EXHIBIT 10.11
RENT PURCHASE AGREEMENT
by and among
SUMITOMO BANK LEASING AND FINANCE, INC.,
a Delaware corporation,
as Landlord
and
INTEGRATED DEVICE TECHNOLOGY, INC.,
a Delaware corporation
as RENT PURCHASER
RENT PURCHASE AGREEMENT
THIS RENT PURCHASE AGREEMENT ("Agreement"), dated as of September ___,
1999, is by and among Sumitomo Bank Leasing and Finance, Inc., a Delaware
corporation ("Landlord"), and Integrated Device Technology, Inc., a Delaware
corporation ("Rent Purchaser"), and shall be effective and binding upon Landlord
and Rent Purchaser as of the date specified on the counterpart signature page of
each hereof. Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Lease as amended (defined below).
WHEREAS, pursuant to the Lease, Landlord has made Advances related to
the Premises using its own funds pursuant to the Lease, and Landlord has leased
the Premises to Tenant;
WHEREAS, Rent Purchaser shall purchase from Landlord an undivided
interest in the Lease Investment Balance; and
WHEREAS, Rent Purchaser and Landlord are entering into this Agreement
to set forth, among other things, the order of priority for distributions of
funds received by Landlord under the Lease and the rights, duties and
obligations of Landlord in connection with administrating the Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows.
DEFINITIONS
For purposes of this Rent Purchase Agreement, the following terms shall
have the meanings set forth in this Section 1.
"Advances" shall have the meaning as set forth in the Lease.
"Default Amounts" shall mean all amounts paid by Tenant or otherwise
realized by Landlord as a result of the exercise of Landlord's remedies during
the continuance of an Event of Default under the Lease.
"Insurance and Condemnation Payments" shall mean the portion of all
compensation attributable to the Premises and awarded or paid upon any Taking,
as described in Article 16 of the Lease, and paid to Landlord pursuant to
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Article 16 of the Lease, plus a portion of all proceeds of insurance paid to
Landlord pursuant to Article 17 of the Lease.
"Landlord's Base Rent Interest" shall mean the sum of (a) the portion
of such payment of Base Rent equal to the product obtained by multiplying the
Landlord Contribution Rate by the Landlord Contribution outstanding on each day
during the relevant period, which amount is then prorated for the monthly rental
period in question on the basis of a 360-day year and the actual number of days
elapsed; plus (b) the same portion of each payment of interest paid by Tenant at
the Default Rate on Base Rent.
"Landlord's Default Interest" shall mean Landlord's right to receive
and retain, in the order of priority set forth in Section 1.2 hereof, so much of
the Default Amounts that does not exceed the sum of (a) the aggregate amount of
the accrued and unpaid Landlord's Base Rent Interest; plus (b) the Landlord's
Purchase Price Interest.
"Landlord's Insurance and Condemnation Interest" shall mean Landlord's
right to receive and retain, in the order of priority set forth in Section 1.2
hereof, so much of the Insurance and Condemnation Payments that does not exceed
the sum of (a) Landlord's Percentage of the Insurance and Condemnation Payments,
plus (b) the same portion of each payment of interest paid by Tenant at the
Default Rate on the Insurance and Condemnation Payments.
"Landlord's Interests" shall mean the Landlord's Base Rent Interest,
the Landlord's Default Interest, the Landlord's Insurance and Condemnation
Interest; the Landlord's Purchase Price Interest and the Landlord's Termination
Option Interest, and Landlord's Percentage of any other payment made by Tenant
pursuant to the Lease which is required to be credited against, and cause the
reduction of, the Lease Investment Balance.
"Landlord's Percentage" shall mean Landlord's percentage interest in
the Lease Investment Balance. As of the date hereof, the Landlord's Percentage
is equal to 21.3639123 %.
"Landlord's Purchase Price Interest" shall mean Landlord's right to
receive and retain, in the order of priority set forth in Section 1.2 hereof, a
portion of the Purchase Price payable by Tenant under Section 20.1 of the Lease,
in the amount specified in Section 1.2.
"Landlord's Residual Interest" shall mean all of Landlord's rights,
title and interest in and to the Operative Documents that are not included in
the Rent Purchaser's Interests or the Landlord's Interests, including, without
limitation, all costs and expenses (including counsel fees) incurred by Landlord
in connection with an Event of Default and all costs of carry with regard to the
Property in connection with a Termination Option.
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"Landlord's Termination Option Interest" shall mean Landlord's right to
receive and retain, in the order of priority set forth in Section 1.2 hereof, a
portion of the Termination Amount payable by Tenant pursuant to Section 20.2 of
the Lease.
"Lease" shall mean that certain lease dated January 27, 1995 between
Landlord and Tenant, as amended by that certain First Amendment to Sublease of
Land and Lease of the Improvements dated December 11, 1995, and as further
amended by that certain Second Amendment to Sublease of the Land and Lease of
the Improvements dated on even date herewith.
"Lease Investment Balance" has the meaning set forth in the Lease.
"Percentage Interest" shall mean Landlord's Percentage and Rent
Purchaser's Percentage, respectively.
"Rent Payment Date" shall have the meaning set forth in the Lease.
