premises during the Term, the amounts determined in accordance
with Exhibit "D" hereto ("Basic Rent"), commencing on the Commencement Date, and
continuing on the first day of each March, June, September and December
thereafter during the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made, at Landlord's sole discretion, (a) to
Landlord at its address set forth above and/or to such one or more other
Persons, at such addresses and in such proportions as Landlord may direct by
fifteen (15) days' prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrent with the making thereof),
and (b) by a check mailed at least seven (7) days before the applicable Basic
Rent Payment Date, or in Federal Funds. Pro rata Basic Rent for the period from
the Commencement Date through the last calendar day of February, 2001 shall be
paid on the Commencement Date.
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7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all out-of-pocket costs and expenses of Tenant and Landlord which are reasonably
incurred by Landlord or Tenant in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises (except payments on any Loan, third party management fees,
replacement reserves for the Equipment and Improvements, real estate
commissions, costs related to the sale of the Leased Premises to any Person and
costs related to obtaining and closing any Loan or any other loan unless such
costs are part of any other Cost of Landlord unrelated to the Leased Premises
and Impositions (which are governed by Paragraph 9 hereof)), (B) the performance
of any of Tenant's obligations under this Sublease, (C) any transfer of any of
the Leased Premises to Tenant under this Sublease, (D) any Condemnation
proceedings, (E) the adjustment, settlement or compromise of any insurance
claims involving or arising from any of the Leased Premises, (F) the
prosecution, defense or settlement of any litigation involving or arising from
any of the Leased Premises, this Sublease, or the sale of the Leased Premises to
Landlord excluding litigation by Tenant against Landlord in which Tenant is the
prevailing party and excluding litigation or any proceeding concerning any Loan
or any other loan secured by the Leased Premises unless such litigation or
proceeding arises out of any action or non-action by Tenant under this Sublease,
(G) the exercise or enforcement by Landlord, its successors and assigns, of any
of its rights under this Sublease if Landlord is the prevailing party, (H) any
amendment to or modification or termination of this Sublease made at the request
of Tenant, (I) Costs of Landlord's counsel incurred in connection with any act
undertaken by Landlord (or its counsel) at the request of Tenant, or incurred in
connection with any act of Landlord performed at the request of Tenant or if
Tenant fails to perform its obligations under this Sublease, and (J) any other
items specifically required to be paid by Tenant under this Sublease;
(ii) payments to be made to or on behalf of any
Landlord pursuant to Paragraph 15 hereof;
(iii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to three percent
(3%) of the amount of such unpaid installment or portion thereof, provided,
however, that with respect to the first late payment of all or any portion of
any installment of Basic Rent in any Lease Year, the Late Charge shall not be
due and payable unless the Basic Rent has not been paid within seven (7) days
following the due date thereof;
(iv) a sum equal to any late charge or default
penalties in excess of the amount of Late Charge and Default Rate paid by Tenant
on that portion of the Basic Rent equal to payments of principal and interest
payable by Master Landlord and/or Landlord on any Note then in effect and legal
fees and expenses of Lender, which are payable by Master Landlord and/or
Landlord to any Lender under any Note by reason of Tenant's late payment or
non-payment of Basic Rent or by reason of an Event of Default; and
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(v) interest at the rate (the "Default Rate") of
three percent (3%) over the Prime Rate per annum on the following sums until
paid in full: (A) all overdue installments of Basic Rent from the respective due
dates thereof and (B) all overdue amounts of Additional Rent relating to
obligations which Landlord shall have paid on behalf of Tenant, from the date of
payment thereof by Landlord.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a)(i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within seven (7) days after Tenant's receipt of Landlord's written
demand for payment thereof, and (ii) any other Additional Rent, within seven (7)
days after Tenant's receipt of Landlord's written demand for payment thereof.
(c) In no event shall amounts payable under Paragraph
7(a)(iii), (iv) and (v) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and, except as otherwise specifically
provided herein, all Monetary Obligations shall be paid without notice or demand
(provided that notice of increases in Basic Rent payments shall be given as
required under Exhibit "D" and in accordance with the provisions of Paragraph
24) and without set-off, counterclaim, recoupment, abatement, suspension,
deferment, diminution, deduction, reduction or defense (collectively, a
"Set-Off").
(b) Except as otherwise expressly provided herein, this
Sublease and the rights of Landlord and the obligations of Tenant hereunder
shall not be affected by any event or for any reason, including the following:
(i) any damage to or theft, loss or destruction of any of the Leased Premises,
(ii) any Condemnation, (iii) Tenant's acquisition of ownership of any of the
real property upon which the Leased Premises are situated, (iv) any default on
the part of Master Landlord under any Note, Mortgage, Assignment or any other
agreement, (v) any latent or other defect in any of the Leased Premises, (vi)
the breach of any warranty of any seller or manufacturer of any of the
Equipment, (vii) any violation of Paragraph 4(b) or any other provision of this
Sublease by Landlord, (viii) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution or winding-up of, or other
proceeding affecting Master Landlord or Landlord, (ix) the exercise of any
remedy, including foreclosure, under any Mortgage or Assignment, (x) any action
with respect to this Sublease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of Landlord or any court
under the Federal Bankruptcy Code or otherwise, (xi) any interference with
Tenant's use of the Leased Premises, (xii) market or economic changes, (xiii)
any default under the Master Lease by Master Landlord or Landlord, or (xiv) any
other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding. The foregoing shall not limit
Tenant's right to recover damages or obtain any equitable remedy in the event of
a default by Landlord, subject in any event to the provisions, of Paragraph
30(a).
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have
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been terminated pursuant to an express provision of this Sublease. All Rent
payable by Tenant hereunder shall constitute "rent" for all purposes (including
Section 502 (b)(6) of the Bankruptcy Code).
(d) Except as otherwise expressly provided herein, Tenant
shall have no right and hereby waives all rights which it may have under any Law
(i) to quit, terminate or surrender this Sublease or any of the Leased Premises,
or (ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, and all other public charges whether of a like or different nature,
even if unforeseen or extraordinary, imposed upon or assessed against (i)
Tenant, (ii) Tenant's possessory interest in the Leased Premises, (iii) any of
the Leased Premises, (iv) Landlord as a result of or arising in respect of the
acquisition, ownership, occupancy, leasing, use, possession or sale of any of
the Leased Premises, any activity conducted on any of the Leased Premises, or
the Rent, or (v) any Lender by reason of any tax or charge payable to or on
behalf of Lender which is not imposed as of the date hereof, is customarily paid
by tenants or by borrowers pursuant to then prevailing mortgage practices and
which is a substitute for any ad valorem tax payable on the Leased Premises or
any portion thereof and (as to this clause (v)) which Landlord has agreed to pay
(collectively, the "Impositions"); provided, that nothing in this Sublease shall
obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or
Lender) which are determined on the basis of Landlord's (or Lender's) net income
or net worth, (B) any estate, inheritance, succession, gift or similar tax
imposed on Landlord or (C) any capital gains or transfer tax imposed on Landlord
in connection with the sale of the Leased Premises to any Person except for a
sale of the Leased Premises or any part thereof to Tenant or to any nominee or
designee of Tenant. If any Imposition may be paid in installments without
penalty, Tenant shall have the option to pay such Imposition in installments; in
such event, Tenant shall be liable only for those installments which accrue or
become due and payable during the Term. Tenant shall prepare and file all tax
reports required by governmental authorities which relate to the Impositions.
Tenant shall deliver to Landlord (1) copies of all settlements and notices
pertaining to the Impositions which may be issued by any governmental authority
within ten (10) days after Tenant's receipt thereof, (2) receipts for payment of
all taxes required to be paid by Tenant hereunder within thirty (30) days after
the due date thereof and (3) receipts for payment of all other Impositions
within ten (10) days after Landlord's request therefor.
(b) Landlord shall have the right during the occurrence of an
Event of Default to require Tenant to pay to Landlord an additional monthly sum
(each an "Escrow Payment") sufficient to pay the Escrow Charges (as hereinafter
defined) as they become due. As used herein, "Escrow Charges" shall mean real
estate taxes on the Leased Premises or payments in lieu thereof and premiums on
any insurance required by this Sublease. Landlord shall determine, in a
commercially reasonable manner, the amount of the Escrow Charges and of each
Escrow Payment. The Escrow Payments may be commingled with other funds of
Landlord or other
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Persons and no interest thereon shall be due or payable to Tenant. Landlord
shall apply the Escrow Payments to the payment of the Escrow Charges in such
order or priority as Landlord shall determine or as required by law. If at any
time the Escrow Payments theretofore paid to Landlord shall be insufficient for
the payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Subject to Landlord's indemnity obligations set forth in
Section 15(c) of this Sublease, Tenant shall, at its expense, comply with and
conform to, and cause the Leased Premises and any other Person occupying any
part of the Leased Premises to comply with and conform to, all Insurance
Requirements and Legal Requirements (including all applicable Environmental
Laws) and shall maintain in full force and effect all permits, licenses and
utility services required for the use and occupancy of the Leased Premises.
Tenant shall not at any time (i) cause, permit or suffer to occur any
Environmental Violation or (ii) permit any sublessee, assignee or other Person
occupying the Leased Premises under or through Tenant to cause, permit or suffer
to occur any Environmental Violation.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Tenant will not
alter, modify, amend or terminate any Easement Agreement, give any consent or
approval thereunder, or enter into any new Easement Agreement without, in each
case, prior written consent of Landlord, which will not be unreasonably
withheld.
(c) Upon prior written notice from Landlord and/or Master
Landlord, Tenant shall permit such persons as Landlord and/or Master Landlord
may designate ("Site Reviewers") to visit the Leased Premises and perform,
environmental site investigations and assessments ("Site Assessments") on the
Leased Premises for the purpose of determining whether there exists on the
Leased Premises any Environmental Violation or any condition which could result
in any Environmental Violation. Such Site Assessments may include both above and
below the ground testing for Environmental Violations and such other tests as
may be necessary, in the opinion of the Site Reviewers, to conduct the Site
Assessments. Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Leased Premises as may be reasonably
requested by the Site Reviewers to facilitate the Site Assessments, and shall
make available for meetings with the Site Reviewers appropriate personnel having
knowledge of such matters. The cost of performing and reporting any Site
Assessment which discloses an Environmental Violation that first occurs or
arises on or after the Commencement Date shall be paid by Tenant. The cost of
performing and evaluating any Site Assessment that fails to disclose an
Environmental Violation that first occurred or arose on or after the
Commencement Date shall be paid by Landlord.
(d) If an Environmental Violation first arises or occurs
during the Term of this Sublease and, in Landlord's reasonable judgment, the
cost of remediation of the same is likely to exceed $100,000, Tenant shall
provide to Landlord, within ten (10) days after Landlord's request therefor,
adequate financial assurances that Tenant will effect such remediation in
accordance with applicable Environmental Laws.
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(e) Notwithstanding any other provision of this Sublease, if
an Environmental Violation first arises or occurs on or after the Commencement
Date, the Term would otherwise terminate or expire and Landlord, after good
faith efforts, shall have been unable to relet the Leased Premises solely
because of the existence of such Environmental Violation, then, at the option of
Landlord, the Term shall be automatically extended beyond the date of
termination or expiration and this Sublease shall remain in full force and
effect beyond such date until the earliest to occur of (i) the completion of
remedial action to the extent necessary to make the Leased Premises relettable,
(ii) the date specified in a written notice from Landlord to Tenant terminating
this Sublease or (iii) the date on which Tenant obtains a bona-fide replacement
tenant for the Leased Premises on terms reasonably satisfactory to Master
Landlord and Landlord (and in this regard Landlord and its broker shall
reasonably cooperate with Tenant with respect to Tenant's marketing efforts).
(f) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any Environmental Violation which first
occurs or arises on or after the Commencement Date, Landlord and/or the Master
Landlord shall have the right (but no obligation) to take any and all actions as
the Site Reviewers shall deem necessary in order to cure such Environmental
Violation.
(g) Tenant shall notify Landlord immediately alter becoming
aware of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord immediately upon receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain and shall promptly discharge or remove any lien, levy
or encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Sublease, other than any Mortgage or Assignment,
the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord or Master
Landlord. NOTICE IS HEREBY GIVEN THAT NEITHER LANDLORD NOR MASTER LANDLORD SHALL
NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED
TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH
OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD OR
MASTER LANDLORD IN AND TO ANY OF THE LEASED PREMISES. LANDLORD OR MASTER
LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD OR MASTER LANDLORD.
(b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord, Master Landlord and Tenant in any of the Leased Premises, and shall
cause a memorandum of this Sublease (or, if such a memorandum
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cannot be recorded, this Sublease), and any supplement hereto or thereto, to be
recorded in such manner and in such places as may be required or permitted by
any present or future Law in order to protect the validity and priority of this
Sublease.
