<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
or
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File number 0-22114
ASYST TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
California 94-2942251
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
48761 Kato Road, Fremont, California 94538
(Address of principal executive offices)
(510) 661-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
---
The number of shares of the registrant's Common Stock, no par value, outstanding
as of October 15, 1999 was 12,964,194.
<PAGE>
ASYST TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
---------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets --
September 30, 1999 and March 31, 1999 2
Condensed Consolidated Statements of Operations --
Three Months Ended September 30, 1999 and
September 30, 1998 and Six Months Ended
September 30, 1999 and September 30, 1998 3
Condensed Consolidated Statements of Cash Flows --
Six Months Ended September 30, 1999 and
September 30, 1998 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Part II. Other Information
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 20
Signatures, 21
- ----------
Exhibit Index 22
- -------------
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,024 $ 6,382
Short-term investments 18,682 29,380
Accounts receivable, net 29,614 14,511
Inventories 23,789 19,373
Deferred tax asset 19,051 19,142
Prepaid expenses and other current assets 3,836 3,474
-------- --------
Total current assets 106,996 92,262
-------- --------
Property and equipment, net 13,562 12,923
Other assets, net 18,526 19,103
-------- --------
$139,084 $124,288
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ -- $ 2,190
Accounts payable 14,266 5,055
Accrued liabilities and other current liabilities 10,460 10,051
Income taxes payable 642 676
Customer deposits 1,042 1,806
-------- --------
Total current liabilities 26,410 19,778
-------- --------
Long-term liabilities:
Redeemable convertible preferred stock -- 5,000
Long-term debt, net of current portion -- 2,876
-------- --------
Total long-term liabilities -- 7,876
-------- --------
Total Liabilities 26,410 27,654
-------- --------
Shareholders' equity:
Common stock 135,716 111,851
Accumulated deficit (23,042) (15,217)
-------- --------
Total shareholders' equity 112,674 96,634
-------- --------
$139,084 $124,288
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 40,696 $ 18,900 $ 67,782 $ 56,341
Cost of sales 22,327 15,450 38,167 35,174
--------- --------- ---------- ----------
Gross profit 18,369 3,450 29,615 21,167
--------- --------- ---------- ----------
Operating expenses:
Research and development 4,456 4,459 8,691 8,999
Selling, general and administrative 12,343 12,297 23,685 22,842
In-process research and development of acquired
businesses and product line 4,000 5,900 4,000 7,100
Restructuring charge -- 2,922 -- 2,922
--------- --------- ---------- ----------
Total operating expenses 20,799 25,578 36,376 41,863
--------- --------- ---------- ----------
Operating loss (2,430) (22,128) (6,761) (20,696)
Other income, net 299 1,131 285 1,486
--------- --------- ---------- ----------
Loss before provision (benefit) for income taxes (2,131) (20,997) (6,476) (19,210)
Provision (benefit) for income taxes 635 (6,858) (842) (5,971)
--------- --------- ---------- ----------
Net loss $ (2,766) $(14,139) $ (5,634) $ (13,239)
========= ========= ========== ==========
Basic and diluted loss per share $ (0.22) $ (1.20) $ (0.45) $ (1.11)
========= ========= ========== ==========
Shares used in per share calculation of
Basic and diluted loss per share 12,828 11,746 12,532 11,944
========= ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
------------------------------
1999 1998
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,634) $ (13,239)
Adjustments to reconcile net loss to net cash provided by (used
by) operating activities:
Adjustment to conform year end of pooled company (2,290) --
Change in net assets/liabilities of discontinued operations -- 1,078
Depreciation and amortization 3,504 3,130
Change in provision for doubtful accounts 43 (883)
Non-cash restructuring expense -- 893
Write-down of inventories -- 1,837
Tax benefit associated with employee option plans -- 50
Purchased in-process research and development of acquired 4,000 7,100
business and product line
Changes in current assets and liabilities, net of acquisition of
FluoroTrac(R) product line, Hine Design Incorporated and Palo Alto
Technologies, Inc.:
Accounts receivable (15,146) 16,035
Inventories (4,406) (1,088)
Deferred tax asset 198 (5,817)
Prepaid expenses and other current assets (342) 430
Other assets, net 317 --
Accounts payable 9,235 (4,672)
Accrued liabilities and other current liabilities 476 1,092
Income taxes payable (34) 674
Customer deposits (764) (311)
-------- ---------
Net cash provided by (used by) operating activities (10,843) 6,309
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments (64,047) (26,050)
Sale of short-term investments 75,398 56,676
Purchase of property, plant and equipment (3,401) (2,982)
Increase in other assets (724) (1,016)
Cash used in the acquisition of the FluoroTrac(R) product line -- (2,794)
Cash used in the acquisition of Hine Design Incorporated -- (12,433)
Cash used in the acquisition of Palo Alto Technologies, Inc. (4,639) --
-------- ---------
Net cash provided by (used by) investing activities 2,587 11,401
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used in the reduction of debt assumed in the acquisition of
Hine Design Incorporated -- (12,479)
Principal payments on current and long-term debt (10,066) (1,090)
Issuance of common stock 23,964 919
Cash used in the repurchase of common stock -- (11,472)
-------- ---------
Net cash provided by (used by) financing activities 13,898 (24,122)
-------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,642 (6,412)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,382 15,006
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,024 $ 8,594
======== =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of Asyst
Technologies, Inc. the ("Company"), a California corporation, and its wholly
owned subsidiaries. Significant inter-company accounts and transactions have
been eliminated. On June 2, 1999 the Company acquired Progressive System
Technologies, Inc. ("PST") in a transaction accounted for using the
pooling of interests accounting method. Accordingly, the restated condensed
consolidated financial statements of the Company give retroactive effect to the
merger with PST and all material inter-company transactions have been
eliminated.
While the financial information furnished is unaudited, the condensed
consolidated financial statements included in this report reflect all
adjustments (consisting only of normal recurring adjustments) which the Company
considers necessary for the fair presentation of the results of operations for
the interim periods covered and of the financial condition of the Company at the
date of the interim balance sheet. The Company closes its books on the last
Saturday of each quarter and thus the actual date of the quarter-end is usually
different from the month-end dates used throughout this 10-Q report. The results
for interim periods are not necessarily indicative of the results for the entire
year. The condensed consolidated financial statements should be read in
connection with the Asyst Technologies, Inc. consolidated financial statements
for the year ended March 31, 1999 included in its Annual Report on Form 10-K
and Current Report on Form 8-K/A, dated August 16, 1999.
Short-term Investments
As of September 30, 1999 and March 31, 1999, the Company's short-term
investments consisted of liquid debt investments with maturities, at the time of
purchase, of one year or less and will remain classified as such until such time
they are subsequently sold and converted to cash. All such investments have been
classified as "available-for-sale" and are carried at fair value, with
unrealized holding gains and losses (which have not been material to date), net
of taxes reported as a separate component of shareholders' equity. The cost of
the debt security is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization, interest income, realized gains and
losses and declines in value that are considered to be other than temporary, are
included in other income (expense), net, on the accompanying condensed
consolidated statements of operations. There have been no declines in value that
are considered to be other than temporary for any of the six months in the
period ended September 30, 1999. The cost of investments sold is based on
specific identification. The Company does not intend to hold any individual
securities for greater than one year.
Short-term investments by security type consist of the following (dollars in
thousands):
<TABLE>
<CAPTION>
Cost / Fair Value
-----------------------------------
September 30, March 31,
1999 1999
----------------- ---------------
(unaudited)
<S> <C> <C>
Debt securities issued by states of the United States and political
subdivisions of the states.............................................. $ -- $ 12,780
Corporate debt securities................................................. 18,682 16,600
-------- --------
Total $ 18,682 $ 29,380
======== ========
</TABLE>
5
<PAGE>
Supplemental Statements of Cash Flows Disclosure
Cash paid for interest and domestic and foreign income taxes was as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------------------------
1999 1998
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Interest.............................................................. $ 166 $ 338
Income taxes.......................................................... $ 34 $ 370
</TABLE>
Inventories
Inventories are stated at the lower of cost (first in, first out) or market
and include materials, labor and manufacturing overhead costs. Inventories
consist of the following (dollars in thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Raw materials......................................................... $ 19,852 16,119
Work-in-process and finished goods.................................... 3,937 3,254
-------- --------
Total $ 23,789 $ 19,373
======== ========
</TABLE>
Intangible Assets
The realizability of intangible assets, which are included in other assets,
net, in the accompanying condensed consolidated balance sheets, is evaluated
periodically as events or circumstances indicate a possible inability to recover
the net carrying amount. Such evaluation is based on various analyses, including
cash flow and profitability projections that incorporate, as applicable, the
impact on existing lines of business. The analyses involve a significant level
of management judgment in order to evaluate the ability of the Company to
perform within projections.
Provision (Benefit) for Income Taxes
The annual effective tax rate and benefit recorded for the three and six
months ended September 30, 1998 does not reconize the full deferred benefit of
the utilization of net operating loss of PST because there was uncertainty as
to PST's ability to generate future taxable income. Absent this, our effective
tax rate would have been 34.0 percent. The provision for income taxes for the
three and six months ended September 30, 1999 reflects the impact of the in-
process research and development charge of $4.0 million which for tax purposes
is not deductible.
Earnings (Loss) Per Share
Earnings per share has been reported based upon Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share", which requires presentation of
basic and diluted earnings per share. Basic earnings per share has been computed
using the weighted average number of actual common shares outstanding, while
diluted earnings per share has been computed using the weighted average number
of dilutive common equivalent shares outstanding. Dilutive common equivalent
shares used in the computation of diluted earnings per share result from the
assumed exercise of stock options, warrants and redeemable convertible preferred
stock, using the treasury stock method.
6
<PAGE>
The following table sets forth the calculation of basic and diluted
earnings per share (dollars in thousands, except share and per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
------------- ------------ ------------- -------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Basic and diluted loss per share:
Net loss........................................... $(2,766) $(14,139) $(5,634) $(13,239)
------- -------- ------- --------
Weighted average common shares..................... 12,828 11,746 12,532 11,944
------- -------- ------- --------
Basic and diluted loss per share............. $ (0.22) $ (1.20) $ (0.45) $ (1.11)
======= ======== ======= ========
</TABLE>
Common share equivalents are anti-dilutive in all periods presented.
Comprehensive Income
In 1999, the Company adopted SFAS No. 130 "Reporting Comprehensive
Income," which establishes standards for reporting and presentation of
comprehensive income. SFAS No. 130, which was adopted by the Company in the
first quarter of 1999, requires companies to report a new measure of income
(loss). Comprehensive income is defined as the change in equity of a company
during a period from transactions and other events and circumstances excluding
transactions resulting from investments by owners and distributions to owners
and is to include unrealized gains and losses that have historically been
excluded from net income (loss) and reflected instead in equity. The Company has
not had any such material transactions or events during the periods and
therefore comprehensive income (loss) is the same as the net income (loss)
reported in the condensed consolidated financial statements.
New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. It requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met and that a company must formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000 and cannot be applied
retroactively. The Company has not yet determined the effect SFAS No. 133 will
have on its financial position, results of operations or cash flows.
RESTRUCTURING ACTIVITY
During the year ended March 31, 1999 the Company underwent significant
restructuring of its operations to reduce its costs structure in response to the
reduction in net sales activities. The Company also is in the process of
completing the planned restructuring activities in Japan and Europe to
reposition its activities to compete more effectively. In addition, the Company
is repositioning its product offerings to eliminate low margin products, or
software services that have high risks of failure. During the fiscal year ended
March 31, 1999, the Company recorded a restructuring charge of approximately
$5.5 million.
7
<PAGE>
The following table summarizes restructuring charges and amounts incurred by
geographic region as of September 30, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
Expensed Cash outlays Ending
as of as of Accrual
March 31, September 30, September 30,
1999 1999 1999
--------- ------------- ------------
<S> <C> <C> <C>
Europe:
Severance............................................... $1,732 $1,136 $ 596
Facilities.............................................. 336 235 101
Other................................................... 437 182 255
Japan:
Severance............................................... 150 75 75
Other................................................... 35 -- 35
US:
Severance............................................... 700 690 10
Facilities.............................................. 550 318 232
Other................................................... 1,002 776 226
Non-cash.................................................. 600 N/A N/A
------ ------ ------
Total $5,542 $3,412 $1,530
====== ====== ======
</TABLE>
As of September 30, 1999, the Company has severed all employees targeted in
connection with the restructuring. The Company expects all cash payments to
severed employees will be disbursed by December 31, 1999. Certain facilities and
other restructuring costs may not be fully disbursed before the end of fiscal
year ended March 31, 2000.
REPORTABLE SEGMENTS
In 1999, the Company adopted SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS 131 supersedes SFAS 14, "Financial
Reporting for Segments of a Business Enterprise", replacing the "industry
segment" approach with the "management" approach. SFAS 131 designates the
internal organization that is used by management for making decisions,
evaluating performance and allocating resources of the enterprise as the source
of the Company's reportable segments. SFAS 131 also requires disclosures about
products and services, geographic areas and major customers. The adoption of
SFAS 131 did not impact the results of operations or financial position but did
affect the disclosures of segment information.
The Company offers a family of products and related services to provide a
front-end automation and isolation system for wafer handling in semiconductor
manufacturing facilities. All of the Company's activities are aggregated into a
single operating segment. As a result, no operating segment information is
required.
Net sales by geography were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
United States............................................. $17.3 $6.6 $29.6 $22.1
Taiwan.................................................... 10.9 6.9 20.9 23.1
Singapore................................................. 3.0 0.3 4.3 1.5
Japan..................................................... 8.2 3.7 10.8 6.6
Europe.................................................... 1.3 1.4 2.2 3.0
----- ----- ------ ------
Total................................................. $40.7 $18.9 $67.8 $56.3
====== ====== ====== ======
</TABLE>
8
<PAGE>
The net sales by product or service categories comprising the Company's net
sales were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
SMIF Systems...................................... $ 28,064 $ 11,221 $ 46,629 $ 38,122
Non-SMIF Systems.................................. 3,475 3,368 5,697 6,305
SMART Traveler Systems............................ 2,837 1,227 4,416 4,407
Robotics.......................................... 3,636 -- 6,603 1,368
Services & other.................................. 2,684 3,084 4,437 6,139
----------- ----------- ----------- -----------
Total......................................... $ 40,696 $ 18,900 $ 67,782 $ 56,341
=========== =========== =========== ===========
</TABLE>
ACQUISITION OF THE FLUOROTRAC(R) PRODUCT LINE
In April 1998, the Company entered into an agreement with Fluoroware, Inc.
("Fluoroware"), a supplier of materials management solutions; to acquire
Fluoroware's FluoroTrac(R) automated radio frequency identification ("RFID")
technology for automated work-in-progress tracking in semiconductor factories.
Under the terms of the agreement, the Company acquired all of the FluoroTrac
intellectual property including RFID tracking solutions, inventory and
installed-base opportunities from Fluoroware in consideration for approximately
$2.8 million in cash and liabilities assumed by the Company.
In connection with the acquisition, approximately $1.2 million of the intangible
assets acquired consisted of in-process research and development. Because there
can be no assurance that the Company will be able to successfully complete the
development of FluoroTrac products or that the technology has any alternative
future use, such in-process research and development was charged to expense in
the six-month period ended September 30, 1998. As a result of the purchase price
allocation, approximately $0.3 million was assigned to intangible assets related
to existing product technology, the assembled workforce and the excess purchase
price over the net assets acquired. These intangibles are being amortized over a
three to five year period. Management believes that the unamortized balance of
these assets, which is included in other assets, net, in the accompanying
condensed consolidated balance sheets, is recoverable.
ACQUISITION OF HINE DESIGN INCORPORATED
On July 31, 1998, the Company completed its acquisition of Hine Design
Incorporated ("Hine"). The acquisition, originally announced on July 6, 1998,
was structured as a purchase of all of the outstanding capital stock of Hine for
approximately $12.4 million in cash. In addition, the Company granted options to
purchase the Company's common stock in substitution for outstanding, vested
options to purchase capital stock of Hine worth approximately $1.0 million and
assumed certain liabilities of Hine of approximately $12.5 million. Hine, a
supplier of wafer-handling robots for semiconductor process tools, is now a
wholly owned subsidiary of the Company.
In connection with the acquisition, approximately $18.4 million of the purchase
price in excess of the value of net liabilities assumed were allocated to
various intangible assets, which are being amortized over periods of four to
fourteen years (dollar average life of ten years). Management believes that the
unamortized balance of these assets, which is included in other assets, net, in
the accompanying condensed consolidated balance sheets, is recoverable. During
the current quarter, a charge for amortization relating to these intangibles of
approximately $0.6 was included in selling, general and administrative expenses.
ACQUISITION OF PROGRESSIVE SYSTEM TECHNOLOGIES, INC.
On June 2, 1999, the Company completed its acquisition of 100 percent of the
common stock of PST, a Texas corporation, in exchange for 274,810 shares of
common stock of the Company. In addition to the exchange of common stock in the
merger, 225,190 shares of common stock of the Company were issued in exchange
for $4.9 million of PST debt. PST manufactures wafer-sorting equipment used by
semiconductor manufacturers. The acquisition has been accounted for using the
pooling of interests method of accounting. Accordingly, the
9
<PAGE>
accompanying condensed consolidated financial statements have been restated for
all periods prior to the business combination. All material inter-company
transactions between the Company and PST have been eliminated. Costs associated
with the PST merger, which consist primarily of transaction costs amounted to
approximately $0.1 million and were expensed during the current fiscal period
ended. PST's fiscal year end was December 31. In accordance with Securities and
Exchange Commission Rules, the condensed consolidated statements of operations
and cash flows for the three-months ended June 30, 1998 have been restated to
reflect the statement of operations and cash flows of PST. The condensed
consolidated balance sheet, as of March 31, 1999, has also been restated to
reflect the financial position of PST. PST's results of operations for the
three-month period ended March 31, 1999 have been excluded from the reported
results of operations and, therefore, have been added to the Company's
accumulated deficit as of April 1, 1999. PST's net sales and net loss for the
three month period ended March 31, 1999 were $1.5 million and $2.3 million,
respectively.
The conforming of Asyst's and PST's accounting practices resulted in no
adjustments to net income (loss) or shareholders' equity. Net sales and net
income (loss) for the individual companies reported prior to the merger were as
follows (dollars in thousands):
Six Months Ended Three Months Ended
September 30, September 30,
1998 1998
(unaudited) (unaudited)
----------- ----------
Net sales:
Asyst Technologies, Inc...... $ 50,036 $ 15,963
PST.......................... 6,305 2,937
---------- ----------
Total............................. $ 56,341 $ 18,900
========== ==========
Net income (loss):
Asyst Technologies, Inc...... $ (11,591) $ (13,167)
PST.......................... (1,648) (972)
---------- ----------
Total............................. $ (13,239) $ (14,139)
========== ==========
In conjunction with the PST acquisition, the Company also completed a sale of
625,000 shares of its common stock to eight institutional investors. The shares
issued in this transaction, which closed in May 1999, were priced at $18.00 per
share, for aggregate proceeds of approximately $11.3 million. The purpose of
this transaction was to untaint shares of common stock to obtain pooling of
interests accounting treatment for the acquisition of PST. The proceeds were
used for general corporate purposes.
ACQUISITION OF PALO ALTO TECHNOLOGIES, INC.
On August 27, 1999, the Company acquired all of the equity of Palo Alto
Technologies, Inc., ("PAT") a California company formed in 1997 to develop and
market a new concept wafer transport system for use in semiconductor
manufacturing facilities, for $4.6 million consisting primarily of cash
and the Company's common stock. Approximately $4.6 million of the purchase price
in excess of the value of the net liabilities assumed was allocated to various
intangible assets including $4.0 million allocated to in-process research and
development which was expensed in the three month period ended September 30,
1999. The remain $0.6 million was assigned to goodwill which will be amortized
over 5 years.
Dr. Parikh, the Company's Chairman and Chief Executive Officer and Mr. Bonora,
the Company's Senior Vice President and Chief Technology Officer were selling
securities holders of PAT. See "Related Parties Transactions".
10
<PAGE>
SHAREHOLDERS' RIGHTS PLAN
The Company has adopted a Shareholders' Rights Plan under which all shareholders
of record, as of July 10, 1998 (the "Record Date"), received a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, without par value per share, (the "Common Shares") of the Company. The
Rights will also attach to new Common Shares issued after the Record Date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock,
without par value per share, (the "Preferred Shares") of the Company at a price
of $140 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. Each Preferred Share is designed to be the economic
equivalent of 100 Common Shares.
STOCK REPURCHASE PROGRAM
On June 22, 1998, the Board of Directors of the Company, authorized a stock
repurchase program whereby up to 2,000,000 shares of its Common Stock may be
repurchased by the Company using existing cash, from time-to-time at market
prices, and as market and business conditions warrant, in the open market, or in
negotiated transactions. The Company utilized the remaining portion of the
reacquired shares for reissuance in connection with certain employee stock
programs. On June 3, 1999, in connection with the acquisition of PST, the
Company rescinded the stock purchase program and reissued the remaining portion
of the reacquired shares in May 1999.
RELATED PARTY TRANSACTIONS
In September 1997, we entered into an asset purchase agreement with PAT pursuant
to which we sold to PAT intellectual property rights and office equipment which
were owned or licensed by Asyst Automation, Inc., a discontinued operation, in
consideration for quarterly earn-out payments, up to an aggregate of $2.0
million. In addition, PAT granted us the non-exclusive, worldwide right to
distribute and sell any of PAT's products on PAT's most favorable distributor
terms and conditions; except PAT could grant exclusive distribution rights to
particular markets so long as such rights were first offered to Asyst and we did
not accept the offer. We and PAT agreed that Dr. Parikh, the Chairman and Chief
Executive Officer of Asyst and Mr. Bonora, the Senior Vice President and Chief
Technology Officer of Asyst, could serve as the Chairman of PAT and an advisor
to PAT, respectively, while employed full time by Asyst. In August 1999, we
acquired all of the equity of PAT in a stock purchase transaction for
approximately $3.7 million and the repayment of $0.8 million of debt. In
addition we agreed to pay an earn out to certain PAT security holders based on
future transport automation product revenue in excess of certain defined
threshold amounts. Dr. Parikh received approximately $1.4 million in proceeds
from the sale of his shares of PAT for which he had paid approximately $0.7
million. In addition Dr. Parikh received approximately $0.8 million for the
repayment of a loan he made to PAT. Mr. Bonora received approximately $0.2
million in proceeds from the sale of his shares of PAT for which he had paid
approximately $0.1 million. Neither Dr. Parikh nor Mr. Bonora are eligible to
participate in the earn out payments to PAT shareholders.
As of September 30, 1999 and March 31, 1999, the Company held four notes
receivable, with balances totaling $1,172,750, from two executive officers of
the Company, which have resulted from advances made to the officers to assist in
their relocation to California. The notes bear interest that ranges from 4.0
percent to 6.4 percent per annum and are fully secured by second deeds of trust
on certain real property, as well as, other pledged securities of the Company
owned by the officers, respectively. The notes, which are included in prepaid
expenses and other current assets in the accompanying condensed consolidated
balance sheets, mature at various dates between September 1, 2002 and January
31, 2004.
LEGAL PROCEEDINGS
In October 1996, we filed a lawsuit against a number of defendants including
Jenoptik-Infab, Inc. alleging infringement of two patents related to our SMART
Traveler System and alleging breach of fiduciary duty and misappropriation of
trade secrets and unfair business practices. The defendants filed counter claims
alleging the patents invalid, unenforceable and not infringed and alleging that
we had violated federal antitrust laws and engaged in unfair competition. In
November 1998, the court granted defendants motion for partial summary judgment
as to most of the patent infringement claims. In January 1999, the court granted
our motion for leave to seek reconsideration of the November 1998 summary
judgment order and also, pursuant to a stipulation of the parties, dismissed
without prejudice two of the three antitrust counter claims brought by the
defendants. Since then, the parties stipulated to the dismissal with prejudice
of the defendants' unfair competition and remaining antitrust counter claim, and
our breach of fiduciary duty, misappropriation of trade secrets and unfair
business practices claims. In June 1999, the court granted our motion for
reconsideration in the sense that it considered the merits of our arguments, but
did not change its prior summary judgment ruling and also granted summary
judgment for defendants on the remaining patent infringement claim. We intend to
take an appeal.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes included elsewhere in this prospectus. This
discussion contains forward-looking statements which involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including but not limited to those discussed in "Risk Factors" in our Annual
Report on Form 10-K.
Overview
Our sales are tied to capital expenditures at wafer fabrication
facilities. The majority of our revenues in any single quarter are typically
derived from relatively few large customers, and our revenues will therefore
fluctuate based on a number of factors, including:
. the timing of significant customer orders;
. the timing of product shipments;
. variations in the mix of products sold;
. the introduction of new products;
. changes in customer buying patterns;
. fluctuations in the semiconductor equipment market;
. the availability of key components; and
. general trends in the economy.
In addition, due to production cycles and customer requirements, we often
ship significant quantities of products in the last month of the quarter. This
factor increases the risk of unplanned fluctuations in net sales since we have
limited opportunity to take corrective actions should a customer reschedule a
shipment or otherwise delay an order during the last month of the quarter.
Fiscal year 1999 was significantly and adversely impacted by the
worldwide drop in demand for semiconductor devices. The drop in demand resulted
from a dramatic slowdown in the Asian economies and over-capacity of memory
chip manufacturing. In response, many of our customers slashed capital
expenditure budgets by 40 percent or more. Net sales decreased 49.0 percent
from $182.3 million for the year ended March 31, 1998 to $92.9 million for the
year ended March 31, 1999. In addition, in fiscal year 1999, we acquired the
FluoroTrac Auto-ID product line from Flouroware, Inc. and HDI, enhancing our
wafer tracking and robotics capabilities. The significant decline in net sales
and the new acquisitions required us to undertake substantial restructuring
activities to reduce costs and eliminate low margin products. Nevertheless, we
experienced a net loss in fiscal year 1999 of $26.9 million compared to a
record net income of $15.4 million in fiscal year 1998.
In contrast, net sales for each of the quarters ended June 30, 1999 and
September 30, 1999 have increased sequentially by over 45 percent over the
prior quarter. Our book to bill ratios have improved and are higher than those
reported for the industry. Whereas for most of the year ended March 31, 1999 we
were dependent upon orders received and shipped during the same quarter, our
current backlog of orders exceeds our manufacturing capacity for the quarter
ended December 31, 1999. Many of our customers have announced significantly
increased capital expenditure spending plans.
In June 1999, we acquired all of the shares of PST, which manufactures
wafer-sorting equipment used by semiconductor manufacturers. The acquisition
was accounted for as a pooling of interests. Accordingly, our consolidated
financial statements for all periods presented have been restated to include
the financial statements of PST.
12
<PAGE>
In August 1999, we acquired all of the shares of PAT, which is in the
process of developing a continuous flow transport system for use in
semiconductor manufacturing facilities. The transaction was accounted for as a
purchase.
In September 1999, we entered into an alliance with MECS to sell our
products and provide local customer support in the Japanese market. We also
acquired an option to purchase at least 66 2/3 percent of the equity securities
of MECS, once MECS meets various operating performance levels and disposes of
its non-semiconductor subsidiaries. If we were to acquire 66 2/3 percent of the
equity securities of MECS, then we would spend approximately $9.9 million. If
we were to acquire 100 percent of the equity securities of MECS, then we would
spend approximately $14.9 million. As of March 31, 1999, MECS had long-term
debt and bonds totaling approximately $34.0 million with interest rates ranging
between 1.4 percent to 1.8 percent per annum.
Three and Six Months Ended September 30, 1998 and 1999
The following table sets forth the percentage of net sales represented by
consolidated statements of operations data for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
--------------------- -------------------
1998 1999 1998 1999
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net sales......................... 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales..................... 81.8 54.9 62.4 56.3
--------- -------- -------- --------
Gross profit.................... 18.2 45.1 37.6 43.7
--------- -------- -------- --------
Operating expenses:
Research and development........ 23.6 11.0 16.0 12.8
Selling, general and
administrative................. 65.1 30.3 40.5 34.9
In-process research and
development of acquired
businesses and product line.... 31.2 9.8 12.6 5.9
Restructuring charge............ 15.4 -- 5.2 --
--------- -------- -------- --------
Total operating expenses...... 135.3 51.1 74.3 53.6
--------- -------- -------- --------
Operating income (loss)....... (117.1) (6.0) (36.7) (9.9)
Other income, net................. 6.0 0.7 2.6 0.4
--------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes....... (111.1) (5.3) (34.1) (9.5)
Provision (benefit) for income
taxes............................ (36.3) 1.5 (10.6) (1.2)
--------- -------- -------- --------
Net income (loss)................. (74.8)% (6.8)% (23.5)% (8.3)%
========= ======== ======== ========
</TABLE>
Results of Operations
Net Sales. Net sales increased 115.3 percent from $18.9 million for the
three months ended September 30, 1998, to $40.7 million for the three months
ended September 30, 1999. Net sales increased 20.3 percent from $56.3 million
for the six months ended September 30, 1998 to $67.8 million for the six months
ended September 30, 1999. The increase in net sales for the three and six
months ended September 30, 1999 is due to increased demand for our products as
capital expenditures of semiconductor manufacturers have increased to add
capacity.
International sales have increased in terms of dollars of net sales but
decreased as a percent of net sales for the six months ended September 30, 1999
compared to the six month ended September 30, 1998. This is partly due to the
influence of the acquisition of HDI in August 1998 which sells primarily to
OEMs in the
13
<PAGE>
United States. International sales by region for the six months ended September
30, 1998 and 1999, are summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended September Six Months Ended September
30, 1998 30, 1999
--------------------------- ---------------------------
Geographic Net Sales Percentage of Net Sales Percentage of
Region (in millions) Net Sales (in millions) Net Sales
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Taiwan............ $23.1 41.0% $20.9 30.8%
Japan............. 6.6 11.7 10.8 15.9
Singapore......... 1.5 2.7 4.3 6.4
Europe............ 3.0 5.3 2.2 3.2
----- ---- ----- ----
$34.2 60.7% $38.2 56.3%
===== ==== ===== ====
</TABLE>
Our results of operations have not been adversely affected by currency exchange
rates because we have invoiced substantially all of our international sales in
United States dollars, except in Asyst KK, our Japanese subsidiary, where over
20 percent of its sales are denominated in the yen. However, there can be no
assurance that our results of operations will not be adversely affected by such
fluctuations in the future.
We have experienced cancellations and delays of orders in the past,
particularly during fiscal year 1999, while the industry was undergoing a
significant downturn. During the six months ended September 30, 1999,
cancellation and delays were not significant. Given the cyclical nature of the
semiconductor industry, we can give no assurance that there will not be future
cancellations or delays in orders.
Gross Margin. Gross margin increased from 18.2 percent of net sales for
the three months ended September 30, 1998, to 45.1 percent of net sales for the
three months ended September 30, 1999. Gross margin increased from 37.6 percent
of net sales for the six months ended September 30, 1998 to 43.7 percent of net
sales for the six months ended September 30, 1999. The primary contributor to
the increase in the gross margin for the three and six months ended September
30, 1999 was the increase in net sales without increasing indirect
manufacturing costs at the rate net sales increased. Gross margin also improved
as a result of the impact of cost reduction efforts we undertook during the
past year, offset somewhat by lower gross margins in our robotics products
added to our portfolio of products by the acquisition of HDI in August 1998. It
remains our goal to improve gross margins as a percentage of net sales in the
future through reduction of direct manufacturing costs and increase the
leverage of the indirect manufacturing through higher net sales.
Research and Development. Research and development expenses were $4.5
million for the three months ended September 30, 1998 and 1999. Research and
development expenses decreased 3.4 percent from $9.0 million for the six months
ended September 30, 1998, to $8.7 million for the six months ended
September 30, 1999. The dollar decrease for the six months ended September 30,
1999 from the six months ended September 30, 1998 is because of our cost
reduction efforts in response to a sharp decline in sales. Research and
development expenses decreased as a percentage of net sales from 23.6 percent
for the three months ended September 30, 1998 to 10.9 percent for the three
months ended September 30, 1999 and decreased as a percentage of net sales from
16.0 percent for the six months ended September 30, 1998 to 12.8 percent for
the six months ended September 30, 1999. The decrease in research and
development expenses as a percentage of net sales for the comparative three and
six month periods is due primarily to the increase in our net sales. We expect
that our research and development expenses may increase in future periods, but
will fluctuate as a percentage of net sales.
Selling, General and Administrative. Selling, general and administrative
expenses were $12.3 million for the three months ended September 30, 1998 and
1999. Selling, general, and administrative expenses increased 3.9 percent from
$22.8 million for the six months ended September 30, 1998, to $23.8 million for
the six months ended September 30, 1999. Selling, general and administrative
expenses have increased because of
14
<PAGE>
the impact of the acquisition of HDI in August 1998, staffing additions in
response to the increase in our sales and higher commission expenses related to
our increase in net sales. The decrease in selling, general and administrative
expenses as a percentage of net sales is due primarily to the increase in net
sales in both the three and six month comparative periods. We expect that
selling, general and administrative expenses may increase in future periods,
although the spending may vary as a percentage of net sales.
In-process Research and Development of Acquired Businesses and Product
Line. In April 1998, we completed the acquisition of the FluoroTrac product
line from Fluoroware. The transaction was completed in the three months ended
June 30, 1998. In connection with the acquisition of FluoroTrac, we recorded a
write-off of $1.2 million of in-process research and development for the three
months ended June 30, 1998. The remaining excess cost of purchase price over
net assets acquired, approximately $0.3 million, is being amortized over
periods of three to five years.
In July 1998, we acquired HDI using the purchase method of accounting. In
connection with the acquisition of HDI, we recorded a write-off of $5.9 million
of purchased in-process research and development costs for the three months
ended September 30, 1998. In addition, approximately $18.4 million of the
purchase price in excess of the value of net liabilities we assumed were
allocated to various intangible assets, which are being amortized over periods
of four to fourteen years, with a dollar average life of ten years. For the
three months ended September 30, 1999, a charge for amortization relating to
these intangibles, approximately $0.6 million, was included in our selling,
general and administrative expenses.
In August 1999, we acquired PAT using the purchase method of accounting.
In connection with the acquisition of PAT, we recorded a write off of $4.0
million of purchased in-process research and development costs for the three
months ended September 30, 1999. In addition, approximately $0.6 million of the
purchase price in excess of the value of the net liabilities we assumed were
allocated to goodwill, which is being amortized over five years. The purchased
in-process research and development and goodwill does not result in a tax
benefit.
Restructuring Charge. For the three months ended September 30, 1998, in
response to the reductions in capital spending by semiconductor manufacturers,
we undertook a formal plan to lower our cost structure and reorganize to more
effectively manufacture, market and sell our portfolio of products and value
added services. The restructuring effort consisted of the closure of two of our
facilities in the United States during the three months ended December 31, 1998
and the closure and downsizing of certain facilities in Europe for the three
months ended March 31, 1999. In addition, management of the software product
line was streamlined eliminating one level of management and administrative
activities, which were deemed redundant.
Other Income, Net. Other income, net, includes interest income, interest
expense, foreign exchange gain and loss, which has not been material, and
royalty income. Other income, net, decreased from $1.1 million for the three
months ended September 30, 1998 to $0.3 million for the three months ended
September 30, 1999. Other income, net, decreased from $1.5 million for the six
months ended September 30, 1998 to $0.3 million for the six months ended
September 30, 1999. Our average cash, cash equivalents and short-term
investments balance for the six months ended September 30, 1998 was
approximately $67.0 million compared to $33.2 million for the six months ended
September 30, 1999. Our average current and long-term debt balance was $10.3
million for the six months ended September 30, 1998, while we had no debt
outstanding for the six months ended September 30, 1999.
Provision (Benefit) for Income Taxes. We reported a benefit for income
taxes of $6.9 million and a provision for income taxes of $0.6 million for the
three months ended September 30, 1998 and 1999, respectively. For the six
months ended September 30, 1998 and 1999, we reported a benefit for income
taxes of $6.0 million and $0.8 million, respectively. The effective income tax
rates for the three and six month periods in 1998 were impacted by the
acquisition of PST. The annual effective tax rates and benefits recorded for
the three and six months ended September 30, 1998 do not recognize the full
deferred benefits of the utilization of
15
<PAGE>
net operating losses of PST because there was uncertainty as to PST's ability
to generate future taxable income. Absent the restatement of earnings to
reflect the pooling of interests related to PST for the three and six months
ended September 30, 1998, our effective tax rate would have been 34.0 percent.
The provision for income taxes for the three months ended September 30, 1999
reflects the non-deductible charge of $4.0 million related to the acquisition
of PAT in August 1999. The annual estimated effective tax rate and benefit
recorded for the six months ended September 30, 1999, reflect the nondeductible
charge of $4.0 million related to the acquisition of PAT in August 1999.
Additionally, the benefit for income taxes was impacted by foreign income and
withholding taxes in excess of the statutory rates, the lack of Foreign Sales
Corporation benefit due to net operating losses for the six months ended
September 30, 1999 and limitations on state net operating loss carryforwards.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Although we operate and sell products in various global markets,
substantially all sales are denominated in the U.S. dollar therefore reducing
the foreign currency risk, except in Japan, where over 20 percent of sales
generated are denominated in the yen. To date, the foreign currency
transactions and exposure to exchange rate volatility have not been
significant. We cannot anticipate with certainty the effect of inflation on our
operations. To date, inflation has not had a material impact on our net sales
or results of operations, however, with the industry's upturn currently
underway; labor markets are tightening thus putting upward pressure on current
labor costs. Our exposure to market risk for changes in interest rates relate
primarily to the investment portfolio. Our investment portfolio consists of
short-term, fixed income securities and by policy is limited by the amount of
credit exposure to any one issuer. Fixed rate securities have their fair market
value adversely affected due to rise in interest rates. To date, the change in
interest rate markets has not had a material impact on our results of
operations or the market value of our investments. There can be no assurance
that foreign currency risk, inflation or interest rate risk will not have a
material impact on our financial position, results of operations or cash flow
in the future.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In October 1996, we filed a lawsuit against a number of defendants
including Jenoptik-Infab, Inc. alleging infringement of two patents
related to our SMART Traveler System and alleging breach of fiduciary
duty and misappropriation of trade secrets and unfair business
practices. The defendants filed counter claims alleging the patents
invalid, unenforceable and not infringed and alleging that we had
violated federal antitrust laws and engaged in unfair competition. In
November 1998, the court granted defendants motion for partial
summary judgment as to most of the patent infringement claims. In
January 1999, the court granted our motion for leave to seek
reconsideration of the November 1998 summary judgment order and also,
pursuant to a stipulation of the parties, dismissed without prejudice
two of the three antitrust counter claims brought by the defendants.
Since then, the parties stipulated to the dismissal with prejudice of
the defendants' unfair competition and remaining antitrust counter
claim, and our breach of fiduciary duty, misappropriation of trade
secrets and unfair business practices claims. In June 1999, the court
granted our motion for reconsideration in the sense that it
considered the merits of our arguments, but did not change its prior
summary judgment ruling and also granted summary judgment for
defendants on the remaining patent infringement claim. We intend to
take an appeal.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of Asyst Technologies, Inc. was
held on September 2, 1999 for the purpose of (1) electing directors
to the Company's Board of Directors to serve a one-year term expiring
on the date of the Company's 2000 annual meeting of the shareholders
and until his successor is elected and qualified, (2) to approve an
amendment to the Company's Amended and Restated Articles of
Incorporation to increase the authorized number of shares of common
stock from 20,000,000 to 50,000,000 shares (5) to ratify the
selection of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending March 31, 2000 (4) to transact
such other business as may properly come before the meeting or any
adjournment or postponement thereof. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities Exchange Act of
1934, as amended, and there was no solicitation in opposition of
management's solicitations. The final vote on the proposals were
recorded as follows:
Proposal 1:
----------
Mihir Parikh was elected to the board of directors for a one-year
term with 9,896,235 votes for and 548,061 votes against.
Stanley Grubel was elected to the board of directors for a one-year
term with 9,9002,683 votes for and 541,613 votes against.
17
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders (continued)
Tsuyoshi Kawanishi was elected to the board of directors for a one-
year term with 9,906,383 votes for and 537,913 votes against.
Ashok K. Sinha was elected to the board of directors for a one-year
term with 9,902,883 votes for and 541,413 votes against.
Walter K. Wilson was elected to the board of directors for a one-year
term with 9,906,433 votes for and 537,863 votes against.
Proposal 2:
----------
To approve an amendment to the Company's Amended and Restated
Articles of Incorporation to increase the authorized number of shares
of Common Stock from 20,000,000 to 50,000,000 shares
<TABLE>
<CAPTION>
BROKERED
"FOR" "AGAINST" "ABSTAIN" "NON-VOTES"
------- ----------- ----------- -------------
<S> <C> <C> <C>
9,137,231 1,297,692 9,373 --
</TABLE>
Proposal 3:
----------
The selection of Arthur Andersen LLP as the Company's independent
auditors for the fiscal year ending March 31, 2000 was ratified by
the following vote:
<TABLE>
<CAPTION>
BROKERED
"FOR" "AGAINST" "ABSTAIN" "NON-VOTES"
------- ----------- ----------- -------------
<S> <C> <C> <C>
10,387,734 30,027 26,535 --
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.3 Stock Purchase Agreement among the Company, Palo Alto
Technologies, Inc. ("PAT"), the shareholders of PAT and
the optionholders of PAT, dated August 27, 1999.
3.1 Amended and Restated Articles of Incorporation of the
Company.
3.2 Certificate of Amendment of the Amended and Restated
Articles of Incorporation.
10.14 Lease Agreement between Aetna Life Insurance Company and
Hine Design, Inc., dated August 4, 1995.
10.15 Industrial Space Lease Agreement between PEN Associates
and Asyst Technologies, Inc., dated November 13, 1995.
10.16 Lease Agreement between SL-6 Partners, Ltd. and
Progressive System Technologies, Inc., dated November
20, 1995.
10.17 Sublease Agreement between Progressive System
Technologies, Inc. and Group, Inc., dated December 3,
1996.
10.18 Industrial Space Lease Agreement between PEN Associates
and Asyst Technologies, Inc., dated December 14, 1997.
10.19 Separation Agreement between Asyst Technologies, Inc.
and William B. Leckonby, dated November 9, 1998.
10.20 Amendment to Lease between Kato Road Partners and Asyst
Technologies, Inc., dated July 30, 1999.
10.21 Cooperation Agreement between MECS Corporation and Asyst
Technologies, Inc., dated August 5, 1999.
27.1 Financial Data Schedule
(b) Form 8-K
The Company filed a current report on Form 8-K/A relating to the amendment and
restatement of Asyst Technologies, Inc.'s (the "Company") Consolidated Balance
Sheets as of March 31, 1999 and 1998 and the related Consolidated Statements of
Operations, Shareholders' Equity and Cash Flows for the years ended March 31,
1999, 1998 and 1997 to reflect the pooling of interests for accounting purposes
of the Company's acquisition of Progressive System Technologies, Inc. ("PST")
pursuant to an Agreement and Plan of Merger and Reorganization dated June 2,
1999, including an update to the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in connection with the filing of
the foregoing restated financial statements, dated August 16, 1999.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASYST TECHNOLOGIES, INC.
Date: October 21, 1999 By: /s/ Douglas J. McCutcheon
----------------------- ----------------------------
Douglas J. McCutcheon
Senior Vice President
Chief Financial Officer
Signing on behalf of the
registrant and as the principal
accounting and financial officer
19
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
2.3 Stock Purchase Agreement among the Company, Palo Alto
Technologies, Inc. ("PAT"), the shareholders of PAT and the
option holders of PAT, dated August 27, 1999.
3.2 Certificate of Amendment of the Amended and Restated Articles
of Incorporation.
10.14 Lease Agreement between Aetna Life Insurance Company and Hine
Design, Inc., dated August 4, 1995.
10.15 Industrial Space Lease Agreement between PEN Associates and
Asyst Technologies, Inc., dated November 13, 1995.
10.16 Lease Agreement between SL-6 Partners, Ltd. and Progressive
System Technologies, Inc., dated November 20, 1995.
10.17 Sublease Agreement between Progressive System Technologies,
Inc. and Group, Inc., dated December 3, 1996.
10.18 Industrial Space Lease Agreement between PEN Associates
and Asyst Technologies, Inc., dated December 14, 1997.
10.19 Separation Agreement between Asyst Technologies, Inc. and
William B. Leckonby, dated November 9, 1998.
10.20 Amendment to Lease between Kato Road Partners and Asyst
Technologies, Inc., dated July 30, 1999.
10.21 Cooperation Agreement between MECS Corporation and Asyst
Technologies, Inc., dated August 5, 1999.
27.1 Financial Data Schedule
13
<PAGE>
Exhibit 2.3
================================================================================
STOCK PURCHASE AGREEMENT
among:
Asyst Technologies, Inc.
a California corporation;
Palo Alto Technologies, Inc.
a California corporation;
and
The Shareholders and Optionholders of
Palo Alto Technologies, Inc.
___________________________
Dated as of August 27, 1999
___________________________
================================================================================
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Description of Transaction.................................................... 1
1.1 Sale and Purchase of Shares................................................... 1
1.2 Sale and Purchase of Vested Options........................................... 1
1.3 Purchase Price................................................................ 2
1.4 Closing; Closing Date......................................................... 2
1.5 Unvested Options.............................................................. 2
Section 2. Representations and Warranties of the Company, the
Shareholders and the Optionholders............................................ 4
2.1 Due Organization; No Subsidiaries; Etc........................................ 5
2.2 Articles of Incorporation and Bylaws; Records................................. 5
2.3 Capitalization, Etc........................................................... 6
2.4 Financial Statements.......................................................... 6
2.5 Absence of Changes............................................................ 7
2.6 Title to Assets............................................................... 8
2.7 Bank Accounts; Receivables.................................................... 9
2.8 Proprietary Assets............................................................ 9
2.9 Contracts..................................................................... 11
2.10 Liabilities................................................................... 13
2.11 Compliance with Legal Requirements............................................ 13
2.12 Governmental Authorizations................................................... 13
2.13 Tax Matters................................................................... 13
2.14 Employee and Labor Matters; Benefit Plans..................................... 15
2.15 Environmental Matters......................................................... 17
2.16 Insurance..................................................................... 17
2.17 Related Party Transactions.................................................... 18
2.18 Legal Proceedings; Orders..................................................... 18
2.19 Authority; Binding Nature of Agreement........................................ 18
2.20 Full Disclosure............................................................... 19
2.21 Non-Contravention; Consents................................................... 19
2.22 Title to Securities........................................................... 20
</TABLE>
i.
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
2.23 Authority; Binding Nature of Agreement........................................ 20
2.24 Shareholder Legal Proceeding.................................................. 20
Section 3. Representations and Warranties of Asyst....................................... 20
3.1 Authority; Binding Nature of Agreement........................................ 20
3.2 Acquisition of Company Common Stock and Company Preferred Stock............... 20
3.3 Valid Issuance................................................................ 20
Section 4. Certain Covenants of the Company and the Shareholders......................... 21
4.1 Access and Investigation...................................................... 21
4.2 Operation of the Company's Business........................................... 21
4.3 Notification; Updates to Disclosure Schedule.................................. 23
4.4 No Negotiation................................................................ 23
Section 5. Additional Covenants of the Parties........................................... 24
5.1 Filings and Consents.......................................................... 24
5.2 Public Announcements.......................................................... 24
5.3 Best Efforts.................................................................. 24
5.4 FIRPTA Matters................................................................ 24
5.5 General Release............................................................... 24
5.6 Registration on Form S-8...................................................... 24
5.7 Termination of 401(k) Plan.................................................... 24
Section 6. Conditions Precedent to Obligations of Asyst.................................. 24
6.1 Accuracy of Representations................................................... 25
6.2 Performance of Covenants...................................................... 25
6.3 Consents...................................................................... 25
6.4 Agreements and Documents...................................................... 25
6.5 No Material Adverse Change.................................................... 25
6.6 FIRPTA Compliance............................................................. 26
6.7 No Restraints................................................................. 26
6.8 No Legal Proceedings.......................................................... 26
6.9 Termination of 401(k) Plan.................................................... 26
</TABLE>
ii.
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<TABLE>
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Section 7. Conditions Precedent to Obligations of the Company, the
Shareholders and the Optionholders............................................ 26
7.1 Accuracy of Representations................................................... 26
7.2 Performance of Covenants...................................................... 26
7.3 No Restraints................................................................. 26
7.4 No Legal Proceedings.......................................................... 27
Section 8. Termination................................................................... 27
8.1 Termination Events............................................................ 27
8.2 Termination Procedures........................................................ 27
8.3 Effect of Termination......................................................... 28
Section 9. Indemnification............................................................... 28
9.1 Survival of Representations, Etc.............................................. 28
9.2 Indemnification by Shareholders and Optionholders............................. 28
9.3 Threshold; Ceiling............................................................ 29
9.4 Claim Procedure............................................................... 29
9.5 Resolution of Conflicts....................................................... 30
9.6 Effect of Indemnity Agreements................................................ 31
9.7 Interest...................................................................... 31
9.8 Defense of Third Party Claims................................................. 31
9.9 Exercise of Remedies by Indemnitees Other Than Asyst.......................... 32
Section 10. Additional Post-Closing Obligations........................................... 32
10.1 Repayment of Certain Debt Obligations......................................... 32
10.2 Indemnification of Directors and Officers..................................... 33
10.3 Insurance Policies............................................................ 33
10.4 Piggyback Registrations....................................................... 33
Section 11. Miscellaneous Provisions...................................................... 34
11.1 Shareholders' Agent........................................................... 34
11.2 Further Assurances............................................................ 35
11.3 Fees and Expenses............................................................. 35
11.4 Attorneys' Fees............................................................... 36
</TABLE>
iii.
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11.5 Notices....................................................................... 36
11.6 Confidentiality............................................................... 37
11.7 Time of the Essence........................................................... 37
11.8 Headings...................................................................... 37
11.9 Counterparts.................................................................. 37
11.10 Governing Law................................................................. 37
11.11 Successors and Assigns........................................................ 37
11.12 Remedies Cumulative; Specific Performance..................................... 37
11.13 Waiver........................................................................ 38
11.14 Amendments.................................................................... 38
11.15 Severability.................................................................. 38
11.16 Parties in Interest........................................................... 38
11.17 Entire Agreement.............................................................. 38
11.18 Construction.................................................................. 38
</TABLE>
iv.
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into as of
August 27, 1999, by and among Asyst Technologies, Inc., a California corporation
("Asyst"); Palo Alto Technologies, Inc., a California corporation (the
"Company"); the shareholders of the Company (the "Shareholders") and the
optionholders of the Company (the "Optionholders"). Certain other capitalized
terms used in this Agreement are defined in Exhibit A.
Recitals
A. The Shareholders own a total of 9,626,775 shares of the common stock
of the Company ("Company Common Stock") and a total of 1,038,293 shares of the
Series A Preferred Stock of the Company ("Company Preferred Stock") which
constitute all of the outstanding capital stock of the Company.
B. The Optionholders own (i) vested options to purchase a total of
518,460 shares of the common stock of the Company ("Vested Options") and (ii)
unvested options to purchase a total of 169,940 shares of the common stock of
the Company ("Unvested Options").
C. The Shareholders wish to sell the Company Common Stock and the Company
Preferred Stock to Asyst on the terms set forth in this Agreement.
D. The Optionholders wish to sell the Vested Options to Asyst on the
terms set forth in this Agreement and to convert the Unvested Options into New
Asyst Options (as defined below) on the terms set forth in this Agreement.
Agreement
The parties to this Agreement agree as follows:
SECTION 1. Description of Transaction
1.1 Sale and Purchase of Shares. At the Closing, each Shareholder shall
sell, assign, transfer and deliver such Shareholder's respective shares of
Company Common Stock and shares of Company Preferred Stock to Asyst, and Asyst
shall purchase the Company Common Stock and the Company Preferred Stock from the
Shareholders, on the terms and subject to the conditions set forth in this
Agreement.
1.2 Sale and Purchase of Vested Options. At the Closing, each Optionholder
shall sell, assign, transfer and deliver such Optionholder's respective Vested
Options to Asyst, and Asyst shall purchase the Vested Options from the
Optionsholders, on the terms and subject to the conditions set forth in this
Agreement.
1.
<PAGE>
1.3 Purchase Price.
(a) The purchase price for each share of Company Common Stock,
except for Affiliate Shares (as defined below), shall be $0.50 per share plus
the pro rata portion of the Earn-Out Payments in Section 1.6. The purchase price
for each Affiliate Share shall be $0.10 per share. "Affliliate Shares" are the
8,600,000 shares of Company Common Stock held by Mihir Parikh and Anthony
Bonora.
(b) The purchase price for each share of Company Preferred Stock
shall be either (i) $2.00 per share plus the pro rata portion of the Earn-Out
Payments in Section 1.6, or (ii) that number of shares of Asyst Common Stock
equal to $2.00 divided by the Designated Asyst Share Price, plus the pro rata
portion of the Earn-Out Payments in Section 1.6 payable in cash, at the option
of the holder of each share of Company Preferred Stock. The "Designated Asyst
Share Price" shall be the average of the closing prices of a share of Asyst
Common Stock as reported on the Nasdaq National Market for each of the ten (10)
consecutive tradings ending on the date immediately preceding the date hereof.
(c) The purchase price for each share of Company common stock subject
to Vested Options shall be $0.50 per share less the exercise prices per share of
Company common stock of $.10 plus the pro rata portion of the Earn-Out Payments
in Section 1.6.
(d) The repayment of certain obligations set forth in Section 10.1.
(e) The purchase price shall be paid in cash or shares of Asyst
Common Stock at the Closing except for the Earn-Out Payments in Section 1.6
which will be paid as set forth in Section 1.6.
1.4 Closing; Closing Date. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, Five Palo Alto Square, Palo Alto, California 94306, once
all conditions to Closing are satisfied and/or waived, at such time and date as
the parties may designate upon not less than five days' prior notice to the
Company (the "Closing Date.")
(a) At the Closing:
(i) the Shareholders shall deliver to Asyst the stock
certificates representing the Company Common Stock and the Company Preferred
Stock, duly endorsed (or accompanied by duly executed stock powers), and Asyst
shall pay the purchase price;
(ii) the Optionholders shall deliver to Asyst the agreements
representing the Vested Options and the Unvested Options, duly endorsed, and
Asyst shall pay the purchase price;
(iii) the Shareholders shall execute and deliver to Asyst and
the Company a General Release substantially in the form of Exhibit B.
1.5 Unvested Options. At the Closing Date, each Unvested Option that is
then outstanding under the Company's 1997 Stock Option Plan shall be assumed by
Asyst in
2.
<PAGE>
accordance with the terms (as in effect as of the date of this Agreement) of the
Company's 1997 Stock Option Plan. All rights with respect to Company Common
Stock under the Unvested Options shall thereupon be converted into rights with
respect to Asyst Common Stock. Accordingly, from and after the Closing Date, (a)
each Unvested Option assumed by Asyst may be exercised solely for shares of
Asyst Common Stock, (b) the number of shares of Asyst Common Stock subject to
each such assumed Unvested Option shall be equal to the current number of shares
subject to each assumed Unvested Option multiplied by the fraction equal to $.60
divided by the Designated Asyst Share Price, (c) the per share exercise price
for Asyst Common Stock issuable upon exercise of each such assumed Unvested
Option shall be equal to the current exercise price of each such Unvested Option
multiplied by the fraction equal to the Designated Asyst Share Price divided by
$.60, and (d) all restrictions on the exercise of each such assumed Unvested
Option shall continue in full force and effect, and the term, exercisability,
vesting schedule and other provisions of such Unvested Option shall otherwise
remain unchanged; provided, however, that each such assumed Unvested Option
shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction effected by Asyst after the
Closing Date.
1.6 Earn-Out Payments.
(a) In addition to the consideration set forth in Section 1.3
above, Asyst shall distribute annually to the Shareholders and Optionholders
Earn-Out Payments (as defined below) in cash for each of the four fiscal years
ending on March 31, 2000, 2001, 2002 and 2003 (the "Earn-Out Period"). The
Earn-Out Payments shall be made within ninety (90) days following the end of
each fiscal year during the Earn-Out Period (the "Distribution Date").
(b) For purposes of this Agreement:
(i) "PAT Products" shall mean the products in the
semiconductor fab transport and transport-to-equipment loading field including,
but not limited to, the FasTrack product line and elevators.
(ii) "Threshold Revenue" shall be $1.0 million for the year
ending March 31, 2000, $8.0 million for the year ending March 31, 2001, $12.0
million for the year ending March 31, 2002, and $16.0 million for the year
ending March 31, 2003.
(iii) "Earn-Out Revenue" shall be the gross revenue of PAT
Products sold by Asyst for each fiscal year during the Earn-Out Period.
(iv) "Payout Ratio" shall be 10% for the year ending March
31, 2000, 8% for the year ending March 31, 2001, 7% for the year ending March
31, 2002, and 6% for the year ending March 31, 2003.
(v) "Earn-Out Payments" for each year during the Earn-Out
Period shall be the greater of (i) $0 or (ii) the product of (Earn-Out Revenue -
Threshold Revenue) multiplied by .2010 multiplied by the Payout Ratio.
3.
<PAGE>
(c) On the Distribution Date, the Earn-Out Payments shall be paid to
each Shareholder and Optionholder on a pro rata basis except that Mihir Parikh
and Anthony Bonora shall not be eligible to receive Earn-Out Payments. The pro-
rata distribution of the Earn-Out Payments shall be based on the ratio of the
percentage of the ownership of Company Common Stock, Company Preferred Stock and
Vested Options held by each Stockholder or Optionholder, to the total ownership
of Company Common Stock, Company Preferred Stock and Vested Options, not
including any shares and options held by Mihir Parikh and Anthony Bonora.
(d) During the Earn-Out Period and for six (6) months thereafter,
the Shareholders' Agent shall have reasonable access to the financial books and
records of Asyst for the purpose of auditing the Earn-Out Payments. On the
Distribution Date, Asyst shall deliver to the Shareholders' Agent a statement
setting forth in reasonable detail (1) Earn-Out Revenue and (2) Earn-Out
Payments (the "Earn-Out Statement").
(e) If within thirty (30) days after Distribution Date, the
Shareholders' Agent has not given written notice to Asyst that it believes the
Earn-Out Payments are incorrect (the "Earn-Out Difference") and its reasons for
the Earn-Out Difference, the amount of the Earn-Out Payments shall be deemed
correct. If the Shareholders' Agent gives Asyst notice of the Earn-Out
Difference within such thirty (30) day period, the Shareholders' Agent and Asyst
will use their best efforts to settle the Earn-Out Difference within the
following thirty (30) days after the giving of such notice (the "Resolution
Period"). If the Earn-Out Difference is unresolved after the Resolution Period,
then the Earn-Out Difference shall be submitted for resolution to a national
public accounting firm satisfactory to the Shareholders' Agent and to Asyst (the
"Auditor"). The decision of the Auditor with respect to the Earn-Out Difference
shall be final and binding on the parties hereto (the "Auditor's Decision"). If
the Auditor's Decision results in any additional payments to the Stockholders
and Optionholders in excess of ten thousand dollars ($10,000) (the "Minimum
Earn-Out Discrepancy"), then Asyst shall be liable for the fees and expenses of
the Auditor. If the Auditor's Decision results in no additional payments or
payments below the Minimum Earn-Out Discrepancy, then the Stockholders and
Optionholders shall be liable for the Auditor's fees and expenses. Asyst shall
make any additional payments to the Stockholders and Optionsholders required in
order to comply with Auditor's Decision within twenty (20) days after the
Auditor's Decision is rendered.
SECTION 2. Representations and Warranties of the Company, the Shareholders and
the Optionholders
The Company, the Shareholders and the Optionholders jointly and
severally (except that as among the Shareholders and the Optionholders liability
will be several (in proportion to ownership of Company Common Stock, Company
Preferred Stock and Vested Options as of the Closing Date) and not joint and
except that the representations and warranties in Section 2.21(f), 2.22, 2.23
and 2.24 are made by each Shareholder and Optionholder severally) represent and
warrant subject to Section 9, to and for the benefit of the Indemnitees, as
follows, except as set forth in the Disclosure Schedule (references below to
particular parts of the Disclosure Schedule are intended to refer to, in
particular, sections in the Disclosure Schedule that reference the relevant
Sections of this Section 2).
4.
<PAGE>
2.1 Due Organization; No Subsidiaries; Etc.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Company Contracts.
(b) The Company has not conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name.
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Company.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Company's board of directors, (ii) the names of
the members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any Entity
and the Company has never owned, beneficially or otherwise, any shares or other
securities of, or any direct or indirect equity interest in, any Entity. The
Company has never agreed and is not presently obligated to make any investment
in or capital contribution to any Entity. The Company has not guaranteed and is
not responsible or liable for any obligation of any of the Entities in which it
owns or has owned any equity interest.
2.2 Articles of Incorporation and Bylaws; Records. The Company has
delivered to Asyst accurate and complete copies of: (1) the Company's articles
of incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) the minutes and other records of the meetings
and other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the Shareholders of the Company, the board of
directors of the Company and all committees of the board of directors of the
Company. There have been no formal meetings or other proceedings of the
Shareholders of the Company, the board of directors of the Company or any
committee of the board of directors of the Company that are not fully reflected
in such minutes or other records. There has not been any violation of any of
the provisions of the Company's articles of incorporation or bylaws, and the
Company has not taken any action that is inconsistent in any material respect
with any resolution adopted by the Company's Shareholders, the Company's board
of directors or any committee of the Company's board of directors. The books of
account, stock records, minute books and other records of the Company are
accurate, up-to-date and complete in all material respects, and have been
maintained in accordance with prudent business practices.
5.
<PAGE>
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of fifteen
million (15,000,000) shares of Common Stock, of which nine million six hundred
twenty-six thousand seven hundred seventy-five (9,626,775) shares have been
issued and are outstanding as of the date of this Agreement and one million five
hundred thousand (1,500,000) shares of Preferred Stock, of which one million
thirty-eight thousand two hundred ninety-three (1,038,293) shares have been
issued and are outstanding as of the date of this Agreement. All of the
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued, and are fully paid and non-assessable.
(b) The Company has outstanding options to purchase six hundred
eighty eight thousand four hundred (688,400) shares as of the date of this
Agreement ("Company Options"). Part 2.3 of the Disclosure Schedule accurately
sets forth, with respect to each outstanding Company Option as of the date of
this Agreement: (i) the name of the holder of such Company Option; (ii) the
total number of shares of Company Common Stock that are subject to such Company
Option; (iii) the number of shares of Company Common Stock with respect to which
such Company Option is immediately exercisable; and (iv) the exercise price per
share of Company Common Stock purchasable under such Company Option. The
Agreement and the other transactions contemplated by this Agreement will not
result in the acceleration of vesting of any Company Option.
(c) There is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire any shares of
the capital stock or other securities of the Company; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of the Company, or any
phantom stock or similar rights; (iii) Contract under which the Company is or
may become obligated to sell or otherwise issue any shares of its capital stock
or any other securities; or (iv) condition or circumstance that may give rise to
or provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company.
(d) All outstanding shares of Company Common Stock and of Company
Preferred Stock and all outstanding Company Options have been issued and granted
in compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(e) The Company has never repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities of the Company. All
securities so reacquired by the Company were reacquired in compliance with (i)
the applicable provisions of the California General Corporation Law and all
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Asyst the following financial
statements and notes (collectively, the "Company Financial Statements"):
6.
<PAGE>
(i) The unaudited balance sheets of the Company as of
February 28, 1999, and February 28, 1998, and the related unaudited income
statements of the Company for the years then ended; and
(ii) the unaudited balance sheet of the Company as of June
30, 1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited
income statement of the Company for the four months then ended.
(b) The Company Financial Statements are accurate and complete in
all material respects and present fairly the financial position of the Company
as of the respective dates thereof and the results of operations for the periods
covered thereby. The Company Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the period covered (except that the financial statements
referred to in Section 2.4(a)(ii) do not contain footnotes and are subject to
normal and recurring year-end audit adjustments).
(c) The Company Financial Statements contain adequate reserves for
all existing and reasonably foreseeable warranty claims.
2.5 Absence of Changes. Since June 30, 1999:
(a) there has not been any material adverse change in the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects, and, to the best of the knowledge of the Company, no
event has occurred that will, or could reasonably be expected to, have a
Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the Company's assets
(whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) there has been no amendment to the Company's articles of
incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(e) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(f) the Company has not made any capital expenditure since June
30, 1999;
(g) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in Section 2.9(a)), or (ii) amended
or prematurely terminated, or waived any material right or remedy under, any
such Contract;
7.
<PAGE>
(h) the Company has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right, in each case except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices;
(i) the Company has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness (except for accounts receivable or other indebtedness not exceeding
$10,000 individually or $25,000 in the aggregate);
(j) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(k) the Company has not (i) lent money to any Person (other than
pursuant to routine travel advances made to employees in the ordinary course of
business), or (ii) incurred or guaranteed any indebtedness for borrowed money;
(l) the Company has not (i) established or adopted any Plans (as
defined in Section 2.15), (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hired any new employee;
(m) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(n) the Company has not made any Tax election;
(o) the Company has not commenced or settled any Legal Proceeding;
(p) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(q) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(p)" above.
2.6 Title to Assets
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Section
2.1(e), 2.7(b) and 2.8 and all of the Company's rights under the Material
Contracts (as defined in Section 2.9) and (iii) all other assets reflected in
the Company's books and records as being owned by the Company. All of said
assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (x) any lien for
8.
<PAGE>
current taxes not yet due and payable, and (y) minor liens that have arisen in
the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of the Company.
(b) The Company has good title to all assets that are material to the
business of the Company and that are being leased or licensed to the Company.
(c) All material items of equipment and other tangible assets owned
by or leased to the Company are adequate for the uses to which they are being
put, are in good condition and repair (ordinary wear and tear excepted) and are
adequate for the conduct of the Company's business in the manner in which such
business is currently being conducted.
(d) The Company does not own any real property or any interest in
real property.
2.7 Bank Accounts; Receivables.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of the
Company at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company as of June 30, 1999. All existing accounts
receivable of the Company (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since June 30, 1999 and have not yet been
collected) (i) represent valid obligations of customers of the Company arising
from bona fide transactions entered into in the ordinary course of business, and
(ii) are current and are currently expected to be collected in full when due,
without any counterclaim or set off (net of an allowance for doubtful accounts
not to exceed $25,000 in the aggregate).
2.8 Proprietary Assets.
(a) Part 2.8(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) the
title of such Proprietary Asset, and (ii) the names of the jurisdictions covered
by the applicable registration or application. Section 2.8(a)(ii) of the
Disclosure Schedule identifies each Proprietary Asset licensed to the Company by
any Person (except for any Proprietary Asset that is licensed to the Company
under any third party software license generally available to the public at a
cost of less than $10,000), and identifies the license agreement under which
such Proprietary Asset is being licensed to the Company. The Company has good,
valid and marketable title to all of the Company Proprietary Assets identified
in Parts 2.8(a)(i) of the Disclosure Schedule, free and clear of all liens and
other Encumbrances, and has a valid right to use all Proprietary Assets
identified in Part 2.8(a)(iii) of the Disclosure Schedule. The Company is not
obligated to make any payment to any Person for the use of any Company
Proprietary Asset. The Company has not developed jointly with any other Person
any Company Proprietary Asset with respect to which such other Person has any
rights.
9.
<PAGE>
(b) The Company has taken all measures and precautions reasonably
necessary to protect and maintain the confidentiality and secrecy of all Company
Proprietary Assets (except Company Proprietary Assets whose value would be
unimpaired by public disclosure) and otherwise to maintain and protect the value
of all Company Proprietary Assets. The Company has not (other than pursuant to
license agreements identified in Part 2.9 of the Disclosure Schedule) disclosed
or delivered to any Person, or permitted the disclosure or delivery to any
Person of, (i) the source code, or any portion or aspect of the source code, of
any Company Proprietary Asset, or (ii) the object code, or any portion or aspect
of the object code, of any Company Proprietary Asset.
(c) To the best of the Company's knowledge after reasonable
investigation, none of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person; except for
copyrights, for which such representation is made without limitation by the
Company's knowledge. To the best of the Company's knowledge after reasonable
investigation, the Company is not infringing, misappropriating or making any
unlawful use of, and the Company has not at any time infringed, misappropriated
or made any unlawful use of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person; except for copyrights, for which such
representation is made without limitation by the Company's knowledge. To the
best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Each Company Proprietary Asset conforms in all material respects
with any specification, documentation, performance standard, representation or
statement made or provided with respect thereto by or on behalf of the Company.
There has not been any claim by any customer or other Person alleging that any
Company Proprietary Asset (including each version thereof that has ever been
licensed or otherwise made available by the Company to any Person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company, and, to the best of the knowledge of the Company, there
is no basis for any such claim. The Company has established adequate reserves on
the Unaudited Interim Balance Sheet to cover costs associated with any
obligations that the Company may have with respect to the correction or repair
of programming errors or other defects in the Company Proprietary Assets.
(e) To the best of the Company's knowledge after reasonable
investigation, except for copyrights, for which such representation is made
without limitation by the Company's knowledge, the Company Proprietary Assets
constitute all the Proprietary Assets necessary to enable the Company to conduct
its business in the manner in which such business has been and is being
conducted. The Company has not licensed any of the Company Proprietary Assets to
any Person on an exclusive basis, and the Company has not entered into any
covenant not to compete or Contract limiting its ability to exploit fully any of
its Proprietary Assets or to transact business in any market or geographical
area or with any Person.
(f) All current and former employees of the Company have executed and
delivered to the Company an agreement (containing no exceptions to or exclusions
from the
10.
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scope of its coverage) that is substantially identical to the form of
Confidential Information and Invention Assignment Agreement previously delivered
to Asyst, and all current and former consultants and independent contractors to
the Company have executed and delivered to the Company an agreement (containing
no exceptions to or exclusions from the scope of its coverage) that is
substantially identical to the form of Consultant Confidential Information and
Invention Assignment Agreement previously delivered to Asyst.
(g) To the knowledge of the Company, each computer program and other
item of software that is owned by the Company is Year 2000 Compliant. Each
computer program and other item of software that has been designed, developed,
sold, installed, licensed or otherwise made available by the Company to any
Person is Year 2000 Compliant. As used in this Section 2.8, "Year 2000
Compliant" means, with respect to a computer program or other item of software
(i) the functions, calculations, and other computing processes of the program or
software perform in a consistent and correct manner without interruption
regardless of the date on which the Processes are actually performed, whether
before, on, or after January 1, 2000; (ii) the program or software accepts,
calculates, compares, sorts, extracts, sequences, and otherwise processes date
inputs and date values, and returns and displays date values, in a consistent
and correct manner regardless of the dates used whether before, on, or after
January 1, 2000; (iii) the program or software accepts, stores, displays and
responds to date information in a manner that resolves any ambiguities as to
century in a defined, predetermined, and appropriate manner; and (iv) leap years
will be determined by the following standard (A) if dividing the year by 4
yields an integer, it is a leap year, except for years ending in 00, but (B) a
year ending in 00 is a leap year if dividing it by 400 yields an integer.