"Rent Purchaser's Base Rent Interest" shall mean the sum of (a) the
portion of such payment equal to the product obtained by multiplying the LIBOR
Rate by the Rent Purchaser Contribution outstanding on each day during the
relevant period, which amount is then prorated for the monthly rental period in
question on the basis of a 360-day year and the actual number of days elapsed;
plus (b) the same portion of each payment of interest paid by Tenant at the
Default Rate on Base Rent.
"Rent Purchaser's Default Interest" shall mean so much of the Default
Amounts that does not exceed the sum of (a) the accrued and unpaid Rent
Purchaser's Base Rent Interest; plus (b) the Rent Purchaser's Purchase Price
Interest.
"Rent Purchaser's Insurance and Condemnation Interest" shall mean so
much of the Insurance and Condemnation Payments that does not exceed the sum of
(a) Rent Purchaser's Percentage of the Insurance and Condemnation Payments, plus
(b) the same portion of each payment of interest paid by Tenant at the Default
Rate on the Insurance and Condemnation Payments.
"Rent Purchaser's Interests" shall mean the Rent Purchaser's Base Rent
Interest, the Rent Purchaser's Default Interest, the Rent Purchaser's Insurance
and Condemnation Interest, Rent Purchaser's Purchase Price Interest, the Rent
Purchaser's Termination Option Interest , and Rent Purchaser's Percentage of any
other payment made by Tenant pursuant to the Lease which is required to be
credited against, and cause the reduction of, the Lease Investment Balance.
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"Rent Purchaser's Percentage" shall mean the percentage interest in the
Lease Investment Balance of the Rent Purchaser. As to any individual Rent
Purchaser, "Rent Purchaser's Percentage" shall mean the percentage interest in
the Lease Investment Balance of such Rent Purchaser. As of the date hereof, the
Rent Purchaser's Percentage is equal to 78.6360877 %.
"Rent Purchaser's Purchase Price Interest" shall mean (a) so much of
the Lease Investment Balance payable by Tenant to Landlord pursuant to any
exercise of the Purchase Option by Tenant under the Lease (including, without
limitation, pursuant to Sections 17.2, 19.3(b), or 20.1 of the Lease) that does
not exceed the Guaranteed Residual Value, plus (b) the same portion of any
interest paid by Tenant at the Default Rate on the amount described in the
preceding clause (a).
"Rent Purchaser's Termination Option Interest" shall mean (a) so much
of the Termination Amount that does not exceed the Guaranteed Residual Value,
plus (b) the same portion of any interest paid by Tenant at the Default Rate on
the Termination Amount.
"Termination Amount" shall mean the sum of all Proceeds of any sale of
the Premises pursuant to the Termination Option paid to Landlord pursuant to
Section 20.2(d) of the Lease and all amounts payable by Tenant pursuant to
Section 20.2(e) of the Lease resulting from the exercise of the Termination
Option.
SECTION 1
DISTRIBUTIONS
1.1. General.
(a) Payment by Rent Purchaser of Consideration. Rent Purchaser
shall pay to Landlord, and Landlord hereby acknowledges receipt from Rent
Purchaser of, $50,558,000.00 as consideration for the sale by Landlord to Rent
Purchaser of Rent Purchaser's Interest.
(b) Distributions by Landlord. Upon Landlord's receipt of
collected funds of any amount constituting a part of the Landlord's Interests or
the Rent Purchaser's Interests, Landlord shall distribute the same, in the order
of priority set forth in Section 1.2. Distributions to Rent Purchaser, shall be
made by wire transfer in immediately available funds to Rent Purchaser's account
in the United States as such Rent Purchaser shall notify Landlord in writing at
least five (5) Business Days before the date of such distribution.
(c) Procedure for Distribution. If Landlord receives any Rent
Purchaser's Interests to be distributed pursuant to Section 1.2 prior to 11:00
a.m,
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New York time, on any Business Day, it shall distribute any such Rent
Purchaser's Interests to Rent Purchaser by 2:00 p.m., New York time, on the same
Business Day. If Landlord receives any such Rent Purchaser's Interests after
11:00 a.m., New York time, on a Business Day, it shall distribute such Rent
Purchaser's Interests to Rent Purchaser by 2:00 p.m., New York time, on the next
Business Day. In the event that Landlord shall fail to make any such
distribution by the time specified, Landlord shall pay to Rent Purchaser, on
demand, the amount of such distribution with interest thereon at a rate equal to
the average Federal Funds Rate for the period from the required date of
distribution to the date on which Landlord makes such distribution available to
Rent Purchaser in immediately available funds at the account referenced above.
If Landlord does not make such distribution available to Rent Purchaser within
three (3) Business Days after the required date of distribution, such Rent
Purchaser, shall be entitled to recover such distribution with interest thereon
at the Default Rate, on demand, from Landlord.
1.2. Priority.
(a) All amounts received by Landlord constituting any payment of
Purchase Price, Default Amount, or Insurance and Condemnation Payment shall be
distributed by Landlord in the following order of priority:
first: to Landlord for application by Landlord to any unpaid
amounts due to Landlord in respect of the Landlord's Residual Interest;
second: so much of the proceeds remaining that does not exceed
the Landlord's Interest shall be retained by the Landlord for itself;
third: so much of such amounts remaining that that does not
exceed the Rent Purchaser's Interest shall be paid to the Rent
Purchaser; and
fourth: the balance, if any, shall be paid to the Tenant.
