LEASE AGREEMENT
BETWEEN
KIM CAMP NO. VII
AS LANDLORD
AND
ALPHATEC ELECTRONICS COMPANY LIMITED (PUBLIC)
A THAILAND PUBLIC CORPORATION
AS
TENANT
TABLE OF CONTENTS
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Page
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1. Premises......................................... 1
2. Tenant Improvements; Condition of Premises....... 1
2.1 Construction of Tenant Improvements....... 1
2.2 Contractor; Construction.................. 1
2.3 Improvement Costs......................... 3
2.4 Delivery of Premises; As-is Condition..... 4
3. Term............................................. 5
3.1 Initial Lease Term........................ 5
3.2 Extended Terms............................ 6
4. Rent............................................. 7
4.1 Base Rent................................. 7
4.2 Rent for Extended Term.................... 8
5. [Intentionally Omitted].......................... 10
6. Operating Expenses and Taxes..................... 10
6.1 Payment by Tenant......................... 10
6.2 Definitions............................... 12
7. Utilities........................................ 14
8. Late Charges..................................... 15
9. Use of Premises; Compliance with Laws............ 15
9.1 General................................... 15
9.2 Hazardous Materials....................... 17
9.3 Signage................................... 20
9.4 Reasonableness of Restrictions............ 20
10. Alterations; Condition on Termination............ 21
11. Repairs and Maintenance.......................... 22
11.1 Tenant's Obligations...................... 22
11.2 Landlord's Obligations.................... 23
12. Insurance........................................ 24
12.1 Tenant's Insurance........................ 24
12.2 Landlord's Insurance...................... 25
12.3 Waiver of Subrogation..................... 25
13. Limitation of Liability and Indemnity............ 26
14. Assignment and Subletting........................ 28
14.1 In General................................ 28
14.2 Transfers of Interests in Tenant.......... 29
14.3 Permitted Transfers....................... 29
14.4 Excess Rents.............................. 29
15. Ad Valorem Taxes................................. 30
16. Lender Requirements.............................. 30
16.1 Subordination............................. 30
16.2 Attornment................................ 31
16.3 Approval by Lender........................ 31
17. Right of Entry................................... 31
18. Estoppel Certificate............................. 32
19. Tenant's Default................................. 33
20. Remedies for Tenant's Default.................... 34
20.1 Termination............................... 34
20.2 Continuance of Lease...................... 36
20.3 Reletting Premises........................ 36
20.4 Right to Cure Tenant's Default............ 37
21. Surrender of Premises............................ 37
22. Landlord's Default............................... 38
23. Parking.......................................... 38
24. Sale of Premises................................. 38
25. Waiver........................................... 38
26. Casualty Damage.................................. 39
27. Condemnation..................................... 41
28. General Provisions............................... 42
28.1 Time...................................... 42
28.2 Successors and Assigns.................... 42
28.3 Recordation............................... 42
28.4 Landlord's Personal Liability............. 42
28.5 Separability.............................. 42
28.6 Choice of Law............................. 42
28.7 Attorneys' Fees........................... 42
28.8 Interest.................................. 43
28.9 Notices................................... 43
28.10 Authorization............................. 43
28.11 Prior Agreements.......................... 44
28.12 Quiet Enjoyment........................... 44
28.13 Brokers................................... 44
ii
LEASE AGREEMENT
---------------
DATE: March 23, 1995
LANDLORD: KIM CAMP NO. VII, a California
general partnership
50 West San Fernando Street, Suite 320
San Jose, CA 95113
TENANT: ALPHATEC ELECTRONICS COMPANY LIMITED (PUBLIC)
a Thailand public corporation
1245 Oakmead Parkway, Suite 200
Sunnyvale, CA 94086
After Commencement Date:
3600 Peterson Way
Santa Clara, CA
1. Premises. Landlord hereby leases to Tenant, upon the terms and
--------
conditions contained in this lease ("Lease"), those certain premises (the
"Premises") consisting of the ("Land") and the "Building" located at 3600
Peterson Way, Santa Clara, California, which Premises are shown on the map
attached hereto as Exhibit "A." The Building contains approximately 70,538
square feet.
2. Tenant Improvements; Condition of Premises.
------------------------------------------
2.1 Development of Plans and Specifications. On or before April 11,
---------------------------------------
1995, Landlord shall cause to be prepared and submitted to Tenant working
drawings and related specifications (the "Plans and Specifications") for the
interior improvements (the "Tenant Improvements") depicted in the floor plan
attached hereto as Exhibit "B". Provided that Landlord has submitted the Plans
and Specifications to Tenant by the date set forth in the preceding sentence,
Tenant shall review and approve the Plans and Specifications no later than 5:00
p.m. April 14, 1995.
2.2 Contractor; Construction. Upon review and approval of the Plans
------------------------
and Specifications by Tenant, Landlord shall submit the same for bidding
purposes to Devcon Construction ("Devcon") and
1
one other contractor selected by Tenant ("Tenant's Contractor"), which
submission shall be with instructions that such contractors must provide full
written bids for the construction of the Tenant Improvements to Landlord no
later than 5:00 p.m., April 18, 1995. Landlord shall select, for the
construction of the Tenant Improvements, the contractor which has submitted the
lowest responsive bid; provided, however, Landlord shall only be required to
select Tenant's Contractor to the extent such contractor has the requisite level
of back-ground and experience, is able to provide full performance and payment
bonding for the Tenant Improvements (whether or not bonds are actually
obtained), and otherwise has the financial capability to carry out the subject
construction; provided further, however, in the event Tenant's Contractor has
submitted the lowest responsive bid (and meets the requirements set forth
above), Landlord may nevertheless select Devcon if either Devcon agrees to lower
its bid to that submitted by Tenant's Contractor or Landlord otherwise agrees to
increase the Improvement Allowance (as defined in Section 2.3 below) to include
the excess of Devcon's bid over the bid of Tenant's Contractor.
The contractor selected, as provided above, shall be retained by
Landlord and the actual construction for the Tenant Improvements shall be
carried out under the direction and supervision of Landlord. Landlord shall use
its reasonable efforts to cause the Tenant Improvements to be Substantially
Completed by July 1, 1995. "Substantially Completed" shall mean (a) the Tenant
Improvements have been completed in accordance with the Plans and Specifications
approved by Landlord, except for minor deviations and Tenant's punchlist items
and (b) a certificate of occupancy has been issued for the Premises by the
appropriate governmental authority.
2
Tenant shall have the right to have its employees and/or contractors enter
the Premises prior to the Substantial Completion of the Tenant Improvements for
the purposes of installing Tenant's data and telecommunications cabling and
related fixtures and equipment, provided that prior to such entry Tenant shall
submit to Landlord evidence of the liability insurance required pursuant Section
12.1 below. Any entry by Tenant pursuant to the preceding sentence shall be
subject to the provisions of Section 13.1 below.
During the course of construction of the Tenant Improvements, Landlord shall
obtain the prior consent of Tenant to any changes to, or deviations from, the
Plans and Specifications (as approved by both Landlord and Tenant), which
changes or deviations would, in the aggregate, result in an overall increase in
the total amount of the Improvements Costs.
2.3 Improvement Costs. All of the costs, expenses, and applicable fees
-----------------
to be incurred in connection with the design and construction of the Tenant
Improvements ("Improvement Costs") shall be advanced by Landlord. Landlord shall
advance funds for the Improvements Costs up to One Million Four Hundred Ten
Thousand Seven Hundred Sixty Dollars ($1,410,760) as the "Improvement
Allowance". Any Improvements Costs incurred by Landlord in excess of the
Improvement Allowance (but only to the extent such excess does not exceed Three
Hundred Fifty-two Thousand Six Hundred Ninety Dollars ($352,690) (the
"Additional Allowance") shall be amortized over the initial Lease Term (together
with interest thereon at the rate of eleven percent (11%) per annum) and shall
be payable by Tenant, as Additional Rent under this Lease, in equal monthly
installments over the initial Lease Term with each payment of monthly Base Rent
payable by Tenant under this Lease. Any Improvement Costs incurred by Landlord
in connection with the
3
Tenant Improvements in excess of the Improvement Allowance and the Additional
Allowance shall be paid for by Tenant, which payment shall be due and payable
within ten (10) days following written demand therefor by Landlord.
