Exhibit 10.3
SUBLEASE
THIS SUBLEASE ("Sublease"), dated February 5, 1999 for reference
purposes only, is entered into by and between INTERNATIONAL MICROCIRCUITS,
INC., a California corporation ("Sublandlord" or "IMI") and DEVCON
CONSTRUCTION, INC., a California corporation, ("Subtenant" or "DEVCON").
RECITALS
A. IMI entered into that certain Lease dated as of July __,
1998 ("Master Lease") with the Marin County Employees' Retirement
Association, a political subdivision of the State of California, as landlord
(hereinafter, the "Master Lessor") for certain premises at 525 Los Coches
Street, Milpitas, CA (the "IMI Premises") containing approximately 38,710
square feet (the "Master Lease"). The capitalized terms used but not
otherwise defined in this Sublease shall have the meanings assigned to them
in the Master Lease.
B. IMI and DEVCON were parties to that certain Lease Agreement
dated November 17, 1992, as amended by the Lease Amendment #1 For Los Coches
Place dated January 28, 1998 (as so amended, the "Original Devcon Lease"). At
the time the parties entered into the Original Devcon Lease, IMI was the
owner of fee title to the IMI Premises, prior to the sale of the IMI Premises
by IMI to Master Lessor. The parties wish to terminate the Original Devcon
Lease and to enter into this Sublease.
C. IMI desires to sublease a portion of the IMI Premises to
DEVCON, and DEVCON desires to sublease a portion of the IMI Premises from IMI
on the terms and provisions hereof.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, IMI and DEVCON covenant and agree as follows:
AGREEMENT
1. TERMINATION OF ORIGINAL DEVCON LEASE. The parties hereby
acknowledge that the Original Devcon Lease is hereby terminated and shall be
of no further force or effect.
2. SUBLEASED PREMISES. On and subject to the terms and
conditions below, IMI hereby leases to DEVCON, and DEVCON hereby leases from
IMI, the premises described in Exhibit A (the "Subleased Premises"). The
Subleased Premises contain both office and warehouse space, as shown on the
attached Exhibit A (and known respectively as the "Office Space" and the
"Warehouse Space"). The Office Space contains approximately 5538 square feet,
and the Warehouse Space contains approximately 4224 square feet.
3. TERM. Subject to obtaining the consent of Master Lessor as
described below, this Sublease shall commence on March 1, 1999, (the
"Commencement Date") and shall expire at 11:59 p.m. on September 30, 2003,
unless sooner terminated pursuant to any provision hereof.
4. POSSESSION. If for any reason IMI cannot deliver possession of
the Subleased Premises to DEVCON on the Commencement Date, IMI shall not be
subject to any liability
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therefor, nor shall such failure affect the validity of this Sublease or the
obligations of DEVCON hereunder or extend the term hereof, unless IMI has not
delivered the Subleased Premises to DEVCON on or before March 1, 1999, in
which case DEVCON shall have the right thereafter to cancel this Sublease by
written notice to IMI given no later than thirty days following such date.
Upon such cancellation, IMI shall return all sums deposited by DEVCON with
IMI, and neither party shall have any further liability to the other.
5. RENT.
(a) BASE RENT. Commencing on the Commencement Date and
continuing throughout the term of this Sublease, DEVCON shall pay monthly
rent ("Base Rent") to IMI in the amount of $11,977 per month, subject to
adjustment on each Rental Adjustment Date (as defined in Section 4.2 of the
Master Lease), in accordance with the same formula set forth in Section 4.2
of the Master Lease.
(b) PAYMENT OF RENT. Upon execution of this Sublease,
DEVCON shall pay to IMI the sum of Twenty-Three Thousand Nine Hundred
Fifty-Four Dollars ($23,954.00), constituting payment in advance of the first
month's Rent, together with the Security Deposit, as set forth in Section 6
below. Rent shall be payable to IMI in lawful money of the United States, in
advance, without prior notice, demand, or offset, on or before the first day
of each calendar month during the term hereof. All Rent shall be paid to IMI
at the address specified for notice to IMI in Section 13, below. If the
Commencement Date does not fall an the first day of a calendar month, Rent
for the first month shall be prorated on a daily basis based upon a thirty
day calendar month.
(c) ABATEMENT. In the event of any casualty or
condemnation affecting the Subleased Premises, Base Rent payable by DEVCON
shall be abated hereunder in the same proportion, if any, that rent payable
by IMI under the Master Lease is abated.
