FACILITIES LEASE AND
SERVICES AGREEMENT
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This Facilities Lease and Services Agreement (Agreement) is made this 25th
day of February, 1999, by and between UTMC MICROELECTRONIC SYSTEMS INC., a
Delaware corporation (UTMC), UNITED TECHNOLOGIES CORPORATION, a Delaware
corporation (UTC), and XXXXXXXX STANDARD ELECTRONICS, INC., a Delaware
corporation (HSE).
WHEREAS, concurrently with the execution of this Agreement, UTC has sold to
Aeroflex Incorporated (Aeroflex) all of the shares of capital stock of UTMC, on
the terms and subject to the conditions set forth in a Purchase Agreement, dated
as of the date hereof (the Purchase Agreement);
WHEREAS, immediately prior to the date hereof, the business of HSE was
conducted by UTMC as a business unit within UTMC (the CCA Unit);
WHEREAS, immediately prior to the date hereof, UTMC provided certain rights
and services to the CCA Unit and UTC provided certain rights and services to
UTMC;
WHEREAS, to facilitate the transition of the CCA Unit to HSE and the
transition of UTMC to Aeroflex, the parties have agreed to enter into this
Agreement; and
WHEREAS, contemporaneously with the execution of this Agreement, HSE and
UTMC are entering into an agreement for the production by UTMC of certain
integrated circuits utilizing HSE-supplied wafers and dies (the Supply
Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
LEASE OF PREMISES BY UTMC TO HSE
1.1 Building. UTMC hereby leases to HSE, and HSE hereby leases from UTMC,
approximately 23,300 square feet of space in the approximately 103,000 square
foot building (the Building) located at 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx, as shown on the floor plan attached hereto as Exhibit A,
together with the appurtenances thereto (the Premises).
1.2 Access Road. Road access to portions of the Building is provided by
UTMCs privately owned and maintained roadway shown cross-hatched on the map
attached hereto as Exhibit B (the Access Road). During the Term (as defined in
Article IV), HSE and its agents, employees and invitees shall have the right to
the free use of the Access Road to provide access to the Building
1.3 Common Areas. During the Term, HSE and its agents, employees and
invitees shall have the nonexclusive right to the free use of the common areas
in the Building shown on Exhibits A and B hereto (the Common Areas) for the
intended and normal purposes thereof, subject to reasonable rules established by
UTMC. The Common Areas shall include the parking lot, sidewalks, driveways,
entranceways, lobbies and other similar public areas, loading dock, rest rooms,
medical and first aid facilities, corridors (but only such corridors as connect
any Common Areas or any Common Area with the Premises), stairwells, lunch room,
conference facilities, exercise room, locker rooms, hallways, reception area and
any other area(s) designated by agreement of HSE and UTMC as Common Areas.
1.4 Access. HSE and its agents, employees and invitees shall have access to
the Premises, Access Road and Common Areas twenty-four (24) hours a day, seven
(7) days a week.
1.5 Rights-of-Way. During the Term, HSE shall have a non-exclusive right-
of-way through the Building solely for the purposes of conducting activities
incidental to the permitted uses hereunder, providing the services required to
be provided by HSE under Article III or V of this Agreement or to fulfill its
obligations under the Supply Agreement. UTMC shall have a non-exclusive
right-of-way under, over and through the Premises solely for the purposes of
conducting activities incidental to UTMCs operations in the Building and
providing the services required to be provided by UTMC under Articles II and III
of this Agreement. In addition, UTMC and its agents shall have the right to
enter the Premises at reasonable times for the purpose of inspecting the same,
performing maintenance and making such alterations, repairs, improvements or
additions to the Premises as may be required hereunder or that UTMC may deem
necessary or desirable; provided, however, that UTMC shall use its best efforts
to ensure that such entry, or such maintenance, alterations, repairs,
improvements or additions shall not adversely affect HSEs operations in any way.
UTMC, its agents and customers may also enter the Premises at reasonable times,
upon prior notice and subject to reasonable conditions to protect HSE
proprietary information, to the extent necessary to permit UTMC customers to
observe and reasonably inspect HSE's CCA Services (as defined in Article V).
1.6 Relinquishment of Portions of the Premises. At any time and from time
to time, HSE shall have the right, exercisable by delivery of written notice to
UTMC, to relinquish its right to all or any portion of the Premises. Upon any
such relinquishment by HSE, UTMCs and HSEs obligations under this Agreement
shall terminate with respect to such portion(s) so relinquished (subject to the
provisions of Sections 4.3 and 6.6), the right to occupy and use such portion(s)
shall revert to UTMC and the term Premises as used herein shall exclude such
portion(s). Without limiting the generality of the first sentence of this
Section 1.6, HSE agrees to relinquish its right to, and shall vacate, on or
about July 31, 1999, the approximately 2,000 square feet of the Premises
indicated on Exhibit C hereto (the July 31 Footage).