2.4 Delivery of Premises: "As Is" Condition. Landlord shall not be in
---------------------------------------
default hereunder and shall not be liable to Tenant for any damage or loss
incurred by Tenant by reason of Landlord's failure, for whatever reason, to
cause the Premises to be delivered (or the Tenant Improvements Substantially
Completed) by any particular date, nor shall this Lease be void nor voidable on
account thereof; provided, however, in the event the Tenant Improvements have
not been Substantially Completed on or before January 31, 1996 ("Outside
Completion Date") and such delay is not a result of a Tenant Delay (as defined
in Section 3.1 below), Tenant shall have the right, as its sole and exclusive
remedy, to terminate this Lease by providing Landlord with written notice
thereof on or before the date which is ten (10) days following the Outside
Completion Date:
Tenant shall accept the Premises on the Commencement Date (as defined
below) in its "As Is" condition, subject to the following:
(a) The Tenant Improvements shall have been constructed in
accordance with the Plans and Specifications approved by Landlord;
(b) The Premises shall be in compliance with all applicable
governmental ordinances, rules, codes, or regulations which relate to the
Building (collectively, "General Building Regulations"); and,
(c) The Building shall comply with the Americans with Disabilities
Act ("ADA").
4
All costs and expenses incurred in placing the base Building shell in
compliance with any General Building Regulations and/or the ADA shall be borne
by Landlord and shall not be deducted from the Improvement Allowance or, if
applicable, included within Additional Allowance. All other costs and expenses
relating to compliance with General Building Regulations and/or the ADA
(including, without limitation, any such compliance which is required in
connection with the Tenant Improvements) may be deducted from the Improvement
Allowance and, if applicable, included within Additional Allowance.
3. Term.
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3.1 Initial Lease Term; Early Occupancy. The term of this Lease (the
-----------------------------------
"Lease Term") shall commence on the Commencement Date (defined below) and shall
end on the date that is five (5) years thereafter, which Lease Term is subject
to extension as provided in Section 3.2 below. The Commencement Date shall be
the date which is sixty (60) days following the earlier of the date (a) upon
which the Tenant Improvements are Substantially Completed, or (b) upon which the
Tenant Improvements would have been Substantially Completed, but for the
occurrence of any Tenant Delays; provided, however, in no event shall the
Commencement Date be earlier than September 1, 1995. "Tenant Delay(s)" shall
mean delays in the design and/or construction of the Tenant Improvements caused
by (i) Tenant's failure to review and approve the Plans and Specifications
within the times set forth in Section 2.1 above, (ii) errors or defects in the
floor plan of the Tenant Improvements (to the extent prepared by Tenant or
Tenant's consultants), (iii) requests by Tenant for change orders or other
modifications to the Tenant Improvements, and/or (iv) any other act or omission
on the part of Tenant, or its agents, employees, contractor's, or
5
consultants. The events described in (ii) through (iv) above shall only
constitute Tenant Delays to the extent such events result in an actual delay in
the overall substantial completion of the Tenant Improvements.
Tenant may take occupancy of the Premises at such time as the Tenant
Improvements are Substantially Completed. The date of such occupancy is
hereinafter referred to as the "Occupancy Date". Tenant's entry and occupancy of
the Premises on the Occupancy Date shall be subject to all the terms, covenants,
conditions and provisions of this Lease, including, but not limited to, the
maintenance of insurance as provided in Section 12.1, but excepting therefrom
the payment by Tenant of monthly Base Rent, as described in Section 4.1 below.
As of the Commencement Date, all terms, covenants, conditions and
provisions of the Lease shall apply. At such time as the Commencement Date is
ascertainable, Landlord shall provide to Tenant written notice thereof.
3.2 Extended Term. The Landlord hereby grants to Tenant one option to
-------------
extend the Lease Term (the "Option") upon the following terms and conditions:
(a) The option shall give Tenant the right to extend the Lease Term
for one (1) additional five (5) year period (the "Extended Term");
(b) Tenant shall give Landlord written notice of its exercise of the
Option no later than six (6) months before the date the Lease Term would end but
for said exercise;
(c) Tenant shall not have the right to exercise the Option if at the
time of exercise Tenant is in material default under this Lease. The period of
exercise for the Option shall not be extended for any period for which Tenant is
6
unable to exercise the Option by reason of Tenant's material default;
(d) All terms and conditions of this Lease shall apply during
the Extended Term except that Base Rent shall be determined as provided in
Section 4.2 below; and,
(e) Once Tenant delivers notice of its exercise of the
Option, Tenant may not withdraw such exercise, and such notice of exercise shall
operate to automatically extend the Lease Term; provided, however, if Tenant is
in material default on the date an Extended Term is to begin, this Lease, at
Landlord's election shall not be extended pursuant to the provisions of this
Section 3.2, but shall terminate on the last day of the Lease Term.
The term "Lease Term" shall mean and refer to the initial term of the Lease,
as described in Section 3.1 above, together with the Extended Term which has
been put into effect by reason of an exercise of the Option by Tenant pursuant
to this Section 3.2.
4. Rent.
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4.1 Base Rent; Additional Rent.
--------------------------
4.1.1 Base Rent. Tenant agrees to pay Landlord, without
---------
prior notice, demand, or right of deduction and/or offset monthly "Base Rent" in
the amounts set forth in Exhibit "C" attached hereto, which Base Rent shall be
due and payable at Landlord's address shown above on the first day of each
calendar month throughout the Lease Term. Base Rent for any period during the
Lease Term which is for less than one (1) month shall be prorated based on a
thirty (30) day month.
4.1.2 Actual Rent. In addition to Base Rent, Tenant shall
-----------
pay, as "Additional Rent," Tenant's Percentage Share of Operating Expenses and
Taxes, utility costs as referred to in Section 7 below, that portion of any
Improvement Costs described
7
in the last sentence of Section 2.3, late charges and interest as provided for
in this Lease, and all other items to be paid hereunder to Landlord. The term
"Rent(s)" whenever used herein refers to Base Rent and Additional Rent.
4.1.3 Rent Deposit. Upon execution of this Lease, Tenant
------------
shall pay to Landlord the sum of Fifty Thousand Seven Hundred Eighty-seven
Dollars and Thirty-six Cents ($50,787.36) as a prepayment towards Base Rent for
the first month of the Lease Term.
4.2 Rent for Extended Term. Base Rent for the Extended Term shall
----------------------
be an amount equal to ninety-five percent (95%) of the fair market rental value
of the Premises in relation to market conditions at the time of the extension;
provided, however, in no event shall the Base Rent for the Extended Term be less
than Fifty-two Thousand Nine Hundred Three Dollars and Fifty Cents(i.e.
$52,903.50). The fair market rental value of the Premises shall be determined by
and as follows:
4.2.1 Mutual Agreement. After timely receipt by Landlord of
----------------
Tenant's notice of exercise of the Option, Landlord and Tenant shall have a
period of thirty (30) days in which to agree on Base Rent for the Extended Term;
provided, however, if Tenant's notice of exercise of the Option is given prior
to the 48th month of the Lease Term, then the thirty (30) day period referenced
herein shall commence to run on the first day of the 53rd month of the Lease
Term and if Tenant's notice of exercise of the Option is given after the 48th
month of the Lease Term, then the thirty (30) day period referenced herein shall
commence to run as of the date of such notice. If Landlord and Tenant agree on
Base Rent during the thirty (30) day, they shall immediately execute an
amendment to this Lease stating Base Rent for the Extended Term. If Landlord
8
and Tenant are unable to so agree on Base Rent, then Base Rent for the Extended
Term shall be calculated by utilizing the fair market rental value of the
Premises determined as provided in Section 4.2.2 below.
4.2.2 Appraisal. Within ten (10) days after the expiration
---------
of the thirty (30) day period described in Section 4.2.1 above, each party, at
its cost and by giving notice to the other party, shall appoint M.A.I. real
estate appraiser, with at least five (5) years full-time commercial appraisal
experience in Santa Clara County, to appraise and set the fair market rental
value of the Premises. If a party does not appoint an appraiser within five (5)
days after the other party has given notice of the name of its appraiser, the
single appraiser appointed shall be the sole appraiser and shall set the fair
market rental value of the Premises. The cost of such sole appraiser shall be
borne equally by the parties. The two appraisers appointed by the parties shall
meet promptly and attempt to set the fair-market rental value of the Premises.
If they are unable to agree within twenty (20) days after the last appraiser has
been appointed, then the two appraisers shall attempt to select a third
appraiser meeting the qualifications stated in this Section 4.2.2 within ten
(10) days after the last day the two appraisers are given to set the fair market
rental value of the Premises. If they are unable to agree on the third
appraiser, either of the parties to this Lease, by giving ten (10) days notice
to the other party, may apply to the presiding judge of the Superior Court of
Santa Clara County for the selection of a third appraiser who meets the
qualifications stated above. 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. The third appraiser, however selected, shall be instructed to
9
select which of the two appraisals submitted by the parties' respective
appraisers more closely represents the fair market rental value for the
Premises, which selection shall be the fair market rental value of the Premises.