2.9 Contracts.
(a) Part 2.9 of the Disclosure Schedule identifies the following
company contracts, each of which, except for the Company contracts listed in
(i), (ii) and (iii) below, has a value in excess of $10,000 (collectively, the
"Material Contracts"):
(i) each Company Contract relating to the employment of, or the
performance of services by, any employee, consultant or independent contractor;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset except for licenses for off the shelf software;
(iii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C) to
develop or distribute any technology;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition, issuance
or transfer of any securities;
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(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any material asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.17);
(x) each Company Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other material Company Contract that was entered into
outside the ordinary course of business or was inconsistent with the Company's
past practices;
(xii) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Company (without penalty) within
60 days after the delivery of a termination notice by the Company; and
(xiii) any other Company Contract that contemplates or involves
(A) the payment or delivery of cash or other consideration in an amount or
having a value in excess of $50,000 in the aggregate, or (B) the performance of
services having a value in excess of $50,000 in the aggregate.
(b) The Company has delivered to Asyst accurate and complete copies
of all written Contracts identified in Part 2.9 of the Disclosure Schedule,
including all amendments thereto. Part 2.9 of the Disclosure Schedule provides
an accurate description of the terms of each Company Contract that is not in
written form. Each Contract identified in Part 2.9 of the Disclosure Schedule is
valid and in full force and effect and is enforceable by the Company in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(c) The Company has not violated or breached, or committed any
default under, any Company Contract, and, to the best of the knowledge of the
Company, no other Person has violated or breached, or committed any default
under, any Company Contract.
(d) To the best of the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Company Contract, (C) give any Person the right to accelerate the maturity or
performance of any Company Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract.
12.
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(e) Since December 31, 1998, the Company has not received any notice
or other communication regarding any actual or possible violation or breach of,
or default under, any Company Contract.
(f) The Company has not waived any of its material rights under any
Material Contract.
(g) No Person is renegotiating any amount paid or payable to the
Company under any Material Contract or any other material term or provision of
any Material Contract.
(h) The Contracts identified in Part 2.9 of the Disclosure Schedule
collectively constitute all of the Contracts necessary to enable the Company to
conduct its business in the manner in which its business is currently being
conducted.
2.10 Liabilities. The Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (b) accounts payable or accrued salaries that have been
incurred by the Company since June 30, 1999 in the ordinary course of business
and consistent with the Company's past practices; (c) liabilities under the
Company Contracts identified in Part 2.10 of the Disclosure Schedule, to the
extent the nature and magnitude of such liabilities can be specifically
ascertained by reference to the text of such Company Contracts.
2.11 Compliance with Legal Requirements. The Company is, and has at all
times been, in compliance with all applicable Legal Requirements, except where
the failure to comply with such Legal Requirements has not had and will not have
a Material Adverse Effect on the Company. The Company has not received any
notice or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement.
2.12 Governmental Authorizations. The Governmental Authorizations held by
the Company are valid and in full force and effect, and collectively constitute
all Governmental Authorizations necessary to enable the Company to conduct its
business in the manner in which its business is currently being conducted. The
Company is, and at all times since December 31, 1995 has been, in compliance
with the terms and requirements of the respective Governmental Authorizations
held by the Company. The Company has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.13 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately
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and completely prepared in all material respects in compliance with all
applicable Legal Requirements. All amounts shown on the Company Returns to be
due on or before the Closing Date have been or will be paid on or before the
Closing Date, and no other Taxes are payable by the Company with respect to
items or periods covered by such Tax Returns (whether or not shown on or
reportable on such Tax Returns) or with respect to any period prior to the date
of this Agreement. The Company has withheld and paid over all Taxes required to
have been withheld and paid over, and complied with all information reporting
and backup withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. There are no liens on
any of the assets of the Company with respect to Taxes, other than liens for
Taxes, not yet due and payable. The Company has delivered to Asyst accurate and
complete copies of all Company Returns that are open to review by the Internal
Revenue Service or other Governmental Body. The amount of the Company's
liability for unpaid Taxes for all periods ending on or before June 30, 1999
does not, in the aggregate, exceed the amount of the current liability accruals
for Taxes reflected on the Unaudited Interim Balance Sheet, and the amount of
the Company's liability for unpaid Taxes for all periods ending on or before the
Closing Date shall not, in the aggregate exceed the amount of the current
liability accruals for Taxes as such accruals are reflected on the Unaudited
Interim Balance Sheet, as adjusted for operations and transactions in the
ordinary course of business of the Company since the date of the Unaudited
Interim Balance Sheet in accordance with past custom and practice.
(b) No Company Return relating to income Taxes has ever been examined
or audited by any Governmental Body. There have been no examinations or audits
of any Company Return. The Company has delivered to Asyst accurate and complete
copies of all audit reports and similar documents (to which the Company has
access) relating to the Company Returns. No extension or waiver of the
limitation period applicable to any of the Company Returns has been granted (by
the Company or any other Person), and no such extension or waiver has been
requested from the Company.
(c) No claim or Proceeding is pending or has been threatened against
or with respect to the Company in respect of any Tax. There are no unsatisfied
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered into or become bound
by any agreement or consent pursuant to Section 341(f) of the Code. The Company
has not been, and the Company will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(d) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any
14.
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amount that would not be deductible pursuant to Section 280G or Section 162 of
the Code. The Company is not, and has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
Contract.
2.14 Employee and Labor Matters; Benefit Plans.
(a) Part 2.14(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company ("Employee"), except for Plans which
would not require the Company to make payments or provide benefits having a
value in excess of $25,000 in the aggregate.
(b) The Company does not maintain, sponsor or contribute to, and, to
the best of the knowledge of the Company, has not at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Subtitles of ERISA) for the benefit of Employees or former Employees
(a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Subtitles of ERISA) for the
benefit of Employees or former Employees which are described in Part 2.14(c) of
the Disclosure Schedule (the "Welfare Plans"), none of which is a multi-employer
plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to Asyst:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-
15.
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loss agreements, investment management agreements, subscription and
participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the best of the
knowledge of the Company, has never been required to be, treated as a single
employer with any other Person under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code. The Company has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. To
the best of the knowledge of the Company, the Company has never made a complete
or partial withdrawal from a multi-employer plan, as such term is defined in
Section 3(37) of ERISA, resulting in "withdrawal liability," as such term is
defined in Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA).
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any Employee.
(g) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former Employee after
any such Employee's termination of service (other than (i) benefit coverage
mandated by applicable law, including coverage provided pursuant to Section
4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on
the Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which
are borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and the Company is not aware of any reason why any such determination
letter should be revoked.
(k) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Transaction or any of the other transactions
contemplated by this Agreement, will result in any payment (including any bonus,
golden parachute or severance payment) to any current or former Employee or
director of the Company (whether or not under any Plan), or materially increase
the benefits payable under any Plan, or result in any acceleration of the time
of payment or vesting of any such benefits.
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(l) Part 2.14(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(n) The Company has good labor relations, and the Company has no
reason to believe that (i) the consummation of the Transaction or any of the
other transactions contemplated by this Agreement will have a material adverse
effect on the Company's labor relations, or (ii) any of the Company's employees
intends to terminate his or her employment with the Company.
2.15 Environmental Matters. The Company is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes the
possession by the Company of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. The Company has not received any notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the best of the knowledge of the
Company and Shareholders, there are no circumstances that may prevent or
interfere with the Company's compliance with any Environmental Law in the
future. To the best of the knowledge of the Company, no current or prior owner
of any property leased or controlled by the Company has received any notice or
other communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or the Company is not in compliance with any Environmental Law. (For
purposes of this Section 2.15: (i) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
2.16 Insurance. Part 2.16 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Asyst accurate and complete copies of the insurance policies
identified on Part 2.16 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.16 of the Disclosure Schedule is in full force and
effect.
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The Company has not received any notice or other communication regarding any
actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with respect to
any insurance policy.
2.17 Related Party Transactions. No Related Party: (a) has had any direct
or indirect interest in any material asset used in or otherwise relating to the
business of the Company; (b) has been indebted to the Company; (c) has entered
into, or has had any direct or indirect financial interest in, any Contract,
transaction or business dealing involving the Company; (d) has competed,
directly or indirectly, with the Company; and (e) has any claim or right against
the Company (other than rights under company Options and rights to receive
compensation for services performed as an employee of the Company). (For
purposes of this section each of the following shall be deemed to be a "Related
Party": (i) each of the Shareholders; (ii) each Optionholder; (iii) each
individual who is, or who has at any time been, an officer or director of the
Company; (iv) each member of the immediate family of each of the individuals
referred to in clauses "(i)" through "(iii)" above; and (v) any trust or other
Entity (other than the Company) in which any one of the individuals referred to
in clauses "(i)" through "(iv)" above holds (or in which more than one of such
individuals collectively hold), beneficially or otherwise, a material voting,
proprietary or equity interest.)
2.18 Legal Proceedings; Orders.
(a) There is no pending Legal Proceeding, and (to the best of the
knowledge of the Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves the Company or any of the assets owned or used by
the Company or any Person whose liability the Company has or may have retained
or assumed, either contractually or by operation of law; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Transaction or any of the other transactions
contemplated by this Agreement. To the best of the knowledge of the Company, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that will, or that could reasonably be expected to, give rise to or
serve as a basis for the commencement of any such Legal Proceeding.
(b) No Legal Proceeding has ever been commenced by or has ever been
pending against the Company.
(c) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is subject. None
of the Shareholders is subject to any order, writ, injunction, judgment or
decree that relates to the Company's business or to any of the assets owned or
used by the Company. To the best of the knowledge of the Company, no officer or
other employee of the Company is subject to any order, writ, injunction,
judgment or decree that prohibits such officer or other employee from engaging
in or continuing any conduct, activity or practice relating to the Company's
business.
2.19 Authority; Binding Nature of Agreement. The Company has the absolute
and unrestricted right, power and authority to enter into and to perform its
obligations under this Agreement; and the execution, delivery and performance by
the Company of this Agreement have been duly authorized by all necessary action
on the part of the Company and its board of
18.
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directors. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.20 Full Disclosure. This Agreement (including the Disclosure Schedule)
does not, and the Closing Certificate will not, (i) contain any representation,
warranty or information that is false or misleading with respect to any material
fact, or (ii) omit to state any material fact or necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein (in the light of the circumstances under which such representations,
warranties and information were or will be made or provided) not false or
misleading.
2.21 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of any of the Transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the Company's articles of incorporation or bylaws, or (ii) any
resolution adopted by the Company's Shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated by this Agreement or to exercise any remedy or obtain any relief
under, any Legal Requirement or any order, writ, injunction, judgment or decree
to which the Company, or any of the assets owned or used by the Company, is
subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the Company's business
or to any of the assets owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Company Contract that is or
would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Company Contract, (ii)
accelerate the maturity or performance of any such Company Contract, or (iii)
cancel, terminate or modify any such Company Contract;
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company); or
(f) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to the Company Common Stock (except for minor
liens that will not, in any case or in the aggregate, materially detract from
the value thereof).
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The Company is not and will not be required to make any filing with or give any
notice to, or to obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the
Transaction or any of the other transactions contemplated by this Agreement.
2.22 Title to Securities. The sale and delivery of the Company Common
Stock, Company Preferred Stock and Vested Options as contemplated by this
Agreement are not subject to any preemptive right, right of first refusal, right
of first offer or similar right. Upon such sale, Asyst will acquire the Company
Common Stock, Company Preferred Stock and Vested Options free and clear of any
Encumbrance (other than restrictions on transferability expressly set forth in
applicable Federal or state securities laws).
2.23 Authority; Binding Nature of Agreement. Each of the Shareholders and
Optionholders has the absolute and unrestricted right, power and authority to
enter, into execute and deliver and to perform its obligations under this
Agreement. This Agreement constitutes the legal, valid and binding obligation of
each of the Shareholders and Optionholders enforceable against each of the
Shareholders and Optionholders in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.24 Shareholder Legal Proceeding. There is no action, proceeding or
investigation pending or overtly threatened against any of the Shareholders or
Optionholders before any court or administrative agency that questions the
validity of the Agreement.
Section 3. Representations and Warranties of Asyst
Asyst represents and warrants to the Company, the Shareholders and
Optionholders as follows:
3.1 Authority; Binding Nature of Agreement. Asyst has the absolute and
unrestricted right, power and authority to perform its obligations under this
Agreement; and the execution, delivery and performance by Asyst of this
Agreement have been duly authorized by all necessary action by Asyst and its
boards of directors. No vote of Asyst's shareholders is needed to approve the
Transaction. This Agreement constitutes the legal, valid and binding obligation
of Asyst, enforceable against it in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.2 Acquisition of Company Common Stock and Company Preferred Stock. Asyst
is not acquiring the Company Common Stock and the Company Preferred Stock with
the current intention of making a public distribution thereof.
3.3 Valid Issuance. Asyst Common Stock to be issued hereunder, if any,
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
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SECTION 4. Certain Covenants of the Company and the Shareholders
4.1 Access and Investigation. During the period from the date of this
Agreement through the Closing Date (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Asyst and Asyst's
Representatives with reasonable access to the Company's Representatives,
officers, and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Asyst and Asyst's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Asyst may reasonably request.
4.2 Operation of the Company's Business. During the Pre-Closing Period:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Company shall use reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain its relations and good will with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Company;
(c) the Company shall keep in full force all insurance policies
identified in Part 2.16 of the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but in
no event less frequently than weekly) to Asyst concerning the status of the
Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities (except that the Company may repurchase
Company Common Stock from former employees pursuant to the terms of existing
restricted stock purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance of (i)
any capital stock or other security, (ii) any option or right to acquire any
capital stock or other security, or (iii) any instrument convertible into or
exchangeable for any capital stock or other security;
(g) the Company shall not amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of the 1997 Stock
Option Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option, or (iii) any provision of any restricted stock purchase
agreement;
(h) neither the Company nor any of the Shareholders shall amend or
permit the adoption of any amendment to the Company's articles of incorporation
or bylaws, or effect or
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permit the Company to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(i) the Company shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(j) the Company shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Company during the Pre-Closing Period, do not exceed $5,000 per
month;
(k) the Company shall not (i) enter into, or permit any of the assets
owned or used by it to become bound by, any Contract that is or would constitute
a Material Contract, or (ii) amend or prematurely terminate, or waive any
material right or remedy under, any such Contract; in each case outside of the
Company's ordinary course of business;
(l) the Company shall not (i) acquire, lease or license any right or
other asset from any other Person, (ii) sell or otherwise dispose of, or lease
or license, any right or other asset to any other Person, or (iii) waive or
relinquish any right, except for assets acquired, leased, licensed or disposed
of by the Company pursuant to Contracts that are not Material Contracts;
(m) the Company shall not (i) lend money to any Person (except that
the Company may make routine travel advances to employees in the ordinary course
of business and may, consistent with its past practices, allow employees to
acquire Company Common Stock in exchange for promissory notes upon exercise of
Company Options), (ii) incur or guarantee any indebtedness for borrowed money,
or (iii) repay or forgive any indebtedness owed to any Related Party;
(n) the Company shall not (i) establish, adopt or amend any Plans,
(ii) pay any bonus or make any profit-sharing payment, cash incentive payment or
similar payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hire any new employee whose aggregate
annual compensation is expected to exceed $100,000;
(o) the Company shall not change any of its methods of accounting or
accounting practices in any material respect;
(p) the Company shall not make any Tax election;
(q) the Company shall not commence or settle any material Legal
Proceeding;
(r) the Company shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" above.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Asyst gives its prior written consent to
the taking of such action by the Company, which consent will not be unreasonably
withheld (it being understood that Asyst's withholding of consent to any action
will not be deemed unreasonable if Asyst determines in
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good faith that the taking of such action would not be in the best interests of
Asyst or would not be in the best interests of the Company).
4.3 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, the Company shall promptly notify
Asyst in writing of:
(i) the discovery by the Company of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of any representation
or warranty made by the Company or any of the Shareholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company or any of the Shareholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the Company or
any of the Shareholders; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Asyst an update to the
Disclosure Schedule specifying such change. At Closing, if Asyst agrees to close
this Transaction after receiving the updates in this Section 4.3, then Asyst
shall be deemed to have waived the closing condition in Section 6.1 as to the
updates in this Section 4.3.
4.4 No Negotiation. During the Pre-Closing Period, neither the Company nor
any of the Shareholders shall, and the Company shall cause its Representatives
not to, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Asyst) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Asyst) relating to or in connection with a possible Acquisition Transaction; or
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(c) consider, entertain or accept any proposal or offer from any
Person (other than Asyst) relating to a possible Acquisition Transaction.
Section 5. Additional Covenants of the Parties
5.1 Filings and Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Transaction and the other transactions contemplated by
this Agreement, and (b) shall use all commercially reasonable efforts to obtain
all Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Transaction and the other transactions contemplated by this Agreement. The
Company shall (upon request) promptly deliver to Asyst a copy of each such
filing made, each such notice given and each such Consent obtained by the
Company.
5.2 Public Announcements. During the Pre-Closing Period, (a) neither
party shall (and neither party shall permit any of its Representatives to) issue
any press release or make any public statement regarding this Agreement or any
of the other transactions contemplated by this Agreement, without the other
parties' prior written consent, and (b) each party will consult with the other
party prior to issuing any press release or making any public statement
regarding such matters.
5.3 Best Efforts. During the Pre-Closing Period, (a) the Company and the
Shareholders shall use their best efforts to cause the conditions set forth in
Section 6 to be satisfied on a timely basis, and (b) Asyst shall use their best
efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
5.4 FIRPTA Matters. At the Closing, (a) the Company shall deliver to
Asyst a statement (in such form as may be reasonably requested by counsel to
Asyst) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasure Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of the United States Treasury Regulations.
5.5 General Release. At the Closing, each of the Shareholders shall
execute and deliver to the Company a General Release in the form of Exhibit B.
5.6 Registration on Form S-8. Asyst will register the shares of Asyst
Common Stock to be issued upon the exercise of the assumed Unvested Options
pursuant to a Registration Statement on Form S-8 within 90 days of the Closing
Date.
5.7 Termination of 401(k) Plan. Prior to the Closing, the Company shall
terminate its 401(k) plan.
Section 6. Conditions Precedent to Obligations of Asyst
The obligations of Asyst to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following conditions:
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6.1 Accuracy of Representations. Each of the representations and
warranties made by the Company, the Shareholders and the Optionholders in this
Agreement and in each of the other agreements and instruments delivered to Asyst
in connection with the transactions contemplated by this Agreement shall have
been accurate in all material respects as of the date of this Agreement (without
giving effect to any "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, contained or incorporated
directly or indirectly in such representations and warranties), and shall be
accurate in all material respects as of the Closing Date as if made at the
Closing Date (without giving effect to any update to the Disclosure Schedule and
without giving effect to any "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, contained or incorporated
directly or indirectly in such representations and warranties).
6.2 Performance of Covenants. All of the covenants and obligations that
the Company, the Shareholders and the Optionholders are required to comply with
or to perform at or prior to the Closing shall have been complied with and
performed in all material respects.
6.3 Consents. All Consents required to be obtained in connection with the
Transaction and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.4 Agreements and Documents. Asyst and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) a Release substantially in the form of Exhibit B, executed by
each of the Shareholders and Optionholders ;
(b) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Asyst, executed by all employees and former
employees of the Company and by all consultants and independent contractors and
former consultants and former independent contractors to the Company who have
not already signed such agreements (including the individuals identified in Part
2.9(f) of the Disclosure Schedule);
(c) a legal opinion of Wilson Sonsini Goodrich and Rosati, a
Professional Corporation, dated as of the Closing Date, as set forth in
Exhibit C;
(d) a certificate executed by the chief executive officer of the
Company certifying that each of the representations and warranties set forth in
Section 2 is accurate in all respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections 6.1, 6.2 and 6.3 have
been duly satisfied (the "Closing Certificate"); and
(e) written resignations of all directors of the Company, effective
as of the Closing Date.
6.5 No Material Adverse Change. There shall have been no material adverse
change not disclosed in the Disclosure Schedule in the business, condition,
assets, liabilities, operations or financial performance of the Company since
the date of this Agreement other than
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any loss of revenue (and any corresponding change in margins and profitability
of business) resulting from the public announcement of this Agreement.
6.6 FIRPTA Compliance. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.4(b).
6.7 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
transactions contemplated by this Agreement shall have been issued by any court
of competent jurisdiction and remain in effect, and there shall not be any Legal
Requirement enacted or deemed applicable to the Transactions contemplated by
this Agreement that makes consummation of the transactions contemplated by this
Agreement illegal.
6.8 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the transactions contemplated by this
Agreement or seeking to prohibit or limit the exercise by Asyst of any material
right pertaining to its ownership of stock of the Company.
6.9 Termination of 401(k) Plan. The Company shall have provided Asyst
with evidence, reasonably satisfactory to Asyst, as to the termination of the
Company's 401(k) plan.
Section 7. Conditions Precedent to Obligations of the Company, the
Shareholders and the Optionholders
The obligations of the Company to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, at or prior to the
Closing, of the following conditions:
7.1 Accuracy of Representations. Each of the representations and
warranties made by Asyst in this Agreement shall have been accurate in all
material respects as of the date of this Agreement (without giving effect to any
materiality or similar qualifications contained in such representations and
warranties), and shall be accurate in all material respects as of the Closing
Date as if made at the Closing Date (without giving effect to any materiality or
similar qualifications contained in such representations and warranties).
7.2 Performance of Covenants. All of the covenants and obligations that
Asyst is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all material respects.
7.3 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the
transactions contemplated by this Agreement shall have been issued by any court
of competent jurisdiction and remain in effect, and there shall not be any Legal
Requirement enacted or deemed applicable to the transactions contemplated by
this Agreement that makes consummation of the transactions contemplated by this
Agreement illegal.
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7.4 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the transactions contemplated by this
Agreement or seeking to prohibit or limit the exercise by the Shareholders of
any material right pertaining to the Agreement.
Section 8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by Asyst if Asyst reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Asyst to comply with or
perform any covenant or obligation of Asyst set forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the Company or
any of the Shareholders to comply with or perform any covenant or obligation set
forth in this Agreement or in any other agreement or instrument delivered to
Asyst);
(c) by Asyst at or after the Closing Date if any condition set forth
in Section 6 has not been satisfied by the Closing Date;
(d) by the Company at or after the Closing Date if any condition set
forth in Section 7 has not been satisfied by the Closing Date;
(e) by Asyst if the Closing has not taken place on or before August
31, 1999 (other than as a result of any failure on the part of Asyst to comply
with or perform any covenant or obligation of Asyst set forth in this
Agreement);
(f) by the Company if the Closing has not taken place on or before
August 31, 1999 (other than as a result of the failure on the part of the
Company or any of the Shareholders to comply with or perform any covenant or
obligation set forth in this Agreement or in any other agreement or instrument
delivered to Asyst); or
(g) by the mutual consent of Asyst and the Company.
8.2 Termination Procedures. If Asyst wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Asyst shall
deliver to the Company a written notice stating that Asyst is terminating this
Agreement and setting forth a brief description of the basis on which Asyst is
terminating this Agreement. If the Company wishes to terminate this Agreement
pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f), the Company shall
deliver to Asyst a written notice stating that the Company is terminating this
Agreement and setting forth a brief description of the basis on which the
Company is terminating this Agreement.
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8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Asyst shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 11 and (c) the parties shall, in all events, remain bound by and
continue to be subject to Section 5.2.
Section 9. Indemnification
9.1 Survival of Representations, Etc.
(a) The representations and warranties made by the Company, the
Shareholders (including the representations and warranties set forth in Section
2 and the representations and warranties set forth in the Closing Certificate)
shall survive the Closing and shall expire on June 30, 2000; provided, however,
that if, at any time prior to June 30, 2000, any Indemnitee (acting in good
faith) delivers to the Shareholders' Agent (as defined in Section 11.1 below) a
written notice alleging the existence of an inaccuracy in or a breach of any of
the representations and warranties made by the Company and the Shareholders (and
setting forth in reasonable detail the basis for such Indemnitee's belief that
such an inaccuracy or breach may exist) and asserting a claim for recovery under
Section 9.2 based on such alleged inaccuracy or breach, then the claim asserted
in such notice shall survive June 30, 2000 until such time as such claim is
fully and finally resolved. All representations and warranties made by Asyst
shall survive the Closing and shall expire on June 30, 2000, provided, however,
that if, at any time prior to June 30, 2000, the Shareholders' Agent (acting in
good faith) delivers to Asyst a written notice alleging the existence of an
inaccuracy in or a breach of any of the representations and warranties made by
Asyst (and setting forth in reasonable detail the basis for the Shareholders'
Agent belief that such an inaccuracy or breach may exist) and asserting a claim
for recovery under Section 9.2 based on such alleged inaccuracy or breach, then
the claim asserted in such notice shall survive June 30, 2000 until such time as
such claim is fully and finally resolved.
(b) The representations, warranties, covenants and obligations of the
Company, the Shareholders and the Optionholders, and the rights and remedies
that may be exercised by the Indemnitees, shall not be limited or otherwise
affected by or as a result of any information furnished to, or any investigation
made by or knowledge of, any of the Indemnitees or any of their Representatives,
except as otherwise provided herein.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company and the Shareholders in this Agreement.
9.2 Indemnification by Shareholders and Optionholders.
(a) From and after the Closing Date (but subject to Section 9.1(a)),
the Shareholders and Optionholders, severally but not jointly, shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the
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Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim) and
which arise from or as a result of, or are directly or indirectly connected
with: (i) any inaccuracy in or breach of any representation or warranty set
forth in Section 2 or in the Closing Certificate (after giving effect to any
update to the Disclosure Schedule delivered by the Company to Asyst prior to the
Closing); (ii) any breach of any covenant or obligation of the Company or any of
the Shareholders (including the covenants set forth in Sections 4 and 5); or
(iii) any Legal Proceeding relating to any inaccuracy or breach of the type
referred to in clause "(i)" or "(ii)" above (including any Legal Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Section 9).
(b) The Company, the Shareholders and the Optionholders acknowledge
and agree that, if the Company suffers, incurs or otherwise becomes subject to
any Damages as a result of or in connection with any inaccuracy in or breach of
any representation, warranty, covenant or obligation, then (without limiting any
of the rights of the Company as an Indemnitee) Asyst shall also be deemed, by
virtue of its ownership of the stock of the Company, to have incurred Damages as
a result of and in connection with such inaccuracy or breach.
9.3 Threshold; Ceiling.
(a) The Shareholders and Optionholders shall not be required to make
any indemnification payment pursuant to Section 9.2(a) for any inaccuracy in or
breach of any of their representations and warranties set forth in Section 2
until such time as the total amount of all Damages (including the Damages
arising from such inaccuracy or breach and all other Damages arising from any
other inaccuracies in or breaches of any representations or warranties) that
have been directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $75,000 in the aggregate. If the total amount
of such Damages exceeds $75,000, then the Indemnitees shall be entitled to be
indemnified against and compensated and reimbursed for the full amount of such
damages (and not merely the portion of such damages exceeding $75,000).
(b) The maximum liability of each Shareholder and Optionholder under
Section 9.2(a) for breaches of the representations and warranties set forth in
Section 2 shall be equal to the proceeds received under Section 1.3 by each
such Shareholder and Optionholder.
9.4 Claim Procedure. Upon delivery to the Shareholders' Agent in
accordance with Section 11.5 on or before the last day of the period set forth
in Section 9.1(a) above of a certificate signed by any officer of Asyst (an
"Officer's Certificate")
(a) stating that Asyst or the Company has paid or properly accrued or
reasonably anticipates that Asyst or the Company will have to pay or accrue
Damages in an aggregate stated amount, and stating that Asyst or the Company is
entitled to indemnity pursuant to this Agreement with respect to such amount,
and
(b) specifying the individual items of Damages included in the amount
so stated, the date each such item was paid or properly accrued, or the basis
for such anticipated liability;
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The Shareholders' Agent shall, subject to the provisions of Section 9.5 hereof,
deliver to Asyst as promptly as practicable, an amount sufficient to fully
indemnify Asyst or the Company against such Damages.
9.5 Resolution of Conflicts.
(a) No indemnity payment need be made if the Shareholders' Agent
shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to Asyst prior to the
expiration of such 30-day period.
(b) In case the Shareholders' Agent shall so object in writing to the
indemnity of Asyst or the Company in respect of any claim or claims made in any
Officer's Certificate, the Shareholders' Agent and Asyst (acting on its own
behalf or on behalf of the Company) shall attempt in good faith to agree upon
the rights of the respective parties with respect to each of such claims. If
the Shareholders' Agent and Asyst should so agree, the Shareholders and the
Optionholders Agent shall thereupon promptly pay the agreed upon amount of the
claim to Asyst.
(c) If no such agreement can be reached after good faith negotiation,
the claim shall be submitted to non-binding mediation under the rules then in
effect under the American Arbitration Association, or such other forum as the
parties may select. Each party shall have in attendance at such mediation
persons who have actual authority to bind the party to any settlement reached.
If the matter cannot be settled through mediation, then the claim shall be
submitted to binding arbitration under the following rules:
(i) Unless otherwise agreed by the parties, all such claims
shall be decided in San Jose, California by a single arbitrator, acting under
the Commercial Rules of the American Arbitration Association except as modified
herein. Either party may initiate the arbitration following failure of mediation
to resolve the issue by filing a demand for arbitration with the American
Arbitration Association, and simultaneously delivering a copy of such demand to
the other party.
(ii) Unless the parties agree to a mutually acceptable
arbitrator within thirty (30) days of a demand for arbitration, the arbitrator
shall be selected by the American Arbitration Association.
(iii) Unless otherwise agreed by the parties, the arbitrator
shall be a business attorney in practice for at least 10 years, with substantial
experience in the negotiating and drafting of business acquisition agreements.
(iv) It is the intent of the parties that the arbitration be
held in an efficient, economical and expeditious manner. Accordingly, the
parties shall meet in a pre-hearing conference as promptly as practicable after
selection of the arbitrator to establish the scope and extent of all discovery
and the schedule of the arbitration. Discovery shall be limited to that
necessary to resolve the disputed issues, in the judgment of the arbitrator. If
any party wishes to take discovery, including document productions,
interrogatories or depositions, a request to do so must be submitted to the
arbitrator in accordance with the procedures determined at the pre-hearing
conference. The arbitrator in his sole discretion may allow limited
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discovery, all of which must be completed within 20 business days of the
arbitrator's directive unless extended for good cause by the arbitrator.
(v) The arbitrator shall not be bound by rules of evidence or
judicial procedures regarding the conduct of the hearing and shall be obligated
to follow California substantive law.
(vi) The arbitrator's authority shall be limited to
determining whether the claim gives rise to a right to indemnification under the
provisions of this Section 9 and, if so, the amount of Damages as to such claim.
No other issue involving interpretation of this Agreement shall be submitted to
the arbitrator without the consent of both parties.
(vii) The decision of the arbitrator as to the validity and
amount of Damages and the amounts in (c) below shall, subject to the above
limitations, be binding and conclusive upon the parties of this Agreement. The
arbitrator shall issue such decision, including a brief statement of the reasons
for the award and the calculation of damages awarded, within 25 days after
completion of the arbitration hearing and deliver such decision to the Escrow
Agent.
(d) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. The non-prevailing party shall pay the
reasonable expenses (including attorneys' fees) of the prevailing party and the
arbitrator fees and administrative expenses associated with the arbitration
(which expenses and fees, in the event Asyst is the prevailing party, shall
constitute Damages).
9.6 Effect of Indemnity Agreements. Each Shareholder and Optionholder
agrees that its indemnity obligations as a Shareholder or Optionholder pursuant
to this Section 9 shall not be affected or limited by any indemnity obligations
or other rights or remedies it may have against the Company in connection with
any indemnity agreement or the indemnity provisions of the Company's Articles of
Incorporation or Bylaws. For example, an officer, director or other
representative of the Company will retain such rights to indemnity by the
Company as currently exist for liabilities incurred in such person's capacity as
an officer, director or representative of the Company, but payments made or
liabilities incurred by such person pursuant to this Section 9 strictly in his
or her capacity as a Shareholder or Optionholder will not be entitled to
indemnity by the Company.
9.7 Interest. Any Shareholder or Optionholder who is required to hold
harmless, indemnify, compensate or reimburse any Indemnitee pursuant to this
Section 9 with respect to any Damages shall also be liable to such Indemnitee
for interest on the amount of such Damages (for the period commencing as of the
date on which the Shareholders' Agent received the notice in Section 9.1 and
ending on the date on which the liability of the Shareholder and Optionholder to
such Indemnitee is fully satisfied by such Shareholder and Optionholder) at a
floating rate equal to the rate of interest publicly announced by Bank of
America, N.T. & S.A. from time to time as its prime, base or reference rate.
9.8 Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Company, against Asyst or against any other Person) with respect to which any of
the Shareholders or Optionholders may
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become obligated to hold harmless, indemnify, compensate or reimburse any
Indemnitee pursuant to this Section 9, Asyst shall have the right, at its
election, to proceed with the defense of such claim or Legal Proceeding on its
own. If Asyst elects not to proceed with the defense of such claim or Legal
Proceeding, the Shareholders and Optionholders shall defend such claim or legal
proceeding on their own; provided, that the Shareholders and Optionholders shall
not have the right to settle, adjust or compromise such claim or Legal
Proceeding without the consent of Asyst, such consent not to be unreasonably
withheld. If Asyst so proceeds with the defense of any such claim or Legal
Proceeding:
(a) all reasonable expenses relating to the defense of such claim or
Legal Proceeding shall be Damages to the extent that the Company, the
Shareholders or the Optionholders are determined to have breached this Agreement
entitling Asyst to indemnification pursuant to Section 9.2.;
(b) each Shareholder and Optionholder shall make available to Asyst
any documents and materials in his possession or control that may be necessary
to the defense of such claim or Legal Proceeding; and
(c) Asyst shall not have the right to settle, adjust or compromise
such claim or Legal Proceeding without the consent of the Shareholders' Agent;
provided, however, that such consent shall not be unreasonably withheld or
delayed.
Asyst shall give the Shareholders' Agent prompt notice of the commencement of
any such Legal Proceeding against Asyst or the Company; provided, however, that
any failure on the part of Asyst to so notify the Shareholders' Agent shall not
limit any of the obligations of the Shareholders or Optionholders under this
Section 9 (except to the extent such failure materially prejudices the defense
of such Legal Proceeding).
9.9 Exercise of Remedies by Indemnitees Other Than Asyst. No Indemnitee
(other than Asyst or any successor thereto or assign thereof) shall be permitted
to assert any indemnification claim or exercise any other remedy under this
Agreement unless Asyst (or any successor thereto or assign thereof) shall have
consented to the assertion of such indemnification claim or the exercise of such
other remedy.
Section 10. Additional Post-Closing Obligations
10.1 Repayment of Certain Debt Obligations. At the Closing Date, Asyst
shall pay to Mihir Parikh the outstanding principal balance of $800,000 (plus
interest accrued through the date of payment), such amount representing payment
in full of the amount owed to Mihir Parikh under the promissory notes dated
February 19, 1999, March 10, 1999, April 5, 1999, April 30, 1999, May 14, 1999,
June 11, 1999, July 9, 1999 and August 4, 1999, as represented by the Company
and the Shareholders in part 2.11 of the Disclosure Schedule. At the Closing,
Asyst shall pay to Wilson Sonsini Goodrich & Rosati and Flehr Hohbach all
amounts due and owing to them, including reasonable fees and costs incurred in
connection with this transaction as set forth in Section 11.3. The amounts of
such outstanding balances as of June 30, 1999 are set forth in the Disclosure
Schedule.
32.
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10.2 Indemnification of Directors and Officers. All rights to
indemnification existing in favor of the directors and officers of the Company
for acts and omissions occurring prior to the Closing Date, as provided in the
Company's articles of incorporation or bylaws (as in effect as of the date of
this Agreement) and as provided in any indemnification agreements between the
Company and said officers and directors (as in effect at the Closing Date),
shall survive the Transaction and shall be the obligation of and observed by
Asyst and the Company from and after the Closing Date.
10.3 Insurance Policies. To the extent possible without incurring
additional material expense (after taking into account any premiums saved as a
result of the discontinuance of the Company's insurance policies identified in
Part 2.16 of the Company Disclosure Schedule and in effect for a period of at
least six (6) months prior the date of this Agreement (the "Company Policies")),
Asyst shall use commercially reasonable efforts to cause its insurance policies
in effect on the date of this Agreement to be amended to provide a level of
coverage for the business and properties of the Company acquired in the
Transaction that is substantially equivalent to the level of coverage provided
by the Company Policies on the date of this Agreement.
10.4 Piggyback Registrations. Asyst shall notify all holders of
Registrable Securities in writing at least fifteen (15) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of Asyst (including, but not limited to, registration
statements relating to secondary offerings of securities of Asyst, but excluding
Asyst's Registration Statement on Form S-3 to be filed on or prior to August 16,
1999, and registration statements relating to employee benefit plans or with
respect to corporate reorganizations or other transactions under Rule 145 of the
Securities Act) and will afford each such holder an opportunity to include in
such registration statement all or part of such Registrable Securities held by
such holder. Each holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within fifteen
(15) days after the above-described notice from Asyst, so notify Asyst in
writing. Such notice shall state the intended method of disposition of the
Registrable Securities by such holder. If a holder decides not to include all
of its Registrable Securities in any registration statement thereafter filed by
Asyst, such holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by Asyst with respect to offerings of its securities,
all upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which Asyst
gives notice under this Section 10.4 is for an underwritten offering, Asyst
shall so advise the holders of Registrable Securities. In such event, the right
of any such holder to be included in a registration pursuant to this Section
10.4 shall be conditioned upon such holder's participation in such underwriting
and the inclusion of such holder's Registrable Securities in the underwriting to
the extent provided herein. All holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Asyst. Notwithstanding, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting shall be allocated, first, to Asyst; second, to the holders
on a pro rata basis based on the total number of
33.
<PAGE>
Registrable Securities held by the holders; and third, to any shareholder of
Asyst (other than a holder) on a pro rata basis. No such reduction shall reduce
the securities being offered by Asyst for its own account to be included in the
registration and underwriting. If any holder disapproves of the terms of any
such underwriting, such holder may elect to withdraw therefrom by written notice
to Asyst and the underwriter, delivered at least ten (10) business days prior to
the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.
(b) Right to Terminate Registration. Asyst shall have the right to
terminate or withdraw any registration initiated by it under this Section 10.4
prior to the effectiveness of such registration whether or not any holder has
elected to include securities in such registration. The Registration Expenses
of such withdrawn registration shall be borne by Asyst in accordance with
Section 10.4(b) hereof.
(c) Expenses of Registration. Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration,
pursuant to Section 10.4 herein shall be borne by Asyst. All Selling Expenses
incurred in connection with any registrations hereunder, shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares so registered.
(d) Termination of Registration Rights. All registration rights
granted under this Section 10.4 shall terminate and be of no further force and
effect one (1) year after the Closing Date.
Section 11. Miscellaneous Provisions
11.1 Shareholders' Agent.
(a) The Shareholders and Optionholders hereby irrevocably appoint
Erik Jansen as their agent, proxy and attorney-in-fact for purposes of this
Agreement (the "Shareholders' Agent"), and Erik Jansen hereby accepts his
appointment as the Shareholders' Agent. Each of the Shareholders and
Optionholders hereby agrees that such agency and proxy are coupled with an
interest and are, therefore, irrevocable and shall survive the death,
incapacity, bankruptcy, dissolution or liquidation of any Shareholder or
Optionholder. Asyst shall be entitled to deal exclusively with the Shareholders'
Agent for all purposes of this Agreement, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Shareholder or
Optionholder by the Shareholders' Agent, and on any other action taken or
purported to be taken on behalf of any Shareholder by the Shareholders' Agent,
as fully binding upon such Shareholder or Optionholder. If the Shareholders'
Agent shall die, become disabled or otherwise be unable to fulfill his
responsibilities as agent of the Shareholders and Optionholders, then the
Shareholders shall, within ten days after such death or disability, appoint a
successor agent and, promptly thereafter, shall notify Asyst of the identity of
such successor. Any such successor shall become the "Shareholders' Agent" for
purposes of this Agreement. If for any reason there is no Shareholders' Agent at
any time, all references herein to the Shareholders' Agent shall be deemed to
refer to the Shareholders and Optionholders.
34.
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(b) Neither the Shareholders' Agent nor any agent employed by it
shall be liable to any Shareholder or Optionholder relating to the performance
of its duties under this Agreement for any errors in judgment, negligence,
oversight, breach of duty or otherwise except to the extent it is finally
determined in a court of competent jurisdiction by clear and convincing evidence
that the actions taken or not taken by the Shareholders' Agent constituted fraud
or were taken or not taken in bad faith. The Shareholders' Agent shall be
indemnified and held harmless by the Shareholders and Optionholders against all
expenses (including attorneys' fees), judgments, fines and other amounts paid or
incurred in connection with any action, suit, proceeding or claim to which the
Shareholders' Agent is made a party by reason of the fact that it was acting as
the Shareholders' Agent pursuant to this Agreement; provided, however, that the
Shareholders' Agent shall not be entitled to indemnification hereunder to the
extent it is finally determined in a court of jurisdiction by clear and
convincing evidence that the actions taken or not taken by the Shareholders'
Agent constituted fraud or were taken or not taken in bad faith. The
Shareholders' Agent shall be protected in acting upon any notice, statement or
certificate believed by it to be genuine and to have been furnished by the
appropriate person and in acting or refusing to act in good faith or any matter.
(c) A decision, act, consent or instruction of the Shareholders'
Agent shall be made in writing and shall constitute a decision of all the
Shareholders, and shall be final, binding and conclusive upon each of the
Shareholders and Optionholders, and Asyst and the Company may rely upon any
decision, act, consent or instruction of the Shareholders' Agent as being the
decision, act, consent or instruction of each and all of the Shareholders and
Optionholders. Asyst and the Company are hereby relieved from any liability to
any person for any acts done by them in accordance with such decision, act,
consent or instruction of the Shareholders' Agent.
11.2 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
11.3 Fees and Expenses. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Asyst and its Representatives with respect
to the Company's business (and the furnishing of information to Asyst and its
Representatives in connection with such investigation and review), (b) the
negotiation, preparation and review of this Agreement (including the Disclosure
Schedule) and all agreements, certificates, opinions and other instruments and
documents delivered or to be delivered in connection with the transactions
contemplated by this Agreement, (c) the preparation and submission of any filing
or notice required to be made or given in connection with any of the
transactions contemplated by this Agreement, and the obtaining of any Consent
required to be obtained in connection with any of such transactions, and (d) the
consummation of the Transaction; provided, however, that, to the extent the
total amount of all such fees, costs and expenses incurred by or for the benefit
of the Company (including all such fees, costs and expenses incurred prior to
the date of this Agreement) in connection with the transaction exceeds $100,000
in the aggregate, such fees,
35.
<PAGE>
costs and expenses shall be borne and paid by the Shareholders and Optionholders
and not by the Company.
11.4 Attorneys' Fees. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
11.5 Notices. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Asyst:
Asyst Technologies, Inc
48761 Kato Road
Fremont, CA 94538
Attention: Douglas J. McCutcheon
Senior Vice President and Chief Financial Officer
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: James C. Kitch
if to the Company:
Palo Alto Technologies, Inc.
2624 Fayette Drive, #A
Mountain View, CA 94041
with a copy to:
Wilson Sonsini Goodrich & Rosati, a Professional Corporation
625 Page Mill Road
Palo Alto, CA 94306
Attention: Michael Danaher
36.
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if to the Shareholder's Agent:
Erik Jansen
4897 Forest Avenue, S.E.
Mercer Island, WA 98040
11.6 Confidentiality. On and at all times after the Closing Date, each
Shareholder and Optionholder shall keep confidential, and shall not use or
disclose to any other Person, any non-public document or other non-public
information in such Shareholder's or Optionholder's possession that relates to
the business of the Company or Asyst.
11.7 Time of the Essence. Time is of the essence of this Agreement.
11.8 Headings. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
11.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
11.11 Successors and Assigns. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Shareholders and
Optionholders and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); and Asyst and
its successors and assigns (if any). This Agreement shall inure to the benefit
of: the Company; the Shareholders; the Optionholders; Asyst; the other
Indemnitees; and the respective successors and assigns (if any) of the
foregoing. Asyst may freely assign any or all of its rights under this
Agreement (including its indemnification rights under Section 9), in whole or in
part, to any other Person without obtaining the consent or approval of any other
party hereto or of any other Person.
11.12 Remedies Cumulative; Specific Performance. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
37.
<PAGE>
11.13 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11.14 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
11.15 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.16 Parties in Interest. Except for the provisions of Section 9, none of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties hereto and their respective successors and
assigns (if any).
11.17 Entire Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof.
11.18 Construction.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
38.
<PAGE>
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
39.
<PAGE>
The parties hereto have caused this Agreement to be executed and delivered
as of the date hereof.
Asyst Technologies, Inc.
a California corporation
By:/s/ Douglas J. McCutcheon
------------------------------
Douglas J. McCutcheon
Senior Vice President,
Chief Financial Officer
/s/ Palo Alto Technologies, Inc.
/s/ Shareholders of Palo Alto
Technologies, Inc.
/s/ Option holders of Palo Alto
Technologies, Inc.
/s/ Shareholders' Agent of
Palo Alto Technologies, Inc.
<PAGE>
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of the business or assets of the Company or any direct or
indirect subsidiary or division of the Company;
(b) the issuance, grant, disposition or acquisition of (i) any
capital stock or other equity security of the Company or any direct or indirect
subsidiary of the Company, (ii) any option, call, warrant or right (whether or
not immediately exercisable) to acquire any capital stock or other equity
security of the Company or any direct or indirect subsidiary of the Company, or
(iii) any security, instrument or obligation that is or may become convertible
into or exchangeable for any capital stock or other equity security of the
Company or any direct or indirect subsidiary of the Company; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving the Company or any direct or
indirect subsidiary of the Company;
provided, however, that (A) the grant of stock options by the Company to
its employees in the ordinary course of business will not be deemed to be an
"Acquisition Transaction" if such grant is made pursuant to the Company's
existing stock option plans and is consistent with the Company's past practices,
and (B) the issuance of stock by the Company to its employees upon the exercise
of outstanding stock options will not be deemed to be an "Acquisition
Transaction."
Agreement. "Agreement" shall mean the Stock Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
Asyst Company Stock. "Asyst Company Stock" shall mean the common stock of
Asyst.
Company Contract. "Company Contract" shall mean any Contract: (a) to which
the Company is a party; (b) by which the Company or any of its assets is or may
become bound or under which the Company has, or may become subject to, any
obligation; or (c) under which the Company has or may acquire any right or
interest.
Company Proprietary Asset. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
A-1.
<PAGE>
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
Damages. "Damages" shall mean any loss, damage, injury, decline in value
lost opportunity, liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Asyst on behalf of the Company and
the Shareholders.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Government Bid. "Government Bid" shall mean any quotation, bid or proposal
submitted to any Governmental Body or any proposed prime contractor or higher-
tier subcontractor of any Governmental Body.
Government Contract. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under which any Governmental Body or any such
prime contractor or subcontractor otherwise has or may acquire any right or
interest.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department,
A-2.
<PAGE>
agency, commission, instrumentality, official, organization, unit, body or
Entity and any court or other tribunal).
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Asyst; (b)
Asyst's current and future affiliates (including the Surviving Corporation); (c)
the respective Representatives of the Persons referred to in clauses "(a)" and
"(b)" above; and (d) the respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)" and "(c)" above; provided, however, that the
Shareholders shall not be deemed to be "Indemnitees."
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
Material Adverse Effect. A violation or other matter will be deemed to have
a "Material Adverse Effect" on the Company if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or in the Closing
Certificate but for the presence of "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, in such
representations and warranties) would have a material adverse effect on the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
Registrable Securities. "Registrable Securities" means Asyst Common Stock
received in consideration for Company Preferred Stock in connection with this
Agreement.
Registration Expenses. "Registration Expenses" shall mean all expenses
incurred by Asyst in complying with Section 10.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, blue sky fees
and expenses and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
Asyst which shall be paid in any event by Asyst).
A-3.
<PAGE>
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
Securities Act. "Securities Act" shall mean the Securities Act of 1933,
as amended.
Selling Expenses. "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A-4.
<PAGE>
Exhibits Index
Exhibit A - Certain Definitions
Exhibit B - Form of General Release
Exhibit C - Form of legal opinion of Wilson Sonsini Goodrich & Rosati,
a Professional Corporation
i.
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
ASYST TECHNOLOGIES, INC.
a California corporation
The undersigned, Douglas J. McCutcheon and James C. Kitch hereby
certify that:
1. They are the duly elected and acting Senior Vice President and Chief
Financial Officer and Secretary, respectively of Asyst Technologies, Inc., a
California corporation.
2. Article III(A) of the Amended and Restated Articles of Incorporation
(the "Articles of Incorporation") of this corporation is amended to read as
follows:
"Classes of Stock. This corporation is authorized to
----------------
issue two classes of stock designated, respectively, Common
Stock ("Common") and Preferred Stock ("Preferred"). The
total number of shares that this corporation is authorized
to issue is 54,000,000 shares, without par value, of which
50,000,000 shares shall be Common and 4,000,000 shares shall
be Preferred."
3. The foregoing amendment of the Articles of Incorporation has been
duly approved by the board of directors.
4. The foregoing amendment of the Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance with sections
902 and 903 of the California Corporations Code. The total number of outstanding
shares of the corporation was 12,251,366 shares of Common Stock. The number of
shares voting in favor of the amendment equaled or exceeded the vote required.
The percentage vote required was more than 50% of the Common Stock.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Dated: September 24, 1999
/s/ Douglas J. McCutcheon
-------------------------------------------------
Douglas J. McCutcheon
Senior Vice President and Chief Financial Officer
/s/ James C. Kitch
-------------------------------------------------
James C. Kitch, Secretary
<PAGE>
Exhibit 10.14
LEASE AGREEMENT
by and between
AETNA LIFE INSURANCE COMPANY,
a Connecticut corporation
as Landlord
and
HINE DESIGN, INC.,
a California corporation
as Tenant
dated August 4, 1995
LEASE AGREEMENT
BASIC LEASE INFORMATION
1.
<PAGE>
LEASE AGREEMENT
BASIC LEASE INFORMATION
Lease Date: August 4, 1995
Landlord: AETNA LIFE INSURANCE COMPANY, a Connecticut corporation
Landlord's Address: c/o Aetna Investment Group
Kodak Cancer
1740 Technology Drive. Suite 600
San Jose, California 95110
Tenant: HINE DESIGN, INC.,
a California corporation
Tenant's Address: 241 E. Java Drive
Sunnyvale, California 94089
Building: 241 E. Java Drive
Sunnyvale, California 94089
Premises: The building indicated above, containing approximately
Forty Five Thousand One Hundred Twenty (45,120)
rentable square feet
Months of Term: Sixty (60) months
Monthly Base Rent: Months Sq. Ft. Monthly Rate Monthly Rent
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1-6 45,120 $0.50 $ 22,560.00
7-12 45,120 $0.56 $ 25,267.20
13-24 45,120 $0.69 $ 31,132.80
25-36 45,120 $0.71 $32, 035.20
37-48 45,120 $0.74 $ 33,388.80
49-60 45,120 $0.74 $ 33,388.80
Prepaid Rent: Twenty Two Thousand Five Hundred Sixty Dollars
($22,560.00)
Month To Which
Prepaid Rent Applied; First (1st) month of the Term
Security Deposit: Forty Thousand Dollars ($40,000.00)
Permitted Uses; Administrative offices, research and development, and
manufacturing facilities
Brokers: CPS Catalyst Real Estate Group
Tenant Improvements Six Hundred Fifty Two Thousand Four Hundred Dollars
Allowance: ($652,400)
Tenant Improvements Up to Two Hundred Twenty Five Thousand Six Hundred
Loan: Dollars ($225,600)
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Architect: ______________________________________________________
Exhibits: Exhibit A Diagram of the Premises
Exhibit B Tenant Improvements
Exhibit B-1 Final Plans and Specifications for Tenant
Improvements
Exhibit C Commencement Date Memorandum
3.
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LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are defined
in the Basic Lease Information attached to this Lease Agreement ("Basic Lease
Information") shall have the meaning and definition given them in the Basic
Lease Information. The Basic Lease information, the exhibits, and this Lease
Agreement are and shall be construed as a single instrument and are referred to
herein as the "Lease".
1. DEMISE: in consideration for the rents and all other charges and
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payments payable by Tenant, and for the agreements, terms and conditions to be
performed by Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND
TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below
(the "Premises"), upon the agreements, terms and conditions of this Lease for
the Term hereinafter stated.
2. PREMISES: The Premises demised by this Lease is the building specified
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in the Basic Lease Information. The Premises contains the square footage
specified in the Basic Lease Information. The location and dimensions of the
Premises are depicted on Exhibit A, which is attached hereto and incorporated
herein by this reference. Tenant shall have the non-exclusive right to use the
parking and other common areas on the real property on which the Premises is
situated (the ''Property''). No easement for light or air is incorporated in
the Premises.
The Premises demised by this Lease shall also include the Tenant
Improvements (as that term is defined on Exhibit B, attached hereto and
incorporated herein by this reference) to be constructed by Landlord within the
interior of the Premises. Landlord shall construct the Tenant Improvements on
the terms and conditions set forth in Exhibit B. Landlord and Tenant agree to
and shall be bound by the terms and conditions of Exhibit B.
3. TERM: The term of this Lease (the "Term") shall be for the period of
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months specified in the Basic Lease Information, commencing on the earliest to
occur of the following dates (the "Commencement Date"):
(a) The date Landlord files a Notice of Completion for the Tenant
Improvements;
(b) The date the Tenant Improvements are approved by the appropriate
governmental agency as being in accordance with its building code and the
building permit issued for such improvements, as evidenced by the issuance, of a
final building inspection approval; or
(c) The date Landlord's architect and general contractor have both
certified in writing to Tenant that the Tenant improvements have been
substantially completed in accordance with the plans and specifications
therefor; or
(d) The date Tenant commences occupancy of the Premises; provided,
however, that Tenant shall not be deemed to have commenced occupancy of the
Premises if
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Tenant enters upon the Premises solely for the purpose of constructing its Clean
Rooms (as hereinafter defined) in accordance with Section 7(c) below; when the
Commencement Date has been determined pursuant to the foregoing. Landlord and
Tenant shall promptly execute a Commencement Date Memorandum in the form
attached hereto as Exhibit C.
Notwithstanding anything in this Section 3 to the contrary, the
date determined pursuant to Sections 3 (a) through (c) above shall not be
earlier than. February 1, 1996.
The date on which the Term of this Lease expires shall be
referred to herein as the "Expiration Date."
4. RENT
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(a) Base Rent. Tenant shall pay to Landlord, in advance on the first
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day of each month, without further notice or demand and without offset or
deduction, the monthly installments of rent specified in the Basic Lease
Information (the "Base Rent").
Upon execution of this Lease, Tenant shall pay to Landlord the Prepaid
Rent specified in the Basic Lease Information to be applied toward Base Rent for
the month of the Term specified in the Basic Lease Information.
(b) Additional Rent. This Lease is intended to be a net Lease; and
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subject to Paragraph 12(c) below, the Rent owing hereunder is to be paid by
Tenant absolutely net of all costs and expenses relating to Landlord's ownership
of the Property and the Premises. The provisions of this Paragraph 4 (b) for
the payment of Expenses (as hereinafter defined) are intended to pass on to
Tenant all such costs and expenses. In addition to the Base Rent, Tenant shall
pay to Landlord, in accordance with this Paragraph 4, all costs and expenses
paid or incurred by Landlord in connection with the management, operation,
maintenance and repair of the Property and the Premises (the "Expenses"),
including, without limitation, all the following items related to the Premises,
the Property, and/or the Outside Areas (as defined in Paragraph 4 (b)(3)) (the
"Additional Rent"):
(1) Taxes and Assessments. All real estate taxes and
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assessments. Real estate taxes and assessments shall include any form of
assessment, license, fee, tax, levy, penalty (if a result of Tenant's
delinquency), or tax (other than net income, estate, succession, inheritance,
transfer or franchise taxes), imposed by any authority having the direct or
indirect power to tax, or by any city, county, state or federal government or
any improvement or other district or division thereof, whether such tax is (i)
determined by the area of the Premises or the Property or any part thereof, or
the Rent and other sums payable hereunder by Tenant or by other tenants,
including, but not limited to, any gross income or excise tax levied by any of
the foregoing authorities with respect to receipt of Rent or other sums due
under this Lease; (ii) upon any legal or equitable interest of Landlord in the
Premises or the Property, or any part thereof; (iii) upon this transaction or
any document to which Tenant is a party creating or transferring any interest in
the Premises or the Property; (iv) levied or assessed in lieu of, in
substitution for, or in addition to, existing or additional taxes against the
Premises or the Property, whether or not now customary or within the
contemplation of the parties or (v)
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surcharged against the parking area; provided, however, that all special
assessments which can be paid by Landlord in installments shall be paid by
Landlord in the maximum number of installments permitted by law and shall not be
included within the definition of real property taxes except the installment
shall be included in the calendar year in which such installment is actually
paid. Tenant and Landlord acknowledge that Proposition 13 was adopted by the
voters of the State of California in the June, 1978 election and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such purposes as fire protection, street, sidewalk, road, utility
construction and maintenance, refuse removal and for other governmental services
which may formerly have been provided without charge to property owners or
occupants. It is the intention of the parties that all new and increased
assessments, taxes, fees, levies and charges due to Proposition 13 or any other
cause are to be included within the definition of real property taxes for
purposes of this Lease.
(2) Insurance. All insurance premiums including premiums
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for "all risk" fire and extended coverage (including earthquake endorsements)
insurance for the Premises, public liability insurance, other insurance as
Landlord deems necessary, and any deductibles paid under policies of any such
insurance.
(3) Outside Area Expenses. All costs to maintain, repair,
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replace, supervise, insure (including provision of public liability insurance)
and administer the areas outside of the Premises ("Outside Areas"), including
parking areas, landscaping (including maintenance contracts), sprinkler systems,
sidewalks, driveways, curbs, lighting systems, and utilities for Outside Areas.
(4) Parking Charges. Any parking charges or other costs
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levied, assessed or imposed by, or at the direction of, or resulting from
statutes or regulations, or interpretations thereof, promulgated by any
governmental authority or insurer in connection with the use or occupancy of the
Premises, the outside Areas and/or the Property.
(5) Maintenance and Repair of Premises. Except for costs
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which are the responsibility of Landlord pursuant to Section 12(c) below, all
costs to maintain, repair, and replace the Premises including without
limitation, the roof coverings of the Premises, the heating, ventilation, and
air conditioning ("HVAC") systems serving the Premises (including the cost of
maintenance contracts) and all utility and plumbing systems, fixtures and
equipment serving the Premises but which are located in the Outside Areas.
Notwithstanding anything to the contrary contained in this Lease, with respect
to all sums payable by Tenant as Additional Rent hereunder (including, without
limitation outside Area expenses and costs to maintain and repair the Premises
pursuant to Paragraph 12 hereof) for the repair or replacement of any item in
connection with the physical operation of the Premises (i.e., HVAC roof membrane
or coverings, plumbing, electrical and utility systems and parking area) which
is a capital item the repair or replacement of which properly would be
capitalized under generally accepted accounting principles consistently applied
("GAAP"), Tenant shall be required to pay as Additional Rent only the prorata
share of the cost of the item falling due within the term (including any Renewal
Term, as such term is hereinafter defined based upon the amortization of such
cost over the useful life of such item, as reasonably determined by Landlord in
accordance with GAAP.
6.
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(6) Management and Administration. All costs for
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management and administration of the Premises and the Property, including a
property management fee, accounting, auditing, billing, postage, employee
benefits, payroll taxes, etc.
(c) Payment of Additional Rent.
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(1) Upon commencement of this Lease, Landlord shall submit
to Tenant an estimate of monthly Additional Rent for the period between the
Commencement Date and the following December 31 and Tenant shall pay such
estimated Additional Rent on a monthly basis concurrently with the payment of
the Base Rent. Tenant shall continue to make said monthly payments until
notified by Landlord of a change therein. By March 1 of each calendar year,
Landlord shall endeavor to provide to Tenant a statement ("Expense Statement")
showing the actual Additional Rent due to Landlord for the prior calendar year,
prorated from the Commencement Date during the first year. If the total of the
monthly payments of Additional Rent that Tenant has made for the prior calendar
year is less than the actual Additional Rent chargeable to Tenant for such prior
calendar year, then Tenant shall pay the difference in a lump sum within ten
(10) days after receipt of such Expense Statement from Landlord. Any overpayment
by Tenant of Additional Rent for the prior calendar year shall be credited
towards the Additional Rent next due.
(2) The actual Additional Rent for the prior calendar year
shall be used for purposes of calculating Tenant's monthly payment of estimated
Additional Rent for the current year, subject to adjustment as provided above,
except that in any year in which resurfacing of the parking area or material
roof repairs are planned, Landlord may include the estimated cost of such work
in the estimated monthly Additional Rent. Landlord shall make the final
determination of Additional Rent for the year in which this Lease terminates as
soon as possible after termination of such year. Tenant shall remain liable for
payment of any amount due to Landlord in excess of the estimated Additional Rent
previously paid by Tenant, and, conversely, Landlord shall promptly return to
Tenant any overpayment, even though the Term has expired and Tenant has vacated
the Premises. Failure of Landlord to submit Expense Statements as called for
herein shall not be deemed a waiver of Tenant's obligation to pay Additional
Rent as herein provided.
(3) Notwithstanding anything in this Paragraph 4(c) to the
contrary, following the delivery by Landlord of each Expense Statement, Tenant
shall have a period of ninety (90) days to review and audit Landlord's books and
records regarding such Expense Statement, such review or audit to take place
during normal business hours in Landlord's offices and to be completed within
seven (7) days after the commencement thereof. If Tenant does not so review or
audit Landlord's books and records, Landlord's Expense Statement shall be final
and binding upon Tenant. In the event that Tenant determines on the basis of its
review of Landlord's books and records that the amount of Expenses paid by
Tenant pursuant to this Paragraph 4 for the period covered by such Expense
Statement is less than or greater than the actual amount properly payable by
Tenant under the terms of this Lease, Tenant shall promptly pay any deficiency
to Landlord or Landlord shall promptly refund any excess payment to Tenant, as
the case may be; provided, however, that if Landlord disagrees with the results
of Tenant's audit, the dispute shall be submitted to an independent nationally
recognized accounting firm mutually agreed upon by Landlord and Tenant and the
determination of such
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accounting firm shall be binding upon the parties. If the independent accounting
firm determines that the amount of Tenant's payments of Expenses for such period
is less than or greater than the actual amount properly payable by Tenant under
the terms of this Lease, Tenant shall promptly pay any deficiency to Landlord or
Landlord shall promptly refund any excess payment to Tenant, as the case may be.
Tenant shall pay the cost of its audit of Landlord's books and records. The
costs of any independent accounting firm shall be paid by Tenant unless such
firm determines that the overpayment of Expenses by Tenant, if any, equals ten
percent (10%) or more of the Expenses actually payable by Tenant for the period
covered by the audit, in which case, Landlord shall pay the costs of such
independent accounting firm.
(d) General Payment Terms. The Base Rent, Additional Rent and all
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other sums Payable by Tenant to Landlord hereunder (including, without
limitation, installments of principal and interest due under the Tenant
Improvements Loan, as defined in Exhibit B hereto) are referred to as the
"Rent". All Rent shall be paid without deduction, offset or abatement in lawful
money of the United States of America. Checks are to be made payable to ALIC
SA87 IODCG AAF REI 3261 and shall be Mailed to: Lock Box 66268, El Monte,
California 91735-6268, or to such other person or place as Landlord may, from
time to time, designate to Tenant in writing. Rent for any partial month during
the Term shall be prorated for the portion thereof falling due within the Term.
5. LATE CHARGE: Notwithstanding any other provision of this Lease, Tenant
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hereby acknowledges that late payment to Landlord of Rent, or other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain if any Rent or
other sums due from Tenant are not received by Landlord or by Landlord's
designated agent within ten (10) days after their due date, then Tenant shall
pay to Landlord a late charge equal to ten percent (10%) of such overdue amount,
plus any attorneys' fees incurred by Landlord by reason of Tenant's failure to
pay Rent and/or other charges when due hereunder. Landlord and Tenant hereby
agree that such late charges represent a fair and reasonable estimate of the
cost that Landlord will incur by reason of Tenant's late payment, Landlord's
acceptance of such late charges shall not constitute a waiver of Tenant's
default with respect to such overdue amount or estop Landlord from exercising
any of the other rights and remedies granted under this Lease.
Initials: Landlord _____ Tenant _____
6. SECURITY DEPOSIT: Concurrently with Tenant's execution of the Lease,
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Tenant shall deposit with Landlord the Security Deposit specified in the Basic
Lease Information as security for the full and faithful performance of each and
every term, covenant and condition of this Lease. Landlord may use, apply or
retain the whole or any part of the Security Deposit as may be reasonably
necessary (a) to remedy Tenant's default in the payment of any Rent, (b) to
repair damage to the Premises caused by Tenant, (c) to clean the Premises upon
termination of this Lease, (d) to reimburse Landlord for the payment of any
amount which Landlord may reasonably spend or be required to spend by reason of
Tenant's default, or (e) to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default. Should Tenant
faithfully and fully comply with all of the terms, covenants and conditions of
this Lease, within thirty (30) days following the expiration of the Term, the
Security Deposit or any balance thereof shall be returned to Tenant or, at the
option of Landlord, to the last assignee of
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Tenant's interest in this Lease. Landlord shall not be required to keep the
Security Deposit separate from its general funds and Tenant shall not be
entitled to any interest on such deposit. If Landlord so uses or applies all or
any portion of said deposit, within five (5) days after written demand therefor
Tenant shall deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to the full extent of the above amount, and Tenant's failure to
do so shall be a default under this Lease. In the event Landlord transfers its
interest in this Lease, Landlord shall transfer the then remaining amount of the
Security Deposit to Landlord's successor in interest, and thereafter Landlord
shall have no further liability to Tenant with respect to such Security Deposit.
7. POSSESSION:
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(a) Tenant's Right of Possession. Subject to Paragraph 7(b), Tenant
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shall be entitled to possession of the Premises upon commencement of the Term.
(b) Delay in Delivering Possession. If for any reason whatsoever,
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Landlord cannot deliver possession of the Premises to Tenant at the commencement
of the Term, this Lease shall not be void or voidable, nor shall Landlord, or
Landlord's agents, be liable to Tenant for any loss or damage resulting
therefrom. Tenant shall not be liable for Rent until Landlord delivers
possession of the Premises to Tenant. The expiration date of the Term shall be
extended by the same number of days that Tenant's possession of the Premises was
delayed.
(c) Early Access. Tenant shall have the right to construct modular
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"clean rooms" (collectively, the "Clean Rooms") in the Premises prior to the
Commencement Date pursuant to plans and specifications hereinafter approved in
writing by Landlord and otherwise in strict accordance with the terms and
conditions of Section 11 below. In furtherance of the foregoing, and
notwithstanding anything to the contrary contained in Section 7(a), Tenant shall
have the right to enter upon the Premises at such times as shall be acceptable
to Landlord during the ninety (90) day period preceding the Commencement Date to
construct the Clean Rooms, provided, however, that Landlord shall not be liable
to Tenant or its employees or agents for any loss or damage to property, or
injury to person, arising from or related to the construction of the Tenant
Improvements. Tenant shall take all reasonable precautions to protect against
such loss, damage or injury during the construction of the Tenant Improvements,
and shall not interfere with such construction. Tenant shall cooperate with all
reasonable directives of Landlord in order to minimize any disruption or delay
in completion of the Tenant Improvements. Tenant's entry upon the Premises
pursuant to this Section 7(c) shall be subject to all of the terms and
conditions of this Lease, excepting only the covenant to pay Rent.
8. USE OF PREMISES:
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(a) Permitted Uses. The Premises shall be used for the Permitted
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Uses specified in the Basic Lease Information and for no other use. The Premises
shall not be used to create any nuisance or trespass, for any illegal, purpose,
for any purpose not permitted by applicable laws and regulations, or for any
purpose that would vitiate the insurance or increase the premiums for insurance
on the premises. Tenant agrees not to overload the floor(s) of the Premises.
9.
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(b) Compliance with Governmental Regulations. Tenant shall, at
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Tenant's expense, faithfully observe and comply with all municipal, state and
federal statutes, rules, regulations, ordinances, requirements, and orders now
in force or which may hereafter be in force pertaining to the Premises or
Tenant's use thereof, including without limitation, any statutes, rules,
regulations, ordinances, requirements, or orders requiring installation of fire
sprinkler systems, seismic reinforcement and related alterations, and removal of
asbestos, whether substantial in cost or otherwise, and all recorded covenants,
conditions and restrictions affecting the Property ("Private Restrictions") now
in force or which may hereafter be in force; provided, however, that Tenant
shall not be required to make structural changes to the Premises not related to
specific use of the Premises unless the requirement for such changes is imposed
as a result of any improvements or additions made or proposed to be made at
Tenant's request. The judgment of any court of competent jurisdiction, or the
admission of Tenant in any action or proceeding against Tenant, whether Landlord
be a party thereto or not, that Tenant has violated any such rule, regulation,
ordinance, statute or Private Restrictions, shall be conclusive of that fact as
between Landlord and Tenant.
9. ACCEPTANCE OF PREMISES: By entry hereunder, Tenant accepts the
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Premises as suitable for Tenant's intended use and as being in good and sanitary
operating order, condition and repair, AS IS, and without representation or
warranty by Landlord as to the condition, use or occupancy which may be made
thereof. Any exceptions to the foregoing must be by written agreement executed
by Landlord and Tenant. Notwithstanding anything in this Lease to the contrary,
including, without limitation, anything contained in this Paragraph 9 or in
Paragraph 12 below, Landlord shall cause the HVAC, electrical and plumbing
systems (collectively, the "Building Systems") serving the Premises to be in
good working order and the roof on the Premises to be in good condition for a
period of one hundred twenty (120) days after the Commencement Date. Any repair
work to the Building Systems or the roof during such period shall be the sole
cost and expense of Landlord and shall not be charged to Tenant as Additional
Rent under Paragraph 4(b) above.