12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises and
the Adjoining Property in as good repair and appearance as each is in on the
date hereof and fit to be used for their intended use in accordance with the
better of the practices generally recognized as then acceptable by other
companies in its industry, or observed by Tenant with respect to the other real
properties owned or operated by it, and, in the case of the Equipment, in as
good mechanical condition as it was on the later of the date hereof or the date
of its installation, except for ordinary wear and tear. Tenant shall take every
other action necessary or appropriate for the preservation and safety of the
Leased Premises. Tenant shall promptly make all Alterations of every kind and
nature, whether foreseen or unforeseen, which may be required to comply with the
foregoing requirements of this Paragraph 12(a). Landlord shall not be required
to make any Alteration, whether foreseen or unforeseen, or to maintain the
Leased Premises or Adjoining Property in any way, and Tenant hereby expressly
waives any right which may be provided for in any Law now or hereafter in effect
to make Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed by
Tenant, shall (i) encroach upon any setback or any property, street or
right-of-way adjoining any of the Leased Premises, (ii) violate the provisions
of any restrictive covenant affecting any of the Leased Premises, (iii) hinder
or obstruct any easement or right-of-way to which any of the Leased Premises is
subject or (iv) impair the rights of others in, to or under any of the
foregoing, Tenant shall, promptly after receiving notice or otherwise acquiring
knowledge thereof, either (A) obtain from all necessary parties waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, hindrance, obstruction or impairment, whether the same
shall affect Landlord, Tenant or both, or (B) take such action as shall be
necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.
13. Alterations and Improvements.
(a) Tenant shall have the right, without having obtained the
prior written consent of Landlord, Master Landlord and Lender, to make (i)
non-structural Alterations to the Leased Premises, (ii) structural Alterations
or a series of related structural Alterations that, as to any such Alterations
or series of related Alterations, do not cost in excess of $250,000 with respect
to the Leased Premises and (iii) to install Equipment in the Improvements or
accessions to the Equipment that, as to such Equipment or accessions, do not
cost in excess of $250,000, so long as at the time of construction or
installation of any such Equipment or Alterations no Event of Default exists and
the value and utility of the Leased Premises is not materially diminished
thereby. For any other Alterations or Equipment or accessions thereto the cost
of which is in excess of $250,000, the prior written approval of Landlord,
Master Landlord and Lender shall be required, such approval not to be
unreasonably withheld, delayed or conditioned and such
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approval shall not, in any event, include any requirement that the space to be
improved must be returned to its original condition at the end of the Term if
the Alterations are of general utility and do not adversely affect the value of
the Leased Premises. Tenant shall not construct upon the Land any additional
buildings without having first obtained the prior written consent of Landlord,
Master Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph
13 or as required by Paragraph 12 or 17 (such Alterations and actions being
hereinafter collectively referred to as "Work"), then (i) the market value of
the Leased Premises shall not be lessened in any material respect by any such
Work or its usefulness impaired, (ii) all such Work shall be performed by Tenant
or its contractors in a good and workmanlike manner, (iii) all such Work shall
be expeditiously completed in compliance with all Legal Requirements, (iv) all
such Work shall comply with the requirements of all insurance policies required
to be maintained by Tenant hereunder, (v) if any such Work involves the
replacement of Equipment or parts thereto, all replacement Equipment or parts
shall have a value and useful life equal to the greater of (A) the value and
useful life on the date hereof of the Equipment being replaced or (B) the value
and useful life of the Equipment being replaced immediately prior to the
occurrence of the event which required its replacement (assuming such Replaced
Equipment was then in the condition required by this Sublease), (vi) Tenant
shall promptly discharge or remove all liens filed against any of the Leased
Premises arising out of such Work, (vii) Tenant shall procure and pay for all
permits and licenses required in connection with any such Work, (viii) all such
Work shall be the property of Landlord and shall be subject to this Sublease,
and Tenant shall execute and deliver to Landlord any document requested by
Landlord evidencing the assignment to, Landlord of all estate, right, title and
interest (other than the leasehold estate created hereby) of Tenant or any other
Person thereto or therein, and (ix) Tenant shall comply, to the extent requested
by Landlord or required by this Sublease, with the provisions of Paragraph
19(a), whether or not such Work involves restoration of the Leased Premises.
(c) Tenant shall have the right at any time during the Term to
install and remove Tenant's Property which shall remain Tenant's Property
(subject to Tenant's obligations to repair and restore).
14. Permitted Contests. Notwithstanding any other provision of this
Sublease, Tenant shall not be required to (a) pay any Imposition, (b) discharge
or remove any lien referred to in Paragraph 11 or 13, (c) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b), or (d) comply with any Legal Requirements (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such non-compliance no
Event of Default exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof or the manner in which compliance with
Legal Requirements is to be achieved, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (i) the
collection of, or other realization upon, the Permitted Violation so contested,
(ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to
satisfy or to pay any damages caused by any Permitted Violation, (iii) any
material interference with the use or occupancy of any of the Leased Premises,
(iv) any interference with the payment of any Rent, (v) the cancellation or
increase in the rate of any insurance policy or a statement by the carrier that
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coverage will be denied or (vi) the enforcement or execution of any injunction,
order or Legal Requirement with respect to the Permitted Violation. Tenant shall
provide Landlord and Master Landlord security which is required by Law or, if
not required, which is satisfactory, in Landlord's and Master Landlord's
reasonable judgment (which shall be based, among other things, on an analysis of
Tenant's creditworthiness), to assure that such Permitted Violation is
corrected, including all Costs, interest and penalties that may be incurred or
become due in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord and Master Landlord, neither Landlord nor Master Landlord shall have
the right to correct any Permitted Violation thereby being contested unless
Landlord or Master Landlord is required by law to correct such Permitted
Violation and Tenant's contest does not prevent or stay such requirement as to
Landlord or Master Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord or Master
Landlord to the risk of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, defend, save and
hold harmless Landlord, Master Landlord, Lender and all other Persons described
in Paragraph 30 (each a "Landlord Indemnitee") from and against, any and all
liabilities, losses, damages (including punitive damages), penalties, Costs
(including reasonable attorneys' fees and costs), causes of action, suits,
claims, demands or judgments of any nature whatsoever, howsoever caused, without
regard to the form of action and whether based on strict liability, gross
negligence, negligence or any other theory of recovery at law or in equity,
arising, directly or indirectly, from any of the following matters, events,
circumstances, conditions or occurrences: (i) any matter, event, occurrence,
condition or circumstance that occurs during the Term of this Sublease (as such
Term may be extended from time to time in accordance with the terms of this
Sublease) pertaining to the ownership, leasing, use, non-use, occupancy,
operation, management, condition, design, construction, maintenance, repair or
restoration of any of the Leased Premises or Adjoining Property, (ii) any claim
by a third party based on personal injury or property damage where such injury
or damage occurs during the Term and is caused, directly or indirectly, by any
casualty, event, or circumstances in any manner arising from any of the Leased
Premises or Adjoining Property, (iii) any violation by Tenant of any provision
of this Sublease (and/or any act or omission by Tenant that directly or
indirectly causes a violation of the Master Lease), any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance,
(iv) any alleged, threatened or actual Environmental Violation and/or Hazardous
Activity first arising or occurring during the Term of this Sublease, including
(A) liability for response costs and for costs of removal and remedial action
incurred by the United States Government, any state or local governmental unit
or any other Person, or damages from injury to or destruction or loss of natural
resources, including the reasonable costs of assessing such
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injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (B)
liability for costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity; (v) any migration of Hazardous Substances from the
Leased Premises to the West Java Premises; (vi) any latent defects within the
Leased Premises or Adjoining Property first arising or occurring at any time on
or after the Commencement Date of the Term; (vii) any patent defects within the
Leased Premises or Adjoining Property first arising or occurring at any time on
or after the Commencement Date of the Term; (viii) any latent and/or patent
defect arising or occurring at any time prior to the Commencement Date of the
Term to the extent the same does not constitute a breach by Landlord of any
Facility Representation; and (ix) any act or omission of Tenant during the Term
of this Sublease. Notwithstanding the foregoing, Tenant's indemnification and
other obligations under the foregoing provisions of this Subparagraph 15(a)
shall not be applicable with respect to (1) any Landlord Indemnitee due to the
gross negligence or willful misconduct of such Landlord Indemnitee or its
agents, employees or contractors, (2) Landlord for any matter caused solely by
Landlord's breach of this Sublease or any document evidencing or securing a Loan
(so long as such breach is not caused by Tenant's breach of this Sublease), (3)
any Landlord Indemnitee with respect to any misrepresentation made by such
Landlord Indemnitee, (4) any Lender for non-payment of principal, interest or
penalties due on any Loan, or (5) any claim brought or threatened in writing
against Landlord prior to the Commencement Date of the Term; provided, however,
that Tenant's indemnification and other obligations under this Subparagraph
15(a) shall continue to apply to the extent such claim arises, directly or
indirectly, from any act or omission of Tenant. The term "actual knowledge" as
used in this Sublease means the actual, conscious (and not imputed) knowledge of
the officers of Landlord and of the persons listed on Schedule 1 hereof as of
the Commencement Date, without making any investigation or inquiry, and without
any duty or obligation to make any investigation or inquiry. Landlord represents
to Tenant that the persons listed on Schedule 1 are the persons employed by
Landlord that are most familiar with the daily business and operations of the
Leased Premises as of the last calendar day immediately preceding the
Commencement Date. As used in this Sublease, the terms "latent defect" and
"patent defect" shall have the meanings ascribed to such terms under California
statutory and common laws; provided, however, that patent defects shall be
deemed to include any defects which are discoverable or could have been
discovered by Tenant through reasonable inspection.
(b) In case any action or proceeding is brought against any
Landlord Indemnitee by reason of any such claim, (i) Tenant may, except in the
event of a conflict of interest or a dispute between Tenant and any such
Landlord Indemnitee or during the continuance of an Event of Default, retain its
own counsel and defend such action (it being understood that Landlord may employ
counsel of its choice to monitor the defense of any such action at its cost) and
(ii) such Landlord Indemnitee shall notify Tenant to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such
Landlord Indemnitee, and such Landlord Indemnitee will cooperate and assist in
the defense of such action or proceeding if reasonably requested to do so by
Tenant. In the event of a conflict of interest or dispute or during the
continuance of an Event of Default, Landlord shall have the right to select
counsel, and the cost of such counsel shall be paid by Tenant.
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(c) Landlord shall pay, protect, indemnify, defend, save and
hold harmless Tenant and any director, officer, general partner, limited
partner, employee or agent of Tenant, or any general partner of Tenant, any of
its general partners or shareholders (or any legal representative, heir, estate,
successor or assign of any thereof), any predecessor or successor partnership or
corporation (or other entity) of Tenant or any of its general partners, either
directly or through Tenant or its general partners or any predecessor or
successor partnership or corporation or their shareholders, officers, directors,
employees or agents (or other entity) (each a "Tenant Indemnitee") from and
against, any and all liabilities, losses, damages (including punitive damages),
penalties, Costs (including reasonable attorneys' fees and costs), causes of
action, suits, claims, demands or judgments of any nature whatsoever, howsoever
caused, without regard to the form of action and whether based on strict
liability, gross negligence, negligence or any other theory of recovery at law
or in equity, arising, directly or indirectly, from any of the following
matters, events, circumstances, conditions or occurrences: (i) any matter,
event, occurrence, condition or circumstance that occurs during the period of
time from the commencement date of the Master Lease Term through the date which
is one (1) calendar day immediately prior to the Commencement Date (such period
being the "Pre-Existing Period"), pertaining to the leasing, use, non-use,
occupancy, operation, management, construction, maintenance, repair or
restoration of any of the Leased Premises, Adjoining Property, but only to the
extent such matter, event, occurrence or circumstance would also constitute a
breach of any Facility Representation, (ii) any claim by a third party based on
personal injury or property damage where such injury or damage occurs during the
Pre-Existing Period and is caused, directly or indirectly, by any casualty,
event or circumstances in any manner arising from any of the Leased Premises or
Adjoining Property; (iii) any violation by Landlord of any provision of this
Sublease, or any other contract or agreement to which Landlord is a party
(including the Master Lease), (iv) any violation by Landlord during the
Pre-Existing Term of any Legal Requirement or any Permitted Encumbrance; (v) any
alleged, threatened or actual Environmental Violation and/or Hazardous Activity
arising or occurring during the Pre-Existing Term, including (A) liability for
response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental
Laws, and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity; and (vi) any migration of Hazardous Substances from the West Java
Premises to the Leased Premises. Notwithstanding the foregoing, Landlord's
indemnification and other obligations under the foregoing provisions of this
Subparagraph 15(c) shall not be applicable with respect to (i) any Tenant
Indemnitee due to the gross negligence or willful misconduct of such Tenant
Indemnitee or its agents, employees or contractors, (ii) Tenant for any matter
caused solely by Tenant's breach of this Sublease or any document evidencing or
securing a Loan (so long as such breach is not caused by Landlord's breach of
this Sublease), (iii) any Tenant Indemnitee with respect to any
misrepresentation made by such Tenant Indemnitee, (iv) any latent defects within
the Leased Premises arising at any time for which Landlord has no actual
knowledge, (vi) any latent defects within the Leased Premises arising
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during the Pre-Existing Term for which Landlord has actual knowledge and which
Landlord discloses in writing to Tenant prior to the Commencement Date, or (vii)
any patent defects within the Leased Premises arising at any time. To the extent
based or triggered by any matter, event, occurrence or circumstance which
constitutes a breach of a Facility Representation or any other representation or
warranty made by Landlord hereunder, the indemnity and other obligations of
Landlord under Subparagraph 15(c) hereof shall terminate when the survival
period applicable to any such representation or warranty (including, but not
limited to, any Facility Representation) expires.