(b) All amounts received by Landlord constituting any payment of Base
Rent shall be distributed by Landlord to Landlord and Rent Purchaser, pari
passu, in accordance with Landlord's Percentage and Rent Purchaser's Percentage.
(c) In the event Landlord receives any funds on account of Landlord's
Residual Interest pursuant to a distribution made pursuant to Section 1.2(a),
priority "first," and Landlord subsequently receives funds on account of
Landlord's Residual Interest for which Landlord has already been so compensated
by such distribution pursuant to Section 1.2(a), priority "first," then to such
extent such excess funds shall be distributed to Rent Purchaser or Tenant as the
priority requires.
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(d) All amounts received by Landlord constituting any payment of the
Termination Amount shall be distributed by Landlord in the following order of
priority:
(i) If the Premises are not sold:
first: to Landlord for application by Landlord to any unpaid
amounts due to Landlord in respect of the Landlord's Residual Interest;
second: so much of such amounts remaining that that does not
exceed the Rent Purchaser's Interest shall be paid to the Rent
Purchaser; and
third: the balance, if any, shall be paid to the Tenant.
(ii) If the Premises are sold and the Proceeds equal or exceed
the Lease Investment Balance, the portion of the Proceeds remaining
which exceeds the Lease Investment Balance shall be paid to Tenant in
accordance with Article 20.2 of the Lease and the portion of the
Proceeds remaining which equals the Lease Investment Balance shall be
distributed by u Landlord in the order of priority specified in
Section1.2(a).
(iii) If the Premises are sold and the Proceeds are less than
the Lease Investment Balance:
first: to Landlord for application by Landlord to any unpaid
amounts due to Landlord in respect of the Landlord's Residual Interest;
second: so much of the Proceeds remaining that does not exceed
the Landlord's Termination Option Interest shall be retained by the
Landlord for itself;
third: so much of the sum of the Proceeds remaining plus the
reimbursement payment from Tenant pursuant to Article 20.2 of the Lease
as does not exceed the Rent Purchaser's Termination Option Interest
shall be paid to Rent Purchaser; and
fourth: the balance, if any, shall be paid to Tenant.
SECTION 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. Representations and Warranties of Landlord. Landlord
represents and warrants to Rent Purchaser on the date hereof and on each Funding
Date as follows:
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(i) Landlord is duly organized and validly existing
in good standing under the laws of its jurisdiction of incorporation, and has
the corporate power and authority to enter into and perform its obligations
under this Agreement;
(ii) this Agreement has been duly authorized by all
necessary corporate action on the part of Landlord and the execution, delivery
and performance hereof by Landlord do not require the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action in respect of, any federal, state or foreign governmental authority or
agency by Landlord, except such as has been duly obtained and is in full force
and effect, and do not require any approval of stockholders of Landlord or any
approval or consent of any trustee or holders of any indebtedness or obligations
of Landlord, and has been duly executed and delivered by Landlord, and neither
the execution and delivery hereof, nor the consummation of the transactions
contemplated hereby, nor compliance by Landlord with any of the terms and
provisions hereof will contravene any law of the country and state of
incorporation of Landlord or any judgment, governmental rule, regulation or
order applicable to or binding on Landlord or contravene or result in any breach
of or constitute any default under, or result in the creation of any lien upon
any property of Landlord under, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement, charter,
by-law or other agreement or instrument to which Landlord is a party or by which
it or its properties may be bound or affected;
(iii) this Agreement constitutes a legal, valid and
binding obligation of Landlord enforceable against Landlord in accordance with
the terms hereof;
(iv) there are no suits or proceedings pending, or,
to the best knowledge of Landlord, threatened, against or affecting Landlord
before any court, governmental agency or arbitrator, which in the good faith
opinion of Landlord, after consultation with counsel, would if adversely
determined have a material adverse effect on the interests or the financial
condition of Landlord or which would purport to affect the legality, validity or
enforceability of this Agreement.
2.2. Representations and Warranties of Rent Purchaser. Rent
Purchaser represents and warrants to Landlord on the date hereof and on each
Funding Date as follows:
(i) Rent Purchaser is duly organized and validly
existing in good standing under the laws of the jurisdiction of incorporation,
and has the
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corporate power and authority to enter into and perform its obligations under
this Agreement;
(ii) this Agreement has been duly authorized by all
necessary corporate action on the part of Rent Purchaser and the execution,
delivery and performance hereof by such Rent Purchaser do not require the
consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any federal, state or foreign
governmental authority or agency by Rent Purchaser, except such as has been duly
obtained and is in full force and effect and do not require any approval of
stockholders of Rent Purchaser or any approval or consent of any trustee or
holders of any indebtedness or obligations of Rent Purchaser, and has been duly
executed and delivered by Rent Purchaser, and neither the execution and delivery
hereof, nor the consummation of the transactions contemplated hereby, nor
compliance by Rent Purchaser with any of the terms and provisions hereof will
contravene any law of the country and state of incorporation of Rent Purchaser
or any judgment, governmental rule, regulation or order applicable to or binding
on Rent Purchaser or contravene or result in any breach of or constitute any
default under, or result in the creation of any lien upon any property of Rent
Purchaser under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement, charter, by-law or
other agreement or instrument to which Rent Purchaser is a party or by which it
or its properties may be bound or affected;
(iii) this Agreement constitutes a legal, valid and
binding obligation of Rent Purchaser, enforceable in accordance with its terms
against Rent Purchaser, except as otherwise restricted in the written opinion of
Rent Purchaser's counsel delivered on even date herewith;
(iv) there are no suits or proceedings pending, or,
to the best knowledge of Rent Purchaser, threatened, against or affecting Rent
Purchaser before any court, governmental agency or arbitrator, which in the good
faith opinion of Rent Purchaser, after consultation with counsel, would if
adversely determined have a material adverse effect on or the financial
condition of Rent Purchaser or which would purport to affect the legality,
validity or enforceability of this Agreement; and
(v) Rent Purchaser acknowledges receiving a copy of
the Lease Documents.