In establishing the fair market rental value, the appraiser or appraisers shall
consider (on a triple net basis) the reasonable market rental value for the
Premises (which shall include considerations of (a) rental rates for comparable
space with comparable tenant improvements, (b) cost of living increases or other
rental adjustments, (c) the relative strength of the tenants, and (d) the size
of the space without regard to the existence of this Lease.
5. [Intentionally Omitted].
6. Operating Expenses and Taxes.
----------------------------
6.1 Payment by Tenant. Pursuant to this Section 6, Tenant shall pay to
-----------------
Landlord Tenant's Percentage Share of Operating Expenses and Taxes.
(a) Operating Expenses. Landlord shall determine or estimate the
------------------
amount of Tenant's Percentage Share of Operating Expenses for the calendar year
in which the Occupancy Date occurs. Beginning on the Commencement Date, one-
twelfth (1/12) of the amount estimated by Landlord to be Tenant's Percentage
Share of Operating Expenses shall be due and payable by Tenant to Landlord, as
Additional Rent, on the first day of each calendar month remaining in the
calendar year. Thereafter, Landlord may estimate such increases to Tenant's
Percentage Share of Operating Expenses as of the beginning of each calendar year
and may require Tenant to pay one-twelfth (1/12) of such estimated amount as
Additional Rent hereunder as of the first day of each calendar month.
10
In the event that during the course of any calendar year Operating Expenses
have increased by more than five percent (5%) over the amount of Operating
Expenses estimated by Landlord at the commencement of that calendar year,
Landlord may recalculate the amount of the monthly estimated payments to be paid
by Tenant in order to take into account any such increases and, following notice
from Landlord of any such increase, Tenant shall pay the full amount of the
recalculated payments on a monthly basis for the remainder of the subject
calendar year. In making the aforesaid recalculation, Landlord may include
amounts necessary to reimburse Landlord for any increased Operating Expenses
applicable to that portion of the subject calendar year which was prior to the
date of Landlord's notice.
Not later than ninety (90) days following any calendar year (including the
year following the year in which this Lease terminates), Landlord shall furnish
Tenant with a true and correct accounting of the actual Operating Expenses
incurred by Landlord in the preceding calendar year, and within thirty (30) days
of Landlord's delivery of such accounting, Tenant shall pay to Landlord the
amount of any underpayment by Tenant of Tenant's Percentage Share of Operating
Expenses. Notwithstanding the foregoing, failure by Landlord to give such
accounting shall not constitute a waiver by Landlord of its right to collect
Tenant's Percentage Share of Operating Expenses or any underpayment by Tenant
thereof. Landlord shall credit the amount of any overpayment by Tenant toward
the next estimated installment(s) of Tenant's Percentage Share of Operating
Expenses or, where the term of the Lease has expired or been terminated (other
than due to a default by Tenant), shall refund the amount of overpayment to
Tenant within
11
thirty (30) days without obligation upon Tenant to demand such refund from
Landlord.
(b) Taxes. Tenant shall pay to Tenant's Percentage Share of
-----
Taxes within ten (10) days following the written demand by Landlord therefor,
which demand shall be accompanied by a copy of the tax bill reflecting the Taxes
for which Landlord is seeking payment and shall be made by Landlord no earlier
than thirty (30) days prior to the due date of such Taxes. If any Taxes cover
any period of time either prior to the Occupancy Date or after the expiration of
the Lease Term, Tenant's Percentage Share of Taxes shall be prorated to cover
only the period of time following the Occupancy Date or prior to the expiration
of the Lease Term, as applicable.
6.2 Definitions. "Tenant's Percentage Share" shall be one hundred
-----------
percent (100%).
"Operating Expenses" are defined as all reasonable costs and expenses paid
or incurred by Landlord in connection with the ownership, maintenance, repair,
management, and operation of the Premises, the Building, and the Land, which
reasonable costs and expenses shall include, without limit, the following:
(a) Landlord's reasonable costs and expenses in carrying out
repairs and maintenance pursuant to Section 11.2(b), (c), and (d) below;
(b) Landlord's cost of fire, extended coverage (including
rental loss insurance) and other insurance for the Building and the Land;
(c) Landlord's reasonable cost of modifications to the
Building occasioned by any rules, laws or regulations effective subsequent to
the Occupancy Date;
12
(d) Landlord's reasonable cost of the fire sprinkler
monitoring system;
(e) a management fee of Twenty Thousand ($20,000) per year
for each year during the initial five years of the Lease Term (and, if
applicable, a management fee in a reasonable and customary amount for each year
during the Extended Term; and,
(f) the amortized portion of any capital expenditures
incurred by Landlord with respect to the Building, including, without
limitation, expenditures for modifications to Building occasioned by any rules,
laws or regulations made effective subsequent to the Occupancy Date; provided,
however, capital expenditures made with respect to the structure of the Building
shall not be included within Operating Expenses.
In any calendar year Operating Expenses shall include no more than Two
Thousand Dollars ($2,000) for costs and expenses related to routine maintenance
and repair of the roof of the Building; provided, however, if any roof related
expense constitutes a capital expenditure, then Tenant shall pay a portion
thereof as provided in (f) above.
"Amortized portion" of any capital expenditure to be paid by Tenant shall
mean Tenant's Percentage Share of the following: the amount of the expenditure
amortized (on a monthly basis) over the useful life of the item to which the
expenditure is applicable. Tenant's Percentage Share of such amortized amount
shall be payable in each month after such expenditure is incurred until the
earlier of (i) the expiration of the Lease Term, or (ii) the end of the useful
life of the item to which the expenditure is applicable.
"Taxes" are defined as all real property taxes applicable to the Land,
the Building, and the Premises. The term "real
13
property taxes" shall include any form of assessment (general, special, ordinary
or extraordinary), commercial rental tax, improvement bond or bonds, license
fee, license tax, rental tax, levy, penalty imposed by any authority having the
direct or indirect power of tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof, as against any legal or equitable interest of Landlord in the
Land, the Building, and/or the Premises, as against Landlord's right to rent or
to other income therefrom, or as against Landlord's business of leasing the
Premises or the occupancy of Tenant, or any other tax, fee, or excise, however
described including any value added tax, or any tax imposed in substitution,
partially or totally, of any tax previously included within the definition of
real property taxes, or any additional tax, the nature of which was previously
included within the definition of real property tax. The term "real property
taxes" shall not include any income of franchise taxes imposed on Landlord. In
addition, in the event of any increase in real property taxes resulting from a
reassessments of the Land and/or the Building due to any sale, transfer,
refinancing, or other change in ownership of the Building or the Land during the
initial Lease Term, then fifty percent (50%) of the increase in real property
taxes resulting therefrom shall not be included as part of "real property taxes"
for purposes of determining Tenant's Percentage Share of Taxes.
7. Utilities. Tenant shall be solely responsible for paying the cost of
---------
all water, gas, heat, electricity, telephone, garbage and other utilities used
on the Premises. Tenant shall pay directly to the utility provider the cost of
all such utilities.
14
8. Late Charges. Tenant acknowledges that late payment by Tenant to
------------
Landlord of Base Rent, Tenant's Percentage Share of Operating Expenses and Taxes
or other sums due hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of such costs being extremely difficult and
impracticable to fix. Such costs include, without limitation, processing and
accounting charges and late charges that may be imposed on Landlord by the terms
of any encumbrances or notes secured by any encumbrance covering the Premises.
Therefore, if any installment of Base Rent or other sum due from Tenant is not
received by Landlord when due, then, within ten (10) days following the date
said Base Rent or other sum is due, Tenant shall pay to Landlord, without
additional invoice or demand, an additional sum equal to ten percent (10%) of
such overdue amount as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. The accrual and/or acceptance of any late
charge shall not constitute a waiver of Tenant's default with respect to the
overdue amount, nor prevent Landlord from exercising any of Landlord's other
rights and remedies.
9. Use of Premises; Compliance with Laws.
-------------------------------------
9.1 General. The Premises are to be used for testing, research and
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development, related semiconductor testing and such other uses which are
incidental thereto (collectively, "Tenant's Operations"). Any other use of the
Premises shall only be made upon the prior written consent of Landlord, which
consent shall not be unreasonably withheld. Tenant shall not do anything or
permit anything to be done in or about the Premises nor keep or bring anything
or permit anything to be kept or brought therein which will in any way increase
the existing rate of or affect any policy
15
of fire or other insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy. Tenant shall not use or allow the Premises
to be used for any unlawful purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. Tenant shall not damage or deface or
otherwise commit or suffer to be committed any waste in or upon the Premises.