10. SURRENDER: Tenant agrees that on the last day of the Term, or on the
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sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord (a) in good condition and repair (damage by Acts of God, fire, and
normal wear and tear excepted), but with all interior walls painted or cleaned
so they appear painted, any carpets cleaned, and with all floors cleaned and
waxed, together with all alterations, additions and improvements which may have
been made in or on the Premises; except that Tenant shall remove trade fixtures
put in at the expense of Tenant and any alterations, additions and improvements
as to which Landlord has, prior to the date of surrender, consented to or
requested removal; and (b) otherwise in accordance with Paragraph 32 (f).
Tenant shall repair all damage caused by such removal and otherwise restore the
Premises in accordance with the preceding sentence at Tenant's sole cost and
expense. On or before the expiration or sooner termination of this Lease,
Tenant shall remove all of Tenant's personal property from the Premises. All
property of Tenant not so removed, unless such non-removal is consented to by
Landlord, shall be deemed abandoned by Tenant, provided that in such event
Tenant shall remain liable to Landlord for all costs incurred in storing and
disposing of such abandoned property of Tenant. It the Premises are not
surrendered at the end of the Term or sooner termination of this Lease, and in
accordance with the provisions of this Paragraph 10 and of Paragraph 32 (f),
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all loss or liability resulting from delay by Tenant in so
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surrendering the Premises including, without limitation, any loss or liability
resulting from any claim against Landlord made by any succeeding tenant founded
on or resulting from such delay and losses to Landlord due to lost opportunities
to lease any portion of the Premises to succeeding tenants, together with, in
each case, actual attorneys' fees and costs.
11. ALTERATIONS AND ADDITIONS:
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(a) Tenant shall not make, or permit to be made, any alteration or
addition to the Premises, or any part thereof, without the prior written consent
of Landlord, such consent not to be unreasonably withheld.
(b) Any alteration or addition to the Premises shall be at Tenant's
sole cost and expense, in compliance with all applicable laws and requirements
requested by Landlord, and in accordance with plans and specifications approved
in writing by Landlord, and shall be constructed and installed by a contractor
approved in writing by Landlord.
(c) In the event Landlord consents to a proposed alteration or
addition, such consent shall include Landlord's advice whether or not such
proposed alteration or addition shall be required to be removed at the
expiration or termination of this Lease. If Landlord fails so to advise Tenant
regarding whether or not a proposed alteration or addition may be removed at the
expiration or termination of this Lease, then Tenant shall be required to
surrender the alteration or addition to Landlord with the Premises, without
compensation to Tenant, at the expiration or termination of this Lease. All
additions, alterations or improvements, including, but not limited to, heating,
lighting, electrical, air conditioning, fixed partitioning, drapery, wall
covering and paneling, built-in cabinet work and carpeting installations made by
Tenant, together with all property that has become an integral part of the
Premises, shall at once be and become the property of Landlord, and shall not be
deemed trade fixtures.
(d) Tenant agrees not to proceed to make such alterations or
additions, notwithstanding consent from Landlord to do so, until five (5) days
after Tenant's receipt of such consent, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work.
12. MAINTENANCE OF PREMISES:
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(a) Maintenance by Tenant. Throughout the Term, Tenant shall, at its
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sole expense, (1) keep and maintain in good order and condition, repair, and
replace the Premises, and every part thereof, including glass, windows, window
frames, skylights, interior and exterior doors and door frames, and the interior
of the Premises, (excepting only those portions of the Premises to be maintained
by Landlord, as provided in Paragraph 12(c) below), (2) keep and maintain in
good order and condition, repair, and replace all utility and plumbing systems,
fixtures and equipment, including without limitation electricity, gas, water,
and sewer, located in or on the Premises, and furnish all expendables, including
light bulbs, paper goods and soaps, used in the Premises, (3) repair all damage
to the Premises or the Outside Areas caused by the negligence or willful
misconduct of Tenant or its agents, employees, contractors or invitees
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Tenant shall not do anything to cause any damage, deterioration or unsightliness
to the Premises and the outside Areas.
(b) Landlord's Right to Maintain and Repair at Tenant's Expense.
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Notwithstanding the foregoing, Landlord shall have the right, but not the
obligation, at Tenant's expense, to enter the Premises and perform Tenant's
maintenance, repair and replacement work. Within ten (10) days after invoice
thereof or from Landlord, Tenant shall pay all costs and expenses incurred by
Landlord in connection with such maintenance, repair and replacement work.
(c) Maintenance by Landlord. Subject to the provisions of Paragraphs
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12(a), 22 and 23, and further subject to Tenant's obligation under Paragraph 4
to reimburse Landlord, in the form of Additional Rent, for the cost and expense
of the following items, Landlord agrees to repair and maintain the following
items: the roof coverings (provided that Tenant installs no additional air
conditioning or other equipment on the roof that damages the roof coverings);
the HVAC systems serving the Premises; the utility and plumbing systems,
fixtures, and equipment located outside the Premises; and the parking areas,
pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and
lighting systems in the outside Areas. Subject to the provisions of Paragraphs
12(a), 22 and 23, Landlord, at its own cost and expense, agrees to repair and
maintain the following items: the structural portions of the roof, provided that
Tenant installs no additional air conditioning or other equipment on the roof
that damages structural portions of the roof (and specifically excluding the
roof coverings), the foundation, the footings, the floor slab, the load bearing
walls, and the exterior walls (excluding any glass therein) of the Premises.
Landlord shall not be required to repair or maintain conditions created due to
any act, negligence or omission of Tenant or its agents, contractors, employees
or invitees. Landlord's obligation hereunder to repair and maintain is subject
to the condition precedent that Landlord shall have received written notice of
the need for such repairs and maintenance. Tenant shall promptly report in
writing to Landlord any defective condition known to it which Landlord is
required to repair, and failure to so report such defects shall make Tenant
responsible to Landlord for any liability incurred by Landlord by reason of such
condition.
(d) Tenant's Waiver of Rights. Tenant hereby expressly waives all
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rights to make repairs at the expense of Landlord or to terminate this Lease, as
provided for in California Civil Code Sections 1941 and 1942, and 1932 (1),
respectively, and any similar or successor statute or law in effect or any
amendment thereof during the Term.
(e) Construction Warranties. To the extent Tenant is required to
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maintain and repair the Premises or any portion thereof pursuant to Paragraph
12(a) above and such maintenance and repair is covered by any warranty actually
obtained by Landlord in connection with the construction of the Tenant
Improvements, Landlord shall enforce such warranty or shall assign such warranty
to Tenant and permit Tenant to enforce the same.
13. LANDLORD'S INSURANCE: Landlord shall purchase and keep in force fire,
--------------------
extended coverage and "all risk" insurance covering the Premises. Tenant shall,
at its sole cost and expense, comply with any and all reasonable requirements
pertaining to the Premises of any insurer necessary for the maintenance of
reasonable fire and public liability insurance, covering the Premises and the
appurtenances. Landlord, at Tenant's cost, may maintain "Loss of Rents"
12.
<PAGE>
insurance, insuring that the Rent will be paid in a timely manner to Landlord
for a period of at least twelve (12) months if the Premises are destroyed or
rendered unusable or inaccessible by any cause insured against under this Lease.
14. TENANT'S INSURANCE:
------------------
(a) Public Liability Insurance. Tenant shall, at Tenant's expense,
--------------------------
secure and keep in force a "broad form" public liability insurance and property
damage policy covering the Premises, insuring Tenant, and naming Landlord and
its lenders as additional insureds, against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises. The minimum limit of
coverage of such policy shall be in the amount of not less than Three Million
Dollars ($3,000,000.00) for injury or death of one person in any one accident or
occurrence and in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of more than one person in any one accident
or occurrence, shall include an extended liability providing contractual
liability coverage (which shall include coverage for Tenant's Indemnification
obligations in this Lease), and shall contain a severability of interest clause
or a cross liability endorsement. Such insurance shall further insure Landlord
and Tenant against liability for property damage of at least Three Million
Dollars ($3,000,000.00). The limit of any insurance shall not limit the
liability of Tenant hereunder. No policy shall be cancellable or subject to
reduction of coverage, and loss payable clauses shall be subject to Landlord's
approval. Such policies of insurance shall be issued as, primary policies and
not contributing with or in excess of coverage that Landlord may carry, by an
insurance company authorized to do business in the State of California for the
issuance of such type of insurance coverage and rated A:XIII or better in Best's
Key Rating Guide. A copy of said policy or a certificate evidencing to
Landlord's reasonable satisfaction that such insurance is in affect shall be
delivered to Landlord upon commencement of the Term, and thereafter whenever
Landlord shall reasonably request.
(b) Personal Property Insurance. Tenant shall maintain in full force
---------------------------
and effect on all of its fixtures and equipment on the Premises, a policy or
policies of fire and extended coverage insurance with standard coverage
endorsement to the extent of the full replacement cost thereof. During the term
of this Lease the proceeds from any such policy or policies of insurance shall
be used for the repair or replacement of the fixtures and equipment so insured.
Landlord shall have no interest in the insurance upon Tenant's equipment and
fixtures and will sign all documents reasonably necessary in connection with the
settlement of any claim or loss by Tenant. Landlord will not carry insurance on
Tenant's possessions. Tenant shall furnish Landlord with a certificate
evidencing to Landlord's reasonable satisfaction that such insurance is in
effect, and whenever required, shall satisfy Landlord that such policy is in
full force and effect.
15. INDEMNIFICATION:
---------------
(a) Of Landlord. Tenant shall indemnify and hold harmless Landlord
-----------
and agents, employees, partners, shareholders, directors, invitees, and
independent contractors (collectively "Agents") of Landlord against and from any
and all claims, liabilities, judgments, costs, demands, causes of action and
expenses (including, without limitation, reasonable attorneys, fees) arising
from (i) Tenant's use of the Premises or from any activity done, permitted or
suffered by Tenant in or about the Premises or the Property, and (2) any act,
neglect, fault,
13.
<PAGE>
willful misconduct or omission of Tenant, or Tenant's Agents or from any breach
or default in the terms of this Lease by Tenant, and (3) any action or
proceeding brought on account of any matter in items (1) or (2). If any action
or proceeding is brought against Landlord by reason of any such claim, upon
notice from Landlord, Tenant shall defend the same at expense by counsel
reasonably satisfactory to Landlord. As a material part of the consideration to
Landlord, Tenant hereby assumes all risk of damage to property or injury to
persons in or about the Premises from any cause whatsoever (except that which is
caused by the sole active negligence or willful misconduct by Landlord or its
Agents or by the failure of Landlord to observe any of the terms and conditions
of this Lease, if such failure has persisted for an unreasonable period of time
after written notice of such failure), and Tenant hereby waives all claims in
respect thereof against Landlord.
(b) Of Tenant: Landlord shall indemnify and hold harmless Tenant and
---------
its Agents against and from any and all claims, liabilities, judgments, costs,
demands, causes of action and expenses (including, without limitation,
reasonable attorneys' fees) arising from (1) the sole active negligence or
willful misconduct of Landlord, and (2) any action or proceeding brought on
account of any matter in item (1). If any action or proceeding is brought
against Tenant by reason of any such claim, upon notice from Tenant, Landlord
shall defend the same at Landlord's expense by counsel reasonably satisfactory
to Tenant.
(c) Survival. The obligations of Landlord and Tenant under this
--------
Paragraph 15 shall survive any termination of this Lease.
(d) No Impairment of Insurance. The foregoing indemnity shall not
--------------------------
relieve any insurance carrier of its obligations under any policies required to
be carried by either party pursuant to this Lease, to the extent that such
policies cover the peril or occurrence that results in the claim that is subject
to the foregoing indemnity.
16. SUBROGATION: Landlord and Tenant hereby mutually waive any claim
-----------
against the other during the Term for any injury to person or loss or damage to
any of their property located on or about the Premises or the Property that is
caused by or results from perils covered by insurance carried by the respective
parties, to the extent of the proceeds of such insurance actually received with
respect to such injury, loss or damage, whether or not due to the negligence of
the other party or its agents. Because the foregoing waivers will preclude the
assignment of any claim by way of subrogation to an insurance company or any
other person, each party now agrees to immediately give to its insurer written
notice of the terms of these mutual waivers and shall have their insurance
policies endorsed to prevent the invalidation of the insurance coverage because
of these waivers. Nothing in this Paragraph shall relieve a party of liability
to the other for failure to carry insurance required by this Lease.
17. ABANDONMENT: Tenant shall not abandon the Premises at any time during
-----------
the Term. In the event of abandonment, the rights and remedies of Tenant and
Landlord shall be determined in accordance with the applicable California
statutes in affect at the time of abandonment.
14.
<PAGE>
18. FREE FROM LIENS: Tenant shall keep the Premises and the Property free
---------------
from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant.
19. ADVERTISEMENTS AND SIGNS: Tenant shall have the right to place an
------------------------
identification sign on the exterior of the Premises at Tenant's sole cost and
expense, subject to Landlord's prior written approval of the location, size and
design of such sign, and subject further to compliance with Landlord's signage
program, any CC&Rs affecting the Premises and all applicable laws, including,
without limitation, all laws, codes and ordinances of the City of Sunnyvale.
Tenant shall not place or permit to be placed in, upon, or about the Premises or
the Property any advertisements or notices and will not conduct, or permit to be
conducted, any sale by auction on the Premises or otherwise on the Property.
Tenant shall remove any sign placed on the Premises by Tenant upon the
expiration of the Term or sooner termination of this Lease, and Tenant shall
repair any damage or injury to the premises or the Property caused thereby, all
at Tenant's expense. If any signs are not removed, or necessary repairs not
made, Landlord shall have the right to remove the signs and repair any damage or
injury to the Premises or the Property at Tenant's sole cost and expense
20. UTILITIES: Tenant shall pay for all water, gas, heat, light, power,
---------
telephone service and all other materials and services supplied to the Premises.
If Tenant fails to pay for any of the foregoing when due, Landlord may pay the
same and add such amount to the Rent.
21. ENTRY BY LANDLORD: Tenant shall permit Landlord and its Agents to
-----------------
enter into and upon the Premises at all reasonable times, upon reasonable notice
(except in the case of an emergency, for which no notice shall be required), and
subject to Tenant's reasonable security arrangements, for the purpose of
inspecting the same or showing the Premises to prospective purchasers, lenders
or tenants or to alter, improve, maintain and repair the Premises as required or
permitted of Landlord under the terms hereof, without any rebate of Rent and
without any liability to Tenant for any loss of occupation or quiet enjoyment of
the Premises thereby occasioned (except for actual damages resulting from the
negligence or willful misconduct of Landlord or its agents); and Tenant shall
permit Landlord to post notices of non-responsibility and ordinary "for sale" or
"for lease" signs, provided that Landlord may post such "for lease" signs and
exhibit the Premises to prospective tenants only during the six (6) months prior
to termination of this Lease. No such entry shall be construed to be a forcible
or unlawful entry in or a detainer of, the Premises, or an eviction of Tenant
from the Premises.
22. DESTRUCTION AND DAMAGE:
----------------------
(a) If the Premises is damaged by fire or other perils covered by
extended coverage insurance, Landlord shall, at Landlord's option:
(1) In the event of total destruction (which shall mean
destruction or damage in excess of twenty-five percent (25%) of the full
insurable value thereof) of the Premises, elect either to commence promptly to
repair and restore the Premises and prosecute the same diligently to completion,
in which event this Lease shall remain in full force and effect; or not to
repair or restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within sixty (60)
days after the
15.
<PAGE>
occurrence of such destruction. If Landlord elects not to restore the Premises,
this Lease shall be deemed to have terminated as of the date of such total
destruction.
(2) In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) of the Premises for which Landlord will
receive insurance proceeds sufficient to cover the cost to repair and restore
such partial destruction and, if the damage thereto is such that the Premises
may be substantially repaired or restored to its condition arising immediately
prior to such damage or destruction within one hundred eighty (180) days from
the date of such destruction, Landlord shall commence and proceed diligently
with the work of repair and restoration, in which event the Lease shall continue
in full force and effect. If such repair and restoration requires longer than
one hundred eighty (180) days or if the insurance proceeds therefor (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration, Landlord may elect either to so
repair and restore, in which event the Lease shall continue in full force and
effect, or not to repair or restore, in which event the Lease shall terminate.
In either case, Landlord shall give written notice to Tenant of its intention
within sixty (60) days after the destruction occurs. If Landlord elects not to
restore the Premises, this Lease shall be deemed to have terminated as of the
date of such partial destruction.
(3) Notwithstanding anything to the contrary contained in
this Paragraph, in the event of damage to the Premises occurring during the last
twelve (12) months of the Term, Landlord may elect to terminate this Lease by
written notice of such election given to Tenant within thirty (30) days after
the damage occurs.
(b) If the Premises are damaged by any peril not covered by extended
coverage insurance, and the cost to repair such damage exceeds any amount Tenant
may agree to contribute, Landlord may elect either to commence promptly to
repair and restore the Premises and prosecute the same diligently to completion,
in which event this Lease shall remain in full force and effect; or not to
repair or restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within sixty (60)
days after the occurrence of such damage. If Landlord elects not to restore the
Premises, this Lease shall be deemed to have terminated as of the date on which
Tenant surrenders possession of the Premises to Landlord, except that if the
damage to the Premises materially impairs Tenant's ability to continue its
business operations in the Premises, then this Lease shall be deemed to have
terminated as of the date such damage occurred.
(c) In the event of repair and restoration as herein provided, the
monthly installments of Base Rent shall be abated proportionately in the ratio
which Tenant's use of the Premises is impaired during the period of such repair
or restoration, to the extent of rental abatement insurance proceeds received by
Landlord. Tenant shall not be entitled to any compensation or damages for loss
of use of the whole or any part of the Premises and/or any inconvenience or
annoyance occasioned by such damage, repair or restoration.
(d) If Landlord is obligated to or elects to repair or restore as
herein provided, Landlord shall repair or restore only those portions of the
Premises which were originally provided at Landlord's expense, substantially to
their condition existing immediately prior to the
16.
<PAGE>
occurrence of the damage or destruction; and Tenant shall promptly repair and
restore, at Tenant's expense, Tenant's fixtures, improvements, alterations and
additions in and to the Premises which were not provided at Landlord's expense.
(e) Tenant hereby waives the provisions of California Civil Code
Section 1932 (2) and Section 1933 (4) which permit termination of a lease upon
destruction of the leased premises, and the provisions of any similar law now or
hereinafter in effect, and the provisions of this Paragraph 22 shall govern
exclusively in case of such destruction.
23. CONDEMNATION: If twenty-five percent (25%) or more of the Premises or
------------
the parking area for the Premises is taken for any public or quasi-public
purpose by any lawful governmental power or authority, by exercise of the right
of appropriation, inverse condemnation, condemnation or eminent domain, or sold
to prevent such taking (each such event being referred to as a "Condemnation"),
Landlord may, at its option, terminate this Lease as of the date title vests in
the condemning party. If the Premises after any Condemnation and any repairs by
Landlord would be untenantable for the conduct of Tenant's business operations,
Tenant shall have the right to terminate this Lease as of the date title vests
in the condemning party. If either party elects to terminate this Lease as
provided herein, such election shall be made by written notice to the other
party given within thirty (30) days after the nature and extent of such
condemnation have been finally determined, Tenant stall not because of such
taking assess any claim against Landlord. Landlord shall be entitled to receive
the proceeds of all Condemnation awards, and Tenant hereby assigns to Landlord
all of its interest in such awards. If less than twenty-five percent (25%) of
the Premises or the parking area is taken, Landlord at its option may terminate
this Lease, It neither Landlord nor Tenant elects to terminate this Lease to the
extent permitted above, Landlord shall promptly proceed to restore the Premises
to the extent of any Condemnation award received by Landlord, to substantially
the same condition as existed prior to such Condemnation, allowing for the
reasonable effects of such' Condemnation, and a proportionate abatement shall be
made to the Base Rent corresponding to the time during which, and to the portion
of the floor area of the Premises (adjusted for any increase thereto resulting
from any reconstruction) of which, Tenant is deprived on account of such
Condemnation and restoration. The provisions of California Code of Civil
Procedure Section 1265.130, which allows either party to petition the Superior
Court to terminate the Lease in the event of a partial taking of the Premises,
and any other applicable law now or hereafter enacted, are hereby waived by
Landlord and Tenant.
24. ASSIGNMENT AND SUBLETTING:
-------------------------
(a) Tenant shall not voluntarily or by operation of law, (1)
mortgage, pledge, hypothecate or encumber this Lease or any interest herein, (2)
assign or transfer this Lease or any interest herein, sublease the Premises or
any part thereof, or any right or privilege appurtenant thereto, or allow any
other person (the employees, agents and invitees of Tenant excepted) to occupy
or use the Premises, or any portion thereof, without firs obtaining the written
consent of Landlord, which consent shall not be withheld unreasonably. When
Tenant requests Landlord's consent to such assignment or subletting, it shall
notify Landlord in writing of the name and address of the proposed assignee or
subtenant and the nature and character of the business of the proposed assignee
or subtenant and shall provide current financial statements for the proposed
assignee or subtenant prepared in accordance: with GAAP. Tenant shall also
provide Landlord
17.
<PAGE>
with a copy of the proposed sublease or assignment agreement, including all
material terms and conditions thereof. Landlord shall have the option, to be
exercised within thirty (30) days of receipt of the foregoing, to (1) cancel
this Lease as of the commencement date stated in the proposed sublease or
assignment, (2) acquire from Tenant the interest, or any portion thereof, in
this Lease and/or the Premises that Tenant proposes to assign or sublease, on
the same terms and conditions as stated in the proposed sublet or assignment
agreement (3) consent to the proposed assignment or sublease, or (4) refuse its
consent to the proposed assignment or sublease, providing that such consent
shall not be unreasonably withheld.
(b) Without otherwise limiting the criteria upon which Landlord may
withhold its consent, Landlord may take into account the reputation and credit
worthiness of the proposed assignee or subtenant, the character of the business
proposed to be conducted in the Premises or portion thereof sought to be
subleased, and the potential impact of the proposed assignment or sublease on
the economic value of the Premises. In any event, Landlord may withhold its
consent to any assignment or sublease, if the actual use proposed to be
conducted in the Premises or portion thereof conflicts with the provisions of
Paragraph 8(a) or (b) above, or (2) the proposed assignment or sublease requires
alterations, improvements or additions to the Premises or portions thereof.
(c) If Landlord approves an assignment or subletting as herein
provided, Tenant shall pay to Landlord, as Additional Rent, the difference, if
any, between (1) the Base Rent plus Additional Rent allocable to that part of
the Premises affected by such assignment or sublease pursuant to the provisions
of this Lease, and (2) the rent and any additional rent payable by the assignee
or sublessee to Tenant, after deducting the costs incurred by Tenant in
connection with any such assignment or sublease. The assignment or sublease
agreement, as the case may be, after approval by Landlord, shall not be amended
without Landlord's prior written consent, and shall contain a provision
directing the assignee or subtenant to pay the rent and ocher mums due
thereunder directly to Landlord upon receiving written notice from Landlord that
Tenant is in default under this Lease with respect to the payment of rent.
Landlord's collection of such rent and other sums shall not constitute an
acceptance by Landlord of attornment by such assignee or subtenant. A consent
to one assignment subletting, occupation or use shall not be deemed to be a
consent to any other or subsequent assignment, subletting, occupation or use,
and consent to any assignment or subletting shall in no way relieve Tenant of
any liability under this Lease. Any assignment or subletting without Landlord's
consent shall be void, and shall, at the option of Landlord, constitute a
Default under this Lease.
(d) Tenant shall pay Landlord's reasonable fees (including, without
limitation, the fees of Landlord's counsel), incurred in connection with
Landlord's review and processing of documents regarding any proposed assignment
or sublease.
(e) Tenant acknowledges and agrees that the restrictions, conditions
and limitations imposed by this Paragraph 24 an Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or a part-
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this
18.
<PAGE>
Lease or any interest herein, to sublet the Premises or any part thereof, to
transfer or assign any right or privilege appurtenant to the Premises, or to
allow any other person to occupy or use the Premises or any portion thereof.
25. TENANT'S DEFAULT: The occurrence of any of the following; events
----------------
shall constitute an event of default on the part of Tenant; ("Default 11"):
(a) The abandonment of the Premises by Tenant;
(b) Failure to pay any installment or any other monies due and
payable hereunder, said failure continuing for a period of three (3) days after
the same is due;
(c) A general assignment by Tenant: for the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by Tenant, the
filing of a voluntary petition for an arrangement, the filing of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by Tenant's creditors, said involuntary petition remaining undischarged
for a period of sixty (60) days;
(e) Receivership, attachment, or other judicial seizure of
substantially all of Tenant's assets on the Premises, such attachment or other
seizure remaining undismissed or undischarged for a period of sixty (60) days
after the levy thereof;
(f) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required by Paragraph 30 or 31 or 42;
(g) An assignment or sublease, or attempt assignment or sublease, of
this Lease or the Premises by Tenant contrary to the provision of Paragraph 24,
unless much assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;
(h) Failure of Tenant to restore the Security Deposit to the amount
and within the time period provided in Paragraph 6 above;
(i) Failure in the performance of any of Tenant's covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs of, this Paragraph 25, which shall be governed by
such other Paragraphs), which failure continues, for ten (10) days after written
notice thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such ten (10) day period despite reasonable diligence, Tenant shall not
he in default under this subparagraph unless Tenant fails thereafter diligently
and continuously to prosecute the cure to completion; and
(j) Chronic delinquency by Tenant in the payment of Rent, or any
other periodic payments required to be paid by Tenant under this Lease. "Chronic
delinquency" shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within three (3) days after
written notice thereof for any three (3) months (consecutive
19.
<PAGE>
or nonconsecutive) during any twelve (12) month period. In the event of a
Chronic Delinquency, in addition to Landlord's other remedies for Default
provided in this Lease, at Landlord's option, Landlord shall have the right to
require that Rent be paid by Tenant quarterly, in advance.
Tenant agrees that any notice given by Landlord pursuant to Paragraph
25(i) or (j) above shall satisfy the requirements for notice under California
Cod of Civil Procedure Section 1161, and Landlord shall not be required to give
any additional notice in order to be entitled to commence an unlawful detainer
proceeding.
26. LANDLORD'S REMEDIES:
-------------------
(a) Termination. In the event of any Default by Tenant, then in
-----------
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:
(1) the worth at the time of award of any unpaid Rent and
any other sums-due and payable which have been earned at the time of such
termination; plus
(2) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by which
the unpaid Rent and any other sums due and payable for the balance of the term
of this Lease after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new tenant or tenants; (iii) for leasing commissions; or (iv) for
any other costs necessary or appropriate to relet the Premises; plus
(5) such reasonable attorneys, fees incurred by Landlord as
a result of a Default, and costs in the event suit is filed by Landlord to
enforce such remedy; and plum
(6) 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 law.
As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate
20.
<PAGE>
permitted by law, whichever is less. As Used in subparagraph (3) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award,
plus one percent (1%). Tenant waives redemption or relief from forfeiture under
California Code of Civil Procedure Sections 1174 and 1179, or under any other
present or future law, in the event Tenant is evicted or Landlord takes
possession of the Premises by reason of any Default of Tenant hereunder.
(b) Continuation of Lease. In the event of any Default by Tenant,
---------------------
then in addition to any other remedies available to Landlord at law or in equity
and under this Lease, Landlord shall have the remedy described in California
Civil Code Section 1951-4 (Landlord may continue this Lease in effect after
Tenant's Default and abandonment and recover Rent as it becomes due, provided
Tenant has the right to sublet or assign, subject only to reasonable
limitations).
(c) Re-entry. In the event of any Default by Tenant, Landlord shall
--------
also have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.
(d) Reletting. In the event of the abandonment of the Premises by
---------
Tenant or in the event that Landlord shall elect to re-enter as provided in
Paragraph 26(c) or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in Paragraph 26 (a) Landlord may from
time to time, without terminating this Lease, relet the Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Landlord in its sole discretion May deem advisable with
the right to make alterations and repairs to the Premises. In the event that
Landlord shall elect to so relet, then rentals received by Landlord from such
reletting shall be applied in the following order; (1) to reasonable attorneys,
fees incurred by Landlord as a result of a Default and costs in the event suit
is filed by Landlord to enforce such remedies; (2) to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the
payment of any costs of such reletting; (4) to the payment of the costs of any
alterations and repairs to the Premises; (5) to the payment of Rent due and
unpaid hereunder; and (6) the residue, if any, stall be hold by Landlord and
applied in payment of future Rent and other gums payable by Tenant hereunder as
the same may become due and payable hereunder. Should that portion of such
rentals received from such reletting during any month, which is applied to the
payment of Rent hereunder, be less than the Rent payable during the month by
Tenant hereunder, then Tenant, shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(e) Termination. No re-entry or taking of possession of the Premises
-----------
by Landlord pursuant to this Paragraph 26 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination
21.
<PAGE>
by Landlord because of any Default by Tenant, Landlord may at any time after
such reletting elect to terminate this Lease for any such Default.
(f) Cumulative Remedies. The remedies herein provided are not
-------------------
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.
(g) No Surrender. No act or conduct of Landlord, whether consisting
------------
of the acceptance of the keys to the Premises, or otherwise, shall be deemed to
be or y constitute an acceptance of the surrender of the Premises by Tenant
prior to the expiration of the Term, and such acceptance by Landlord of
surrender by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender of
this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
Landlord cleats in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, Or Landlord may, at
its option, elect in writing to treat such surrender as a merger terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.
27. ATTORNEY'S FEES: If either party hereto fails to perform any of its
---------------
obligations under this Lease or if any dispute arises between the parties hereto
concerning the meaning or interpretation of any provision of this Lease then the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all cost expenses incurred by the Other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys,
fees and disbursements. Any such attorneys, fees and other expenses incurred by
either party in enforcing a judgment in its favor under this Lease shall
separately from and in addition to any other be recoverable amount included in
such judgment, and such attorneys' fees obligation is intended to be severable
from the other provisions of this Lease and to survive and not be merged into
any such judgment.
28. TAXES: Tenant shall be liable for and shall pay, prior to delinquency,
-----
all taxes levied against personal property and trade or business fixtures of
Tenant. If any alteration, addition or improvement installed by Tenant pursuant
to Paragraph 11, or any personal property, trade fixture or other property of
Tenant, is assessed and taxed with the Property, Tenant shall pay such taxes to
Landlord within ten (10) days after delivery to Tenant of a statement therefor.
29. EFFECT OF CONVEYANCE: The term "Landlord" as used in this Lease, means
--------------------
only the owner for the time being of the Property containing the Premises, so
that, in the event of any sale of the Property or the Premises, Landlord shall
be and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder accruing from and after the transfer, and it shall be deemed
and construed, without further agreement between the parties and the purchaser
at any such sale, that the purchaser of the Property or the Premises has assumed
and agreed to carry out any and all covenants and obligations of Landlord
hereunder.
30. TENANT'S ESTOPPEL CERTIFICATE: From time to time, upon written
-----------------------------
request of Landlord, Tenant shall execute, acknowledge and deliver to Landlord
or its designee, a written certificate stating (a) the date this Lease was
executed, the Commencement Date of the Term and the date the Term expires; (b)
the date Tenant entered into occupancy of the Premises;
22.
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(c) the amount of Rent and the date to which such Rent has been paid; (d) that
this Lease is in full force and affect and has not been assigned, modified,
supplemented or amended in any way (or, if assigned, modified, supplemented or
amended, specifying the date and terms of any agreement so affecting this
Lease); (e) that this Lease represents the entire agreement between the parties
with respect to Tenant's right to use and occupy the Premises (or specifying
such other agreements, if any); (f) that all obligations under this Lease to be
performed by Landlord as of the date of such certificate have been satisfied (or
specifying those as to which Tenant claims that Landlord has yet to perform);
(g) that all required contributions by Landlord to Tenant on account of Tenant's
improvements have been received (or stating exceptions thereto); (h) that on
such date there exist no defenses off sets that Tenant has against the
enforcement of this Lease by Landlord (or stating exceptions thereto); (i) that
no Rent or other sum payable by Tenant hereunder has been paid more than one (1)
month in advance (or stating exceptions thereto); (j) that security has been
deposited with Landlord, stating the amount thereof; and (k) any other matters
evidencing the status of this Lease that may be required either by a lender
making a loan to Landlord to be secured by a deed of trust covering the Premises
or by a purchaser of the Premises. Any such certificate delivered pursuant to
this Paragraph 30 may be relied upon by a prospective purchaser of Landlord's
interest or a mortgagee of Landlord's interest or assignee of any mortgage upon
Landlord's interest in the Premises. If Tenant shall fail to provide such
certificate within ten (10) days of receipt by Tenant of a written request by
Landlord as herein provided, such failure shall, at Landlord's election,
constitute a Default under his Lease, and Tenant shall be deemed to have given
such certificate as above provided without modification and shall be deemed to
have admitted the accuracy of any information supplied by Landlord to a
prospective purchaser or mortgagee.
31. SUBORDINATION: Landlord shall have the right to cause this Lease to
-------------
be and remain subject and subordinate to any and all mortgages, deeds of trust
and ground leases, if any ("Encumbrances") that are now or may hereafter be
executed covering the Premises, or any renewal, modifications, consolidations,
replacements or extensions thereof, for the full amount of all advances made or
to be made thereunder and without regard to the time or character of such
advances, together with interest thereon and subject to all the terms and
provisions thereof; provided only, that in the event of termination of any such
ground lease or upon the foreclosure of any such mortgage or deed of trust, so
long as Tenant is not in default, the holder thereof ("Holder") shall agree to
recognize Tenant's rights under this Lease as long as Tenant shall pay the Rent
and observe and perform all the provisions of this Lease to be observed and
performed by Tenant. Within ten (10) days after Landlord's written request,
Tenant shall execute, acknowledge and deliver any and all reasonable documents
required by Landlord or the Holder to effectuate such subordination. If Tenant
fails to do so, such failure shall constitute a Default by Tenant under this
Lease. Notwithstanding anything to the contrary set forth in this Paragraph 31,
Tenant hereby attorns and agrees to attorn to any person or entity purchasing or
otherwise acquiring the Premises at any sale or other proceeding or pursuant to
the exercise of any other rights, powers or remedies under such Encumbrance.
32. ENVIRONMENTAL COVENANTS:
-----------------------
(a) As used in this Lease, the term "Hazardous Materials" shall mean
and include any substance that is or contains (a) any 'hazardous substance" as
now hereafter defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability
23.
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Act 1980, as amended ("CERCLA") (42 U.S.C. 5 9601 et seq.) or any regulations
promulgated under CERCLA; (b) any "hazardous waste" as now hereafter defined in
the Resource Conservation and Recovery Act, as amended ("RCRA") (42 U.S.C.
Section 6901 et seq.) or any regulations promulgated under RCRA; (c) any
substance now or hereafter regulated by the Toxic Substances Control Act, as
amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any regulations
promulgated under TSCA; (d) petroleum, petroleum by-products, gasoline, diesel
fuel, or other petroleum hydrocarbons; (e) asbestos and asbestos-containing
material, in any form, whether triable or non-triable; (f) polychlorinated
biphenyls; (g) lead and lead-containing materials; or (h) any additional
substance, material or waste (A) the presence of which on or about the Premises
requires reporting, investigation or remediation under any Environmental Laws
(as hereinafter defined), (ii) causes or threatens to cause. A nuisance on the
Premises or any adjacent property or sea or threatens to pose a hazard to the
health or safety of persons on the Premises or any adjacent property, or (iii)
which, if it emanated or migrated from the Premise could constitute a trespass,
or (B) which is now or is hereafter classified or considered to be hazardous or
toxic under any Environmental Laws.
(b) As used in this Lease, the term "Environmental Laws" shall mean
and include (a) CERCLA, CRA and TSCA; and (b) any other federal, state or local
laws ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to pollution, (ii) the protection or regulation
of human health, natural resources or the environment, (iii) the treatment,
storage or disposal of Hazardous Materials, or (iv) the emission, discharge,
release or threatened release of Hazardous Materials into the environment.
(c) Tenant agrees that during its use and occupancy of the Premises
it will (a) not permit Hazardous Materials to be present on or about the
Premises except in a manner and quantity necessary to the ordinary performance
of Tenant's business or (ii) release, discharge or dispose of any Hazardous
materials on, in, at, under, or emanating from, the Premises or the Property;
(b) comply with all Environmental Laws relating to the Premises and; the use
of Hazardous Materials on or about the Premises and not engage in or permit
others to engage in any activity at the Premises in violation, of any
Environmental Laws; and (c) immediately notify Landlord of (i) any inquiry,
test, investigation or enforcement proceeding by any governmental agency or
authority against Tenant, Landlord or the Premises relating to any Hazardous
Materials or under any Environmental Laws or (ii) the occurrence of any event or
existence of any condition that would cause a breach of any of the covenants set
forth in this Section 32.
(d) If Tenant's use of Hazardous Materials on or about the Premises
results in a release, discharge or disposal of Hazardous Materials on, in, at,
under, or emanating from, the Premises or the Property, Tenant agrees to
investigate, clean up, remove or remediate such Hazardous materials in full
compliance with (a) the requirements of (i) all Environmental Laws and (ii) any
governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (b) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises or the Property.
(e) Upon reasonable notice to Tenant, Landlord may inspect the
Premises for the purpose of determining whether there exists on the Premise any
Hazardous Material or other condition or activity that is in violation of the
requirements of this Lease or of any Environmental Laws. Tenant will supply to
Landlord such historical and operational
24.
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information regarding the Premises as may be reasonably requested to facilitate
any such inspection and will make available for meetings appropriate personnel
having knowledge of such matters. Tenant agrees to give Landlord at least sixty
(60) days, prior notice of its intention to vacate the Premises so that Landlord
will have an opportunity to perform such an inspection prior to such vacation.
The right granted to Landlord herein to perform inspections shall not create a
duty on Landlord's part to inspect the Premises, or liability on the part of
Landlord for Tenant's use, storage or disposal of Hazardous Materials, it being
understood that Tenant shall be solely responsible for all liability in
connection therewith.
(f) Landlord shall have the right, but not the obligation, prior or
subsequent to an event of default, without in any way limiting Landlord's other
rights and remedies under this Lease to enter upon the Premises, or to take
such other actions as it deems necessary or advisable, to investigate, clean up,
remove or remediate any Hazardous materials or contamination by Hazardous
Materials present on in, at, under, or emanating from, the Premises or the
Property in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election. In its own name or as Tenant's
agent, to negotiate, defend, approve and appeal, at Tenant's expense, any action
taken or order issued by any governmental agency or authority with regard to any
such Hazardous Materials or contamination by Hazardous Materials. All costs and
expenses paid or incurred by Landlord in the exercise of the rights set forth in
this Subsection 32 (f) shall be payable by Tenant upon demand.
(g) Tenant shall surrender the Premises to Landlord upon the
expiration or earlier termination of this Lease free of debris, waste or
Hazardous Materials placed on or about the Premises by Tenant or its agents,
employees, contractors or invitees, and in a condition which complies with all
Environmental Laws.
(h) Tenant agrees to indemnify and hold harmless Landlord from and
against any and all claims, losses (including, without limitation, loss in value
of the Premises or the Property, liabilities and expenses (including attorney's
fees) sustained by Landlord attributable to (i) any Hazardous materials placed
on or about the Premises by Tenant or its agents, employees, contractors or
invitees or (ii) Tenant's breach of any provision of this Section 32.
(i) The provisions of this Section 32 shall survive the expiration or
earlier termination of this Lease.
33. NOTICES: All notices and demands which may or are to be required or
-------
permitted to be given to either party by the other hereunder shall be in writing
and shall be sent by United States mail, postage prepaid, certified, or by
personal delivery or overnight courier, addressed to the addressee at the
address for such addressee as specified in the Basic Lease information, or to
such other place as such party may from time to time designate in a notice to
the other party given as provided herein, or by telex or telecopy at the number
therefor designated by the addressee in a written notice given as provided
herein. Notice shall be deemed given upon the earlier of actual receipt or the
third day following deposit in the United States mail in the Manner described
above.
25.
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34. WAIVER: The waiver of any breach of any term, covenant or condition of
------
this Lease shall riot be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of Rent by Landlord
shall not be deemed to be a waiver of any preceding breach by Tenant, other than
the failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No delay or omission in the exercise of any right or remedy of Landlord
on any Default by Tenant shall impair such a right or remedy or be construed as
a waiver. Any waiver by Landlord of any Default must be in writing and shall
not be a waiver of other Default concerning the same or any other provisions of
this Lease.
35. HOLDING OVER: Any holding over after the expiration of the Term,
------------
without the express written consent of Landlord, shall constitute a Default and,
without limiting Landlord's remedies provided in this Lease, such holding over
shall be construed to be a tenancy at sufferance, at a rental rate of one
hundred fifty percent, (150%) of the Base Rent last due in this Lease, plus
Additional Rent, and shall otherwise be on the terms and conditions herein
specified, so far as applicable.
36. SUCCESSORS AND ASSIGNS: The terms, covenants and conditions of this
----------------------
Lease shall, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of all of the parties
hereto. If Tenant shall consist of more than one entity or person, the
obligations of Tenant under this Lease shall be joint and several.
37. TIME: Time is of the essence of this Lease and each and every term,
----
condition and provision herein.
38. BROKERS: Landlord and Tenant each represents and warrants to the other
-------
that neither it nor its officer; or agents nor anyone acting on its behalf has
dealt with any real estate broker except the Broker(s) specified in the Basic
Lease Information in the negotiating or making of this Lease, and each party
agrees to indemnity and hold harmless the other from any claim or claims, and
costs and expense including attorneys' fees, incurred by the indemnified party
in conjunction with any such claim or claims of any broker or brokers to a
commission in connection with this Lease as a result of the actions of the
indemnifying party.
39. LIMITATION OF LIABILITY: Tenant agrees that, in the event of any
-----------------------
default or breach by Landlord with respect to any of the terms of the Lease to
be observed and performed by Landlord (a) Tenant shall look solely to the estate
and property of Landlord or any successor in interest in the Property and the
Premises, for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord;
(b) no other property or assets of Landlord, its partners, shareholder,
officers, directors or any successor in interest shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies; (c) no personal liability shall at any time be asserted or enforceable
against Landlord's partners or successors in interest (except to the extent
permitted in (a) above) , or against Landlord's shareholders, officers or
directors, or their respective partners, shareholders, officers, directors or
successors in interest; and (d) no judgment will be taken against any partner,
shareholder, officer or director of Landlord- The provisions of this
26.
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section shall apply only to the Landlord and the parties herein described, and
shall not be for the benefit of any insurer nor any other third party.
40. FINANCIAL STATEMENTS: Within thirty (30) days after Landlord's
--------------------
request, Tenant shall deliver to Landlord the then current financial statements
of Tenant (including interim periods following the end of the last fiscal year
for which annual statements are available), prepared or compiled by a certified
public accountant, including a balance sheet and profit and loss statement for
the most recent prior year, all prepared in accordance with GAAP.
41. RULES AND REGULATIONS: Tenant agrees to comply with such reasonable
---------------------
rules and regulations as Landlord may adopt from time to time for the orderly
and proper operating of the Premises and parking and other common areas. Such
rules may include but shall not be limited to the following: (a) restriction of
employee parking to a limited, designated area or areas; and (b) regulation of
the removal, storage and disposal of Tenant's refuse and other rubbish at the
sole cost and expense of Tenant. The rules and regulations shall be binding
upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be
responsible to Tenant for the failure of any other person to observe and abide
by any of said rules and regulations,
42. MORTGAGEE PROTECTION:
--------------------
(a) Modifications for Lender. If, in connection with obtaining
------------------------
financing for the Premises or any portion thereof, Landlord's lender shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant shall not unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially adversely affect
Tenant's rights or increase Tenant's obligations under this Lease.
(b) Rights to Cure. Tenant agrees to give to any trust deed or
--------------
mortgage holder ("Holder"), by registered mail, at the same time as it is given
to Landlord, a copy of any notice of default given to Landlord, provided that
prior to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease; then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 42 (b) whichever shall last occur within which to cure such default or
if such default cannot he cured within that time, then such additional time as
may be necessary if within such twenty (20) days, any Holder has commenced and
is diligently pursuing the remedies necessary to cure such default (including
but not limited to commencement of foreclosure, proceedings, if necessary to
effect such cure), in which event this Lease shall not be terminated.
43. ENTIRE AGREEMENT: This Lease, including the Exhibits and any Addenda
----------------
attached hereto, which are hereby incorporated herein by this reference,
contains the entire agreement of the parties hereto, and no representations,
inducements, promises or agreements, oral or otherwise, between the parties,
not embodied herein or therein, shall of any force and effect.
27.
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44. INTEREST: Any installment of Rent and any other sum due from Tenant
--------
under this Lease which is not received by Landlord within ten (10) days from
when the same is due shall bear interest from such tenth (10th) day until paid
at an annual rate equal to the maximum rate of interest permitted by law.
Payment of such interest shall not excuse or cure any Default by Tenant. In
addition, Tenant shall pay all costs and attorneys' fees incurred by Landlord in
collection of such amounts.
45. CONSTRUCTION: This Lease shall be construed and interpreted in
------------
accordance with the laws of the state of California. The parties acknowledge
and agree that no rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall be employed in the interpretation
of this Lease, including the Exhibits and any Addenda attached hereto. All
captions in this Lease are for reference only and shall not be used in the
interpretation of this Lease. Whenever required by the context of this Lease,
the singular shall include the plural, the masculine shall include the feminine,
and vice versa. If any provision of this Lease shall be determined to be
illegal or unenforceable, such determination shall not affect any of her
provision of this Lease and all such other provisions shall remain in full force
and effect.
46. REPRESENTATIONS AND WARRANTIES OF TENANT: Tenant hereby makes the
----------------------------------------
following representations and warranties, each of which is material and being
relied up on by Landlord, is true in all respects as of the date of this Lease,
and shall survive the expiration or termination of the Lease.
(a) If Tenant in an entity, Tenant is duly organized, validly
existing and in good standing under the laws of the state of its organization
and the persons executing this Lease on behalf of Tenant have the full right and
authority to execute this Lease on behalf of Tenant and to bind Tenant without
the consent or approval of any other person or entity. Tenant has full power,
capacity, authority and legal right to execute and deliver this Lease and to
perform all of its obligations hereunder. This Lease is a legal, valid and
binding obligation of Tenant, enforceable in accordance with its terms.
(b) Tenant has not (1) made a general assignment for the benefit of
creditors, (2) filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by any creditors, (3) suffered the appointment of a
receiver to take possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or substantially all of
its assets, (5) admitted in writing its inability to pay its debts as they come
due, or (6) made an offer of settlement, extension or composition to its
creditors generally.
(c) Tenant presently maintains working capital (as defined in Section
47 below) in an amount sufficient to satisfy the requirements of said
section 47.
47. WORKING CAPITAL. Throughout the Term of this Lease, including,
---------------
without limitation, any Renewal-Term, Tenant shall at all times maintain working
capital in an amount equal to twenty percent (20%) of Tenant's net sales
(calculated in accordance with GAAP). For purposes of this section 47, "working
capital" means the sum of Tenant's current assets, less the sum of Tenant's
current liabilities, all determined in accordance with GAAP.
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48. RENEWAL OPTIONS. Tenant shall have two (2.) options (the "First
---------------
Renewal Option" and the "Second Renewal Option," respectively, and collectively,
the Renewal Options") to extend the Term for successive periods of three (3)
years each beyond the Expiration Date (the "First Renewal Term" and the "Second
Renewal Term," respectively and collectively, the "Renewal Terms") The Renewal
Options shall be effective only if Tenant is not in Default under this Lease,
nor has any event occurred which with the giving of notice or the passage of
time, or both, would constitute a Default hereunder, either at the time of
exercise of the respective Renewal Option or the time of commencement of the
respective Renewal Term. The Second Renewal option shall be effective only if
Tenant has previously validly exercised the First Renewal Option and occupied
the Premises throughout the First Renewal Term. The Renewal Options must be
exercised, if at all, by written notice from Tenant to Landlord given not more
than nine (9) months nor less than six (6) months prior to the expiration of the
initial Term or the First Renewal Term, as the case may be. Any such notice
given by Tenant to Landlord shall be irrevocable, if Tenant fails to exercise
the Renewal Options in a timely manner as provided for above, the Renewal
Options shall be void. The Renewal Terms shall be upon the same terms and
conditions as the initial Term, except that the annual Base Rent during the
Renewal Terms shall be equal to the prevailing market rate for space in well
located, high visibility buildings in Moffett Park comparable to the Premises in
size, condition (excluding, however, for purposes of determining prevailing
market rate, the value of any Tenant Improvements or Alterations paid for
directly by Tenant and not funded out of the Tenant Improvements Allowance, the
Tenant Improvements Deposit or Tenant Improvements Loan, as such terms are
defined in Exhibit B hereto), quality and type, and with a comparable landlord
(taking into account, among other things, the availability of tenant improvement
dollars) at the commencement of the respective Renewal Term; provided, however,
that the Base Rent payable hereunder during the First Renewal Term shall not be
less than eighty-eight cents ($0.88) per rentable square foot per month, and,
provided further, that the Base Rent during the Second Renewal Term shall not be
less than the Base Rent payable hereunder at the end of the First Renewal Term.
As used herein, the term "prevailing mark shall mean the base annual rental
for such comparable space, taking into account any additional rental and all
other payments and escalations payable hereunder and by tenants under leases of
such comparable space.' If Tenant disputes Landlord's determination of the
prevailing market rate, Tenant shall so notify the Landlord within ten (10) days
following Landlord's notice to Tenant of the prevailing market rate and such
dispute shall be resolved as follows:
(a) Within thirty (30) days following Tenant's notice to Landlord of
Tenant's dispute of Landlord's determination of the prevailing market rate.
Landlord and Tenant shall meet no less than two (2) times, at a mutually
agreeable time and place, to attempt to resolve any such disagreement.
(b) if within this thirty (30) day period Landlord and Tenant cannot
reach agreement as to the prevailing market rate, they shall each select one
appraiser to determine the prevailing market rate. Each such appraiser shall
arrive at a determination of the prevailing market rate and submit his
conclusions to Landlord and Tenant within thirty (30) days of the expiration of
the thirty (30) day consultation period described in paragraph (a) above.
(c) if only one appraisal is submitted within the requisite time
period, it shall be deemed to be the prevailing market rate. If both appraisals
are submitted within such time
29.
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period, and if the two appraisals so submitted differ by less than ten (10)
percent of the higher of the two, the average of the two shall be the prevailing
market rate. If the two appraisals differ by more than ten (10) percent of the
higher of the two, then the two appraisers shall immediately select a third
appraisers who will within thirty (30) days of his selection make a
determination of the prevailing market rate and submit such determination to
Landlord and Tenant. This third appraisal will then be averaged with the closer
of the two previous appraisals and the result shall be the prevailing market
rate.
(d) All appraisers specified pursuant her to shall be licensed real
estate brokers in the State of California with not less than five (5) years,
experience appraising commercial and industrial properties in the County of
Santa Clara. Each party shall pay the cost of the appraiser selected by such
party and one-half (1/2) of the cost of the third appraiser plus one-half (1/2)
of any other costs incurred in connection with the appraisal.
Landlord and Tenant have executed and delivered this Lease as of the
Lease Date specified in the Basic Lease Information.
LANDLORD: TENANT:
AETNA LIFE INSURANCE COMPANY, HINE DESIGN, INC.,
a Connecticut corporation a California corporation
By: /s/ Joseph E. Gankler By:
------------------------------- -----------------------------
Print Joseph E. Gankler Print Scott C. Kennedy
---------------------------- -----------------------------
Name: Name:______________________________
Its: Asst. Vice Pres. Its: Controller
------------------------------- ------------------------------
By:________________________________
Print:_____________________________
Name:______________________________
Its:_______________________________
30.
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EXHIBIT B
TENANT IMPROVEMENTS
This exhibit, entitled "Tenant Improvements", is and shall constitute
EXHIBIT B to the Lease Agreement, dated as of the Lease Date, by and between
Landlord and Tenant for the Premises. The terms and conditions of this EXHIBIT
B are hereby incorporated into and are made a part of the Lease. Capitalized
term used, but not otherwise defined, in this EXHIBIT B have the meanings
ascribed to such terms in the Lease.
1. Tenant Improvements. Subject to the conditions set forth below,
-------------------
Landlord agrees to construct certain Tenant Improvements in the Premises
pursuant to the terms of this EXHIBIT B.
2. Definition. "Tenant Improvements" as used in the Lease and this
----------
EXHIBIT B shall include only those improvements within the interior portions of
the Premises which are depicted on the Final Plans and Specifications (hereafter
defined in Paragraph 3) or described hereinbelow. "Tenant Improvements" shall
specifically not include any alterations, additions, or improvements installed
or constructed by Tenant, and any of Tenant's personal property or trade
fixtures.
The Tenant Improvements may include:
(a) Partitioning, doors, floor coverings, finishes, ceilings, wall
coverings and painting, millwork and similar items.
(b) Electrical wiring, lighting fixtures, outlets and switches, and
other electrical work,
(c) Duct work, terminal boxes, defusers and accessories required for
the completion of the heating, ventilation and air conditioning systems serving
the Premises, including the cost of meter and key central for after-hour air
conditioning.
(d) Any additional Tenant requirements including, but not limited to
odor control, special heating ventilation and air conditioning, noise or
vibration control or other special systems.
(e) All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and accessories
installed within and serving the Premises.
(f) All plumbing, fixtures, pipes, and accessories to be installed
within and serving the Premises.
3. Plans and Specifications. Landlord shall retain the architect
------------------------
specified in the Basic Lease information ("Architect") for the preparation of
preliminary and final working architectural and engineering plans and
specifications for the Tenant Improvements ("Final Plans aid Specifications")
Landlord reserves the right to substitute for the Architect another architect of
its selection. Tenant shall cooperate diligently with the Architect and shall
furnish within ten (10)
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days after request therefor, all information required by the Architect for
completion of the Final Plans and Specifications, and shall provide (in writing,
if requested by Landlord). Not later than three (3) business days after request
therefor, any approval or disapproval of preliminary or Final Plans and
Specifications which Tenant is permitted to give under this EXHIBIT B. Landlord
and Tenant shall indicate their approval of the Final Plans and Specifications
by initialing them and attaching them to the Lease as EXHIBIT B-1. Upon
completion of the Final Plans and Specifications and approval thereof by
Landlord and Tenant, Landlord will obtain subcontractor trade bids and furnish a
cost breakdown to Tenant. In the event the estimated Tenant Improvements Cost
(hereafter defined in Paragraph 8), based on such bids and the reasonably
anticipated costs of other items constituting the Tenant Improvements Cost,
exceeds the sum of the Tenant Improvements Allowance (hereafter defined in
Paragraph 5) the Tenant Improvements Deposit (hereinafter defined in Paragraph
6), and the Tenant Improvements Loan (hereinafter defined in Paragraph 7) plug
any amounts which Tenant desires to pay as an Excess Tenant Improvements cost
(hereafter defined in Paragraph 9) ("Tenant's T.I. Budget, at Tenant's request,
the Final Plans and Specifications may be revised once, at Tenant's cost and
expense. Any such revisions shall be subject to Landlord's approval, and the
amended Final Plans and Specifications, as approved by Landlord and Tenant,
shall thereafter be deemed to be the Final Plans and Specifications for the
Tenant Improvements. The amended Final Plans and Specifications shall be
approved by Tenant (in writing, if requested by Landlord) not later than three
(3) days after Landlord's request therefor. Landlord shall thereafter submit
such amended Final Plans and specifications to the contractor (as hereinafter
defined) and subcontractors for rebidding, and shall furnish a cost breakdown to
Tenant. If the estimated Tenant improvements cost, as determined by the bids
based on the amended Final Plans and Specifications and the reasonably
anticipated costs of other items constituting the Tenant Improvements Cost,
result in an Excess Tenant Improvement Cost, then Tenant shall pay such Excess
Tenant Improvements Cost as and when required by Paragraph 9. Tenant's failure
to approve or disapprove any matters which Tenant shall be entitled to approve
or disapprove pursuant to this Paragraph 3 shall be conclusively deemed to be
approval of same try Tenant.
4. Landlord to Construct Improvements. When the Final Plans and
----------------------------------
Specifications (as amended, if required by Paragraph 3 above) have been approved
by Landlord and Tenant, Landlord shall submit such Final Plans and
Specifications to all governmental authorities having rights of approval over
the Tenant improvement work and shall apply for all governmental approvals and
building permits. Subject to satisfaction of all conditions precedent and
subsequent to its obligations under this EXHIBIT B, and further subject to the
provisions of Paragraph 9, Landlord shall thereafter cause the Contractor to
commence and proceed to complete construction of the Tenant Improvements. As
used herein, "Contractor" means a licensed contractor selected by Landlord for
the construction of the Tenant Improvements. Landlord shall consider Tenant's
recommendations regarding the selection of such Contractor, but Landlord
reserves the right to make the final decision regarding the Contractor in its
sole discretion.
5. Tenant Improvements Allowance. Landlord shall provide an allowance
-----------------------------
for the planning and construction of the Tenant Improvements in the amount
specified in the Basic Lease Information ("Tenant Improvements Allowance").
Subject to Paragraph 7. The Tenant Improvements Allowance shall be the maximum
contribution by Landlord for the Tenant Improvements Cost, as defined in
Paragraph B. Should the actual cost of planning and
32.
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constructing those Tenant improvements depicted and the Final Plans and
Specifications be less than the Tenant Improvements Allowance, the Tenant
Improvements Allowance shall be reduced to an amount equal to said actual cost.
6. Tenant Improvements Deposit. Concurrently with the execution of this
---------------------------
Lease by Landlord and Tenant, Tenant shall deposit with Landlord the sum of Two
Hundred Fifty Thousand Dollars ($250,000) (the "Tenant Improvement Deposit,") to
be applied toward the Tenant Improvements Cost. The Tenant Improvements Deposit
shall be held in an interest-bearing account (the "Account") in the name of
Landlord at a bank or other financial institution mutually acceptable to
Landlord and Tenant and all interest earned thereon shall accrue for the account
of Tenant and shall be disbursed to Tenant upon the completion of the Tenant
Improvements. Landlord shall have the right to unilaterally withdraw funds from
the Account from time to time to pay the Tenant improvements Cost after the
Tenant Improvements Allowance has been fully disbursed, and prior to any
disbursements under the Tenant Improvements Loan. Should the actual Tenant
Improvements Cost be less than the sum of the Tenant Improvements Allowance and
the Tenant improvements Deposit, then any funds remaining in the Account shall
be retained by Landlord and shall be deemed Additional Rent under the Lease.
7. Tenant Improvements Loan. Landlord agrees to loan to Tenant up to
------------------------
Two Hundred Twenty Five Thousand Six Hundred Dollars ($225,600) for Tenant
Improvements (the "Tenant Improvements Loan") after the Tenant Improvements
Allowance and the Tenant Improvements Deposit have been fully disbursed. The
Tenant Improvements Loan shall be repayable by Tenant to Landlord in
substantially equal self-amortizing installments over the initial Term of the
Lease, together with interest on the balance outstanding from time to time at
the rate of twelve percent (12%) per annum. Notwithstanding anything herein to
the contrary, in the event the Lease shall terminate for any reason prior to the
scheduled expiration thereof, the Tenant Improvements Loan and all accrued and
unpaid interest thereon shall immediately become due and payable in full.
8. Tenant improvements Cost. The Tenant Improvements Cost ("Tenant
------------------------
Improvements Cost") shall include all costs and expenses associated with the
design, preparation, approval and construction of the Tenant Improvements,
including, but not limited, to the following:
(a) All costs of preliminary and final architectural and engineering
plans and specifications for the Tenant Improvements, and engineering costs
associated with completion of the State of California energy utilization
calculations under Title 24 legislation;
(b) All costs of obtaining building permits and other necessary
authorizations from local governmental authorities;
(c) All costs of interior design and finish schedule plans and
specifications including as-built drawings;
(d) All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee for
33.
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overhead and profit and the cost, of all on-site supervisory and
administrative staff, office, equipment and temporary services rendered by
Landlord's contractor in connection with construction of the Tenant
Improvements;
(e) All fees payable to the Architect and Landlord's engineering firm
if they are required by Tenant to redesign any portion of the Tenant
Improvements following Tenant's approval of the Final Plans and Specifications;
and
(f) Utility connection fees.
In no event shall the Tenant Improvements Cost include any costs of procuring,
constructing or installing in the Premises any of Tenant's personal property or
trade fixtures.
9. Excess Tenant Improvements Cost. If the Tenant Improvements Cost in
-------------------------------
more than the sum of the Tenant Improvements. Allowance, the Tenant
Improvements Deposit and the Tenant Improvements Loan, then the difference
between the Tenant Improvements Cost and the sum of the Tenant Improvements
Deposit, the Tenant Improvements Allowance and the Tenant Improvements Loan
("Excess Tenant Improvements Cost") shall be paid by Tenant to Landlord in cash,
within ten (10) days of delivery of statements from Landlord and Tenant
therefor. If construction of the Tenant Improvements will result in Excess
Tenant Improvements Cost, Landlord shall not be obligated to commence
construction of the Tenant Improvements if payment of the Excess Tenant
Improvements Costs by Tenant is not received within ten (10) days after delivery
by Landlord to Tenant of a statement therefor; provided, however, that Landlord
may, at its option, commence construction of the Tenant Improvements, in which
event Tenant shall pay the Excess Tenant Improvements Cost within ten (10) days
after delivery by Landlord to Tenant of the statement therefor If Landlord so
elects to commence construction of the Tenant Improvements or has already
commenced construction of the Tenant Improvements when there occurs an Excess
Tenant Improvements cost, then Landlord shall be entitled to suspend or
terminate construction of the Tenant Improvements if payment by Tenant to
Landlord of the Excess Tenant Improvement Costs has not been received within ten
(10) days after delivery by Landlord to Tenant of a statement therefor.
10. Change Request. When the Final Plans and Specifications have been
--------------
approved by Landlord, there shall be no changes without Landlord's prior written
consent except for (a) necessary on-site installation variations or minor
changes necessary to comply with building codes and other governmental
regulations; (b) one revision, if requested by Tenant, to adjust the estimated
Tenant Improvements Cost to Tenant's T. I. Budget therefor, as permitted by
Paragraph 3 above; and (c) changes approved in writing by both parties. Any
costs related to such governmentally required or requested and approved changes
shall be added to the Tenant Improvements Cost and, to the extent such cost
results in Excess Tenant Improvements Cost, shall be paid for by Tenant as and
with any Excess Tenant Improvements Cost as set forth in Paragraph 9. The
billing for such additional costs to Tenant shall be accompanied by evidence of
the amounts billed as is customarily used in the business, Costs related to
changes shall include, without, limitation, any architectural or design fees,
and Landlord Is general contractor's price for affecting the change.
34.
<PAGE>
11. Roof. Notwithstanding anything in the Lease or this Exhibit B to the
---- ---------
contrary, Landlord shall install a new roof on the Premises prior to the
Commencement Date. The cost of such roof shall be paid out of Landlord's own
funds and shall not be debited against the Tenant Improvements Allowance, Tenant
Improvements Deposit or Tenant Improvements Loan.
12. HVAC Improvements.
-----------------
A. Repair and Replacement of Existing HVAC Units. Prior to the
---------------------------------------------
Commencement Date, Landlord shall, at its sole cost and expense, repair the
existing HVAC units serving the Premises which are deemed repairable by the
Contractor (such units being hereinafter referred to as the "Repairable Units").
The remaining HVAC units shall be replaced by Landlord with new units (the
"Replacement Units") prior to the Commencement Date, provided that Tenant shall
pay to Landlord as Additional Rent its prorata share of the cost of the
Replacement units falling due within tie Term (including any Renewal Terms)
based upon the amortization of such cost over the useful life of the Replacement
Units, as reasonably determined by Landlord accordance with GAAP. In the event
Tenant desires Landlord to replace (rather than to repair) the Repairable Units,
then Landlord shall so replace such Repairable Units with a Replacement Units
prior to the Commencement Date provided that Tenant shall pay to Landlord as
Additional Rent its prorata share of the cost of the Replacement Units falling
due within the Term in the manner previously described in this Paragraph 12.A.
B. Installation of Additional HVAC Units. In the event that, as
-------------------------------------
part of the Tenant Improvements, Tenant requests that Landlord install any
additional HVAC units in the Premises (in addition to the existing HVAC units,
which shall be repaired and/or replaced in accordance with Paragraph 12.A above)
or any additional related equipment to provide additional air-handling capacity
for Tenant's specific use of the Premises, then the cost of such additional
HVAC units and equipment shall be part of the Tenant Improvements cost and shall
be paid for out of the Tenant Improvements Allowance, the Tenant Improvements
Deposit and the Tenant Improvements Loan. At Tenant's request, such additional
HVAC units and equipment serving the clean Rooms will be refurbished or
reconditioned (rather than new) units; provided, however, that if Tenant so
elects to install refurbished or reconditioned (rather than new) units, then at
the request of Landlord made at any time prior to the expiration of the Term,
Tenant shall be required to remove such refurbished or reconditioned units from
the Premises on or before the Expiration Date and to repair and restore any
damage to the Premises resulting from such removal.
13. Termination. If the Lease is terminated prior to completion of the
-----------
Tenant Improvements for any reason due to the Default of Tenant under the Lease,
in addition to any other damages available to Landlord, Tenant shall pay to
Landlord, within five (5) days of receipt of a statement therefor, all costs
incurred by Landlord through the date of termination in connection with the
Tenant Improvements (collectively, "Landlord's Costs"), without limiting the
foregoing, upon such termination, Landlord shall have the right to withdraw
funds from the Account to pay Landlord's Costs and/or to complete the Tenant
Improvements or to remove the Tenant Improvements theretofore constructed by
Landlord in the Premises. Landlord shall have the right to terminate the Lease,
upon written notice to Tenant, if Landlord is unable to obtain a building permit
for the Tenant Improvements within one hundred twenty (120) days from the date
the Lease is mutually executed.
35.
<PAGE>
14. Interest. Any payments required to be made by Tenant hereunder which
--------
are not paid when due shall bear interest at the maximum rate permitted by law
from the due date therefor until paid.
15. Disclaimer. Landlord shall have no liability to Tenant in the event
----------
construction of the Tenant improvements is delayed or prevented due to any cause
beyond Landlord's reasonable control. If Tenant is entitled or permitted to
enter the Premises prior to completion of the Tenant Improvements, Landlord
shall not be liable to Tenant or its employees or agents for any loss or damage
to property, or injury to person, arising from or related to construction of the
Tenant Improvements. Tenant shall take all reasonable precautions to protect
against such loss, damage or injury during construction of the Tenant
Improvements, and shall not interfere with the conduct of the Tenant Improvement
work. Tenant shall cooperate with all reasonable directives of Landlord and
Landlord's contractor in order to minimize any disruption or delay in completion
of the Tenant Improvements work.
36.
<PAGE>
EXHIBIT B-1
FINAL PLANS AND SPECIFICATIONS
Reference is hereby made to that certain Lease Agreement dated August
4, 1995 by and between Aetna Life Insurance Company, a Connecticut corporation,
as landlord ("Landlord"), and Hine Design, Inc., a California corporation, as
tenant ("Tenant"), ("Lease Agreement").
The Final Plans and Specifications (as defined in Exhibit B to the
Lease Agreement) consists of the following described drawings, specifications
and other documents:
Title of Drawing, Specification
or Other Document Date
- -------------------------------- ------------------
The Final Plans and Specifications have been initialed by both
Landlord and Tenant and are on file with Landlord.
Initials; Landlord______________ Tenant________________
37.
<PAGE>
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
LANDLORD AETNA LIFE INSURANCE COMPANY DESIGN, INC.
TENANT: HINE DESIGN, INC.
LEASE DATE August 4, 1995
PREMISES: Located at 241 E. Java Drive,
Sunnyvale, California
Tenant hereby accepts the Premises as being in the condition required
under the Lease, with all Tenant Improvements completed (except for minor
punchlist items which Landlord agrees to complete).
The Commencement Date of the above referenced Lease is hereby
established as 1-29-96.
TENANT:
HINE DESIGN, INC.,
A California corporation
By /s/ Dominic J. Credi
-----------------------------------
Print_________________________________
Name: Dominic J. Credi
Its___________________________________
Approved and Agreed:
AETNA LIFE COMPANY,
a Connecticut corporation
By_________________________________
Print______________________________
Name:______________________________
Its________________________________
TENANT FILE___________________________
38.
<PAGE>
Exhibit 10.15
File No.__________
INDUSTRIAL SPACE LEASE
(MULTI-TENANT NET)
THIS LEASE, dated November 13, 1995 for reference purposes only, is made by and
between PEN Associates a California partnership ("Landlord"), and Asyst
Technologies, Inc., a Delaware corporation ("Tenant"), to be effective and
binding upon the parties as of the date the last of the designated signatories
to this Lease shall have executed this Lease (the "Effective Date of this
Lease").
ARTICLE 1
REFERENCES
1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
A. Tenant's Address for Notices: 48761 Kate Road
Fremont, CA 94538
B. Tenant's Representative: Orval Hogsett
Phone Number: (510) 661-5042
C. Landlord's Address for Notices: 1285 Oakmead Parkway
Sunnyvale, California
94086
D. Landlord's Representative: William N. Neidig
Phone Number: (408) 730-5500
E. Intended Commencement Date: January 1, 1996
F. Intended Term: four years and one month
G. Lease Expiration Date: January 31, 2000
H. Tenant's Punchlist Period: Ten Business Days
I. First Month's Prepaid Rent: $ 25,640.00
J. Last Month's Prepaid Rent: $ -0-
K. Tenant's Security Deposit: $ 27,400.00
L. Late Charge Amount: Ten percent (10%) of the
delinquent amount
M. Tenant's Required Liability Coverage: $3,000,000.00
N. Tenant's Number of Parking Spaces: 122
O. Brokers: Mike Michaels, Bill Puterbaugh, CPS Commercial Real
Estate
P. Project or Property: That certain real property situated in the
City of Fremont County of Alameda, State of California, as presently improved
with two ( 2 ) buildings, which real property is shown on the Site Plan attached
hereto as Exhibit "A" and is commonly known ,as or otherwise described as
follows:
48603 - 48633 Warm Springs Boulevard
Fremont, California
Q. Building: That certain Building within the Project in which the
Leased Premises are located, which Building is shown outlined in red on Exhibit
"A" hereto.
1.
<PAGE>
R. Common Areas: The "Common Areas" shall mean those areas within
the Project which are located outside the buildings and which ,are provided and
designated by Landlord from time to time for general use by tenants of the
Project including driveways, pedestrian walkways, parking spaces, landscaped
areas and enclosed trash disposal areas.
S. Leased Premises: That certain space which is a portion of the
Building, which space is shown outlined in red on the Floor Plan attached hereto
as Exhibit "B" consisting of approximately 35,360 square feet of leasable area
and, for purposes of this Lease, agreed to contain said number of square feet.