2.3. Covenants.
2.3.1. Exercise of Rights Under Lease. Rent Purchaser
acknowledges and agrees that all rights of Landlord to (i) exercise any remedy
(including remedies against the Parcels), election or option, or make any
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decision or determination, or give any notice, consent, waiver or approval under
or in respect of, the Lease or any other Lease Document, (ii) receive and to
enforce the payment of the full amount of any damages (whether or not an Event
of Default under the Lease has occurred), (iii) receive and enforce each
installment of Base Rent, Additional Rent and all other amounts payable under
the Lease and any other Lease Document, (iv) receive and enforce all amounts
payable on account of any actual or constructive loss or damage to the Premises
or any part thereof, (v) receive and enforce all payments on account of any sale
of the Parcels, (vi) receive and enforce all insurance proceeds, condemnation or
requisition payments or other payments of any kind for or with respect to the
Premises or any part thereof, have been expressly retained by Landlord as part
of the Landlord's Retained Residual Interests and that Landlord may exercise
such rights, or choose not to, after making commercially reasonable efforts to
confer with Rent Purchaser and seek its agreement to such exercise or
forbearance. Rent Purchaser specifically agrees that in the event Landlord and
Rent Purchaser cannot agree as to how to proceed to foreclose against the
Parcels, Landlord shall have the right to judicially foreclose against the
Premises without the agreement of Rent Purchaser. Nothing herein shall be deemed
to confer upon Rent Purchaser the right to require Landlord to declare that an
Event of Default has occurred, or otherwise take any particular enforcement or
remedial action available to Landlord under the Lease Documents. Landlord agrees
to use commercially reasonable efforts to notify Rent Purchase in writing of the
occurrence of an Event of Default under the Lease Documents, but Landlord's
failure to give Rent Purchaser any such notice shall not result in any liability
of Landlord to Rent Purchaser. Landlord further agrees to use commercially
reasonable means to enforce its rights under the Lease and this Agreement.
2.3.2. Return of Distribution. In the event that
Landlord shall be required, as the result of any bankruptcy or insolvency
proceeding of Tenant or otherwise, to return to Tenant or pay over to any court
or other entity an amount (a "Returned Amount") that was distributed pursuant to
Section 1 hereof, Rent Purchaser shall on demand from Landlord pay to Landlord
so much of the Returned Amount that was distributed to Rent Purchaser. On such
payment, Rent Purchaser's right to receive such payment shall be reinstated as
if no distribution of the Returned Amount has been made.
SECTION 3
PROVISIONS RELATING TO LANDLORD
3.1 Role of Landlord. Rent Purchaser acknowledge and agree
that Landlord shall be responsible for the general administration and servicing
of the Lease. In discharging such responsibilities, Landlord shall act in
accordance with its customary procedures and practices in the administration and
servicing of leases of a type similar to the Lease. Landlord shall retain
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possession of all of the Lease Documents and all other documents relating to the
Lease. Photocopies or duplicate originals of any Lease Documents, all financial
and other information concerning Tenant and/or the Premises and all other like
documents and items prepared or received by Landlord after the date hereof in
connection with the Lease shall be supplied by Landlord to Rent Purchaser upon
written request therefor. Each Rent Purchaser may at all reasonable times at its
expense, and upon reasonable prior written notice to Landlord, inspect, copy and
audit Landlord's books and records pertaining to the Lease.
The parties agree that Landlord is not a party hereto in its capacity
as Landlord under the Lease and Landlord is not assigning, and no Rent Purchaser
is obtaining, any of the rights or obligations whatsoever of Landlord under the
Lease Documents.
3.2 Immunities. Each Rent Purchaser acknowledges and agrees
that Landlord (i) shall not, by reason of this Agreement, any Lease Document, or
otherwise, be or be deemed to be a trustee, fiduciary or agent of any kind
whatsoever for or on behalf of any Rent Purchaser; (ii) shall not have any
duties or responsibilities with respect to Rent Purchaser except those expressly
set forth in this Agreement; (iii) shall not be responsible to any Rent
Purchaser for any recitals, statements, representations or warranties contained
in any Lease Document, or in any certificate or other document referred to or
provided for in, or received by any of them under, the Lease Documents (except
to the extent explicitly made by Landlord herein), or for the value, validity,
effectiveness, genuineness, enforceability, execution, filing, registration,
collectability, recording, perfection, existence, or sufficiency of any Lease
Document, or any other document referred to or provided for herein or therein or
any Premises covered by the Lease or for any failure by any person to perform
any of its obligations hereunder (except for its own breach hereof) or
thereunder, and shall have no duty to inquire into or pass upon any of the
foregoing matters; (iv) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any Lease Document
except to the extent required hereby or to the extent the failure to do so would
constitute gross negligence or willful misconduct; (v) shall not be responsible
for any mistake of law or fact or any action taken or omitted to be taken by it
hereunder or under any Lease Document or any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct; (vi) shall
not be responsible for any delay, error, omission, or default of any mail,
telegraph, cable or wireless agency or operator; and (vii) shall not be
responsible for the acts or edicts of any governmental or revenue authority.