(d) In case any action or proceeding is brought against any
Tenant Indemnitee by reason of any such claim, (i) Landlord may, except in the
event of a conflict of interest or a dispute between Landlord and any such
Tenant Indemnitee or during the continuance of an Event of Default, retain its
own counsel and defend such action (it being understood that Landlord may employ
counsel of its choice to monitor the defense of any such action at its cost) and
(ii) such Tenant Indemnitee shall notify Landlord to resist or defend such
action or proceeding by retaining counsel reasonably satisfactory to such Tenant
Indemnitee, and such Tenant Indemnitee will cooperate and assist in the defense
of such action or proceeding if reasonably requested to do so by Landlord. In
the event of a conflict of interest or dispute, Tenant shall have the right to
select counsel, and the cost of such counsel shall be paid by Landlord.
(e) The obligations of Tenant and Landlord under this
Paragraph 15 shall survive any termination, expiration or rejection in
bankruptcy of this Sublease with respect to any indemnified matter, including
any condition, that existed, occurred or arose out of a matter or condition that
existed or occurred prior to the date of such termination, expiration or
rejection, whether or not known or actionable at such date.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:
(i) (A) Insurance against physical loss or
damage to the Improvements and Equipment as provided under a standard "All Risk"
property policy (but excluding earthquake and flood coverage) in amounts not
less than the actual replacement cost of the Improvements and Equipment and (B)
subject to the provisions of the last two (2) sentences of this Paragraph 16 (a)
(i) , earthquake and flood coverage in the amount of $5,000,000. The policies
described in clause (A) above shall contain Replacement Cost and Agreed Amount
Endorsements and shall contain deductibles not more than $100,000 per occurrence
and the earthquake and flood policy described in clause (B) shall contain
deductibles of not more than $1,000,000. The amount of such insurance shall not
be reduced and the amount of such deductible shall not be increased as long as
such insurance is available. If such insurance is not available, the amounts of
coverage and deductibles may be reduced or increased, respectively, as
applicable.
(ii) Commercial general liability insurance
against claims for personal and bodily injury, death or property damage
occurring on, in or as a result of the use of the Leased Premises, in an amount
not less than $10,000,000 per occurrence/annual aggregate
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including but not limited to incidental medical malpractice, and all other
coverage extensions that are usual and customary for properties of this size and
type; provided, however, that Landlord shall have the right to require such
higher limits as may be reasonable and customary for properties of this size and
type.
(iii) Worker's compensation insurance covering all
persons employed by Tenant in connection with any work done on or about any of
the Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such worker's compensation insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State
or States in which the Leased Premises are located.
(iv) If applicable, comprehensive boiler and
machinery insurance on any of the Equipment or any other equipment on or in the
Leased Premises, including but not limited to service interruption, expediting
expenses, ammonia contamination, hazardous clean-up and comprehensive object
definition, in an amount not less than $5,000,000 for damage to property, bodily
injury or death resulting from such covered perils as found in a standard
comprehensive boiler & machinery policy. Such policies shall contain a
deductible not to exceed $100,000.
(v) Loss of rents insurance on an actual loss
sustained basis with a period of indemnity not less than one year from the time
of loss.
(vi) During any period in which substantial
Alterations at the Leased Premises are being undertaken, builder's risk
insurance covering the total completed value including any "soft costs" with
respect to the Improvements being altered or repaired (on a completed value,
non-reporting basis), replacement cost of work performed and equipment, supplies
and materials furnished in connection with such construction or repair of
Improvements or Equipment, together with such "soft cost" endorsements and such
other endorsements as Landlord may reasonably require and general liability,
worker's compensation and automobile liability insurance with respect to the
Improvements being constructed, altered or repaired.
(vii) Such other insurance (or other terms with
respect to any insurance required pursuant to this Paragraph 16 except for the
earthquake coverage described in Paragraph 16 (a)(i), including without
limitation amounts of coverage, deductibles and form of mortgagee clause) on or
in connection with any of the Leased Premises as Landlord or Lender may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size, use and location to
the Leased Premises.
(b) The insurance required by Paragraph 16(a) shall be written
by companies which have a Best's rating of at least A:X (unless a lesser rating
is approved by Landlord) and are admitted in, and approved to write insurance
policies by, the State Insurance Department for the states in which the Leased
Premises are located. The insurance policies (i) shall be on such terms as
Landlord may reasonably approve and (ii) shall be in amounts sufficient at all
times to satisfy any coinsurance requirements thereof. The insurance referred to
in Paragraphs 16 (a)(i), 16(a)(iv) and 16(a)(vi) shall name Master Landlord and
Landlord as additional insureds and Lender as loss payee and Tenant as its
interest may appear. The insurance referred to in
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Paragraph 16(a)(ii) shall name Master Landlord, Landlord and Lender as
additional insureds, and the insurance referred to in Paragraph 16(a)(v) shall
name Tenant as insured and Lender, Master Landlord and Landlord as loss payee.
If said insurance or any part thereof shall expire, be withdrawn, become void,
voidable, unreliable or unsafe for any reason, including a breach of any
condition thereof by Tenant or the failure or impairment of the capital of any
insurer, or if for any other reason whatsoever said insurance shall become
reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or
additional insurance reasonably satisfactory to Landlord.
(c) Each insurance policy referred to in clauses (i), (iv),
(v) and (vi) of Paragraph 16 (a) shall contain standard non-contributory
mortgagee clauses in favor of and acceptable to Lender. Each policy required by
any provision of Paragraph 16 (a), except clause (iii) thereof, shall provide
that it may not be cancelled except after thirty (30) days' prior notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise
payable thereunder shall be payable notwithstanding (i) any act or omission of
Landlord or Tenant which might, absent such provision, result in a forfeiture of
all or a part of such insurance payment, (ii) the occupation or use of any of
the Leased Premises for purposes more hazardous than those permitted by the
provisions of such policy, (iii) any foreclosure or other action or proceeding
taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or
other document evidencing or securing the Loan upon the happening of an event of
default therein or (iv) any change in title to or ownership of any of the Leased
Premises.
(d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence of the payment of the full premium therefor or
installment then due at least thirty (30) days prior to the expiration date of
such policy, and shall promptly deliver to Landlord all original policies or
certified copies thereof. In the event that, within seven (7) calendar days
after Tenant's receipt of Landlord's demand, Tenant fails to deliver to Landlord
such evidence of the payment of the full premium of any insurance policy
required hereunder, and/or the original of such insurance policy or a certified
copy thereof, then Landlord shall have the right, but not the obligation, to
obtain such insurance policy in the form required hereunder and pay the premiums
and commissions associated with such insurance policy, in which event Tenant
shall reimburse landlord for all costs and expenses incurred by Landlord in
connection with obtaining such policy, including, without limitation, insurance
premiums, commissions and reasonable attorneys' fees and costs.
(e) Anything in this Paragraph 16 to the contrary
notwithstanding, any insurance which Tenant is required to obtain pursuant to
Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies
covering other properties or liabilities of Tenant, provided that such "blanket"
or umbrella policy or policies otherwise comply with the provisions of this
Paragraph 16 and provided further that such policies shall provide for a
reserved amount thereunder with respect to the Leased Premises so as to assure
that the amount of insurance required by this Paragraph 16 will be available
notwithstanding any losses with respect to other property covered by such
blanket policies. The amount of the total insurance allocated to the Leased
Premises, which amount shall be not less than the amounts required pursuant to
this Paragraph 16, shall be specified either (i) in each such "blanket" or
umbrella policy or (ii) in a written statement, which Tenant shall deliver to
Landlord, from the insurer thereunder. The original or a certified copy of each
such "blanket" or umbrella policy shall promptly be delivered to Landlord.
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(f) Tenant shall have the replacement cost and insurable value of the
Improvements and Equipment determined from time to time as required by the
replacement cost and agreed amount endorsements and shall deliver to Landlord
the new replacement cost and agreed amount endorsement or certificate evidencing
such endorsement promptly upon Tenant's receipt thereof.
(g) Tenant shall promptly comply with and conform to (i) all provisions
of each insurance policy required by this Paragraph 16 and (ii) all requirements
of the insurers thereunder applicable to Landlord, Tenant or any of the Leased
Premises or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of any of the Leased Premises, even if such
compliance necessitates Alterations or results in interference with the use or
enjoyment of any of the Leased Premises.
(h) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
or certified copies thereof.
(i) All policies shall contain effective waivers by the carrier against
all claims for insurance premiums against Landlord and shall contain full
waivers of subrogation against Landlord.
(j) All proceeds of any insurance required under Paragraph 16(a) shall
be payable as follows:
(i) Except for proceeds payable to a Person other than
Master Landlord, Landlord, Tenant or Lender, all proceeds of insurance required
under clauses (ii), (iii), (iv), (v) and (vii) of Paragraph 16(a) and proceeds
attributable to the general liability coverage provisions of Builder's Risk
insurance under clause (vi) of Paragraph 16(a) shall be payable to Escrow Holder
or, if required by the Mortgage, to Lender who shall apply such proceeds to the
Persons legally entitled thereto for the benefit of the named insureds as their
interests appear.
(ii) Proceeds of insurance required under clause (i) of
Paragraph 16 (a) and proceeds attributable to Builder's Risk insurance (other
than its general liability coverage provisions) under clause (vi) of Paragraph
16 (a) shall be payable to Escrow Holder (or Lender) and applied as set forth in
Paragraph 17 or Paragraph 18, as applicable. If Tenant is obligated to restore
the Leased Premises, then Escrow Holder or Lender, as the case may be, shall
make the proceeds available to Tenant in accordance with the applicable
provisions hereof and Tenant shall apply the Net Award to restoration of the
Leased Premises in accordance with the applicable provisions of this Sublease.
(iii) Each insurer is hereby authorized and directed to
make payment under said policies directly to Escrow Holder or, if required by
the Mortgage, to Lender instead
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of to Master Landlord, Landlord and Tenant jointly, and Tenant hereby appoints
each of Escrow Holder and Lender as Tenant's attorneys-in-fact to endorse any
draft therefor.
17. Casualty and Condemnation.
(a) If any Casualty to the Leased Premises occurs, Tenant
shall give Master Landlord, Landlord and Lender immediate notice thereof. So
long as no Event of Default has occurred and is continuing Tenant is hereby
authorized to adjust, collect and compromise all claims under any of the
insurance policies required by Paragraph 16(a) (except public liability
insurance claims payable to a Person other than Tenant, Master Landlord,
Landlord or Lender) and to execute and deliver on behalf of Master Landlord and
Landlord all necessary proofs of loss, receipts, vouchers and releases required
by the insurers and Master Landlord and Landlord shall have the right to join
with Tenant therein. Any final adjustment, settlement or compromise of any such
claim shall be subject to the prior written approval of Master Landlord and
Landlord, which shall not be unreasonably withheld or delayed, and Master
Landlord and Landlord shall have the right to prosecute or contest, or to
require Tenant to prosecute or contest, any such claim, adjustment, settlement
or compromise. If an Event of Default has occurred and is continuing, Tenant
shall not be entitled to adjust, collect or compromise any such claim or to
participate with Master Landlord or Landlord in any adjustment, collection and
compromise of the Net Award payable in connection with a Casualty. Tenant agrees
to sign, upon the request of Master Landlord or Landlord, all such proofs of
loss, receipts, vouchers and releases. The rights of Master Landlord and
Landlord under this Paragraph 17(a) shall be extended to Lender if and to the
extent that any Mortgage so provides.