The Leased Premises are commonly known as or otherwise described as follows:
48633 Warm Springs Boulevard
Fremont, California
T. Base Monthly Rent: The term "Base Monthly Rent" shall mean the
following:
Twenty five thousand six hundred forty dollars ($25,640.00) for
each month from January 1, 1996 through January 31, 1998
Twenty seven thousand 'four hundred dollars ($27,400.00) for each
month from February 1, 1998 through January 31, 2000
U. Permitted Use: The term "Permitted Use" shall mean the following:
Office, research and development, light manufacturing, and
warehousing of Tenant's products.
V. Exhibits: The term "Exhibits" shall mean the Exhibits to this
Lease which are described as follows:
Exhibit "A" - Site Plan showing the Project and delineating the
Building in which the Leased Premises are located.
Exhibit "B" - Floor Plan outlining the Leased Premises.
Exhibit "C" - Tenant Improvement Agreement
Exhibit "D" - Acceptance Agreement
W. Addenda: The term "Addenda" shall mean the Addendum (or Addenda)
to this Lease which is (or are) described as follows:
First Addendum To Lease
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the terms and subject to the conditions of this Lease, that certain
interior space described in Article l(s), as the Leased Premises. Landlord
further reserves the right to install, maintain, use and replace ducts, wires,
conduits and pipes leading through the Leased Premises in locations which will
not materially interfere with Tenant's use of the Leased Premises (see
attached). Tenant's lease of the Leased Premises, together with the appurtenant
right to use the Common Areas as described in Article 2.2 below, shall be
conditioned upon and be subject to the continuing compliance by Tenant with (i)
all tile terms anti conditions of the Lease, (ii) all Laws governing the use of
the Leased Premises and the Project, (iii) all Private Restrictions, easements
and other matters now of public record respecting tile use of the Leased
Premises and the Project, and (iv) all reasonable rules and regulations from
time to time established by Landlord.
2.2 RIGHT TO USE COMMON AREAS: As an appurtenant right to Tenant's right
to the use of the Leased Premises, Tenant shall have the non-exclusive right to
use the Common Areas in conjunction with other tenants of the Project and their
invitees, subject to the limitations on such use as set forth in Article 4, and
solely for the purposes for which they were designed
2.
<PAGE>
and intended. Tenant's right to use the Common Areas shall terminate
concurrently with any termination of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term or this Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Article 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date. in
which case the Lease Commencement Date shall be as determined pursuant to
Article 2.7 below (the "Lease Commencement Date"). The term of this Lease shall
end on the Lease Expiration Date (as set forth in Article 1), irrespective of
whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence (see attached). The Lease Term shall be that period of time
commencing on the Lease Commencement Date and ending on the Lease Expiration
Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession of
the Leased Premises on or before the Intended Commencement Date (as set forth in
Article 1) in their presently existing condition, broom clean, unless Landlord
shall have agreed, as a condition to Tenant's obligation to accept possession of
the Leased Premises, pursuant to an Exhibit or Addenda attached to and made a
part of this Lease to modify existing interior improvements or to make,
construct and/or install additional specified improvements within the Leased
Premises, in which case Landlord shall deliver to Tenant possession of the
Leased Premises on or before the Intended Commencement Date as so modified
and/or improved. If Landlord is unable to so deliver possession of the Leased
Premises to Tenant on or before the Intended Commencement Date, for whatever
reason, Landlord shall not be in default under this Lease, nor shall this Lease
be void, voidable or cancelable by Tenant until the lapse of ninety, (90) days
after the Intended Commencement Date (the "delivery grace period"; however, the
Lease Commencement Date shall not be deemed to have occurred until such date as
Landlord notifies Tenant that the Leased Premises are Ready for Occupancy.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in delivering possession of the
Leased Premises to Tenant by reason of Force Majeure or the actions of Tenant.
If Landlord is unable to deliver possession of the Leased Premises to Tenant
within the described delivery grace period (including any extensions thereof by
reason of Force Majeure or the actions of Tenant), then Tenant's sole remedy
shall be to cancel and terminate this Lease, and in no event shall Landlord be
liable to Tenant for such delay. Tenant may not cancel this Lease at any time
after the date Landlord notifies Tenant the Leased Premises are Ready for
Occupancy (see attached).
2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected
the Leased Premises and is willing to accept them in their existing condition,
broom clean, unless Landlord shall have agreed, as a condition to Tenant's
obligation to accept possession of the Leased Premises, pursuant to an Exhibit
or Addenda attached to and made a part of this Lease to modify existing interior
improvements or to make, construct and/or install additional specified
improvements within the Leased Premises, in which case Tenant agrees to accept
possession of the Leased Premises when Landlord has substantially completed such
modifications or improvements and the Leased Premises are Ready for Occupancy
(see attached). If Landlord shall have so modified existing improvements or
constructed additional improvements within the Leased Premises for Tenant,
Tenant shall, within Tenant's Punchlist Period (as set forth in Article 1) which
shall commence on the date that Landlord notifies Tenant that the Leased
Premises are Ready for Occupancy, submit to Landlord a signed copy of the
Acceptance Agreement attached hereto as Exhibit "D" together with a punchlist of
all incomplete and/or improper work performed by Landlord. Upon the expiration
of Tenant's Punchlist Period, Tenant shall be conclusively deemed to have
accepted the Leased Premises in their then-existing condition as so delivered by
Landlord to Tenant, except as to those items reasonably set forth in the
punchlist submitted to Landlord prior to the expiration of said period.
Landlord agrees to correct all items reasonably set forth in Tenant's punchlist,
provided that such punchlist was submitted to Landlord within Tenant's Punchlist
Period. Additionally, Landlord agrees to place in good working order all
existing plumbing, lighting, heating, ventilating and air conditioning systems
within the Leased Premises and all man doors and roll-up truck doors serving the
Leased Premises to the extent that such systems and/or items are not in good
operating condition as of the date Tenant accepts possession of the Leased
Premises; provided that, and only if, Tenant
3.
<PAGE>
notifies Landlord in writing of such failures or deficiencies within thirty (30)
business days from the date Tenant so accepts possession of the Leased Premises.
2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from the Leased Premises, and shall vacate and surrender the Leased
Premises to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date (see attached). Landlord, at Tenant's expense, shall retain a
mechanical contractor to service all heating, ventilation and air conditioning
equipment, and Tenant shall pay the cost to restore (or replace as required),
said equipment to good working order. Tenant shall pay as a project maintenance
cost the cost of restoring or replacing all trees, shrubs, plants, lawn and
ground cover, and repair (or replace as required) all paved surfaces of the
Property, and otherwise satisfy all requirements to repair any damage or wear to
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall repair all damage to the Leased Premises caused by Tenant or by
Tenant's removal of Tenant's property and all damage to the exterior of the
Building caused by Tenant's removal of Tenant's signs. Tenant shall patch and
refinish, to Landlord's reasonable satisfaction, all penetrations made by Tenant
or its employees to the floor, walls or ceiling of the Leased Premises, whether
such penetrations were made with Landlord's approval or not. Tenant shall clean,
repair or replace all stained or damaged ceiling tiles, wall coverings and clean
or replace as may be required floor coverings to the reasonable satisfaction of
Landlord. Tenant shall replace all burned out light bulbs and damaged light
lenses, and clean and repaint as reasonably necessary all painted walls. Tenant
shall repair all damage caused by Tenant to the exterior surface of the
Building and the paved surfaces of the outside areas adjoining the Leased
Premises and, where necessary, replace or resurface same. Additionally, Tenant
shall, prior to the expiration or sooner termination of this Lease, remove any
improvements constructed or installed by Tenant which Landlord requests be so
removed by Tenant and repair all damage caused by such removal (see attached).
If the Leased Premises are not surrendered to Landlord in the condition required
by this Article at the expiration or sooner termination of this Lease, Landlord
may, at Tenant's expense, so remove Tenant's signs, property and/or improvements
not so removed and make such repairs and replacements not so made or hire, at
Tenant's expense, independent contractors to perform such work. Tenant shall be
liable to Landlord for all costs incurred by Landlord in returning the Leased
Premises to the required condition, plus interest on all costs incurred from the
date paid by Landlord at the then maximum rate of interest not prohibited by Law
until paid, payable by Tenant to Landlord within ten days after receipt of a
statement therefore from Landlord, and Tenant shall be deemed to have
impermissibly held over until such time as such required work is completed, and
Tenant shall pay Base Monthly Rent and Additional Rent in accordance with the
terms of Section 13.2 (Holding Over) until such work is completed. Tenant shall
indemnify Landlord against loss or liability resulting from delay by Tenant in
so surrendering the Leased Premises, including, without limitation, any claims
made by any succeeding tenant or any losses to Landlord due to lost
opportunities to lease to succeeding tenants.
2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased
Premises prior to the Intended Commencement Date (or permits its contractors to
enter the Leased Premises prior to the Intended Commencement Date), unless
otherwise agreed in writing by Landlord, the Lease Commencement Date shall be
deemed to have occurred on such sooner date, and Tenant shall be obligated to
perform all its obligations under this Lease, including the obligation to pay
rent, from that sooner date.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Dated (as
determined pursuant Article 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefore, in advance on the
first day of each calendar month, as base monthly rent, the amount set forth as
"Base Monthly Rent" in Article 1 (the Base Monthly Rent").
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3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
A. Tenant's Proportionate Share of all Building Operating Expenses
(as defined in Article 13). Payment shall be made by whichever of the following
methods (or combination of methods) is (are) from time to time designated by
Landlord:
(1) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, Tenant's Proportionate Share of such expenses (or group
of expenses) as paid or incurred by Landlord, and Tenant shall pay such share of
such expenses within ten days after receipt of a written bill therefore from
Landlord; and/or
(2) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (or group of expenses, such as Landlord's
Insurance Costs or Real Property Taxes) which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay its Proportionate Share of such expenses for such year in equal
monthly installments during such year with the installments of Base Monthly
Rent. Landlord reserves the right to change from time to time the method of
billing Tenant its Proportionate Share of such expenses or the periodic basis on
which such expenses are billed.
B. Landlord's share of the consideration received by Tenant upon
certain assignments and sub-lettings as required by Article 7;
C. Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
D. Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
3.3 YEAR END ADJUSTMENTS: If Landlord shall have elected to charge Tenant
its Proportionate Share of the Building Operating Expenses (or any group of such
expenses) on an estimated basis in accordance with the provisions of Article
3.2A(2) above, Landlord shall furnish to Tenant within three months following
the end of the applicable calendar or fiscal year, as the case may be, a
statement setting forth (i) the amount of such expenses paid or incurred during
the just ended calendar or fiscal year, as appropriate, and (ii) Tenant's
Proportionate Share of such expenses for such period. If Tenant shall have paid
more than its Proportionate Share of such expenses for the stated period,
Landlord shall, at its election, either (i) credit the amount of such
overpayment toward the next ensuing payment or payments of Additional Rent that
would otherwise be due or (ii) refund within fifteen days in cash to Tenant the
amount of such overpayment. If such year end statement shall show that Tenant
did not pay its Proportionate Share of any such expenses in full, then Tenant
shall pay to Landlord the amount of such underpayment within ten days from
Landlord's billing of same to Tenant. The provisions of this Article shall
survive the expiration or sooner termination or this Lease.
LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within six business days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article 1 as the "Late Charge Amount," and if any Additional Rent
is not received by Landlord within six business days after same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to ten
percent of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for its loss suffered by reason of Tenant's
failure to make timely payment. In no event shall this provision for a late
charge be deemed to grant to Tenant a grace period or extension of time within
which to pay any rental installment or prevent Landlord from exercising any
right or remedy available to Landlord upon Tenant's failure to pay each rental
installment due under this Lease when due, including the right to terminate this
Lease. If any
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rent remains delinquent for a period in excess of six business days, the, in
addition to such late charge, Tenant shall pay to Landlord interest on any rent
that is not so paid from said sixth day (see attached) until paid.
3.4 PAYMENT OF RENT: All rent shall be paid in lawful money of the United
States, without any abatement, deduction or offset for any reason whatsoever
(see attached), to Landlord at such address as Landlord may designate from time
to time Tenant's obligation to pay Base Monthly Rent and all Additional Rent
shall be prorated at the commencement and expiration of the Lease Term. The
failure by Tenant to pay any Additional Rent as required pursuant to this Lease
when due shall be treated the same as a failure by Tenant to pay Base Monthly
Rent when due, and Landlord shall have the same rights and remedies against
Tenant as Landlord would have if Tenant failed to pay the Base Monthly Rent when
due.
3.5 PREPAID RENT: Upon signing this Lease, Tenant shall immediately pay to
Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against file first installment(s) of Base Monthly
Rent due hereunder. Additionally,
SECURITY DEPOSIT: Upon signing this Lease, Tenant shall immediately deposit
with Landlord the amount set forth in Article 1 as the "Security Deposit" as
security for the performance by Tenant of the terms of this Lease to be
performed by Tenant, and not as prepayment of rent. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of Base
Monthly Rent or Additional Rent or a late charge or interest on defaulted rent;
(ii) to repair damage to the Leased Premises caused by Tenant; (iii) to clean
and repair the Leased Premises following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2;
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises In
this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950.7(c) of the
California Civil Code and/or any successor statute In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum. If Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent", Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from its general accounts. Tenant
shall not be entitled to any interest on the Security Deposit (see attached). If
Landlord transfers the Building during the Lease Term, Landlord shall pay the
Security Deposit to any subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit (see attached). Tenant specifically grants to
Landlord (and hereby waives the provision of California Civil Code Section
1950.7 to the contrary) a period of thirty days following a surrender of the
Leased Premises by Tenant to Landlord within which to return the Security
Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
and Tenant that sixty days is a reasonable period of time within which to
inspect the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent.
ARTICLE 4
USE OF LEASED PREMISES AND COMMON AREAS
4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term. Any discontinuance
of such use for a period of thirty consecutive calendar days without Landlord's
knowledge shall be, at Landlord's election, a default by Tenant under the terms
of this Lease. Subject to the limitations contained in this Article 4, Tenant
shall have
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the right to use the Common Areas, in conjunction with other tenants and during
normal business hours, solely for the purposes for which they were intended and
for no other purposes whatsoever. Tenant shall not have the right to use the
exterior surfaces of exterior walls, the area beneath the floor or the area
above the ceiling of the Leased Premises.
4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything to
be done in or about the Leased Premises, the Building, the Common Areas or the
Project which does or could (i) interfere with the rights of other tenants or
occupants of the Building or the Project, (ii) jeopardize the structural
integrity of the Building or (iii) cause damage to any part of the Building or
the Project. Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leased Premises or the
Building, (ii) damage, overload, corrode, or impair the efficient operation of
any electrical, plumbing, sewer, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, walls, ceiling or roof systems
which could endanger structural integrity of the Building or damage its floors,
foundations or supporting structural components. Tenant shall not place any
explosive, flammable or harmful fluids, including Hazardous Materials, or other
waste materials in the drainage systems of the Building or the Project. Tenant
shall not drain or discharge any fluids in the landscaped areas or across the
paved areas of the Project. Tenant shall not use any area located outside the
Leased Premises for the storage of its materials, supplies, inventory or
equipment, and all such materials, supplies, inventory and equipment shall at
all times be stored within the Leased Premises. Tenant shall not commit nor
permit to be committed any waste in or about the Leased Premises, the Common
Areas or the Project.
4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere with
the businesses of or unreasonably annoy other tenants of the Building or the
Project. All dust, fumes, odors and other emissions generated by Tenant's use of
the Leased Premises shall be sufficiently dissipated in accordance with sound
environmental practices and exhausted from the Leased Premises in such a manner
so as not to interfere with the businesses of or unreasonably annoy other
tenants of the Building or the Project, or cause any damage to the Leased
Premises or the Building or any component part thereof or the property of other
tenants of the Building or the Project.
4.4 TRASH DISPOSAL: Tenant shall provide trash and garbage disposal
facilities inside the Leased Premises for all of its trash, garbage and waste
requirements and shall cause such trash, garbage and waste to be regularly
removed from the Leased Premises at Tenant's sole cost. Tenant shall keep all
areas outside the Leased Premises and all fire corridors and mechanical
equipment rooms in or about the Leased Premises free and clear of all trash,
garbage, waste and boxes containing same at all times.
4.5 PARKING: Tenant is allocated, and Tenant and its employees and
invitees shall have the non-exclusive right to use, not more than the number of
parking spaces set forth in Article 1 as "Tenant's Number of Parking Spaces".
Tenant shall not, at any time, use or permit its employees or invitees to use
more parking spaces than the number so allocated to Tenant. Tenant shall not
have the exclusive right to use any specific parking space, and Landlord
reserves the right to designate from time to time the location of the parking
spaces allocated for Tenant's use. In the event Landlord elects or is required
by any Law to limit or control parking within the Project, whether by validation
of parking tickets or any other method, Tenant agrees to participate in such
validation or other program as reasonably established by Landlord. Tenant shall
not, at any time, park or permit to be parked any trucks or vehicles adjacent to
entryways or loading areas within the Project so as to interfere in any way with
the use of such areas, nor shall Tenant, at any time, park or permit the parking
of Tenant's trucks or other vehicles, or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the Common Areas not designated by
Landlord for such use by Tenant. Tenant shall not, at any time, park or permit
to be parked any recreational vehicles, inoperative vehicles or equipment on any
portion of the common parking area or other Common Areas of the Project. Tenant
agrees to assume responsibility for compliance by its employees and invitees
with the parking provisions contained herein. If Tenant or its employees park
any vehicle within the Project in violation of these provisions, then Landlord
may charge Tenant, as Additional Rent, and Tenant agrees to pay, as Additional
Rent,
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Fifty Dollars per day for each day or partial day that each such vehicle is
illegally parked, or parked in any area other than that designated. Tenant
hereby authorizes Landlord, at Tenant's sole expense, to tow away from the
Project and store until redeemed by its owner any vehicle belonging to Tenant or
Tenant's employees parked in violation of these provisions.
4.6 SIGNS: Tenant shall not place or install on or within any portion of
the Leased Premises, the Building, the Common Areas or the Project any sign
(other than a business identification sign first approved by Landlord in
accordance with this Article), advertisements, banners, placards or pictures
which are visible from the exterior of the Leased Premises. Tenant shall not
place or install on or within any portion of the Leased Premises, the Building,
the Common Areas or the Project any business identification sign which is
visible from the exterior of the Leased Premises until Landlord shall have first
approved in writing the location, size, content, design, method of attachment
and material to be used in the making of such sign. Any signs, once approved by
Landlord, shall be installed only in strict compliance with Landlord's approval,
at Tenant's expense, using a person first approved by Landlord to install same.
Landlord may remove any signs (not first approved in writing by Landlord),
advertisements, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the Building, the Common Areas or the Project and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition. Tenant
shall remove any such signs, repair any damage caused thereby, and restore the
surface upon which the sign was affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not use
or permit any person to use the Leased Premises in any manner which violates any
Laws or Private Restrictions. Tenant shall abide by and shall promptly observe
and comply with, at its sole cost and expense, all Laws and Private Restrictions
respecting the use and occupancy of the Leased Premises, the Building, the
Common Areas or the Project and shall defend with competent counsel, indemnify
and hold Landlord harmless from any claims, damages or liability resulting from
Tenant's failure to do so.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any
insurance policies carried by Landlord in accordance with the provisions of this
Lease, Tenant shall not conduct (nor permit any other person to conduct) any
activities within the Leased Premises, or store, keep or use anything within the
Leased Premises which (i) is prohibited under the terms of any of such policies,
(ii) could result in the termination of the coverage afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any of
such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies. Tenant
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER: Upon 48 hours' notice Landlord and its
agents shall have the right to enter the Leased Premises during normal business
hours and subject to Tenant's reasonable security measures for the purpose of
(i) inspecting the same; (ii) supplying any services to be provided by Landlord
to Tenant; (iii) showing the Leased Premises to prospective purchasers,
mortgagees or tenants: (iv) making necessary alterations, additions or repairs;
(v) performing any of Tenant's obligations when Tenant has failed to do so after
giving Tenant reasonable written notice of its intent to do so; and (vi) posting
notices of non-responsibility or "For Lease" or "For Sale" signs. Additionally,
Landlord shall have the right to enter the Leased Premises at times of emergency
(see attached). Any entry into the Leased Premises or portions thereof obtained
by Landlord in accordance with this Article shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Leased Premises, or an eviction, actual or constructive, of Tenant from the
Leased Premises or any portion thereof.
4.10 CONTROL OF COMMON AREAS: Landlord shall at all times have exclusive
control of the Common Areas. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant to
any reduction in or abatement of rent, to: (i) (see attached) temporarily close
any part of the Common Areas to whatever extent required in the opinion of
Landlord's counsel to prevent a dedication thereof or the accrual of
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any prescriptive rights therein; (ii) (see attached) temporarily close all or
any part of the Common Areas to perform maintenance or for any reason deemed
sufficient by Landlord; (iii) change the shape, size, location, number and
extent of improvements within the Common Areas including, without limitation,
changing the location of driveways, enhances; exits parking spaces, parking
areas, sidewalks, directional or locator signs, or the direction of the now of
triune; anal1 (iv) to make additions to the Common Areas including, without
limitation, the construction of parking structures. Landlord shall have the
right to change the name or address of the Building. Tenant, in its use of the
Common Areas, shall keep the Common Areas free and clear of all obstructions
created or permitted by Tenant. If, in the opinion of Landlord, unauthorized
persons are using any of the Common Areas by reason of, or under claim of, the
express or implied authority or consent of Tenant, then Tenant, upon demand of
Landlord, shall restrain, to the fullest extent then allowed by Law, such
unauthorized use, and shall initiate such appropriate proceedings as may be
required to so restrain such use. Nothing contained herein shall affect the
right of Landlord at any time to remove any unauthorized person from the Common
Areas or to prohibit the use of the Common Areas by unauthorized persons,
including, without limitation, the right to prohibit mobile food and beverage
vendors. In exercising any such right regarding the Common Areas, Landlord shall
make a reasonable effort to minimize any disruption to Tenant's business.
4.11 RULES AND REGULATIONS: Landlord shall have the right from time to
time to establish reasonable rules and regulations and/or amendments or
additions thereto respecting the use of space within the Project and the use of
the Common Areas for the care and orderly management of the Project and the
safety of its tenants, occupants and invitees. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this
Lease. If there is a conflict between the rules and regulations and any of the
provisions of this Lease, the provisions of this Lease shall prevail. Landlord
shall not be responsible or liable to Tenant for the violation of such rules and
regulations by any other tenant of the Project.
4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage (see attached). Tenant shall not be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of such compliance or cooperation. Tenant agrees at all times to
cooperate fully with Landlord and to abide by all rules and regulations and
requirements which Landlord may reasonably prescribe in order to comply with the
requirements and recommendations of governmental agencies regulating, or
otherwise involved in, the protection of the environment.
4.13 OUTSIDE AREAS: No materials, pallets, supplies, tanks or containers
whether above or below ground level, equipment, finished products or semi-
finished products, raw materials, inoperable vehicles or articles of any nature
shall be stored upon or permitted to remain outside of the Leased Premises
except in fully fenced and screened areas outside the Building which have been
designed for such purpose and have been approved in writing by Landlord for such
use by Tenant.
4.14 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:
A. Any handling, transportation, storage, treatment, disposal or
use of Hazardous Materials by Tenant, Tenant's Agents, or any other party after
the Effective Date of this Lease in or about the Property shall strictly comply
with all applicable Hazardous Materials Laws. Tenant shall indemnify, defend
upon demand with counsel reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses, claims, damages, lost
profits, consequential damages, interest, penalties, fines, court costs,
remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Property by Tenant, Tenant's Agents, Permitees, or Invitees after the Effective
Date.
B. If the presence of Hazardous Materials on the Property caused or
permitted by Tenant, Tenant's Agents, Permittees, or Invitees after the
Effective Date of this Lease results in contamination or deterioration of water
or soil or any other part of the Property,
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then Tenant shall promptly take any and all action necessary to investigate and
remediate such contamination. Tenant shall further be solely responsible for,
and shall defend, indemnify and hold Landlord and its agents harmless from and
against all claims, costs and liabilities, including attorney's fees and costs,
arising out of or in connection with any investigation and remediation
(including investigative analysis, removal, cleanup, and/or restoration work)
required hereunder (see attached) to return the Leased Premises, Building,
Common Areas, Outside Areas, and/or Property and any other property of whatever
nature to their condition existing prior to the appearance of such Hazardous
Materials.
C. Landlord and Tenant shall each give written notice to the other
as soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination of the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant may use
small quantities of household chemicals such as adhesive, lubricants, and
cleaning fluids in order to conduct its business at the Premises and such other
Hazardous Materials as are necessary to the operation of Tenant's business of
which Landlord receives notice prior to such Hazardous Materials being brought
onto the Property (or any portion thereof) and which Landlord consents in
writing may be brought onto the Property. In granting Landlord's consent,
Landlord may specify the location and manner or use, storage, or handling of any
Hazardous Material. Landlord's consent shall in no way relieve Tenant from any
of its obligations as contained herein. Tenant shall notify Landlord in writing
at least ten (10) days prior to the first appearance of any Hazardous Material
on the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall provide Landlord with a list of all Hazardous Materials and the
quantities of each Hazardous Material to be stored, or used, on any portion of
the Property, and upon Landlord's request Tenant shall provide Landlord with
copies of any and all Hazardous Materials Management Plans, Material Safety Data
Sheets, Hazardous Waste Manifests, and other documentation maintained or
received by Tenant pertaining to the Hazardous Materials used, stored, or
transported or to be used, stored, or transported on any portion of the
Property. At any time during the Lease Term, Tenant shall, within five days
after written request therefor received from Landlord, disclose in writing all
Hazardous Materials that are being used by Tenant on the Property (or have been
used on the Property), the nature of such use, and the manner of storage and
disposal.
D. Landlord may cause testing wells to be installed on the Property
and may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. If Tenant so requests, Landlord shall supply Tenant with copies of
such test results. The cost of such tests and of the installation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in A and/or B above. Landlord may retain consultants to
inspect the Property, conduct reasonable periodic environmental audits, and
review any information provided by Tenant. Tenant shall pay the reasonable cost
of fees charged by Landlord and/or Landlord's consultants as a Project
Maintenance Cost.
E. Upon the expiration or earlier termination of the Lease, Tenant,
at its sole cost, shall remove all Hazardous Materials from the Property. If
Tenant fails to so surrender the Property, Tenant shall indemnify and hold
Landlord harmless from all damages resulting from Tenant's failure to surrender
the Property as required by this Subsection, including, without limitation, any
claims or damages in connection with the condition of the Property including,
without limitation, damages occasioned by the inability to Lease the Property
(or any portion thereof) or a reduction in the fair market and/or rental value
of the Property, Building, Common Areas, Outside Areas, and/or Property by
reason of the existence of any Hazardous Materials in or around the Leased
Premises, Building, Common Areas, Outside Areas, and/or Property. If any action
is required to be taken by a governmental authority to test, monitor, and/or
clean up Hazardous Materials from the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property and such action is not completed prior to the
expiration or earlier termination of the Lease, Tenant shall be deemed to have
impermissibly held over until such time as such required action is completed,
and Tenant shall pay Base Monthly Rent and Additional Rent in accordance with
the terms of Section 13.2 (Holding Over). In addition, Landlord shall be
entitled to all damages directly or indirectly incurred in connection with such
holding over, including without limitation, damages occasioned by the inability
to Lease the Property or a reduction of the fair market and/or rental value of
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
10.
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F. As used herein, the term "Hazardous Materials(s)" means any
hazardous or toxic substance, material or waste, which is or becomes regulated
by any federal, state, regional or local governmental authority because it is in
any way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects
any part of the environment or creates risks of any such hazards or effects,
including, but not limited to, petroleum; asbestos, and polychlorinated bipheyls
and any material, substance, or waste (a) defined as a "hazardous waste,"
"extremely hazardous waste" or "restricted hazardous waste" under Sections
25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California
Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);
(b) defined as a "hazardous substance" under Section 25316 of the California
Health and Safety Code, Division 20, Chapter 6.8 (Carpenter Presley Tanner
Hazardous Substance Account Act); (c) defined as a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the
California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory); (d) defined as a "hazardous
substance" under Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (e)
defined as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 United States Code Sections 1251 et seq. (33 U.S.C. 1321) or listed
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pursuant to Section 307 of the Clean Water Act (33 U.S.C. 1317); (f) defined as
a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 United States Code Sections 6901 et seq. (42 U.S.C. 6903); or
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(g) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 United
States Code Section 9601 et seq. (42 U.S.C. 9601) or (h) defined as a
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"hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act, 33 U.S.C. 1251 et seq., or (i) listed pursuant to Section 307 of
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the Federal Water Pollution Control Act (33 U.S.C. 1317 ) or (j) regulated
under the Toxic Substances Control Act (15 U.S.C. 2601 et seq.) or (k) defined
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as a "hazardous material "under Section 66680 or 66084 of Title 22 of the
California Code of Regulations (Administrative Code) (1) listed in the United
States Department of Transportation Hazardous Materials Table (49 C. F.R.
172.101) or (m) listed by the Environmental Protection Agency as "hazardous
substances" ( 4 0 C.F.R. Part 302 ) and amendments thereto. The term
"Hazardous Material Laws" shall mean (i) all of the foregoing laws as amended
from time to time and (ii) any other federal, state, or local law, ordinance,
regulation, or order regulating Hazardous Materials.
G. Tenant's failure to comply with any of the requirements of this
Section regarding the storage, use, disposal, or transportation of Hazardous
Materials, or the appearance of any Hazardous Materials on the Leased Premises,
Building, Common Area, Outside Area, and/or the Property without Landlord's
consent shall be an Event of Default as defined in this Lease. The obligations
of Landlord and Tenant under this Section shall survive the expiration or
earlier termination of the Lease Term. The rights and obligations of Landlord
and Tenant within respect to issues relating to Hazardous Materials are
exclusively established by this section. In the event of any inconsistency
between any other part of this Lease and this Section, the terms of this Section
shall control.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or destruction
of the Leased Premises, the Building or the Project caused by an Act of God or
other peril, in which case the provisions of Article 10 shall control, the
parties shall have the following obligations and responsibilities with respect
to the repair and maintenance of the Leased Premises, the Building and the
Common Areas.
A. Tenants Obligation: Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof and all appurtenances thereto, including, without limiting the
generality of the foregoing, (i) all interior walls, floors and ceilings, (ii)
all windows, doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and
drains, (v) all lighting fixtures, bulbs and lamps, (vi) all heating,
ventilating and air conditioning equipment located within the Leased Premises or
located outside the Leased Premises (e.g. rooftop compressors) and serving the
Leased Premises (other than Common HVAC as defined in Subarticle B below), and
(vii) all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to
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regularly, and periodically inspect (not less frequently than every three
months) and perform required maintenance on the heating, ventilating and air
conditioning equipment and systems serving the Leased Premises, or
alternatively, Landlord may, at its election, contract in its own name for such
regular and periodic inspections of and maintenance on such heating, ventilating
and air conditioning equipment and systems and charge to Tenant, as Additional
Rent, the cost thereof. Tenant shall, at its sole cost and expense, repair all
damage to the Building, the Common Areas or the Project caused by the activities
of Tenant, its employees, invitees or contractors promptly following written
notice from Landlord to so repair such damage. If Tenant shall fall to perform
the required maintenance or fail to make repairs required of it pursuant to this
Article within a reasonable period of time following notice from Landlord to do
so, then Landlord may, at its election and without waiving any other remedy it
may otherwise have under this Lease or at Law (see attached), perform such
maintenance or make such repairs and charge to Tenant, as Additional Rent, the
costs so incurred by Landlord for same. All glass within or a part of the Leased
Premises, both interior and exterior, is at the sole risk of Tenant and any
broken glass shall promptly be replaced by Tenant at Tenant's expense with glass
of the same kind, size and quality.
B. Landlord's Obligation: Landlord shall, at all times during the
Lease Term, maintain in good condition and repair: (i) the exterior and
structural parts of the Building (including the foundation, subflooring, load
bearing and exterior walls, and roof); (ii) the Common Areas; and (iii) the
electrical and plumbing systems located outside the Leased Premises which
service the Building. Additionally, to the extent that the Building contains
central heating, ventilating and/or air conditioning systems located outside the
Leased Premises which are designed to service, and are then servicing, more than
a single tenant within the Building ("Common HVAC"), Landlord shall maintain in
good operating condition and repair such Common HVAC equipment and systems. The
provisions of this Subarticle B shall in no way limit the right of Landlord to
charge to tenants of the Project, as Additional Rent pursuant to Article 3, the
costs incurred by Landlord in malting such repairs and/or performing such
maintenance.
5.2 SERVICES AND UTILITIES: The parties shall have the following
responsibilities and obligations with respect to obtaining and paying the cost
of providing the following utilities and other services to the Leased Premises.
A. Gas and Electricity: Tenant shall arrange, at its sole cost and
expense and in its own name, for the supply of gas and electricity to the Leased
Premises. In the event that such services are not separately metered, Tenant
shall, at its sole expense, cause such meters to be installed. Tenant shall be
responsible for determining if the local supplier of gas and/or electricity can
supply the needs of Tenant and whether or not the existing gas and/or electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall pay all charges for gas and electricity as so
supplied to the Leased Premises.
B. Water: Landlord shall provide the Leased Premises with water for
lavatory and drinking purposes only. Tenant shall pay, as Additional Rent, the
cost to Landlord of providing water to the Leased Premises. In the reasonably
event Landlord reasonably believes that Tenant is using more water than what
normally would be required for lavatory and drinking purposes, Landlord at its
election may (i) periodically charge Tenant, as Additional Rent, a sum equal to
Landlord's estimate of the cost of Tenant's excess water usage or (ii) install
(or require Tenant to install at Tenant's sole cost) a separate meter for
purposes of measuring Tenant's water usage and, based upon such meter readings,
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
reasonably estimate of the cost of Tenant's excess water usage. In the event
that Landlord shall so install such a separate meter, Tenant shall pay to
Landlord, upon demand, the costs incurred by Landlord in purchasing and
installing such meter and thereafter all costs incurred by Landlord in
maintaining said meter. The cost of Tenant's water usage shall include any costs
to Landlord in keeping account of such usage and all governmental fees, public
charges or the like attributable to or based upon (such as sewer usage fees) the
use of water to the extent of such usage.
C. Security Service: Tenant acknowledges that Landlord is not
responsible for the security of the Leased Premises or the protection of
Tenant's property or Tenant's employees, invitees or contractors, and that to
the extent Tenant determines that such security or protection services are
advisable or necessary, Tenant shall arrange for and pay the costs of providing
stone.
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D. Trash Disposal: Tenant acknowledges that Landlord is not
responsible for the disposal of Tenant's waste, garbage or trash and that Tenant
shall arrange, in its own name and at its sole cost, for the regular and
periodic removal of such waste, garbage or trash from the Leased Premises. In no
event shall Landlord be required to provide trash bins for the disposal of
Tenant's waste, garbage or trash.
5.3 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate in
a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Project.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Project and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.4 LIMITATION OF LANDLORD'S LIABILITY: (See attached) Landlord shall not
be liable to Tenant for injury to Tenant, its employees, agents, invitees or
contractors, damage to Tenant's property or loss of Tenant's business or
profits, nor shall Tenant be entitled to terminate this Lease or to any
reduction in or abatement of rent by reason of (i) Landlord's failure to perform
any maintenance or repairs to the Project until Tenant shall have first notified
Landlord, in writing, of the need for such maintenance or repairs, and then only
after Landlord shall have had a reasonable period of time following its receipt
of such notice within which to perform such maintenance or repairs, or (ii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility service to the Leased Premises, the
Building or the Project from whatever cause (other than Landlord's active
negligence or willful misconduct), or (iii) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT: Tenant shall not make any alterations to or modifications
of the Leased Premises or construct an improvements to or within the Leased
Premises without Landlord s prior written approval, and then not until Landlord
shall have first approved, in writing, the plans and specifications therefore,
which approval shall not be unreasonably withheld or delayed. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense, using a licensed
contractor first approved by Landlord, in substantial compliance with the
Landlord approved plans and specifications therefore. All work undertaken by
Tenant shall be done in accordance with all Laws and in a good and workmanlike
manner using new materials (see attached). Tenant shall not commence the making
of any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii) Tenant shall have given Landlord at least five
business days prior written notice of its intention to commence such work so
that Landlord may post and file notices of non-responsibility, and (iv) if
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount satisfactory to Landlord to cover any
perils relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modifications,
alterations or improvements to the Common Areas or any ,areas outside of the
Leased Premises. As used in this Article, the term "modifications, alterations
and/or improvements" shall include, without limitation, the installation of
additional electrical outlets, overhead lighting fixtures, drains, sinks,
partitions, doorways, or the like.
6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, wall decorations and trade fixtures)
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease Term. Any such modifications,
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
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approval first obtained in accordance with the provisions of Article 6.1 above.
At the expiration or sooner termination of the Lease, all such modifications,
alterations and improvements (other than Tenant's inventory, equipment, movable
furniture, wall decorations and trade fixtures) shall automatically become the
property of Landlord and shall be surrendered to Landlord as a part of the
Leased Premise as required pursuant to Article 2, unless Landlord shall require
Tenant to remove any of such modifications, alterations or improvements in
accordance with the provisions of Article 2, in which case Tenant shall so
remove same (see attached). Landlord shall have no obligation to reimburse to
Tenant all or any portion of the cost or value of any such modifications,
alterations or improvements so surrendered to Landlord. All modifications,
alterations or improvements which are installed or constructed on or attached to
the Leased Premises by Landlord at Landlord's expense shall be deemed real
property, and a part of the Leased Premises and shall be the property of
Landlord. All lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings, wall coverings and floor
coverings installed by Tenant shall be deemed improvements to the Leased
Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS: At its sole cost, Tenant shall make all modifications,
alterations and improvements to the Leased Premises that are required by any Law
because of (i) Tenant's use or occupancy of the Leased Premises, the Building,
the Outside Areas, or the Property, (ii) Tenant's application for any permit or
governmental approval, or (iii) Tenant's making of any modifications,
alterations or improvements to or within the Leased Premises. If Landlord shall,
at any time during the Lease Term, (i) be required by any governmental authority
to make any modifications, alterations or improvements to the Building or the
Project, (ii) modify the existing (or construct additional) capital improvements
or provide building service equipment for the purpose of reducing the
consumption of utility services or project maintenance costs for the property,
the cost incurred by Landlord in making such modifications, alterations or
improvements, including an (see attached) per annum cost of money factor, shall
be amortized by Landlord over the useful life of such modifications, alterations
or improvements, as determined in accordance with generally accepted accounting
standards, and the monthly amortized cost of such modifications, alterations and
improvements as so amortized shall be considered a Project Maintenance Cost.
6.4 LIENS: Tenant shall keep the Leased Premises, the Building and the
Property free from any liens and shall pay when due all bills arising out of any
work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises. If any such
claim of lien is recorded against Tenant's interest in this Lease, the Leased
Premises, the Building or the Project, Tenant shall bond against, discharge or
otherwise cause such lien to be entirely released within ten days after the same
has been so recorded.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT: Tenant shall not sublet the Leased Premises (or any portion
thereof) or assign or encumber its interest in this Lease, whether voluntarily
or by operation of Law, without Landlord's prior written consent first obtained
in accordance with the provisions of this Article 7 (see attached). Any
attempted subletting, assignment or encumbrance without Landlord's prior written
consent, at Landlord's election, shall constitute a default by Tenant under the
terms of this Lease. The acceptance of rent by Landlord from any person or
entity other than Tenant, or the acceptance of rent by Landlord from Tenant with
knowledge of a violation of the provisions of this Article, shall not be deemed
to be a waiver by Landlord of any provision of this Article or this Lease or to
be a consent to any subletting by Tenant or any assignment or encumbrance of
Tenant's interest in this Lease.
7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant, or the sale or other
transfer in the aggregate over the Lease Term of a controlling percentage of the
capital stock of Tenant, shall be deemed a voluntary assignment of Tenant's
interest in this Lease. The phrase "controlling percentage" means the ownership
of and the right to vote stock possessing more than fifty percent of the total
combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, a withdrawal or change, whether voluntary, involuntary or by
operation of Law, of any general
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partner, or the dissolution of the partnership, shall be deemed a voluntary
assignment of Tenant's interest in this Lease.
7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest
under this Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least ninety days
in advance of the date it intends to so assign its interest in this Lease or
sublet the Leased Premises but not sooner than one hundred eighty days in
advance of such date, specifying in detail the terms of such proposed assignment
or subletting, including the name of the proposed assignee or sublessee, the
proposed assignee's or Sublessee's intended use of the Leased Premises, a
current financial statement of such proposed assignee or sublessee and the form
of documents to be used in effectuating such assignment or subletting. Landlord
shall have a period of fifteen days following receipt of such notice within
which to do one of the following: (i) consent to such requested assignment or
subletting subject to Tenant's compliance with the conditions set forth in
Article 7.4 below or (ii) refuse to so consent to such requested assignment or
subletting, provided that such consent shall not be unreasonably refused. It
shall not be unreasonable for Landlord to withhold its consent to any proposed
assignment or subletting if (i) the proposed assignee's or subtenant's
anticipated use of the Premises involves the storage, use or disposal of a
Hazardous Material; (ii) if the proposed assignee or subtenant has been required
by any prior landlord, lender or governmental authority to clean up Hazardous
Materials unlawfully discharged by the proposed assignee or subtenant; or (iii)
if the proposed assignee or subtenant is subject to investigation or enforcement
order or proceeding by any governmental authority in connection with the use,
disposal or storage of a Hazardous Material. During said fifteen day period,
Tenant covenants and agrees to supply to Landlord, upon request, all necessary
or relevant information which Landlord may reasonably request respecting such
proposed assignment or subletting and/or the proposed assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be exercised
at any time following such a purported assignment, subletting or encumbrance but
prior to the satisfaction of each of the stated conditions, shall constitute a
material default by Tenant under this Lease giving Landlord the absolute right
to terminate this Lease unless such default is promptly cured by satisfying in
full each such condition by the assignee, sublessee or encumbrancer. The
conditions are as follows:
A. Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld or delayed by Landlord if the requirements of this Article
7 are otherwise complied with.
B. Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant (or, in the case of an encumbrance, each such encumbrancer
having similarly agreed to assume, be bound by and to perform Tenant's
obligations upon a foreclosure or transfer in lieu thereof).
C. Tenant having fully and completely performed all of its
obligations under the terms of this Lease through and including the date of such
assignment or subletting.
D. Tenant having reimbursed to Landlord all reasonable costs and
attorneys fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting, assignment or encumbrance.
E. Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.
F. Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord fifty percent of all assignment consideration or
excess rentals to be paid to
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Tenant or to any other on Tenant's behalf or for Tenant's benefit for such
assignment or subletting as follows:
(1) If Tenant assigns its interest under the Lease and if all or
a portion of the consideration for such assignment is to be paid by the assignee
at the time of the assignment, that Tenant shall have paid to Landlord and
Landlord shall have received an amount equal to fifty percent of the assignment
consideration so paid or to be paid whichever is the greater) at the time of the
assignment by the assignee; or
(2) If Tenant assigns its interest under this Lease and if
Tenants is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to one hundred percent of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.
(3) If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to Landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty percent of all excess
rentals to be paid by such sublessee as and when such excess rentals are so
paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of
this Article, the term "assignment consideration" shall mean all consideration
to be paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, less any commissions paid
by Tenant to a licensed real estate broker for arranging such assignment (not to
exceed then standard rates) (see attached), and the term "excess rentals" shall
mean all consideration to be paid by the sublessee to Tenant or to any other on
Tenant's behalf or for Tenant's benefit for the sublease of the Leased Premises
in excess of the rent due Landlord under the terms of this Lease for the same
period, less any commissions paid by Tenant to a licensed real estate broker for
arranging such sublease (not to exceed then standard rates) (see attached),
Tenant agrees that the portion of any assignment consideration and/or excess
rentals arising from and assignment or subletting by Tenant which is to be paid
to Landlord pursuant to this Article now is and shall then be the property of
Landlord' and not the property of Tenant.
7.6 PAYMENTS: All payments required by this Article to be made to Landlord
shall be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.
7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted
in consideration of Tenant's express covenant that all pertinent allocations
which are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant's personal property which may be conveyed or leased
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this Covenant of Good Faith,
Landlord may immediately declare Tenant to be in default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord would have under the terms of this Lease in the case of a material
default by Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or
encumbrance, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder. Consent by Landlord to one or
more assignments or encumbrances of Tenant's interest in this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to
any subsequent assignment, encumbrance or subletting. If Landlord shall have
been ordered by a court of competent jurisdiction to consent to a requested
assignment or subletting, or such an assignment or subletting shall have been
ordered over the objection of Landlord, such assignment or subletting shall not
be binding between the assignee (or sublessee) and Landlord
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until such time as all conditions set forth in Article 7.4 above have been fully
satisfied (to the extent not then satisfied) by the assignee or sublessee,
including, without limitation, the payment to Landlord of all agreed assignment
considerations and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners and
officers from, any and all liability, whether in contract, tort or on any other
basis, for any injury to or any damage sustained by Tenant, its agents,
employees, contractors or invitees; any damage to Tenant's property; or any
loss to Tenant's business, loss of Tenant's profits or other financial loss of
Tenant resulting from or attributable to the condition of, the management of,
the maintenance of, or the protection of the Leased Premises, the Building, the
Project or the Common Areas, including, without limitation, any such injury,
damage or loss resulting from (i) the failure, interruption, rationing or other
curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Project, the Building or the Leased Premises; (ii) the
vandalism or forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises through
roof leaks or otherwise; (iv) the failure to provide security and/or adequate
lighting in or about the Project, the Building or the Leased Premises; (v) the
existence of any design or construction defects within the Project, the Building
or the Leased Premises; (vi) the failure of any mechanical systems to function
properly (such as the HVAC systems); or (vii) the blockage of access to any
portion of the Project, the Building or the Leased Premises, except to the
extent such damage was proximately caused by Landlord's negligence or willful
misconduct, or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease but only if Tenant shall have given Landlord prior
written notice to perform such obligation and Landlord shall have failed to
perform such obligation within a reasonable period of time following receipt of
written notice from Tenant to so perform such obligation. In this regard, Tenant
acknowledges that it is fully apprised of the provisions of Law relating to
releases, and particularly to those provisions contained in Section 1542 of the
California Civil Code which read as follows: A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor. Notwithstanding such statutory
provision, and for the purpose of implementing a full and complete release and
discharge, Tenant hereby (i) waives the benefit of such statutory provision and
(ii) acknowledges that, subject to the exceptions specifically set forth herein,
the release and discharge set forth in this Article is a full and complete
settlement and release and discharge of all claims and is intended to include in
its effect, without limitation, all claims which Tenant, as of the date hereof,
does not know of or suspect to exist in its favor.
8.2 TENANT'S INDEMNIFICATION OF LANDLORD: Tenant shall defend, with
competent counsel satisfactory to Landlord, any claims made or legal actions
filed or threatened by third parties against Landlord which result in the death,
bodily injury, personal injury, damage to property or interference with
contractual or other rights suffered by any third party, (including other
Tenants within the Project) which (see attached) (i) occurred within the Leased
Premises or (ii) resulted from Tenant's use or occupancy of the Leased Premises
or the Common Areas or (iii) resulted from Tenant's activities in or about the
Leased Premises, the Building or the Project, and Tenant shall indemnify and
hold Landlord, Landlord's principals, employees and agents harmless from any
loss (including loss of rents by reason of vacant space which otherwise would
have been leased but for such activities), liabilities, penalties, or expense
whatsoever (including all legal fees incurred by Landlord with respect to
defending such claims) resulting therefrom, except to the extent proximately
caused by the negligence or willful misconduct of Landlord. This indemnity
agreement shall survive until the latter to occur of (i) the date of the
expiration, or sooner termination, of this Lease, or (ii) the date Tenant
actually vacates the Leased Premises provided Tenant received approval by
Landlord for such vacating.
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ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with all
of the following:
A. Tenant shall procure, pay for and keep in full force and effect,
at all times during the Lease Term, the following:
(1) Commercial General Liability insurance insuring Tenant
against liability for bodily injury, death, property damage and personal injury
occurring at the Leased Premises, or resulting from Tenant's use or occupancy of
the Leased Premises or the Building, Outside Areas, Property, or Common Areas or
resulting from Tenant's activities in or about the Leased Premises. Such
insurance shall be on an occurrence basis with a combined single limit of
liability of not less than the amount of Tenant's Required Liability Coverage
(as set forth in Article 1). The policy or policies shall be endorsed to name
Landlord and such others as are designated by Landlord as additional insureds in
the form equivalent to CG20111185 or successor and shall contain the following
additional endorsement: "The insurance afforded to the additional insureds is
primary insurance. If the additional insureds have other insurance which is
applicable to the loss on a contributing, excess or contingent basis, the amount
of this insurance company's liability under this policy shall not be reduced by
the existence of such other insurance. Any insurance carried by the additional
insureds shall be excess and non contributing with the insurance provided by the
Tenant." The policy shall not be canceled or reduced without at least 30 days
written notice to additional insureds. If the policy insures more than one
location, it shall be endorsed to show that the limits and aggregate apply per
location using endorsement CG25041185 or successor. Tenant's policy shall also
contain the severability of interest and cross-liability endorsement or clauses.
(2) Fire and property damage insurance in so-called Special Form
plus earthquake and flood insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, stock, trade fixtures and improvements
within the Leased Premises with coverage for the full actual replacement cost
thereof;
(3) Plate-glass insurance, at actual replacement cost;
(4) Boiler and Machinery insurance, if applicable;
(5) Product Liability insurance (including without limitation
Liquor Liability insurance for liability arising out of the distribution, sale,
or consumption of food and/or beverages including alcoholic beverages at the
Leased Premises for not less than the Tenant's Required Liability Coverage as
set forth in Article 1;
(6) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all Laws which policy shall be
endorsed to provide thirty (30) days written notice of cancellation to Landlord;
(7) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord;
(8) Business Income Insurance at a minimum of 50% co-insurance
including coverage for loss of business income due to damage to equipment from
perils covered under the so-called Special Form plus perils of earth quake and
flood; and
(9) Comprehensive Auto Liability insurance with a combined single
limit coverage of not less than the amount of Tenant's Required Liability
Coverage (as set forth in Article 1) for bodily injury and/or property damage
liability for: a) Owned autos b) Hired or borrowed autos c) Non-owned autos d)
Auto blanket contractual form CA0029. The policy shall be endorsed to provide 30
days written notice of cancellation to Landlord.
B. Each policy of liability insurance required to be carried by
Tenant pursuant to this Article or actually carried by Tenant with respect to
the Leased Premises or the Property (i) shall be in a form satisfactory to
Landlord, (ii) Shall be provided by carriers admitted
18.
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to do business in the state of California, with a Best rating of "A/VI" or
better and/or acceptable to Landlord. Property insurance shall contain a waiver
and/or a permission to waive by the insurer any right of subrogation against
Landlord, its principals, employees, agents and contractors which might arise by
reason of any payment under such policy or by reason of any act or omission of
Landlord, its principals, employees, agents or contractors.
C. Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to the Landlord with respect to each
policy of insurance required to be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying, in a form satisfactory to the Landlord,
that the policy has been issued and premium paid providing the coverage required
by this Article and containing the provisions herein. Attached to such a
certificate shall be endorsements naming Landlord as additional insured, and
including the wording under primary insurance above. With respect to each
renewal or replacement of any such insurance, the requirements of this Article
must be complied with not less than 30 days prior to the expiration or
cancellation of the policy being renewed or replaced. Landlord may at any time
and from time-to-time inspect and/or copy any and all insurance policies
required to be carried by Tenant pursuant to this article. If Landlord's lender,
insurance broker or advisor or counsel reasonably determines at any time that
the form or amount of coverage set forth in Article 9.1.(A) for any policy of
insurance Tenant is required to carry pursuant to this Article is not adequate,
then Tenant shall increase the amount of coverage for such insurance to such
greater amount or change the form as Landlord's lender, insurance broker or
advisor or counsel reasonably deems adequate (provided however such increase
level of coverage may not exceed the level of coverage for such insurance
commonly carried by comparable businesses similarly situated and operating under
similar circumstances).
D. The Commercial General Liability insurance carried by Tenant
shall specifically insure the performance by Tenant of the Indemnification
provisions set forth in Article 8.2 of this lease provided, however, nothing
contained in this Article 9 shall be construed to limit the liability of Tenant
under the Indemnification provisions set forth in said Article 8.2.
9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by
Landlord:
A. Landlord shall maintain, as the minimum coverage required of it
by this Lease, property insurance in so-called "Special" form insuring Landlord
(and such others as Landlord may designate) against loss from physical damage to
the Building with coverage of not less than one hundred percent of the full
actual replacement cost thereof and against loss of rents for a period of not
less than twelve months. Such property damage insurance, at Landlord's election
but without any requirement on Landlord's behalf to do so, (i) may be written in
so-called Special Form, excluding only those perils commonly excluded from such
coverage by Landlord's then property damage insurer; (ii) may provide coverage
for physical damage to the improvements so insured for up to the entire full
actual replacement cost thereof; (iii) may be endorsed to include or separate
policies may be carried to cover loss or damage caused by any additional perils
against which Landlord may elect to insure, including earthquake and/or flood;
(iv) may provide coverage for loss of rents for a period of up to twelve months;
and/or (v) may contain "deductibles" per occurrence in an amount reasonably
acceptable to Landlord. Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.
B. Landlord shall maintain Commercial General Liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Project, or any portion thereof, with combined single limit coverage of at least
Two Million Dollars. Landlord may carry such greater coverage as Landlord or
Landlord's Lender, insurance broker or advisor or counsel may from time to time
determine is reasonably necessary for the adequate protection of Landlord and
the Project.
C. Landlord may maintain any other insurance which in the opinion of
its insurance broker or advisor or legal counsel is prudent to carry under the
given circumstances.
9.3 MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant (see
attached), and Tenant hereby releases Landlord and its respective partners and
officers,
19.
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agents, employees and servants, from any and all liability for loss, damage or
injury to the property of the other in or about the Leased Premises which is
caused by or results from a peril or event or happening which would be covered
by insurance required to be carried under the terms of this Lease, or is covered
by insurance actually carried and in force at the time of the loss, by the party
sustaining such loss; provided, however, that such waiver shall be effective
only to the extent permitted by the insurance covering such loss and to the
extent such insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises are damaged by any
peril after the Effective Date of this Lease, Landlord shall restore the Leased
Premises, as and when required by this Article, unless this Lease is terminated
by Landlord pursuant to Article 10.2 or by Tenant pursuant to Article 10.3. All
insurance proceeds available from the fire and property damage insurance carried
by Landlord shall be paid to and become the property of Landlord. If this Lease
is terminated pursuant to either Article 10.2 or 10.3, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that is
Landlord's property or would become Landlord's property on termination of this
Lease shall be paid to and become the property of Landlord, and the remainder of
such proceeds shall be paid to and become the property of Tenant. If this Lease
is not terminated pursuant to either Article 10.2 or 10.3, all insurance
proceeds available from insurance carded by Tenant which cover loss to property
that is Landlord's property shall be paid to and become the property of
Landlord, and all proceeds available which cover loss to property which would
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. If this Lease is not so terminated, then
upon receipt of the insurance proceeds (if the loss is covered by insurance) and
the issuance of all necessary governmental permits, Landlord shall immediately
commence and diligently prosecute to completion the restoration of the Leased
Premises, to the extent then allowed by Law, to substantially the same condition
in which the Leased Premises existed as of the Lease Commencement Date.
Landlord's obligation to restore shall be limited to the Leased Premises and
interior improvements constructed by Landlord. Landlord shall have no obligation
to restore any other improvements to the Leased Premises or any of Tenant's
personal property, inventory or trade fixtures Upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully repair all of
Tenant's personal property, inventory, trade fixtures and other improvements
constructed by Tenant to like or similar condition as existed at the time of
such damage or destruction.
10.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
A. The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii)
seventy-five percent of the then actual replacement cost thereof;
B. The Building is damaged by an uninsured peril, which peril
Landlord was required to insure against pursuant to the provisions of Article 9
of this Lease, to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds which would have been available
had Landlord carried such required insurance, or (ii) seventy-five percent of
the then actual replacement cost thereof;
C. The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease, to any extent.
D. The Building is damaged by any peril and, because of the Laws
then in force, the Building (i) can not be restored at reasonable cost or (ii)
if restored, can not be used for the same use being made thereof before such
damage. [insert]
20.
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10.3 TENANT'S RIGHT TO TERMINATE: If the Leased Premises are damaged by any
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised in the case of A or B below only by delivery to Landlord of a written
notice of election to terminate within thirty days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
A. The Leased Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within nine
months after the date of such notice from Landlord; or
B. The Leased Premises are damaged by any peril within nine months
of the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Leased Premises
cannot be substantially completed within ninety days after the date such
restoration is commenced.
10.4 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 10.3 above, captioned "Tenant's Right to Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar Laws hereinafter enacted.
10.5 ABATEMENT OF RENT: In the event of damage to the Leased Premises which
does not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 LANDLORD'S RIGHT TO TERMINATE. Subject to Article 11.3, Landlord shall
have the option to terminate this Lease if, as a result of a taking by means of
the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord under threat of condemnation to
an entity having the power of eminent domain), (i) all or more than fifty
percent (50%) any part of the Leased Premises is so taken, (ii) more than sixty-
six percent (66%) of the Common Area is so taken, or (iv) because of the Laws
then in force, the Leased Premises may not be used for the same use being made
thereof before such taking, whether or not restored as required by Article 11.4
below. Any such option to terminate by Landlord must be exercisable within a
reasonable period of time, to be effective as of the date possession is taken by
the condemnor.
11.2 TENANT'S RIGHT TO TERMINATE: Subject to Article 11.3, Tenant shall
have the option to terminate this Lease if, as a result of any taking by means
of the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord to an entity having the power of
eminent domain under threat of condemnation), (i) all or more than fifty percent
(50%) of the Leased Premises is so taken, (ii) thirty-three and one-third
percent or more of the Leased Premises is so taken and the part of the Leased
Premises that remains cannot, within a reasonable period of time, be made
reasonably suitable for the continued operation of the Tenant's business, or
(iii) there is a taking of a portion of the Common Area and, as a result of such
taking, Landlord cannot provide parking spaces within the Project (or within a
reasonable distance therefrom) equal in number to at least eighty-five percent
of Tenant's Number of Parking Spaces (as set forth in Article 1), whether by
rearrangement of the remaining parking areas in the Common Area (including, if
Landlord elects, construction of multi-dock parking structures or restriping
for compact cars where permitted by Law), or by providing alternative parking
facilities on other land within reasonable walking distance of the Leased
Premises. Tenant must exercise such option within a reasonable period of time,
to be effective on the later to occur of (i) the date that possession of that
portion of the Common Area
21.
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or the Leased Premises that is condemned is taken by the condemnor or (ii) the
date Tenant vacates the Leased Premises.
11.3 (SEE ATTACHED)
11.4 RESTORATION AND ABATEMENT OF RENT: If any part of the Leased Premises
is taken by condemnation and this Lease is not terminated, then Landlord shall
repair any damage occasioned thereby to the remainder of the Leased Premises to
a condition reasonably suitable for Tenant's continued operations and otherwise,
to the extent practicable, in the manner and to the extent provided in Article
10. 1. As of the date possession is taken by the condemning authority, (i) the
Base Monthly Rent shall be reduced in the same proportion that the area of that
part of the Leased Premises so taken (less any addition to the area of the
Leased Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking, and (ii) Tenant's Proportionate Share
shall be appropriately adjusted.
11.5 DIVISION OF CONDEMNATION AWARD: Any award made for any condemnation of
the Project, the Building, the Common Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation
award that is made directly to Tenant (i) for the taking of personal property,
inventory or trade fixtures belonging to Tenant, (ii) for the interruption of
Tenant's business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking. The rights of Landlord and Tenant regarding any condemnation shall
be determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Superior Court to terminate this Lease and/or allocating
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occur:
A. Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due (see attached); or
B. Tenant shall have done or permitted to have been done any act,
use or thing in its use, occupancy or possession of the Leased Premises or in
its use of the Common Areas which is prohibited by the terms of this Lease; (see
attached) or
C. Tenant shall have failed to perform any term, covenant or
condition of this Lease, except those requiring the payment of Base Monthly Rent
or Additional Rent, within fifteen days (see attached) after written notice from
Landlord to tenant specifying the nature of such failure and requesting Tenant
to perform same.
D. Tenant shall have sublet the Lease Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or
E. Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
F. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
22.
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G. Tenant or any Guarantor of this Lease shall have allowed (or
sought to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subarticle if such decree or order is
rescinded or reversed within thirty days after its original entry.
H. Tenant or any Guarantor of this Lease shall have availed itself
of the protection of any debtor's relief law, moratorium law or other similar
Law which does not require the prior entry of a decree of order.
12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant (see
attached), and without limiting Landlord's right to indemnification as provided
in Article 8.2, Landlord shall have the following remedies, in addition to all
other rights and remedies provided by Law or otherwise provided in this Lease,
to which Landlord may resort cumulatively, or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity all of its rights and remedies
under this Lease including, without limitation, (i) the right to recover the
rent and other sums as they become due by appropriate legal action, (ii) the
right to make payments required of Tenant, or perform Tenant's obligations and
be reimbursed by Tenant for the cost thereof with interest at the then maximum
rate of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
B. Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this Subarticle shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing. In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease:
(1) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(2) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(3) Any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects of any breach of this Lease by Tenant, including,
without limitation, any action taken to maintain and preserve the Leased
Premises or any action taken to relet the Leased Premises, or any portion
thereof, for the account of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease (see attached) and
abandons the Leased Premises, Landlord may terminate this Lease, but this Lease
shall not terminate unless Landlord gives Tenant written notice of termination.
No act by or on behalf of Landlord intended to mitigate the adverse effect of
such breach, including those described by Subarticles B(1), (2) and (3)
immediately preceding, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. If
Landlord does not terminate this Lease by giving written notice of termination,
Landlord may enforce ail its rights and remedies under this Lease, including the
right to recover rent as it becomes due under this Lease as provided in
California Civil Code Section 1951.4, as in effect on the Effective Date of
this Lease
D. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord s election, to damages in an amount as set forth in
California Civil Code Section
23.
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1951.2, as in effect on the Effective Date of this Lease. For purposes of
computing damages pursuant to said Section 1951.2, an interest rate equal to ten
percent per annum shall be used where permitted. Such damages shall include,
without limitation:
(1) 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, computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent; and
(2) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform Tenant's obligations under
this Lease, or which in the ordinary course of things would be likely to result
therefrom, including, without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; including removal of
existing leasehold improvements subject to Section 2.6 (iii) broker's fees,
advertising costs and other, expenses of reletting the Leased Premises; (iv)
costs of carrying the Leased Premises, which costs would have been billed to
Tenant as Additional Rent had Tenant not defaulted and which include, but are
not limited to; taxes, insurance premiums, landscape maintenance, HVAC
maintenance, utility charges and security precautions; (v) expenses incurred in
removing, disposing of and/or storing any of Tenant's personal property,
inventory or trade fixtures remaining therein; (vi) attorneys' fees, expert
witness fees, court costs and other reasonable expenses incurred by Landlord
(but not limited to taxable costs) in retaking possession of the Leased
Premises, establishing damages hereunder, and releasing the Leased Premises; and
(vii) any other expenses, costs or damages otherwise incurred or suffered as a
result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord fails
to perform any of its obligations under this Lease, Landlord shall nevertheless
not be in default under the terms of this Lease until such time as Tenant shall
have first given Landlord written notice specifying the nature of such failure
to perform its obligations, and then only after Landlord shall have had a
reasonable period of time following its receipt of such notice within which to
perform such obligations. In the event of Landlord's default as above set forth,
then, and only then, Tenant shall have the following remedies only:
A. Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform.
B. Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subarticle, Tenant reasonably pays any sum
to any third party or does any act that requires the payment of any sum to any
third party at any time by reason of Landlord's default, the sum paid by Tenant
shall be immediately due from Landlord to Tenant at the time Tenant supplies
Landlord with an invoice therefore (provided such invoice sets forth and is
accompanied by a written statement of Tenant setting forth in reasonable detail
the amount paid, the party to whom it was paid, the date it was paid, and the
reasons giving rise to such payment), together with interest at twelve percent
per annum from the date of such invoice until Tenant is reimbursed by Landlord.
Tenant may not offset such sums against any installment of rent due Landlord
under the terms of this Lease.
12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity for the satisfaction of such obligations and
not against the assets of such officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or principals (other than to the extent
of their interest in the assets owned by such business entity). Additionally, if
Landlord is a partnership, then Tenant covenants and agrees:
A. No partner of Landlord shall be sued or named as a party in any
suit or action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
24.
<PAGE>
B. No service of process shall be made against any partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
C. No writ of execution shall be levied against the assets of any
partner of Landlord other than to the extent of his interest in the assets of
the partnership. Tenant further agrees that each of the foregoing covenants and
agreements shall be enforceable by Landlord and by any partner of Landlord and
shall be applicable to any actual or alleged non-disclosure made respecting this
Lease or the Leased Premises or any actual or alleged failure, default or breach
of any covenant or agreement either expressly or implicitly contained in this
Lease or imposed by statute or at common law.
12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 12.3 above are intended to supersede and replace the provisions of
California Civil Code 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of Section 1932(1), 1941 and 1942 of the California Civil
Code and/or any similar or successor Law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease. Tenant hereby waives any right of redemption or
relief from forfeiture under the Laws of the State of California, or under any
other present or future Law, in the event Tenant is evicted or Landlord takes
possession of the Leased Premises by reason of any default by Tenant.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property;
improvements made by Tenant to the Leased Premises, improvements made by
Landlord for Tenant's use within the Leased Premises, Tenant's use (or estimated
use) of public facilities or services or Tenant's consumption (or estimated
consumption) of public utilities, energy, water or other resources. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlord's property, the Building or the Project, or if the
assessed value of the Building or the Project is increased by the inclusion
therein of a value placed upon same, then Landlord, after giving written notice
to Tenant, shall have the right, regardless of the validity thereof, to pay such
taxes, assessment, fee or public charge and bill Tenant, as Additional Rent, the
amount of such taxes, assessment, fee or public charge so paid on Tenant's
behalf. Tenant shall, within ten days from the date it receives an invoice from
Landlord setting forth the amount of such taxes, assessment, fee or public
charge so levied, pay to Landlord, as Additional Rent, the amount set forth in
said invoice. Failure by Tenant to pay the amount so invoiced within said ten
day period shall be conclusively deemed a default by Tenant under this Lease.
Tenant shall have the right, and with Landlord's full cooperation if Tenant is
not then in default under the terms of this Lease, to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.
13.2 HOLDING OVER: This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1) (see attached). Any holding
over by Tenant after expiration of the Lease Term shall neither constitute a
renewal nor extension of this Lease nor give Tenant any rights in or to the
Leased Premises except as expressly provided in this Article. Any such holding
over shall be deemed an unlawful detainer of the Leased Premises unless Landlord
has consented to same. Any such holding over to which Landlord has consented
shall be construed to be a tenancy from month to month, on the same terms and
conditions herein specified insofar as applicable, except that the Base Monthly
Rent shall be increased to an amount equal to one hundred fifty percent of the
Base Monthly Rent payable during the last full month immediately preceding such
holding over.
13.3 SUBORDINATION TO MORTGAGES: This Lease is subject and subordinate to
all underlying ground leases and to all mortgages and deeds of trust which
affect the Building and are of public record as of the Effective Date of this
Lease, and to all renewals, modifications, consolidations, replacements and
extensions thereof. However, if the lessor under any such
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ground lease or any Lender holding any such mortgage or deed of trust shall
advise Landlord that it desires or requires this Lease to be made prior and
superior thereto, then, upon written request of Landlord to Tenant, Tenant shall
promptly execute, acknowledge and deliver any and all documents or instruments
which Landlord and such lessor or Lender deem necessary or desirable to make
this Lease prior thereto. Tenant hereby consents to Landlord's ground leasing
the land underlying the Building and/or encumbering the Building as security for
future loans on such terms as Landlord shall desire, all of which future ground
leases, mortgages or deeds of trust shall be subject and subordinate to this
Lease. However, if any lessor under any such future ground lease or any Lender
holding such future mortgage or deed of trust shall desire or require that this
Lease be made subject and subordinate to such future ground lease, mortgage or
deed of trust, then Tenant agrees, within ten days after Landlord's written
request therefore, to execute, acknowledge and deliver to Landlord any and all
documents or instruments requested by Landlord or such lessor or Lender as may
be necessary or proper to assure the subordination of this Lease to such future
ground lease, mortgage or deed of trust; but only if such lessor or Lender (see
attached) agrees to recognize Tenant's rights under this Lease and not to
disturb Tenant's quiet possession of the Leased Premises so long as Tenant is
not in default under this Lease.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request,
attorn (i) to any purchaser of the Building at any foreclosure sale or private
sale conducted pursuant to any security instrument encumbering the Building,
(ii) to any grantee or transferee designated in any deed given in lieu of
foreclosure of any security interest encumbering the Building, or (iii) to the
lessor under any underlying ground lease of the land underlying the Building,
should such ground lease be terminated; provided that such purchaser, grantee or
lessor recognizes Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION: In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessor a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effect a cure.
13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by Landlord,
promptly execute and modified, stating the nature of such modification and
certifying that this Lease is unmodified and in full force and effect, or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant s knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord. Tenant's failure to execute and deliver such estoppel
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Article may be relied upon by any Lender or
purchaser or prospective Lender or purchaser of the Building, the Project, or
any interest therein.
13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within ten business days
after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement, including an income statement and balance sheet, and any
such other information reasonably requested by Landlord regarding Tenant's
financial condition (see attached). Tenant acknowledges, that Landlord has and
will rely on the truth and accuracy of the information provided by Tenant to
Landlord both prior to and during the term of the Lease. Landlord shall be
entitled to disclose such financial statements or other information to its
Lender, to any present or prospective principal of or investor in Landlord, or
to any prospective Lender or purchaser of the Building, the Project or any
portion thereof or interest therein. Any such financial statement or other
information which is marked "confidential" or "company secrets" (or is otherwise
similarly marked by Tenant) shall be confidential and shall not be disclosed by
Landlord to any
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third party except as specifically provided in this Article, unless the same
becomes a part of the public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Project, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Project.
13.9 FORCE MAJEURE: The obligations of each of the parties under this
Lease (other than the obligation to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligation by reason of
any strikes, lockouts or labor disputes; inability to obtain labor, materials,
fuels or reasonable substitutes therefore; governmental restrictions,
regulations, controls, action or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial inability) beyond
the reasonable control of the party obligated to perform (including acts or
omissions of the other party for a period equal to the period of any such
prevention, delay or stoppage.