Tenant shall honor the terms of all recorded covenants, conditions and
restrictions relating to the Land. Tenant shall honor the terms of any
reasonable rules and regulations established by Landlord during the Lease Term
which relate to the Premises and/or the Building.
In connection with Tenant's use of the Premises, Tenant shall, at its
sole cost and expense, do the following:
(a) Apply for, obtain and maintain throughout the Lease Term any and
all permits, licenses and other governmental approvals which are required in
connection with Tenant's Operations;
(b) Comply with any and all laws, rules, regulations or ordinances
(collectively, "Law") of and governmental authority which govern Tenant's
Operations;
(c) Adopt such measures as are, from time to time, necessary or
required in order to prevent injury, or damage to persons or properties, in or
around the Premises as a result of any activities related to Tenant's
Operations; and,
(d) Subject to Article 10 below, carry out any and all alterations
and improvements to the Premises which may be necessary in order to comply with
the Laws, except that Tenant shall not be responsible for (nor shall Operating
Expenses include) any alterations or improvements to the Premises which may be
necessary in order to comply with any Laws which (i) are effective prior to
16
the Occupancy Date, and (ii) do not relate to specifically to Tenant's
Operations or any other specific use of the Premises by Tenant; provided,
however, subject to Landlord's obligations as set forth in Section 2.4 above,
with respect to the ADA, Tenant shall carry out those alterations and
improvements to the Premises which may be necessary in order to comply with the
provisions of Titles I and IV of the ADA and Titles II and III of the ADA as
Titles II and III of the ADA relate to any construction, alterations,
renovations and/or repairs made to the Premises by or at the direction of
Tenant. Any work to the Premises by Tenant to comply with the ADA shall be
carried out in accordance with, and subject to, Section 10 below.
9.2 Hazardous Materials.
-------------------
9.2.1 Prohibition. Tenant and Tenant's agents, contractors,
-----------
subcontractors, and employees shall not use, store, release or dispose of
(collectively "Release(s)"), or allow a Release of, any Hazardous Materials
(defined below) in or about the Premises, except that Tenant may, subject to the
terms of this Lease, use and store in the Premises any Permitted Materials
(defined below). Tenant shall, at its sole cost and expense, comply with any
and all laws, rules, regulations or ordinances of any governmental authority
which govern the use, handling or storage of any Hazardous Materials in or about
the Premises. All provisions of this Lease relating to Tenant's obligations with
respect to Hazardous Materials, including, without limitation, the obligations
set forth in this Section 9.2, in Section 11.1 (regarding maintenance of the
Premises) and Section 13 (regarding Tenant's indemnity of Landlord with respect
to Hazardous Materials), shall survive the termination or earlier expiration of
this Lease.
17
9.2.3 Definitions. As used in this Lease, the term "Hazardous
-----------
Materials" includes, without limitation, any material or substance which is (i)
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), (ii) 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), (iii) 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), (iv) 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),
(v) petroleum and any petroleum by-products, (vi) asbestos, (vii) urea
formaldehyde foam insulation, (viii) listed under Article 9 or defined as
hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (ix) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. (S)1317), (x) defined as a "hazardous waste" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
(S)6901 et seq. (42 U.S.C. (S)6903), (xi) defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq. (42 U.S.C."(S) 9601),
or (xii) determined to be, or defined as, under any federal, state or local
18
governmental authority as hazardous, toxic, or dangerous to persons, animals or
the environment.
As used in this Lease, the term "Permitted Materials" shall mean and
refer to those Hazardous Substances which are (a) customarily used by Tenant in
the conduct of Tenant's Operations, (b) designated by Tenant to Landlord in
writing prior to use, and (c) reasonably approved, in advance of its use, by
Landlord. As to any Hazardous Materials which are "Permitted Materials," Tenant
shall comply with any reasonable requirements imposed by Landlord to confirm
that Tenant's use of such materials are, or will be, in compliance with all
applicable rules, laws and regulations, and will not otherwise not pose a threat
of contamination or unlawful release in or about the Premises.
9.2.4 Landlord's Representation. Landlord hereby represents to
-------------------------
Tenant that Landlord has no actual knowledge of the existence of any Hazardous
Materials on or within the Land, Building and/or Premises. Tenant acknowledges
that Landlord has not conducted any investigation, examination or study of the
Land, Building or Premises in connection with the representation made herein.
The term "actual knowledge" shall mean and refer to the knowledge of Kimball W.
Small, David K. Small and Steven P. Belomy.
9.2.5 Landlord's Indemnity. Landlord hereby agrees to indemnify,
--------------------
defend and hold Tenant harmless from and against any and all claims,
liabilities, damages, costs or expenses arising in connection with the presence
or Release of Hazardous Materials on or within the Land, the Building and/or the
Premises, except to the extent that the presence of the Hazardous Materials in
question (a) arose after the Occupancy Date, (b) was due to the actions of
Tenant, its agents, invitees, contractors, subcontractors and/or employees or
any failure by Tenant to take
19
any actions that Tenant is required to take either pursuant to the terms of this
Lease or by any law, rule, regulation or ordinance, or (c) the Tenant's use or
occupancy of the Premises; provided, however, in no event shall Landlord have
any obligation to indemnify, defend or hold Tenant harmless from and against any
of such claims, liabilities, damages, costs or expenses that (i) are covered by
any insurance that is either actually maintained or required to be maintained by
Tenant pursuant to the terms of this Lease (whether it be in the form of
worker's compensation, business interruption, general liability, casualty or
otherwise), or (ii) relate to loss of profits, loss of income or other business
or consequential damages suffered or incurred by Tenant.
9.3 Signage. Tenant shall be entitled to place its name and logo
-------
("Tenant's Sign") on the two monument signs on the exterior of the Premises
and/or on the exterior of the Building, subject to the following:
(a) The design of Tenant's Sign shall be subject to Landlord's
prior reasonable approval;
(b) Tenant's Sign shall comply with all appropriate sign
ordinances of the City of Santa Clara; and
(c) All costs and expenses in connection with Tenant's Sign
shall be borne by Tenant.
9.4 Reasonableness of Restrictions. Landlord and Tenant hereby
------------------------------
acknowledge and agree that the use restrictions set forth in this Section 9
shall be deemed reasonable in all respects and under all circumstances. Landlord
and Tenant further acknowledge and agree that, notwithstanding any other
provision of this Lease to the contrary, (a) in the event Tenant requests
Landlord's consent to a proposed assignment or subletting pursuant to Section 14
hereof, Landlord shall be deemed reasonable in withholding its consent to
20
such assignment or subletting if the proposed assignee or subtenant intends to
use the Premises for any purpose other than as set forth in Section 9.1 above,
and (b) in the event of a default by Tenant, the enforcement of the use
restrictions set forth herein shall be deemed reasonable for the purpose of
computing the rental loss that could have been reasonably avoided by Landlord
pursuant to California Civil Coded Section 1951.2.
10. Alterations; Condition on Termination. Tenant shall not install any
------------------------------------
signs, fixtures or improvements ("Alterations") to the Premises, the cost of
which is Ten Thousand Dollars ($10,000) or more, without the prior written
consent of Landlord. At such time as Landlord is granting its consent to any
proposed Alterations, Landlord shall indicate whether such Alterations will be
required to be removed upon a termination of this Lease. Tenant shall obtain all
governmental permits, licenses and other consents, and shall comply with all
governmental rules, laws, regulations and requirements, which are applicable to
any Alterations and/or additions constructed on the Premises by Tenant, all at
Tenant's sole cost and expense. Tenant shall keep the Premises, the Building and
the Land free from any liens arising out of any work performed, materials
furnished or obligations incurred by or on behalf of Tenant. During the Lease
Term, all Alterations placed or constructed on the Premises by Tenant shall be
deemed the property of Tenant. During the Lease Term, Tenant may remove any
such Alterations without the prior consent of Landlord, provided that Tenant
shall pay all costs and expenses relating to damage caused by such removal. Upon
the termination of this Lease, Tenant shall cause all its equipment and trade
fixtures to be removed from the Premises and shall repair any damage to the
Premises resulting therefrom at its sole cost and expense. With respect to any
21
Alterations (including any Alterations not requiring the prior written consent
of Landlord) not removed by Tenant prior to the termination of this Lease and
provided that Landlord has not indicated otherwise, Landlord expressly reserves
the right to require Tenant to remove any or all of such Alterations upon the
termination of this Lease, and Tenant shall promptly remove any Alterations that
Landlord so requires to be removed and repair any damage to the Premises
resulting from such removal, all at Tenant's sole cost and expense. All
Alterations not required, pursuant to this Section 10, to be removed shall
become the property of Landlord upon the termination of this Lease.