(d) RENT CREDIT FOR TENANT IMPROVEMENTS PAID FOR BY
DEVCON. DEVCON hereby agrees to construct office tenant improvements (the
"Office TIs") in accordance with the terms of this Sublease, the plans and
specifications and budget for which shall be subject to the written approval
of both IMI and Master Lessor, it being agreed that DEVCON shall spend no
less than $110,250 ($50 per square foot for 2205 square feet). Provided that
DEVCON has complied with this requirement, DEVCON shall be entitled to deduct
from the amount of each installment of Base Rent the amount of $1,837.50 (the
"Rent Credit"). The right to such Rent Credit is personal to DEVCON, and
shall not be assignable to any person under any circumstances.
(e) INDUCEMENT RECAPTURE. DEVCON's right to the Rent
Credit, shall be deemed conditioned upon DEVCON's full and faithful
performance of all the terms, covenants and conditions of this Sublease. Upon
default by DEVCON of its obligations hereunder, any Rent Credit provisions
shall be deemed deleted herefrom and any rent or other charge abated or
deducted from payments made hereunder shall become immediately due and
payable by DEVCON to IMI.
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6. SECURITY DEPOSIT. Upon execution of this Sublease, DEVCON
shall deposit with IMI the sum of Eleven Thousand Nine Hundred Seventy-Seven
Dollars ($11,977.00) as a security deposit ("Security Deposit"). If DEVCON
fails to pay Rent or other charges when due under this Sublease, or fails to
perform any of its other obligations hereunder, IMI may use or apply all or
any portion of the Security Deposit for the payment of any Rent or other
amount then due hereunder and unpaid, for the payment of any other sum for
which IMI may become obligated by reason of DEVCON's default or breach, or
for any loss or damage sustained by IMI as a result of DEVCON's default or
breach. If IMI so uses any portion of the Security Deposit, DEVCON shall
restore the Security Deposit to the full amount originally deposited within
thirty (30) days after IMI's written demand. IMI shall not be required to
keep the- Security Deposit separate from its general accounts, and shall have
no obligation or liability for payment of interest on the Security Deposit.
The Security Deposit, or so much thereof as had not theretofore been applied
by IMI, shall be returned to DEVCON promptly following the expiration or
earlier termination of this Sublease, provided DEVCON has vacated the
Subleased Premises.
7. ASSIGNMENT AND SUBLETTING. Except in connection with a
Permitted Transfer (defined below), DEVCON may not assign, sublet, transfer,
pledge, hypothecate or otherwise encumber the Subleased Premises, in whole or
in part, or permit the use or occupancy of the Subleased Premises by anyone
other than DEVCON unless IMI has obtained IMI's consent thereto, which shall
not be unreasonably withheld, and the consent of Master Lessor. Regardless of
IMI's consent, no subletting or assignment shall release DEVCON from its
obligations hereunder. Notwithstanding anything to the contrary contained in
this Sublease, IMI and DEVCON agree that DEVCON may assign this Sublease or
sublet the Subleased Premises, or any portion thereof, without IMI's consent,
to any entity which controls, is controlled by, or is under common control
with DEVCON, and which has an equal or greater net worth than DEVCON at the
time of such transfer or on the date of this Sublease, whichever is greater;
(hereinafter each a "Permitted Transfer").
8. CONDITION OF SUBLEASED PREMISES. DEVCON hereby accepts the
Subleased Premises in their "as-is" condition, without any reliance upon any
representation or warranty of IMI.
9. USE. DEVCON may use the Subleased Premises only for uses
permitted under the Master Lease.
10. PARKING. DEVCON shall have the right to use 30 parking
spaces.
11. INCORPORATION OF SUBLEASE.
(a) All of the terms and provisions of the Master
Lease, except as provided in subsection (b) below, are incorporated into and
made a part of this Sublease and the rights and obligations of the parties
under the Master Lease are hereby imposed upon the parties hereto with
respect to the Subleased Premises, IMI being substituted for the "Master
Lessor" in the Master Lease (except as modified by Section 14 below), and
DEVCON being substituted for the "Tenant" in the Master Lease. It is further
understood that where reference is made in the Master Lease to the
"Premises," the same shall mean the Subleased Premises as defined herein;
where reference is made to the "Commencement Date," the same shall mean the
Commencement Date
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as defined herein; and where reference is made to "this Lease," the same
shall mean this Sublease.
(b) The following Sections of the Master Lease are not
incorporated herein: Sections 1, 2, 3, 4, 5, 7.1, 8.2, 10, the first sentence
of 11, 12, 15, 16.3, 21, 22, 24, 29, 30.3, 36, 40 and 41.
(c) DEVCON hereby assumes and agrees to perform for
IMI's benefit, during the term of this Sublease, all of IMI's obligations
with respect to the Subleased Premises under the Master Lease, except as
otherwise provided herein. DEVCON shall not commit or permit to be committed
any act or omission which violates any term or condition of the Master Lease.