(b) Tenant, immediately upon receiving a Condemnation Notice,
shall notify Master Landlord, Landlord and Lender thereof. So long as no Event
of Default has occurred and is continuing, Tenant is authorized to collect,
settle and compromise the amount of any Net Award and Master Landlord and
Landlord shall have the right to join with Tenant herein. If an Event of Default
has occurred and is continuing, Master Landlord and Landlord shall be authorized
to collect, settle and compromise the amount of any Net Award and Tenant shall
not be entitled to participate with Master Landlord and Landlord in any
Condemnation proceeding or negotiations under threat thereof or to contest the
Condemnation or the amount of the Net Award therefor. No agreement with any
condemnor in settlement or under threat of any Condemnation shall be made by
Tenant without the written consent of Master Landlord and Landlord, which shall
not be unreasonably withheld. Subject to the provisions of this Paragraph 17(b),
Tenant hereby irrevocably assigns to Master Landlord and Landlord any award or
payment to which Tenant is or may be entitled by reason of any Condemnation,
whether the same shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Sublease shall impair Tenant's right
to any award or payment on account of Tenant's trade fixtures, equipment or
other tangible property which is not part of the Equipment, moving expenses or
loss of business, if available, to the extent that and so long as (i) Tenant
shall have the right to make, and does make, a separate claim therefor against
the condemnor and (ii) such claim, does not in any way reduce either the amount
of the award otherwise payable to Master Landlord and Landlord for the
Condemnation of Master Landlord's fee interest in, and Landlord's leasehold
interest in, the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder. The
rights of Master Landlord and Landlord under this
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Paragraph 17(b) shall also be extended to Lender if and to the extent that any
Mortgage so provides.
(c) If any Partial Casualty (whether or not insured
against) or Partial Condemnation shall occur to the Leased Premises, this
Sublease shall continue, notwithstanding such event, and there shall be no
abatement or reduction of any Monetary Obligations, except to the extent of
proceeds received by Landlord from the insurance described in Paragraph 16(a)(v)
hereof. Promptly after such Partial Casualty or Partial Condemnation, Tenant, as
required in Paragraph 12 (a), shall commence and diligently continue to restore
the Leased Premises as nearly as possible to their value, condition and
character immediately prior to such event (assuming the Leased Premises to have
been in the condition required by this Sublease). So long as no Event of Default
has occurred and is continuing, any Net Award up to and including $250,000 shall
be paid by Escrow Holder to Tenant and Tenant shall restore the Leased Premises
in accordance with the requirements of Paragraph 13(b)of this Sublease. Any Net
Award in excess of $250,000 shall (unless such Casualty resulting in the Net
Award is a Termination Event) be made available by Escrow Holder (or Lender if
the terms of the Mortgage so require) to Tenant for the restoration of any of
the Leased Premises pursuant to and in accordance with and subject to the
provisions of Paragraph 19 hereof. If any Casualty or Condemnation which is not
a Partial Casualty or Partial Condemnation shall occur, Tenant shall comply with
the terms and conditions of Paragraph 18.
18. Termination Events.
(a) If (i) all the Leased Premises shall be taken by a
Taking, or (ii) (A) any substantial portion of the Leased Premises shall be
taken by a Taking (and provided that the Taking of such portion would materially
adversely affect Tenant's use and occupation of the Leased Premises and its
operations thereon) or (B) all or any substantial portion of the Leased Premises
shall be damaged or destroyed by a Casualty (and provided that the damage caused
by such casualty would materially adversely affect Tenant's use and occupation
of the Leased Premises and its operations thereon), and (1) as to such Casualty
Tenant shall provide evidence satisfactory to Master Landlord, Landlord and
Lender that it shall be unable to rebuild the Leased Premises by the beginning
of the ninth (9th) calendar month following the date of such Casualty, or (2)
the Casualty was an earthquake or the insurer is insolvent so that proceeds
(exclusive of the required deductible) sufficient to rebuild the Leased Premises
are not available and, in any such case, Tenant certifies and covenants to
Master Landlord and Landlord that it will forever abandon operations at the
Leased Premises, (each of the events described in the above clauses (i) and (ii)
shall hereinafter be referred to as a "Termination Event"), then (x) in the case
of (i) above, Tenant shall be obligated, within thirty (30) days after Tenant
receives a Condemnation Notice, and (y) in the case of (ii) above Tenant shall
have the option within thirty (30) days after Tenant receives a Condemnation
Notice or thirty (30) days after the Casualty, as the case may be, to give to
Master Landlord and Landlord written notice (a "Termination Notice") of Tenant's
election to terminate this Sublease as to the Leased Premises in the form
described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of
Tenant's intention to terminate this Sublease as to the Leased Premises on the
first Basic Rent Payment Date which occurs at least sixty (60) days after the
date of the Termination Notice (the "Termination Date"),
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(ii) a binding and irrevocable offer of Tenant to pay the Termination Amount,
and (iii) if the Termination Event is an event described in Paragraph 18(a)(ii),
the certification and covenant described therein and a certified resolution of
the Board of Directors of Tenant authorizing the same.
(c) Upon the Termination Date, Tenant shall pay the
Termination Amount and all unpaid Monetary Obligations to Landlord, and this
Sublease shall terminate as to the Leased Premises; provided that, if Tenant has
not satisfied all Monetary Obligations as to the Leased Premises (collectively,
"Remaining Obligations") on or prior to the Termination Date, then Master
Landlord and/or Landlord may, at its option, extend the date on which this
Sublease may terminate as to the Leased Premises to a date which is no later
than the first Basic Rent Payment Date after the Termination Date on which
Tenant has satisfied all Remaining Obligations; provided, however, the parties
acknowledge that if this Sublease Lease is terminated pursuant to this Paragraph
18(c) the Tenant has no obligation to repair or restore any damage to the Leased
Premises. Upon such termination (i) all obligations of Tenant hereunder as to
the Leased Premises shall terminate except for any Surviving Obligations, (ii)
Tenant shall immediately vacate and shall have no further right, title or
interest in or to any of the Leased Premises and (iii) the Net Award shall be
retained by Landlord. Notwithstanding anything to the contrary hereinabove
contained, if on the date when this Sublease would otherwise terminate as
provided above, Landlord shall not have received the full amount of the Net
Award payable by reason of the applicable Termination Event, then the date on
which this Sublease is to terminate automatically shall be extended to the first
Basic Rent Payment Date after the receipt by Landlord of the full amount of the
Net Award; provided that, if Tenant has not satisfied all Remaining Obligations
on such date, then Landlord may, at its option, extend the date on which this
Sublease shall terminate to a date which is no later than the first Basic Rent
Payment Date after such date on which Tenant has satisfied all such Remaining
Obligations.
(d) Landlord and Tenant acknowledge and agree, that
pursuant and subject to the terms of Section 18(d) of the Master Lease, Master
Landlord may be required to convey the West Java Premises and/or Gibraltar
Premises to Landlord. In the event that, pursuant to the provisions of Section
18 of the Master Lease, Master Landlord conveys the Gibraltar Premises to
Landlord, Landlord shall promptly thereafter convey the Gibraltar Premises to
Tenant pursuant to a quitclaim deed. Notwithstanding the foregoing, such
conveyance by Landlord to Tenant is and shall be contingent upon: (i) Tenant not
being in default under this Sublease at the time of such conveyance, and (ii)
the payment by Tenant to Landlord of a sum equal to the Termination Amount plus
any other amounts paid by Landlord to Master Landlord under Section 18, Section
20 and other applicable provisions of the Master Lease with respect to the
Gibraltar Premises (i.e., if Master Landlord conveys only the Gibraltar Premises
to Landlord, then Tenant shall pay to Landlord a sum equal to the aggregate
amounts and other moneys paid by Landlord to Master Landlord with respect to the
Gibraltar Premises under the Master Lease, and if Master Landlord conveys both
the West Java Premises and Gibraltar Premises to Landlord, then Tenant shall pay
to Landlord a sum equal to 45% of the aggregate amounts and other moneys paid by
Landlord to Master Landlord with respect to the West Java Premises and Gibraltar
Premises under the Master Lease).
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19. Restoration.
(a) Escrow Holder (or Lender if required by any Mortgage)
shall hold any Net Award in excess of $250,000 in a fund (the "Restoration
Fund") and disburse amounts from the Restoration Fund only in accordance with
the following conditions:
(i) prior to commencement of restoration, (A)
the architects, general construction contract, general contractor and plans and
specifications for the restoration shall have been approved by Master Landlord
and Landlord, such approval not to be unreasonably withheld, (B) Master
Landlord, Landlord and Lender shall be provided with mechanics' lien insurance
(if available) and performance and payment bonds reasonably acceptable to Master
Landlord and Landlord which insure satisfactory completion of and payment for
the restoration, are in an amount and form and have a surety acceptable to
Master Landlord and Landlord, and name Master Landlord, Landlord and Lender as
additional dual obligees, and (C) appropriate waivers of mechanics' and
materialmen's liens shall have been filed;
(ii) at the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed against any of the Leased Premises and remain undischarged;
(iii) disbursements shall be made from time to
time in an amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence, including architects'
certificates, of the stage of completion, the estimated total cost of completion
and performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B) waivers of liens,
(C) contractors' and subcontractors' sworn statements as to completed work and
the cost thereof for which payment is requested, (D) a satisfactory bringdown of
title insurance and (E) other evidence of cost and payment so that Master
Landlord, Landlord and Lender can verify that the amounts disbursed from time to
time are represented by work that is completed, in place and free and clear of
mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be
accompanied by a certificate of Tenant, signed by the president or a vice
president of Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies with the applicable
requirements of this Sublease;
(v) Master Landlord or Landlord may retain ten
percent (10%) of the Restoration Fund until the restoration is fully completed;
(vi) the Restoration Fund shall not be commingled
with other funds and shall bear interest at the short term rate of interest then
generally available from Lender or through Escrow Agent for such escrow
arrangements; and
(vii) such other reasonable conditions as Lender
may impose.
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(b) Prior to commencement of restoration and at any time
during restoration, if the estimated cost of completing the restoration work
free and clear of all liens, as determined by Master Landlord and Landlord,
exceeds the amount of the Net Award available for such restoration, the amount
of such excess shall, upon demand by Master Landlord or Landlord, be paid by
Tenant to Escrow Holder to be added to the Restoration Fund. Any sum so added by
Tenant which remains in the Restoration Fund upon completion of restoration
shall be refunded to Tenant. For purposes of determining the source of funds
with respect to the disposition of funds remaining after the completion of
restoration, the Net Award shall be deemed to be disbursed prior to any amount
added by Tenant.
(c) If any sum remains in the Restoration Fund after
completion of the restoration and any refund to Tenant pursuant to Paragraph
19(b), such sum shall be retained by Master Landlord or Landlord or, if required
by a Note or Mortgage, paid by Master Landlord or Landlord to a Lender.
20. Intentionally Omitted.
21. Assignment and Subletting; Prohibition against Leasehold Financing.
(a) (i) Tenant shall have the right, upon thirty (30)
days prior written notice to Master Landlord, Landlord and Lender, with no
consent of Master Landlord or Landlord or Lender being required or necessary
("Preapproved Assignment") to assign this Sublease (A) as specifically permitted
in Section 1 of Exhibit "G" or (B) to any Person that, immediately following
such assignment has a publicly traded unsecured senior debt rating of "BBB" or
better from Moody's Investors Services, Inc. or a rating of "Baa" or better from
Standard & Poor's Corporation, and in the event all of such rating agencies
cease to furnish such ratings, then a comparable rating by any rating agency
reasonably acceptable to Master Landlord, Landlord and Lender.
(ii) Any assignment or sublease of this Sublease
except for a Preapproved Assignment shall require the prior written consent of
Master Landlord, Landlord and Lender. Such prior written consent by Landlord
shall not be unreasonably withheld. Tenant shall, not less than ninety (90) days
prior to the date on which it desires to make an assignment or sublease, submit
to Master Landlord, Landlord and Lender information regarding the following with
respect to the assignee or sublessee (the "Criteria") : (i) credit, (ii) capital
structure, (iii) management, (iv) operating history, (v) proposed use of the
Leased Premises, and (vi) risk factors associated with the proposed use of the
Leased Premises by the proposed assignee or sublessee, taking into account
factors such as environmental concerns, product liability and the like. Master
Landlord, Landlord and Lender shall review the Criteria, advise Tenant no later
than the fifteenth (15th) day following receipt of the Criteria if additional
information is required and shall approve or disapprove the assignee no later
than the thirtieth (30th) day following receipt of all required information, and
Master Landlord, Landlord and Lender shall be deemed to have acted reasonably in
granting or withholding consent if such grant or disapproval is based on their
review of the Criteria. Any purported assignment that is not a Preapproved
Assignment or otherwise consented to under this Paragraph 21(a) shall be null
and void. Landlord shall have no liability for Master Landlord's failure to
review the Criteria or provide any consent required hereunder by the due dates
set forth above.
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(b) Tenant shall have the right, without obtaining the
consent of Master Landlord or Landlord, to have under sublease at any time up to
and including but not in excess of twenty-five percent (25%) of the net
leaseable space in the Leased Premises. Any sublease that, when added to all
other subleases then in effect, would result in more than twenty-five percent
(25%) of the leaseable area of the Leased Premises being under sublease at any
one time shall require the prior written approval of Master Landlord, Landlord
and Lender which shall not be unreasonably withheld.