Upon termination of this Lease, Tenant shall (a) repair any damage caused
by the installation or removal of any Alterations placed or constructed on the
Premises by Tenant, (b) assure that the Premises, the Building and/or the Land
are free and clear of all Hazardous Materials used or stored by Tenant, or
Tenant's agents, employees, contractors, subcontractors, licensees, customers or
invitees, during the Lease Term, and (c) assure that the Premises are in good
condition and in good working order (except as to any casualty damage and where,
pursuant thereto, this Lease has been terminated pursuant to Section 27 below),
reasonable and normal wear and tear excepted.
11. Repairs and Maintenance.
-----------------------
11.1 Tenant's Obligations. Tenant shall, at Tenant's sole cost and
--------------------
expense, do the following:
(a) maintain the interior portions of the Premises in good,
clean and safe condition and repair;
(b) maintain all phone, network, and other communications
cabling on, about or within the Premises;
22
(c) maintain those exterior portions of the Premises which are not
otherwise the responsibility of Landlord as set forth in Section 11.2 below in
good, clean and safe condition and repair;
(d) repair any damage to the Premises, the Building or Land caused
by any act or omission of Tenant or its employees, agents, invitees, licensees
or contractors; and
(e) conduct all maintenance, clean-ups and repair required in
connection with Tenant's or Tenant's agents, employees, contractors,
subcontractors, licensees, customers or invitees use and/or storage of Hazardous
Materials on or about the Premises, the Building and/or the Land.
Tenant shall have no right to install any device on the roof of the
Premises or the Building, or make any penetrations of the roof, without the
express prior written consent of Landlord, which consent shall not be
unreasonably withheld; provided, however, Tenant shall be directly liable to
Landlord for any and all damages, costs, expenses, and other charges (including,
without limitation, additional maintenance expenses) incurred by Landlord as a
result of any such installations or penetrations, which damages, costs,
expenses, and other charges shall be due and payable by Tenant to Landlord, as
Additional Rent, within ten (10) days following demand.
11.2 Landlords Obligations. Landlord shall do the following:
(a) repair and maintain in good condition the structural
portions of the Building and the Premises (including, without limit, Building
foundations, structural walls, and the roof structure);
23
(b) repair and maintain in good condition the roof membrane and
other roof components;
(c) repair and maintain in good condition all heating and HVAC
systems servicing the Premises and the Building; and,
(d) maintain in good condition all landscaping, parking areas
and exterior grounds, and any underground plumbing and electrical systems or
connections.
All costs advanced by Landlord in connection with the performance of
Landlord's obligations in this Section 11.2 shall be subject to repayment by
Tenant to Landlord as part of Tenant's Percentage Share of Operating Expenses,
except those costs advanced by Landlord in connection with the work described in
11.2(a).
12. Insurance.
---------
12.1 Tenant's Insurance. Tenant shall at all times during the Lease
------------------
Term, and at its sole cost and expense, maintain general commercial liability
insurance (together with a broad form comprehensive general liability
endorsement) against liability for bodily injury and property damage. The
aforesaid liability insurance shall also contain an endorsement naming Landlord,
and Landlord's partners, employees, agents and assignees, as "additional
insureds," which endorsement shall cover the aforesaid additional insureds for
all acts and omissions of said parties in or about the Premises. The aforesaid
insurance shall be in an amount of not less than Two Million Dollars
($2,000,000) per occurrence and not less than Five Million Dollars ($5,000,000)
in the aggregate. In no event shall the limits of said policy be considered as
limiting the liability of Tenant under this Lease.
24
Tenant shall also at all times maintain standard "all risk" casualty
insurance on the Tenant Improvements; and upon all of Tenant's equipment,
furnishings and fixtures,
The aforesaid insurance shall be with companies licensed to do business with
the Insurance Commissioner of the State of California. A certificate of such
insurance shall be delivered to Landlord prior to the Occupancy Date and,
thereafter, on each anniversary date of the Commencement Date. The certificate
for Tenant's liability insurance shall certify that the policy names Landlord
and the other aforesaid persons and entities as "additional insureds" and that
the policy shall not be canceled or altered without thirty (30} days prior
written notice to Landlord.
12.2 Landlord's Insurance. During the Lease Term, Landlord shall
--------------------
maintain standard "all risk" casualty insurance on the Building and the
Premises, which coverage shall be in an amount not less than the full
replacement cost of the Building, exclusive of architectural and engineering
fees, excavations, footings, and foundations, and the Tenant Improvements. The
policy to be maintained by Landlord, as set forth herein, shall provide that
such policy shall not be canceled or altered without thirty (30) days prior
written notice to Tenant.
12.3 Waiver of Subrogation. Notwithstanding any other provision of
---------------------
this Lease, Landlord and Tenant each hereby waive any right of recovery against
the other and the authorized representatives of the other for any loss or damage
that is of the type required to be covered by any policy of insurance required
under Section 12.1 or 12.2 above. Each party shall cause each insurance policy
obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy. If any insurance
25
policy cannot be obtained with a waiver of subrogation, or is obtainable only by
the payment of an additional premium charge above that charged by insurance
companies issuing policies without waivers of subrogation, the party undertaking
to obtain the insurance shall notify the other party of this fact. The other
party shall have a period of thirty (30) days after receiving such notice either
to replace the insurance with a company that is reasonably satisfactory to the
other party and that will carry the insurance with a waiver of subrogation, or
to agree to pay the additional premium if such policy is obtainable at
additional cost. If the insurance cannot be obtained or the party in whose favor
a waiver of subrogation is desired refuses to pay the additional premium charge,
the other party is relieved of the obligation to obtain a waiver of subrogation
rights with respect to the particular insurance involved.
13. Limitation of Liability and Indemnity.
-------------------------------------
13.1 By Tenant. Tenant agrees to save, defend and hold Landlord
---------
harmless and indemnify Landlord, and Landlord's partners, employees, agents, and
contractors, against all liabilities, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation) by reason of injury to person or property, from
whatever cause, while in or on the Premises, or in any way connected with the
Premises, with the improvements or with the personal property therein, including
any liability for injury to person or property of Tenant, its agents or
employees or third party persons; provided, however, Landlord shall be liable
only for property damage and bodily injury resulting from the negligent acts or
omissions of Landlord, or any of its partners, employees, agents or contractors.
26
Tenant's obligations under this Section 13.1 shall include the obligation
to indemnify, hold harmless, and defend Landlord, and its partners, agents and
employees, from and against any and all claims, losses, liabilities, costs and
expenses arising out of or in connection with (a) any injury or damage resulting
from Tenant's use of the Premises in connection with Tenant's Operations, and
(b) any Release of any Hazardous Materials in or about the Premises, the
Building and/or the Land, to the extent the Release is caused or permitted by
Tenant, or any of its agents, employees, contractors, subcontractors and/or
invitees. Tenant's indemnity obligations under this Section 13.1 shall survive
termination of this Lease.
Landlord, and Landlord's partners, employees, agents, and contractors,
shall not be liable to Tenant for any damage to Tenant or Tenant's property, nor
for any injury to or loss of Tenant's business nor for any damage or injury to
any person from any cause; provided, however, Landlord shall be liable for, and
shall indemnify, defend and hold Tenant harmless from and against any claims
arising in connection with, property damage and bodily injury resulting from the
willful misconduct or negligent acts or omissions of Landlord, or any of its
partners, employees, agents, or contractors, but only to the extent any such
property damage and bodily injury is not covered by either the insurance
required to be maintained by Tenant under this Lease or by any other insurance
actually maintained by Tenant.
13.2 By Landlord. Landlord agrees to save, defend and hold Tenant
-----------
harmless and indemnify Tenant and Tenant's partners, employees, agents, and
contractors, against all liabilities, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of
27
any litigation) arising by reason of injury to person or property, from the
negligent acts or omissions of Landlord, or any of its partners, employees,
agents or contractors, but only to the extent any such liabilities, charges, and
other items are not covered by either the insurance required to be maintained by
Tenant under this Lease or by any other insurance actually maintained by Tenant;
provided, however, Landlord shall in no event be liable to Tenant for any damage
to or loss of Tenant's business nor for any other form of consequential damages.