Landlord may employ agents, designees and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such parties selected by it
with reasonable care. Notwithstanding the foregoing, nothing contained in this
Section 3.2 shall relieve Landlord for any liability for breach of any provision
of this Agreement.
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3.3 Reliance. Landlord shall be entitled to rely upon any
certification, notice, or other communication (including any thereof by
telephone, telex, facsimile, telegram or cable) believed by Landlord to be
genuine and correct and to have been signed or sent by or on behalf of the
proper person and upon advice and statements of legal counsel, independent
accountants and other experts selected by Landlord. Landlord shall not be
required in any way to determine the identity or authority or any person
delivering or executing the same. Landlord shall in all cases be fully protected
in the acting or in refraining from acting hereunder and under the Lease
Documents to the extent such action or failure to ac does not constitute gross
negligence or willful misconduct, and, any action taken or failure to act
pursuant to the terms hereof shall be binding on all of the Rent Purchaser.
3.4 Injunctions. If any order, writ, judgment, or decree shall
be made or entered by any court affect the rights, duties and obligations of
Landlord under this Agreement or any Lease Document, then and in any of such
events, the Landlord is authorized, in its sole discretion, to rely upon and
comply with such order, writ, judgment, or decree which it is advised by legal
counsel of its own choosing is binding upon it under the terms of this
Agreement, the relevant Lease Documents, or otherwise; and, if Landlord complies
with any such order, writ, judgment, or decree, then it shall not be liable to
any Rent Purchaser or to any other person by reason of such compliance even
though such order, writ, judgment, or decree may be subsequently reversed,
modified, deemed inapplicable, annulled, set aside, or vacated.
3.5 Rights of Landlord. Subject to the terms and provisions
hereof, Landlord may (without having to account therefor to Rent Purchaser)
accept deposits from, lend money to, and generally engage in any kind of
banking, financing, leasing, trust, letter of credit, agency or other business
with Tenant (and any of its affiliates) and may accept fees and other
consideration from Tenant for services in connection therewith.
3.6 Liability. Except as specifically set forth herein,
neither Landlord nor any of its affiliates, directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (a) any statement, warranty or representation made in connection with
the Lease Documents; (b) the performance or observance of any of the covenants
or agreements of Tenant; (c) the satisfaction of any condition specified in the
Lease Documents; or (d) the validity, effectiveness or genuineness of any of the
Lease Documents or any other instrument or writing furnished in connection
herewith or therewith.
SECTION 4
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MISCELLANEOUS
4.1 Rent Purchaser Due Diligence. Rent Purchaser acknowledges
that it has, independently and without reliance upon Landlord, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Rent Purchaser also
acknowledges that it will, independently and without reliance upon Landlord, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under this Agreement.
4.2 Counterparts. This Agreement may be executed by the
parties hereto in multiple counterparts and each counterpart, when so executed,
shall be deemed an original, but all of which shall be considered as one
agreement. Further, in making proof of this Agreement, it shall not be necessary
to produce or account for more than one such counterpart.
4.3 Survival. The representations, warranties, indemnities and
agreements of Landlord and Rent Purchaser provided for in this Agreement shall
survive the purchase of the Interests by Rent Purchaser
4.4 Modification, Binding Effect, etc. Neither this Agreement
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified, except by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. The terms of this Agreement shall be binding upon, and
inure to the benefit of, Rent Purchaser and its successors and permitted assigns
and Landlord and its successors and permitted assigns. This Agreement shall in
all respects be governed by, and construed in accordance with, the laws of the
State of Oregon, including all matters of construction, validity and
performance, but excluding the conflict of laws principles thereof.
4.5 Assignment. Rent Purchaser may not assign any of its
rights or obligations hereunder (by participation or otherwise) without the
prior written consent of the other parties hereto, which consent shall not be
unreasonably withheld. Landlord shall not have the right to assign or otherwise
transfer its interests in this Agreement except to the extent that Landlord is
permitted by the Lease to assign its interest in the Lease to a third party
pursuant to Section 14.2 of the Lease; provided, however, that this Agreement
may not be assigned separately from Landlord's interest in the Lease, and
provided further that in connection with an assignment of the Lease, Landlord
shall have the right to transfer its interests in this Agreement, without Rent
Purchaser's or Tenant's consent, to another financial institution with a
capitalization in excess of $50,000,000.00; provided, however, the transferee
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institution continues to satisfy all applicable accounting standards to permit
the lease to retain operating lease treatment.