(c) If Tenant assigns all its rights and interest under
this Sublease, the assignee under such assignment shall expressly assume all the
obligations of Tenant hereunder, actual or contingent, including obligations of
Tenant which may have arisen on or prior to the date of such assignment, by a
written instrument delivered to Master Landlord and Landlord at the time of such
assignment. Each sublease of the Leased Premises shall be subject and
subordinate to the provisions of this Sublease and the Master Lease and shall be
for a term that expires no later than one (1) day prior to the expiration of the
Term and two (2) days prior to the expiration of the Master Lease Term. No
assignment or sublease shall affect or reduce any of the obligations of Tenant
hereunder, and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor, as if no
assignment or sublease had been made. No assignment or sublease shall impose any
additional obligations on Landlord under this Sublease.
(d) Tenant shall, within ten (10) days after the
execution and delivery of any assignment or sublease, deliver a duplicate
original copy thereof to Master Landlord and Landlord which, in the event of an
assignment, shall be in recordable form.
(e) As security for performance of its obligations under
this Sublease, Tenant hereby grants, conveys and assigns to Landlord all right,
title and interest of Tenant in and to all subleases now in existence or
hereafter entered into for any or all of the Leased Premises, any and all
extensions, modifications and renewals thereof and all rents, issues and profits
therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all
rents and other sums of money payable under any sublease of any of the Leased
Premises, provided, however, that Landlord shall have the absolute right at any
time following the occurrence of an Event of Default to revoke said license and
to collect such rents and sums of money and to retain the same. Tenant shall not
consent to, cause or allow any modification or alteration of any of the terms,
conditions or covenants of any of the subleases or the termination thereof,
without the prior written approval of Landlord, which approval shall not be
unreasonably withheld, nor shall Tenant accept any rents more than thirty (30)
days in advance of the accrual thereof nor do nor permit anything to be done,
the doing of which, nor omit or refrain from doing anything, the omission of
which, will or could be a breach of or default in the terms of any of the
subleases.
(f) Tenant shall not have the power to mortgage, pledge
or otherwise encumber its interest under this Sublease or any sublease of the
Leased Premises, and any such mortgage, pledge or encumbrance made in violation
of this Paragraph 21 shall be void.
(g) Landlord may transfer its interest in this Sublease
at any time without Tenant's consent to any third party (each a "Third Party
Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third
Party Purchaser as Landlord so long as such Third Party
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Purchaser and Landlord notify Tenant in writing of such transfer and the Third
Party Purchaser agrees to be bound by the terms of this Sublease applicable to
Landlord. At the request of Landlord, Tenant will execute such documents
confirming the agreement referred to above and such other agreements as Landlord
may reasonably request, provided that such agreements do not increase the
liabilities and obligations of Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following
(after expiration of any applicable cure period as provided in Paragraph 22 (b))
shall, at the sole option of Landlord, constitute an "Event of Default" under
this Sublease:
(i) a failure by Tenant to make any payment of
any Monetary Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and
observe, or a violation or breach of, any other provision hereof not otherwise
specifically mentioned in this Paragraph 22(a);
(iii) any representation or warranty made by
Tenant herein or in any certificate, demand or request made pursuant hereto
proves to be materially incorrect, now or hereafter, in any material respect;
(iv) Tenant shall (A) voluntarily be adjudicated
a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for the Leased Premises, (C) file a petition seeking
relief under the bankruptcy or other similar laws of the United States, any
state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) admit in writing its inability to pay its debts as they
mature;
(v) a court shall enter an order, judgment or
decree appointing, without the consent of Tenant, a receiver or trustee for it
or for the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(vi) the Leased Premises shall have been vacated
for a period of more than one (1) year or the Leased Premises shall have been
abandoned;
(vii) Tenant shall be liquidated or dissolved or
shall begin proceedings towards its liquidation or dissolution;
(viii) the estate or interest of Tenant in the
Leased Premises shall be levied upon or attached in any proceeding and such
estate or interest is about to be sold or transferred or such process shall not
be vacated or discharged within sixty (60) days after it is made;
(ix) a failure by Tenant to perform or observe,
or a violation or breach of, or a misrepresentation by Tenant under, any
provision of any Assignment or any other written
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document between Tenant and Lender or specifically for the benefit of Lender
that is executed by Tenant, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any applicable cure period with
respect to any Loan and the Lender commences to exercise its remedies under the
documents evidencing and securing such Loan;
(x) a failure by Tenant to maintain in effect
any license or permit necessary for the use, occupancy or operation of the
Leased Premises; or
(xi) The breach of any Covenant shall occur.
(b) No notice or cure period shall be required in any one or
more of the following events: (A) the occurrence of an Event of Default under
clause (i) (except as otherwise set forth below) , (iii), (iv), (v), (vi),
(vii), (viii), (ix), or (xi) of Paragraph 22 (a); (B) the default consists of a
failure to provide any insurance as required by and in accordance with Paragraph
16 (a) (i) or (a) (iv) that does not substantially comply with the requirements
thereof or an assignment or sublease entered into in violation of Paragraph 21;
or (C) the default is such that any delay in the exercise of a remedy by
Landlord could reasonably be expected to cause material and irreparable harm to
Landlord. If the default consists of the failure to pay any Monetary Obligation
under clause (i) of Paragraph 22(a), the applicable cure period shall be three
(3) days from the date on which notice is received by Tenant, but Landlord shall
not be obligated to give notice of, or allow any cure period for, any default in
the payment of Basic Rent more than one (1) time within any consecutive twelve
(12) month period. If the default consists of a default under clause (ii) or (x)
of Paragraph 22 (a) , other than the events specified in clauses (B) and (C) of
the first sentence of this Paragraph 22(b), the applicable cure period shall be
twenty (20) days from the date on which notice is received by Tenant or, if the
default cannot be cured within such twenty (20) day period and delay in the
exercise of a remedy would not cause any material adverse harm to Landlord or
any of the Leased Premises, the cure period shall be extended for the period
required to cure the default (but such cure period, including any extension,
shall not in the aggregate exceed one hundred twenty (120) days), provided that
Tenant shall commence to cure the default within the said twenty-day period and
shall actively, diligently and in good faith proceed with and continue the
curing of the default until it shall be fully cured. The notices described in
this Paragraph 22 (b) are in lieu of and not in addition to the notice under
California Civil Code 1161.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is
continuing, Landlord shall have the right, at its sole option, then or at any
time thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22 (b) and this Paragraph 23.
(i) Landlord may give Tenant notice of
Landlord's intention to terminate this Sublease on a date specified in such
notice and upon such date, this Sublease, the estate hereby granted and all
rights of Tenant hereunder shall expire and terminate, provided, that if and
only if the Event of Default that gave rise to such notice is the failure to pay
Rent as and when due such termination shall be of no force and effect if Tenant
cures such Event of Default
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within three (3) days after receipt of such notice from Landlord. Upon such
termination, Tenant shall immediately surrender and deliver possession of the
Leased Premises to Landlord in accordance with Paragraph 26. If Tenant does not
so surrender and deliver possession of all of the Leased Premises, Landlord may
repossess any of the Leased Premises not surrendered, with legal process, by
summary proceedings, ejectment or any other lawful means or procedure. Upon or
at any time after taking possession of any of the Leased Premises, Landlord may,
by peaceable means or legal process, remove any Persons or property therefrom.
Landlord shall be under no liability for or by reason of any such entry,
repossession or removal. Notwithstanding such entry or repossession, Landlord
may collect the damages set forth in Paragraph 23(c).
(ii) After repossession of any of the Leased
Premises pursuant to clause (i) above, Landlord shall have the right to relet
any of the Leased Premises to such tenant or tenants, for such term or terms,
for such rent, on such conditions and for such uses as Landlord in its sole
discretion may determine, and collect and receive any rents payable by reason of
such reletting. Landlord may make such Alterations in connection with such
reletting as it may deem advisable in its sole discretion. Notwithstanding any
such reletting, Landlord may collect the damages set forth in Paragraph 23(c).
(b) In addition to its other rights under this Sublease,
Landlord has the remedy described in California Civil Code Section 1951.4 which
provides substantially as follows: Landlord may continue the Master Lease in
effect after Tenant's breach and abandonment and recover the Rent as it becomes
due, if Tenant has the right to sublet or assign, subject only to reasonable
limitations. In accordance with California Civil Code Section 1951.4 (or any
successor statute), Tenant acknowledges that in the event Tenant breaches this
Sublease and abandons the Leased Premises, this Sublease shall continue in
effect for so long as Landlord does not terminate Tenant's right to possession,
and Landlord may enforce all of its rights and remedies under this Sublease,
including the right to recover the Rent as it becomes due under this Sublease.
Tenant acknowledges that the limitations on subletting and assignment set forth
in Paragraph 21 are reasonable. Acts of maintenance or preservation or efforts
to relet the Leased Premises or the appointment of a receiver upon initiative of
Landlord to protect Landlord's interest under this Sublease shall not constitute
a termination of Tenant's right to possession.
(c) If Landlord elects to terminate this Sublease upon the
occurrence of an Event of Default, Landlord may collect from Tenant damages
computed in accordance with the following provisions in addition to Landlord's
other remedies under this Sublease:
(i) the worth at the time of award of any unpaid
Rent which has been earned at the time of such termination; plus
(ii) the worth at the time of the award of the
amount by which any unpaid Rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; plus
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(iv) any other reasonable cost necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this Sublease or which in the ordinary course
of things would be likely to result therefrom including, without limitation,
brokerage commissions, the cost of repairing and reletting the Leased Premises
and reasonable attorneys' fees; plus
(v) at Landlord's election, such other amounts
in addition to or in lieu of the foregoing as may be permitted from time to time
by applicable state law. Damages shall be due and payable from the date of
termination.
For purposes of clauses (i) and (ii) of this Paragraph, the "worth at
the time of award" shall be computed by adding interest at the Default Rate to
the past due Rent. For the purposes of clause (iii) of this Paragraph 23 (c),
the "worth at the time of award" shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%).
(d) Landlord shall be entitled to apply the Security
Deposit to any amounts due under Paragraph 23 (a) or 23 (c) if this Sublease
shall be terminated, or, if this Sublease shall remain in full force and effect,
to any amounts due under Paragraph 23 (b) and in either event in the following
order (i) to past due Basic Rent and (ii) to cure any other monetary Event of
Default.
(e) Notwithstanding anything to the contrary herein
contained, in lieu of or in addition to any of the foregoing remedies and
damages, Landlord may exercise any remedies and collect any damages available to
it at law or in equity. If Landlord is unable to obtain full satisfaction
pursuant to the exercise of any remedy, it may pursue any other remedy which it
has hereunder or at law or in equity.
(f) If any Law shall validly limit the amount of any
damages provided for herein to an amount which is less than the amount agreed to
herein, Landlord shall be entitled to the maximum amount available under such
Law.
(g) No termination of this Sublease, repossession or
reletting of any of the Leased Premises, exercise of any remedy or collection of
any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving
Obligations.
(h) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD
HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY. Landlord and
Tenant agree that this Sublease constitutes a written consent to waiver of trial
by jury pursuant to the provisions of California Code of Civil Procedure Section
631, and each of Landlord and Tenant does appoint the other Person as its true
and lawful attorney-in-fact, which appointment is coupled with an interest, and
does hereby authorize and empower the other Person, in its name, place and
stead, to file this Sublease with the clerk of any court of competent
jurisdiction as statutory written consent to waiver of trial by jury.
(i) Upon the occurrence of any Event of Default, Landlord
shall have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such
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act requires that Landlord enter the Leased Premises, Landlord may enter the
Leased Premises for such purpose.,
(j) No failure of Landlord (i) to insist at any time upon
the strict performance by Tenant of any provision of this Sublease or (ii) to
exercise any option, right, power or remedy contained in this Sublease shall be
construed as a waiver, modification or relinquishment thereof. A receipt by
Landlord of any sum in satisfaction of any Monetary Obligation with knowledge of
the breach of any provision hereof shall not be deemed a waiver of such breach,
and no waiver by Landlord of any provision hereof shall be deemed to have been
made unless expressed in a writing signed by Landlord. No failure of Tenant (i)
to insist at any time upon the strict performance by Landlord of any provision
of this Sublease or (ii) to exercise any option, right, power or remedy
contained in this Sublease shall be construed as a waiver, modification or
relinquishment thereof EXCEPT with respect to Tenant's extension option(s) under
Paragraph 5(b) of this Sublease or EXCEPT as otherwise expressly provided to the
contrary elsewhere in this Sublease.
(k) Tenant hereby waives and surrenders, for itself and
all those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Sublease
after termination of this Sublease or of Tenant's right of occupancy or
possession pursuant to any court order or any provision hereof if the Event of
Default is an Event of Default under Paragraph 22 (a) (iv) or 22 (a)(xi), and
(ii) the benefits of any present or future Law which exempts property from
liability for debt or for distress for rent.