14. Assignment and Subletting.
-------------------------
14.1 In General. Tenant shall not, either voluntarily or by operation
----------
of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease
or any interest therein, and shall not sublet the Premises or any part thereof,
or any right or privilege appurtenant thereto, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld. Tenant shall give
Landlord at least thirty (30) days written notice of its desire to assign or
sublet all or some of the Premises. Any such assignment, sublease or the like
which is approved by Landlord must be pursuant to a written agreement in a form
acceptable to Landlord. Each permitted assignee, transferee, or sublessee shall
assume and be deemed to have assumed this Lease (or the appropriate part hereof)
and shall be and remain jointly and severally liable with Tenant for the payment
of Rents and for the due performance of and compliance with all the terms,
covenants, conditions and agreements to be performed or complied with by Tenant
herein (including, but not limited to, the provisions of this Section 14).
14.2 Transfers of Interests in Tenant. Except as provided in Section 14.3
--------------------------------
below, any dissolution, consolidation or other reorganization of the corporation
which comprises Tenant, any sale,
28
transfer, or distribution (or cumulative sales, transfers, or distributions) of
substantially all of the assets of Tenant, or any sale or other transfer of a
majority of the shareholder interests in Tenant shall be deemed an assignment of
this Lease requiring the prior written consent of Landlord pursuant to Section
14.1 above.
14.3 Permitted Transfers. Notwithstanding Sections 14.1 and 14.2
-------------------
above, Tenant may assign this Lease to a limited partnership, corporation or
other entity with which it may merge or consolidate, or to a purchaser of two-
thirds (i.e. 66.66%) or more of Tenant's assets, or to any parent, subsidiary,
or other limited partnership, corporation or other entity to which Tenant is
affiliated, or to any entity resulting from a reorganization of Tenant, provided
that each of the following shall be complied with:
(a) the assignee shall execute an instrument reasonably
satisfactory to Landlord assuming all of Tenant's obligations under this Lease;
(b) Tenant shall give Landlord prior written notice of the
subject transfer; and
(c) Tenant shall provide to Landlord sufficient evidence (as
reasonably determined by Landlord) that the net worth of the assignee is equal
to or greater than the net worth of Tenant as of the Commencement Date or as of
the date of transfer, whichever is higher. Any permitted assignment pursuant to
this Section 14.3, or any other assignment otherwise permitted pursuant to this
Lease, shall not release Tenant from any liability under this Lease.
14.4 Excess Rents. Any Excess Rents (defined below) payable pursuant
------------
to any assignment or subletting shall be paid to Landlord and Tenant shall have
no right thereto or interest therein. Landlord shall have the right to impose
terms and
29
conditions on its consent to any assignment or subletting to assure the
accounting and payment to Landlord of Excess Rents. "Excess Rents" shall mean
any and all rents, payments, charges and other considerations to be received by
Tenant upon an assignment or subletting of all or any portion of the Premises
which are in excess of the Rents payable by Tenant to Landlord under this Lease
after the recovery by Tenant of reasonable amounts for brokerage commissions,
legal expenses, and tenant improvement costs, to the extent such items have been
incurred by Tenant in connection with the subject assignment or sublease.
15. Ad Valorem Taxes. Tenant shall pay before delinquent all taxes
----------------
assessed against the personal property of Tenant and all taxes attributable to
any leasehold improvements installed by Tenant.
16. Lender Requirements.
-------------------
16.1 Subordination. This Lease is subordinate to any and all
-------------
mortgages and/or deeds of trust ("Encumbrances") now of record against the Land
and/or the Building. Tenant shall, upon the request of Landlord, execute any
instrument reasonably necessary or desirable to (a) acknowledge the
subordination of this Lease to any existing mortgages or deeds of trust, or (b)
subordinate this Lease and all of Tenant's rights hereunder to any and all
Encumbrances hereafter recorded against the Land and/or the Building; provided,
however, Tenant may require as a condition to any subordination in (b) above
that the holder of any future Encumbrances agree to not disturb (a "non-
disturbance agreement") Tenant's possession of the Premises in the event such
holder acquires the Premises pursuant to foreclosure or otherwise. Landlord
shall, within thirty (30) days following the date hereof, submit a written
request to all present holders of any Encumbrances
30
that such parties provide a non-disturbance agreement to and for the benefit of
Tenant. Tenant hereby acknowledges that there is no assurance that such present
holders will honor such request and that, if the request is denied, this Lease
will continue unaffected.
16.2 Attornment. In the event any proceedings are brought for
----------
foreclosure or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord covering the Premises, Tenant shall,
at the option of such purchaser, attorn to the purchaser upon any such
foreclosure or sale and shall recognize such purchaser as the Landlord under
this Lease, provided such purchaser agrees in writing to assume all obligations
of Landlord under this Lease accruing following such sale or purchase and
provides a copy of such agreement to Tenant.
16.3 Approval by Lender. Tenant acknowledges that any future holder
------------------
of an Encumbrance may retain the right to approve the terms and provisions of
this Lease. Tenant agrees that, in the event such holder shall require any
modification of this Lease in order to protect its security interest in the
Premises, including, without limitation, modification of the provisions relating
to damage to or condemnation of the Premises, Tenant shall execute the
appropriate amendments to this Lease, provided, however, no modification of this
Lease shall (a) change the size, location or dimension of the Premises, (b)
increase the Rents payable by Tenant hereunder, (c) result in unreimbursable
expenses to Tenant, or (d) reduce Tenant's rights or protections set forth
herein. If Tenant fails to execute any such amendment, Landlord may, at
Landlord's discretion, terminate this Lease.
17. Right to Entry. Tenant grants Landlord or its agents the right to
--------------
enter the Premises at all reasonable times during normal
31
business hours for purposes of inspection, exhibition, repair or alteration;
provided, however, Landlord shall give Tenant at least one (1) business day
prior notice (except in the event of emergency) of Landlord's intent to enter
the Premises. Landlord shall have the right to use any and all means Landlord
deems necessary to enter the Premises in an emergency. Landlord shall also have
the right to place "for rent" signs of a reasonable size on the outside of the
Premises at a reasonable location during the last six (6) months of the Lease
Term, provided that such signs shall include the words "Do Not Disturb Tenant".
Tenant hereby waives any claim for damages or for any injury or inconvenience to
or interference with Tenant's business, or any other loss occasioned thereby;
provided, however, Landlord shall be liable for property damage and bodily
injury resulting from the negligent acts or omissions of Landlord or Landlord's
authorized representatives (except where Landlord is released from liability for
negligence in Section 12.3 above).
18. Estoppel Certificate. Each party shall execute and deliver to the
--------------------
other party, upon not less than fifteen (15) days prior written notice, a
statement in writing certifying (a) that this Lease is unmodified and is in full
force and effect (or, if modified, stating the nature of such modification), (b)
the date to which Rent and other charges are paid in advance, if any, (c) that
there are not, to such party's knowledge, any uncured defaults on the part of
the other party or specifying such defaults as they are claimed, and (d) such
other information as a prospective purchaser, encumbrancer, assignee or
subletter of the Premises may reasonably require. Any such statement may be
conclusively relied upon by any prospective purchaser, encumbrancer, assignee or
subletter of the Premises, as applicable. A party's failure to deliver such
32
statement within such time shall be conclusive upon such party that (i) this
Lease is in full force and effect without modification except as may be
represented by the other party, (ii) there are no uncured defaults in the other
party's performance, and (iii) not more than one month's Rent has been paid in
advance.
19. Tenant's Default. The occurrence of any one or more of the following
----------------
events shall constitute a default and breach of this Lease by Tenant:
(a) The failure by Tenant to make any payment of Rent or any other
payment required hereunder within five (5) days from the date the same is due
and payable;
(b) The failure of Tenant to observe, perform or comply with any of
the conditions or provisions of this Lease for a period, unless a longer period
is otherwise provided herein, of thirty (30) days after written notice, or if
such default cannot be cured within that time, then such additional time as may
be reasonably necessary if within such thirty (30) days Tenant has commenced and
is diligently pursuing such activities as are necessary to cure the default; and
(c) Tenant becomes the subject of any bankruptcy, reorganization or
insolvency proceeding, whether voluntary or involuntary, and, in the case of an
involuntary bankruptcy proceeding, Tenant fails to cause the same to be
dismissed within sixty (60) days following that date of the filing of such bank-
ruptcy.