4.6 Notices. Any notice hereunder shall be in writing. Notices
given by telegram, telecopier or personal delivery shall be deemed to have been
given and received when sent and notices given by mail shall be deemed to have
been given and received four business days after the date when sent by
registered or certified mail, postage prepaid, and addressed to Landlord or Rent
Purchaser at its address shown below its signature hereto, or at such other
address as Landlord or any Rent Purchaser may by written notice received by the
other, have designated as its address for such Purpose.
[Signatures begin on next page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
date set forth on each counterpart signature page hereto.
LANDLORD: SUMITOMO BANK LEASING AND FINANCE, INC.,
a Delaware corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
277 Park Avenue
New York, New York 10172
Attention: Chief Credit Officer
Date:________________________, 1999
[Signatures continued on next page]
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RENT PURCHASER: INTEGRATED DEVICE TECHNOLOGY, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
_____________________________________
Attention: __________________________
Date: ______________, 1999
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SECOND AMENDMENT TO SUBLEASE OF THE LAND AND
LEASE OF THE IMPROVEMENTS
THIS SECOND AMENDMENT TO SUBLEASE OF THE LAND AND LEASE OF THE
IMPROVEMENTS ("Second Amendment") is made and entered into as of September ____,
1999, by and between SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation ("Landlord"), and INTEGRATED DEVICE TECHNOLOGY, INC., a Delaware
corporation ("Tenant" or "IDT").
THIS SECOND AMENDMENT IS ENTERED INTO upon the basis of the following
facts, understandings and intentions.
A. Landlord and Tenant entered into that certain Sublease of the Land
and Lease of the Improvements dated as of January 27, 1995 ("Lease"), pursuant
to which Landlord leased to Tenant certain Land and Existing Improvements
located in Washington County, Oregon and Landlord agreed to lease to Tenant
certain Additional Improvements to be constructed on the Land pursuant to the
terms of the Lease. Any capitalized terms used but not defined in this Second
Amendment which are defined in the Lease shall have the meaning given such terms
in the Lease;
B. Landlord and Tenant entered into a First Amendment to Sublease of
the Land and Lease of the Improvements dated as of December 11, 1995 (the "First
Amendment") (the Lease and the First Amendment are collectively referred to
herein as the "Lease"), pursuant to which Landlord and Tenant agreed to amend
the Lease to grant a purchaser at a foreclosure sale the option to purchase the
then-existing Premises under the terms of the Lease and to further clarify
certain provisions of the Lease; and
C. Landlord and Tenant have agreed to terminate that certain Pledge
Agreement dated January 27, 1995 by and between Tenant and Landlord (the "Pledge
Agreement") upon receipt of funds from the Rent Purchaser (as defined below).
Furthermore, Landlord and Tenant, in conjunction with the termination of the
Pledge Agreement have agreed to terminate the Institutional Custody Agreement
dated January 27, 1995 by and between Tenant, Landlord and Sumitomo Bank of New
York Trust Company, as custodian (the "Custodial Agreement").
D. Landlord and Tenant have agreed to amend the Lease as set forth
herein to replace the bank debt currently provided by the Sumitomo Bank, Limited
with funding from a Rent Purchaser Contribution advanced to Landlord by IDT, in
its capacity as a Rent Purchaser ("Rent Purchaser"), pursuant to that Rent
Purchase Agreement executed by Landlord and IDT of even date herewith (the "Rent
Purchase Agreement"). Tenant has further agreed to pledge additional real estate
collateral and improvements to Landlord in consideration
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for the new Commitment Amount. Such additional real estate collateral and
improvements shall mean the DI/HF Treatment Building, an Energy Center, the
Generator/Electrical Building, the Water Treatment Building, and tank farm
(hereinafter, collectively referred to as the "Additional Collateral"). In
addition to the foregoing, the Lease is hereby amended more particularly as
described hereinbelow.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereby agree as follows:
1. Base Lease Term. Section 1.7 of the Lease shall be amended to provide
for an Expiration Date of May 20, 2005.
2. Addresses for Notices. Section 1.11 of the Lease shall be amended to
provide a new address for counsel to Landlord. The address for Landels,
Ripley & Diamond shall be deleted and replaced with:
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, Suite 2900
San Francisco, CA 94104
Attention: Gary S. Hand, Esq.
3. Commitment Amount. The Commitment Amount, as defined in Section 2.10 of
the Lease shall be increased to $64,293,636.00 That portion of the
Commitment Amount which represents a new commitment from Landlord shall
be considered an Advance pursuant to the terms of the Lease and
disbursed to Tenant by Landlord on the closing date of this Amendment.
4. Guaranteed Residual Value. The Guaranteed Residual Value, as defined in
the Lease, shall be changed to 78.6360877%.
5. Landlord Contribution Rate. The rate applicable to that portion of the
Lease Investment Balance which represents the Landlord's contribution
to the Lease Investment Balance (the "Landlord Contribution") shall be
calculated at LIBOR plus one hundred fifty-five (155) basis points. The
Landlord Contribution as of the date hereof is $13,735,636.00.
6. Rent Purchaser Contribution Rate. The rate applicable to that portion
of the Lease Investment Balance which represents the Rent Purchaser's
contribution to the Lease Investment Balance (the "Rent Purchaser
Contribution") shall be calculated at LIBOR plus twelve and one-half
(12.5) basis points. The Rent Purchaser Contribution as of the date
hereof is $50,558.000.00.