(l) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Sublease shall be in writing and
shall be deemed to have been given and received for all purposes when delivered
in person or by Federal Express or other reliable 24-hour delivery service or
five (5) business days after being deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address stated above or when delivery is
refused. A copy of any notice given by Tenant to Landlord shall simultaneously
be given by Tenant to Dewey Ballantine LLP, 333 South Hope Street, 30th Floor,
Los Angeles, California 90071, Attention: Rafael A. Stone, Esq. A copy of any
notice given by Landlord to Tenant shall simultaneously be given by Landlord to
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500 First Union
Capitol Center, Raleigh, North Carolina 27601, Attention: Stephen T.
Parascandola, Esq. For the purposes of this Paragraph, any party may substitute
another address stated above (or substituted by a previous notice) for its
address by giving fifteen (15) days' notice of the new address to the other
party, in the manner provided above.
25. Estoppel Certificate. At any time upon receipt of not less than ten
(10) days' prior written request by either Landlord or Tenant (the "Requesting
Party") to the other party (the
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"Responding Party"), the Responding Party shall deliver to the Requesting Party
a statement in writing, executed by an authorized officer of the Responding
Party, certifying (a) that, except as otherwise specified, this Sublease is
unmodified and in full force and effect, (b) the dates to which Basic Rent,
Additional Rent and all other Monetary Obligations have been paid, (c) that, to
the knowledge of the signer of such certificate and except as otherwise
specified, no default by either Landlord or Tenant exists hereunder, (d) such
other matters as the Requesting Party may reasonably request, and (e) if Tenant
is the Responding Party, that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened, against
Tenant before or by any court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Tenant. Any such statements by the Responding Party may be relied
upon by the Requesting Party, any Person whom the Requesting Party notifies the
Responding Party in its request for the certificate is an intended recipient or
beneficiary of the certificate, Master Landlord, any Lender or their assignees
and by any prospective purchaser or mortgagee of any of the Leased Premises. Any
certificate required under this Paragraph 25 and delivered by Tenant shall state
that, in the opinion of each person signing the same, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to the subject matter of such certificate, and shall briefly
state the nature of such examination or investigation.
26. Surrender. Upon the expiration or earlier termination of this
Sublease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Sublease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Sublease,
and except for ordinary wear and tear and damage by Casualty or a Taking if
Landlord rejects Tenant's offer under Paragraph 18 hereof. Upon such surrender,
Tenant shall (a) remove from the Leased Premises all property which is owned by
Tenant or third parties other than Landlord and (b) repair any damage caused by
such removal. Property not so removed shall become the property of Landlord, and
Landlord may thereafter cause such property to be removed from the Leased
Premises. The cost of removing and disposing of such property and repairing any
damage to any of the Leased Premises caused by such removal shall be paid by
Tenant to Landlord upon demand. Landlord shall not in any manner or to any
extent be obligated to reimburse Tenant for any such property which becomes the
property of Landlord pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Sublease with the fee estate in any of the Leased
Premises by reason of the fact that the same Person may acquire or hold or own,
directly or indirectly, (a) the leasehold estate created hereby or any part
thereof or interest therein and (b) the fee estate in any of the Leased Premises
or any part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of
account with respect to the finances and business of Tenant generally and with
respect to the Leased Premises, in accordance with generally accepted accounting
principles ("GAAP") consistently applied, and
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shall permit Master Landlord, Landlord and Lender by their respective agents,
accountants and attorneys, upon reasonable notice to Tenant, to visit and
inspect the Leased Premises and examine (and make copies of) the records and
books of account and to discuss the finances and business with the officers of
Tenant, at such reasonable times as may be requested by Master Landlord,
Landlord or Lender. Upon the request of Master Landlord, Landlord or Lender
(either telephonically or in writing), Tenant shall provide the requesting party
with copies of any information to which such party would be entitled in the
course of a personal visit.
(b) Tenant shall deliver to Master Landlord, Landlord and
to Lender, within ninety (90) days of the close of each fiscal year, annual
audited financial statements of Tenant prepared by a firm of nationally
recognized independent certified public accountants. Tenant shall also furnish
to Landlord within forty-five (45) days after the end of each of the three
remaining quarters unaudited financial statements and all other quarterly
reports of Tenant, certified by Tenant's chief financial officer, and all
filings, if any, of Form 10-K, Form 10-Q and other required filings with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, or any other Law. All financial statements of
Tenant shall be prepared in accordance with GAAP consistently applied. All
annual financial statements shall be accompanied (i) by an opinion of said
accountants stating that (A) there are no qualifications as to the scope of the
audit and (B) the audit was performed in accordance with GAAP and (ii) by the
affidavit of the president or a vice president of Tenant, dated within five (5)
days of the delivery of such statement, stating that (C) the affiant knows of no
Event of Default, or event which, upon notice or the passage of time or both,
would become an Event of Default which has occurred and is continuing hereunder
or, if any such event has occurred and is continuing, specifying the nature and
period of existence thereof and what action Tenant has taken or proposes to take
with respect thereto and (D) except as otherwise specified in such affidavit,
that Tenant has fulfilled all of its obligations under this Sublease which are
required to be fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is
required pursuant to any provision of this Sublease, or under the Master Lease
with respect to the Leased Premises, such Fair Market Value shall be determined
in accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree
upon such Fair Market Value within thirty (30) days after the date (the
"Applicable Initial Date") on which Landlord provides Tenant with notice of its
intention to redetermine Fair Market Value pursuant to Paragraph 20(c). Landlord
and Tenant shall endeavor to agree on Fair Market Rental Value on the date
(also, an "Applicable Initial Date") which is six (6) calendar months prior to
the expiration of the then current Term unless Tenant has failed to previously
exercise its option to extend the Term pursuant to Paragraph 5(b). Upon reaching
such agreement, the parties shall execute an agreement setting forth the amount
of such Fair Market Value or Fair Market Rental Value.
(ii) If the parties shall not have signed such
agreement within thirty (30) days after the Applicable Initial Date, Tenant
shall within fifty (50) days after the Applicable Initial Date select an
appraiser and notify Landlord in writing of the name, address
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and qualifications of such appraiser. Within twenty (20) days following
Landlord's receipt of Tenant's notice of the appraiser selected by Tenant,
Landlord shall select an appraiser and notify Tenant of the name, address and
qualifications of such appraiser. Such two appraisers shall endeavor to agree
upon Fair Market Value or Fair Market Rental Value based on a written appraisal
made by each of them as of the Relevant Date (and given to Landlord by Tenant).
If such two appraisers shall agree upon a Fair Market Value or Fair Market
Rental Value, the amount of such Fair Market Value or Fair Market Rental Value
as so agreed shall be binding and conclusive upon Landlord and Tenant.
(iii) If such two appraisers shall be unable to
agree upon a Fair Market Value or Fair Market Rental Value within twenty (20)
days after the selection of an appraiser by Landlord, then such appraisers shall
advise Landlord and Tenant of their respective determinations of Fair Market
Value or Fair Market Rental Value and shall select a third appraiser to make the
determination of Fair Market Value or Fair Market Rental Value. The selection of
the third appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to
agree upon the designation of a third appraiser within ten (10) days after the
expiration of the twenty (20) day period referred to in clause (iii) above, or
if such third appraiser does not make a determination of Fair Market Value or
Fair Market Rental Value within twenty (20) days after his selection, then such
third appraiser or a substituted third appraiser, as applicable, shall, at the
request of either party hereto (with respect to the other party), be appointed
by the President or Chairman of the American Arbitration Association in New
York, New York. The determination of Fair Market Value or Fair Market Rental
Value made by the third appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.
(v) If a third appraiser is selected, Fair
Market Value or Fair Market Rental Value shall be the average of the
determination of Fair Market Value or Fair Market Rental Value made by the third
appraiser and the determination of Fair Market Value or Fair Market Rental Value
made by the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose
determination of Fair Market Value or Fair Market Rental Value is closest to the
total dollar value to that of the third appraiser. Such average shall be binding
and conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed
pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI
appraisers, (B) have no right, power or authority to alter or modify the
provisions of this Sublease, (C) utilize the definition of Fair Market Value or
Fair Market Rental Value hereinabove set forth, and (D) be licensed in the State
if the State provides for or requires such registration.
(vii) The Cost of the procedure described in this
Paragraph 29(a) above shall be borne by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended
with respect to the Leased Premises to the date specified for termination in the
particular provision of this Sublease pursuant to which the
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determination of Fair Market Value is being made. If, by virtue of any delay,
Fair Market Rental Value is not determined by the expiration or termination of
the then current Term, then until Fair Market Rental Value is determined, Tenant
shall continue to pay Basic Rent during the succeeding Renewal Term in the same
amount which it was obligated under this Sublease to pay prior to the
commencement of the Renewal Term. When Fair Market Rental Value is determined,
the appropriate Basic Rent shall be calculated retroactive to the commencement
of the Renewal Term and Tenant shall either receive a refund from Landlord (in
the case of an overpayment) or shall pay any deficiency to Landlord (in the case
of an underpayment).
(c) In determining Fair Market Value as defined in clause
(b) of the definition of Fair Market Value, the appraisers shall add (a) the
present value of the Basic Rent for the remaining Term then in effect (with
assumed increases in the CPI to be determined by the appraisers) using a
discount rate (which may be, but shall not be required to be, determined by an
investment banker retained by any appraiser electing to seek such opinion) based
on the creditworthiness of Tenant and (b) the present value of the Leased
Premises as of the end of such Term (without assuming the Term has been
extended). The appraisers shall further assume that no default then exists under
the Lease, that Tenant has complied (and will comply) with all provisions of the
Lease, and that Tenant has not violated (and will not violate) any of the
Covenants.
(d) In determining Fair Market Rental Value, the
appraisers shall determine with respect to the Leased Premises the amount that a
willing tenant would pay for, and a willing landlord of the Leased Premises
would accept, at arm's length for the Leased Premises, taking into account
comparable buildings and also taking into account: (a) the age, quality and
condition (as required by the Lease) of the Improvements; (b) that the Leased
Premises will be leased as a whole or substantially as a whole to single user;
(c) a lease term of five (5) years; (d) an absolute triple net lease; and (e)
such other items that professional real estate appraisers customarily consider.
30. Non-Recourse as to Landlord.
(a) Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Landlord
under this Sublease shall be enforced only against the Leased Premises and not
against any other assets, properties or funds of (a) Landlord, (b) any
affiliate, director, officer, shareholder, general partner, limited partner,
principal, employee, attorney, or agent of Landlord (or any legal
representative, heir, estate, successor or assign of any of them), (c) any
predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its general partners, either directly or through Landlord or
its general partners or any predecessor or successor partnership or corporation
or their shareholders, officers, directors, employees or agents (or other
entity), (d) Master Landlord or any of its directors, officers, shareholders,
general partners, limited partners, principals, employees, attorneys, or agents
(or any legal representative, heir, estate, successor or assign of any of them),
or (e) any other Person.
(b) Notwithstanding the foregoing, Tenant shall not be
precluded from instituting legal proceedings for the purpose of making a claim
against Landlord on account of an alleged
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violation of Landlord's obligation under this Sublease, subject, however, to
Paragraph 30(a) above.
(c) The provisions of this Section 30 shall not terminate
or otherwise limit Landlord's liability for breaches of its obligations under
the Asset Purchase Agreement.
31. Financing. If Master Landlord or Landlord desires to obtain or
refinance any Loan, Tenant shall negotiate in good faith with Master Landlord
and/or Landlord concerning any request made by any Lender or proposed Lender for
changes or modifications in this Sublease. With respect to any Loan obtained or
refinanced by Landlord, Tenant shall be obligated to negotiate in good faith
changes or modifications in this Sublease to the extent that such changes or
modifications do not have a material adverse effect on Tenant's rights or
liabilities under this Sublease. In particular, Tenant shall agree, upon request
of Master Landlord and/or Landlord, to supply any such Lender with such notices
and information as Tenant is required to give to Master Landlord or Landlord
hereunder and to extend the rights of Master Landlord and Landlord hereunder to
any such Lender and to consent to such financing if such consent is requested by
such Lender. Tenant shall provide any other reasonable consent or statement and
shall execute any and all other reasonable documents that such Lender requires
in connection with such financing, including any environmental indemnity
agreement (so long as it is not more burdensome than the provisions relating to
environmental matters set forth in this Sublease) and subordination,
non-disturbance and attornment agreement, so long as the same do not adversely
affect any right, benefit or privilege of Tenant under this Sublease or increase
Tenant's obligations under this Sublease. Such subordination, non-disturbance
and attornment agreement may require Tenant to confirm that (a) Lender and its
assigns will not be liable for any misrepresentation, act or omission of Master
Landlord or Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offset which Tenant may have against Master Landlord or
Landlord.
32. Subordination. This Sublease and Tenant's interest hereunder shall
be subordinate to any Mortgage or other security instrument securing a Loan
hereafter placed upon the Leased Premises by Master Landlord or Landlord, and to
any and all advances made or to be made thereunder, to the interest thereon, and
all renewals, replacements and extensions thereof, provided that any such
Mortgage or other security instrument (or a separate instrument in recordable
form such as a subordination, non-disturbance and attornment agreement duly
executed by the holder of any such Mortgage and Tenant and delivered to Tenant)
shall provide for the recognition of this Sublease and all of Tenant's rights
hereunder, including, without limitation, application of the Net Award in
accordance with the terms of this Sublease unless and until an Event of Default
has occurred and is continuing or Landlord shall have the right to terminate
this Sublease pursuant to any applicable provision hereof.