Any notice from Landlord to Tenant described in this Section 19 shall, in
the sole discretion of Landlord, constitute a three (3) day notice pursuant to
California Code of Civil Procedure section 1161 or any successor statute. With
respect to any "default" by Tenant referenced in this Lease, the term "default"
as
33
used in such context shall mean any of the events described in subsections (a),
(b) and/or (c) of this Section 19.
20. Remedies for Tenant's Default. Upon any default by Tenant, Landlord
---------------------------
shall have the following remedies, in addition to all other rights and remedies
provided by law, to which Landlord may resort cumulatively, or in the
alternative:
20.1 Termination. Upon any default by Tenant, Landlord shall have the
-----------
right (but not the obligation) to terminate this Lease and Tenant's right to
possession of the Premises. If Landlord has given Tenant any written notice
pursuant to Section 19 above, then Landlord shall not be required to give Tenant
any additional notice terminating this Lease. Upon termination of this Lease,
Landlord shall have the right to recover from Tenant:
(a) The worth at the time of award of the unpaid Rents which had
been earned at the time of termination;
(b) The worth at the time of award of the amount by which the
Rents which would have been earned after termination until the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award (computed by discounting at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent) of the amount by which the Rents for the balance of the
Lease Term after the time of award exceed the amount of such rental loss that
Tenant proves could be reasonably avoided; and
(d) Any other amounts necessary to compensate Landlord for all
detriment proximately caused by the default by Tenant or which in the ordinary
course of events would likely result, including without limitation the
following:
34
(i) Expenses in retaking possession of the Premises;
(ii) Expenses for cleaning, repairing or restoring the
Premises, except for normal wear and tear;
(iii) Any unamortized real estate brokerage commission paid
in connection with this Lease;
(iv) Expenses for removing, transporting, and storing any
of Tenant's property left at the Premises (although Landlord shall have no
obligation to remove, transport, or store any such property);
(v) Expenses of reletting the Premises, including without
limitation, brokerage commissions and attorneys' fees; and
(vi) Attorneys' fees and court costs.
The "worth at the time of award" of the amounts referred to in
subparagraphs (a) and (b) of this Section 20.1 is computed by allowing interest
at an annual rate equal to the greater of: ten percent (10%); or five percent
(5%) plus the rate established by the Federal Reserve Bank of San Francisco, as
of the twenty-fifth (25th) day of the month immediately preceding the default by
Tenant, on advances to member banks under Sections 13 and 13(a) of the Federal
Reserve Act, as now in effect or hereafter from time to time amended, not to
exceed the maximum rate allowable by law.
The computation of the rental loss that could be or could have been avoided
by Landlord pursuant to California Civil Code Section 1951.2 shall take into
account the use restrictions set forth in Section 9 above except to the extent
Tenant proves under all circumstances that the enforcement of the such
restrictions would be unreasonable.
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20.2 Continuance of Lease. Upon a default by Tenant and unless and
--------------------
until Landlord elects to terminate this Lease pursuant to Section 20.1 above,
this Lease shall continue in effect after the default by Tenant, and Landlord
may enforce all rights and remedies under this Lease, including, without
limitation, the right to recover payment of Rents as they become due. Neither
efforts by Landlord to mitigate damages caused by a default by Tenant nor the
acceptance of any Rents shall constitute a waiver by Landlord of any of
Landlord's rights or remedies, including the rights and remedies specified in
this Section 20. It is intended that the remedy set forth in this Section 20.2
is to provide Landlord the rights set forth in California Civil Code Section
1951.4. The use restrictions set forth in Section 9 above shall apply to
Landlord's rights under this Section 20.2 except to the extent Tenant proves
under all circumstances that the enforcement of such restrictions would be
unreasonable.
20.3 Reletting Premises. Upon a default by Tenant, Landlord may, at
------------------
Landlord's election, re-enter the Premises and, without terminating this Lease,
and at any time and from time to time, relet the Premises or any part or parts
thereof for the account and in the name of Tenant or otherwise. Landlord may, at
Landlord's election, eject Tenant or any of Tenant's subtenants, assignees or
other person claiming any right in or through this Lease. Tenant shall
nevertheless pay to Landlord on the due dates specified in this Lease all sums
required to be paid by Tenant under this Lease, plus Landlord's expenses, less
the proceeds of any sublease or reletting. Notwithstanding any prior reletting
without termination, Landlord may later elect to terminate this Lease because of
a default by Tenant.
36
20.4 Right to Cure Tenant's Default. In the event Tenant fails to
------------------------------
cure a default described under Section 19(b) within a period of thirty (30) days
after written notice (unless a longer period of time is otherwise provided
herein), Landlord may, in addition to all other rights and remedies under this
Lease, to which Landlord may resort cumulatively or in the alternative, cure
such default and demand reimbursement by Tenant of the cost actually incurred by
Landlord in curing such default by Tenant, with interest thereon from the date
such cost is incurred by Landlord until payment. All amounts due and payable to
Landlord under this Section 20.4 shall constitute Rent under this Lease. The
cure by Landlord of any default shall in no way be deemed a waiver or release of
Tenant from any obligation under this Lease.
21. Surrender of Premises. Upon termination of the Lease or expiration of
---------------------
the term hereof, if Tenant retains possession of the Premises without Landlord's
written consent first had and obtained, then Tenant's possession shall be deemed
a tenancy at sufferance, and Landlord may bring an action for possession or
detainer at any time thereafter. If Tenant holds possession of the Premises
after the term of this Lease with Landlord's consent, Tenant shall become a
tenant from month to month upon the terms and conditions as provided in this
Lease except that Base Rent shall equal one hundred twenty-five percent (125%)
of the Base Rent due during the last year of the Lease Term, payable in advance
on or before the first day of each month. All options, if any, granted under the
terms of this Lease shall be deemed terminated and be of no effect during said
month to month tenancy. Tenant shall continue in possession until such tenancy
shall be terminated by either Landlord or Tenant giving written notice of
termination to the
37
other party at least thirty (30) days prior to the effective date of
termination.
22. Landlord's Default. Upon any default by Landlord under this Lease,
------------------
Tenant shall provide Landlord with written notice of such default and a
reasonable time period in which to cure such default.
23. Parking. Tenant shall have the right during the Lease Term to use, on
-------
an exclusive basis, one hundred percent (100%) of the parking spaces located
within the parking facilities situated within the Common Areas.
24. Sale of Premises. In the event of any sale of the Premises by
----------------
Landlord, Landlord shall be, without any further act or acknowledgment on the
part of Landlord or Tenant, entirely released from all liability under any and
all of its covenants and obligations contained in or derived from this Lease or
arising out of any act, occurrence or omission occurring after the consummation
of such sale. The purchaser at such sale or any subsequent sale of the Premises
shall be deemed, without any further agreement between the parties or their
successors in interest or between the parties and any such purchaser, to have
assumed and agreed to carry out any and all of the covenants and obligations of
Landlord under this Lease.
25. Waiver. No delay or omission in the exercise of any right or remedy of
------
either party on any default by the other party shall impair such a right or
remedy or be construed as a waiver. The subsequent acceptance of Rents by
Landlord or payments by Tenant after breach by the payee of any covenant or term
of this Lease shall not be deemed a waiver of such breach, other than a waiver
of timely payment for the particular payment involved, and shall not prevent the
aggrieved party from maintaining any action
38
based on such breach (including an unlawful detainer action, if applicable). No
payment by a party or receipt by the other party of a lesser amount than the
Rent and other sums due hereunder shall be deemed to be other than on account of
the earliest Rent or other sums due, nor shall any endorsement or statement on
any check or accompanying any check or payment be deemed an accord and
satisfaction. A party may accept such check or payment without prejudice to its
right to recover the balance of such Rent or other sum or pursue any other
remedy provided in this Lease. The waiver by a party of any breach of any term
of this Lease shall not be deemed a waiver of such term or of any subsequent
breach thereof.