This Sublease shall be subject and subordinate to all of the terms of the
Master Lease.
12. INSURANCE. DEVCON shall be responsible for insuring its
personal property, tenant improvements and equipment in the amount of their
full replacement value and shall maintain comprehensive general liability
insurance in the amount of $2,000,000 per occurrence respecting the use and
occupancy of the Subleased Premises. Such insurance shall insure the
performance by DEVCON of its indemnification obligations hereunder and shall
name Master Lessor and IMI as additional insureds. All insurance required
under this Sublease shall contain an endorsement requiring thirty (30) days
written notice from the insurance company to DEVCON and IMI before
cancellation or change in the coverage, insureds or amount of any policy.
DEVCON shall provide IMI with certificates of insurance evidencing such
coverage prior to the commencement of this Sublease.
13. NOTICES. The addresses specified in the Master Lease for
receipt of notices to each of the parties are deleted and replaced with the
following:
To IMI at: 525 Los Coches Street
Milpitas, CA
Attn: President
With copy to: Cooley Godward LLP
5 Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attn: Anna B. Pope, Esq.
To DEVCON at: the Subleased Premises
Attn: Chief Financial Officer
14. IMI'S OBLIGATIONS. To the extent that the provision of any
services or the performance of any maintenance or any other act respecting
the Subleased Premises is the responsibility of Master Lessor (collectively
"Master Lessor Obligations"), upon DEVCON's request, IMI shall use its best
efforts to cause Master Lessor to perform such Master Lessor Obligations. It
is expressly understood that the services and repairs which are incorporated
herein by reference, will in fact be furnished by Master Lessor, and not by
IMI, except to the extent otherwise provided in the Master Lease. In addition
IMI shall not be liable for any
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maintenance, restoration (following casualty or destruction) or repairs in or
to the Subleased Premises, other than its obligation hereunder to use its
best efforts to cause Master Lessor to perform its obligations under the
Master Lease.
15. EARLY TERMINATION OF SUBLEASE. If, without the fault of
IMI, the Sublease should terminate prior to the expiration of this Sublease,
IMI shall have no liability to DEVCON on account of such termination. DEVCON
shall have the right, upon ninety (90) days prior written notice to IMI, to
terminate this Sublease. Upon such termination, DEVCON shall surrender the
Subleased Premises, including any and all improvements thereto, to IMI
without any reimbursement obligation upon the part of IMI or Master Lessor.
16. CONSENT OF SUBLANDLORD AND MASTER LESSOR. If DEVCON desires
to take any action which requires the consent or approval of IMI pursuant to
the terms of this Sublease, prior to taking such action, including, without
limitation, making any alterations, then, notwithstanding anything to the
contrary herein, (a) IMI shall have the same rights of approval or
disapproval as Master Lessor has under the Master Lease, and (b) DEVCON shall
not take any such action until it obtains the consent of IMI and Master
Lessor, as may be required under this Sublease or the Master Lease. This
Sublease shall not be effective unless and until any required written consent
of the Master Lessor shall have been obtained.
17. BROKERS. Each party hereto represents and warrants that it
has dealt with no broker, in connection with this Sublease and the
transactions contemplated herein. Each party shall indemnify, protect, defend
and hold the other party harmless from all costs and expenses (including
reasonable attorneys' fees) arising from or relating to a breach of the
foregoing representation and warranty.
18. SURRENDER OF SUBLEASED PREMISES. Upon the expiration or
earlier termination of this Sublease, DEVCON shall surrender the Subleased
Premises in as good a condition as they were in on the Commencement Date,
except for ordinary wear and tear and damage due to casualty not caused by
DEVCON, or condemnation. Notwithstanding anything to the contrary herein,
DEVCON shall not be required to remove (i) any of the initial tenant
improvements constructed by or on behalf of DEVCON, and (ii) any alterations
or additions for which DEVCON has obtained Master Lessor's and IMI's consent
unless IMI has indicated, at the time of granting such consent, that such
removal will be required.
19. NO THIRD PARTY RIGHTS. The benefit of the provisions of
this Sublease is expressly limited to IMI and DEVCON and their respective
permitted successors and assigns. Under no circumstances will any third party
be construed to have any rights as a third party beneficiary with respect to
any of said provisions.
20. COUNTERPARTS. This Sublease may be signed in two or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one agreement.
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IN WITNESS WHEREOF, the parties have executed this Sublease as of the
date first written above.
SUBLANDLORD SUBTENANT
International/Microcircuits, Inc. Devcon Construction, Inc.
By: By:
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Name: Name:
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Title: President Title: President
By: By:
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Name: Name:
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Title: Secretary Title: Secretary
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CONSENT OF MASTER LESSOR
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EXHIBIT A
SUBLEASED PREMISES
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