33. Financial Covenants. Tenant hereby covenants and agrees to comply
with the Covenants.
34. Right to Vacate. Tenant shall have the right to vacate the Leased
Premises; provided that (i) Tenant shall notify Landlord and Lender within ten
(10) days after vacation of the Leased Premises by Tenant, (ii) Tenant shall
make reasonable good faith efforts to sublet the Leased Premises, which sublease
or subleases shall be subject to the provisions of Paragraph 21(b)
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hereof, and (iii)Tenant shall continue to perform all of its obligations under
this Lease, including its obligation to maintain the Leased Premises and to pay
all Rent as and when due hereunder. If at any time during the Term the Leased
Premises shall be vacant for twelve (12) consecutive months, then on the first
day of the thirteenth (13th) month that the Leased Premises is vacant Tenant
shall cause the Leased Premises to cease to be vacant.
35. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
each shall treat this transaction as a true lease for state law purposes and
shall report this transaction as a lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Sublease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and Tenant as the
lessee of such Leased Premises and Equipment including: (1) treating Landlord as
the owner of the property eligible to claim depreciation deductions under
Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as rent expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.
36. Intentionally Omitted.
37. Security Deposit.
(a) Concurrently with the execution of this Sublease,
Tenant shall deliver to Landlord cash (U.S. dollars) in the amount of One
Hundred Fifty One Thousand One Hundred Sixty Four and 08/100ths Dollars
($151,164.08) (the "Security Deposit"). The Security Deposit shall be security
for the payment by Tenant of the Rent and all other charges or payments to be
paid hereunder and the performance of the covenants and obligations contained
herein and shall be held by Landlord or, if applicable, any Lender of Landlord,,
as security for Tenant's obligations under this Sublease. Landlord or such
Lender, as the case may be, shall invest the Security Deposit in such investment
vehicle as is designated by Tenant and approved by Landlord and such Lender,
which approval shall not be unreasonably withheld, subject to the following: (i)
attached to this Sublease as Exhibit "F" is a list of approved investments and
each such investment is deemed to be approved by Landlord and such Lender; (ii)
the Security Deposit shall be invested in one investment vehicle that is held in
the name of the Landlord or such Lender; (iii) Tenant may require that the
Security Deposit be transferred or reinvested from one approved investment
vehicle to another, but no more frequently than one time in any 12-month period
during the term of the Lease; (iv) if Landlord or such Lender reasonably
determine at any time that the liquidation value of the investment vehicle in
which the Security Deposit has been invested is less than the required principal
amount of the Security Deposit, then within two (2) business days after demand
therefor, Tenant shall deposit in cash with the holder of the Security Deposit
an amount in cash which, when added to the reasonably estimated liquidation
value of the investment vehicle, is equal to the required amount of the Security
Deposit, which cash deposit shall be returned to Tenant when the liquidation
value of the investment equals or exceeds the required amount of the Security
Deposit; and (v) Tenant shall pay all transaction costs reasonably incurred by
Landlord or such Lender in investing the Security Deposit in accordance with the
instructions of Tenant.
(b) Landlord shall have the right to assign the Security
Deposit to its Lender or any other holder of a Mortgage during the term of the
applicable Loan, so long as such Lender or
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such other holder of a Mortgage agrees in writing that it shall have all of the
rights and obligations of Landlord with respect to the Security Deposit,
provided that any portion of the Security Deposit applied by such Lender shall,
with respect to Tenant, be deemed applied as provided in Paragraph 23 (d)
hereof. Tenant covenants and agrees to execute such agreements, consents and
acknowledgments as may be reasonably requested by Landlord and such Lender from
time to time to acknowledge and perfect such assignment.
38. Miscellaneous.
(a) The Paragraph headings in this Sublease are used only
for convenience in finding the subject matters and are not part of this Sublease
or to be used in determining the intent of the parties or otherwise interpreting
this Sublease.
(b) As used in this Sublease, the singular shall include
the plural and any gender shall include all genders as the context requires and
the following words and phrases shall have the following meanings: (i)
"including" shall mean "including without limitation"; (ii) "provisions" shall
mean "provisions, terms, agreements, covenants and/or conditions"; (iii) "lien"
shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of
the Leased Premises" shall mean "the Leased Premises or any part thereof or
interest therein"; (vi) "any of the Land" shall mean "the Land or any part
thereof or interest therein"; (vii) "any of the Improvements" shall mean "the
Improvements or any part thereof or interest therein"; (viii) "any of the
Equipment" shall mean "the Equipment or any part thereof or interest therein";
and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or
any part thereof or interest therein".
(c) Any act which Landlord is permitted to perform under
this Sublease may be performed at any time and from time to time by Landlord or
any person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except with respect to any assignment of this Sublease or sublet that
is not otherwise specifically permitted hereunder or for which a reasonableness
standard is not specifically required for Landlord's consent, Landlord shall not
unreasonably withhold or delay its consent whenever such consent is required
under this Sublease. Time is of the essence with respect to the performance by
Tenant of its obligations under this Sublease.
(d) Landlord shall in no event be construed for any
purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or license of Tenant with respect to any of
the Leased Premises or otherwise in the conduct of their respective businesses.
(e) This Sublease and any documents which may be executed
by Tenant on or about the effective date hereof at Landlord's request constitute
the entire agreement between the parties and supersede all prior understandings
and agreements, whether written or oral, between the parties hereto relating to
the Leased Premises and the transactions provided for herein. Landlord and
Tenant are business entities having substantial experience with the subject
matter of this Sublease and have each fully participated in the negotiation and
drafting of this Sublease.
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Accordingly, this Sublease shall be construed without regard to the rule that
ambiguities in a document are to be construed against the drafter.
(f) This Sublease may be modified, amended, discharged or
waived only by an agreement in writing signed by the party against whom
enforcement of any such modification, amendment, discharge or waiver is sought.
(g) The covenants of this Sublease shall run with the
land and bind Tenant, its successors and assigns and all present and subsequent
encumbrancers and subtenants of any of the Leased Premises, and shall inure to
the benefit of Landlord, its successors and assigns. If there is more than one
Tenant, the obligations of each shall be joint and several.
(h) Notwithstanding any provision in this Sublease to the
contrary, all Surviving Obligations of Tenant shall survive the expiration or
termination of this Sublease with respect to the Leased Premises.
(i) If any one or more of the provisions contained in
this Sublease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Sublease, but this Sublease shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
(j) All exhibits attached hereto are incorporated herein
as if fully set forth.
(k) This Sublease shall be governed by and construed and
enforced in accordance with the Laws of the State.
(l) Tenant hereby waives the provisions of California
Civil Code Sections 1941 and 1942. Landlord and Tenant waive the provisions of
California Civil Code Sections 1932 and 1933, and of California Code of Civil
Procedure Section 1265.130.
(m) As a condition precedent to the effectiveness of this
Sublease and to the performance by Landlord of its obligations hereunder, Tenant
shall cause Cree to concurrently herewith execute and deliver to and for the
benefit of Landlord a Guaranty of Lease in the form attached hereto as Exhibit
"H".
(n) Tenant acknowledges and agrees that it is subleasing
the Leased Premises from Landlord subject to all of the rights and interests of
the Master Landlord in and to the Leased Premises arising under the Lease,
including, without limitation, rights of inspection and rights to notice of
various matters, events, circumstances and materials, all as granted to Master
Landlord under the Lease. In no event shall Tenant prohibit or otherwise limited
the Master Landlord from exercising or receiving the benefit of any of its
rights arising under the Master Lease with respect to the Leased Premises,
including, without limitation, Master Landlord's rights to inspection of the
Leased Premises and information related thereof, regardless of whether or not
rights are provided for under this Sublease.
(o) Notwithstanding any provision set forth herein that
may be construed to the contrary, in no event may Tenant renew or extend the
Term of this Sublease for a period which is longer than the Term (as defined in
the Lease) of the Lease.
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(p) Landlord represents and warrants to Tenant the
following: (a) Landlord is a corporation duly formed, validly existing and in
good standing under the laws of the State of California, (ii) Landlord has all
requisite corporate power and authority to execute and deliver this Sublease and
perform Landlord's obligations hereunder, and this Sublease has been duly
executed and delivered by Landlord and constitutes the valid and binding
agreement of Landlord enforceable in accordance with its terms, (iii) the
execution and performance of this Sublease will not conflict with or constitute
a default by Landlord under any other agreement to which Landlord is a party or
is otherwise bound, or any order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over Landlord,
except where such conflict or default would not have a material adverse effect
on the ability of Landlord to perform its obligations hereunder, (iv) no consent
from or notice to any federal, state or local court or federal, state, or local
governmental bureau, department, commission or agency, or any person or entity
whether or not governmental in character (other than Master Landlord and the
Lender of Master Landlord), is required to permit Landlord to execute, deliver
and perform under this Sublease in accordance with its terms, (v) the Master
Lease has not been amended or supplemented other than as disclosed to Tenant,
(vi) to Landlord's actual knowledge (as defined in Section 15 of this Sublease),
the Master Lease has not been terminated and is in full force and effect, and
(vii) to Landlord's actual knowledge (as defined in Section 15 of this
Sublease), Landlord has not received any written notice from Master Landlord of
any uncured default on Landlord's part under the Master Lease. Tenant represents
and warrants to Landlord the following: (a) Tenant is a corporation duly formed,
validly existing and in good standing under the laws of the State of North
Carolina, (b) Tenant is in good standing and is qualified to conduct business
under the laws of the State of California, (c) Tenant has all requisite
corporate power and authority to execute and deliver this Sublease and perform
Tenant's obligations hereunder, and this Sublease has been duly executed and
delivered by Tenant and constitutes the valid and binding agreement of Tenant
enforceable in accordance with its terms, (d) the execution and performance of
this Sublease will not conflict with or constitute a default by Tenant under any
agreement to which Tenant is a party or is otherwise bound, or any order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over Tenant, except where such conflict or default
would not have a material adverse effect on the ability of Tenant to perform its
obligations hereunder, and (e) no consent from or notice to any federal, state
or local court or federal, state, or local governmental bureau, department,
commission or agency, or any person or entity whether or not governmental in
character (other than Master Landlord), is required to permit Tenant to execute,
deliver and perform under this Sublease in accordance with its terms.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Sublease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
SPECTRIAN CORPORATION,
a California corporation
By: /s/ Michael Angel
-----------------------------------------
Name: Michael Angel
---------------------------------------
Title: Executive Vice President and Chief
Financial Officer
--------------------------------------
TENANT:
ZOLTAR ACQUISITION, INC.,
a North Carolina corporation
to be known as UltraRF, Inc.
By: /s/ Adam H. Broome
-----------------------------------------
Name: Adam H. Broome
---------------------------------------
Title: Secretary
--------------------------------------
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EXHIBIT A
LEASED PREMISES
(160 Gibraltar Court Premises)
All that certain real property situate in the City of Sunnyvale, County of Santa
Clara, State of California, described as follows:
Parcel B, as shown on that Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara, State of California on January 31,
1977, in Book 388 of Maps, page(s) 32.
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EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances
of every kind and nature whatsoever now or hereafter affixed or attached to or
installed in any of the Leased Premises (except as hereafter provided),
including all electrical, anti-pollution, heating, lighting (including hanging
fluorescent lighting), incinerating, power, air cooling, air conditioning,
humidification, sprinkling, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and ventilating systems, devices and machinery and all engines,
pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors,
conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil
burners, boilers, doors, windows, loading platforms, lavatory facilities,
stairwells, fencing (including cyclone fencing), passenger and freight
elevators, overhead cranes and garage units, together with all additions
thereto, substitutions therefor and replacements thereof required or permitted
by this Sublease which were leased by Master Landlord to Landlord under the
Master Lease and are situated upon the Leased Premises as of the Commencement
Date.
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EXHIBIT B-1
TENANT'S PROPERTY
Tenant's Property shall mean all "Acquired Assets" (as defined in the
Asset Purchase Agreement).
Tenant's Property shall not include any of the following:
(a) Mechanical/HVAC equipment including Scrubber, Acid
Neutralization System, Water Deionization System, Chiller, Emergency Generator
and CO2 tank;
(b) Water, environmental and piping systems which are and shall be
Equipment; and
(c) any Equipment owned by Landlord or owned by Master Landlord
and not leased to Landlord under the Master Lease (whether or not described on
Exhibit B).
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EXHIBIT C
PERMITTED ENCUMBRANCES
1. General and Special City and/or County taxes for the fiscal
year 2000-2001, payable but not yet due.