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7. Base Rent. The definition of Base Rent in Section 2.3 of the Lease is
hereby replaced with the following language: "'Base Rent' shall mean,
as of a Rent Payment Date, that annual amount equal to the sum of (i)
the Rent Purchaser Contribution multiplied by the Rent Purchaser
Contribution Rate, the product of which is then divided by the Lease
Investment Balance (at the time of the relevant calculation), plus (ii)
the Landlord Contribution multiplied by the Landlord Contribution Rate,
the product of which is then divided by the Lease Investment Balance
(at the time of the relevant calculation), which amount is then
prorated for the Calculation Period in question on the basis of a 360
day year and the actual number of days elapsed."
8. Rent Purchaser's Deed of Trust. In conjunction with the Rent Purchase
Agreement, being executed on even date herewith, Landlord shall grant a
Deed of Trust for the benefit of the Rent Purchaser ("Rent Purchaser's
Deed of Trust"), and such Rent Purchaser's Deed of Trust shall be
subject only to the Permitted Title Exceptions. Section 14.1 of the
Lease shall be amended to allow for the Rent Purchaser's Deed of Trust
as a permitted exception. Section 2.30 of the Lease shall be amended to
include the Rent Purchaser's Deed of Trust as a Permitted Title
Exception.
9. Right of Offset. Provided IDT is Tenant under the Lease, IDT shall have
a right of offset against amounts owing Landlord under the Lease for
amounts owing to IDT, as Rent Purchaser, from Landlord pursuant to the
Rent Purchase Agreement. Landlord shall have a right to offset amounts
owing to IDT under the Rent Purchase Agreement against amounts owing
Landlord by IDT, as Tenant, pursuant to the Lease. Without limiting the
generality of the foregoing, and provided IDT is both Tenant under the
Lease and Rent Purchaser under the Rent Purchase Agreement, if IDT as
Tenant under the Lease becomes obligated to pay amounts that are to be
credited toward the Lease Investment Balance (e.g., Purchase Price or
Termination Amount, as defined in the Rent Purchase Agreement), IDT may
immediately exercise its right to offset (and thereby reduce) such
obligation by amounts that would be due from Landlord to IDT as Rent
Purchaser under the Rent Purchase Agreement had Landlord received the
payment required of IDT as Tenant under the Lease, which exercise of
such offset right shall satisfy Landlord's obligation to make required
payments to IDT as Rent Purchaser under the Rent Purchase Agreement to
the extent of such offset. Notwithstanding the generality of the
foregoing, the rights of offset contained in this paragraph shall not
apply to the monthly payments of Base Rent, except IDT as Tenant may
offset against a subsequent month's Base Rent payment the amount not
remitted by Landlord to IDT as Rent Purchaser for the preceding month,
in accordance with the terms of the Rent Purchase Agreement.
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10. Deed of Trust for Additional Collateral. As further consideration for
Landlord to enter into this Agreement, Tenant is granting to Landlord a
security interest in the Additional Collateral, as more particularly
described in that First Amendment to Line of Credit Trust Deed
(including Fixture Filing and Assignment of Rents) (the "SBLF
Mortgage") being executed concurrently herewith. The SBLF Mortgage, as
amended, shall remain a first position deed of trust on all collateral
and shall be a permitted exception for purposes of Sections 2.30 and
14.1 of the Lease.
11. Financial Covenants. Section 19.1(g) of the Lease shall be amended to
provide for a tangible net worth of not less than $200,000,000.00 which
shall be measured and monitored on a quarterly basis in conjunction
with the quarterly financial statements required by Section 21.21 of
the Lease.
12. Default in Payment for Other Credit Facility. The amount in Section
19.1(h) shall be increased from a payment in the amount of
$1,000,000.00 to a payment in the amount of $10,000,000.00.
13. Change of Ownership Control. In the event an unrelated third party
acquires ownership in the aggregate of forty-nine percent (49%) or more
of the voting securities of Tenant, it shall be deemed a "Change of
Ownership Control." Upon a Change of Ownership Control, Landlord shall
have the right to terminate the Lease and require the Tenant to
exercise the Purchase Option pursuant to Section 20.1 of the Lease.
Tenant shall give Landlord written notice of such Change of Ownership
within thirty (30) days of such change. After Landlord receives written
notice of such Change in Ownership Control Landlord shall notify Tenant
within ninety (90) days of Landlord's receipt of such notice, in
writing of its intent to terminate the Lease upon such a Change of
Ownership Control. Landlord's failure to notify Tenant of such
termination within the ninety (90) days will be deemed a waiver of
Landlord's right to terminate the Lease based on a Change of Ownership
Control.
14. LIBOR Rate. The definition of LIBOR Rate in Section 2.27 of the Lease
shall be amended to include the following language at the end of the
definition: "If LIBOR is unavailable, the applicable rate shall be the
Federal Funds Rate (defined for purposes of this section 2.27 as the
rate of interest given by the Federal Reserve of the United States to
participating banks for borrowings corresponding to the Borrowing
Period) plus fifty (50) basis points."