13.10 NOTICES: Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by: (i) delivery by Federal Express,
United Parcel Service or similar commercial service, (ii) electronic facsimile
transmission, or (iii) by depositing such notice in the United States mail,
postage prepaid, addressed to the other party as follows:
A. If addressed to Landlord, to Landlord at its Address for Notices
(as set forth in Article 1).
B. If addressed to Tenant, to Tenant at its Address for Notices (as
set forth in Article 1).
Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice given
by certified mail shall be deemed given on the date receipt was acknowledged to
the postal authorities. Any notice given by mail other than registered or
certified mail shall be deemed given only if received by the other party, and
then on the date of receipt. In the event of notice by electronic facsimile
transmission or commercial carrier, notice shall be deemed received on the date
of confirmation documented by the transmission or carrier. Each party may, by
written notice to the other in the manner aforesaid, change the address to which
notices addressed to it shall thereafter be mailed.
13.11 ATTORNEYS' FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party. In the event
that Landlord shall be required to retain counsel to enforce any provision of
this Lease (see attached), and if Tenant shall thereafter cure (or desire to
cure) such default, Landlord shall be conclusively deemed the prevailing party,
and Tenant shall pay to Landlord all attorneys' fees, expert witness fees, court
costs and other reasonable expenses so incurred by Landlord promptly upon
demand. Landlord may enforce this provision by either (i) requiring Tenant to
pay such fees and costs as a condition to curing its default or (ii) bringing a
separate action to enforce such payment, it being agreed by and between Landlord
and Tenant that Tenant's failure to pay such fees and costs upon demand shall
constitute a breach of this Lease in the same manner as a failure by Tenant to
pay the Base Monthly Rent, giving Landlord the same rights and remedies as if
Tenant failed to pay the Base Monthly Rent.
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13.12 DEFINITIONS: Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have such
meaning whenever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article 1, the following terms shall have the
following meanings:
A. REAL PROPERTY TAXES: The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
to tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest therein, or
the fixtures, equipment and other property of Landlord that is an integral part
of the Project and located thereon, or Landlord's business of owning, leasing or
managing the Project or the gross receipts, income or rentals from the Project;
(ii) all charges, levies or fees imposed by any governmental authority against
Landlord by reason of or based upon the use of or number of parking spaces
within the Project, the amount of public services or public utilities used or
consumed (e.g. water, gas, electricity, sewage or surface water disposal) at the
Project, the number of persons employed by tenants of the Project, the size
(whether measured in area, volume, number of tenants or whatever) or the value
of the Project, or the type of use or uses conducted within the Project; and
(iii) all costs and fees (including attorneys' fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax. If, at any time during the Lease Term, the taxation or
assessment of the Project prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate, substitute, or additional tax or
charge (i) on the value, size, use or occupancy of the Project or Landlord's
interest therein or (ii) on or measured by the gross receipts, income or rentals
from the Project, or on Landlord's business of owning, leasing or managing the
Project or (iii) computed in any manner with respect to the operation of the
Project, then any such tax or charge, however designated, shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes" for
purposes of this Lease. If any Real Property Tax is partly based upon property
or rents unrelated to the Project, then only that part of such Real Property Tax
that is fairly allocable to the Project shall be included within the meaning of
the terms "Real Property Tax" or "Real Property Taxes". Notwithstanding the
foregoing, the terms "Real Property Tax" or "Real Property Taxes" shall not
include estate, inheritance, transfer, gift or franchise taxes of Landlord or
the federal or state income tax imposed on Landlord's income from all sources.
B. LANDLORD'S INSURANCE COSTS: The term "Landlord's Insurance Costs"
shall mean the costs to Landlord to carry and maintain the policies of fire and
property damage insurance, including quake and flood, for the Project and
general liability insurance required, or permitted, to be carried by Landlord
pursuant to Article 9, together with any deductible amounts paid by Landlord
upon the occurrence of any insured casualty or loss.
C. PROJECT MAINTENANCE COSTS: The term "Project Maintenance Costs"
shall mean all costs and expenses (except Landlord's Insurance Costs and Real
Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Project and all parts thereof,
including without limitation, (i) professional management fees (equal to three
percent of the annualized Base Monthly Rent), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements as set forth in Article 6, which are so amortized during the Lease
Term, (iii) costs of complying with governmental regulations governing Tenant's
use of Hazardous Materials, and Landlord's costs of monitoring Tenant's use of
Hazardous Materials including fees charged by Landlord's consultants to
periodically inspect the Premises and the Property, and (iv) such other costs as
may be paid or incurred with respect to operating, maintaining and preserving
the Project, such as repairing replacing and resurfacing the exterior surfaces
of the buildings (including roofs), repairing, replacing, and resurfacing paved
areas, repairing structural parts of the buildings, cleaning, maintaining,
repairing, or replacing the interior of the Leased Premises both during the
Lease Term and upon the termination of the Lease, and maintaining, repairing or
replacing, when necessary electrical, plumbing, sewer, drainage, heating,
ventilating and air conditioning systems serving the buildings, providing
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utilities to the common areas, maintenance, repair, replacement or installation
of lighting fixtures, directional or other signs and signals, irrigation or
drainage systems, trees, shrubs, materials, maintenance of all landscaped areas,
and depreciation and financing costs on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
leased). [see insert]
D. READY FOR OCCUPANCY: The term "Ready for Occupancy" shall mean
the date upon which (i) the Leased Premises are available for Tenant's occupancy
in a broom clean condition and (ii) the improvements, if any, to be made to the
Leased Premises by Landlord as a condition to Tenant's obligation to accept
possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. the City building department,
if the Project is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as
substantially complete or is willing to so approve the construction of such
improvements as substantially complete subject only to compliance with specified
conditions which are the responsibility of Tenant to satisfy or is willing to
allow Tenant to occupy subject to its receiving assurances that specified work
will be completed.
E. TENANT'S PROPORTIONATE SHARE: The term "Tenant's Proportionate
Share" or "Tenant's Share", as used with respect to an item pertaining to the
Building, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Building as the same
from time to time exists or, as used with respect to an item pertaining to the
Project, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Project as the same
from time to time exists, unless, as to any given item, such a percentage
allocation unfairly burdens or benefits a given tenant(s), in which case
Landlord shall have the exclusive right to equitably allocate such item so as to
not unfairly burden or benefit any given tenant(s). Landlord's determination of
any such special allocation shall be final and binding upon Tenant unless made
in bad faith.
F. BUILDING'S PROPORTIONATE SHARE: The term "Building's
Proportionate Share" or "Building's Share" shall each mean that percentage which
is obtained by dividing the leasable square footage combined within the
Building by the leasable square footage contained within all buildings located
within the Project, unless, as to any given item, such a percentage allocation
unfairly burdens or benefits a given building(s), in which case Landlord shall
have the exclusive right to equitably allocate such item so as to not unfairly
burden or benefit any given building(s). Landlord's determination of any such
special allocation shall be final and binding upon Tenant unless made in bad
faith.
G. BUILDING OPERATING EXPENSES: The term "Building Operating
Expenses" shall mean and include the Building's Share of all Real Property
Taxes, plus the Building's Share of all Landlord's Insurance Costs, plus the
Building's Share of all Project Maintenance Costs, plus an accounting fee equal
to five percent of all such costs.
H. LAW: The term "Law" shall mean any judicial decision and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi official entity or body (e.g. a board of fire examiners or a public
utility or special district).
I. LENDER: The term "Lender" shall mean the holder of any Note or
other evidence of indebtedness secured by the Project or any portion thereof.
J. PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean
all recorded covenants, conditions and restrictions, private agreements,
easements, and any other recorded instruments affecting the use of the Project,
as they may exist from time to time.
K. RENT: The term "rent" shall mean collectively Base Monthly Rent
and all Additional Rent.
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13.13 GENERAL WAIVERS: One party's consent to or approval of any act by the
other party, requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof or
any breach of any provision hereof shall be effective unless in writing and
signed by the waiving party. The receipt by Landlord of any rent or payment with
or without knowledge of the breach of any other provision hereof shall not be
deemed a waiver of any such breach. No waiver of any provision of this Lease
shall be deemed a continuing waiver unless such waiver specifically states so in
writing and is signed by both Landlord and Tenant. No delay or omission in the
exercise of any right or remedy accruing to either party upon any breach by the
other party under this Lease shall impair such right or remedy or be construed
as a waiver of any such breach theretofore or thereafter occurring. The waiver
by either party of any breach of any provision of this Lease shall not be deemed
to be a waiver of any subsequent breach of the same or any other provisions
herein contained.
13.14 MISCELLANEOUS: Should any provision of this Lease prove to be invalid
or illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms "must", "shall", "will" and "agree" are
mandatory. The term "may" is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefore. Where Tenant is obligated not to perform any act or is not permitted
to perform any act, Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees, contractors, subcontractors and
employees, from performing said act. Landlord shall not become or be deemed a
partner or a joint venturer with Tenant by reason of any of the provisions of
this Lease.
ARTICLE 14
CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents, and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease,
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant in accordance with the bylaws and/or a board of directors' resolution of
Tenant, and that this Lease is binding upon Tenant in accordance with its terms.
14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any
dealings with any real estate broker(s), leasing agent(s), finder(s) or
salesmen, other than those persons or entities named in Article I as the
"Brokers" with respect to the lease by it of the Leased Premises pursuant to
this Lease, and that it will indemnify, defend with competent counsel, and hold
Landlord harmless from any liabilities for the payment of any real estate
brokerage commissions, leasing commissions or finder's fees claimed by any other
real estate broker(s), leasing agent(s), finder(s) or salesmen to be earned or
due and payable by reason of Tenant's agreement or promise (implied or
otherwise) to pay (or have Landlord pay) such a commission or finder's fee by
reason of its leasing the Leased Premises pursuant to this Lease.
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14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article
1) and the Addenda (as described in Article 1), which Exhibits and Addenda are
by this reference incorporated herein, constitute the entire agreement between
the parties, and there are no other agreements, understandings or
representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS: Tenant acknowledges that neither Landlord
nor any of its agents made any representations or warranties respecting the
Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this lease or in
any Addenda hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease.
AS LANDLORD: AS TENANT:
PEN Associates Asyst Technologies, Inc.
a California limited partnership a Delaware corporation
By: /s/ Pen Associates By: /s/ Asyst Technologies, Inc.
------------------------------ -----------------------------
Title: General Partner Title: CFO
------------------------------ -----------------------------
By: By: /s/ Asyst Technologies, Inc.
------------------------------ -----------------------------
Title: General Partner Title: COO
------------------------------ -----------------------------
Dated: 11/13/95 Dated: 11/13/95
------------------------------ -----------------------------
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease must
be executed by the chairman of the board, president or vice president, and the
secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.
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FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM.TO LEASE ("Addendum") is made to that Industrial Space Lease
dated as of November 13, 1995 (the "Lease") by and between PEN Associates, a
California general partnership (as "Landlord"), and Asyst Technologies, Inc., a
Delaware corporation (as "Tenant"), for the lease of space located at 48633 Warm
Springs Boulevard, Fremont, California (the "Leased Premises"). The parties
hereto agree that the Lease is amended, changed and modified by the following
provisions, which are hereby added to the Lease:
Unless otherwise expressly provided herein, all terms which are given a special
definition by the Lease that are used herein are intended to be used with the
definition given to them by the Lease. The provisions of the Lease shall remain
in full force and effect except as specifically amended hereby. In the event of
any inconsistency between the Lease and this Addendum, the terms of this
Addendum shall prevail.
The Following are inserts to the text of the Lease located in the areas
specified as "see insert: or "see attached":
2.1 upon 48 hours' notice to Tenant
2.3 subject to Tenants' option to renew pursuant to Article 16
2.4 in which event Landlord shall immediately return to Tenant any and all
funds therefore delivered by Tenant to Landlord.
2.5 subject to section 2.4 hereof.
Insert Section 2.5.
Notwithstanding any other provision of this Lease, Landlord represents to Tenant
to the best of its knowledge that on the commencement of the term hereof, the
Leased Premises and any improvements to be constructed by Landlord (a) shall be
free from material structural defects and (b) shall comply with building codes
maintained by the City of Fremont at the time the various improvements were
constructed. Landlord's belief is based on approvals granted by the City of
Fremont and on no other information. In the event that the foregoing
representations are not true, Landlord shall rectify said conditions at its sole
cost.
2.6 ordinary wear and tear excepted
2.6 (second attachment) provided, that Tenant shall not be required to remove
any improvement for which Tenant has obtained Landlord's consent that the
improvements may remain upon the termination of this lease.
3.4 interest rate of Wells Fargo Bank prime lending rate plus three percent
(3%)
3.5 except as expressly provided in this lease,
3.7 and any other funds held by Landlord which Tenant is entitled to have
returned or reimbursed
3.7 (second attachment) and any such additional funds
4.2 without Landlord's prior written consent, not to be unreasonably withheld
or delayed,
4.9 such determination of an emergency being reasonably made by Landlord.
4.10 except to the extent that Tenant's access to the Leased Premises is
impaired
4.12 provided Landlord's actions shall not materially interfere with Tenant's
use of the Premises
4.14B as a result of the acts or omissions of Tenant, Tenant's agents,
Permitees, or invitees
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Insert Section 4.14.H.
Notwithstanding any other provision of this Lease, Landlord represents to Tenant
to the best of its knowledge that on the commencement of the term hereof, the
Leased Premises are free from contamination by any Hazardous Materials in
violation of any governmental regulation known to Landlord (and for purposes of
this section, the Leased Premises shall be deemed to include the underlying soil
and ground water). Landlord also shall protect, indemnify, defend, and hold
Tenant harmless from and against any and all liability, loss, suits, claims,
actions, costs, and expense (including, without limitation, attorneys' fees)
arising from any contamination of the Leased Premises (including the underlying
land and ground water) by any Hazardous Materials existing prior to the Lease
Commencement Date in violation of any governmental regulation known to Landlord.
The provisions of this section shall survive the termination of this Lease.
5.1 after providing five business days' prior written notice to Tenant, 5.4
except as a result of Landlord's negligence or willful misconduct, 6.1
consistent with those used by Landlord.
5.4 except as a result of Landlord's negligence or willful misconduct,
6.1 consistent with those used by Landlord.
6.2 provided that Tenant shall not be required to remove any modification,
alteration or improvement for which Tenant has obtained Landlord's
consent, that the improvements could remain at the termination of the
lease.
6.3 three percent in excess of the Wells Fargo Bank prime lending rate
7.1 which consent shall not be unreasonably withheld or delayed
7.5 and reasonable legal expenses and the cost of improvements specifically
approved by Landlord in writing which Landlord agrees may remain in the
building following the expiration of the Lease
8.2 occurred during the term of this Lease and
9.3 and its respective partners and officers, agents, employees and servants,
10.2 Notwithstanding any of the foregoing, if the casualty is the result of
Landlord's active gross negligence or willful misconduct. Landlord shall
restore the Leased Premises regardless of any insufficiency or lack of
insurance proceeds.
11.3 This section is governed by same terms as permanent taking
12.1B within five business days of the date the same was
12.1C unless such default cannot be reasonably cured within said fifteen day
period in which case Tenant shall not be in default if it proceeds to and
does cure the default in a reasonable time period
12.1 (second see attached) and Tenant continued doing or permitting such act,
use or thing five business days following receipt of written notification
thereof by Landlord
12.2 without cure within the applicable cure period, if any, provided herein
12.2 (second see attached) without cure within the applicable cure period, if
any, provided herein
13.2 or upon the expiration of the Renewal Term pursuant to Article 11
13.3 executes, acknowledges, and delivers to Tenant a non-disturbance agreement
on which such lessor or lender
13.6 Landlord shall provide estoppel certificates to Tenant for Tenant's
benefit within the same time period as required of Tenant in this section
13.6.
33.
<PAGE>
13.7 provided that Tenant shall not be required to provide any financial
information, which it deems to be confidential and of a non-public nature
so long as Tenant remains a public corporation
13.11 after the expiration of any applicable cure period provided herein,
Insert Section 13.12.C.
Notwithstanding anything to the contrary contained herein, the following shall
not be included in the costs of operation and maintenance referred to herein:
1. Leasing commissions, attorneys' fees, costs, disbursements, and other
expenses incurred in connection with negotiations or disputes with tenants
(other than Tenant), or in connection with leasing, renovating, or
improving space for tenants or other occupants or prospective tenants or
other occupants of the building or land upon which the Leased Premises are
located.
2. The cost of any service sold to any tenant (other than Tenant) or
other occupant for which Landlord is entitled to be reimbursed by that
tenant.
3. Any depreciation on the building except as provided elsewhere in this
Lease.
4. Omitted
5. Expenses in connection with services or other benefits of a type that
are not provided to Tenant but which are provided another tenant or
occupant of the building or land upon which the Leased Premises are
located for the exclusive benefit of the other tenant or occupant.
6. Costs incurred due to Landlord's violation of any terms or conditions
of this Lease.
7. Overhead profit increments paid to Landlord's subsidiaries or
affiliates for management or other services on or to the building or for
supplies or other materials to the extent that the cost of the services,
supplies, or materials exceeds the cost that would reasonably have been
paid had the services, supplies, or materials been provided by
unaffiliated parties on a competitive basis.
8. All interest, loan fees, and other carrying costs related to any
mortgage or deed of trust (except as otherwise provided in this Lease),
and all rental and other payments due under any ground or underlying
lease, or any lease for any equipment ordinarily considered to be of a
capital nature (except janitorial equipment which is not affixed to the
building and except as otherwise provided in this Lease).
9. Landlord's property management and administrative expenses and
personnel costs except as provided in this Lease.
10. Advertising and promotional expenditures.
11. Costs of repairs and other work occasioned by fire, windstorm, or
other casualty of an insurable nature but only to the extent of insurance
proceeds actually received by Landlord and subject to other provisions of
this Lease.
12. Any costs, fines, or penalties incurred due to violations by Landlord
of any governmental rule or authority provided Tenant has not contributed
to the violation as a result of its actions or inactions or the actions or
inactions of those for whom Tenant is responsible.
13. Costs for sculpture, paintings, or other objects of art (nor insurance
thereon or extraordinary security in connection therewith).
14. Wages, salaries, or other compensation paid to any executive employees
above the grade of building manager.
34.
<PAGE>
15. The cost of correcting any building code or other violations which
were violations prior to the Commencement Date.
16. Payment for work that does not directly benefit the Leased Premises,
the Building, and/or the Property.
New Sections
15: 1. Design and Construction of Improvements in and about the Leased
---------------------------------------------------------------
Premises ("Tenant Improvements"): Landlord agrees to construct within, under,
- --------------------------------
and above the Building housing the Leased Premises certain "Tenant Improvements"
(or "Interior Improvements"). The Tenant Improvements shall be similar in type
and quality to the general purpose interior improvements previously installed by
Landlord in the building. Landlord shall install interior finishes including
carpet, paint, tile, acoustical tile ceiling, floor and wall cover, doors and
hardware all with a quality and color similar to those previously installed in
the building. Subject to Landlord's reasonable approval Tenant shall have the
flexibility to design a floor plan that suits Tenant's needs so long as Tenant's
plan preserves the general purpose nature of the building.
The term "general purpose improvements" is intended to mean those improvements
(and the configuration of such improvements) that can be used by a majority of
users who have or are likely to locate in Landlord's building. Special purpose
improvements include but are not limited to the following: raised computer
floors, compressed air systems, gas or liquid distribution systems, haylon fire
extinguishing systems, excess or redundant HVAC equipment or distribution
systems, flammable or solvent storage or waste systems, special electrical
systems (anything other than duplex plugs on office walls), lighting levels in
excess of Title 24 limitations, redundant or backup electrical power, telephone
systems, alarm systems, public address systems, fire sprinkler monitoring
equipment, computer cabling, burn in rooms, sound insulated rooms, plumbing
other than for domestic use, special cabinetry, clean rooms, window covering,
moveable partitions, equipment used in eating or food handling facilities,
materials (or the arrangement of materials) that are unique to one segment of
users (such as semiconductor manufacturers), the connection of Tenant's
equipment to building HVAC, electric, or plumbing systems ("fit up"), and the
like. Subject to Landlord's approval, Tenant at its sole cost and expense shall
install all required improvements and fixtures to provide for any Hazardous
Materials.
Landlord and Tenant shall agree upon a floor plan showing the improvements
Landlord shall construct for Tenant (the "Schematic Plan"). Landlord shall have
its architect prepare construction drawings and Landlord shall construct the
improvements shown on the plan. Tenant shall be responsible for the construction
of improvements not to be built by Landlord which improvements shall include
special purpose improvements, special electrical requirements, and the like.
Tenant may ask Landlord to construct Tenant's special purpose improvements in
which event Tenant shall pay the reasonable cost of said improvements. In the
event that Tenant retains its own contractor to construct Tenant's special
purpose improvements Tenant's contract shall not interfere with or delay
Landlord's work.
16. Option to Renew: Landlord hereby grants to Tenant the option to renew the
Lease, for an additional term of five (5) years (the "Renewal Term") with the
option commencing on the expiration of the Lease (the "First Renewal
Commencement Date") and ending five (5) years thereafter (the "First Renewal
Expiration Date").
1. The lease of the Leased Premises for the Renewal Term shall be on the same
terms and conditions as set forth in the Lease, except:
A. That the rental for the Leased Premises during the Renewal Term shall
be as set forth below in Paragraph 3, and
B. That the Security Deposit shall be increased to the rental amount
determined in Paragraph 3 (the "Increased Security Deposit Amount").
2. Tenant shall notify Landlord of Tenant's exercise of its right to renew the
Lease for the Renewal Term only by giving to Landlord written notice not sooner
than eight (8) months prior to the Renewal Commencement Date and not later than
six (6) months prior to the Renewal Commencement Date (time is expressly of the
essence to Landlord). Any attempted exercise of
35.
<PAGE>
this Option made other than within the time period stated or in the manner
stated shall be void and of no force or effect. In the event that Tenant does
not or is not entitled to exercise its option Tenant shall have no further
rights hereunder.
3. If Tenant shall have properly and timely exercised its right to extend the
term of the Lease, the term of the Lease shall be so extended for the Renewal
Term on the same terms and conditions contained in the Lease; provided, however,
the Base Monthly Rent for each month of the first thirty (30) months of the
Renewal Term shall be calculated as follows: The new Base Monthly Rent for the
Renewal Term shall be the greater of: (i) the Base Monthly Rent being paid by
Tenant to Landlord during the final full month of the final year of the initial
Lease Term, or (ii) the Then Market Rental Rate for the Lease Premises.
4. The term "Then Monthly Market Rental Rate" shall be determined by mutual
agreement between Landlord and Tenant or, in the event such agreement cannot be
made within ten (10) days from the date Tenant shall have exercised this option,
Landlord and Tenant shall each appoint a real estate appraiser with at least
five (5) years full-time commercial/industrial appraisal experience in Santa
Clara County to appraise and determine the fair market monthly rental rate the
Leased Premises, in their then existing condition for the use specified in the
Lease could be leased for, on the same terms and conditions set forth in the
Lease, to a qualified tenant ready, willing and able to lease the Leased
Premises for a term equal to the Renewal Term.
If either party does not appoint an appraiser within ten (10) days after the
other party has given notice of the name of its appraiser, the other party can
then apply to the President of the Santa Clara County Real Estate Board or the
presiding Judge of the Superior Court of that County for the selection of a
second appraiser who meets the qualifications stated above. The failing party
shall bear the cost of appointing the second appraiser and of paying the second
appraiser's fee. The two appraisers shall attempt to establish the Then Monthly
Market Rental Rate for the Leased Premises. If the two appraisers are unable to
agree on the Then Monthly Market Rental Rate for the Leased Premises within ten
(10) days after the second appraiser has been selected or appointed, then the
two appraisers shall attempt to select a third appraiser meeting the
qualifications stated above. If they fail to agree on a third appraiser, either
party can follow the above procedure for having an appraiser appointed by the
Real Estate Board or a judiciary. Each of the parties shall bear one-half (1/2)
of the cost of appointing the third appraiser and of paying the third
appraiser's fee. Unless the three appraisers are able to agree on the Then
Monthly Market Rental Rate for the Leased Premises within ten (10) days after
the selection or appointment of the third appraiser, the two appraisal amounts
being calculated most closely together, after having discarded the appraisal
amount which most greatly varies from the other two appraisal amounts, shall be
added together then divided by two (2). The resulting rental amount shall be
defined as the Then Monthly Market Rental Rate for the Leased Premises. In no
event, however, shall the resulting Then Monthly Market Rental Rate for the
Renewal Term be less than the Base Monthly Rent paid during the final full month
of the initial Lease Term.
The Base Monthly Rent shall be adjusted at the end of the thirtieth (30th)
month of the Renewal Term by multiplying the Base Monthly Rent for the thirtieth
(30th) month times a fraction the numerator of which shall be the Consumer Price
Index published immediately prior to the period including the thirtieth (30th)
month of the Renewal Term and the denominator of which shall be the Consumer
Price Index published immediately prior to the first (1st) month of the Renewal
Term. In no event, however, shall the Base Monthly Rent for the last thirty (30)
months of either Renewal Term be less than the Base Monthly Rent for the first
thirty (30) months of the Renewal Term.
16 Quiet Enjoyment: Landlord hereby warrants that it is the fee owner of the
Leased Premises, that it has authority to enter into this Lease, and that it
shall take all actions necessary, at its expense, to defend Tenant's right to
possession of the Leased Premises. Subject to the terms of this Lease and so
long as no default under this Lease shall have occurred and be continuing,
Landlord shall not take any action (nor permit any action by anyone rightfully
claiming by, through or under Landlord (other than Tenant)) that would adversely
affect Tenant's right to peaceably and quietly have, hold and enjoy the Leased
Premises for the Lease Term with respect to any matters arising from and after
the Commencement Date.
17 Right of First Refusal: Provided that Tenant is not in default of the terms
of this Lease, in the event that during the term of this Lease, or any extension
period hereof, any of the premises located at 48621 and/or 48625 Warm Springs
Boulevard, should become available for lease,
36.
<PAGE>
Landlord hereby agrees to provide written notice thereof to Tenant, and Tenant
shall have a right of first refusal on such premises. Landlord shall give to
Tenant written notice of the terms upon which Landlord intends to lease the
space to another tenant. Tenant shall have three (3) business days from the date
of said notice to accept or reject Landlord's offer and, should Tenant fail to
respond within such period of time or refuse to lease the space, said offer
shall be deemed rejected. Upon rejection of Landlord's offer, expressly or by
lapse of the three (3) business day period, Landlord may proceed to rent said
space to a third party. In the event Tenant accepts Landlord's offer, Tenant
shall enter into a lease on the terms contained in Landlord's offer.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Addendum To
Lease with the intent to be legally bound thereby, to be effective as of the
date the second party signs this First Addendum To Lease.
AS LANDLORD: AS TENANT:
PEN Associates Asyst Technologies, Inc.
a California limited partnership a Delaware corporation
By: /s/ Pen Associates By: /s/ Asyst Technologies, Inc.
--------------------------- ---------------------------
Title: General Partner Title: CFO
--------------------------- ---------------------------
By: By: /s/ Asyst Technologies, Inc.
--------------------------- ---------------------------
Title: General Partner Title: COO
--------------------------- ---------------------------
Dated: 11/13/95 Dated: 11/13/95
--------------------------- ---------------------------
37.
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT B
<PAGE>
EXHIBIT "D"
ACCEPTANCE AGREEMENT
This Acceptance Agreement is made as of ___________, 1994, by and between
the parties hereto with regard to that Lease dated __________, 1994, by and
between _____________, a California general partnership, as Landlord
("Landlord"), and __________________, a corporation, as Tenant ("Tenant"),
affecting those premises commonly known as _________________________, located at
____________________ in the City of _________________, State of California (the
"Premises"). The parties agree as follows:
1. All improvements required to be constructed by Landlord by the Lease
have been completed in accordance with the terms of the Lease and are hereby
accepted by Tenant, subject to the completion of punchlist items identified on
Exhibit "A" attached hereto.
2. Possession of the Premises has been delivered to Tenant and Tenant has
accepted and taken possession of the Premises.
3. The Lease Commencement Date is________________,1994.
4. The Lease Term shall expire on ____________,19____, unless sooner
terminated according to the terms of the Lease or by mutual agreement.
5. The Base Monthly Rent due pursuant to the Lease is as follows:
_______________ thru _______________ _______________
_______________ thru _______________ _______________
_______________ thru _______________ _______________
6. Landlord has received a Security Deposit in the amount of ____________
Dollars ($__________).
7. Landlord has received Prepaid Rent in the amount of __________________
Dollars ($_________), which shall be applied to the first installment(s) of Base
Monthly Rent.
8. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.
AS LANDLORD: AS TENANT:
__________________________ ______________________________
a California general partnership a ______________ corporation
By: ________________________ By: _______________________
Title: General Partner Title: _______________________
------------------------
By: ________________________ By: _______________________
Title: General Partner Title: _______________________
------------------------
By: ________________________ Dated: _______________________
Title: General Partner
------------------------
Dated: ________________________
<PAGE>
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("Amendment") dated for reference purposes as of
July 19, 1999 is made to that Industrial Space Lease dated as of November 13,
1995, (the "Lease") by and between Asyst Technologies, Inc., a California
Corporation as ("Tenant"), and PEN Associates, a California limited partnership
as ("Landlord"), for the lease of space located at 48633 Warm Springs, Fremont,
California (the "Leased Premises"). The parties hereto agree that the Lease is
amended, changed and modified by the following provisions, which are hereby
added to the Lease:
Unless otherwise expressly provided herein, all terms which are given a special
definition by the Lease that are used herein are intended to be used with the
definition given to them by the Lease. The provisions of the Lease shall remain
in full force and effect except as specifically amended hereby. In the event of
any inconsistency between the Lease and this Amendment, the terms of this
Amendment shall prevail.
Tenant hereby exercises its option to renew the Lease pursuant to Section 16 of
the First Addendum To Lease.
The Term of the Lease is hereby extended by five (5) years to January 31, 2005
which date is the new Lease Expiration Date.
Tenant's Security Deposit is increased to thirty seven thousand one hundred
twenty eight dollars ($37,128.00). Upon signing this Amendment Tenant shall pay
to Landlord the amount of nine thousand seven hundred twenty eight dollars
($9,728.00) to increase the Security Deposit from twenty seven thousand four
hundred dollars ($27,400.00) to thirty seven thousand one hundred twenty eight
dollars ($37,128.00).
The Base Monthly Rent during the Renewal Term shall be as follows:
February 1,2000, through January 31, 2001, thirty seven thousand one hundred
twenty eight dollars ($37,128.00) per month.
February 1, 2001, through January 31, 2002, thirty eight thousand eight hundred
ninety six dollars ($38,896.00) per month.
February 1, 2002, through January 31, 2003, forty thousand six hundred sixty
four dollars ($40,664.00) per month.
February 1, 2003, through January 31, 2004, forty two thousand four hundred
thirty two dollars ($42,432.00) per month.
February 1, 2004, through January 31, 2005, forty four thousand two hundred
dollars ($44,200.00) per month.
Right Of First Refusal: Landlord confirms that Section 17 of the First Addendum
To Lease which provides Tenant with the right of first refusal to lease the
spaces located at 48621 and 48625 Warm Springs Boulevard remains in effect.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment To
Lease with the intent to be legally bound thereby, to be effective as of the
date the second party signs this First Amendment To Lease.
AS LANDLORD: AS TENANT:
PEN Associates Asyst Technologies, Inc.
a California limited partnership a California corporation
By: __________________________ By: /s/ Douglas J. McCutcheon
-------------------------
Douglas J. McCutcheon
Title: General Partner
-------------------------- Title: Senior Vice President
-------------------------
By: __________________________ Chief Financial Officer
-------------------------
Title: General Partner
--------------------------
Dated: July ___, 1999 Dated: August 16, 1999
<PAGE>
Willis & Company
Commercial Property Services
August 31, 1999
Mr. Douglas J. McCutcheon
Senior Vice President/Chief Financial Officer
ASSYST TECHNOLOGIES, INC
48761 Kato Road
Fremont, CA 94538
Re: First Amendment to Lease
PEN Associates
48633 Warm Springs Boulevard
Fremont, CA
Dear Mr. McCutcheon:
This letter will confirm that you are in receipt of an original fully
executed First Amendment of Lease for the above referenced property. This
Amendment extends your Lease Termination Date to January 31, 2005.
Your future base rent increases will be as follows:
February 1, 2000 $37,128.00
February 1, 2001 $38,896.00
February 1, 2002 $40,664.00
February 1, 2003 $42,432.00
February 1, 2004 $44,200.00
We are in receipt of your check #130773, in the amount of $9,728.00, which
represents the increased security deposit for this space. Your total security
deposit for this space now totals $37,128.00.
Thank you for your continued tenancy at the building. Should you have any
questions regarding this Amendment, feel free to contact our office.
Sincerely,
Shirleen Willis
Enclosure
<PAGE>
Exhibit 10.16
LEASE AGREEMENT
Between
SL-6 PARTNERS, LTD.
as Landlord,
and
Progressive System Technologies, Inc.,
as Tenant,
Covering approximately 40,000 gross square feet
of the Building known (or to be known) as
Stonelake #6
located at
North Mopac Expressway and Stonelake Boulevard
Austin, Texas, 78759
<PAGE>
STANDARD INDUSTRIAL LEASE AGREEMENT
TRAMMELL CROW COMPANY - (AUS/91)
Approximately 40,000 gross square feet
N. Mopac Expressway at Stonelake Boulevard
Austin, Texas 78759
(Stonelake #6)
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between. SL-6 Partners,
Ltd., hereinafter referred to as "Landlord," and Progressive System
Technologies, Inc., hereinafter referred to as "Tenant."
1. PREMISES AND TERM. In consideration of the mutual obligations of Landlord
and Tenant set forth herein, Landlord leases to Tenant, and Tenant hereby takes
from Landlord, certain leased premises situated within the County of Travis,
State of Texas, comprising approximately 40,000 square feet (the "Premises")
of the building known locally as Stonelake #6 ("Building") located at
___________ Stonelake Blvd., Austin, Texas 78759 situated on land more fully
described on EXHIBIT "A" attached hereto and incorporated herein by reference,
together with all rights, privileges, easements, appurtenances and amenities
belonging to or in any way pertaining to the Premises, to have and to hold,
subject to the terms, covenants and conditions in this Lease. The term of this
Lease shall commence on the Commencement Date hereinafter set forth and shall
end on the last day of the month that is one hundred twenty (120) months after
the Commencement Date.
A. Building or Improvements to be Constructed. If the Premises or part
------------------------------------------
thereof are to be constructed, the "Commencement Date" shall be deemed to be the
earliest of: (i) the date upon which the Premises and other improvements to be
erected in accordance with the plans and specifications described on EXHIBIT "B"
attached hereto and incorporated herein by reference or to be attached hereto
following completion of such plans and specifications (the "Plans") have been
substantially completed and the Premises are tendered to Tenant with a
Certificate of Occupancy; (ii) the date on which the Premises or such
improvements would have been substantially completed but for delays Caused by
Tenant, including Plan delays or change orders; or (iii) the date on which
Tenant occupies any part of the Premises. Landlord shall notify Tenant in
writing at any time Landlord claims any delay caused by Tenant. As used herein,
the term "substantially completed" shall mean that, in the opinion of the
architect or space planner that prepared the Plans, such improvements have been
completed in accordance with the Plans, and the Premises are in good and
satisfactory condition, with the exception of completion of minor punch list
items. As soon as such improvements have been substantially completed and a
Certificate of Occupancy has been obtained, Landlord shall, tender the premises
to Tenant by notifying Tenant in writing that the Commencement Date has
occurred. Should the Commencement Date not have occurred on or prior to May 1,
1996, provided such delay is not caused by Tenant, including plan delays or
change orders, Landlord shall pay liquidated damages equal to One Thousand and
No/100 Dollars ($1,000.00) for every calendar day after May 1, 1996 until the
Premises are substantially completed and delivered to Tenant with a Certificate
of Occupancy. Landlord shall pay such liquidated damage amount to Tenant in
cash or at Tenant's written election and instruction, offset such amounts
against rentals due hereunder. If the Premises have not been substantially
completed and tendered to Tenant along with a Certificate of Occupancy obtained
and tendered to Tenant by June 30, 1996, Landlord will provide temporary
alternative space to Tenant of a quality and location similar to the Premises
and at a total monthly cost to Tenant not exceeding the cost hereunder.
Landlord shall be responsible for all the costs incurred by Tenant to move into
such temporary alternative space. In addition, Tenant shall have a one-time
right to terminate this Lease only in the event that Landlord has not commenced
drilling foundation piers for the Building on or before December 19, 1995. This
December 19, 1995 date shall be extended on a day-for-day basis for each day of
rain encountered at the Building site between and including December 1, 1995 and
December 19, 1995. Should Tenant elect to exercise its termination right, Tenant
must notify Landlord in writing of such election no later than 6:00 p.m. CST,
December 20, 1995, at which point this Lease shall be null and void and of no
further force and effect and Tenant shall receive a full refund of the Security
Deposit. If the Premises have not been substantially completed and tendered to
Tenant along with a Certificate of Occupancy by September 30, 1996, Tenant may
at any time within 30 days thereafter terminate this Lease as a matter of right
and without further liability therefor, and receive a full refund of the
Security Deposit.
Initial_______ ______
Date _________ ______
1.
<PAGE>
2. BASE RENT, SECURITY DEPOSIT AND ESCROW DEPOSITS
A. Base Rent. Tenant agrees to pay Landlord rent for the Premises, in
---------
advance, without demand, deduction or set off, except as set forth herein, at
the rate set forth below:
Year Monthly Base Rental Rate PSF Total Monthly Base Rent
- ------------ ------------------------------ -------------------------
Years 1 - 5 $0.70 $28,000
Years 6 - 7 $0.74 $29,600
Year 8 $0.76 $30,400
Years 9 - 10 $0.78 $31,200
The first such monthly installment, plus the other monthly charges set forth in
Paragraph 2C below, shall be .due and payable on the Commencement Date, and a
like monthly installment shall be due and payable on or before the first day of
each calendar month succeeding the Commencement. Date, except that all
payments due hereunder for any fractional calendar month shall be prorated.
B. Security Deposit. In addition; Tenant agrees to deposit with Landlord
----------------
on the date hereof the stern of twenty eight thousand and 00/100 Dollars
($28,000.00), which shall be held by Landlord in an interest bearing account, as
security for the performance of Tenant's obligations under this Lease (the
"Security Deposit"), it being expressly understood and agreed that the Security
Deposit is not an advance rental deposit or a measure of Landlord's damages in
case of Tenant's default. Upon occurrence, of an Event of Default, Landlord may
use all or part of the Security. Deposit to pay past due rent or other payments
due Landlord under this Lease or the cost of any other damage, injury, expense
or liability caused by such Event of Default, without prejudice to any other
remedy provided herein or provided by law. On demand, Tenant shall pay Landlord
the amount that will restore the Security Deposit to its original amount. The
Security Deposit shall be deemed the property of Landlord, but any remaining
balance of the Security Deposit shall be returned by Landlord to Tenant upon
termination or expiration of this Lease and when all of Tenant's obligations
under this Lease have been fulfilled.
C. Escrow Deposits. Without limiting in any way Tenant's other
---------------
obligations under this Lease, Tenant agrees to pay to Landlord its Proportionate
Share (as defined in this Paragraph 2C below) of (i) Taxes (hereinafter defined)
payable by Landlord pursuant to Paragraph 3A below, (ii) the cost of utilities
payable by Landlord pursuant to Paragraph 8 below, (iii) Landlord's cost of
maintaining insurance pursuant to Paragraph 9A below, and (iv) Landlord's cost
of maintaining the Premises pursuant to Paragraph 5D below and any common area
charges payable by Tenant in accordance with Paragraph 4B below, which costs
shall exclude, however, any management fees charged by Landlord or its
affiliates or agents other than the fee contemplated in Paragraph 4B
(collectively, the "Tenant Costs"). During each month of the term of this
Lease, on the same day that base rent is due hereunder, Tenant shall deposit in
escrow with Landlord an amount equal to one-twelfth (1/12) of the estimated
amount of Tenant's Proportionate Share of the Tenant Costs. Tenant authorizes
Landlord to use the funds deposited with Landlord under this Paragraph 2C to pay
such Tenant Costs. The initial monthly escrow payments will be $0.13 times the
number of square feet of the Premises based upon the estimated amounts for the
year in which this Lease commences and shall be increased or decreased annually
to reflect Landlord's reasonable projections of the actual amount of all Tenant
Costs. If the Tenant's total escrow deposits for any calendar year are less
than Tenant's actual Proportionate Share of the Tenant Costs for such calendar
year, Tenant shall pay the difference to Landlord within the later of thirty
(30) days after demand or ten (10) days after delivery to Tenant and approval
of the reconciliation referenced below. Upon request by Tenant, Landlord will
provide a written reconciliation of the Tenant Costs. If the total escrow
deposits of Tenant for any calendar year are more than Tenant's actual
Proportionate Share of the Tenant Costs for such calendar year, Landlord shall
give Tenant written notice of same supported by a written reconciliation and if
requested by Tenant, written evidence of Tenant Costs and retain the entire
excess and credit it against Tenant's escrow deposits next maturing after such
determination, or if such excess exceeds twenty percent (20%) of the escrowed
amount, refund the entire excess balance to Tenant within thirty (30) business
days of such notice. Tenant's "Proportionate Share" with respect to the
Building, as used in this Lease, shall mean a fraction, the numerator of which
is the gross rentable area contained in the Premises and the denominator of
which is the gross rentable area contained in the entire Building. For purposes
hereof, the gross rentable area of the Building shall be 108,000 square feet,
To the extent the entire square footage of the Building is not leased, Landlord
shall bear the pro rata expense allocable to the unleashed portion thereof. If
Tenant or any other particular tenant of the Building could be clearly
identified as (i) being responsible for causing any required maintenance or
repair to any of the Building Common area or facilities, (ii) using excessive
amounts of water (to the extent such usage is not separately metered), (iii)
causing the insurance premiums to increase or require additional coverage
because of such Tenant's use of the Building then such responsible tenant shall
pay the entire cost of such maintenance, repair, usage or premium and such
amount shall not be included as a Tenant Cost.
Initial_______ ______
Date _________ ______
2.
<PAGE>
3. TAXES
A. Taxes and Assessments. Subject to reimbursement under Paragraph 2C
---------------------
herein, Landlord agrees to pay all taxes, assessments and governmental charges
of any kind and nature (collectively referred to herein as "Taxes") that accrue
against file Premises, the Building and/or the land of which the Premises or the
Building are a part. If at any time during the term of this Lease the present
method of ad valorem taxation should be changed so that in lieu of or in
addition to any taxes, assessments or governmental charges levied or imposed on
real estate or improvements thereon there shall be levied, assessed or imposed
on Landlord a capital levy or other tax directly on the rents received from the
Premises and/or the land and improvements of which the Premises are a part, then
the amount of such taxes, assessments, levies or charges, so measured or based
shall be deemed to be included within the term "Taxes" for the purposes hereof.
The Landlord shall have the right to employ a tax consulting firm to attempt to
assure a fair tax burden on the real property within the applicable taxing
jurisdiction. Tenant agrees to pay its Proportionate Share of the cost of such
consultant which proportionate share shall not exceed a maximum of $1,000.00
annually. Landlord shall be responsible to pay all capital recovery fees
trod/or special utility assessments rendered with respect to the Premises, and
Tenant shall have no responsibility to pay or reimburse Landlord therefor
provided that Tenant shall pay for all hook-up and meter fees necessitated by
the interior finish of the Premises.
B. Personal Property Taxes. Tenant shall be liable for all taxes levied
-----------------------
or assessed against any personal property or fixtures placed in or on the
Premises. If any such taxes are levied or assessed against Landlord or
Landlord's property and (i) Landlord pays the same or (ii) the assessed value
of Landlord's property is increased by inclusion of such personal property and
fixtures and Landlord pays the increased taxes, then Tenant shall pay to
Landlord, upon demand, the amount of such taxes.
4. LANDLORD'S REPAIRS AND MAINTENANCE.
A. Structural Repairs. Landlord, at its own cost and expense, shall
------------------
maintain the roof foundation and the structural soundness of the exterior walls
of the Building in good repair, reasonable wear and tear excluded. The term
"walls" as used herein shall not include windows, glass or plate glass, any
doors, special store fronts or office entities, and the term "foundation" as
used herein shall not include loading docks. Tenant shall immediately give
Landlord written notice of defect or need for repairs, after which Landlord
shall have reasonable opportunity to effect such repairs or cure such defect.
B. Tenant's Share of Common Area Charge. Tenant agrees to pay its
------------------------------------
Proportionate Share of the cost incurred by Landlord for Landlord's (i)
maintenance and/or landscaping (including both maintenance and replacement of
landscaping) of any property that is a part of the Building or immediately
adjacent to the Building and (ii) operating, maintaining and repairing any
property, facilities or services (including without limitation utilities and
insurance therefor) provided for the use or benefit of Tenant or the common use
or benefit, of Tenant and other lessees of the Building so long as such property
facility or service is otherwise contemplated in this Lease or hereafter
requested or agreed to by Tenant and (iii) an administrative fee of fifteen
percent (15%) of all common area maintenance charges described herein.
C. Audit of Tenant Costs. Tenant shall have the right, at Tenant's sole
---------------------
cost, to audit the Landlord's records of Tenant Costs provided that all of the
following criteria are met:
1. Before conducting any audit, Tenant must pay the full amount of
the escrow deposits then due for Tenant Costs under Paragraph 2C and must not be
in default of any other lease provisions.
2. Tenant may review only those records of Landlord that are related
to Tenant Costs. Without limiting the foregoing, Tenant may not review any
other leases, or Landlord's tax returns or financial statements.
3. In conducting an audit, Tenant must utilize an independent
certified Public accountant experienced in auditing such records subject to
Landlord's reasonable prior approval.
4. Upon receipt thereof, Tenant will deliver to Landlord a copy of
the audit report and all accompanying data.
5. Tenant will keep confidential all agreements involving the rights
provided in this section and the results of any audits conducted hereunder.
Notwithstanding the foregoing, Tenant shall be permitted to furnish the
foregoing information to its attorneys, accountants and auditors to the extent
necessary to perform their respective services for Tenant or to any arbitrator,
mediator or court in which proceedings are pending related to such audit
information.
6. The audit shall be conducted in accordance with generally
accepted rules of auditing practices.
Initial_______ ______
Date _________ ______
3.
<PAGE>
7. Tenant may not conduct an audit more often than once each
calendar year. Tenant may audit records with respect to each lease year only
one time. No audit shall cover a period of time in excess of the one calendar
year immediately preceding the audit.
8. The audit right set forth in this section is not transferable by
Tenant and shall be terminated if Tenant or a subsidiary or affiliate thereof is
not the Tenant under this lease.
9. If an audit by Tenant of the Tenant cost records pursuant to the
foregoing demonstrates an overstatement of costs by Landlord in excess of the
amount properly determined by the audit, Landlord shall pay Tenant the amount of
said overstatement of costs (to the extent Tenant has paid such amount to
Landlord). If said audit demonstrates an overstatement of costs by Landlord in
excess of ten percent (10%) of the amount properly determined by the audit,
Landlord shall also pay Tenant the reasonable costs incurred by Tenant in
connection with said audit. If said audit demonstrates an understatement of
costs by Landlord, Tenant shall reimburse Landlord's property management company
for its reasonable costs incurred in connection with said audit. If such audit
demonstrates an understatement, Tenant shall also pay Landlord the amount of
such understatement.
5. TENANT'S REPAIRS
A. Maintenance of Premises and Appurtenances. Tenant, at its own cost
-----------------------------------------
and expense, shall (i) maintain all parts of the Premises and promptly make all
necessary repairs and replacements to the Premises (except those for which
Landlord is expressly responsible hereunder), and (ii) keep the parking areas,
driveways and alleys surrounding the Premises free from trash and debris
generated by Tenant or its employees, agents or vendors. Tenant's obligation
to 'maintain, repair and make replacements to the Premises shall cover, but not
be limited in, pest control (including termites), trash removal and the
maintenance, repair and replacement of all HVAC, electrical, plumbing, sprinkler
and Other mechanical systems; provided, however, any maintenance, repair or
replacement of the Premises covered by a warranty or guaranty of any contractor
or materialman shall be coordinated through and enforced by Landlord pursuant to
terms of such warranty or guaranty and at the cost and expense of such
contractor or materialman as set forth therein.
B. Parking. Landlord, at its expense, will provide and designate as
-------
parking for Tenant one hundred sixty (160)parking spaces, of which eighty (80)
shall be reserved exclusively for Tenant. Such reserved spaces shall be located
in the areas identified on EXHIBIT "C" attached hereto and incorporated herein.
-----------
For purposes hereof, a "parking space" shall mean a minimum eight-foot (8')
wide, eighteen and one-half foot (18 1/2") long space with a twenty-six foot
(26') foot wide swing aisle for entrance into the space. Tenant and its
employees, customers and licensees shall have thc right to use the eighty (80)
exclusive reserved parking spaces that have been designated for Tenant's use on
Exhibit "C" and the remaining eighty (80) unreserved, non-exclusive parking
- -----------
spaces subject to (1) ail rules and regulations promulgated by Landlord, and
(ii) rights of ingress and egress of other lessees. Landlord shall use
reasonable and diligent efforts to enforce Tenant's parking rights against any
third parties, and Tenant expressly does not have the right to tow or obstruct
improperly parked vehicles. Tenant agrees not to park on any public streets or
private roadways adjacent to or in the vicinity of the Premises.
C. System Maintenance. Tenant, at its own cost and expense, shall enter
------------------
into a regularly scheduled preventive maintenance/service contract with a
maintenance contractor approved by Landlord for servicing all heating and air
conditioning systems and equipment within the Premises. The service contract
must include all services suggested by the equipment manufacturer in its
operations/maintenance manual and must become effective within thirty (30) days
of the date Tenant takes possession of the Premises.
D. Option to Maintain Premises. Should Tenant fail to perform any
---------------------------
maintenance, repair or replacement to the Premises required hereunder, and
should such failure continue for a period of ten (10) business days following
receipt of written notice from Landlord, Landlord reserves the right to perform,
in whole or in part, any such maintenance, repairs and replacements to the
Premises, in which event, Tenant shall be liable for the Cost and expense of
such repair, replacement, maintenance and other such items. Landlord shall
provide, at the monthly expense of the Tenants of the Building, regular mowing
of any grass, trimming, weed removal, exterior painting, common sewage plumbing
and general landscape maintenance, including keeping the parking areas,
driveways, alleys, and the whole of the exterior of the Building and surrounding
property in good repair and in a neat, clean condition and such other services,
facilities, maintenance, and repair appropriate to the operation of research and
development/service center projects in Austin, Texas. Subject to the terms of
paragraph 9 below, Tenant shall not be obligated to repair any damage caused by
fire or other peril covered by the insurance to be maintained by Landlord
pursuant to paragraph 9 below.
6. ALTERATIONS. Tenant shall not make any alterations, additions or
improvements to the Premises without the prior written :consent of Landlord,
such consent not to be Unreasonably withheld, conditioned or delayed, however,
structural or exterior alterations, additions or improvements are subject to
Landlord's prior consent which may be given or withheld in its sole discretion.
Prior to beginning construction of any such improvements, Tenant shall submit
architectural drawings of the proposed improvements to Landlord and shall obtain
Landlord's written consent to begin construction. Tenant, at its own cost and
expense, may erect such shelves, bins, machinery and trade fixtures as it
desires,
Initial_______ ______
Date _________ ______
4.
<PAGE>
provided that (i) such items do not alter the basic character of the Premises or
the Building, (ii)such items do not overload or damage same, (iii) such items
may be removed without injury to the Premises, and (iv) the construction,
erection or installation thereof complies with all applicable governmental laws,
ordinances, regulations and with Landlord's specifications and requirements
defined as Trammell Crow Company's Standards and Specifications for Industrial
Tenant Finish Construction dated April 1991 and as modified thereafter. Tenant
shall be responsible for compliance with The Americans With Disabilities Act of
1990. Without implying any consent of Landlord thereto, all alterations,
additions, improvements and partitions erected by Tenant shall be and remain the
property of Tenant during the term of this Lease. All shelves, bins, machinery
and trade fixtures installed by Tenant and other improvements installed after
Commencement Date shall be removed on or before the earlier to occur of the day
of termination or expiration of this Lease or vacating the Premises, at which
time Tenant shall restore the Premises to their original condition. All
alterations, installations, removals and restorations shall be performed in a
good and workmanlike manner so as not to damage or alter the primary structure
or structural qualities of the Building or other improvements situated on the
Premises or of which the Premises are a part.
7. SIGNS. Tenant shall be entitled to install signage on the exterior of the
Building in locations and of a type and design more particularly described on
EXHIBIT "D" attached hereto and incorporated herein. Any change to or
- -----------
additional signage Tenant desires for the Premises shall be subject to
Landlord's written approval, which shall not be unreasonably delayed, and shall
be submitted to Landlord prior to the installation of such signage. Tenant
shall repair, paint and/or replace the Building fascia surface to which its
signs are attached upon Tenant's vacating the Premises or the removal or
alteration of its signage. Tenant shall not, without Landlord's prior written
consent, (i) make any changes to the exterior of the Premises, such as painting;
(ii) install any exterior lights, decorations, balloons, flags, pennants or
banners; or (iii) erect or install any signs, windows or door lettering,
placards, decorations or advertising media of any type which can be viewed from
the exterior of the Premises: All signs, decorations, advertising media, blinds,
draperies and other window treatment or bars or other security installations
visible from outside the Premises shall conform in all respects to the criteria
established by Landlord or shall be Otherwise subject to Landlord's prior
written consent, which shall not be unreasonably delayed.
8. UTILITIES. Landlord agrees to provide, at no cost to Tenant, water and
wastewater connections to the Premises and electricity service connections into
the Building. Tenant shall have the right to connect the Premises to such
Building connections as a part of the tenant finish construction. Tenant shall
pay for all water, gas, heat, light, power, telephone, sewer, sprinkler charges
and other utilities and services used on or at the Premises, together with any
taxes, penalties, surcharges or the like pertaining to the Tenant's use of the
Premises (unless such penalties are due to Landlord's acts or omissions) and any
maintenance charges for utilities. Landlord shall have the right to cause any
of said services to be separately metered to Tenant, at Tenant's expense.
Tenant shall pay its pro rata share, as reasonably determined by Landlord, of
all charges for jointly metered utilities. In the event water is not separately
metered to Tenant, Tenant agrees that it will not use water and sewer capacity
for uses other than normal domestic restroom and kitchen usage, and Tenant
further agrees to reimburse Landlord for the cost of such additional water and
sewer use as determined by Landlord in its reasonable discretion, as additional
rental if, in fact, Tenant uses water or sewer capacity for uses other than
normal domestic restroom and kitchen uses without first obtaining Landlord's
written permission, including but not limited to the cost for acquiring
additional sewer capacity to service Tenant's excess sewer use. Furthermore,
Tenant agrees in such event to install at its own expense a submeter to
determine Tenant's usage. If Landlord determines that any other tenant or
tenants in the Building use water and sewer capacity in excess of normal
domestic restroom and kitchen uses, Landlord will require such tenant to
separately meter or submeter such tenant or tenants' premises in the Building.
Any material cessation of services for water, electric and wastewater that
causes Tenant to cease normal operations in the Premises and is caused by
Landlord or which may be covered under any insurance carried by Landlord
extending beyond fourteen (14) consecutive days or thirty (30) days in the
aggregate shall allow Tenant to abate rental payments for so long thereafter as
services are not furnished and for each day thereafter services cease, following
the original period.
9. INSURANCE.
A. Landlord's Insurance. Subject to reimbursement under Paragraph 2C
--------------------
herein, Landlord shall maintain insurance covering the Building in an amount not
less than eighty percent (80%) of the "replacement cost" thereof, insuring
against the perils of fire and extended coverage, vandalism and malicious
mischief. Landlord shall procure and maintain throughout the term of this Lease
a policy or policies of insurance, at its sole cost and expense, insuring
Landlord and Tenant against all claims, demands or actions arising out of or in
connection with (i) the Premises and Building; (ii) the condition of the
Premises and Building; (iii) Landlord's operations in and maintenance and use of
the Premises and Building; and (iv) Landlord's liability assumed under this
Lease, the limits of such policy or policies to be in the amount of not less
than $500,000.00 per occurrence in respect of injury to persons (including
death), and in the amount of not less than $1,000,000 per occurrence in respect
of property damage or destruction, including the loss of use thereof. Copies of
the policies or certificates shall be delivered to Tenant upon request.
Initial_______ ______
Date _________ ______
5.
<PAGE>
B. Tenant's Insurance. Tenant, at its own expense, shall maintain during
------------------
the term of this Lease a policy or policies of workers' compensation and
comprehensive general liability insurance, including personal injury and
property damage, with contractual liability endorsement, in the amount of Five
Hundred Thousand Dollars ($500,000.00) for property damage and One Million
Dollars ($1,000,000.00) per occurrence and One Million Dollars ($1,000,000.00)
in the aggregate for personal injuries or deaths of persons occurring in or
about the Premises. Tenant, at its own expense, shall also maintain during the
term of this Lease, fire and extended coverage insurance covering the
replacement cost of (i) all alterations, additions, partitions and improvements
installed or placed on the Premises by Tenant or by Landlord on behalf of
Tenant; and (ii) all of Tenant's personal property contained within the
Premises. Said policies shall (i) name the Landlord and management company as
additional insured and insure Landlord's and management company's contingent
liability under or in connection with this Lease (except for the workers'
compensation policy, which instead shall include a Waiver of subrogation
endorsement in favor of Landlord); (ii) be issued by an insurance company which
is acceptable to Landlord; and (iii) provide that said insurance shall not be
cancelled unless thirty (30) days prior written notice has been given to
Landlord. Said policy or policies or certificates thereof Shall be delivered to
Landlord by Tenant on or before the Commencement Date and upon each renewal of
said insurance.
C. Prohibited Uses. Tenant will not permit the Premises to be used for
---------------
any purpose or in any manner that would (i) void the insurance thereon, (ii)
increase the insurance risk or cost thereof, or (iii) cause the disallowance of
any sprinkler credits; including without limitation, use of the Premises for the
receipt, storage or handling of any product, material or merchandise that is
explosive or highly inflammable. If any increase in the cost of any insurance
on the Premises or the Building is caused by Tenant's use of the Premises or
because Tenant vacates the Premises, then Tenant shall pay the amount of such
increase to Landlord upon demand therefor. Any increase in the cost of
insurance on the Building caused by any other tenant's use of the Building shall
not be included as a Tenant Cost and shall be borne exclusively by such
tenant.
10. FIRE AND CASUALTY DAMAGE.
A. Total or Substantial, Damage and Destruction. If the Premises or the
--------------------------------------------
Building should be damaged or destroyed by fire or other casualty, Tenant shall
immediately give written notice to Landlord of such damage or destruction and
Landlord shall within thirty (30) days of receipt of such notice determine and
notify Tenant in Writing of its reasonable estimation of the time period
required for completion of rebuilding or repairs. If the Premises or the
Building should be totally destroyed by fire, or other casualty, or if they
should be so damaged thereby that, in Landlord's reasonable estimation,
rebuilding or repairs cannot be completed within one hundred twenty (120) days
after the date of such damage or after such Completion there would not be enough
time remaining under the terms of this Lease to fully amortize such rebuilding
or repairs, then this Lease shall terminate and the rent shall be abated during
the unexpired portion of this Lease, effective upon the date of the occurrence
of such damage.
B. Partial Damage or Destruction. If the Premises or the Building should
-----------------------------
be damaged by fire or other casualty and, in Landlord's reasonable estimation,
rebuilding or repairs can be substantially completed within one hundred twenty
(120)days after the date of such damage, then this Lease shall not terminate and
Landlord shall at its expense proceed with reasonable diligence to substantially
restore the Premises to its previous condition, except that Landlord shall not
be required to rebuild, repair or replace any part of the partitions, fixtures,
additions and other improvements that may have been constructed, erected or
installed in or about, the Premises for the benefit of, by or for Tenant. If
the Premises are untenable in whole or in part following such damage, the rent
payable hereunder during the period to which they are untenable shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. In the event that Landlord should fail to complete such repairs
and rebuilding within one hundred twenty (120) days after the date upon which
Landlord is notified by Tenant of such damage, Tenant may at its option
terminate this Lease as to all of the Premises or the damaged portion of the
Premises by delivering written notice of termination to Landlord as Tenant's
exclusive remedy, which termination shall be effective as of the date of the
notice of such damage provided pursuant to Paragraph 10(A) above, whereupon all
rights and obligations with respect to the terminated portion of the Premises
hereunder shall cease and terminate unless on or prior to the expiration of
thirty (30) days following Landlord's receipt of such termination notice such
repair or rebuilding is complete, in which event the Lease shall continue in
full force and effect.
C. Damage or Destruction Prior to Occupancy. Notwithstanding the
----------------------------------------
foregoing, if any substantial portion of the Premises is damaged or destroyed
prior to the date the Premises is initially occupied by Tenant by a casualty
described in Paragraph 10(A) above or due to any other cause not proximately
caused by the negligence or willful misconduct of Tenant or its employees, and
the rebuilding or repair thereof, in Tenant's reasonable estimation, will
extend beyond September 30, 1996 then Tenant may elect to terminate this Lease
as to all or the damaged portion of the building Premises as a matter of right
without liability therefor as of the date of the notice of such damage provided
pursuant to Paragraph 10(A) above (the "Damage Notice"), such termination to be
accomplished by delivering written notice of such termination to Landlord within
fifteen (15) calendar days of the Damage Notice, Whereupon all rights and
obligations with respect to the terminated portion of the Premises hereunder,
shall cease and terminate (other than Tenant's obligations under Paragraph 2(B)
with respect to Monthly
Initial_______ ______
Date _________ ______
6.
<PAGE>
Escrows, if any, applicable to the period of time from the Commencement Date
through the effective date of such termination).
D. Alternative Space. If the Building is damaged or destroyed by a fire
-----------------
or other casualty described in Paragraph 10(A) above or due to any other cause
not proximately caused by the negligence or willful misconduct of Tenant or its
employees and if Tenant has not initially occupied the Building and the
rebuilding or repair will extend beyond July 31, 1996, then on or before five
(5) calendar days after request therefor by the Tenant, Landlord shall provide
to Tenant a list of all potential alternate locations in the existing inventory
of available sites of Landlord and its affiliates which are not Under lease for
alternative warehouse space with HVAC in the amount of 16,200 square feet, and
on or before forty-five (45) days (as such period may be extended for a
reasonable period of time to accomplish any non-standard tenant finish-out
requested by Tenant) after selection by Tenant of an alternate location from
such inventory (the "Alternate Location"), Landlord shall provide the Alternate
Location in a condition sufficient and with all requisite governmental permits
and approvals for occupancy and use as soon as possible for Tenant's intended
purposes at a total cost not greater than the base rental hereunder per square
foot. The Alternate Location will be located, if possible, in reasonable
proximity to the Premises and will contain in one structure, if possible,
contiguous space not less than the total number of square feet contained in the
Premises hereunder. Tenant may, but shall not be required to, occupy the
Alternate Location for a period of time extending up to two (2) weeks following
the restoration of the damaged or destroyed portion of the Premises and the
completion of all Tenant Finish-Out thereto sufficient to restore the condition
which existed immediately prior to such damage or destruction. In the event
Landlord fails to timely provide the Alternate Location in full and complete
accordance with this Paragraph 10(D), then Tenant may terminate this Lease as
to all of the Premises or the damaged portion of the Premises as a matter of
right and without liability therefor by delivering written notice thereof to
Landlord, whereupon all rights and obligations with respect to the terminated
portion of the Premises hereunder shall cease and terminate (other than
Tenant's obligations under Paragraph 2(B) with respect to Monthly Escrows, if
any, applicable to periods of time prior to such termination).
E. Lienholders' Rights in Proceeds. Notwithstanding anything herein to
-------------------------------
the contrary, in the event the holder of any indebtedness secured by a mortgage
or deed of trust covering the Premises requires that the insurance proceeds be
applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made known to Landlord by any such holder,
whereupon all rights and obligations hereunder shall cease and terminate.
Landlord shall inquire of such holder as to the intended application of the
insurance proceeds if such holder has not instructed Landlord as to such
application within twenty (20) days of the casualty.
F. Waiver of Subrogation. Notwithstanding any provision of this Lease,
---------------------
each party hereto waives any cause of action it might have against the other
party on account of any loss or damage that is insured against under any
insurance policy carried or required to be carried hereunder (to the extent that
such loss or damage is recoverable under Such insurance policy) that covers the
Building, the Premises, Landlord's or Tenant's fixtures, personal property,
leasehold improvements or business and which names Landlord or Tenant, as the
ease may be, as a party insured but only to the extent of the insurance proceeds
payable under such policies. Each party hereto agrees that it will cause its
insurance carrier to endorse all applicable policies waiving the carrier's
rights of recovery under subrogation or otherwise against the other party.
11. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of recovery
and causes of action that Landlord has released, or that are caused in whole or
in part by the gross negligence or willful misconduct of Landlord, Tenant Shall
hold Landlord harmless from and defend Landlord against any and all claims or
liability including without limitation reasonable attorneys' fees and court
costs raised against or suffered by Landlord for any injury or damage (i) to any
person or property whatsoever occurring in, on or about the Premises or any part
thereof, the Building and/or other common areas, the use of which Tenant may
have in accordance with this Lease, if (and only if) such injury or damage shall
be caused in whole or in part by the act, neglect, fault or omission of Tenant,
its agents, servants, employees or invitees; (ii) arising from the conduct or
management of any work done by the Tenant in or about the Premises; The
provisions of this Paragraph 11 shall survive the expiration or termination of
this Lease for a period of two (2) years. Landlord shall not be liable in any
event for personal injury or loss of Tenant's property caused by: fire, flood,
water leaks, rain, hail, ice, snow, smoke, lightning, wind, explosion,
interruption of utilities or other occurrences unless, in the case of a water
leak, such leak is a result of a failure by Landlord to repair a portion of the
Building or Premises required to be repaired hereunder by Landlord and Landlord
has received thirty (30) days prior written notice from Tenant of the necessity
of such repair. To the extent the damage arising from such leak is paid by
Tenant's insurance, Landlord shall reimburse Tenant upon demand for the amount
of any deductible paid by Tenant and the increase in any premiums arising solely
because of such claim. Landlord strongly recommends that Tenant secure Tenant's
own insurance in excess of the amounts required elsewhere in this Lease to
protect against the above occurrences if Tenant desires additional coverage for
such risks. Tenant shall give prompt notice to Landlord of any significant
accidents involving injury to persons or property. Furthermore, Landlord shall
not be responsible for lost or stolen personal property, equipment, money or
jewelry from the Premises or from the public areas of the Building or the
Project, regardless of whether such loss occurs when the area is locked against
entry. Landlord shall not be liable to Tenant or Tenant's
Initial_______ ______
Date _________ ______
7.
<PAGE>
employees, customers or invitees for any damages or losses to persons or
property caused by any lessees in the Building or the Project, or for any
damages or losses caused by theft, burglary, assault, vandalism or other crimes.
Landlord strongly recommends that Tenant provide its own security systems and
services and secure Tenant's own insurance in excess of the amounts required
elsewhere, in this Lease to protect against the above occurrences if Tenant
desires additional protection or coverage for such risks. Tenant shall give
Landlord prompt notice of any criminal or suspicious conduct within or about the
Premises, the Building or the Project and/or any personal injury or property,
damage caused thereby. Landlord may, but is not obligated to, enter into
agreements with third parties for the provision, monitoring, maintenance and
repair of any courtesy patrols or similar services or fire protective systems
and equipment and, to the extent same is provided at Landlord's sole discretion,
Landlord shall not be liable to Tenant for any damages, costs or expenses which
occur for any reason in the event any such system or equipment is not properly
installed, monitored or maintained or any such services are not properly
provided. Landlord shall use reasonable diligence in the maintenance of existing
lighting, if any, in the parking garage or parking areas servicing the Premises,
and Landlord shall not be responsible for additional lighting or any security
measures in the Project, the Premises, the parking garage or other parking
areas.
12. USE. The Premises shall be used only for the purpose of conducting a
business, office, manufacturing, research and engineering facility with
attendant health, recreation and dining facilities, and for receiving, storing,
shipping and selling (other than retail)products, materials and merchandise made
and/or distributed by Tenant and for such other lawful purposes as may be
directly incidental thereto. Outside Storage, including without limitation
storage of trucks and other vehicles, is prohibited without Landlord's prior,
written consent Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and shall promptly comply with
all governmental orders and directives for the correction, prevention and
abatement of nuisances in, upon or connected with the Premises, all at Tenant's
sole expense. Tenant shall not permit any objectionable or unpleasant odors,
smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take
any other action that would constitute a nuisance or would disturb,
unreasonably interfere with or endanger Landlord or any other lessees of the
Building or the Project.
13. HAZARDOUS WASTE. The term "Hazardous Substances," as used in this Lease,
shall mean pollutants, contaminants, toxic or hazardous wastes, radioactive
materials or any other substances, the use and/or the removal of which is
required or the use of which is restricted, prohibited or penalized by any
"Environmental Law," which term. shall mean any federal, state or local
statute, ordinance, regulation or other law of a governmental or quasi-
governmental authority relating to pollution or protection of the environment or
the regulation of the storage or handling of Hazardous Substances Tenant hereby
agrees that: (i) no activity will be conducted on the Premises that will
produce any Hazardous Substances, except for such activities that are part of
the ordinary course of Tenant's business activities (the "Permitted
Activities"), provided said Permitted Activities are conducted in accordance
with all Environmental Laws and have been approved in advance in writing by
Landlord and, in connection therewith, Tenant shall be responsible for obtaining
any required permits or authorizations and paying any fees and providing any
testing required by any governmental agency; (ii) the Premises will not be used
in any manner for the storage of any Hazardous Substances, except for the
temporary storage of such materials that are used in the ordinary course Of
Tenant's business (the "Permitted Materials"), provided such Permitted Materials
are properly stored in a manner and location meeting all Environmental Laws and
have been approved in advance in writing by Landlord, and, in connection
therewith, Tenant shall be responsible for obtaining any required permits or
authorizations and paying any fees and providing any testing required by any
governmental agency; (iii) no portion of the Premises will be used as a landfill
or a dumping (iv) Tenant will not install any underground tanks of any type; (v)
Tenant will not allow any surface or subsurface conditions to exist or come into
existence that constitute, or with the passage of time may constitute, a public
or private nuisance; and (vi) Tenant will not permit any Hazardous Substances
to be brought Ohio the Premises, except for the Permitted Materials, and if so
brought or found located thereon, the same shall be immediately removed, with
proper disposal, and all required. clean-up procedures shall be diligently
Undertaken by Tenant at its sole cost pursuant to all Environmental Laws.