2. Lien of supplemental taxes, if any, assessed pursuant to the
provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and
Taxation Code of the State of California.
3. Easement Deed to the City of Sunnyvale, recorded October 9,
1964 in Book 6695, page 415.
4. Easement Deed to the City of Sunnyvale, recorded October 9,
1964 in Book 6695, page 437.
5. Easement Deed to the City of Sunnyvale, recorded September 2,
1966 in Book 7494, page 638, as modified by Quitclaim Deed from the City of
Sunnyvale to Moffett Park Associates, recorded October 24, 1967 in Book 7903,
page 280.
6. Agreement between the City of Sunnyvale and Moffett Park
Associates, recorded November 2, 1966 in Book 7552, page 688; as amended,
recorded April 21, 1967 in Book 7700, page 638; and as amended, recorded
February 23, 1968 in Book 8034, page 631.
7. Declaration of Protective Covenants by Moffett Industrial Park
No. 1, recorded January 5, 1968 in Book 7985, page 605; as amended, recorded
September 27, 1968 in Book 8277, page 704; and as assigned, recorded January 17,
1977 in Book C541, page 367.
8. Easement to Pacific Gas and Electric Company, recorded January
31, 1973 in Book O217, page 330.
9. Notice Affecting Real Property - Waiver of Construction
Credits, recorded September 28, 1976 in Book C307, page 346.
10. Ingress and Egress for Driveway Easement which have not been
reserved or conveyed of record.
11. Easement Deed to the City of Sunnyvale, recorded January 28,
1977 in Book C565, page 679.
12. Access easement shown on plat recorded in Maps 388, page 32.
13. Easement Deed to Santa Clara County Transit District, recorded
April 8, 1997 as Instrument No. 13664365.
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14. The following matters shown on the ALTA/ALCM Land Title Survey
prepared by Kier & Wright Civil Engineers & Surveyors, Inc., dated November
1996, last revised April 10, 1997, and bearing Job No. 85020-3.
a. The fact that a concrete curb encroach onto said
lands 1.08 feet. Affects the Southeasterly portion of Parcel One.
b. The fact that there is a sign located near the most
Southerly corner of Parcel One.
c. The fact that there are water valve, fire service
box, water meter and anti syph valves located on or near the Southeasterly
boundary of Parcel One.
d. The fact that there are traffic signals and traffic
boxes located near the most Easterly corner of Parcel One.
e. The fact that there are P.G. & E; Pacific Telephone
and Telegraph, Telephone, Transformer and Street Light Boxes located on or near
the Northeasterly boundary of Parcel One.
f. The fact that there is a service pedestal located in
the Northeasterly portion of Parcel One.
g. The fact that there are two 0.7 wide walls located in
the Northeasterly portion of Parcel One.
h. The fact that there is an electrolier located in the
Northwesterly portion of Parcel One.
i. The fact that there are irrigation boxes located in
the Northwesterly portion of Parcel One.
j. The fact that there is a nitrogen line located in the
Northerly and Westerly portion of Parcel Two.
k. The fact that there is a gas line located in the
Northerly portion of Parcel Two.
15. Deed of Trust to Spec (CA) QRS 12-20, Inc., recorded April 14,
1997 under Serial No. 13671353.
16. Assignment of Rents to State Farm Life Insurance Company,
recorded April 14, 1997 as Instrument No. 13671354.
17. Unrecorded Lease between Spec (CA) QRS 12-20, Inc. and
Spectrian Corporation, recorded November 19, 1996 under Serial No. 13528640, by
the provision of an Agreement between Spectrian Corporation, Spec (CA) QRS
12-20, Inc. and State Farm Life Insurance Company, recorded April 14, 1997 as
Instrument No. 13671355.
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18. Easement Deed by and between Gibraltar Court Associates, LLC
and Site One, LLC, recorded December 16, 1999 as Instrument No. 15092766.
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EXHIBIT D
BASIC RENT PAYMENTS
1. Basic Rent.
(a) Initial Term. Subject to the adjustments provided for
in Paragraphs 2, 3 and 4 below, Basic Rent payable in respect of the Term shall
be $906,984.48 per annum, payable quarterly in advance on each Basic Rent
Payment Date, in equal installments of $226,746.12 each.
(b) Renewal Term. Subject to the adjustments provided for
in Paragraphs 2, 3 and 4 below, per annum Basic Rent for each Renewal Term shall
be an amount equal to the greater of $18.03 per sq. ft. triple-net (which shall
be not less than 50,311 square feet for the Leased Premises) or the Fair Market
Rental Value as of the first day of the applicable Renewal Term, as determined
in accordance with Paragraph 29 of the Lease.
2. CPI Adjustments to Basic Rent; Arbitration of Disputes. The
Basic Rent shall be subject to adjustment, in the manner hereinafter set forth,
for increases in the index known as United States Department of Labor, Bureau of
Labor Statistics, Consumer Price Index, All Urban Consumers, United States City
Average, All Items (1982-84=100) ("CPI") or the successor index that most
closely approximates the CPI. If the CPI shall be discontinued with no successor
or comparable successor index, Landlord and Tenant shall attempt to agree upon a
substitute index or formula, but if they are unable to so agree, then the matter
shall be determined by arbitration in accordance with the rules of the American
Arbitration Association then prevailing in New York City. Any decision or award
resulting from such arbitration shall be final and binding upon Landlord and
Tenant and judgment thereon may be entered in any court of competent
jurisdiction. In no event will the Basic Rent as adjusted by the CPI adjustment
be less than the Basic Rent in effect for the three (3) year period immediately
preceding such adjustment or, with respect to each Renewal Term, be less than
the Basic Rent determined for such Renewal Term (as described in Paragraph 1(b)
above).
3. Arbitration of Disputes. NOTICE: BY INITIALLING IN THE SPACE
BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED
IN PARAGRAPH 2 ABOVE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW YOU ARE
GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN PARAGRAPH 2 ABOVE. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARY.
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WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN PARAGRAPH 2 ABOVE TO NEUTRAL
ARBITRATION."
/s/ Michael Angel /s/ AHB
----------------- ----------------
LANDLORD TENANT
4. Effective Date of CPI Adjustments. Basic Rent shall not be
adjusted to reflect changes in the CPI until the third (3rd) anniversary of the
Basic Rent Payment Date (as defined in the Master Lease) on which the first full
quarterly installment of Master Lease Basic Rent was due and payable from
Landlord to Master Landlord under the Master Lease (the "First Full Basic Rent
Payment Date"). As of the third (3rd) anniversary of the First Full Basic Rent
Payment Date under the Master Lease and thereafter on the sixth (6th), ninth
(9th) and twelfth (12th) anniversaries of the First Full Basic Rent Payment Date
under the Master Lease, Basic Rent (as defined in this Sublease) shall be
adjusted to reflect increases in the CPI during the most recent three (3) year
period immediately preceding each of the foregoing dates (each such date being
hereinafter referred to as "Basic Rent Adjustment Date"). If the Initial Term of
the Sublease is renewed, then as of the third (3rd) anniversary of the date on
which the first full quarterly installment of Master Lease Basic Rent shall be
due and payable for the corresponding Renewal Term (as defined in the Master
Lease) under the Master Lease (each such date also a "First Full Basic Rent
Payment Date"), Basic Rent (as defined under this Sublease) shall be adjusted to
reflect increases in the CPI during the first three (3) years of applicable
Renewal Term under this Sublease (each such date also a "Basic Rent Adjustment
Date").
5. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date, the Basic Rent
in effect immediately prior to such date shall be multiplied by seventy-five
percent (75%) of the Aggregate CPI Increase (as hereinafter defined) and the
product of such multiplication shall be added to the Basic Rent in effect
immediately prior to such Basic Rent Adjustment Date.
"Aggregate CPI Increase" shall mean the product of the sums of one (1)
plus each of the compounded increases (but not decreases) in the Relevant CPI
(as hereinafter defined) for each of the three (3) 12-month periods ending on
the first, second and third anniversaries (each such anniversary being a
"Calculation Date") of the first full Basic Rent Payment Date (in the case of
the First Basic Rent Adjustment Date) or the preceding Basic Rent Adjustment
Date (in the case of each subsequent Basic Rent Adjustment Date) over the
Relevant CPI for the previous 12-month period (each an "Annual Increase") from
which product shall be subtracted one (1); provided, that if the Annual Increase
for any 12-month period is greater than 4.5%, then the Annual Increase for such
12-month period shall be deemed to be 4.5%. The Relevant CPI for the 12-month
period ending on any Calculation Date shall be equal to the average CPI for the
three (3) calendar months published on or before the forty-fifth day preceding
such Calculation Date (the "Prior Months"), and the Relevant CPI for each of the
preceding 12-month periods shall be equal to the average CPI for the three (3)
months of such 12-month period which correspond to the Prior Months.
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By way of example and not of limitation, if, immediately prior to the
Basic Rent Adjustment Date occurring on the ninth (9th) anniversary of the First
Full Basic Rent Payment Date, Basic Rent is $100 and the increases in the
Relevant CPI for the three (3) preceding years are 2%, 0% and 12%, respectively,
the Aggregate CPI Increase will be as follows: (1.02 x 1.0 x 1.045) = 1.0659 - 1
= .0659 x .75 or .0494; then, .0494 x $100 = $4.94; then $100 + $4.94 = $104.94,
which is the new Basic Rent. Said another way, .0494 + 1 = 1.0494; then, $100 x
1.0494 = $104.94, which is the new Basic Rent.
(b) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment
Date.
6. Basic Rent Corresponds to Master Lease Basic Rent.
Notwithstanding anything set forth in this Sublease that may be construed to the
contrary, in no event shall the Basic Rent due from Tenant during the Term of
this Sublease, including, without limitation, any Renewal Term, as such Basic
Rent may be adjusted from time to time by the CPI adjustment provided for
hereunder, be less than forty-five percent (45%) of the Master Lease Basic Rent
(as the same may be adjusted from time to time under the Master Lease) due from
Landlord to Master Landlord for the Gibraltar Premises and the West Java
Premises under the Master Lease for the corresponding portion of the Term (as
defined in the Master Lease) thereunder, including, without limitation, any
Renewal Term (as defined under the Master Lease) thereunder.
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EXHIBIT E
FLOOR AMOUNT
<TABLE>
<CAPTION>
Prior to From and after
12/1/2001 12/1/2001
<S> <C> <C>
Leased Premises $7,939,791 $7,312,500
</TABLE>
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EXHIBIT F
APPROVED INVESTMENTS
(A) U.S. government obligations.
(B) Certificates of Deposit issued by one of the twenty
(20) largest U.S. banks.
(C) Corporate bonds having an AAA or better rating.
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EXHIBIT G
FINANCIAL COVENANTS
1. Mergers and Sale of Assets.
(a) Tenant shall not consolidate with or merge with any
other corporation unless, immediately following such consolidation or merger,
the surviving corporation shall have, on a pro-forma basis and, after giving
effect thereto, an Adjusted Consolidated Tangible Net Worth of not less than the
Adjusted Consolidated Tangible Net Worth of Tenant and its Consolidated
Subsidiaries immediately prior to such merger or consolidation.
(b) Tenant shall not, in a single transaction or a series
of related transactions, sell, convey, transfer, abandon or lease all or
substantially all of its assets to any Person except for a sale, transfer,
conveyance, lease or other disposition to a Person that shall assume the
obligations and liabilities of Tenant under this Sublease and that, immediately
following such sale, transfer or conveyance, and after given effect thereto, has
an Adjusted Consolidated Tangible Net Worth of not less than Thirty Million
Dollars ($30,000,000).
2. Restricted Payments. Tenant will not, directly or indirectly
make, or cause or permit any Subsidiary of Tenant to make, any Restricted
Payment, unless at the time thereof, and after giving effect thereto:
(a) no Event of Default shall have occurred and be
continuing; and
(b) Tenant's Adjusted Consolidated Tangible Net Worth
equals or exceeds $40,150,000 at the end of the month preceding such payment.
3. Definitions. For the purpose of this Exhibit "G" the following
terms shall have the following meanings:
"Adjusted Consolidated Tangible Net Worth" shall mean, at any
date, the tangible net worth of any Person and its consolidated Subsidiaries on
a consolidated basis, determined in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles as
in effect from time to time in the United States of America, applied on a
consistent basis.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Restricted Payment" shall mean and include (a) any direct or
indirect purchase, redemption or other acquisition or retirement for value of
any equity security of Tenant or any option, warrant or right to acquire any
such equity security, or any security convertible into or exchangeable for any
such equity security by any Person other than Cree, and (b) any dividend,
distribution, whether in cash or property and whether direct or indirect, to or
for the benefit any Person (other than Cree) holding an equity interest in the
Tenant or any affiliate of any such Person (other than Cree).
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"Subsidiary" of any Person means a corporation a majority of
the capital stock of which is at the time owned, or the management of which is
otherwise controlled, directly or indirectly, through one or intermediaries, or
both, by such Person.
59