15. Additional Representation and Warranty of Landlord. Landlord is a
substantive entity with equity capital in excess of Six Hundred Million
Dollars ($600,000,000.00) as of the date of this Amendment. Landlord
shall provide Tenant a copy of an audited balance sheet for Landlord,
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prepared in accordance with GAAP, on an annual basis within one hundred
twenty (120) days of the conclusion of its fiscal year end. Landlord
will continue to maintain an equity investment in the Lease sufficient
to meet the SFAS 13 accounting criteria for operating lease treatment
and will comply with the Emerging Issue Task Force's issues 90-15 and
96-21 with regard to the Lease.
16. Additional Rights of IDT as Ground Lessor under Termination Option.
Section 20.2(c) of the Lease shall be amended to include the following
language at the end of the referenced section: "If IDT as tenant under
the Lease (hereinafter, "Tenant"), terminates the Lease pursuant to
Section 20.2 of the Lease and if the Sumitomo Bank Leasing and Finance,
Inc. as landlord under the Lease (hereinafter, "Landlord"), sells the
Improvements after the expiration of the Sales Period (as defined in
the Lease), or if Landlord sublets the Improvements after the Sales
Period, then Ground Lessor shall have the right, in its sole discretion
and within thirty (30) days of the election by Landlord to sell or
sublet, to increase the rental due under the Ground Lease to the lower
of: (a) a fair market value rental, as determined by an appraisal,
(valued as unimproved, zoned and entitled to permit the use then being
conducted thereon, and unencumbered by this Lease, the SBLF Mortgage,
the Rent Purchaser's Deed of Trust, and any other then existing
exception to title that is not a Permitted Title Exception) at the time
the Termination Option is elected by Tenant, or (b) the projected fair
market value rental of $33,333.33 per month, as determined by Cushman &
Wakefield, with regard to its appraisal completed in conjunction with
this transaction, dated August 31, 1999 (the "Appraisal"). Landlord
shall also have the right to purchase the Land which is the subject of
the Ground Lease for the lower of: (x) the fair market value, as
determined by an appraisal, (valued as unimproved, zoned and entitled
to permit the use then being conducted thereon, and unencumbered by
this Lease, the SBLF Mortgage, the Rent Purchaser's Deed of Trust, and
any other then existing exception to title that is not a Permitted
Title Exception) at the time the Tenant elects the Termination Option,
or (y) the projected fair market value of $4,000,000.00, as determined
by Cushman & Wakefield in its Appraisal. Should Ground Lessor and
Ground Lessee fail to agree on the adjustment to the Ground Lease
payments pursuant to the foregoing, the manner of adjusting the Ground
Lease payment, for purposes of this section, shall be governed by an
appraisal conducted by a mutually acceptable commercial property
appraiser, similar to Cushman & Wakefield, and the parties agree to
abide by the assessment of the appraiser. Within thirty (30) days of
the conclusion of the Sales Period, Ground Lessor must provide Landlord
written notice of the amount of the increased Ground Lease payments
pursuant to this section; thereafter, Landlord shall provide Ground
Lessor written notice within one hundred eighty (180) days of receipt
of the notice of its intent to either sell,
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sublease or purchase the Land subject to the increased Ground Lease
payment." In conjunction with this Paragraph 16, Landlord and Tenant
agree to amend the Ground Lease accordingly. Nothing in this Second
Amendment shall affect any of the parties' other rights pursuant to the
Ground Lease, as specified therein.
17. Termination of Pledge Agreement and Institutional Custody Agreement.
Upon receipt of the funds provided by Rent Purchaser, in accordance
with the Rent Purchase Agreement dated of even date herewith, Landlord
and Tenant agree to terminate the Custodial Agreement by executing a
letter, along with the present custodian under the Custodial Agreement,
releasing said custodian from its responsibilities under the Custodial
Agreement. The execution of this Second Amendment by Landlord and
Tenant shall serve as the termination of the Pledge Agreement. With
regard to the release of the Collateral, Sections 2.9 and 21.16 of the
Lease are deleted and references to "Pledge Agreement" in Sections
2.31, 2.43 and 19.1(e) are also hereby deleted.
18. Assignment or Transfer by Landlord. Landlord shall have the right to
transfer its interest in the Premises to another financial institution
with a capitalization in excess of $50,000,000.00 without Tenant's
approval; provided, however, that the transferee financial institution
continues to satisfy all accounting criteria for the treatment of this
Lease as an operating lease for financial accounting purposes.
19. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
of which together shall comprise but a single instrument.
20. Representations and Warranties. Tenant represents and warrants that (1)
no Event of Default exists under the Lease as of the date hereof; and
(2) Tenant has the full right and authority to enter into this Second
Amendment and the persons signing this Second Amendment have full power
and authority to bind Tenant. All representations and warranties of
Tenant pursuant to the Lease are hereby restated by Tenant as though
such representations and warranties are being made anew in conjunction
herewith, and such representations and warranties remain in full force
and effect, unless otherwise amended.
21. Existing Lease. Except to the extent specifically amended hereby and
pursuant to the First Amendment, all terms and conditions of the Lease
remain in full force and effect.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment as of the date and year first written above.
"TENANT"
INTEGRATED DEVICE TECHNOLOGY, INC.,
a Delaware corporation
By: ______________________
Name: ______________________
Its: ______________________
(Signatures continue on next page)
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"LANDLORD"
SUMITOMO BANK LEASING AND FINANCE, INC.,
a Delaware corporation
By: ______________________
Name: ______________________
Its: ______________________
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