Landlord and Landlord's representatives shall have the right but not the
obligation to enter the Premises for the purpose of inspecting the storage, use
and disposal of any Permitted Materials to ensure compliance with all
Environmental Laws. Should it be determined, in Landlord's sole opinion, that
any Permitted Materials are being improperly stored, used or disposed of, then
Tenant shall immediately take such corrective action as requested by Landlord.
Should Tenant fail to take such corrective action within twenty-four (24) hours,
Landlord shall have the right to perform such work and Tenant shall reimburse
Landlord, on demand, for any and all costs associated with said Work. If at any
time during Or after the term of this Lease, the Premises is found to be
contaminated with Hazardous Substances and such contamination resulted from the
acts or omissions of Tenant or its agents, contractors, licensees or invitees,
Tenant shall diligently institute proper and thorough clean-up procedures, at
Tenant's sole Cost. Tenant agrees to indemnify and hold Landlord harmless from
all claims, demands, actions, liabilities, costs, expenses, damages, penalties
and obligations of any nature arising from or as a result of any contamination
of the Premises with Hazardous Substances, or otherwise arising from the use of
the Premises by Tenant. The foregoing indemnification and the responsibilities
of Tenant shall survive the termination or expiration of this Lease. Landlord
shall conduct a phase I environmental review of the Land on which the Building
sits to detect the existence of any Hazardous Substances or the violation of
any Environmental Laws on said land. Landlord shall provide Tenant with a copy
of such review and if Hazardous Materials are detected
Initial_______ ______
Date _________ ______
8.
<PAGE>
in violation of Environmental Laws, Tenant may terminate this Lease within ten
(10) days after receipt of such report. Further, in the construction of the
Building and Premises, Landlord shall not use or install any Hazardous
Substances except that are part of the ordinary course of construction of the
Building and Premises and provided they are constructed in accordance with all
Environmental Laws.
14. INSPECTION. Landlord's agents and representatives shall have the right to
enter the Premises at any reasonable time during business hours (or at any time
in ease of emergency) (i) to inspect the Premises, (ii) to make such repairs as
may be required or permitted pursuant to this Lease, and/or (iii) during the
last six (6) months of the Lease term, for the purpose of showing the Premises.
In addition, Landlord shall have the right to erect a suitable sign on the
exterior of the Premises stating the Premises are available for lease. Landlord
shall only erect signage on the exterior of the Building advertising the
Building for sale or lease in the location or locations designated on EXHIBIT
-------
"D" attached hereto. Landlord shall not maintain for sale or lease signs On the
- ---
Building during periods the Building is fully occupied. Tenant shall notify
Landlord in writing at least thirty (30) days prior to vacating the Premises and
shall arrange to meet with Landlord for a joint inspection of the Premises prior
to vacating. If Tenant fails to give such notice or to arrange for such
inspection, then Landlord's inspection of the Premises shall be deemed correct
for the purpose of determining Tenant's responsibility for repairs and
restoration of the Premises.
15. ASSIGNMENT AND SUBLETTING. Tenant shall not have the right to sublet,
assign or otherwise transfer or encumber this Lease, or any interest therein,
without the prior written consent of Landlord which consent shall not be
unreasonably withheld or delayed. Any attempted assignment, subletting,
transfer or encumbrance by Tenant in violation of the terms and covenants of
this paragraph shall be void. Any assignee, sublessee or transferee of Tenant's
interest in this Lease (all such assignees, sublessees and transferees being
hereinafter referred to as "Transferees"), by assuming Tenant's obligations
hereunder, shall assume liability to Landlord for all amounts paid to persons
other than Landlord by such Transferees to which Landlord is entitled or is
otherwise in contravention of this Paragraph 15. No assignment, subletting or
other transfer, whether or not consented to by Landlord or permitted hereunder,
shall relieve Tenant of its liability under this Lease. If an Event of Default
occurs while the Premises or any part thereof are assigned or sublet, then
Landlord, in addition to any other remedies herein provided or provided by law,
may collect directly from such Transferee all rents payable to the Tenant and
apply such rent against any sums due Landlord hereunder. No such collection
shall be construed to constitute a novation or a release of Tenant from the
further performance of Tenant is obligations hereunder. If Landlord consents to
any subletting or assignment by Tenant as hereinabove provided and any category
of rent subsequently received by Tenant under any such sublease is in excess of
the same category of rent payable under this Lease, or any additional
consideration is paid to Tenant by the assignee under any such assignment, after
deducting from such excess rent or additional consideration, legal fees,
broker's fees, tenant finish out costs and other fees incurred by Tenant in
connection with such assignment or subletting, then Landlord may, at its option,
declare seventy-five percent (75%) of such net excess rents under any sublease
or such net additional consideration for any assignment to be due and payable by
Tenant to Landlord as additional rent hereunder. The following shall
additionally constitute an assignment of this Lease by Tenant for the purposes
of this Paragraph 15: (i) any merger or consolidation of Tenant when Tenant is
not the surviving corporation or its shareholders do not constitute at least
fifty percent (50%) of the ownership of the consolidated company or in the
alternative control the board of directors of the surviving corporation, (ii) a
transaction resulting in a change in control of Tenant when fifty percent (50%)
or more of Tenant's outstanding voting stock is sold and the board of directors
of Tenant prior to such transaction ceases to be at least a majority of the
board of directors after such transaction, and (iii) the sale, transfer,
exchange, liquidation or other distribution in excess of fifty percent (50%) of
Tenant's assets. Notwithstanding the foregoing, consent will not be required in
the event that Tenant transfers the owner, hip of its principal business
operation or in excess of fifty percent (50%) of its assets to or merges with a
public company or to another entity with a net worth equal to or greater than
that of Tenant.
16. CONDEMNATION. If any portion of the Building constituting the Premises or
twenty-five percent (25%) of the non-Building portion of the Premises are taken
for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain or private purchase in lieu thereof,
and the taking prevents or materially interferes with the use of the Premises
for the purpose for which they were leased to Tenant, then this Lease shall
terminate and the rent shall be abated during the unexpired portion of this
Lease, effective on the date of such taking. If less than 25% of the non-
Building portion of the Premises are taken for any public or quasi-public rise
under any governmental law, ordinance or regulation, or by right of eminent
domain or private purchase in lieu thereof, which taking does not prevent or
materially interfere with the use of the Premises for the purpose for which they
were leased to Tenant, then this Lease shall not terminate, but the rent payable
hereunder during the unexpired portion of this Lease shall be reduced to such
extent as may be fair and reasonable under all of the circumstances. All
compensation awarded in connection with or as a result of any of the foregoing
proceedings, other than relocation expenses due to Tenant, shall be the property
of Landlord, and Tenant hereby assigns any interest in any such award to
Landlord; provided, however, Landlord shall have no interest in any such reward
made to Tenant for loss of business or goodwill or for the taking of Tenant's
trade fixtures and personal property, if a separate award for such items is made
to Tenant.
Initial_______ ______
Date _________ ______
9.
<PAGE>
17. HOLDING OVER. At the termination of this' Lease by its expiration or
otherwise, Tenant shall immediately deliver possession of the Premises to
Landlord with all repairs and maintenance required herein to be performed by
Tenant completed. If, for any reason, Tenant retains possession of the Premises
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, such possession shall be deemed to be a tenancy at
will only, and all of the other terms and provisions of this Lease shall be
applicable during such period, except that Tenant shall pay Landlord from time
to time, upon demand, as rental for the period of such possession, an amount
equal to one and one-half(1 1/2) times the base rent in effect on the date of
such termination of this Lease, computed on a daily basis for each day of such
period. No holding over by Tenant, whether with or without consent of Landlord,
Shall operate to extend this Lease except as otherwise expressly provided. The
preceding provisions of this Paragraph 17 shall not be construed as consent for
Tenet to retain possession of the Premises in the absence of written consent
thereto by Landlord."
18. QUIET ENJOYMENT. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the Premises, good title to and/or a ground
lease of the Premises, free and clear of all liens and encumbrances, excepting
only the lien for current ad valorem taxes not yet due, any mortgage or
mortgages, zoning ordinances and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions and other conditions of record which do not contain terms or
provisions which would at any time prohibit Tenant's permitted use of the
Premises under this Lease. Landlord represents that it has the authority to
enter into this Lease and that, so long as Tenant pays all amounts due hereunder
and performs all other covenants and agreements herein set forth, Tenant shall
peaceably and quietly have, hold and enjoy the Premises for the term hereof
without hindrance or molestation from Landlord, subject to the terms and
provisions of this Lease.
19. EVENTS OF DEFAULT. The following events (herein individually referred to
as an "Event of Default") each shall be deemed to be a default in or breach of
Tenant's obligations under this Lease:
A. Tenant shall fail to pay any installment of the rent herein reserved
when due; or any other payment or reimbursement to Landlord required herein when
due, and such failure shall continue for a period of five (5) business clays
following receipt by Tenant of written notice thereof from Landlord.
B. Tenant shall fail to discharge any lien placed upon the Premises in
Violation of Paragraph 22 hereof within twenty (20) days after any such lien or
encumbrance is filed against the Premises.
C. Tenant shall fail to comply with any term, provision or covenant of
this Lease (other than those listed above in this paragraph) and shall not
commence the curing of such failure within twenty (20) days after receipt of
written notice thereof from Landlord and prosecute the curing thereof to
completion with reasonable diligence.
20. REMEDIES. Upon each occurrence of an Event of Default, Landlord shall have
the option to pursue any one or more of the following remedies without any
notice or demand:
(A) Terminate this Lease;
(B) Enter upon and take possession of the Premises without
terminating this Lease;
(C) Make such payments and/or take such action and pay and/or
perform whatever Tenant is obligated to pay or perform under the terms of this
Lease, and Tenant agrees that Landlord shall not be liable for any damages
resulting to Tenant from such action unless caused by the gross negligence or
willful misconduct of Landlord; and/or
(D) Alter all locks and other security devices at the
Premises, with or without terminating this Lease, and pursue, at Landlord's
option, one or more remedies pursuant to this Lease, however, Tenant and
Landlord hereby expressly agree that Landlord shall be required to provide to
Tenant the new key to the Premises, regardless, of hour upon payment to Landlord
of all delinquent rental and other sums due to Landlord under this Lease by
cashier's check. Landlord, without waiving any other remedy it may have, may
enter upon and take possession of the Premises and expel or remove Tenant and
any other person who may be occupying such Premises or any part thereof, without
being liable for prosecution of any claim of damages therefore. In the event of
any violation of Section 93.002 of file Texas Property' Code by Landlord or by
any agent or employee of Landlord, Tenant hereby expressly waives any and all
rights Tenant may have under Paragraph (g) of such Section 93.002
A. Damages Upon Termination. If Landlord terminates this Lease at
------------------------
Landlord's option, Tenant shall be liable for and shall pay to Landlord the sum
of all rental and other payments owed to Landlord hereunder accrued to the date
of such termination, plus, as liquidated damages, an amount equal to (i) the
present value of the total rental and other payments owed hereunder for the
remaining portion of the Lease term, calculated as if such term expired on the
date set forth in Paragraph 1, less (ii) the present value of the then fair
market rental for the Premises for such period.
Initial______ ______
Date_________ ______
10.
<PAGE>
B. Damages Upon Repossession. If Landlord repossesses the Premises
-------------------------
without terminating this Lease, Tenant, at Landlord's option, shall be liable
for and shall pay Landlord on demand all rental and other payments owed to
Landlord hereunder, accrued to the date of such repossession, plus all amounts
required to be paid by Tenant to Landlord until the date of expiration of the
term as stated in Paragraph 1, reduced by all amounts actually received by
Landlord through reletting the Premises, during such remaining term (but only
to the extent of the rent herein reserved). Actions to collect amounts due by
Tenant to Landlord under this paragraph may be brought from time to time, on one
or more occasions, without the necessity of Landlord's waiting until expiration
of the Lease term.
C. Costs of Reletting, Removing, Repairs and Enforcement. Upon an Event
-----------------------------------------------------
of Default, in addition to any sum provided to be paid under this Paragraph 20,
Tenant also shall be liable for and shall pay to Landlord (i) brokers' fees and
all other costs and expenses incurred by Landlord in connection with reletting
the whole or any part of the Premises; (ii) the costs of removing, storing or
disposing of Tenant's or any other occupant's property; (iii) the costs of
repairing, altering, remodeling or otherwise putting the Premises into condition
acceptable to a new tenant or tenants which are not expenses incurred by
Landlord specifically because of the requirements of the replacement tenant;
(iv) any and all reasonable costs and expenses incurred by Landlord in effecting
compliance with Tenant's obligations under this Lease; and (v) all reasonable
expenses incurred by Landlord in enforcing or defending Landlord's rights and/or
remedies hereunder, including without limitation all reasonable attorneys' fees
and all court costs incurred in connection with such enforcement or defense.
D. Late Charge. In the event Tenant fails to make any payment due
-----------
hereunder within five (5) business days after such payment is due, including
without limitation any rental or escrow payment, in order to help defray the
additional cost to Landlord for processing such late payments and not as
interest, Tenant shall pay to Landlord on demand a late charge in an amount
equal to one percent (1%) of the first two (2) late payments, and five percent
(5%) of each late payment thereafter during any twelve (12) calendar month
period. The provision for such late charge shall be in addition to all of
Landlord's other rights and remedies hereunder or at law, and shall not be
construed as liquidated damages or as limiting Landlord's remedies in any
manner.
E. Interest on Past Due Amount. If Tenant fails to pay any s/ma which at
---------------------------
any time becomes due to Landlord under any provision of this Lease as and when
the same becomes due hereunder, and such failure continues for ten (10) days
after receipt by Tenant of notice of such payment being due, then Tenant shall
pay to Landlord interest on such overdue amounts from the date due until paid
at an annual rate which equals the lesser of (i) twelve percent (12%) or (ii)
the highest rate then permitted by law.
F. No Implied Acceptances or Waivers. Exercise by Landlord of any one or
---------------------------------
more remedies hereunder granted or otherwise available shall not be deemed to be
an acceptance by Landlord of Tenant's surrender of the Premises it being
understood that such surrender can be effected only by the written agreement of
Landlord. Tenant and Landlord further agree that forbearance by Landlord to
enforce any of its rights under this Lease or at law or inequity shall not be a
waiver of Landlord's right to enforce any one or more of its rights, including
any right previously forborne, in connection with any existing or subsequent
default. No re-entry or taking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease, unless a written
notice of such intention is given to Tenant, and, notwithstanding any such
reletting or re-entry or taking possession of the Premises, Landlord may at any
time thereafter elect to terminate this Lease for a previously uncured default.
Pursuit of any remedies hereunder shall not preclude the pursuit of any other
remedy herein provided or any other remedies provided by law, nor shall pursuit
of any remedy herein provided constitute a forfeiture or waiver of any rent due
to Landlord hereunder or of any damages occurring to Landlord by reason of the
violation of any of the terms, provisions and covenants contained in this Lease.
Landlord's acceptance of any rent following an Event of Default hereunder shall
not be construed as Landlord's waiver of such Event of Default. No waiver by
Landlord of any violation or breach of any of the terms, provisions and
covenants of this Lease shall be deemed or construed to constitute a waiver of
any other violation or default.
G. Reletting of Premises. In the event of any termination of this Lease
---------------------
and/or repossession of the Premises for an Event of Default, Landlord shall use
reasonable efforts to relet the Premises and to collect rental after reletting,
with no obligation to accept any lessee that Landlord deems undesirable or to
expend any funds in connection with such reletting or collection of rents
therefrom. Tenant shall not be entitled to credit for or reimbursement of any
proceeds of such reletting in excess of the rental Owed hereunder for the period
of such reletting. Landlord may relet the whole or any portion of the Premises,
for any period, to any tenant and for any use or purpose.
H. Landlord's Default. If Landlord fails to perform any of its
------------------
obligations hereunder within thirty (30) days after written notice from Tenant
specifying such failure, Tenant's exclusive remedy shall be an action for
damages and the abatement of rent due hereunder if the default arises from
Landlord's violation of Paragraph 18 hereof and Tenant is prevented from using
the Premises for the uses permitted hereunder. Unless and until Landlord fails
to so cure any default after such notice, Tenant shall not have any remedy or
cause of action by reason thereof. All obligations of Landlord hereunder except
as expressly set forth in Paragraphs l, 4A and 18 will be construed as
covenants, not conditions; and all such obligations will be binding upon
Landlord only during the period of its possession of the premises and not
Initial______ ______
Date_________ ______
11.
<PAGE>
thereafter. The term "Landlord" shall mean only the owner, for the time being,
of the Premises and, in the event of the transfer by such owner of its interest
in the Premises, such owner shall thereupon be released and discharged from all
covenants and obligations of the Landlord thereafter accruing, provided that
such covenants and obligations shall be binding during the Lease term upon each
new owner for the duration of such owner's ownership. Notwithstanding any other
provision of this Lease, Landlord shall not have any personal liability
hereunder. In the event of any breach or default by Landlord in any term or
provision of this Lease, Tenant agrees to look solely to the Premises and the
Building for satisfaction of any judgment obtained against Landlord following
execution against the building, Tenant will not seek any deficiency judgment
against Landlord for any unsatisfied portion of the judgment for use by Tenant
on or before September 30, 1996, Tenant may terminate this Lease by written
notice to Landlord and the Security Deposit shall be refunded to Tenant in full.
I. Tenant's Personal Property. If Landlord repossesses the Premises
--------------------------
pursuant to the authority herein granted, then, in addition to Landlord's rights
under Paragraph 27 hereof, Landlord shall have the right to (i) keep in place
and use, or (ii) remove and store, all of the furniture, fixtures and equipment
at the Premises, including that which is owned by or leased to Tenant, at all
times prior to any foreclosure thereon by Landlord or repossession thereof by
any lessor thereof or third party having a lien thereon. In addition to the
Landlord's other rights hereunder, Landlord may dispose of the stored property
if Tenant does not claim the property within twenty (20) days after the date the
property is stored. Landlord shall give Tenant at least ten (10) days prior
written notice of such intended disposition. Landlord shall also have the right
to relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") who presents to Landlord
a copy of any instrument represented by Claimant to have been executed by Tenant
(or any predecessor of Tenant) granting claimant the right under various
circumstances to take possession of such furniture, fixtures, equipment or other
property. The rights of Landlord herein stated shall be in addition to any and
all other rights that Landlord has or may hereafter have at law or in equity,
and Tenant stipulates and agrees that the rights granted Landlord under this
paragraph are commercially reasonable.
J. Abandonment. Should Tenant vacate or abandon all or
-----------
substantially all of the Premises whether or not Tenant is in default of the
rental payments due under this Lease and shall fail to re-occupy same within
thirty (30) days of receipt by Tenant of written notice from Landlord, Landlord
shall have the right as its sole remedy for such abandonment to terminate this
Lease and Tenant shall pay to Landlord the unamortized balance of the Tenant
Finish Allowance and any leasing commissions paid in connection with this Lease
using a ten (10) year amortization period and an imputed rate of ten percent
(10%).
21. MORTGAGES. Conditioned upon receipt by Tenant of a Subordination,
Attornment and Non-Disturbance Agreement as described below, Tenant accepts this
Lease subject and subordinate to any mortgages and/or deeds of trust now or at
any time hereafter constituting a lien or charge upon the Premises or the
improvements situated thereon or the Building, provided, however, that if the
mortgagee, trustee or holder of any such mortgage or deed of trust elects to
have Tenant's interest in this Lease superior to any such instrument, then by
notice to Tenant from such mortgagee, trustee or holder, this Lease shall be
deemed superior to such lien, whether this Lease was executed before or after
said mortgage or deed of trust. Tenant, at any time hereafter on demand, shall
execute any instruments, releases or other documents that may be required by any
mortgagee, trustee or holder for the purpose of subjecting and subordinating
this Lease to the lien of any such mortgage, so long as a Subordination, Non-
disturbance and Attornment Agreement has been executed by such mortgagee,
trustee or holder and provided to Tenant. Tenant shall not terminate this Lease
or pursue any other remedy available to Tenant hereunder for any default on the
part of Landlord without first giving written notice by certified or registered
mail, return receipt requested, to any mortgagee, trustee or holder of any such
mortgage or deed of trust, the name and post office address of which Tenant has
received written notice, specifying the default in reasonable detail and
affording such mortgagee, trustee or holder a reasonable opportunity (but in no
event less than thirty (30) days) to make performance, at its election, for and
on behalf of Landlord. Landlord agrees that Landlord shall use reasonable
diligence to obtain from each and every mortgagee or lessor that is on will be
superior to this Lease a Subordination, Non-Disturbance and Attornment
Agreement.
22. MECHANIC'S LIENS. Tenant has no authority, express or implied, to create
or place any lien or encumbrance of any kind or nature whatsoever upon, or in
any manner to bind, the interest of Landlord or Tenant in the Premises. Tenant
will save and hold Landlord harmless from any and all loss, cost or expense,
including without limitation attorneys' fees, based on or arising out of
asserted claims or liens against the leasehold estate or against the right,
title and interest of the Landlord in the Premises or under the terms of this
Lease arising from the actions or alleged actions of Tenant or its agents,
contractors, licensees or invitees.
23. STONELAKE BOULEVARD CONSTRUCTION. Landlord agrees to construct at
Landlord's sole cost and expense, Stonelake Boulevard being a minimum thirty-six
foot (36') wide two lane public roadway from the Mopac Expressway access road
west to the proposed Homestead Suite hotel site by May 22, 1996. Should
Landlord fail to have commenced and be diligently pursuing completion of such
construction by May 1, 1996, Tenant may terminate this Lease within two (2)
business days thereafter by written notice to Landlord and the Security Deposit
shall be immediately refunded to Tenant in full. Such termination right shall
cease, if not exercised upon completion of the roadway. If the roadway is not
completed and available
24. ACCESS ROAD TO BRAKER LANE. Landlord agrees to construct a private access
road to Braker Lane by December 31, 1996. Should Landlord fail to do so, ten
percent (10%) of the monthly base rent due hereunder shall abate until such time
as the road is completed.
25. EXPANSION/RIGHT OF FIRST REFUSAL. Tenant shall have the right to lease as
much additional contiguous space (above and beyond the initial 40,000 square
feet) as Tenant desires prior to February 1, 1996 under the same lease rates and
finish allowance per square foot as provided for in this Lease. Tenant shall
notify Landlord in writing of its desire to increase the square footage of the
Premises lease hereunder and Landlord shall prepare or cause to be prepared,
and execute an amendment to this Lease modifying the definition of Premises and
the total monthly base rent to include such additional space.
At any time after February 1, 1996, Landlord shall have the right to lease
the Building other than the Premises and any other space then leased by Tenant,
beginning with the west end of the Building and then proceeding toward the east
end of the Building until the Building becomes fully leased. Prior to executing
any other lease, Landlord shall extend to Tenant an ongoing right of first
refusal to lease any space adjoining the Premises and any other space leased by
Tenant that becomes available in the Building, subject to existing tenants'
rights. Landlord hereby grants to Tenant the right of first refusal to lease the
space adjacent to the Premises from the Landlord subject to any existing leases
in place. In the event a prospective tenant desires to lease this space from
Landlord, Landlord shall notify Tenant thereof in the manner provided herein for
notice, whereupon Tenant shall have five (5) business days after receipt of such
notice in which to elect to exercise Tenant's right of first refusal. In the
event Tenant fails to give Landlord written notice of Tenant's election to
lease the adjacent space within said five (5) business day period, Tenant shall
have no further right, title or interest in the adjacent space until the tenant
leasing such space vacates the building. If, on the other hand, Tenant exercises
its right of first refusal in the manner provided, above, the lease of the
adjacent property shall be consummated at comparable rates and terms offered to
the prospective tenant for a lease of equal term and the same tenant improvement
allowances. Landlord agrees to use its reasonable diligence to secure the right
of substitution in any lease within the contiguous 20,000 Square feet to the
west of Tenant's original 40,000 Square feet of lease space. Any renewals on
such contiguous 20,000 square feet will be subject to Tenant's right, of first
refusal.
26. TENANT FINISH ALLOWANCE PROVIDED. Landlord will pay an allowance to Tenant
Of $12.00 per square foot for the initial 40,000 square feet and any additional
space leased prior to February 1, 1996 ("Tenant Finish Allowance") for the
construction of Tenant's Improvements to the Premises. All Tenant Improvements
shall be constructed by Landlord's contractors in accordance with the plans and
specifications approved by Tenant with no construction management fee payable to
Landlord. To the extent practical, Tenant Improvements construction shall
commence as early in the construction of the Building as possible. Landlord
shall pay for completion of the Tenant Improvements ("Tenant Finish Costs");
provided, however, Tenant shall reimburse Landlord for Tenant Finish Costs
exceeding $12.00 per square foot of space in the Premises, such reimbursement to
be paid fifty percent (50%) upon approval of the construction budget as provided
below and fifty percent (50%) upon substantial completion of the Tenant
Improvements. For purposes hereof, Tenant Finish Costs include but are not
limited to architectural and engineering fees, actual construction material and
labor. Should the actual Tenant Finish Costs incurred by Landlord be less than
the Tenant Finish Allowance, the balance of the Tenant Finish Allowance shall
at Landlord's election be credited against the first months' rental payments due
hereunder or shall reduce the per square foot rental rate for the balance of the
initial lease term by amortizing the unused portion over a period of ten (10)
years at 11% interest per annum.
27. OPTION TO RENEW. Tenant shall have the right and option to renew this
Lease for one (1) additional five (5) year term by delivering written notice
thereof to Landlord at least one hundred eighty
Initial______ ______
Date_________ ______
12.
<PAGE>
(180) days prior to the expiration date of the original lease term, provided
that at the time of such notice and at the end of the lease term, Tenant is not
in default hereunder. Upon the delivery of said notice and subject to the
conditions set forth in the preceding sentence, this Lease shall be extended
upon the same terms, covenants and conditions as provided in this Lease, except
that the base rental payable during said extended term shall be the fair market
rental rate for space of comparable size, quality and location at the
commencement of such extended term. If a conflict arises in the determination of
such a fair market rental rate, a three-member committee, selected from brokers
licensed by the Texas Real Estate Commission and active in the Austin, Texas
industrial market shall determine the fair market rental rate. The first two
members of such committee shall be selected by Landlord and Tenant respectively,
which two members shall select the third.
28. NET PROFITS AGREEMENT. Landlord and Tenant have entered into that certain
Net Profits Agreement as a material inducement and in consideration for Tenants
entering into this Lease, a copy of which is attached hereto and incorporated
herein as EXHIBIT "F".
-----------
29. MISCELLANEOUS.
A. Interpretation. The captions inserted in this Lease are for
--------------
convenience only and in no way define, limit or otherwise describe the scope or
intent of this Lease, or any provision hereof, or in any way affect the
interpretation of this Lease. Any reference in this Lease to rentable area
shall mean the gross rentable area as determined by the roofline of the building
in question.
B. Binding Effect. Except as otherwise herein expressly provided, the
--------------
terms, provisions and covenants and conditions in this Lease shall apply to,
inure to the benefit of and be binding upon the parties hereto and upon their
respective heirs, executors, personal representatives, legal representatives,
successors and assigns. Landlord shall have the right to transfer and assign,
in whole or in part, its rights and obligations in the Premises and in the
Building and other property that are the subject of this Lease.
C. Evidence of Authority. Tenant agrees to furnish to Landlord, promptly
---------------------
upon demand, a corporate resolution, proof of due authorization by partners or
other appropriate documentation evidencing the due authorization of such party
to enter into this Lease.
D. Force Majeure. Landlord shall not be held responsible for delays in
-------------
the performance of its obligations hereunder when caused by material shortages,
acts of God, labor disputes or other events beyond the control of Landlord.
E. Payments Constitute Rent. Notwithstanding anything in this Lease to
------------------------
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated as rent, shall constitute rent.
F. Estoppel Certificates. Tenant agrees, from time to time, within ten
---------------------
(10) business days after request of Landlord, to deliver to Landlord, or
Landlord's designee, an estoppel certificate stating, if true, that this Lease
is in full force and effect, the date to which rent has been paid, the unexpired
term of this Lease, any defaults existing under this Lease (or the absence
thereof) and such other factual or legal matters pertaining to this Lease as may
be requested by Landlord. It is understood and agreed that Tenant's obligation
to furnish such estoppel certificates in a timely fashion is a material
inducement for Landlord's execution of this Lease.
G. Entire Agreement. This Lease constitutes the entire understanding and
----------------
agreement of Landlord and Tenant with respect to the subject matter of this
Lease, and contains all of the covenants and agreements of Landlord and Tenant
with respect thereto. Landlord and Tenant each acknowledge that no
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises, negotiations
or representations not expressly set forth in this Lease are of no force or
effect. EXCEPT AS SPECIFICALLY PROVIDED IN THIS LEASE, TENANT HEREBY WAIVES THE
BENEFIT OF ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE
FOR ANY PARTICULAR PURPOSE. Landlord's agents and employees do not and will not
have authority to make exceptions, changes or amendments to this Lease, or
factual representations not expressly contained in this Lease. Under no
circumstances shall Landlord or Tenant be considered an agent of the other.
This Lease may not be altered, changed or amended except by an instrument in
writing signed by both parties hereto.
H. Survival of Obligations. So long as Tenant has at any point occupied
-----------------------
the Premises, all obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of the term of this Lease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition and repair of the Premises. Upon the
expiration or earlier termination of the term hereof, and prior to Tenant
Vacating the Premises, Tenant shall pay to Landlord any amount reasonably
estimated by Landlord as necessary to put the Premises in good condition and
repair, reasonable wear and tear excluded, including without limitation, the
cost of repairs to and, if required, replacements of all heating and air
conditioning systems and equipment therein. Tenant shall also, prior to
vacating the Premises,
Initial______ ______
Date_________ ______
13.
<PAGE>
pay to Landlord the amount, as estimated by Landlord; of Tenant's obligation
hereunder for real estate taxes and insurance premiums for the year or portion
thereof in which the Lease expires or terminates. All such amounts shall be used
and held by Landlord for payment of such obligations of Tenant hereunder, with
Tenant being liable for any additional costs therefor upon demand by Landlord,
or with any exceeds to be returned to Tenant after all such obligations have
been determined and satisfied, as the case may be. Any Security Deposit held by
Landlord may, at Landlord's option, be credited against any amounts due from
Tenant under this Paragraph 23H.
I. Severability of Terms. If any clause or provision of this Lease is
---------------------
illegal, invalid or unenforceable under present or future laws effective during
the term of this Lease, then, in such event, it is the intention of the parties
hereto that the remainder of this Lease shall not be affected thereby, and it is
also the intention of the parties to this Lease that in lieu of each clause or
provision of this Lease that is illegal, invalid or unenforceable, there be
added, as a part of this Lease, a clause or provision as similar in terms to
such illegal, invalid or unenforceable clause or provision as may be possible
and be legal; valid and enforceable.
J. Effective Date. All references in this Lease to "the date hereof" or
--------------
similar references shall be deemed to refer to the last date, in point of time,
on which all parties hereto have executed this Lease.
K. Brokers' Commission. Tenant represents and warrants that it has dealt
-------------------
with and will deal with no broker, agent or other person other than Susan Harris
of Commercial Industrial Properties Company ("CIP"), in connection with this
transaction or future related transactions and that no other broker, agent or
other person brought about this transaction, and Tenant agrees to indemnify and
hold Landlord harmless from and against any claims by any other broker, agent or
other person claiming a commission or other form of compensation by virtue of
having dealt with Tenant with regard to this leasing transaction. An agreement
setting forth in greater detail the agreement between Tenant, CIP and Landlord
regarding commissions is attached hereto and incorporated herein as EXHIBIT "E".
-----------
L. Ambiguity. Landlord and Tenant hereby agree and acknowledge that this
---------
Lease has been fully reviewed and negotiated by both Landlord and Tenant, and
that Landlord and Tenant have each had the opportunity to have this Lease
reviewed by their respective legal counsel, and, accordingly, in the event of
any ambiguity herein, Tenant does hereby waive the rule of construction that
such ambiguity shall be resolved against the party who prepared this Lease.
M. Joint Several Liability. If there be more than one Tenant, the
-----------------------
obligations hereunder imposed upon Tenant shall be joint and several. If there
be a guarantor of Tenant's obligations hereunder, the obligations hereunder
imposed upon Tenant shall be joint and several obligations of Tenant and such
guarantor, and Landlord need not first proceed against Tenant before proceeding
against such guarantor, nor shall any such guarantor be released from its
guaranty for any reason whatsoever, including, without limitation, in ease of
any amendments hereto, waivers hereof or failure to give such guarantor any
notices hereunder.
N. Third Party Rights. Nothing herein expressed or implied is intended,
------------------
or shall be construed, to confer upon or give to any person or entity, other
than the parties hereto, any right or remedy under or by reason of this Lease.
O. Exhibits and Attachment. All exhibits, attachments, riders and
-----------------------
addenda referred to in this Lease, and the exhibits listed herein below and
attached hereto, are incorporated into this Lease and made a part hereof for all
intents and purposes, as if fully set out herein. All capitalized terms used in
such documents shall, unless otherwise defined therein, have the same meanings
as are set forth herein.
P. Applicable Law. This Lease has been executed in the State of Texas
--------------
and shall be governed in all respects by the laws of the State of Texas. It is
the intent of Landlord and Tenant to conform strictly to all applicable state
and federal usury laws. All agreements between Landlord and Tenant, whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount
contracted for, charged or received by Landlord for the use, forbearance or
retention of money hereunder or otherwise exceed the maximum amount which
Landlord is legally entitled to contract for, charge or collect under the
applicable state or federal law. If, from any circumstance whatsoever,
fulfillment of any provision hereof at the time performance of such provision
shall be due shall involve transcending the limit of validity prescribed by law,
then the obligation to be fulfilled shall be automatically reduced to the limit
of such validity, and if from any such circumstance Landlord shall ever receive
as interest or otherwise an amount in, excess of the maximum that can be legally
collected, then such amount which would be excessive interest shall be applied
to the reduction of rent hereunder, and if such amount which would be excessive
interest exceeds such rent, then such additional amount shall be refunded to
Tenant.
30. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivering of notice or the making of any payment by
Landlord to Tenant or with reference to the sending, mailing or delivering of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken.
Initial______ ______
Date_________ ______
14.
<PAGE>
(i) All rent and other payments required to be made by
Tenant to Landlord hereunder shall be payable to Landlord at the address for
Landlord set forth below or at such other address as Landlord may specify from
time to time by written notice delivered in accordance herewith. Tenant's
obligation to pay rent and any other amounts to Landlord under the terms of this
Lease shall not be deemed satisfied until such rent and other amounts have been
actually received by Landlord.
(ii) All payments required to be made by Landlord to Tenant
hereunder shall be payable to Tenant at the address set forth below, or at such
other address within the continental United States as Tenant may specify from
time to time by written notice delivered in accordance herewith.
(iii) Except as expressly provided herein, any written notice,
document or payment required or permitted to be delivered hereunder shall be
deemed to be delivered when received or, whether actually received or not, when
deposited in the United States Mail, postage prepaid, Certified or Registered
Mail, return receipt requested, addressed to the parties hereto, at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith.
31. LANDLORD'S LIEN. In addition to any statutory lien for rent in Landlord's
favor, Landlord shall have and Tenant hereby grants to Landlord a continuing
security interest in all rentals and other sums of money which may become due
under this Lease from Tenant, all goods, equipment, fixtures, furniture,
inventory, and other personal property of Tenant now or hereafter situated at,
on or within the real property described in EXHIBIT "A" attached hereto and
incorporated herein by reference, and such property shall not be removed
therefrom without the consent of Landlord, except in the ordinary course of
Tenant's business. In the event any of the foregoing described property is
removed from the Premises in violation of the covenant in the preceding
sentence, the security interest shall continue in such property and all proceeds
and products, regardless of location. Upon an Event of Default hereunder by
Tenant, in addition to all of Landlord's other rights and remedies, Landlord
shall have all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this paragraph at
public or private sale at any time after ten (10) days prior notice by Landlord.
Tenant hereby agrees to execute such Other instruments deemed by Landlord as
necessary or desirable under applicable law to Perfect more fully the security
interest hereby created. Landlord and Tenant agree that this Lease and security
agreement and EXHIBIT "A" attached hereto serves as a financing statement and
that a copy, photograph or other reproduction of this portion of this Lease may
be filed of record by Landlord and have the same force and effect as the
original. This security agreement and financing statement also covers fixtures
located at the Premises subject to this Lease and legally described in EXHIBIT
"A" attached hereto, and all rents or other consideration received by or on
behalf of Tenant in connection with any assignment of Tenant's interest in this
Lease or any sublease of the Premises or any part thereof, and, therefore, may
also be filed for record in the appropriate real estate records.
EXECUTED BY LANDLORD, this 20/th/ day of November, 1995.
<TABLE>
<S> <C>
SL-6 Partners, LTD.
By: Trammell Crow Central Texas, Ltd.
a Texas limited partnership,
By: Trammell Crow Central Texas, Inc.
a Texas corporation, its general partner
Attest/Witness By:__________________________________________
Title:_______________________________________
___________________________________
Title: Property Manager Address: c/o Trammell Crow Central Texas, Inc.
-----------------------------
301 Congress Avenue, Suite 1300, Austin, TX 78701
EXECUTED BY TENANT, this 14/th/ day of November, 1995.
PROGRESSIVE SYSTEM TECHNOLOGIES, INC.:
Attest/Witness
_____________________________________________
By: Sharon Foster
___________________________________
Title:Marketing Director - TCCT Title: Chief Financial Officer
-----------------------------
Address: 3100 Alvin DeVane, Suite B-125
Austin, Texas 78741
EXHIBIT "A" - Description of Premises
EXHIBIT "B" - Plans
EXHIBIT "C" - Parking Plan
EXHIBIT "D" - Signage Plan
EXHIBIT "E" - CIP Agreement
EXHIBIT "F" - Net Profits Agreement
</TABLE>
Initial______ ______
Date_________ ______
15.
<PAGE>
EXHIBIT A
DESCRIPTION OF PREMISES
TO BE INCLUDED AT A LATER DATE
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT B
CONSTRUCTION PLANS
TO BE INCLUDED AT A LATER DATE
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT C
PARKING PLAN
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT D
SIGNAGE PLAN
ATTACH
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT D
SIGNAGE PLAN
ATTACH
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT E
CIP AGREEMENT
ATTACH
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT F
NET PROFITS AGREEMENT
Initial______ ______
Date_________ ______
1.
<PAGE>
FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN
SL-6 PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP, AS LANDLORD, AND
PROGRESSIVE SYSTEM TECHNOLOGIES, INC., AS TENANT
To be attached to and form a part of Lease made the
20/th/ day of November, 1995 (which together with any
amendments, modifications and extensions thereof, is
hereinafter called the Lease), between Landlord and
Tenant, covering a total of 40,000 square feet and
located at North Mopac Expressway and Stonelake
Boulevard, Austin, Texas, known as Stonelake #6.
WITNESSETH, THAT:
WHEREAS, by Agreement of Lease dated November 20, 1995, Landlord leased to
Tenant certain space containing approximately 40,000 square feet in the building
located at North Mopac Expressway and Stonelake Boulevard, Austin, Texas, for a
period of ten (10) years commencing May 1, 1996 and ending April 30, 2006; and
WHEREAS, Tenant needs additional space for its business purposes and
Landlord has available an area adjacent thereto.
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
covenant and agree as follows:
1. Effective May 1, 1996, the demised premises shall contain, in addition
to the approximately 40,000. square feet originally demised, hereinafter called
the "original space", an additional area, hereinafter called the "new space",
containing approximately 12,566 square feet adjacent thereto, and effective
January 1, 1997, a second additional area, hereinafter called the "second new
space", containing approximately 6,834 square feet adjacent thereto thus making
the aggregate area of the demised premises approximately 59,400 square feet. The
new space and the second new space are hereinafter collectively called
"expansion space" (see Exhibit "A" attached hereto).
2. Effective May 1, 1996, the monthly base rental shall be as follows:
<TABLE>
<CAPTION>
Square Monthly Square Monthly Base
Monthly Footage of Base Rental Footage of Rental of Total
Base Rental Original of Original Expansion Expansion Monthly
Term Rate PSF Space Space Space space Base Rental
- ------------------ ------------ -------------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
5/1/96-12/31/96 $.70 40,000 $28,000.00 12,566 $ 9,479.60 $37,479.60
1/1/97-4/30/2001 $.70 40,000 $28,000.00 19,400 $13,871.00 $41,871.00
5/1/2001-4/30/2003 $.74 40,000 $29,600.00 19,400 $14,356.00 $43,956.00
5/1/2003-4/30/2004 $.76 40,000 $30,400.00 19,400 $14,744.00 $45,144.00
5/1/2004-4/30/2006 $.78 40,000 $31,200.00 19,400 $15,132.00 $46,332.00
</TABLE>
These amounts shall be in addition to property taxes, common area maintenance,
and insurance as provided in the Lease, payable on the first day of each month
during the balance of the term.
3. Tenant Finish Allowance
Landlord shall provide a tenant finish allowance of $13.71 per square
foot ($266,023.39) to be applied toward interior improvements in the expansion
space.
Tenant shall bear the entire cost of any interior improvements to be installed
in the premises in connection with Tenant's occupancy of the premises, to the
extent that such improvements exceed the finish-out allowance of $266,023.39,
and shall pay for such excess over the allowance as hereinafter provided. In
the event the estimated cost for interior improvements exceeds the allowance,
Tenant shall pay into escrow at Heritage Title Company of Austin the following
percentages of such excess on the dates shown below:
Percentage
Date of Excess
---------------- ------------
March 13, 1996 50%
April 1, 1996 40%
May 1, 1996 10%
Up to 90% of the funds deposited into escrow by Tenant shall be released upon
approval by Landlord and Tenant of all appropriate receipts and lien waivers
pertaining to the improvements for which reimbursement is requested by tenant
improvement contractors. The remaining 10% shall be released to contractors
upon Tenant's clearance of construction punchlist items and Landlord's receipt
of final lien waivers and Certificate of Occupancy.
Initial______ ______
Date_________ ______
1.
<PAGE>
Notwithstanding any provision contained herein to the contrary, it is understood
and agreed that Landlord shall have no obligation to allow commencement of any
interior improvements until (a) Tenant shall have furnished and/or approved and
forwarded to Landlord and Landlord shall have approved the final working
drawings as required by the provision hereof, Co)Tenant's first advance payment
(described above) for the percentage of the cost of improvements in excess of
the initial allowance shall have been deposited into escrow, and (c) Landlord
and Tenant shall have approved the total cost of the planned improvements. In
no event shall credit be given to Tenant for any allowance not utilized to the
extent that the allowance utilized is less than $232,800.00.
WITNESSETH FURTHER, THAT:
WHEREAS, by that same Lease Agreement dated November 20, 1995, Landlord and
Tenant agreed that Landlord would pay to Tenant liquidated damages equal to One
thousand and No/100 Dollars ($1,000.00) for every calendar day after May 1, 1996
until the Premises are substantially completed and delivered to Tenant with a
Certificate of Occupancy; and
WHEREAS, Tenant now desires to select an alternate contractor (Trimbuilt
Construction) for construction of the interior improvements rather than EE Reed,
the shell building contractor,
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
covenant and agree as follows:
1. Landlord shall not be held liable for any liquidated damages (as
provided for in the Lease) in the event that tenant improvements are not
completed and/or a Certificate of Occupancy is not obtained for Tenant by May 1,
1996; and
2. Should the shell Building not be substantially completed and a shell
completion certificate obtained by Landlord on or Prior to May 1, 1996, provided
such delay is not caused by Tenant, including plan delays or change orders,
Landlord shall pay liquidated damages equal to One Thousand and No/100 Dollars
($1,000.00) for every calendar day after May 1, 1996 until the shell Building is
substantially completed and a shell completion certificate is obtained.
3. Except as herein and hereby modified and amended the Agreement of
Lease shall remain in full force and effect and all the terms, provisions,
covenants and conditions thereof are hereby ratified and confirmed.
EXECUTED BY LANDLORD, the 10/th/ day of April, 1996
SL-6 PARTNERS, LTD.
a Texas limited partnership:
By: TCCT Development, Inc.
a Delaware corporation
Its General Partner
/s/ Andrew R. Pastor
-----------------------------------------------
Attest/Witness By: Andrew R. Pastor
-------------------------------------------
Title: Vice President
- -------------------- ----------------------------------------
Address:c/o Trammell Crow Central Texas, Inc.
-------------------------------------
301 Congress Avenue, Suite 1300, Austin, TX 78701
--------------------------------------------------
EXECUTED BY LANDLORD, the 20/th/ day of March, 1996
PROGRESSIVE SYSTEM TECHNOLOGIES, INC.
/s/ Sharon Foster
---------------------------------------------
Attest/Witness By: Sharon Foster
----------------------------------------
Denise Whatley Title: Chief Financial Officer
- -------------------- ---------------------------------------
Address: 3100 Alvin DeVane, Suite B-125
-------------------------------------
Austin, Texas 78741
---------------------------------------------
Initial______ ______
Date_________ ______
2.
<PAGE>
EXHIBIT "A"
BUILDING: Stonelake #6
LEGAL DESCRIPTION: 8,865 acres tract of land situated in the City of
Austin, Travis County, Texas being a portion of Lot 5
Block "A" Stonelake Section 3.
ADDRESS: North Mopac Expressway and Stonelake Boulevard Austin,
Texas 78759
[DIAGRAM]
Initial______ ______
Date_________ ______
1.
<PAGE>
SECOND AMENDMENT TO LEASE AGREEMENT BETWEEN
SL-6 PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP, AS LANDLORD, AND
PROGRESSIVE SYSTEM TECHNOLOGIES, INC., AS TENANT
To be attached to and form a part of Lease made the 20/th/ day
of November, 1995 (which together with any amendments,
modifications and extensions thereof, is hereinafter called the
Lease), between Landlord and Tenant, covering a total of 40,000
square feet and located at North Mopac Expressway and Stonelake
Boulevard, Austin, Texas, known as Stonelake #6.
WITNESSETH, THAT:
WHEREAS, by Agreement of Lease dated November 20, 1995, Landlord leased to
Tenant certain space containing approximately 40,000 square feet in the building
located at North Mopac Expressway and Stonelake Boulevard, Austin, Texas, for a
period of ten (10) years commencing May 1, 1996 and ending April 30, 2006, and
such lease was thereafter amended to add 19,400 square feet of space, making the
aggregate area of the demised premises approximately 59,400 square feet; and
WHEREAS, Tenant needs additional space for its business purposes and
Landlord has available an area adjacent thereto.
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
covenant and agree as follows:
1. Effective October 1, 1996, the demised premises shall contain, in
addition to the approximately 59,400 square feet currently demised, hereinafter
called the "original space", an additional area, hereinafter called the
"expansion space", containing approximately 21,600 square feet adjacent thereto
thus making the aggregate area of the demised premises approximately 81,000
square feet (see Exhibit "A" attached hereto).
2. Effective October 1, 1996, the monthly base rental shall be as follows:
<TABLE>
<CAPTION>
Expansion Monthly Base Square Monthly Base
Monthly Rental of Footage of Rental of Total
Base Rental Original Original Expansion Monthly
Term Rate PSF Space Space Space Base Rental
- ------------------ ------------ --------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
10/1/96-12/31/96 $.75 $37,479.60 21,600 $16,200.00 $53,679.60
1/1/97-4/30/2001 $.75 $41,871.00 21,600 $16,200.00 $58,071.00
5/1/2001-4/30/2003 $.79 $43,956.00 21,600 $17,064.00 $61,020.00
5/1/2003-4/30/2004 $.81 $45,144.00 21,600 $17,496.00 $62,640.00
5/1/2004-4/30/2006 $.82 $46,332.00 21,600 $17,712.00 $64,044.00
</TABLE>
These amounts shall be in addition to property taxes, common area
maintenance, and insurance as provided in the Lease, payable on the first day of
each month during the balance of the term.
3. Tenant Finish Allowance
Landlord shall provide a tenant finish allowance (the "Allowance") of
$12.00 per square foot ($259,200.00) to be applied toward interior improvements
in the expansion space. Tenant shall bear the entire cost of any interior
improvements to be installed by Landlord in the premises in excess of the
Allowance of $259,200.00 and shall pay for such excess over the Allowance as
hereinafter provided. In the event Landlord is to construct the interior
improvements and the estimated cost for same exceeds the Allowance, Tenant shall
pay to Landlord (assuming Landlord's approval of the working drawings referred
to herein) prior to commencement of such construction, an advance payment equal
to one-half (1/2) of the mount of such excess over the Allowance as reasonably
estimated by Landlord. Notwithstanding any provision contained herein to the
contrary, it is understood and agreed that Landlord shall have no obligation to
commence installation of any interior improvements until (a) Tenant shall have
furnished to Landlord and Landlord shall have approved the final working
drawings as required by the provision hereof, (b) Landlord shall have received
Tenant's advance payment (described above) for the amount of the cost of
improvements in excess of the Allowance and (c) Landlord and Tenant shall have
approved the total cost of any change order. Upon Substantial Completion of the
installation of the interior improvements and prior to occupancy by Tenant,
Tenant shall pay Landlord the remainder of the actual amount of the excess cost
incurred over the Allowance. In no event shall credit be given to Tenant for
any Allowance not utilized.
All improvements must comply with Trammell Crow Company's standard
specifications (see Standards and Specifications for Office/Warehouse Buildings)
-----------------------------------------------------------
and all applicable governmental regulations. Prior to beginning construction of
any such improvements, Tenant shall submit architectural drawings of the
proposed improvements to Landlord and shall obtain Landlord's written consent to
begin construction.
Initial______ ______
Date_________ ______
1.
<PAGE>
4. Tenant's share of parking in the building for the 81,000 square feet
of lease space shall be increased from the one hundred sixty (160) total parking
spaces provided in paragraph 5.B. of the lease to a total of two hundred eighty
three (283) parking spaces.
5. Except as herein and hereby modified and amended the Agreement of
Lease shall remain in full force and effect and all the terms, provisions,
covenants and conditions thereof are hereby ratified and confirmed.
EXECUTED BY LANDLORD, this 30/th/ day of July, 1996.
SL-6 PARTNERS, LTD.
a Texas limited partnership:
By: TCCT Development, Inc.
a Delaware corporation
Its General Partner
_______________________________________________
Attest/Witness By: Andrew R. Pastor
-------------------------------------------
Title: Vice President
- ----------------------- -----------------------------------------
Address: c/o Trammell Crow Central Texas, Inc.
--------------------------------------
301 Congress Avenue, Suite 1300, Austin, TX 78701
--------------------------------------------------
EXECUTED BY LANDLORD, the 24/th/ day of July, 1996
PROGRESSIVE SYSTEM TECHNOLOGIES, INC.
_______________________________________________
Attest/Witness By: Sharon Foster
------------------------------------------
Denise Whatley Title: Chief Financial Officer
- ---------------------- ---------------------------------------
Address: 3100 Alvin DeVane, Suite B-125
-------------------------------------
Austin, Texas 78741
-----------------------------------------------
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT "A"
BUILDING: Stonelake #6
LEGAL DESCRIPTION: 8,865 acres tract of land situated in the City of
Austin, Travis County, Texas being a portion of Lot 5
Block "A" Stonelake Section 3.
ADDRESS: North Mopac Expressway and Stonelake Boulevard Austin,
Texas 78759
[DIAGRAM]
Initial______ ______
Date_________ ______
1.
<PAGE>
THIRD AMENDMENT TO LEASE AGREEMENT BETWEEN
SL-.6 PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP, AS LANDLORD, AND
PROGRESSIVE SYSTEM TECHNOLOGIES, INC., AS TENANT
To be attached to and form a part of Lease made the 20th day of
November, 1995 (which together with any amendments,
modifications and extensions thereof, is hereinafter called the
Lease), between Landlord and Tenant, covering a total of 40,000
square feet and located at 11000 North Mopac Expressway,
Austin, Texas, known as Stonelake #6.
WITNESSETH, THAT:
WHEREAS, by Agreement of Lease dated November 20, 1995, Landlord leased to
Tenant certain space containing approximately 40,000 square feet in the building
located at North Mopac Expressway and Stonelake Boulevard, Austin, Texas, for a
period of ten (10) years commencing May 1, 1996 and ending April 30, 2006, and
such lease was thereafter amended to add a total of 41,000 square feet of space,
making the aggregate area of the demised premises approximately 81,000 square
feet; and
WHEREAS, Tenant intends to sublease approximately 21,600 square feet of its
space that it currently does not need for its business purposes (the "Sublease
Space"), which sublease is documented in the Sublease Agreement between Tenant,
as Sublessor, and Leasing Group, Inc., as Sublessee, dated of even date
herewith; and
WHEREAS, Landlord desires to lease the approximately 10,800 square feet of
space adjoining Tenant's current leased Premises, for which 10,800 square feet
Tenant has a right of first refusal in accordance with Paragraph 25 of the Lease
(the "Expansion Space").
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
covenant and agree as follows:
1. Tenant hereby declines to exercise its right of first refusal to lease
the Expansion Space (see Exhibit "A" attached hereto) and acknowledges that
Landlord shall have the right to lease the Expansion Space for a period of five
(5) years commencing in January 1997 and expiring January 31, 2002.
2. Tenant shall have, with written notice to Landlord delivered by July
30, 2001, the option to expand into the Expansion Space effective February 1,
2002 for a term to be coterminous with Tenant's Lease for the current demised
Premises and at a fair market rental rate to be determined in accordance with
Paragraph 27 of the Lease.
3. Landlord agrees to reimburse Tenant Five Thousand Dollars ($5,000.00)
for each Six Thousand Five Hundred Dollars ($6,500.00) that Tenant pays to
Sublessee for cancellation of the Sublease prior to expiration of the thirty-six
(36) month Sublease term, up to a total not to exceed Sixty Thousand Dollars
($60,000.00).
4. Landlord shall have, during the term of the Sublease, the right to:
(a) designate the location of any and all of the parking spaces
allocated to Tenant and Sublessee under the terms of the Lease and Sublease,
provided that the eighty (80) exclusive reserved spaces designated in Paragraph
5.B. and Exhibit "C" to the Lease shall remain reserved for Tenant's exclusive
use, and
(b) approve, in its sole discretion, the location, number, and
configuration of any parking spaces to be striped by Tenant or Sublessee in the
truck court area.
5. Except as herein and hereby modified and amended the Agreement of
Lease shall remain in full force and effect and all the terms, provisions,
covenants and conditions thereof are hereby ratified and confirmed.
Intial______ ______
Date________ ______
1.
<PAGE>
EXECUTED BY LANDLORD, this 12/th/ day of December, 1996.
SL-6 PARTNERS, LTD.
a Texas limited partnership:
By: TCCT Development, Inc.
a Delaware corporation
Its General Partner
/s/ Andrew R. Pastor
Attest/Witness -------------------------------------------
By: Andrew R. Pastor
-------------------------------------------
Title: Vice President
- ---------------------- -------------------------------------------
Address: c/o Trammell Crow Central Texas, Inc.
-------------------------------------
301 Congress Avenue, Suite 1300, Austin, TX 78701
--------------------------------------------------
EXECUTED BY LANDLORD, the 6/th/ day of December, 1996
PROGRESSIVE SYSTEM TECHNOLOGIES, INC.
Attest/Witness By: /s/ Sharon Foster
----------------------------------------------
Title: Chief Financial Officer
- ---------------------- -------------------------------------------
Address: 3100 Alvin DeVane, Suite B-125
----------------------------------------
Austin, Texas 78741
--------------------------------------------------
Initial______ ______
Date_________ ______
2.
<PAGE>
EXHIBIT "A"
BUILDING: Stonelake #6
LEGAL DESCRIPTION: 8,865 acres tract of land situated in the City of
Austin, Travis County, Texas being a portion of Lot 5
Block "A" Stonelake Section 3.
ADDRESS: 11000 North Mopac Expressway, Austin, Texas 78759
[DIAGRAM]
Initial______ ______
Date_________ ______
1.
<PAGE>
EXHIBIT 10.17
SUBLEASE AGREEMENT
This Sublease is made this 3/rd/ day of December, 1996 at Travis County,
Texas by and between Progressive System Technologies, Inc., (herein,
"Sublessor"), and Group, Inc., (herein, "Sublessee").
Sublessor is the Lessee under that certain Lease, (the "Main Lease"), by
and between SL-6 PARTNERS, LTD. as Landlord, (herein, "Lessor"), and Progressive
System Technologies, Inc., as Tenant, (herein "Sublessor"), executed on or about
November 20, 1995, for the premises described in the Main Lease, (herein,
"Leased Premises"), a true and correct copy of which Main Lease is attached
hereto as Exhibit "B" and incorporated herein by this reference.
In consideration of the mutual promises contained herein, Sublessor hereby
subleases a portion of the Leased Premises to Sublessee as further described
below, subject to the terms of the Main Lease, and subject further to the
provisions of this Sublease Agreement, as follows:
1. Sublessor hereby leases to Sublessee, and Sublessee hereby takes from
Sublessor approximately 21,600 square feet of the Leased Premises
(herein "Sublease Space") in the building known locally as Stonelake
#6 located at 11000 North Mopac Expressway, Austin, Texas 78759 as
shown on Exhibit "A" attached hereto and a part hereof.
2. Sublessee hereby takes the Sublease Space subject to any mortgages or
deeds of trust to the same extent that Sublessor holds the Leased
Premises as set forth in paragraph 21 of the Main Lease and Sublessee
agrees to abide by and observe all the terms, covenants and conditions
of the Main Lease.
3. The term of this Sublease shall be for a term of thirty six (36)
months, commencing on February 1, 1997, and ending January 31, 2000,
provided, however, that this Sublease shall sooner terminate upon the
termination for any cause whatsoever of the Main Lease, and as further
provided for below. In the event that the tenant improvements are not
substantially complete, but for delays caused directly or indirectly
by Sublessee, and ready for occupancy by January 31, 1997, then the
rent during the first month of the lease term shall be appropriately
abated and pro-rated. Sublessor agrees to negotiate, to the best of
its ability, with the contractor selected to build the tenant
improvements, provisions for said contractor to pay liquidated damages
to Sublessor in the event the tenant improvements are not
substantially complete by January 31, 1997. In such event, Sublessor
agrees to pass through any and all liquidated damages collected to
Sublessee upon collecting same from the contractor.
4. Insofar as the provisions of the Main Lease do not conflict with the
specific provisions of this Sublease Agreement, they and each of them
are incorporated into this Sublease as if fully completely rewritten
herein, and Sublessee agrees to be bound to the Sublessor by all the
terms of the Main Lease and to assume towards Sublessor and perform
all the obligations and responsibilities that Sublessor, by the Main
Lease, assumes towards the Lessor, except for the
1.
<PAGE>
payment of rent by Sublessee to Sublessor, which is governed by
Paragraph 5 herein. However, some provisions of the Main Lease shall
specifically be modified from the terms of the Main Lease and/or not
be incorporated into this Sublease Agreement as follow:
(a) Paragraph 1.A, Building or Improvements to be Constructed shall
------------------------------------------
be modified by replacing the provisions for liquidated damages
with the following: Sublessor agrees to negotiate, to the best of
its ability, with the contractor selected to build the tenant
improvements, provisions for said contractor to pay liquidated
damages to Sublessor in the event the tenant improvements are not
substantially complete by January 31, 1997. In such event,
Sublessor agrees to pass through any and all liquidated damages
collected to Sublessee upon collecting same from the contractor.
(b) Paragraph 10.D, Alternative Space, of the Main Lease shall not be
-----------------
incorporated herein;
(c) Paragraph 11.D, Liability and Indemnification, shall be modified
-----------------------------
by adding the following language: Except for any claims, rights
of recovery, and causes of action that Sublessee has released, or
that are caused in whole or in part by the gross negligence or
willful misconduct of Sublessee, Sublessor shall hold Sublessee
harmless from and defend Sublessee against any and all claims or
liability including without limitation reasonable attorney's fees
and court costs raised against or suffered by Sublessee for any
injury or damage (i) to any person or property whatsoever
occurring in, on or about the Premises or any part thereof, the
Building and/or other common areas, the use of which Sublessor
may have in accordance with the Main Lease, if (and only if) such
injury or damage shall be caused in whole or in part by the act,
neglect, fault or omission of Sublessor, its agents, servants,
employees, or invitees; (ii) arising from the conduct or
management of any work done by the Sublessor in or about the
Premises. The provisions of this paragraph shall survive the
expiration or termination of this Sublease for a period of two
(2) years.
(d) Paragraph 20.H, Landlord's Default, shall be modified by changing
------------------
the second to last sentence to read: In the event of any breach
or default by Sublessor in any term or provision of this Sublease
Agreement, Sublessee agrees to look solely to Sublessors interest
in the Premises and the Building for satisfaction of any
judgement obtained against Sublessor.
(e) Paragraph 25, Expansion/Right of First Refusal, of the Main Lease
--------------------------------
shall not be incorporated herein;
(f) With respect to paragraph 28 of the Main Lease, Sublessee and
Sublessor agree that the Net Profits Agreement is made by and
between Lessor and
2.
<PAGE>
Sublessor and is not part of the relationship between Sublessor
and Sublessee.
Sublessee further agrees to indemnify and hold harmless Sublessor from
any claim or liability arising under the Main Lease brought against
Sublessor that are caused in whole or in part by the act, neglect,
fault or omission of Sublessee, its agents, servants, employees, or
invitees. Except as otherwise provided by this Sublease Agreement, the
relationship between Sublessee and Sublessor shall be the same as that
between Sublessor and Lessor under the Main Lease.
5. Sublessee agrees to pay Sublessor, as rent for the Sublease Space, the
sum of Sixteen Thousand Two Hundred and 00/100 Dollars ($16,200.00),
--------------------------------------- ------------
per month, payable in advance on the first day of each calendar month
during the term of this Sublease. In the event that the tenant
improvements are not substantially complete, but for delays caused
directly or indirectly by Sublessee, and ready for occupancy by
January 31, 1997, then the rent during the first month of the lease
term shall be appropriately abated and pro-rated.
6. In addition to the rent provided for above, Sublessee agrees to pay
directly to Sublessor its Proportionate Share of the Tenant Costs (as
defined in paragraph 2.C of the Main Lease) on the first day of each
calendar month. The provisions of paragraph 2.C of the Main Lease that
require the payments to be deposited in escrow with the Landlord shall
not apply to this Sublease Agreement. Upon commencement of this
Sublease Agreement Sublessee's Proportionate Share amounts to Two
---
Thousand Five Hundred and Ninety Two Dollars ($2,592.00) which is
-------------------------------------------- ----------
equivalent to $0.12 per square foot per month and reflects the amount
that Lessor is charging Sublessor at the effective date of this
Sublease Agreement. During the term of this Sublease Agreement the
amount of the Tenant Costs may change from the amount originally
charged as the Landlord under the Main Lease makes changes to its
reasonable projections of the actual amount of all Tenant Costs.
Sublessor shall notify Sublessee in writing at the time of any change
in Tenant Costs and Sublessee agrees to pay the amount then charged by
Sublessor.
7. The following events shall be deemed to be events of default by
Sublessee under this Sublease: any events of default by Sublessee,
listed as events of default by Tenant set forth in the Main Lease, or
any default in the provisions of this Sublease Agreement. Upon the
occurrence of any such events of default, and in addition to any other
available remedies provided by law or in equity, Sublessor shall have
all remedies granted to Lessor in the Main Lease.
8. Upon execution of this Sublease, Sublessee shall deposit with
Sublessor the sum of Sixteen Thousand Two Hundred and 00/100 Dollars
-----------------------------------------------
($16,200.00), as a security deposit to be held by Sublessor pursuant
-----------
to the provisions of the Main Lease.
9. Sublessor will pay an allowance to Sublessee of $12.00 per square foot
which is equivalent to Two Hundred fifty-nine Thousand and Two Hundred
-----------------------------------------------
Dollars ($259,200) for the construction of Sublease's improvements to
------- --------
the Sublease
3.
<PAGE>
Space. All improvements shall be constructed by Lessor's approved
contractors in accordance with the plans and specifications approved
by Sublessor and Sublessee. Sublessor shall pay for the completion of
the improvements provided, however, Sublessee shall reimburse Landlord
for any costs exceeding $259,200, such reimbursement to be paid upon
substantial completion of the improvements.
10. Per paragraph 5.A of the Main Lease and paragraph 4 of the Second
Amendment to Lease Agreement Between SL-6 PARTNERS, LTD., a Texas
Limited Partnership, as Landlord, and Progressive System Technologies,
Inc., as Tenant, Sublessor's share of parking totals two hundred
eighty three (283) spaces. Sublessee shall have the right to ninety
(90) un-reserved, non-exclusive parking spaces. In addition, Sublessee
may at any time during the term of the Sublease Agreement, at its own
cost and upon receipt of written permission from Sublessor, which
permission shall not be unreasonably withheld, stripe the track court
area on the north end of the Sublease Space for the purpose of
parking.
11. At any time after the twenty-fourth month of the lease term, Sublessor
shall have the ongoing right to terminate this Sublease Agreement by
giving Sublessee six month's advance written notice of its intent to
terminate. In consideration therefore, Sublessor agrees to pay to
Sublessee at the time Sublessee vacates the Sublease Space, an amount
equal to Six Thousand Five Hundred Dollars ($6,500.00) per month of
unexpired time remaining on the sublease term which Sublessee will
forfeit as a result of early termination of the Sublease Agreement.
12. Time is of the essence of this Sublease, and each and all the terms
hereof.
13. Any notice or other communication required or permitted to be given
under this Sublease or under the Main Lease shall be in writing and
shall be deemed to be delivered on the date it is hand delivered to
the party to whom such notice is given, at the address set forth
below, or if such notice is mailed, on the date on which it is
deposited in the United States Mail, postage prepaid, certified or
registered mail, return receipt requested, addressed to the party to
whom such notice is directed, at the address set forth below:
If to Sublessor:
Ms. Sharon Foster
Progressive System Technologies, Inc.
11000 North Mopac Expressway, Suite 100
Austin, Texas 78759
If to Sublessee:
Mr. Clark Covert
Leasing Group, Inc.
11000 North Mopac Expressway, Suite
Austin, Texas 78759
4.
<PAGE>
14. Sublessee shall have no right to assign or sublet any interest in this
Sublease without first obtaining the written consent of the Lessor and
Sublessor, which consent may or may not be granted by the Lessor or
Sublessor in their sole opinion, judgment or discretion.
15. Sublessor shall have no liability to Sublessee for any wrongful action
or default on the part of Lessor pursuant to the terms of the Main
Lease, and Sublessee hereby agrees to look solely to Lessor in event
of any such default, the liability and obligations of Sublessor being
solely pursuant to the terms and conditions of this Sublease
Agreement.
16. In the event any one or more of the provisions contained in this
Sublease Agreement shall for any reason be held invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof and this
agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
17. This agreement constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings and written or oral
agreements between the parties respecting the subject matter of this
Sublease Agreement.
EXECUTED on the day and year first above written.
SUBLESSOR: Progressive System Technologies
By: /s/ Sharon Foster
--------------------
Title: CFO
--------------------
SUBLESSEE: Leasing Group, Inc.
By: /s/ Clark A. Covat
--------------------
Title: President
--------------------
CONSENT BY LESSOR
-----------------
SL-6 PARTNERS, Ltd., Lessor under the Main Lease referred to in this
Sublease Agreement, hereby consents to the foregoing Sublease Agreement,
provided that this Sublease in no way modifies or amends the Main Lease, and
such consent shall not be construed in any way as a consent to any other
sublease of the Premises or assignment of the Lease.
By: TCCT Development, Inc.
a Delaware corporation
LESSOR: /s/ Andrew R. Pastor Its General Partner
--------------------
By: Andrew R. Pastor
--------------------
Title: Vice President
--------------------
5.
<PAGE>
Exhibit "A"
BUILDING: Stonelake #6
LEGAL DESCRIPTION: 8,865 acres tract of land situated in the City of
Austin, Travis County, Texas being a portion of Lot 5
Block "A" Stonelake Section 3.
ADDRESS: North Mopac Expressway and Stonelake Boulevard, Austin,
Texas 78759
[DIAGRAM]
1.
<PAGE>
The Prudential Insurance Company of America
The Prudential Realty Group
One Prudential Plaza, Suite 1300
Chicago, IL 60601-6217
312 861-4838 Fax: 312 861-4303
April 22, 1997
Progressive System Technologies, Inc.
11000 MoPac Expressway
Austin, TX
RE: Prudential Loan No. 6-101-132
Mortgagor: SL-6 Partners, Ltd. Property:
Stonelake 6 Austin, Texas
To Whom It May Concern:
Please be advised that the above-named Mortgagor, your Landlord under that
certain Lease Agreement dated November 20, 1995, has assigned the Lease to The
Prudential Insurance Company of America as additional security for a loan on the
above-referenced property. Such assignment has been made in the Assignment of
Leases and Rents, filed in the public records of Travis County, Texas, File
12801, Page 1854.
In the Assignment, your Landlord has agreed, among other things, that
Prudential's prior written consent shall be required for certain modifications
of the Lease.
We point out further that your Landlord is to continue to collect all rent under
the Lease unless and until a default under Prudential's loan occurs and you have
been notified that Prudential elects to collect the rent.
Very truly yours,
Patricia J. Haze
Legal Secretary
Real Estate Operations
/pjh
1.
<PAGE>
Exhibit 10.18
File No.__________
INDUSTRIAL SPACE LEASE
(MULTI-TENANT NET)
THIS LEASE, dated December 14, 1997 for reference purposes only, is made by and
between PEN Associates a California partnership ("Landlord"), and Asyst
Technologies, Inc., a California corporation ("Tenant"), to be effective and
binding upon the parties as of the date the last of the designated signatories
to this Lease shall have executed this Lease (the "Effective Date of this
Lease").
ARTICLE 1
REFERENCES
1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:
A. Tenant's Address for Notices: 48761 Kato Road
Fremont, CA 94538
B. Tenant's Representative: Orval Hogsett
Phone Number: (510) 661-5042
C. Landlord's Address for Notices: 1285 Oakmead Parkway
Sunnyvale, California 94086
D. Landlord's Representative: William N. Neidig
Phone Number: (408) 730-5500
E. Intended Commencement Date: January 15, 1998
F. Intended Term: Four (4) years
G. Lease Expiration Date: Four (4) Years from the
actual commencement date
H. Tenant's Punchlist Period: Ten Business Days
I. First Month's Prepaid Rent: $17,680.00
J. Last Month's Prepaid Rent: $-0-
K. Tenant's Security Deposit: $20,332.00
L. Late Charge Amount: Ten percent (10%) of the
delinquent amount
M. Tenant's Required Liability
Coverage: $3,000,000.00
N. Tenant's Number of Parking Spaces: 61
O. Brokers: Bill Puterbaugh, CPS Commercial Real Estate
P. Project or Property: That certain real property situated in the
City of Fremont, County of Alameda, State of California, as presently improved
with two (2) buildings, which real property is shown on the Site Plan attached
hereto as Exhibit "A" and is commonly known as or otherwise described as
follows:
48603 - 48633 Warm Springs Boulevard
Fremont, California
1.