26. Casualty Damage. If the Premises or any part thereof shall be damaged
---------------
by fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building or the Premises shall be damaged by fire or other
casualty (a) such that more than thirty percent (30%) reconstruction of the
Building or the Premises is required, as determined by Landlord, or (b)
regardless of the extent of damage, such damage is either uninsured or the
insurance proceeds are unavailable or insufficient for Landlord to restore the
Building or the Premises, Landlord may elect to either terminate this Lease or
restore the Building or the Premises. In all other cases, Landlord shall
promptly commence reconstruction repair subject to this Section 26. If Landlord
elects to terminate the Lease, the estate created hereby shall terminate forty-
five (45) days following the date of damage, and Base Rent due hereunder shall
be abated as of the date of such damage. If Landlord elects to repair and
restore the Building or the Premises, then Landlord shall proceed with
reasonable diligence to restore the Building or the Premises (except Landlord
shall not be responsible for delays outside of its control) to substantially
39
the same condition existing immediately prior to the casualty. If Landlord is
required to make any repairs or restorations pursuant to this Section 26,
Landlord shall not be required to spend for such repairs or restoration an
amount in excess of the insurance proceeds actually received by Landlord as a
result of the casualty. If Landlord elects to repair or restore the Building or
the Premises, then Tenant, within thirty (30) days after the date the damage
occurred, may request in writing from Landlord an estimate of the time required
to repair or restore the Building or the Premises. Landlord shall notify Tenant
of Landlord's reasonable estimate of the time for restoration or repair. If
Landlord estimates that the Premises or the Building cannot be restored within
one hundred and eighty (180) days from the date that the damage occurred, then
Tenant shall have five (5) business days from receipt of Landlord's estimate in
which to terminate this Lease, which termination shall be effective as of the
date the damage occurred. Landlord shall not be liable for any inconvenience or
annoyance to Tenant, injury to the business of Tenant, loss of use of any part
of the Premises by Tenant or loss of Tenant's personal property resulting in any
way from such damage or the restoration thereof, except that, during any
restoration, Landlord shall allow Tenant a fair diminution of Base Rent during
the time and to the extent the Premises are unfit for occupancy. In no event
shall Landlord be required to rebuild, repair or replace any part of the Tenant
Improvements or Tenant's furniture, furnishings or fixtures and equipment except
to the extent that Landlord actually receives insurance proceeds with respect to
the damage of such property (Tenant acknowledges that Landlord is under no
obligation to maintain insurance covering such property and that neither
Landlord nor any of its representatives have made any representations or
40
warranties to Tenant that Landlord intends to maintain any insurance covering
such property). Tenant hereby waives the provisions of Sections 1932(2.),
1933(4.), 1941 and 1942 of the California Civil Code.
Landlord or Tenant shall have the right to terminate this Lease if (a) the
damage to the Premises occurs during the last year of the term of this Lease,
and (b) it is estimated by Landlord that the necessary repairs will take more
than ninety (90) days from the date of the damage.
27. Condemnation. If twenty-five percent (25%) or more of the Land
------------
or fifteen percent (15%) or more of the Premises is taken for any public or
quasi-public purpose of any lawful governmental power or authority, by exercise
of the right of appropriation, reverse condemnation, condemnation or eminent
domain, or sold to prevent such taking, Tenant or Landlord may, at its sole
option, terminate this Lease as of the effective date of such taking. Tenant
shall not assert any claim against Landlord or the taking authority for any
compensation because of such taking, and Landlord shall be entitled to receive
the entire amount of any award without deduction for any estate of interest of
Tenant; provided, Tenant shall be entitled to any portion of an award separately
designated as compensation to Tenant for moving expenses and/or loss of
goodwill. If less than twenty-five percent (25%) of the Land and/or less than
fifteen percent (15%) of the Premises is taken, Landlord shall, if necessary,
promptly proceed to restore the Premises to substantially its same condition
prior to such partial taking, allowing for the reasonable effects of such
taking, and a proportionate allowance shall be made to Tenant for the Rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of such taking and
41
restoration. Notwithstanding the foregoing, Landlord shall not be required to
expend funds in connection with the restoration of the Premises in excess of
compensation actually received by Landlord from the condemning authority.
28. General Provisions.
------------------
28.1 Time. Time is of the essence in this Lease and with respect to
----
each and all of its provisions in which performance is a factor.
28.2 Successors and Assigns. The covenants and conditions herein
----------------------
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors and assigns of the parties hereto.
28.3 Recordation. Tenant shall not record this Lease or a short form
-----------
memorandum hereof without the prior written consent of Landlord.
28.4 Landlord's Personal Liability. The liability of Landlord to
-----------------------------
Tenant for any default by Landlord under the terms of this Lease shall be
limited to the interest of Landlord in the Building, and Tenant agrees to look
solely to Landlord's interest in the Building for the recovery of any judgment,
it being intended that Landlord (nor any of its partners) shall not be
personally liable for any judgment or deficiency.
28.5 Separability. Any provisions of this Lease which shall prove to
------------
be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provision shall remain in full force and
effect.
28.6 Choice of Law. This Lease shall be governed by the laws of the
-------------
State of California.
28.7 Attorneys' Fees. In the event any legal action is brought to
---------------
enforce or interpret the provisions of this Lease, the
42
prevailing party therein shall be entitled to recover all costs and expenses
including reasonable attorneys' fees.
28.8 Interest. Any installment of Base Rent or any other sum due from
--------
Tenant under this Lease which is received by Landlord after thirty (30) days
from when the same is due shall bear interest from said thirtieth (30th) day
until paid at an annual rate equal to the greater of; (a) ten percent (10%); or
(b) five percent (5%) plus the rate established by the Federal Reserve Bank of
San Francisco as of the twenty-fifth (25th) day of the month immediately
preceding the due date on advances to member banks under Sections 13 and 13 (a)
of the Federal Reserve Act, as now in effect or hereafter from time to time
amended, not to exceed the maximum rate allowable by law. The accrual and/or
acceptance of any interest shall not constitute a waiver of Tenant's default
with respect to any overdue amount, nor prevent Landlord from exercising any of
Landlord's other rights or remedies.
28.9 Notices. All notices and demands required to be sent to Landlord
-------
or Tenant under the terms of this Lease shall be personally delivered or sent by
certified or registered mail to the addresses indicated above or to such other
addresses as the parties may from time to time designate by notice. The parties
agree that any notice required pursuant to California Civil Code Section 1946 or
California Code of Civil Procedures Sections 1161 and 1161a may be served in
this manner, and if so served, shall constitute proper service of process under
said statutory provisions.
28.10 Authorization. The person signing this Lease on behalf of
-------------
Tenant hereby represents and warrants to Landlord the following:
(a) That the Tenant, by duly passed resolution of the board of
directors of the corporation which comprises
43
Tenant, is authorized to enter into this Lease and to incur and perform all the
obligations of Tenant hereunder;
(b) That the person signing this Lease on behalf of Tenant has
been authorized by the corporation which comprises Tenant to execute this Lease
on behalf of such corporation and deliver the same to Landlord.
In the event of any breach of the representations and warranties set forth
above, then, in addition to any and all other rights and remedies which Landlord
may have against the person signing this Lease and the corporation which
comprises Tenant, the person(s) signing this Lease on behalf of Landlord shall
be personally liable for each and every obligation of Tenant set forth in this
Lease.
28.11 Prior Agreements. This Lease contains all of the agreements of
----------------
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understandings pertaining to any such matters
shall be effective for any purpose. No provision of this Lease may be amended or
added to except by an agreement in writing signed by the parties hereto or their
respective successors-in-interest.
28.12 Quiet Enjoyment. If Tenant timely pays the Rents and other
---------------
amounts provided in this Lease, and observes and performs all the covenants,
terms, and conditions of this Lease, Tenant shall peaceably and quietly hold and
enjoy the Premises for the Lease Term without interruption by Landlord or any
person or persons claiming by, through or under Landlord, subject, nevertheless,
to the terms and conditions of this Lease.
28.13 Brokers. The parties hereto acknowledge that Landlord is
-------
represented by CPS and that Tenant is represented by
44
Colliers Parrish International. Each party represents and warrants to the other
that no other brokers, finders, or agents have been employed or otherwise
retained by that party. Landlord shall be obligated to pay the commission of
both CPS and Colliers Parrish International pursuant to a separate agreement.
IN WITNESS WHEREOF, this Lease is executed on the date and year first above
written.
LANDLORD
KIM CAMP NO. VII, a California
general partnership
By: Kimball Small Partners, L.P.,
a California limited partnership
By: Kimball Small Corporation,
a California corporation,
its general partner
By: /s/ Kimball W. Small
--------------------------
Kimball W Small
Its president
TENANT:
ALPHATEC ELECTRONICS
COMPANY LIMITED (PUBLIC)
a Thailand public corporation
By /s/ Charn Uswachoke
----------------------------
Charn Uswachoke
Its Chief Executive Officer
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EXHIBIT "A"
BUILDING FLOOR PLAN WITH CROSS-HATCHED PREMISES
[BUILDING FLOOR PLAN APPEARS HERE]
46
EXHIBIT "C"
BASE RENT SCHEDULE
Months Base
- ------ ----
Rent
- ----
Months 1-20 $50,787.36
Months 21-40 $54,314.26
Months 41-60 $57,841.16
47