<PAGE>
Q. Building: That certain Building within the Project in which the
Leased Premises are located, which Building is shown outlined in red on Exhibit
"A" hereto.
R. Common Areas: The "Common Areas" shall mean those areas within
the Project which are located outside the buildings and which are provided and
designated by Landlord from time to time for general use by tenants of the
Project including driveways, pedestrian walkways, parking spaces, landscaped
areas and enclosed trash disposal areas.
S. Leased Premises: That certain space which is a portion of the
Building, which space is shown outlined in red on the Floor Plan attached hereto
as Exhibit "B" consisting of approximately 17,680 square feet of leasable area
and, for purposes of this Lease, agreed to contain said number of square feet.
The Leased Premises are commonly known as or otherwise described as follows:
48625 Warm Springs Boulevard
Fremont, California
T. Base Monthly Rent: The term "Base Monthly Rent" shall mean the
following:
Seventeen Thousand six hundred eighty dollars ($17,680.00) for
each of the first twelve months of the lease of the term,
increasing by eight hundred eighty four dollars ($884.00) on
each anniversary date of the lease.
1/15/98-1/15/99 17,680 1.00
1/15/99-1/15/00 18,564 1.05
1/15/00-1/15/01 19,448 1.10
1/15/01-1/15/02 20,332 1.15
U. Permitted Use: The term "Permitted Use" shall mean the
following:
Office, research and development, light manufacturing, and
warehousing of Tenant's products
V. Exhibits: The Term "Exhibits" shall mean the Exhibits to this
Lease which are described as follows:
Exhibit "A" - Site Plan showing the Project and delineating the
Building in which the Leased Premises are located.
Exhibit "B" - Floor Plan outlining the Leased Premises
Exhibit "C" - Tenant Improvement Agreement
Exhibit "D" - Acceptance Agreement
W. Addenda: The term "Addenda" shall mean the Addendum (or
Addenda) to this Lease which is (or are) described as follows:
First Addendum to Lease
ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION
2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for Tenant's own use in the conduct of
Tenant's business and not for purposes of speculating in real estate, for the
Lease Term and upon the terms and subject to the conditions of this Lease, that
certain interior space described in Article 1(s) as the Leased Premises.
Landlord further reserves the right to install, maintain, use and replace ducts,
wires, conduits and pipes leading through the Leased Premises in locations which
will not materially interfere with Tenant's use of the Leased Premises. See
attached. Tenant's lease of the Leased Premises, together with the appurtenant
right to use the Common Areas as described in Article 2.2 below, shall be
conditioned upon and be subject to the continuing compliance by Tenant with (i)
all the terms and conditions of the Lease, (ii) all Laws governing the use of
the Leased Premises and the Project, (iii) all Private Restrictions, easements
and other matters now
2.
<PAGE>
of public record respecting the use of the Lease Premises and all Project, and
(iv) all reasonable, and (iv) all reasonable rules and regulations from time to
time established by Landlord.
2.2 RIGHT TO USE COMMON AREAS: As an appurtenant right to Tenant's right
to the use of the Leased Premises, Tenant shall have the nonexclusive right to
use the Common Areas in conjunction with other tenants of the Project and their
invitees, subject to the limitations on such use as set forth in Article 4, and
solely for the purposes for which they were designed and intended. Tenant's
right to use the Common Areas shall terminate concurrently with any termination
of this Lease.
2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of this Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Article 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Article 2.7 below (the "Lease Commencement Date". The term of this Lease shall
end on the Lease Expiration Date (as set forth in Article 1), irrespective of
whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence. See attached. The Lease Term shall be that period of time
commencing on the Lease Commencement Date and ending on the Lease Expiration
Date (the "Lease Term").
2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession
of the Leased Premises on or before the Intended Commencement Date (as set forth
in Article 1) in their presently existing condition, broom clean, unless
Landlord shall have agreed, as a condition to Tenant's obligation to accept
possession of the Leased Premises, pursuant to an Exhibit or Addenda attached to
and made a part of this Lease to modify existing interior improvements or to
make, construct and/or install additional specified improvements within the
Leased Premises, in which case Landlord shall deliver to Tenant possession of
the Leased Premises on or before the Intended Commencement Date as so modified
and/or improved. If Landlord is unable to so deliver possession of the Leased
Premises to Tenant on or before the Intended Commencement Date, for whatever
reason, Landlord shall not be in default under this Lease, nor shall this Lease
be void, voidable or cancelable by Tenant until the lapse of thirty (30) days
after the intended Commencement Date (the "delivery grace period"; however, the
Lease Commencement Date shall not be deemed to have occurred until such date as
Landlord notifies Tenant that the leased Premises are Ready for Occupancy.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in delivering possession of the
Leased Premises to Tenant by reason for Force Majeure or the actions of Tenant.
If Landlord is unable to deliver possession of the Leased Premises to Tenant
within the described delivery grace period (including any extensions thereof by
reason of Force Majeure or the actions of Tenant), then Tenant's sole remedy
shall be to cancel and terminate this Lease, and in no event shall Landlord be
liable to Tenant for such delay. Tenant may not cancel this Lease at any time
after the date Landlord notifies Tenant the Leased Premises are Ready for
Occupancy. See attached.
2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected
the Leased Premises and is willing to accept them in their existing condition,
broom clean, unless Landlord shall have agreed, as a condition to Tenant's
obligation to accept possession of the Leased Premises. Pursuant to an Exhibit
or Addenda attached to and made a part of this Lease to modify existing interior
improvements or to make, construct and/or install additional specified
improvements within the Leased Premises, in which case Tenant agrees to accept
possession of the Leased Premises when Landlord has substantially completed such
modifications or improvements and the Leased Premises are Ready for Occupancy.
See attached. If Landlord shall have so modified existing improvements or
constructed additional improvements within the Leased Premises for Tenant,
Tenant shall, within Tenant's Punchlist Period (as set forth in Article 1) which
shall commence on the date that Landlord notifies Tenant that the Leased
Premises are Ready for Occupancy, submit to Landlord a signed copy of the
Acceptance Agreement attached hereto as Exhibit "D" together with a punchlist of
all incomplete and/or improper work performed by Landlord. Upon the expiration
of Tenant's Punchlist Period. Tenant shall be conclusively deemed to have
accepted the Leased Premises in their then existing condition as so delivered by
Landlord to Tenant. Except as to those items reasonably set forth in the
punchlist submitted to Landlord prior to the expiration of said period.
Landlord agrees to
3.
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correct all items reasonably set forth in Tenant's punchlist, provided that such
punchlist was submitted to Landlord within Tenant's Punchlist Period.
Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and all man doors and roll-up truck doors serving the Leased
Premises to the extent that such systems and/or items are not in good operating
condition as of the date Tenant accepts possession of the Leased Premises;
provided that, and only if, Tenant notifies Landlord in writing of such failures
or deficiencies within thirty business days from the date Tenant so accepts
possession of the Leased Premises.
2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon
the sooner termination of this lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from the Leased Premises, and shall vacate and surrender the Leased
Premises to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date. See attached. Landlord, at Tenant's expense, shall retain a
mechanical contractor to service all heating, ventilation and air conditioning
equipment, and Tenant shall pay as a project maintenance cost the cost to
restore (or replace as required, said equipment to good working order. Tenant
shall pay the cost of restoring or replacing all trees, shrubs, plants, lawn and
ground cover, and repair (or replace as required) all paved surfaces of the
Property, and otherwise satisfy all requirements to repair any damage or wear to
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall repair all damage to the Leased Premises caused by Tenant's removal
of Tenant's signs. Tenant shall patch and refinish, to Landlord's reasonable
satisfaction, all penetrations made by Tenant or its employees to the floor,
walls or ceiling of the Leased Premises, whether such penetrations were made
with Landlord's approval or not. Tenant shall clean, repair or replace all
stained or damaged ceiling tiles, wall coverings and clean or replace as may be
required floor coverings to the reasonable satisfaction of Landlord. Tenant
shall replace all burned out light bulbs and damaged light lenses, and clean and
repaint as reasonably necessary all painted walls. Tenant shall repair all
damage caused by Tenant to the exterior surface of the Building and the paved
surfaces of the outside areas adjoining the Leased Premises and, where
necessary, replace or resurface same. Additionally, Tenant shall, prior to the
expiration or sooner termination of this Lease, remove any improvements
constructed or installed by Tenant which Landlord requests be so removed by
Tenant and repair all damage caused by such removal. See attached. If the
Leased Premises are not surrendered to Landlord in the condition required by
this Article at the expiration or sooner termination of this Lease, Landlord
may, at Tenant's expense, so remove Tenant's signs, property and/or improvements
not so removed and make such repairs and replacements not so made or hire, at
Tenant's expense, independent contractors to perform such work. Tenant shall be
liable to Landlord for all costs incurred by Landlord in returning the Leased
Premises to the required condition, plus interest on all costs incurred from the
date paid by Landlord at the then maximum rate of interest not prohibited by Law
until paid, payable by Tenant to Landlord within ten days after receipt of a
statement therefore from Landlord, and Tenant shall be deemed to have
impermissibly held over until such time as such required work is completed, and
Tenant shall pay Base Monthly Rent and Additional Rent in accordance with the
terms of Section 13.2 (Holding Over) until such work is completed. Tenant shall
indemnify Landlord against loss or liability resulting from delay by Tenant in
so surrendering the Leased Premises, including, without limitation, any claims
made by any succeeding tenant or any losses to Landlord due to lost
opportunities to lease to succeeding tenants.
2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased
Premises prior to the Intended Commencement Date (or permits its contractors to
enter the Leased Premises prior to the Intended Commencement Date), unless
otherwise agreed in writing by Landlord, the Lease Commencement Date shall be
deemed to have occurred on such sooner date, and Tenant shall be obligated to
perform all its obligations under this Lease, including the obligation to pay
rent, from that sooner date.
ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS
3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Dated (as
determined pursuant Article 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefore, in advance on the
first day of each
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calendar month, as base monthly rent, the amount set forth as "Base Monthly
Rent" in Article 1 (the "Base Monthly Rent").
3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, in addition to the Base Monthly Rent, Tenant shall pay to Landlord as
additional rent (the "Additional Rent") the following amounts:
A. Tenant's Proportionate Share of all Building Operating Expenses
(as defined in Article 13). Payment shall be made by whichever of the following
methods (or combination of methods) is (are) from time to time designated by
Landlord:
(1) Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, Tenant's Proportionate Share of such expenses (or group
of expenses) as paid or incurred by Landlord, and Tenant shall pay such share of
such expenses within ten days after receipt of a written bill therefore from
Landlord; and/or
(2) Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (or group of expenses, such as Landlord's
Insurance Costs or Real Property Taxes) which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay its Proportionate Share of such expenses for such year in equal
monthly installments during such year with the installments of Base Monthly
Rent. Landlord reserves the right to change from time to time the method of
billing Tenant its Proportionate Share of such expenses or the periodic basis on
which such expenses are billed.
B. Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings, as required by Article 7;
C. Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and
D. Any other charges or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.
3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to charge Tenant
its Proportionate Share of the Building Operating Expenses (or any group of such
expenses) on an estimated basis in accordance with the provisions of Article
3.2A(2) above, Landlord shall furnish to Tenant within three months following
the end of the applicable calendar or fiscal year. As the case may be, a
statement setting forth (i) the amount of such expenses paid or incurred during
the just ended calendar or fiscal year, as appropriate, and (ii) Tenant's
Proportionate Share of such expenses for such period. If Tenant shall have paid
more than its Proportionate Share of such expenses for the stated period,
Landlord shall, at its election, either (i) credit the amount of such
overpayment toward the next ensuing payment or payments of Additional Rent that
would otherwise be due or (ii) within fifteen days refund in cash to Tenant the
amount of such overpayment. If such year-end statement shall show that Tenant
did not pay its Proportionate Share of any such expenses in full, then Tenant
shall pay to Landlord the amount of such underpayment within ten days from
Landlord's billing of same to Tenant. The provisions of this Article shall
survive the expiration or sooner termination of this Lease.
3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges that
the late payment by Tenant of any monthly installment of Base Monthly Rent or
any Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within six business days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to ten
percent of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for its loss suffered by reason of Tenant's
failure to make timely payment. In no event shall this provision for a late
charge be deemed to grant to Tenant a grace period or extension of time within
pay any rental installment or prevent Landlord from exercising any right or
remedy available to Landlord upon Tenant's failure to pay each rental
installment due under this Lease when due, including the
5.
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right to terminate this Lease. If any rent remains delinquent for a period in
excess of six business days, then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not so paid from said sixth day
until paid. See attached
3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the United
State without any abatement, deduction or offset for any reason whatsoever to
Landlord at such address as Landlord may designate from time to time. Tenant's
obligation to pay Base Monthly Rent and all Additional Rent shall be prorated at
the commencement and expiration of the Lease Term. The failure by Tenant to pay
any Additional Rent as required pursuant to this Lease when due shall be treated
the same as a failure by Tenant to pay Base Monthly Rent when due, and Landlord
shall have the same rights and remedies against Tenant as Landlord would have if
Tenant failed to pay the Base Monthly Rent when due.
3.6 PREPAID RENT: Upon signing this Lease, Tenant shall immediately pay
to Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first installment(s) of Base Monthly
Rent due hereunder.
3.7 SECURITY DEPOSIT: Upon signing this Lease, Tenant shall immediately
deposit with Landlord the amount set forth in Article 1 as the "Security
Deposit" as security for the performance by Tenant of the terms of this Lease to
be performed by Tenant, and not as prepayment of rent. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of Base
Monthly Rent or Additional Rent or a late charge or interest on defaulted rent;
(ii) to repair damage to the Leased Premises caused by Tenant; (iii) to clean
and repair the Leased Premises following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2;
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises.
In this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950.7(e) of the
California Civil Code and/or any successor statute. In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum. If Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent". Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from its general accounts. Tenant
shall not be entitled to any interest on the Security Deposit. See attached.
If Landlord transfers the Building during the Lease Term, Landlord shall pay the
Security Deposit to any subsequent owner in conformity with the provisions of
Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit. See attached. Tenant specifically grants
to Landlord (and hereby waives the provisions of California Civil Code Section
1950.7 to the contrary) a period of thirty days following a surrender of the
Leased Premises by Tenant to Landlord within which to return the Security
Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
and Tenant that sixty days is a reasonable period of time within which to
inspect the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent.
ARTICLE 4
USE OF LEASED PREMISES AND COMMON AREAS
4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever. Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term. Any discontinuance
of such use for a period of thirty consecutive calendar days without Landlord's
knowledge shall be, at Landlord's election, a default by Tenant under
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the terms of this Lease. Subject to the limitations contained in this Article 4,
Tenant shall have the right to use the Common Areas, in conjunction with other
tenants and during normal business hours, solely for the purposes for which they
were intended and for no other purposes whatsoever. Tenant shall not have the
right to use the exterior surfaces of exterior walls, the area beneath the floor
or the area above the ceiling of the Leased Premises.
4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything to
be done in or about the Leased Premises, the Building, the Common Areas or the
Project which does or could (i) interfere with the rights of other tenants or
occupants of the Building or the Project, (ii) jeopardize the structural
integrity of the Building or (iii) cause damage to any part of the building or
the Project. Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leased Premises or the
Building, (ii) damage, overload, corrode, or impaired the efficient operation of
any electrical, plumbing, sewer, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building or (iii) damage
or impaired the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix see attached any equipment or to make
any penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, walls, ceiling or roof system
which could endanger the structural integrity of the Building or damage its
floors, foundations or supporting structural components. Tenant shall not place
any explosive, flammable or harmful fluids, including Hazardous Materials, or
other waste materials in the drainage systems of the Building or the Project.
Tenant shall not drain or discharge any fluids in the landscaped areas or across
the paved areas of the Project. Tenant shall not use any area located outside
the Leased Premises for the storage of its materials, supplies, inventory or
equipment, and all such materials, supplies, inventory and equipment shall at
all times be stored within the Leased Premises. Tenant shall not commit nor
permit to be committed any waste in or about the Leased Premises, the Common
Areas or the Project.
4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that it does not interfere with
the businesses of or unreasonably annoy other tenants of the Building or the
Project. All dust, fumes, odors and other emissions generated by Tenant's use
of the Leased Premises shall be sufficiently dissipated in accordance with sound
environmental practices and exhausted from the Leased Premises in such a manner
so as not to interfere with the businesses of or unreasonably annoy other
tenants of the Building or the Project, or cause any damage to the Leased
Premises or the Building or any component part thereof or the property of other
tenants of the Building or the Project.
4.4 TRASH DISPOSAL: Tenant shall provide trash and garbage disposal
facilities inside the Leased Premises for all of its trash, garbage and waste
requirements and shall cause such trash, garbage and waste to be regularly
removed from the Leased Premises at Tenant's sole cost. Tenant shall keep all
areas outside the Leased Premises and all fire corridors and mechanical
equipment rooms in or about the Leased Premises free and clear of all trash,
garbage, waste and boxes containing same at all times.
4.5 PARKING: Tenant is allocated, and Tenant and its employees and
invitees shall have the nonexclusive right to use, not more than the number of
parking spaces set forth in Article 1 as "Tenant's Number of Parking Spaces".
Tenant shall not, at any time, use or permit its employees or invitees to use
more parking spaces than the number so allocated to Tenant. Tenant shall not
have the exclusive right to use any specific parking space, and Landlord
reserves the right to designate from time to time the location of the parking
spaces allocated for Tenant's use. In the event Landlord elects or is required
by any Law to limit or control parking within the Project, whether by validation
of parking tickets or any other method, Tenant agrees to participate in such
validation or other program as reasonably established by Landlord. Tenant shall
not, at any time, park or permit to be parked any trucks or vehicles adjacent to
entryways or loading areas within the Project so as to interfere in any way with
the use of such areas, nor shall Tenant, at any time, park or permit the parking
of Tenant's trucks or other vehicles, or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the Common Areas not designated by
Landlord for such use by Tenant. Tenant shall not, at any time, park or permit
to be parked any recreational vehicles, inoperative vehicles or equipment on any
portion of the common parking area or other Common Areas of the Project. Tenant
agrees to assume responsibility for compliance by its employees and invitees
with the parking provisions contained herein. If Tenant or its employees park
any vehicle within the Project in violation of these provisions, then
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Landlord may charge Tenant, as Additional Rent, and Tenant agrees to pay, as
Additional Rent, Fifty Dollars per day for each day or partial day that each
such vehicle is illegally parked, or parked in any area other than that
designated. Tenant hereby authorizes Landlord, at Tenant's sole expense, to tow
away from the Project and store until redeemed by its owner any vehicle
belonging to Tenant or Tenant's employees parked in violation of these
provisions.
4.6 SIGNS: Tenant shall not place or install on or within any portion of
the Leased Premises, the Building, the Common Areas or the Project any sign
(other than a business identification sign first approved by Landlord in
accordance with this Article), advertisements, banners, placards or pictures
which ate visible from the exterior of the Leased Premises. Tenant shall not
place or install on or within any portion of the Leased Premises, the Building,
the Common Areas or the Project any business identification sign which is
visible from the exterior of the Leased Premises until Landlord shall have first
approved in writing the location, size, content, design, method of attachment
and material to be used in the making of such sign. Any signs, once approved by
Landlord, shall be installed only in strict compliance with Landlord's approval,
at Tenant's expense, using a person first approved by Landlord to install same.
Landlord may remove any signs (not first approved in writing by Landlord),
advertisements, banners, placards or pictures so placed by Tenant on or within
the Leased Premises, the Building, the Common Areas or the Project and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition. Tenant
shall remove any such signs, repair any damage caused thereby, and restore the
surface upon which the sign was affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.
4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall not use or
permit any person to use the Leased Premises in any manner which violates any
Laws or Private Restrictions. Tenant shall abide by and shall promptly observe
and comply with, at its sole cost and expense, all Laws and Private Restrictions
respecting the use and occupancy of the Leased Premises, the Building, the
Common Areas or the Project and shall defend with competent counsel, indemnify
and hold Landlord harmless from any claims, damages or liability resulting from
Tenant's failure to do so.
4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any insurance
policies carried by Landlord in accordance with the provisions of this Lease,
Tenant shall not conduct (nor permit any other person to conduct) any activities
within the Leased Premises, or store, keep or use anything within the Leased
Premises which (i) is prohibited under the terms of any of such policies, (ii)
could result in the termination of the coverages afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any of
such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies. Tenants
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.
4.9 LANDLORD'S RIGHT TO ENTER: Upon 48 hours' notice Landlord and its
agents shall have the right to enter the Leased Premises during normal business
hours and subject to Tenant's reasonably security measures for the purpose of
(i) inspecting the same; (ii) supplying any services to be provided by Landlord
to Tenant; (iii) showing the Leased Premises to prospective purchasers,
mortgagees or tenants: (iv) making necessary alterations, additions or
repairs;(v) performing any of Tenant's obligations when Tenant has failed to do
so after giving Tenant reasonable written notice of its intent to do so; and
(vi) posting notices of non-responsibility or "For Lease" or "For Sale" signs.
Additionally, Landlord shall have the right to enter the Leased Premises at
times of emergency. See attached. Any entry into the Leased Premises or
portions thereof obtained by Landlord in accordance with this Article shall not
under any circumstances be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Leased Premises, or an eviction, actual or
constructive, of Tenant from die Leased Premises or any portion thereof.
4.10 CONTROL OF COMMON AREAS: Landlord shall at all times have exclusive
control of the Common Areas. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant to
any reduction in or abatement of rent. to: (i) See attached temporarily close
any part of the Common Areas to whatever extent
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required in the opinion of Landlord's counsel to prevent a dedication thereof or
the accrual of any prescriptive rights therein; (ii) See attached temporarily
close all or any part of the Common Areas to perform maintenance or for any
other reason deemed sufficient by Landlord; (iii) See attached change the shape,
size, location, number and extent of improvements within the Common Areas
including, without limitation, changing the location of driveways, entrances,
exits, parking spaces, parking areas, sidewalks, directional or locator signs,
or the direction of the flow of traffic; and (iv) to make additions to the
Common Areas including, without limitation, the construction of parking
structures. See attached. Landlord shall have the right to change the name or
address of the Building. Tenant, in its use of the Common Areas, shall keep the
Common Areas free and clear of all obstructions created or permitted by Tenant.
If, in the opinion of Landlord, unauthorized persons are using any of the Common
Areas by reason of, or under claim of, the express or implied authority or
consent of Tenant, then Tenant, upon demand of Landlord, shall restrain, to the
fullest extent then allowed by Law, such unauthorized use, and shall initiate
such appropriate proceedings as may be required to so restrain such use. Nothing
contained herein shall affect the right of Landlord at any time to remove any
unauthorized person from the Common Areas or to prohibit the use of the Common
Areas by unauthorized persons, including, without limitation, the right to
prohibit mobile food and beverage vendors. In exercising any such right
regarding the Common Areas, Landlord shall make a reasonable effort to minimize
any disruption to Tenant's business.
4.11 RULES AND REGULATIONS: Landlord shall have the right from time to
time to establish reasonable rules and regulations and/or amendments or
additions thereto respecting the use of space within the Project and the use of
the Common Areas for the care and orderly management of the Project and the
safety of its tenants, occupants and invitees. Upon delivery to Tenant of a
copy of such rules and regulations or, any amendments or additions thereto,
Tenant shall comply with such rules and regulations. A violation by Tenant of
any of such rules and regulations shall constitute a default by Tenant under
this Lease. If there is a conflict between the rules and regulations and any of
the provisions of this Lease, the provisions of this Lease shall prevail.
Landlord shall not be responsible or liable to Tenant for the violation of such
rules and regulations by any other tenant of the Project.
4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. See attached. Tenant shall not be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of such compliance or cooperation. Tenant agrees at all times to
cooperate fully with Landlord and to abide by all rules and regulations and
requirements which Landlord may reasonably prescribe in order to comply with the
requirements and recommendations of governmental agencies regulating, or
otherwise involved in, the protection of the environment.
4.13 OUTSIDE AREAS: No materials, pallets, supplies, tanks or containers
whether above or below ground level, equipment, finished products or semi-
finished products, raw materials, inoperable vehicles or articles of any nature
shall be stored upon or permitted to remain outside of the Leased Premises
except in fully fenced and screened areas outside the Building which have been
designed for such purpose and have been approved in writing by Landlord for such
use by Tenant.
4.14 HAZARDOUS MATERIALS: Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:
A. Any handling, transportation, storage, treatment, disposal or use
of Hazardous Materials by Tenant, Tenant's Agents, or any other party after the
Effective Date of this Lease in or about the Property shall strictly comply with
all applicable Hazardous Materials Laws. Tenant shall indemnify, defend upon
demand with counsel reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses, claims, damages, lost
profits, consequential damages, interest, penalties, fines, court costs,
remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Property by Tenant, Tenant's Agents, Permitees, or Invitees after the Effective
Date.
B. If the presence of Hazardous Materials on the Property caused or
permitted by Tenant, Tenant's Agents, Permittees, or Invitees after the
Effective Date of this
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Lease results in contamination or deterioration of water or soil or any other
part of the Property, then Tenant shall promptly take any and all action
necessary to investigate and remediate such contamination. Tenant shall further
be solely responsible for, and shall defend, indemnify and hold Landlord and its
agents harmless from and against all claims, costs and liabilities, including
attorney's fees and costs, arising out of or in connection with any
investigation and remediation (including investigative analysis, removal,
cleanup, and/or restoration work) required hereunder see attached to return the
Leased Premises, Building, Common Areas, Outside Areas, and/or Property and any
other property of whatever nature to their condition existing prior to the
appearance of such Hazardous Materials.
C. Landlord and Tenant shall each give written notice to the other
as soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination of the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law. Tenant may use
small quantities of household chemicals such as adhesive, lubricants, and
cleaning fluids in order to conduct its business at the Premises and such other
Hazardous Materials as are necessary to the operation of Tenant's business of
which Landlord receives notice prior to such Hazardous Materials being brought
onto the Property (or any portion thereof and which Landlord consents in writing
may be brought onto the Property. In granting Landlord's consent, Landlord may
specify the location and manner or use, storage, or handling of any Hazardous
Material. Landlord's consent shall in no way relieve Tenant from any of its
obligations as contained herein. Tenant shall notify Landlord in writing at
least ten (10) days prior to the first appearance of any Hazardous Material on
the Leased Premises, Building, Common Areas, Outside Areas, and/or Property.
Tenant shall provide Landlord with a list of all Hazardous Materials and the
quantities of each Hazardous Material to be stored, or used, on any portion of
the Property, and upon Landlord's request Tenant shall provide Landlord with
copies of any and all Hazardous Materials Management Plans, Material, Safety
Data Sheets, Hazardous Waste Manifests, and other documentation maintained or
received by Tenant pertaining to the Hazardous Materials used, stored, or
transported or to be used, stored, or transported on any portion of the
Property. At any time during the Lease Term, Tenant shall, within five days
after written request therefor received from Landlord, disclose in writing all
Hazardous Materials that are being used by Tenant on the Property (or have been
used on the Property), the nature of such use, and the manner of storage and
disposal.
D. Landlord may cause testing wells to be installed on the Property
and may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. If Tenant so requests, Landlord shall supply Tenant with copies of
such test results. The cost of such tests and of the instillation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in A and/or B above. Landlord may retain consultants to
inspect the Property, conduct reasonable periodic environmental audits, and
review any information provided by Tenant. Tenant shall pay the reasonable
costs of fees charged by Landlord and/or Landlord's consultants as a Project
Maintenance Cost.
E. Upon the expiration or earlier termination of the Lease. Tenant
at its sole cost shall remove all Hazardous Materials from the Property. If
Tenant fails to so surrender the Property, Tenant shall indemnify and hold
Landlord harmless from all damages resulting from Tenant's failure to surrender
the Property as required by this Subsection, including, without limitation, any
claims or damages in connection with the condition of the Property including,
without limitation, damages occasioned by the inability to Lease the Property
(or any portion thereof) or a reduction in the fair market and/or rental value
of the Property, Building, Common Areas, Outside Areas, and/or Property by
reason of the existence of any Hazardous Materials in or around the Leased
Premises, Building, Common Areas, Outside Areas, and/or Property. If any action
is required to be taken by a governmental authority to test, monitor, and/or
clean up Hazardous Materials from the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property and such action is not completed prior to the
expiration or earlier termination of the Lease, Tenant shall be deemed to have
impermissibly held over until such time as such required action is completed,
and Tenant shall pay Base Monthly Rent and Additional Rent in accordance with
the terms of Section 13.2 (Holding Over). In addition, Landlord shall be
entitled to all damages directly or indirectly incurred in connection with such
holding over, including without limitation, damages occasioned by rite inability
to Lease the Property or a reduction of the fair
10.
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market and/or rental value of the Leased Premises, Building, Common Area,
Outside Areas, and/or Property.
F. As used herein, the term "Hazardous Materials(s)" means any
hazardous or toxic substance, material or waste, which is or becomes regulated
by any federal, state, regional or local governmental authority because it is in
any way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects
any part of the environment or creates risks of any such hazards or effects,
including, but not limited to, petroleum; asbestos, and polychlorinated
bipheyls, and any material, substance, or waste (a) defined as a "hazardous
waste," "extremely hazardous waste" or "restricted hazardous waste" under
Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law); (b) defined as a "hazardous substance" under Section 5316 of the
California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley
Tanner Hazardous Substance Account Act); (cc) defined as a "hazardous material,"
"hazardous substance" or "hazardous waste" under Section 25501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release
Response Plans and Inventory); (d) defined as a "hazardous substance" under
Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances); (e) defined as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act 33 United States
Code Sections 1251 et seq. (33 U.S.C. 1321) or listed pursuant to Section 307
of the Clean Water Act (33 U.S.C. 1317); (0 defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
United States Code Sections 6901 Ct see (42 U.S.C. 6903); or (g) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 United States Code Section 9601
et. seq (42 U.S.C. 9601) or (h) defined as a "hazardous substance" pursuant to
- -------
Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq or
------
(i) listed pursuant to Section 307 of the Federal Water Pollution Control Act
(33 U.S.C. 1317 ) or (j) regulated under the Toxic Substances Control Act (15
U.S.C. 2601 et seq.) or (k) defined as a "hazardous material "under Section
------
66680 or 66084 of Title 22 of the California Code of Regulations (Administrative
Code) (l) listed in the United States Department of Transportation Hazardous
Materials Table (49 C. F.R. 172.101) or (m) listed by the Environmental
Protection Agency as "hazardous substances" (4 0 C.F.R. Part 302 ) and
amendments thereto. The term "Hazardous Material Laws" shall mean (i) all of
the foregoing laws as amended from time to time and (ii)any other federal,
state, or local law, ordinance, regulation, or order regulating Hazardous
Materials.
G. Tenant's failure to comply with any of the requirements of this
Section regarding the storage, use, disposal, or transportation of Hazardous
Materials, or the appearance of any Hazardous Materials on the Leased Premises,
Building, Common Area, Outside Area, and/or the Property without Landlord's
consent shall be an Event of Default as defined in this Lease. The obligations
of Landlord and Tenant under this Section shall survive the expiration or
earlier termination of the Lease Term. The rights and obligations of Landlord
and Tenant within respect to issues relating to Hazardous Materials are
exclusively established by this section. In the event of any inconsistency
between any other part of this Lease and this Section, the terms of this Section
shall control.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE: Except in the case of damage to or
destruction of the Leased Premises, the Building or the Project caused by an Act
of God or other peril, in which case the provisions of Article 10 shall control,
the parties shall have the following obligations and responsibilities with
respect to the repair and maintenance of the Leased Premises, the Building and
the Common Areas.
A. Tenants Obligation: Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean, and continuously keep
and maintain in good order, condition and repair the Leased Premises and every
part thereof find all appurtenances thereto, including, without limiting the
generality or the foregoing, (i) all interior walls, floors and ceilings, (ii)
all windows, doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and
drains, (v) all lighting fixtures, bulbs and lamps, (vi) all heating,
ventilating and air conditioning equipment located within the Leased Premises or
located outside the Leased Premises (e.g. rooftop compressors) and serving the
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Leased Premises (other than Common HVAC as defined in Subarticle B below), and
(vii) all entranceways to the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly, and periodically
inspect (not less frequently than every three months) and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof. Tenant
shall, at its sole cost and expense, repair all damage to the Building, the
Common areas or the Project caused by the activities of Tenant, its employees,
invitees or contractors promptly following written notice from Landlord to so
repair such damage. If Tenant shall fail to perform the required maintenance or
fail to make repairs required of it pursuant to this Article within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or at Law ______ perform such maintenance or make such repairs and
charge to Tenant, as Additional Rent, the costs so incurred by Landlord for
same. All glass within or a part of the Leased Premises, both interior and
exterior, is at the sole risk of Tenant and any broken glass shall promptly be
replaced by Tenant at Tenant's expense with glass of the same kind, size and
quality.
B. Landlord's Obligation: Landlord shall, at all times during the
Lease Term, maintain in good condition and repair:, (i) the exterior, and
structural parts of the Building (including the foundation, subflooring, load-
bearing anti exterior walls, and roof); (ii) the Common Areas; and (iii) the
electrical and plumbing systems located outside the Leased Premises which
service the Building. Additionally, to the extent that the Building contains
central heating, ventilating and/or air conditioning systems located outside the
Leased Premises which arc designed to service, and are then servicing, more than
a single tenant within the Building ("Common HVAC"), Landlord shall maintain in
good operating condition and repair such Common HVAC equipment and systems. The
provisions of this Subarticle B shall in no way limit the right of Landlord to
charge to tenants of the Project, as Additional Rent pursuant to Article 3, the
costs incurred by Landlord in making such repairs and/or performing such
maintenance.
5.2 SERVICES AND UTILITIES: The parties shall have the following
responsibilities and obligations with respect to obtaining and paying the cost
of providing the following utilities and other services to the Leased Premises.
A. Gas and Electricity: Tenant shall arrange, at its sole cost and
expense and in its own name, for the supply of gas and electricity to the Leased
Premises. In the event that such services are not separately metered, Tenant
shall, at its sole expense, cause such meters to be installed. Tenant shall be
responsible for determining if the local supplier of gas and/or electricity can
supply the needs of Tenant and whether or not the existing gas and/or electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall pay all charges for gas and electricity as so
supplied to the Leased Premises.
B. Water: Landlord shall provide the Leased Premises with water for
lavatory and drinking purposes only. Tenant shall pay, as Additional Rent, the
cost to Landlord of providing water to the Leased Premises. In the reasonably
event Landlord reasonably believes that Tenant is using more water than what
normally would be required for lavatory and drinking purposes, Landlord at its
election may (i) periodically charge Tenant, as Additional Rent, a sum equal to
Landlord's estimate of the cost of Tenant's excess water usage or (ii) install
(or require Tenant to install at Tenant's sole cost) a separate meter for
purposes of measuring Tenant's water usage and, based upon such meter readings,
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
reasonable estimate of the cost of Tenant's excess water usage. In the event
that Landlord shall so install such a separate meter, Tenant shall pay to
Landlord, upon demand, the costs incurred by Landlord in purchasing and
installing such meter and thereafter all costs incurred by Landlord in
maintaining said meter. The cost of Tenant's water usage shall include any costs
to Landlord in keeping account of such usage and all governmental fees, public
charges or the like attributable to or based upon (such as sewer usage fees) the
use of water to the extent of such usage.
C. Security Service: Tenant acknowledges that Landlord is not
responsible for the security of the Leased Premises or the protection of
Tenant's property or Tenant's employees, invitees or contractors, and that to
the extent Tenant determines that such security or protection services are
advisable or necessary, Tenant shall arrange for and pay the costs of providing
stone.
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D. Trash Disposal: Tenant acknowledges that Landlord is not
responsible for the disposal of Tenant's waste, garbage or trash and that Tenant
shall arrange, in its own name and at its sole cost, for the regular and
periodic removal of such waste, garbage or trash from the Leased Premises. In no
event shall Landlord be required to provide trash bins for the disposal of
Tenant's waste, garbage or trash.
5.3 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate
in a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Project.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Project and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.
5.4 LIMITATION OF LANDLORD'S LIABILITY: (See attached) Landlord shall not
be liable to Tenant for injury to Tenant, its employees, agents, invitees or
contractors, damage to Tenant's property or loss of Tenant's business or
profits, nor shall Tenant be entitled to terminate this Lease or to any
reduction in or abatement of rent by reason of (i) Landlord's failure to perform
any maintenance or repairs to the Project until Tenant shall have first notified
Landlord, in writing, of the need for such maintenance or repairs, and then only
after Landlord shall have had a reasonable period of time following its receipt
of such notice within which to perform such maintenance or repairs, or (ii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility service to the Leased Premises, the
Building or the Project from whatever cause (other than Landlord's active
negligence or willful misconduct), or (iii) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord).
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
6.1 BY TENANT: Tenant shall not make any alterations to or modifications
of the Leased Premises or construct an improvements to or within the Leased
Premises without Landlord s prior written approval, and then not until Landlord
shall have first approved, in writing, the plans and specifications therefore,
which approval shall not be unreasonably withheld or delayed. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense, using a licensed
contractor first approved by Landlord, in substantial compliance with the
Landlord-approved plans and specifications therefore. All work undertaken by
Tenant shall be done in accordance with all Laws and in a good and workmanlike
manner using materials (see attached). Tenant shall not commence the making of
any such modifications or alterations or the construction of any such
improvements until (i) all required governmental approvals and permits shall
have been obtained, (ii) all requirements regarding insurance imposed by this
Lease have been satisfied, (iii) Tenant shall have given Landlord at least five
business days prior written notice of its intention to commence such work so
that Landlord may post and the notices of non-responsibility, and (iv) if
requested by Landlord, Tenant shall have obtained contingent liability and broad
form builder's risk insurance in an amount satisfactory to Landlord to cover any
perils relating to the proposed work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any modifications,
alterations or improvements to the Common Areas or any ,areas outside of the
Leased Premises. As used in this Article, the term "modifications, alterations
and/or improvements" shall include, without limitation, the installation of
additional electrical outlets, overhead lighting fixtures, drains, sinks,
partitions, doorways, or the like.
6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, wall decorations and trade fixtures)
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease Term. Any such modifications,
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
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approval first obtained in accordance with the provisions of Article 6.1 above.
At the expiration or sooner termination of the Lease, all such modifications,
alterations and improvements (other than Tenant's inventory, equipment, movable
furniture, wall decorations and trade fixtures) shall automatically become the
property of Landlord and shall be surrendered to Landlord as a part of the
Leased Premise as required pursuant to Article 2, unless Landlord shall require
Tenant to remove any of such modifications, alterations or improvements in
accordance with the provisions of Article 2, in which case Tenant shall so
remove same (see attached). Landlord shall have no obligation to reimburse to
Tenant all or any portion of the cost or value of any such modifications,
alterations or improvements so surrendered to Landlord. All modifications,
alterations or improvements which are installed or constructed on or attached to
the Leased Premises by Landlord at Landlord's expense shall be deemed real
property, and a part of the Leased Premises and shall be the property of
Landlord. All lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings, wall coverings and floor
coverings installed by Tenant shall be deemed improvements to the Leased
Premises and not trade fixtures of Tenant.
6.3 ALTERATIONS: At its sole cost, Tenant shall make all modifications,
alterations and improvements to the Leased Premises that are required by any Law
because of (i) Tenant's use or occupancy of the Leased Premises, the Building,
the Outside Areas, or the Property, (ii) Tenant's application for any permit or
governmental approval, or (iii) Tenant's making of any modifications,
alterations or improvements to or within the Leased Premises. If Landlord shall,
at any time during the Lease Term, (i) be required by any governmental authority
to make any modifications, alterations or improvements to the Building or the
Project, (ii) modify the existing (or construct additional) capital improvements
or provide building service equipment for the purpose of reducing the
consumption of utility services or project maintenance costs for the property,
the cost incurred by Landlord in making such modifications, alterations or
improvements, including an (see attached) per annum cost of money factor, shall
be amortized by Landlord over the useful life of such modifications, alterations
or improvements, as determined in accordance with generally accepted accounting
standards, and the monthly amortized cost of such modifications, alterations and
improvements as so amortized shall be considered a Project Maintenance Cost.
6.4 LIENS: Tenant shall keep the Leased Premises, the Building and the
Property free from any liens and shall pay when due all bills arising out of any
work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises. If any such
claim of lien is recorded against Tenant's interest in this Lease, the Leased
Premises, the Building or the Project, Tenant shall bond against, discharge or
otherwise cause such lien to be entirely released within ten days after the same
has been so recorded.
ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT
7.1 BY TENANT: Tenant shall not sublet the Leased Premises (or any
portion thereof) or assign or encumber its interest in this Lease, whether
voluntarily or by operation of Law, without Landlord's prior written consent
first obtained in accordance with the provisions of this Article 7 (see
attached). Any attempted subletting, assignment or encumbrance without
Landlord's prior written consent, at Landlord's election, shall constitute a
default by Tenant under the terms of this Lease. The acceptance of rent by
Landlord from any person or entity other than Tenant, or the acceptance of rent
by Landlord from Tenant with knowledge of a violation of the provisions of this
Article, shall not be deemed to be a waiver by Landlord of any provision of this
Article or this Lease or to be a consent to any subletting by Tenant or any
assignment or encumbrance of Tenant's interest in this Lease.
7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment of Tenant's interest in this Lease. The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing more
than fifty percent of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors. If Tenant is a partnership, a withdrawal or change, whether
voluntary, involuntary or by operation of Law, of any general
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partner, or the dissolution of the partnership, shall be deemed a voluntary
assignment of Tenant's interest in this Lease.
7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest
under this Lease or to sublet the Leased Premises, Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least ninety days
in advance of the date it intends to so assign its interest in this Lease or
sublet the Leased Premises but not sooner than one hundred eighty days in
advance of such date, specifying in detail the terms of such proposed assignment
or subletting, including the name of the proposed assignee or sublessee, the
proposed assignee's or Sublessee's intended use of the Leased Premises, a
current financial statement of such proposed assignee or sublessee and the form
of documents to be used in effectuating such assignment or subletting. Landlord
shall have a period of fifteen days following receipt of such notice within
which to do one of the following: (i) consent to such requested assignment or
subletting subject to Tenant's compliance with the conditions set forth in
Article 7.4 below or (ii) refuse to so consent to such requested assignment or
subletting, provided that such consent shall not be unreasonably refused. It
shall not be unreasonable for Landlord to withhold its consent to any proposed
assignment or subletting if (i) the proposed assignee's or subtenant's
anticipated use of the Premises involves the storage, use or disposal of a
Hazardous Material; (ii) if the proposed assignee or subtenant has been required
by any prior landlord, lender or governmental authority to clean up Hazardous
Materials unlawfully discharged by the proposed assignee or subtenant; or (iii)
if the proposed assignee or subtenant is subject to investigation or enforcement
order or proceeding by any governmental authority in connection with the use,
disposal or storage of a Hazardous Material. During said fifteen day period,
Tenant covenants and agrees to supply to Landlord, upon request, all necessary
or relevant information which Landlord may reasonably request respecting such
proposed assignment or subletting and/or the proposed assignee or sublessee.
7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of Landlord, which election may be exercised
at any time following such a purported assignment, subletting or encumbrance but
prior to the satisfaction of each of the stated conditions, shall constitute a
material default by Tenant under this Lease giving Landlord the absolute right
to terminate this Lease unless such default is promptly cured by satisfying in
full each such condition by the assignee, sublessee or encumbrancer. The
conditions are as follows:
A. Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld or delayed by Landlord if the requirements of this Article
7 are otherwise complied with.
B. Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be per-
formed by Tenant (or, in the case of an encumbrance, each such encumbrancer
having similarly agreed to assume, be bound by and to perform Tenant's
obligations upon a foreclosure or transfer in lieu thereof).
C. Tenant having fully and completely performed all of its
obligations under the terms of this Lease through and including the date of such
assignment or subletting.
D. Tenant having reimbursed to Landlord all reasonable costs and
attorneys fees incurred by Landlord in conjunction with the processing and
documentation of any such requested subletting, assignment or encumbrance.
E. Tenant having delivered to Landlord a complete and fully-executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.
F. Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord fifty percent of all assignment consideration or
excess rentals to be paid to
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Tenant or to any other on Tenant's behalf or for Tenant's benefit for such
assignment or subletting as follows:
(1) If Tenant assigns its interest under the Lease and if all or a
portion of the consideration for such assignment is to be paid by the assignee
at the time of the assignment, that Tenant shall have paid to Landlord and
Landlord shall have received an amount equal to fifty percent of the assignment
consideration so paid or to be paid whichever is the greater) at the time of the
assignment by the assignee; or
(2) If Tenant assigns its interest under this Lease and if Tenants is
to receive all or a portion of the consideration for such assignment in future
installments, that Tenant and Tenant's assignee shall have entered into a
written agreement with and for the benefit of Landlord satisfactory to Landlord
and its counsel whereby Tenant and Tenant's assignee jointly agree to pay to
Landlord an amount equal to fifty percent of all such future assignment
consideration installments to be paid by such assignee as and when such
assignment consideration is so paid.
(3) If Tenant subleases the Leased Premises, that Tenant and Tenant's
sublessee shall have entered into a written agreement with and for the benefit
of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant's
sublessee jointly agree to pay to Landlord fifty percent of all excess rentals
to be paid by such sublessee as and when such excess rentals are so paid.
7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of
this Article, the term "assignment consideration" shall mean all consideration
to be paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, less any commissions paid
by Tenant to a licensed real estate broker for arranging such assignment (not to
exceed then standard rates) (see attached), and the term "excess rentals" shall
mean all consideration to be paid by the sublessee to Tenant or to any other on
Tenant's behalf or for Tenant's benefit for the sublease of the Leased Premises
in excess of the rent due Landlord under the terms of this Lease for the same
period, less any commissions paid by Tenant to a licensed real estate broker for
arranging such sublease (not to exceed then standard rates) (see attached),
Tenant agrees that the portion of any assignment consideration and/or excess
rentals arising from and assignment or subletting by Tenant which is to be paid
to Landlord pursuant to this Article now is and shall then be the property of
Landlord' and not the property of Tenant.
7.6 PAYMENTS: All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due. At the time
Tenant, Tenant's assignee or sublessee makes each such payment to Landlord,
Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct .
7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted
in consideration of Tenant's express covenant that all pertinent allocations
which are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant's personal property which may be conveyed or leased
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly and in good faith. If Tenant shall breach this Covenant of Good Faith,
Landlord may immediately declare Tenant to be in default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord would have under the terms of this Lease in the case of a material
default by Tenant under this Lease.
7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or
encumbrance, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder. Consent by Landlord to one or
more assignments or encumbrances of Tenant's interest in this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to
any subsequent assignment, encumbrance or subletting. If Landlord shall have
been ordered by a court of competent jurisdiction to consent to a requested
assignment or subletting, or such an assignment or subletting shall have been
ordered over the objection of Landlord, such assignment or subletting shall not
be binding between the assignee (or sublessee) and Landlord
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until such time as all conditions set forth in Article 7.4 above have been fully
satisfied (to the extent not then satisfied) by the assignee or sublessee,
including, without limitation, the payment to Landlord of all agreed assignment
considerations and/or excess rentals then due Landlord.
ARTICLE 8
LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY
8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners and
officers from, any and all liability, whether in contract, tort or on any other
basis, for any injury to or any damage sustained by Tenant, its agents,
employees, contractors or invitees; any damage to Tenant's property; or any
loss to Tenant's business, loss of Tenant's profits or other financial loss of
Tenant resulting from or attributable to the condition of, the management of,
the maintenance of, or the protection of the Leased Premises, the Building, the
Project or the Common Areas, including, without limitation, any such injury,
damage or loss resulting from (i) the failure, interruption, rationing or other
curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Project, the Building or the Leased Premises; (ii) the
vandalism or forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises through
roof leaks or otherwise; (iv) the failure to provide security and/or adequate
lighting in or about the Project, the Building or the Leased Premises; (v) the
existence of any design or construction defects within the Project, the Building
or the Leased Premises; (vi) the failure of any mechanical systems to function
properly (such as the HVAC systems); or (vii) the blockage of access to any
portion of the Project, the Building or the Leased Premises, except to the
extent such damage was proximately caused by Landlord's negligence or willful
misconduct, or Landlord's failure to perform an obligation expressly undertaken
pursuant to this Lease but only if Tenant shall have given Landlord prior
written notice to perform such obligation and Landlord shall have failed to
perform such obligation within a reasonable period of time following receipt of
written notice from Tenant to so perform such obligation. In this regard,
Tenant acknowledges that it is fully apprised of the provisions of Law relating
to releases, and particularly to those provisions contained in Section 1542 of
the California Civil Code which read as follows: A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor. Notwithstanding such
statutory provision, and for the purpose of implementing a full and complete
release and discharge, Tenant hereby (i) waives the benefit of such statutory
provision and (ii) acknowledges that, subject to the exceptions specifically set
forth herein, the release and discharge set forth in this Article is a full and
complete settlement and release and discharge of all claims and is intended to
include in its effect, without limitation, all claims which Tenant, as of the
date hereof, does not know of or suspect to exist in its favor.
8.2 TENANT S INDEMNIFICATION OF LANDLORD: Tenant shall defend, with
competent counsel satisfactory to Landlord, any claims made or legal actions
filed or threatened by third parties against Landlord which result in the death,
bodily injury, personal injury, damage to property or interference with
contractual or other rights suffered by any third party, (including other
Tenants within the Project) which (see attached) (i) occurred within the Leased
Premises or (ii) resulted from Tenant's use or occupancy of the Leased Premises
or the Common Areas or (iii) resulted from Tenant s activities in or about the
Leased Premises, the Building or the Project, and Tenant shall indemnify and
hold Landlord, Landlord's principals, employees and agents harmless from any
loss (including loss of rents by reason of vacant space which otherwise would
have been leased but for such activities), liabilities, penalties, or expense
whatsoever (including all legal fees incurred by Landlord with respect to
defending such claims) resulting therefrom, except to the extent proximately
caused by the negligence or willful misconduct of Landlord. This indemnity
agreement shall survive until the latter to occur of (i) the date of the
expiration, or sooner termination, of this Lease, or (ii) the date Tenant
actually vacates the Leased Premises provided Tenant received approval by
Landlord for such vacating.
17
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ARTICLE 9
INSURANCE
9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with all
of the following:
A. Tenant shall procure, pay for and keep in full force and effect,
at all times during the Lease Term, the following:
(1) Commercial General Liability insurance insuring Tenant
against liability for bodily injury, death, property damage and personal injury
occurring at the Leased Premises, or resulting from Tenant's use or occupancy of
the Leased Premises or the Building, Outside Areas, Property, or Common Areas or
resulting from Tenant's activities in or about the Leased Premises. Such
insurance shall be on an occurrence basis with a combined single limit of
liability of not less than the amount of Tenant's Required Liability Coverage
(as set forth in Article 1). The policy or policies shall be endorsed to name
Landlord and such others as are designated by Landlord as additional insured in
the form equivalent to CG20111185 or successor and shall contain the following
additional endorsement: "The insurance afforded to the additional insured is
primary insurance. If the additional insureds have other insurance which is
applicable to the loss on a contributing, excess or contingent basis, the amount
of this insurance company's liability under this policy shall not be reduced by
the existence of such other insurance. Any insurance carried by the additional
insureds shall be excess and non contributing with the insurance provided by the
Tenant." The policy shall not be canceled or reduced without at least 30 days
written notice to additional insureds. If the policy insures more than one
location, it shall be endorsed to show that the limits and aggregate apply per
location using endorsement CG25041185 or successor. Tenant's policy shall also
contain the severability of interest and cross-liability endorsement or clauses.
(2) Fire and property damage insurance in so-called Special Form
plus earthquake and flood insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, stock, trade fixtures and improvements
within the Leased Premises with coverage for the full actual replacement cost
thereof;
(3) Plate-glass insurance, at actual replacement cost;
(4) Boiler and Machinery insurance, if applicable;
(5) Product Liability insurance (including without limitation
Liquor Liability insurance for liability arising out of the distribution, sale,
or consumption of food and/or beverages including alcoholic beverages at the
Leased Premises for not less than the Tenant's Required Liability Coverage as
set forth in Article 1;
(6) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all Laws which policy shall be
endorsed to provide thirty (30) days written notice of cancellation to Landlord;
(7) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord;
(8) Business Income Insurance at a minimum of 50% co-insurance
including coverage for loss of business income due to damage to equipment from
perils covered under the so-called Special Form plus perils of earth quake and
flood; and
(9) Comprehensive Auto Liability insurance with a combined
single limit coverage of not less than the amount of Tenant's Required Liability
Coverage (as set forth in Article 1) for bodily injury and/or property damage
liability for: a) Owned autos b) Hired or borrowed autos c) Non-owned autos d)
Auto blanket contractual form CA0029. The policy shall be endorsed to provide 30
days written notice of cancellation to Landlord.
B. Each policy of liability insurance required to be carried by
Tenant pursuant to this Article or actually carried by Tenant with respect to
the Leased Premises or the Property (i) shall be in a form satisfactory to
Landlord, (ii) Shall be provided by carriers admitted
18.
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to do business in the state of California, with a Best rating of "A/VI" or
better and/or acceptable to Landlord. Property insurance shall contain a waiver
and/or a permission to waive by the insurer any right of subrogation against
Landlord, its principals, employees, agents and contractors which might arise by
reason of any payment under such policy or by reason of any act or omission of
Landlord, its principals, employees, agents or contractors.
C. Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to the Landlord with respect to each
policy of insurance required to be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying, in a form satisfactory to the Landlord,
that the policy has been issued and premium paid providing the coverage required
by this Article and containing the provisions herein. Attached to such a
certificate shall be endorsements naming Landlord as additional insured, and
including the wording under primary insurance above. With respect to each
renewal or replacement of any such insurance, the requirements of this Article
must be complied with not less than 30 days prior to the expiration or
cancellation of the policy being renewed or replaced. Landlord may at any time
and from time-to-time inspect and/or copy any and all insurance policies
required to be carried by Tenant pursuant to this article. If Landlord's lender,
insurance broker or advisor or counsel reasonably determines at any time that
the form or amount of coverage set forth in Article 9.1.(A) for any policy of
insurance Tenant is required to carry pursuant to this Article is not adequate,
then Tenant shall increase the amount of coverage for such insurance to such
greater amount or change the form as Landlord's lender, insurance broker or
advisor or counsel reasonably deems adequate (provided however such increase
level of coverage may not exceed the level of coverage for such insurance
commonly carried by comparable businesses similarly situated and operating under
similar circumstances).
D. The Commercial General Liability insurance carried by Tenant
shall specifically insure the performance by Tenant of the Indemnification
provisions set forth in Article 8.2 of this lease provided, however, nothing
con-mined in this Article 9 shall be construed to limit the liability of Tenant
under the Indemnification provisions set forth in said Article 8.2.
9.2 LANDLORD'S INSURANCE: With respect to insurance maintained by
Landlord:
A. Landlord shall maintain, as the minimum coverage required of it
by this Lease, property insurance in so-called "Special" form insuring Landlord
(and such others as Landlord may designate) against loss from physical damage
to the Building with coverage of not less than one hundred percent of the full
actual replacement cost thereof and against loss of rents for a period of not
less than twelve months. Such property damage insurance, at Landlord's election
but without any requirement on Landlord's behalf to do so, (i) may be written in
so-called Special Form, excluding only those perils commonly excluded from such
coverage by Landlord's then property damage insurer; (ii) may provide coverage
for physical damage to the improvements so insured for up to the entire full
actual replacement cost thereof; (iii) may be endorsed to include or separate
policies may be carried to cover loss or damage caused by any additional perils
against which Landlord may elect to insure, including earthquake and/or flood;
(iv) may provide coverage for loss of rents for a period of up to twelve months;
and/or (v) may contain "deductibles" per occurrence in an amount reasonably
acceptable to Landlord. Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.
B. Landlord shall maintain Commercial General Liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Project, or any portion thereof, with combined single limit coverage of at least
Two Million Dollars. Landlord may carry such greater coverage as Landlord or
Landlord's Lender, insurance broker or advisor or counsel may from time to time
determine is reasonably necessary for the adequate protection of Landlord and
the Project.
C. Landlord may maintain any other insurance which in the opinion of
its insurance broker or advisor or legal counsel is prudent to carry under the
given circumstances.
19.
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9.3 MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant (see
attached), and Tenant hereby releases Landlord and its respective partners and
officers, agents, employees and servants, from any and all liability for loss,
damage or injury to the property of the other in or about the Leased Premises
which is caused by or results from a peril or event or happening which would be
covered by insurance required to be carried under the terms of this Lease, or is
covered by insurance actually carried and in force at the time of the loss, by
the party sustaining such loss; provided, however, that such waiver shall be
effective only to the extent permitted by the insurance covering such loss and
to the extent such insurance is not prejudiced thereby.
ARTICLE 10
DAMAGE TO LEASED PREMISES
10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises are damaged by any
peril after the Effective Date of this Lease, Landlord shall restore the Leased
Premises, as and when required by this Article, unless this Lease is terminated
by Landlord pursuant to Article 10.2 or by Tenant pursuant to Article 10.3. All
insurance proceeds available from the fire and property damage insurance carried
by Landlord shall be paid to and become the property of Landlord. If this Lease
is terminated pursuant to either Article 10.2 or 10.3, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that is
Landlord's property or would become Landlord's property on termination of this
Lease shall be paid to and become the property of Landlord, and the remainder of
such proceeds shall be paid to and become the property of Tenant. If this Lease
is not terminated pursuant to either Article 10.2 or 10.3, all insurance
proceeds available from insurance carded by Tenant which cover loss to property
that is Landlord's property shall be paid to and become the property of
Landlord, and all proceeds available which cover loss to property which would
become the property of Landlord upon the termination of this Lease shall be paid
to and remain the property of Tenant. If this Lease is not so terminated, then
upon receipt of the insurance proceeds (if the loss is covered by insurance) and
the issuance of all necessary governmental permits, Landlord shall immediately
commence and diligently prosecute to completion the restoration of the Leased
Premises, to the extent then allowed by Law, to substantially the same condition
in which the Leased Premises existed as of the Lease Commencement Date.
Landlord's obligation to restore shall be limited to the Leased Premises and
interior improvements constructed by Landlord. Landlord shall have no
obligation to restore any other improvements to the Leased Premises or any of
Tenant's personal property, inventory or trade fixtures Upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully repair all of
Tenant's personal property, inventory, trade fixtures and other improvements
constructed by Tenant to like or similar condition as existed at the time of
such damage or destruction.
10.2 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:
A. The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (an "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) seventy-
five percent of the then actual replacement cost thereof;
B. The Building is damaged by an uninsured peril, which peril
Landlord was required to insure against pursuant to the provisions of Article 9
of this Lease, to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds which would have been available
had Landlord carried such required insurance, or (ii) seventy-five percent of
the then actual replacement cost thereof;
C. The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease, to any extent.
D. The Building is damaged by any peril and, because of the Laws
then in force, the Building (i) can not be restored at reasonable cost or (ii)
if restored, can not be used for the same use being made thereof before such
damage. [insert]
20.
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10.3 TENANT'S RIGHT TO TERMINATE: If the Leased Premises are damaged by
any peril and Landlord does not elect to terminate this Lease or is not entitled
to terminate this Lease pursuant to this Article, then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be complete Tenant shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised in the case of A or B below only by delivery to Landlord of a written
notice of election to terminate within thirty days after Tenant receives from
Landlord the estimate of the time needed to complete such restoration:
A. The Leased Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within nine
months after the date of such notice from Landlord; or
B. The Leased Premises are damaged by any peril within nine months
of the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Leased Premises
cannot be substantially completed within ninety days after the date such
restoration is commenced.
10.4 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 10.3 above, captioned "Tenant's Right to Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar Laws hereinafter enacted.
10.5 ABATEMENT OF RENT: In the event of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion to the degree to which Tenant's use of the Leased
Premises is impaired by such damage.
ARTICLE 11
CONDEMNATION
11.1 LANDLORD'S RIGHT TO TERMINATE. Subject to Article 11.3, Landlord
shall have the option to terminate this Lease if, as a result of a taking by
means of the exercise of the power of eminent domain (including inverse
condemnation and/or a voluntary sale or transfer by Landlord under threat of
condemnation to an entity having the power of eminent domain), (i) all or more
than fifty percent (50%) any part of the Leased Premises is so taken, (ii) more
than sixty-six percent (66%) of the Common Area is so taken, or (iv) because of
the Laws then in force, the Leased Premises may not be used for the same use
being made thereof before such taking, whether or not restored as required by
Article 11.4 below. Any such option to terminate by Landlord must be exercisable
within a reasonable period of time, to be effective as of the date possession is
taken by the condemnor.
11.2 TENANT'S RIGHT TO TERMINATE: Subject to Article 11.3, Tenant shall
have the option to terminate this Lease if, as a result of any taking by means
of the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord to an entity having the power of
eminent domain under threat of condemnation), (i) all or more than fifty percent
(50%) of the Leased Premises is so taken, (ii) thirty-three and one-third
percent or more of the Leased Premises is so taken and the part of the Leased
Premises that remains cannot, within a reasonable period of time, be made
reasonably suitable for the continued operation of the Tenant's business, or
(iii) there is a taking of a portion of the Common Area and, as a result of such
taking, Landlord cannot provide parking spaces within the Project (or within a
reasonable distance therefrom) equal in number to at least eighty-five percent
of Tenant's Number of Parking Spaces (as set forth in Article 1), whether by
rearrangement of the remaining parking areas in the Common Area (including, if
Landlord elects, construction of multi-dock parking structures or re-striping
for compact cars where permitted by Law), or by providing alternative parking
facilities on other land within reasonable walking distance of the Leased
Premises. Tenant must exercise such option within a reasonable period of time,
to be effective on the later to occur of (i) the date that possession of that
portion of the Common Area
21.
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or the Leased Premises that is condemned is taken by the condemnor or (ii) the
date Tenant vacates the Leased Premises.
11.3 (SEE ATTACHED)
11.4 RESTORATION AND ABATEMENT OF RENT: If any part of the Leased Premises
is taken by condemnation and this Lease is not terminated, then Landlord shall
repair any damage occasioned thereby to the remainder of the Leased Premises to
a condition reasonably suitable for Tenant's continued operations and otherwise,
to the extent practicable, in the manner and to the extent provided in Article
10. 1. As of the date possession is taken by the condemning authority, (i) the
Base Monthly Rent shall be reduced in the same proportion that the area of that
part of the Leased Premises so taken (less any addition to the area of the
Leased Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking, and (ii) Tenant's Proportionate Share
shall be appropriately adjusted.
11.5 DIVISION OF CONDEMNATION AWARD: Any award made for any condemnation
of the Project, the Building, the Common Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation
award that is made directly to Tenant (i) for the taking of personal property,
inventory or trade fixtures belonging to Tenant, (ii) for the interruption of
Tenant's business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking. The rights of Landlord and Tenant regarding any condemnation shall
be determined as provided in this Article, and each party hereby waives the
provisions of Section 1265.130 of the California Code of Civil Procedure, and
the provisions of any similar law hereinafter enacted, allowing either party to
petition the Superior Court to terminate this Lease and/or allocating
condemnation awards between Landlord and Tenant in the event of a taking of the
Leased Premises.
ARTICLE 12
DEFAULT AND REMEDIES
12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its
obligations under this Lease if any of the following events occur:
A. Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent when due (see attached); or
B. Tenant shall have done or permitted to have been done any act,
use or thing in its use, occupancy or possession of the Leased Premises or in
its use of the Common Areas which is prohibited by the terms of this Lease; (see
attached) or
C. Tenant shall have failed to perform any term, covenant or
condition of this Lease, except those requiring the payment of Base Monthly Rent
or Additional Rent, within fifteen days (see attached) after written notice from
Landlord to tenant specifying the nature of such failure and requesting Tenant
to perform same.
D. Tenant shall have sublet the Lease Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or
E. Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or
F. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or
22.
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G. Tenant or any Guarantor of this Lease shall have allowed (or
sough0 to have entered against it a decree or order which: (i) grants or
constitutes an order for relief, appointment of a trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subarticle if such decree or order is
rescinded or reversed within thirty days after its original entry.
H. Tenant or any Guarantor of this Lease shall have availed itself
of the protection of any debtor's relief law, moratorium law or other similar
Law which does not require the prior entry of a decree of order.
12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant (see
attached), and without limiting Landlord's right to indemnification as provided
in Article 8.2, Landlord shall have the following remedies, in addition to all
other rights and remedies provided by Law or otherwise provided in this Lease,
to which Landlord may resort cumulatively, or in the alternative:
A. Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity all of its rights and remedies
under this Lease including, without limitation, (i) the right to recover the
rent and other sums as they become due by appropriate legal action, (ii) the
right to make payments required of Tenant, or perform Tenant's obligations and
be reimbursed by Tenant for the cost thereof with interest at the then maximum
rate of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.
B. Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice. Any termination
under this Subarticle shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing. In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease:
(1) Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;
(2) Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof or
otherwise; or
(3) Any other action by Landlord or Landlord's agents intended
to mitigate the adverse effects of any breach of this Lease by Tenant,
including, without limitation, any action taken to maintain and preserve the
Leased Premises or any action taken to relet the Leased Premises, or any portion
thereof, for the account of Tenant and in the name of Tenant.
C. In the event Tenant breaches this Lease (see attached) and
abandons the Leased Premises, Landlord may terminate this Lease, but this Lease
shall not terminate unless Landlord gives Tenant written notice of termination.
No act by or on behalf of Landlord intended to mitigate the adverse effect of
such breach, including those described by Subarticles B(1), (2) and (3)
immediately preceding, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. If
Landlord does not terminate this Lease by giving written notice of
termination, Landlord may enforce ail its rights and remedies under this Lease,
including the right to recover rent as it becomes due under this Lease as
provided in California Civil Code Section 1951.4, as in effect on the Effective
Date of this Lease
D. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section
23.
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1951.2, as in effect on the Effective Date of this Lease. For purposes of
computing damages pursuant to said Section 1951.2, an interest rate equal to ten
percent per annum shall be used where permitted. Such damages shall include,
without limitation:
(1) 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, computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent; and
(2) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including, without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; (ii) including removal of
existing leasehold improvements subject to Section 2.6; (iii) broker's fees,
advertising costs and other, expenses of reletting the Leased Premises; (iv)
costs of carrying the Leased Premises, which costs would have been billed to
Tenant as Additional Rent had Tenant not defaulted and which include, but are
not limited to; taxes, insurance premiums, landscape maintenance, HVAC
maintenance, utility charges and security precautions; (v) expenses incurred in
removing, disposing of and/or storing any of Tenant's personal property,
inventory or trade fixtures remaining therein; (vi) attorneys' fees, expert
witness fees, court costs and other reasonable expenses incurred by Landlord
(but not limited to taxable costs) in retaking possession of the Leased
Premises, establishing damages hereunder, and releasing the Leased Premises;
and (vii) any other expenses, costs or damages otherwise incurred or suffered as
a result of Tenant's default.
12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord fails
to perform any of its obligations under this Lease, Landlord shall nevertheless
not be in default under the terms of this Lease until such time as Tenant shall
have first given Landlord written notice specifying the nature of such failure
to perform its obligations, and then only after Landlord shall have had a
reasonable period of time following its receipt of such notice within which to
perform such obligations. In the event of Landlord's default as above set
forth, then, and only then, Tenant shall have the following remedies only:
A. Tenant may then proceed in equity or at law to compel Landlord
to perform its obligations and/or to recover damages proximately caused by such
failure to perform.
B. Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subarticle, Tenant reasonably pays any sum
to any third party or does any act that requires the payment of any sum to any
third party at any time by reason of Landlord's default, the sum paid by Tenant
shall be immediately due from Landlord to Tenant at the time Tenant supplies
Landlord with an invoice therefore (provided such invoice sets forth and is
accompanied by a written statement of Tenant setting forth in reasonable detail
the amount paid, the party to whom it was paid, the date it was paid, and the
reasons giving rise to such payment), together with interest at twelve percent
per annum from the date of such invoice until Tenant is reimbursed by Landlord.
Tenant may not offset such sums against any installment of rent due Landlord
under the terms of this Lease.
12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity for the satisfaction of such obligations and
not against the assets of such officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or principals (other than to the extent
of their interest in the assets owned by such business entity). Additionally, if
Landlord is a partnership, then Tenant covenants and agrees:
A. No partner of Landlord shall be sued or named as a party in any
suit or action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);
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B. No service of process shall be made against any partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and
C. No writ of execution shall be levied against the assets of any
partner of Landlord other than to the extent of his interest in the assets of
the partnership. Tenant further agrees that each of the foregoing covenants and
agreements shall be enforceable by Landlord and by any partner of Landlord and
shall be applicable to any actual or alleged non-disclosure made respecting this
Lease or the Leased Premises or any actual or alleged failure, default or breach
of any covenant or agreement either expressly or implicitly contained in this
Lease or imposed by statute or at common law.
12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of
Article 12.3 above are intended to supersede and replace the provisions of
California Civil Code 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of Section 1932(1), 1941 and 1942 of the California Civil
Code and/or any similar or successor Law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease. Tenant hereby waives any right of redemption or
relief from forfeiture under the Laws of the State of California, or under any
other present or future Law, in the event Tenant is evicted or Landlord takes
possession of the Leased Premises by reason of any default by Tenant.
ARTICLE 13
GENERAL PROVISIONS
13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property;
improvements made by Tenant to the Leased Premises, improvements made by
Landlord for Tenant's use within the Leased Premises, Tenant's use (or estimated
use) of public facilities or services or Tenant's consumption (or estimated
consumption) of public utilities, energy, water or other resources. On demand
by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlord's property, the Building or the Project, or if the
assessed value of the Building or the Project is increased by the inclusion
therein of a value placed upon same, then Landlord, after giving written notice
to Tenant, shall have the right, regardless of the validity thereof, to pay such
taxes, assessment, fee or public charge and bill Tenant, as Additional Rent, the
amount of such taxes, assessment, fee or public charge so paid on Tenant's
behalf. Tenant shall, within ten days from the date it receives an invoice from
Landlord setting forth the amount of such taxes, assessment, fee or public
charge so levied, pay to Landlord, as Additional Rent, the amount set forth in
said invoice. Failure by Tenant to pay the amount so invoiced within said ten
day period shall be conclusively deemed a default by Tenant under this Lease.
Tenant shall have the right, and with Landlord's full cooperation if Tenant is
not then in default under the terms of this Lease, to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.
13.2 HOLDING OVER: This Lease shall terminate without further notice on
the Lease Expiration Date (as set forth in Article 1) (see attached). Any
holding over by Tenant after expiration of the Lease Term shall neither
constitute a renewal nor extension of this Lease nor give Tenant any rights in
or to the Leased Premises except as expressly provided in this Article. Any such
holding over shall be deemed an unlawful detainer of the Leased Premises unless
Landlord has consented to same. Any such holding over to which Landlord has
consented shall be construed to be a tenancy from month to month, on the same
terms and conditions herein specified insofar as applicable, except that the
Base Monthly Rent shall be increased to an amount equal to one hundred fifty
percent of the Base Monthly Rent payable during the last full month immediately
preceding such holding over.
13.3 SUBORDINATION TO MORTGAGES: This Lease is subject and subordinate to
all underlying ground leases and to all mortgages and deeds of trust which
affect the Building and are of public record as of the Effective Date of this
Lease, and to all renewals, modifications, consolidations, replacements and
extensions thereof. However, if the lessor under any such
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ground lease or any Lender holding any such mortgage or deed of trust shall
advise Landlord that it desires or requires this Lease to be made prior and
superior thereto, then, upon written request of Landlord to Tenant, Tenant shall
promptly execute, acknowledge and deliver any and all documents or instruments
which Landlord and such lessor or Lender deem necessary or desirable to make
this Lease prior thereto. Tenant hereby consents to Landlord's ground leasing
the land underlying the Building and/or encumbering the Building as security for
future loans on such terms as Landlord shall desire, all of which future ground
leases, mortgages or deeds of trust shall be subject and subordinate to this
Lease. However, if any lessor under any such future ground lease or any Lender
holding such future mortgage or deed of trust shall desire or require that this
Lease be made subject and subordinate to such future ground lease, mortgage or
deed of trust, then Tenant agrees, within ten days after Landlord's written
request therefore, to execute, acknowledge and deliver to Landlord any and all
documents or instruments requested by Landlord or such lessor or Lender as may
be necessary or proper to assure the subordination of this Lease to such future
ground lease, mortgage or deed of trust; but only if such lessor or Lender (see
attached) agrees to recognize Tenant's rights under this Lease and not to
disturb Tenant s quiet possession of the Leased Premises so long as Tenant is
not in default under this Lease.
13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request,
attorn (i) to any purchaser of the Building at any foreclosure sale or private
sale conducted pursuant to any security instrument encumbering the Building,
(ii) to any grantee or transferee designated in any deed given in lieu of
foreclosure of any security interest encumbering the Building, or (iii) to the
lessor under any underlying ground lease of the land underlying the Building,
should such ground lease be terminated; provided that such purchaser, grantee or
lessor recognizes Tenant's rights under this Lease.
13.5 MORTGAGEE PROTECTION: In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessor a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effect a cure.
13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by
Landlord, promptly execute and modified, stating the nature of such modification
and certifying that this Lease is unmodified and in full force and effect, or,
if modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant s knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord. Tenant's failure to execute and deliver such estoppel
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Article may be relied upon by any Lender or
purchaser or prospective Lender or purchaser of the Building, the Project, or
any interest therein.
13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within ten business
days after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement, including an income statement and balance sheet, and any
such other information reasonably requested by Landlord regarding Tenant's
financial condition (see attached). Tenant acknowledges, that Landlord has and
will rely on the truth and accuracy of the information provided by Tenant to
Landlord both prior to and during the term of the Lease. Landlord shall be
entitled to disclose such financial statements or other information to its
Lender, to any present or prospective principal of or investor in Landlord, or
to any prospective Lender or purchaser of the Building, the Project or any
portion thereof or interest therein. Any such financial statement or other
information which is marked "confidential" or "company secrets" (or is otherwise
similarly marked by Tenant) shall be confidential and shall not be disclosed by
Landlord to any
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third party except as specifically provided in this Article, unless the same
becomes a part of the public domain without the fault of Landlord.
13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Project, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Project.
13.9 FORCE MAJEURE: The obligations of each of the parties under this
Lease (other than the obligation to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligation by reason of
any strikes, lockouts or labor disputes; inability to obtain labor, materials,
fuels or reasonable substitutes therefore; governmental restrictions,
regulations, controls, action or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial inability) beyond
the reasonable control of the party obligated to perform (including acts or
omissions of the other party for a period equal to the period of any such
prevention, delay or stoppage.
13.10 NOTICES: Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by: (i) delivery by Federal Express,
United Parcel Service or similar commercial service, (ii) electronic facsimile
transmission, or (iii) by depositing such notice in the United States mail,
postage prepaid, addressed to the other party as follows:
A. If addressed to Landlord, to Landlord at its Address for
Notices (as set forth in Article 1).
B. If addressed to Tenant, to Tenant at its Address for Notices
(as set forth in Article 1).
Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice
given by certified mail shall be deemed given on the date receipt was
acknowledged to the postal authorities. Any notice given by mail other than
registered or certified mail shall be deemed given only if received by the other
party, and then on the date of receipt. In the event of notice by electronic
facsimile transmission or commercial carrier, notice shall be deemed received on
the date of confirmation documented by the transmission or carrier. Each party
may, by written notice to the other in the manner aforesaid, change the address
to which notices addressed to it shall thereafter be mailed.
13.11 ATTORNEYS' FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate action for that purpose brought within one year from the determination
of such proceeding, reasonable attorneys' fees, expert witness fees, court costs
and other reasonable expenses incurred by the prevailing party. In the even
that Land rd shall be required to retain counsel to enforce any provision of
this Lease (see attached), and if Tenant shall thereafter cure (or desire to
cure) such default, Landlord shall be conclusively deemed the prevailing patty,
and Tenant shall pay to Landlord all attorneys' fees, expert witness fees, court
costs and other reasonable expenses so incurred by Landlord promptly upon
demand. Landlord may enforce this provision by either (i) requiring Tenant to
pay such fees and costs as a condition to curing its default or (ii) bringing a
separate action to enforce such payment, it being agreed by and between Landlord
and Tenant that Tenant's failure to pay such fees and costs upon demand shall
constitute a breach of this Lease in the same manner as a failure by Tenant to
pay the Base Monthly Rent, giving Landlord the same rights and remedies as if
Tenant failed to pay the Base Monthly Rent.
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13.12 DEFINITIONS: Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have such
meaning whenever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article 1, the following terms shall have the
following meanings:
A. REAL PROPERTY TAXES: The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
to tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest therein, or
the fixtures, equipment and other property of Landlord that is an integral part
of the Project and located thereon, or Landlord's business of owning, leasing or
managing the Project or the gross receipts, income or rentals from the Project;
(ii) all charges, levies or fees imposed by any governmental authority against
Landlord by reason of or based upon the use of or number of parking spaces
within the Project, the amount of public services or public utilities used or
consumed (e.g. water, gas, electricity, sewage or surface water disposal) at
the Project, the number of persons employed by tenants of the Project, the size
(whether measured in area, volume, number of tenants or whatever) or the value
of the Project, or the type of use or uses conducted within the Project; and
(iii) all costs and fees (including attorneys' fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax. If, at any time during the Lease Term, the taxation
or assessment of the Project prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate, substitute, or additional tax or
charge (i) on the value, size, use or occupancy of the Project or Landlord's
interest therein or (ii) on or measured by the gross receipts, income or rentals
from the Project, or on Landlord's business of owning, leasing or managing the
Project or (iii) computed in any manner with respect to the operation of the
Project, then any such tax or charge, however designated, shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes" for
purposes of this Lease. If any Real Property Tax is partly based upon property
or rents unrelated to the Project, then only that part of such Real Property Tax
that is fairly allocable to the Project shall be included within the meaning of
the terms "Real Property Tax" or "Real Property Taxes". Notwithstanding the
foregoing, the terms "Real Property Tax" or "Real Property Taxes" shall not
include estate, inheritance, transfer, gift or franchise taxes of Landlord or
the federal or state income tax imposed on Landlord's income from all sources.
B. LANDLORD'S INSURANCE COSTS: The term "Landlord's Insurance
Costs" shall mean the costs to Landlord to carry and maintain the policies of
fire and property damage insurance, including quake and flood, for the Project
and general liability insurance required, or permitted, to be carried by
Landlord pursuant to Article 9, together with any deductible amounts paid by
Landlord upon the occurrence of any insured casualty or loss.
C. PROJECT MAINTENANCE COSTS: The term "Project Maintenance Costs"
shall mean all costs and expenses (except Landlord's Insurance Costs and Real
Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Project and all parts thereof,
including without limitation, (i) professional management fees (equal to three
percent of the annualized Base Monthly Rent), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements as set forth in Article 6, which are so amortized during the Lease
Term, (iii) costs of complying with governmental regulations governing Tenant's
use of Hazardous Materials, and Landlord's costs of monitoring Tenant's use of
Hazardous Materials including fees charged by Landlord's consultants to
periodically inspect the Premises and the Property, and (iv) such other costs as
may be paid or incurred with respect to operating, maintaining and preserving
the Project, such as repairing replacing and resurfacing the exterior surfaces
of the buildings (including roofs), repairing, replacing, and resurfacing paved
areas, repairing structural parts of the buildings, cleaning, maintaining,
repairing, or replacing the interior of the Leased Premises both during the
Lease Term and upon the termination of the Lease, and maintaining, repairing or
replacing, when necessary electrical, plumbing, sewer, drainage, heating,
ventilating and air conditioning systems serving the buildings, providing
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utilities to the common areas, maintenance, repair, replacement or installation
of lighting fixtures, directional or other signs and signals, irrigation or
drainage systems, trees, shrubs, materials, maintenance of all landscaped areas,
and depreciation and financing costs on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
leased). [see insert]
D. READY FOR OCCUPANCY: The term "Ready for Occupancy" shall mean
the date upon which (i) the Leased Premises are available for Tenant's occupancy
in a broom clean condition and (ii) the improvements, if any, to be made to the
Leased Premises by Landlord as a condition to Tenant's obligation to accept
possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. the City building department,
if the Project is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as
substantially complete or is willing to so approve the construction of such
improvements as substantially complete subject only to compliance with specified
conditions which are the responsibility of Tenant to satisfy or is willing to
allow Tenant to occupy subject to its receiving assurances that specified work
will be completed.
E. TENANT'S PROPORTIONATE SHARE: The term "Tenant's Proportionate
Share" or "Tenant's Share", as used with respect to an item pertaining to the
Building, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Building as the same
from time to time exists or, as used with respect to an item pertaining to the
Project, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Project as the same
from time to time exists, unless, as to any given item, such a percentage
allocation unfairly burdens or benefits a given tenant(s), in which case
Landlord shall have the exclusive right to equitably allocate such item so as to
not unfairly burden or benefit any given tenant(s). Landlord's determination of
any such special allocation shall be final and binding upon Tenant unless made
in bad faith.
F. BUILDING'S PROPORTIONATE SHARE: The term "Building's
Proportionate Share" or "Building's Share" shall each mean that percentage which
is obtained by dividing the leasable square footage contained within the
Building by the leasable square footage contained within all buildings located
within the Project, unless, as to any given item, such a percentage allocation
unfairly burdens or benefits a given building(s), in which case Landlord shall
have the exclusive right to equitably allocate such item so as to not unfairly
burden or benefit any given building(s). Landlord's determination of any such
special allocation shall be final and binding upon Tenant unless made in bad
faith.
G. BUILDING OPERATING EXPENSES: The term "Building Operating
Expenses" shall mean and include the Building's Share of all Real Property
Taxes, plus the Building's Share of all Landlord's Insurance Costs, plus the
Building's Share of all Project Maintenance Costs, plus an accounting fee equal
to five percent of all such costs.
H. LAW: The term "Law" shall mean any judicial decision and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).
I. LENDER: The term "Lender" shall mean the holder of any Note or
other evidence of indebtedness secured by the Project or any portion thereof.
J. PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean
all recorded covenants, conditions and restrictions, private agreements,
easements, and any other recorded instruments affecting the use of the Project,
as they may exist from time to time.
K. RENT: The term "rent" shall mean collectively Base Monthly Rent
and all Additional Rent.
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13.13 GENERAL WAIVERS: One party's consent to or approval of any act by
the other party, requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party. No waiver of any provision
hereof or any breach of any provision hereof shall be effective unless in
writing and signed by the waiving party. The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach. No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.
13.14 MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of
more than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only
and shall not be considered in the construction or interpretation of any
provision hereof. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "must", "shall",
"will" and "agree" are mandatory. The term "may" is permissive. When a party
is required to do something by this Lease, it shall do so at its sole cost and
expense without right of reimbursement from the other party unless specific
provision is made therefore. Where Tenant is obligated not to perform any act
or is not permitted to perform any act, Tenant is also obligated to restrain any
others reasonably within its control, including agents, invitees, contractors,
subcontractors and employees, from performing said act. Landlord shall not
become or be deemed a partner or a joint venturer with Tenant by reason of any
of the provisions of this Lease.
ARTICLE 14
CORPORATE AUTHORITY
BROKERS AND ENTIRE AGREEMENT
14.1 CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents, and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Leased Premises are located,
that Tenant has the full right and legal authority to enter into this Lease,
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant in accordance with the bylaws and/or a board of directors' resolution of
Tenant, and that this Lease is binding upon Tenant in accordance with its terms.
14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any
dealings with any real estate broker(s), leasing agent(s), finder(s) or
salesmen, other than those persons or entities named in Article I as the
"Brokers" with respect to the lease by it of the Leased Premises pursuant to
this Lease, and that it will indemnify, defend with competent counsel, and hold
Landlord harmless from any liabilities for the payment of any real estate
brokerage commissions, leasing commissions or finder's fees claimed by any other
real estate broker(s), leasing agent(s), finder(s) or salesmen to be earned or
due and payable by reason of Tenant's agreement or promise (implied or
otherwise) to pay (or have Landlord pay) such a commission or finder's fee by
reason of its leasing the Leased Premises pursuant to this Lease.
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14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article
1) and the Addenda (as described in Article 1), which Exhibits and Addenda are
by this reference incorporated herein, constitute the entire agreement between
the parties, and there are no other agreements, understandings or
representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein. No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.
14.4 LANDLORD'S REPRESENTATIONS: Tenant acknowledges that neither
Landlord nor any of its agents made any representations or warranties respecting
the Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this lease or in
any Addenda hereto.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease.
AS LANDLORD: AS TENANT:
PEN Associates Asyst Technologies, Inc.
a California limited partnership a Delaware corporation
By: /s/ Pen Associates By: /s/ Douglas J. McCutcheon
------------------------------- -------------------------------
Title: General Partner Title: Senior Vice President
------------------------------- Chief Financial Officer
-------------------------------
By: _______________________________
Dated: 10-31-97
Title: General Partner -------------------------------
-------------------------------
Dated: _______________________________
If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease
must be executed by the chairman of the board, president or vice president, and
the secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.
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FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM.TO LEASE ("Addendum") is made to that Industrial Space Lease
dated as of December 14, 1997 (the "Lease") by and between PEN Associates, a
California general partnership (as "Landlord"), and Asyst Technologies, Inc., a
Delaware corporation (as "Tenant"), for the lease of space located at 48633 Warm
Springs Boulevard, Fremont, California (the "Leased Premises"). The parties
hereto agree that the Lease is amended, changed and modified by the following
provisions, which are hereby added to the Lease:
Unless otherwise expressly provided herein, all terms which are given a special
definition by the Lease that are used herein are intended to be used with the
definition given to them by the Lease. The provisions of the Lease shall remain
in full force and effect except as specifically amended hereby. In the event of
any inconsistency between the Lease and this Addendum, the terms of this
Addendum shall prevail.
The Following are inserts to the text of the Lease located in the areas
specified as "see insert: or "see attached":
2.1 upon 48 hours' notice to Tenant
2.3 subject to Tenants' option to renew pursuant to Article 16
2.4 in which event Landlord shall immediately return to Tenant any and all
funds therefore delivered by Tenant to Landlord.
2.5 subject to section 2.4 hereof.
Insert Section 2.5.
Notwithstanding any other provision of this Lease, Landlord represents to Tenant
to the best of its knowledge that on the commencement of the term hereof, the
Leased Premises and any improvements to be constructed by Landlord (a) shall be
free from material structural defects and (b) shall comply with building codes
maintained by the City of Fremont at the time the various improvements were
constructed. Landlord's belief is based on approvals granted by the City of
Fremont and on no other information. In the event that the foregoing
representations are not true, Landlord shall rectify said conditions at its sole
cost.
2.6 ordinary wear and tear excepted
2.6 (second attachment) provided, that Tenant shall not be required to remove
any improvement for which Tenant has obtained Landlord's consent in
writing that the improvements may remain upon the termination of this
lease.
3.4 interest rate of Wells Fargo Bank prime lending rate plus three percent
(3%)
3.5 except as expressly provided in this lease,
3.7 and any other funds held by Landlord which Tenant is entitled to have
returned or reimbursed
3.7 (second attachment) and any such additional funds
4.2 without Landlord's prior written consent, not to be unreasonably withheld
or delayed,
4.9 such determination of an emergency being reasonably made by Landlord.
4.10 except to the extent that Tenant's access to the Leased Premises is
impaired
4.12 provided Landlord's actions shall not materially interfere with Tenant's
use of the Premises
4.14B as a result of the acts or omissions of Tenant, Tenant's agents,
Permitees, or invitees
32.
<PAGE>
Insert Section 4.14.H.
Notwithstanding any other provision of this Lease, Landlord represents to Tenant
to the best of its knowledge that on the commencement of the term hereof, the
Leased Premises are free from contamination by any Hazardous Materials in
violation of any governmental regulation known to Landlord (and for purposes of
this section, the Leased Premises shall be deemed to include the underlying soil
and ground water). Landlord also shall protect, indemnify, defend, and hold
Tenant harmless from and against any and all liability, loss, suits, claims,
actions, costs, and expense (including, without limitation, attorneys' fees)
arising from any contamination of the Leased Premises (including the underlying
land and ground water) by any Hazardous Materials known to Landlord existing
prior to the Lease Commencement Date in violation of any governmental
regulation. The provisions of this section shall survive the termination of
this Lease.
5.1 after providing five business days' prior written notice to Tenant,
5.4 except as a result of Landlord's negligence or willful misconduct,
6.1 consistent with those used by Landlord.
6.2 provided that Tenant shall not be required to remove any modification,
alteration or improvement for which Tenant has obtained Landlord's
consent, that the improvements could remain at the termination of the
lease.
6.3 three percent in excess of the Wells Fargo Bank prime lending rate
7.1 which consent shall not be unreasonably withheld or delayed
7.5 and reasonable legal expenses and the cost of improvements specifically
approved by Landlord in writing which Landlord agrees may remain in the
building following the expiration of the Lease
8.2 occurred during the term of this Lease and
9.3 and its respective partners and officers, agents, employees and servants,
10.2 Notwithstanding any of the foregoing, if the casualty is the result of
Landlord's active gross negligence or willful misconduct. Landlord shall
restore the Leased Premises regardless of any insufficiency or lack of
insurance proceeds.
11.3 This section is governed by same terms as permanent taking
12.1B within five business days of the date the same was
12.1C unless such default can not be reasonably cured within said fifteen day
period in which case Tenant shall not be in default if it proceeds to and
does cure the default in a reasonable time period
12.1 (second see attached) and Tenant continued doing or permitting such act,
use or thing five business days following receipt of written notification
thereof by Landlord
12.2 without cure within the applicable cure period, if any, provided herein
12.2 (second see attached) without cure within the applicable cure period, if
any, provided herein
13.2 or upon the expiration of the Renewal Term pursuant to Article 11
13.3 executes, acknowledges, and delivers to Tenant a non-disturbance
agreement on which such lessor or lender
13.6 Landlord shall provide estoppel certificates to Tenant for Tenant's
benefit within the same time period as required of Tenant in this section
13.6.
33.
<PAGE>
13.7 provided that Tenant shall not be required to provide any financial
information, which it deems to be confidential and of a non-public nature
so long as Tenant remains a public corporation
13.11 after the expiration of any applicable cure period provided herein,
Insert Section 13.12.C.:
Notwithstanding anything to the contrary contained herein, the following shall
not be included in the costs of operation and maintenance referred to herein:
1. Leasing commissions, attorneys' fees, costs, disbursements, and other
expenses incurred in connection with negotiations or disputes with
tenants (other than Tenant), or in connection with leasing, renovating,
or improving space for tenants or other occupants or prospective tenants
or other occupants of the building or land upon which the Leased Premises
are located.
2. The cost of any service sold to any tenant (other than Tenant) or
other occupant for which Landlord is entitled to be reimbursed by that
tenant.
3. Any depreciation on the building except as provided elsewhere in this
Lease.
4. Omitted
5. Expenses in connection with services or other benefits of a type that
are not provided to Tenant but which are provided another tenant or
occupant of the building or land upon which the Leased Premises are
located for the exclusive benefit of the other tenant or occupant.
6. Costs incurred due to Landlord's violation of any terms or conditions
of this Lease.
7. Overhead profit increments paid to Landlord's subsidiaries or
affiliates for management or other services on or to the building or for
supplies or other materials to the extent that the cost of the services,
supplies, or materials exceeds the cost that would reasonably have been
paid had the services, supplies, or materials been provided by
unaffiliated parties on a competitive basis.
8. All interest, loan fees, and other carrying costs related to any
mortgage or deed of trust (except as otherwise provided in this Lease),
and all rental and other payments due under any ground or underlying
lease, or any lease for any equipment ordinarily considered to be of a
capital nature (except janitorial equipment which is not affixed to the
building and except as otherwise provided in this Lease).
9. Landlord's property management and administrative expenses and
personnel costs except as provided in this Lease.
10. Advertising and promotional expenditures.
11. Costs of repairs and other work occasioned by fire, windstorm, or
other casualty of an insurable nature but only to the extent of insurance
proceeds actually received by Landlord and subject to other provisions of
this Lease.
12. Any costs, fines, or penalties incurred due to violations by
Landlord of any governmental rule or authority provided Tenant has not
contributed to the violation as a result of its actions or inactions or
the actions or inactions of those for whom Tenant is responsible.
13. Costs for sculpture, paintings, or other objects of art (nor
insurance thereon or extraordinary security in connection therewith).
14. Wages, salaries, or other compensation paid to any executive
employees above the grade of building manager.
34.
<PAGE>
15. The cost of correcting any building code or other violations which
were violations prior to the Commencement Date.
16. Payment for work that does not directly benefit the Leased Premises,
the Building, and/or the Property.
New Sections
15: 1. Space Delivered "AS IS" when DecisionOne and Quantel vacate the
premises. Lease to commence immediately thereafter.
16. Option to Renew: Landlord hereby grants to Tenant the option to renew the
Lease, for an additional term of five (5) years (the "Renewal Term") with the
option commencing on the expiration of the Lease (the "First Renewal
Commencement Date") and ending five (5) years thereafter (the "First Renewal
Expiration Date").
1. The lease of the Leased Premises for the Renewal Term shall be on the same
terms and conditions as set forth in the Lease, except:
A. That the rental for the Leased Premises during the Renewal Term shall
be as set forth below in Paragraph 3, and
B. That the Security Deposit shall be increased to the rental amount
determined in Paragraph 3 (the "Increased Security Deposit Amount").
2. Tenant shall notify Landlord of Tenant's exercise of its right to renew the
Lease for the Renewal Term only by giving to Landlord written notice not sooner
than eight (8) months prior to the Renewal Commencement Date and not later than
six (6) months prior to the Renewal Commencement Date (time is expressly of the
essence to Landlord). Any attempted exercise of this Option made other than
within the time period stated or in the manner stated shall be void and of no
force or effect. In the event that Tenant does not or is not entitled to
exercise its option Tenant shall have no further rights hereunder.
3. If Tenant shall have properly and timely exercised its right to extend the
term of the Lease, the term of the Lease shall be so extended for the Renewal
Term on the same terms and conditions contained in the Lease; provided, however,
the Base Monthly Rent for each month of the first thirty (30) months of the
Renewal Term shall be calculated as follows: The new Base Monthly Rent for the
Renewal Term shall be the greater of: (i) the Base Monthly Rent being paid by
Tenant to Landlord during the final full month of the final year of the initial
Lease Term, or (ii) the Then Market Rental Rate for the Lease Premises.
4. The term "Then Monthly Market Rental Rate" shall be determined by mutual
agreement between Landlord and Tenant or, in the event such agreement cannot be
made within ten (10) days from the date Tenant shall have exercised this option,
Landlord and Tenant shall each appoint a real estate appraiser with at least
five (5) years full-time commercial/industrial appraisal experience in Santa
Clara County to appraise and determine the fair market monthly rental rate the
Leased Premises, in their then existing condition for the use specified in the
Lease could be leased for, on the same terms and conditions set forth in the
Lease, to a qualified tenant ready, willing and able to lease the Leased
Premises for a term equal to the Renewal Term.
If either party does not appoint an appraiser within ten (10) days after the
other party has given notice of the name of its appraiser, the other party can
then apply to the President of the Santa Clara County Real Estate Board or the
presiding Judge of the Superior Court of that County for the selection of a
second appraiser who meets the qualifications stated above. The failing party
shall bear the cost of appointing the second appraiser and of paying the second
appraiser's fee. The two appraisers shall attempt to establish the Then Monthly
Market Rental Rate for the Leased Premises. If the two appraisers are unable to
agree on the Then Monthly Market Rental Rate for the Leased Premises within ten
(10) days after the second appraiser has been selected or appointed, then the
two appraisers shall attempt to select a third appraiser meeting the
qualifications stated above. If they fail to agree on a third appraiser, either
party can follow the above procedure for having an appraiser appointed by the
Real Estate Board or a judiciary. Each of the parties shall bear one-half (1/2)
of the cost of appointing the third appraiser and of paying the third
appraiser's fee. Unless the three appraisers are able to agree on the Then
Monthly Market Rental Rate for the Leased Premises within ten (10) days after
the selection or
35.
<PAGE>
appointment of the third appraiser, the two appraisal amounts being calculated
most closely together, after having discarded the appraisal amount which most
greatly varies from the other two appraisal amounts, shall be added together
then divided by two (2). The resulting rental amount shall be defined as the
Then Monthly Market Rental Rate for the Leased Premises. In no event, however,
shall the resulting Then Monthly Market Rental Rate for the Renewal Term be less
than the Base Monthly Rent paid during the final full month of the initial Lease
Term.
The Base Monthly Rent shall be adjusted at the end of the thirtieth (30th)
month of the Renewal Term by multiplying the Base Monthly Rent for the thirtieth
(30th) month times a fraction the numerator of which shall be the Consumer Price
Index published immediately prior to the period including the thirtieth (30th)
month of the Renewal Term and the denominator of which shall be the Consumer
Price Index published immediately prior to the first (1st) month of the Renewal
Term. In no event, however, shall the Base Monthly Rent for the last thirty
(30) months of either Renewal Term be less than the Base Monthly Rent for the
first thirty (30) months of the Renewal Term.
16 Quiet Enjoyment: Landlord hereby warrants that it is the fee owner of the
Leased Premises, that it has authority to enter into this Lease, and that it
shall take all actions necessary, at its expense, to defend Tenant's right to
possession of the Leased Premises. Subject to the terms of this Lease and so
long as no default under this Lease shall have occurred and be continuing,
Landlord shall not take any action (nor permit any action by anyone rightfully
claiming by, through or under Landlord (other than Tenant)) that would adversely
affect Tenant's right to peaceably and quietly have, hold and enjoy the Leased
Premises for the Lease Term with respect to any matters arising from and after
the Commencement Date.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Addendum To
Lease with the intent to be legally bound thereby, to be effective as of the
date the second party signs this First Addendum To Lease.
AS LANDLORD: AS TENANT:
PEN Associates Asyst Technologies, Inc.
a California limited partnership a California corporation
By: /s/ Pen Associates By: /s/ Douglas J. McCutcheon
---------------------------- ----------------------------
Title: General Partner Title: Senior Vice President
---------------------------- ----------------------------
By: ____________________________ By: ___________________________
Title: General Partner Title: ___________________________
----------------------------
Dated: Dated: 10-31-97
---------------------------- ----------------------------
36.
<PAGE>
EXHIBIT A
1.
<PAGE>
EXHIBIT B
2.
<PAGE>
EXHIBIT "D"
ACCEPTANCE AGREEMENT
This Acceptance Agreement is made as of ___________, 1994, by and between
the parties hereto with regard to that Lease dated __________, 1994, by and
between _____________, a California general partnership, as Landlord
("Landlord"), and __________________, a corporation, as Tenant ("Tenant"),
affecting those premises commonly known as _________________________, located at
_____________________in the City of _________________, State of California (the
"Premises"). The parties agree as follows:
1. All improvements required to be constructed by Landlord by the Lease
have been completed in accordance with the terms of the Lease and are hereby
accepted by Tenant, subject to the completion of punchlist items identified on
Exhibit "A" attached hereto.
2. Possession of the Premises has been delivered to Tenant and Tenant has
accepted and taken possession of the Premises.
3. The Lease Commencement Date is________________,1994.
4. The Lease Term shall expire on ____________,19____, unless sooner
terminated according to the terms of the Lease or by mutual agreement.
5. The Base Monthly Rent due pursuant to the Lease is as follows:
_______________________ thru ___________ _____________
_______________________ thru ___________ _____________
_______________________ thru ___________ _____________
6. Landlord has received a Security Deposit in the amount of ____________
Dollars ($__________).
7. Landlord has received Prepaid Rent in the amount of
____________________________ Dollars ($_________), which shall be applied to the
first installment(s) of Base Monthly Rent.
8. The Lease is in full force and effect, neither party is in default of
its obligations under the Lease, and Tenant has no setoffs, claims, or defenses
to the enforcement of the Lease.
AS LANDLORD: AS TENANT:
______________________ ______________________________
a California general partnership a __________________ corporation
By: ______________________ By: ________________________
Title: General Partner Title: ________________________
----------------------
By: ______________________ By: ________________________
Title: General Partner Title: ________________________
----------------------
By: ______________________ Dated: ________________________
Title: General Partner
----------------------
Dated: ______________________
3.
<PAGE>
Exhibit 10.19
ASYST TECHNOLOGIES, INC.
48761 Kato Road
Fremont, CA 94538
TEL: 510.661.5000
FAX: 510.661.5166
November 9, 1998
William R. Leckonby
455 Golden Oak Drive
Portola Valley, CA 94028
Dear Bill:
This letter sets forth the substance of the separation agreement (the
"Agreement") that Asyst Technologies, Inc. ("Asyst" or the "Company") is
offering to aid you with your employment transition.
Separation. Your last day of active employment as President and COO of Asyst
- ----------
Software, Inc. will be October 16, 1998 (the "Separation Date") and you will
resign from all positions and offices you may hold with the Company effective as
of that date. On the Separation Date, the Company will pay you all accrued
salary and all accrued and unused vacation earned through the Separation Date,
subject to standard payroll deductions and withholdings. You are entitled to
this payment regardless of whether you sign this Agreement.
Consulting. Following the Separation Date, the Company will engage you as a
- ----------
consultant under the following terms.
Consulting Period. The consulting relationship commences on the
-----------------
Separation Date and ends on July 16, 2000 (the "Consulting Period").
Consulting Duties. During the Consulting Period, you will make
-----------------
yourself available to provide the following consulting services: completion of a
professional, well-managed transition of the duties you formerly performed as an
employee; provide positive and proactive assistance to current employees
regarding consolidations and reasons for employee departures; provide support
and positively transition customers, business associates and third parties (e.g.
Symbios, Cypress, Harris and Condescent); and participate in projects, business
strategies and other projects. You will be available to provide these services
for up to eight (8) hours per week through October 31, 1998, and as mutually
agreed by you and the Company throughout the remainder of the Consulting Period.
You agree to exercise the highest degree of professionalism and utilize your
expertise and creative talents in performing these services. During the
Consulting Period, you will have access to your voicemail box on the Company's
system as long as necessary to fulfill your Consulting Duties, and you will not
have access to the Company's electronic mail system. The Company will also
provide you with administrative support for up to four (4) hours per week as
necessary to fulfill your Consulting Duties.
<PAGE>
William R. Leckonby
Separation Agreement
November 9, 1998
Page 2 of 6
Consulting Fees. Between October 16, 1998 and April 14, 1999, the
---------------
Company will pay you an amount equivalent to your current monthly base salary as
an employee. After April 14, 1999, the Company will continue to pay in an amount
equivalent to your current monthly base salary through June 30, 1999, however,
the Company's obligation after April 14, 1999, to make the above payments will
cease immediately upon your acceptance of either full time employment or a full
time, long term (6 months or more) consulting engagement with anyone other than
the Company. You agree to notify a duly authorized officer of the Company, in
writing, immediately upon your acceptance of such employment or consulting
engagement. Between June 30, 1999, and July 16, 2000, the Company will pay you
consulting fees in the amount of $250 per hour for any consulting services that
you and the Company mutually agree that you will provide for the Company.
Consulting fees will be paid on the Company's ordinary payroll cycle, subject to
standard withholdings and deductions.
Other Work Activities. During the Consulting Period, you may engage in full or
- ---------------------
part time employment, consulting or other work relationships in addition to your
consulting for the Company. The Company agrees to make reasonable arrangements
to enable you to perform your services for the Company at such times and in such
a manner so that it will not unreasonably interfere with other work activities
in which you may engage.
Health Insurance. As provided by the federal COBRA law and by the Company's
- ----------------
current group health insurance policies, you will be eligible to continue your
health insurance benefits at your own expense for up to eighteen (18) months
following the Separation Date and, later, to convert to an individual policy if
you wish. You will be provided with a separate notice of your COBRA rights. As
part of this Agreement, if you elect continued coverage under COBRA, the Company
will reimburse you 100% for your COBRA premiums for continuation of your and
your dependents current coverage from Separation Date (October 16, 1998),
through September 30, 1999. The Company's obligation to make these payments will
cease immediately if you become eligible for other health insurance benefits at
the expense of a new employer. You agree to notify the Company immediately, in
writing, of the availability of health insurance upon your acceptance of either
full time employment or a full time, long term (6 months or more) consulting
engagement with anyone other than the Company any time prior to September 30,
1999.
Stock Options. Your Asyst Technologies, Inc. and Asyst Software, Inc. options
- -------------
will have their vesting accelerated by twelve (12) months through October 16,
1999. All Asyst Software, Inc. stock options (vested and unvested) will be
converted to Asyst Technologies, Inc. options as determined by the same
conversion formula provided in the applicable stock option agreement(s) and
related plan document(s) that is applied to all Asyst Software, Inc. option
holders. Your rights with regard to your stock options, including your right to
exercise any vested options, will be determined in accordance with the
applicable stock option agreement(s) and related plan document(s) except that
any vested stock options (including all accelerated stock options) may be
exercised up to and through October 16, 2000. You acknowledge that any stock
options which you have been granted which may originally have been intended to
qualify as incentive
<PAGE>
William R. Leckonby
Separation Agreement
November 9, 1998
Page 3 of 6
stock options under section 422 of the Internal Revenue Code may, under the law,
lose that status upon your execution of this Agreement. You further acknowledge
that the Company is not making any representation regarding the tax treatment of
any of your stock options and that you have been advised by the Company to seek
independent tax advice on that matter.
Outplacement Services. The Company will pay an outplacement firm that is
- ---------------------
agreeable to you and the Company an amount not to exceed $10,000 for
outplacement assistance provided to you during the Consultative Period.
Other Compensation Or Benefits. You acknowledge that, except as expressly
- ------------------------------
provided in this Agreement, you will not receive any additional compensation,
severance or benefits from the Company after the Separation Date.
Expense Reimbursements. You agree to submit your final documented expense
- ----------------------
reimbursement statement within thirty (30) days of the Separation Date,
reflecting any and all business expenses you incurred through the Separation
Date for which you seek reimbursement. Asyst will reimburse you for such
expenses pursuant to its regular business practice. During the Consulting
Period, upon your provision of proper documentation, the Company will reimburse
you for reasonable expenses which have been pre-approved by the Company and
incurred by you in performing consulting services at the Company's request.
Return Of Company Property. By thirty (30) days following the Separation Date,
- --------------------------
or earlier if requested by the Company, you shall return to the Company all
Company proprietary documents (and all copies thereof) and other Company
property and proprietary materials in your possession or control, including but
not limited to: Company files, notes, memoranda, correspondence, lists,
drawings, records, plans and forecasts, financial information, personnel
information, customer and customer prospect information, sales and marketing
information, product development and pricing information, specifications,
computer-recorded information, tangible property, cellular phone, pager, credit
cards, entry cards, identification badges and keys; and any materials of any
kind which contain or embody any proprietary or confidential information of the
Company (and all reproductions thereof). You agree that, as of the Separation
Date, you will neither use nor possess Company property, except such property
that a Company officer specifically authorizes you to use or possess for the
sole purpose of performing your Consulting Duties under this Agreement, all of
which property shall be returned to the Company upon completion of specific
project for which you were authorized to possess it or at the end of the
Consulting Period, whichever first occurs.
Proprietary Information. You acknowledge your continuing obligations under your
- -----------------------
Proprietary Information and Inventions Agreement (a copy of which is attached
hereto as Exhibit A), which include, but are not limited to, your obligation not
to use or disclose any confidential or proprietary information of the Company
both during the Consulting Period and thereafter. You further agree to maintain
in confidence and not to use or disclose any confidential or proprietary
information of the Company which you may obtain or develop during the Consulting
Period, except as expressly authorized by the Company; and you hereby assign to
the Company
<PAGE>
William R. Leckonby
Separation Agreement
November 9, 1998
Page 4 of 6
all right, rifle, and interest to any intellectual property you develop in the
course of performing consulting services for the Company, all as described in
Exhibit A.
Confidentiality. The provisions of this Agreement will be held in strictest
- ---------------
confidence by you and the Company and will not be publicized or disclosed in any
manner whatsoever; provided, however, that: (a) you may disclose this Agreement
to your immediate family; (b) the parties may disclose this Agreement in
confidence to their respective attorneys, accountants, auditors, tax preparers,
and financial advisors; (c) the Company may disclose this Agreement as necessary
to fulfill standard or legally required corporate reporting or disclosure
requirements; and (d) the parties may disclose this Agreement insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by
law. In particular, and without limitation, you agree not to disclose the terms
of this Agreement to any current or former employee or independent contractor of
Asyst.
Nondisparagement. Both you and the Company agree not to disparage the other
- ----------------
party, and the other party's officers, directors, employees, shareholders and
agents, in any manner likely to be harmful to the other party's business,
business reputation or personal reputation; provided that both you and the
Company will respond accurately and fully to any question, inquiry or request
for information when required by legal process.
Agreement Not To Compete. In order to protect the trade secrets and
- ------------------------
confidential and proprietary information of the Company, you agree that, through
December 31, 1999, you will not perform work (whether as an employee,
consultant, or principal) for any business entity that is engaging or preparing
to engage in the business of tool centric automation, including robotics and fab
integration software products, that directly competes with the business of the
Company on the date hereof in the geographic areas in which the Company is
currently operating. You agree that, if you are in doubt as to whether a
particular work activity may comprise Competitive Activity, you will obtain the
written consent of the Company's Chief Executive Officer, which will not be
unreasonably withheld, before undertaking such work activity. For purposes of
this paragraph, the holding of less than 1% of the outstanding voting securities
of any firm or business organization in competition with the Company will not
constitute Competitive Activity.
Nonsolicitation. You agree that you will not solicit any employee or
- ---------------
independent contractor of the Company to terminate his or her relationship with
the Company in order to become an employee or independent contractor to or for
any other person or entity through December 31, 1999.
Release. In exchange for the payments and other consideration under this
- -------
Agreement to which each party would not otherwise be entitled, and except as
otherwise set forth in this Agreement, each party releases, acquits and forever
discharges the other party, any parents and subsidiaries, and any respective
officers, directors, agents, servants, employees, attorneys, shareholders,
predecessors, administrators, heirs, executors, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and
<PAGE>
William R. Leckonby
Separation Agreement
November 9, 1998
Page 5 of 6
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, events, acts or conduct at any time prior to
and including the date you sign this Agreement relating to your employment with
the Company, including but not limited to: all such claims and demands directly
or indirectly arising out of or in any way connected with your employment with
the Company or the termination of that employment; claims or demands related to
salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation or other time off pay, fringe benefits,
expense reimbursements, severance pay, or any other form of compensation; claims
pursuant to any federal, state or local law, statute or cause of action
including, but not limited to, the federal Civil Rights Act of 1964, as amended;
the federal Americans with Disabilities Act of 1990; the federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"); the California
Fair Employment and Housing Act, as amended; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of fiduciary duty and breach of the implied covenant of good faith
and fair dealing. Excepted from this release are your rights of indemnity as a
former employee and officer of the Company, your 401(k) rights, and your rights
under the Executive Deferred Compensation Plan and the Stock Option contract.
ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving and
- -----------
releasing any rights you may have under the ADEA. You also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which you are already entitled. You
further acknowledge that you have been hereby advised, as required by the ADEA,
that: (a) your waiver and release do not apply to any rights or claims that may
arise after the execution date of this Agreement; (b) you should consult with an
attorney prior to executing this Agreement; (c) you have twenty-one (21) days to
consider this Agreement (although you may choose to voluntarily execute this
Agreement earlier); (d) you have seven (7) days following the execution of this
Agreement by the parties to revoke the Agreement; and (e) this Agreement will
not be effective until the date upon which the revocation period has expired,
which will be the eighth day after this Agreement is executed by you (the
"Effective Date").
Section 1542 Waiver. In granting the releases herein, you acknowledge that you
- -------------------
have read and understand California Civil Code section 1542: "A general release
does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor." You expressly waive
and relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to the release of any unknown or
unsuspected claims contained in this Agreement.
Arbitration. To provide a mechanism for rapid and economical dispute
- -----------
resolution, you and the Company agree that any and all disputes, claims, or
causes of action, in law or equity, arising from or relating to this Agreement
or its enforcement, performance, breach, or interpretation, with the sole
exception of disputes that may arise from your proprietary information and
inventions agreement, will be resolved by final, binding, and confidential
arbitration held in San
<PAGE>
William R. Leckonby
Separation Agreement
November 9, 1998
Page 6 of 6
Francisco, California and conducted by Judicial Arbitration & Mediation
Services/Endispute ("JAMS"), under its then-existing rules and procedures.
Nothing in this paragraph is intended to prevent either you or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration.
Miscellaneous. This Agreement, including its exhibits and the Stock Option
- -------------
agreements, constitutes the complete, final and exclusive embodiment of the
entire agreement between you and the Company with regard to this subject matter.
It is entered into without reliance on any promise or representation, written or
oral, other than those expressly contained herein, and it supersedes any other
such promises, warranties or representations. This Agreement may not be
modified or amended except in a writing signed by both you and a duly authorized
officer of the Company. This Agreement will bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and assigns.
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question will be modified by the trier of
fact so as to be rendered enforceable insofar as possible consistent with the
intent of the parties.
If this Agreement is acceptable to you, please sign below and return the signed
original to me. I wish you luck in your future endeavors.
Sincerely,
Asyst Technologies, Inc.
/s/ Mihir Parikh /s/ Douglas J. McCutcheon
- ------------------------ ---------------------------
Mihir Parikh Douglas J. McCutcheon
Chairman and CEO Sr. Vice President, CFO
Understood and Agreed:
/s/ William R. Leckonby 11/16/98
- ------------------------ ---------------------------
William R. Leckonby Date
<PAGE>
Exhibit A
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
<PAGE>
EXHIBIT 10.20
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") dated as of July 30, 1999,
is entered into between KATO ROAD PARTNERS, a California general partnership
("Landlord"), and ASYST TECHNOLOGIES, INC., a California corporation ("Tenant").
THE PARTIES ENTER INTO THIS AMENDMENT based upon the following facts,
understandings and intentions:
A. Landlord and Tenant previously entered into that certain
Industrial Lease (the "Lease") dated February 16, 1995, pursuant to which
Landlord leased to Tenant certain improved real property (the "Lot") located in
Fremont, California, as more particularly described in the Lease. The Lot is
improved with a building (the "Building") containing approximately ninety-one
thousand two hundred seventy-five (91,275) rentable square feet of space, the
address of which is 48761 Karo Road. The Lot and the Building are collectively
referred to as the "Premises." Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Lease.
B. Landlord and Tenant now desire to amend the Lease to, among other
things, extend the Term, adjust the amount of Base Rent payable under the Lease
and provide for the construction of certain tenant improvements in the Premises,
all as more particularly provided herein.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and promises
of the parties, the receipt and adequacy & which are hereby acknowledged, the
parties hereto agree as follows:
1. Term. The Term is extended from January 3.1, 2000, through
----
October 31, 2005.
2. Base Rent. The monthly Base Rent during the period (the "First
---------
Extension Term") commencing on February 1, 2000 and ending on October 31, 2005
is set forth in the following table:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Period Monthly Base Rent
- ------------------------------------------------------------------------------------------------------
<S> <C>
February 1, 2000 through January 31, 2001: Ninety-Eight Thousand One Hundred Twenty
and 63/100 Dollars ($98,120.63)
- ------------------------------------------------------------------------------------------------------
February 1, 2001 through January 31, 2002: One Hundred One Thousand Five Hundred Fifty-Four
and 85/100 Dollars ($101,554.85)
- ------------------------------------------------------------------------------------------------------
February 1, 2002 through January 31, 2003: One Hundred Five Thousand One Hundred Nine and
26/100 Dollars ($105,109.26)
- ------------------------------------------------------------------------------------------------------
February 1, 2003 through January 31, 2004: One Hundred Eight Thousand Seven Hundred
Eighty-Eight and 08/100 Dollars ($108,788.08)
- ------------------------------------------------------------------------------------------------------
</TABLE>
1.
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------
February 1, 2004 through January 31, 2005: One Hundred Twelve Thousand Five Hundred
Ninety-Five and 66/100 Dollars ($112,595.66)
- ------------------------------------------------------------------------------------------------------
February 1, 2005 through October 31, 2005: One Hundred Sixteen Thousand Five Hundred
Thirty-Six and 50/100 Dollars ($116,536.50)
- ------------------------------------------------------------------------------------------------------
</TABLE>
Concurrently with the execution of this Amendment, Tenant shall pay to Landlord
the monthly installment of Base Rent due for the month commencing on February 1,
2000.
3. Security Deposit. The Security Deposit shall be increased by
----------------
Fifty-Three Thousand One Hundred Three and 17/100 Dollars ($53,103.17) (the
"Additional Security Deposit") for a total Security Deposit of One Hundred
Sixteen Thousand Five Hundred Thirty-Six and 50/100 Dollars ($116,536.50).
Tenant shall pay the Additional Security Deposit to Landlord concurrently with
the execution of this Amendment.
4. Assignment and Subleasing. During the First Extension Term (but
-------------------------
not during any additional extension terms), all of the terms and conditions set
forth in Section 16 of the Lease regarding an assignment by Tenant of its
interest in the Lease or subletting by Tenant of all or a portion of the
Premises shall apply, subject to the following modifications:
4.1 Option to Terminate. In the event Tenant assigns all of its
-------------------
interest in the Lease or subleases the entire Premises to a Qualified Transferee
(defined below) in accordance with all of the terms and conditions set forth in
the Lease, including Landlord's written approval of Tenant's proposed assignment
of its interest in the Lease or subletting of the Premises, then Landlord and
Tenant shall each have the right to terminate the Lease by written notice to the
other party within five (5) business days after Landlord receives a fully
executed copy of the assignment agreement or the sublease agreement, as
applicable, entered into between Tenant and the Qualified Transferee
(hereinafter referred to as the "Transfer Agreement"). Tenant's right to
terminate the Lease pursuant to this Section 4.1 is conditioned upon (i) the
Qualified Transferee and Tenant entering into an assignment and assumption
agreement in a form acceptable to Landlord pursuant to which the Qualified
Transferee assumes all of the obligations of Tenant under the Lease, or (ii) the
Qualified Transferee and Landlord entering into a new lease pursuant to which
Landlord leases the Premises directly to the Qualified Transferee.
4.2 Qualified Transferee. For purposes of this Section 4, a
--------------------
"Qualified Transferee" is defined as a subtenant or assignee (i) that has a net
worth of at least One Hundred One Million Dollars ($101,000,000.00) as of the
date on which the Qualified Transferee executes the Transfer Agreement and has
achieved net earnings after payment of taxes of not less than Five Million
Dollars ($5,000,000.00) during each of its three (3) most recent fiscal years,
and (ii) whose proposed use of the Premises, if different from the Permitted
Uses, has been approved by Landlord in writing, which approval shall not be
unreasonably withheld.
4.3 Termination Fee. If Landlord terminates the Lease pursuant
---------------
to Section 4.1, Landlord shall pay to Tenant within thirty (30) days after the
effective date of the termination of the Lease an amount equal to the net
present value (discounted at ten percent (10%) per annum) of the reimbursement
payments for Subleasing Costs to which Tenant would
2.
<PAGE>
otherwise have been entitled during the First Extension Term pursuant to Section
4.4, as reasonably determined by Landlord.
4.4 Bonus Rent. If Tenant assigns its interest in the Lease or
----------
sublets the entire Premises, and neither Landlord nor Tenant terminate the Lease
as provided in this Section 4.1, then Tenant shall pay to Landlord fifty percent
(50%) of all Bonus Rent after Tenant has recovered the Subleasing Costs (each as
defined below). The term "Bonus Rent" is defined as any rent or other
consideration received by Tenant in connection with or as a result of any
assignment by Tenant of its interest in the Lease or sublease by Tenant of the
entire Premises in excess of the Rent then payable by Tenant under the Lease.
The term "Subleasing Costs" is defined as the following costs paid by Tenant in
connection with an assignment of its interest under the Lease or subletting of
the entire Premises, and no other costs or expenses: (i) reasonable leasing
commissions in an amount not to exceed (a) 6.5% of the base rent paid by the
assignee during the first year after the assignment or paid by the sublessee
during the first year of the sublease term, (b) 6.5% of the base rent paid by
the assignee during the second year after the assignment or paid by the
sublessee during the second year of the sublease term, (c) 5.5% of the base rent
paid by the assignee during the third year after the assignment or paid by the
sublessee during the third year of the sublease term, (d) 4.5% of the base rent
paid by the assignee during the fourth year after the assignment or paid by the
sublessee during the fourth year of the sublease term, and (e) 4.5% of the base
rent paid by the assignee during the fifth year after the assignment or paid by
the sublessee during the fifth year of the sublease term, (ii) the cost of
constructing additional general purpose office improvements in the Premises,
(iii) reasonable attorneys' fees, and (iv) the amount of Base Rent (the "Double
Rent") paid by Tenant for the Premises during the period commencing on the later
of (A) the date that Tenant commences to pay rent for a new facility in which
Tenant intends to move its business previously operated in the Premises and (B)
the date that Tenant vacates the Premises, and ending on the date on which
Tenant's assignee or subtenant commences to pay rent to Tenant or Landlord
pursuant to an executed agreement approved by Landlord in writing. For purposes
of calculating the amount of excess rent payable to Landlord pursuant to this
Section 4.4, (i) the total amount of Subleasing Costs shall not exceed One
Million Dollars ($1,000,000.00) and (ii) the amount of Double Rent included in
Subleasing Costs shall not exceed Two Hundred Fifty Thousand Dollars
($250,000.00). The provisions contained in this Section 4.4 with respect to
Tenant's obligation to pay to Landlord a portion of the Bonus Rent shall
supercede and take the place of the provisions contained in Section 16 of the
Lease concerning Tenant's obligation to pay to Landlord any excess rent (and
the calculation thereof) in connection with an assignment by Tenant of its
interest in the Lease or subletting of the entire Premises during the First
Extension Term. If Tenant sublets less than the entire Premises during the First
Extension Term, the provisions contained in Section 16 of the Lease with respect
to Tenant's obligation to pay excess rent and the calculation thereof shall
apply.
4.5 No Consent Required. Notwithstanding anything to the contrary
-------------------
contained in the Lease, Tenant may, without Landlord's consent, assign its
interest under the Lease or sublet the Premises to (i) a successor corporation
by merger, consolidation or nonbankruptcy reorganization or (ii) a purchaser of
all or substantially all of Tenant's assets (hereinafter referred to as a
"Permitted Assignee"). In addition, if the stock of Tenant is traded on the New
York Stock Exchange, American Stock Exchange or NASDAQ, then the transfer of
3.
<PAGE>
any controlling or managing ownership or beneficial interest in Tenant shall not
be deemed to be an assignment for purposes of the Lease.
5. Tenant Improvements.
-------------------
5.1 Tenant Improvement Work. Tenant, at Tenant's sole cost and
-----------------------
expense (except for Landlord's obligation to pay to Tenant the Tenant
Improvement Allowance described below), shall construct certain tenant
improvements and complete certain work (collectively, the "Tenant Improvement
Work") in the Premises, as more particularly described herein. The Tenant
Improvement Work shall be performed by Tenant's Contractor (defined below) in
accordance with plans and specifications (the "Plans and Specifications")
prepared by Tenant's Architect (defined below) and approved by Landlord in
writing, which approval shall not be unreasonably withheld or delayed. At
Landlord's election, Tenant shall arrange for Tenant's Architect to prepare
working drawings (the "Working Drawings") of the proposed improvements based
upon the Plans and Specifications and submit the Working Drawings to Landlord
for its review and approval. The Tenant Improvement Work performed in the
Building shall conform to Landlord's Building specifications for interior
improvements. The Tenant Improvement Work shall include (i) replacing the carpet
in the aisle ways and lunch area of the Building, (ii) inspecting the existing
heating, ventilation and air conditioning units (the "HVAC Units") and systems
(the "HVAC Systems"), (iii) adding heat to those HVAC Units that currently do
not provide heat and, to the extent necessary, repairing and/or replacing the
inoperable or deficient HVAC Units and/or portions of the HVAC Systems, (iv)
refurbishing the landscaping on the Lot in accordance with a landscaping plan
prepared by Tenant and approved by Landlord, (v) upgrading all of the lights in
the Building and on the Lot, and (vi) other miscellaneous items of deferred
maintenance to the Building and Lot selected by Tenant. Landlord, at its
election, shall have the right to reasonably employ consultants to review
Tenant's Plans and Specifications and Working Drawings and Tenant shall
reimburse Landlord for the reasonable cost incurred by Landlord for such
consultants within ten (10) days after Landlord's written request therefor.
Tenant shall complete the Tenant Improvement Work within one (1) year after the
date of this Amendment in accordance with the Plans and Specifications and
Working Drawings approved by Landlord.
5.2 Tenant's Architect and Contractor. Prior to commencing the
---------------------------------
Tenant Improvement Work, Tenant shall notify Landlord in writing of the name of
the architect that Tenant proposes to use to prepare the Plans and
Specifications and Working Drawings and the name of the contractor or
contractors that Tenant proposes to use to perform the Tenant Improvement Work.
In addition, Tenant shall deliver to Landlord any information reasonably
requested by Landlord concerning the proposed architect or contractor. The
architect and the contractor proposed by Tenant must each be approved by
Landlord in writing, which approval shall not be unreasonably withheld. The
architect selected by Tenant and approved by Landlord in connection with the
Tenant Improvement Work is hereinafter referred to as "Tenant's Architect". The
contractor selected by Tenant and approved by Landlord in connection with the
Tenant Improvement Work is hereinafter referred to as "Tenant's Contractor".
Both Tenant's Architect and Tenant's Contractor must be licensed to do business
in California. At Landlord's option, Tenant's Contractor shall be bondable.
4.
<PAGE>
5.3 Tenant Improvement Allowance. Landlord shall pay to Tenant up to
----------------------------
Three Hundred Thousand Dollars ($300,000.00) (the "Maximum Tenant Improvement
Allowance") as a tenant improvement allowance (the "Tenant Improvement
Allowance") toward the cost of performing the Tenant Improvement Work as
provided herein. Tenant may use the Tenant Improvement Allowance only to pay for
the Tenant Improvement Work described in Section 5.1 above. The Tenant
Improvement Allowance may not be used to pay for (i) any trade fixtures,
furniture, furnishings, equipment (except for repairs and/or replacements to the
electrical, mechanical and plumbing systems, the HVAC Units and the HVAC
Systems), decorations, signs, inventory or other personal property, (ii) rent
for leased equipment or other personal property, (iii) interest or financing
costs, and (iv) administrative or overhead costs and expenses paid or incurred
by Tenant in connection with the performance of the Tenant Improvement Work,
except amounts reimbursed to third party general contractor or construction
manager.
5.4 Payment of Tenant Improvement Allowance. Landlord shall pay the
---------------------------------------
Tenant Improvement Allowance to Tenant within thirty (30) days after Tenant's
written request therefore, provided and on the condition that (i) Tenant is not
in default under the terms of the Lease, (ii) Tenant has completed all of the
Tenant Improvement Work in accordance with the Plans and Specifications and
Working Drawings, and (iii) Tenant has delivered to Landlord the following: (a)
a copy of a "finaled" building permit issued by the City of Fremont (to the
extent Tenant was required by law or local ordinance to obtain a building permit
in connection with the Tenant Improvement Work), (b) a certificate of
completion issued by Tenant's Architect, certifying that the Tenant Improvement
Work has been completed in accordance with the Plans and Specifications and
Working Drawings, (c) "as built" drawings for the Premises (to the extent
requested by Landlord), (d) evidence that the total cost of the Tenant
Improvement Work which may be paid for out of the Tenant Improvement Allowance
is equal to or exceeds the amount of the Tenant Improvement Allowance requested
by Tenant, which evidence shall be in the form of copies of paid invoices and
applicable construction contracts, and (e) unconditional lien waivers from
Tenant's Contractor and all subcontractors, materialmen and suppliers that have
performed work or supplied materials in connection with the Tenant Improvement
Work.
6. Existing Extension Option. Section 18.12 of the Lease is hereby
-------------------------
deleted and of no further force or effect.
7. Extension Option
----------------
7.1 Option to Extend. Tenant shall have the option to extend the
----------------
Term for an additional period of five (5) years (the "Second Extension Term"),
provided that at the time Tenant's Extension Notice (defined below) is given and
at the time the Second Extension Term is to commence (i) Tenant is not in
default under the Lease and (ii) Tenant is in occupancy of the entire Premises.
Tenant shall exercise such option, if at all, by written notice ("Tenant's
Extension Notice") to Landlord not later than three hundred (300) days prior to
the expiration of the Term. Tenant's failure to deliver to Landlord Tenant's
Extension Notice within the time period provided above shall be deemed a waiver
of Tenant's option to extend the Term. If Tenant exercises its extension
option, the Term shall be extended for an additional period of five (5) years on
all of the terms and conditions of the Lease, except (i) Tenant shall not have
the option to further extend the Term, (ii) Landlord shall not be required to
pay to Tenant any tenant
5.
<PAGE>
improvement allowance or inducement and (iii) the monthly Base Rent for the
first year of the Second Extension Term shall be an amount equal to the greater
of(A) the "Initial Fair Market Rent" or (B) the monthly Base Rent in effect
immediately prior to the Second Extension Term. The Base Rent due during the
Second Extension Term shall be increased annually by the Average Annual
Percentage, as defined below. Tenant's option to extend the Term is personal to
Asyst Technologies, Inc., and shall not be included in any assignment of the
Lease; provided, however, Tenant may assign its option to extend the Term to a
Permitted Assignee in connection with Tenant's assignment of the Lease to said
Permitted Assignee. In addition, Tenant shall be responsible for all brokerage
costs and/or finder's fees associated with Tenant's exercise of its option to
extend the Term if the broker or finder claiming such commission or fee is
engaged by Tenant.
7.2 Determination of Initial Fair Market Rent and Average Annual
------------------------------------------------------------
Percentage.
- ----------
7.2.1 Agreement on Rent. For the purposes of this Amendment,
-----------------
"Initial Fair Market Rent" means the monthly base rent (i.e., rent other than
operating expenses, taxes and insurance premiums) expected to prevail as of the
commencement of the Second Extension Term for the first year of the Second
Extension Term with respect to leases of office/research and development space
of comparable size, quality and age located in Fremont for a term of
approximately five (5) years. The term "Average Annual Percentage" shall mean
the average annual percentage increase in the monthly base rent (i.e., rent
other than operating expenses, taxes and insurance premiums) expected to prevail
as of the commencement of the Second Extension Term with respect to leases of
office/research and development space of comparable size, quality and age
located in Fremont for a term of approximately five (5) years. On or before the
ninetieth (90th) day prior to the expiration of the Term, Landlord shall advise
Tenant in writing ("Landlord's Rent Notice") as to Landlord's determination of
the Initial Fair Market Rent and Average Annual Percentage. If Tenant disagrees
with Landlord's determination, then, within fifteen (15) days after Tenant's
receipt of Landlord's Rent Notice, Tenant shall advise Landlord in writing
("Tenant's Rent Notice") as to Tenant's determination of the Initial Fair Market
Rent and Average Annual Percentage. If Tenant shall fail to timely send Tenant's
Rent Notice, Tenant shall be bound by Landlord's determination of the Initial
Fair Market Rent and Average Annual Percentage as set forth in Landlord's Rent
Notice. If Tenant shall timely send to Landlord Tenant's Rent Notice, Landlord
and Tenant shall attempt in good faith to reach agreement as to the amount of
the Initial Fair Market Rent and Average Annual Percentage within fifteen (15)
days after Landlord's receipt of Tenant's Rent Notice.
7.2.2 Selection of Appraisers. If Landlord and Tenant are unable
-----------------------
to agree upon the Initial Fair Market Rent and Average Annual Percentage within
the aforementioned fifteen (15) day period as evidenced by a written amendment
to the Lease executed by them, then, within ten (10) days after the expiration
of the fifteen (15) day period, Landlord and Tenant each, at its cost and by
giving notice to the other party, shall appoint a competent and disinterested
real estate appraiser with membership in the Appraisal Institute and M.A.I.
designation and with at least five (5) years' full-time commercial appraisal
experience in the Fremont area to determine the Initial Fair Market Rent and
Average Annual Percentage during the Second Extension Term. If either Landlord
or Tenant does not appoint an appraiser within ten (10) days after the other
party has given notice of the name of its appraiser, the single
6.
<PAGE>
appraiser appointed shall be the sole appraiser and shall determine the Initial
Fair Market Rent and Average Annual Percentage during the Second Extension Term.
If two (2) appraisers are appointed by Landlord and Tenant as stated in this
Section they shall attempt to select a third appraiser meeting the
qualifications stated in this Section within ten (10) days. If they are unable
to agree on the third appraiser, either Landlord or Tenant, by giving ten (10)
days' notice to the other party, can apply to the then president of the real
estate board of the county in which the Premises is located, or to the Presiding
Judge of the Superior Court of the county in which the Premises is located, for
the selection of a third appraiser who meets the qualifications stated in this
paragraph. Landlord and Tenant each shall bear one-half (1/2) of the cost of
appointing the third appraiser and of paying the third appraiser's fee. The
third appraiser, however selected, shall be a person who has not previously
acted in any capacity for either Landlord or Tenant.
7.2.3 Value Determined By Three (3) Appraisers. The Appraisers
----------------------------------------
shall determine the Initial Fair Market Rent and the Average Annual Percentage
by using the "Market Comparison Approach" with the relevant market being similar
office/research and development buildings in Fremont. Within thirty (30) days
after the selection of the third appraiser, Landlord's appraiser shall arrange
for the simultaneous delivery to Landlord of written appraisals from each of the
appraisers. The appraiser's determination of the Initial Fair Market Rent and
the Average Annual Percentage stated in the three (3) appraisals shall be added
together (i.e., the Initial Fair Market Rent in each of the three (3) appraisals
shall be added together and the Average Annual Percentage in each of the three
(3) appraisals shall be added together) and the total divided by three (3); the
resulting quotients shall be the monthly Base Rent and annual increase in Base
Rent for the Premises during the Second Extension Term, as applicable. If,
however, the Initial Fair Market Rent and/or the Average Annual Percentage
stated in the low appraisal and/or the high appraisal are/is more than ten
percent (10%) lower and/or higher than the Initial Fair Market Rent and/or the
Average Annual Percentage stated in the middle appraisal, the Initial Fair
Market Rent and/or the Average Annual Percentage stated in the low appraisal
and/or the high appraisal, as applicable, shall be disregarded. If the Initial
Fair Market Rent or the Average Annual Percentage as stated in one (1) of the
appraisals is disregarded, then the Initial Fair Market Rent or the Average
Annual Percentage stated in the remaining two (2) appraisals, as applicable,
shall be added together and their total divided by two (2); the resulting
quotient or quotients shall be the monthly Base Rent and/or the annual increase
in Base Rent for the Premises during the Second Extension Term, as applicable.
If the Initial Fair Market Rent and/or the Average Annual Percentage stated in
both the high and low appraisal are disregarded as stated in this Section, the
Initial Fair Market Rent and/or the Average Annual Percentage stated in middle
appraisal shall be the monthly Base Rent and the annual increase in Base Rent
for the Premises during the Second Extension Term.
7.2.4 Notice to Landlord and Tenant. After the monthly Base
-----------------------------
Rent and annual increase in Base Rent for the Second Extension Term have been
set, the appraisers immediately shall notify Landlord and Tenant, and Landlord
and Tenant immediately shall execute an amendment to the Lease stating the
monthly Base Rent and annual increase in Base Rent for the Second Extension
Term.
8. Brokerage Commission. Landlord shall pay to the broker designated by
--------------------
Tenant in writing ("Tenant's Broker") a leasing commission (the "Leasing
Commission") in the amount of One Hundred Thousand Dollars ($100,000). Landlord
shall pay one-half of the Leasing
7.
<PAGE>
Commission to Tenant's Broker upon the execution of this Amendment and
Landlord's receipt of the Additional Security Deposit and Base Rent for the
month of February, 2000, and one-half of the Leasing Commission to Tenant's
Broker on February 1, 2000.
9. Entire Agreement. This Amendment represents the entire understanding
----------------
between Landlord and Tenant concerning the subject matter hereof, and there are
no understandings or agreements between them relating to the Lease or the
Premises not set forth in writing and signed by the parties hereto. No party
hereto has relied upon any representation, warranty or understanding not set
forth herein, either oral or written, as an inducement to enter into this
Amendment.
10. Continuing Obligations. Except as expressly set forth to the contrary
----------------------
in this Amendment, the Lease remains unmodified and in full force and effect.
To the extent of any conflict between the terms of this Amendment and the terms
of the Lease, the terms of this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
"Tenant Landlord"
ASYST TECHNOLOGIES, INC., KATO ROAD PARTNERS,
a California corporation a California general partnership
By: /s/ A John Miller III By: Brill & Harrington Investments,a
---------------------------------- California general partnership,
Name: A John Miller III Managing Partner
------------------------------
Its: Corp Controller
-----------------------------
By: /s/ Douglas J. McCutcheon By: /s/ John B. Hartington
----------------------------------- ---------------------------------
Name: Douglas J. McCutcheon Name: John B. Hartington
------------------------------ -----------------------------
Its: Senior Vice President Its: Partner
----------------------------- -----------------------------
Chief Financial Officer
-----------------------------
Asyst Technologies, Inc.
-----------------------------
By:__________________________________
Name:_____________________________
Its:_____________________________
8.
<PAGE>
Exhibit 10.21
August 5, 1999
Mr. Kazuo Kimata
President and Chief Executive Officer
MECS CORPORATION
28 Jhonou, Kitaima
Bisai-shi, Aichi 494-8508
Japan
Re: Cooperation Agreement
Mr. Kimata:
By this letter we formalize our understandings with respect to the interim
cooperation contemplated by our Term Sheet dated August 5, 1999 and create the
framework for shared success. Pending the conclusion of "Phase II" or any
earlier termination of our efforts to conclude de Definitive Agreements, the
parties acknowledge that it will be highly desirable to make joint efforts with
respect to specific opportunities in Japan. For example, both MECS and Asyst
have made or contemplate making proposals to Applied Materials Japan, Anelva,
Ulvac and Sony's Oem Metrology Group. These prospective customers, in turn,
have expressed a desire to have us present our SMIF and robotics systems to them
in a more integrated manner. If such a joint proposal were accepted, then
corresponding work would have to be done in a closely coordinated manner,
invoiced, warrantied and supported. If our joint proposal is accepted by the
relevant customer, we agree to proceed on the basis of the terms set forth in
our joint proposal, notwithstanding the failure to conclude the Definitive
Agreements.
Until either of us elects to discontinue these efforts, we each agree to
negotiate in good faith the specific written terms of any joint proposal to the
previously identified prospective customers, and any other prospect subsequently
mutually agreed upon in writing, and thereafter to implement such proposal as
agreed in writing. In some cases, Asyst will take the lead in developing an
opportunity, presenting the proposal and executing the agreed upon scope of
work. In other cases, MECS will take the lead. There will be numerous
variations of the foregoing. In all cases, a party will defer to the other's
area of expertise. Collection, payment, warranty and support terms between the
parties will be specifically negotiated in each instance. Neither party can
bind the other to any terms with a third party without the prior express written
approval of the other. No partnership is intended or created. Each project
will therefore be a specific contractual arrangement, with one party acting as a
subcontractor to the other, as mutually agreed and tailored to specific
circumstances. Customary terms will be relied upon whenever
1
<PAGE>
possible, including with respect to indemnification. Such cooperation does not
create a license to either party's intellectual property rights, unless
specifically agreed to in a written and detailed scope of work for a specific
project. Prior to embarking on the negotiation of any joint project, the parties
will enter a standard mutual confidentiality and nonuse agreement customized to
the specific project.
If the foregoing is acceptable, kindly sign and return a copy of this letter to
me as soon as possible.
Sincerely,
/s/ Mihir Parikh
- ------------------------------
Mihir Parikh
Chairman and Chief Executive Officer
Agreed as of the date hereof.
/s/ Kazuo Kimata
- ------------------------------
Kazuo Kimata
President and Chief Executive Officer
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,024
<SECURITIES> 18,682
<RECEIVABLES> 31,519
<ALLOWANCES> (1,905)
<INVENTORY> 23,789
<CURRENT-ASSETS> 106,996
<PP&E> 35,292
<DEPRECIATION> (21,730)
<TOTAL-ASSETS> 139,084
<CURRENT-LIABILITIES> 26,410
<BONDS> 0
0
0
<COMMON> 135,716
<OTHER-SE> (23,042)
<TOTAL-LIABILITY-AND-EQUITY> 139,084
<SALES> 67,782
<TOTAL-REVENUES> 67,782
<CGS> 38,167
<TOTAL-COSTS> 36,376
<OTHER-EXPENSES> (285)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> (6,476)
<INCOME-TAX> (842)
<INCOME-CONTINUING> (5,634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,634)
<EPS-BASIC> (0.45)
<EPS-DILUTED> (0.45)
</TABLE>