ARTICLE II
FACILITY SERVICES AND RIGHTS TO USE CERTAIN ASSETS
2.1 Facility Services. During the Term, UTMC shall provide or cause to be
provided to the Building (including the Premises) and/or to HSE, as the case may
be, at UTMCs own cost, those services set forth on Schedule 2.1 (the Facility
Services). The Facility Services provided to HSE and/or the Premises shall at
all times during the Term be of substantially the same quality as the Facility
Services provided to the other parts of the Building and/or UTMC, as the other
occupant of the Building; provided, however, except as otherwise expressly
provided herein (or unless UTMC and HSE otherwise agree in writing), during the
Term, the Facility Services provided or caused to be provided by UTMC shall be
of equivalent quantity and quality to such services provided to the Premises
and/or the CCA Unit, as the case may be, prior to the sale of UTMC to Aeroflex.
2.2 Shared Tangible Assets. During the Term, HSE shall have a non-
exclusive right to use those tangible assets of UTMC used by the CCA Unit in the
ordinary and usual course of its business prior to the sale of UTMC to Aeroflex,
subject to such reasonable rules established by UTMC (the Shared Tangible
Assets), including without limitation the Shared Tangible Assets listed on
Schedule 2.2. UTMC shall use its best efforts to maintain the Shared Tangible
Assets in good working condition and to repair or replace (as necessary) any
damaged or malfunctioning Shared Tangible Assets as soon as practicable. It is
understood and agreed that , in the event of any such damage or malfunction,
UTMC may utilize a third-party service provider to perform the functions or
services of any damaged or malfunctioning Shared Tangible Asset on an interim
basis, provided that UTMC arranges for such functions or services also to be
provided to HSE at no cost to HSE.
ARTICLE III
OPERATIONAL SERVICES
3.1 UTC Services. During the period of the Term in which HSE actually
occupies any portion of the Premises pursuant to this Agreement, and subject to
the provisions of Section 6.12, UTC shall provide or cause to be provided to the
Building and/or to UTMC, as the case may be, at UTCs own cost, those services
set forth on Schedule 3.1 (the UTC Services). The UTC Services provided to the
Building and/or UTMC shall be of substantially the same quality as the UTC
Services provided to the Building and/or HSE (to the extent applicable), as the
other occupant of the Building; provided, however, except as otherwise expressly
provided herein, the UTC Services provided or caused to be provided by UTC shall
be of equivalent quantity and quality to such services provided to the Building
and/or UTMC, as the case may be, prior to the sale of UTMC to Aeroflex.
3.2 UTMC Services. During the Term, UTMC shall, in addition to the Facility
Services, provide or cause to be provided to the Premises and/or to HSE, as the
case may be, at UTMCs own cost, those services set forth on Schedule 3.2 (the
UTMC Services). The UTMC Services provided to HSE and/or the Premises shall at
all times during the Term be of substantially the same quality as the UTMC
Services provided to the Building and/or UTMC, as the other occupant of the
Building; provided, however, except as otherwise expressly provided herein, the
UTMC Services provided or caused to be provided by UTMC shall be of equivalent
quantity and quality to such services provided to the Premises and/or the CCA
Unit, as the case may be, prior to the sale of UTMC to Aeroflex.
3.3 Updating. The parties have exercised due diligence in preparing this
Agreement and the Schedules, which Schedules are intended to describe all of the
services that the parties agree are to be provided by UTC to UTMC and by UTMC to
HSE. The parties acknowledge, however, that the complexity of the transactions
contemplated by this Agreement may result in incomplete Schedules. Accordingly,
each party will promptly notify the others if it becomes aware of items that
were inadvertently omitted from or included on a Schedule, or additional
information which, if known at the time a Schedule was originally prepared,
would have caused the parties to have prepared the Schedule in a different
manner. The parties will cooperate in good faith to promptly update the
Schedules as necessary and appropriate to reflect any additional items or
information that are discovered after the execution of this Agreement.
3.4 Inventory Management. HSE shall have the exclusive right to manage and
control, and shall retain title and risk of loss to, all Circuit Card Assembly
materials and HSE wafer and die inventory located within the caged HSE Materials
Center on the Premises. HSE will be responsible for maintaining UTMC materials
within such caged Materials Center in an environmentally proper and physically
safe manner as they have been maintained prior to the sale of UTMC to Aeroflex
and shall be liable to UTMC for loss of or damage to such UTMC materials caused
by the negligence or willful misconduct of HSE or its employees. UTMC authorized
personnel will be allowed access for the management and control of UTMCs
materials used in connection with the provision by HSE of CCA Services (as
defined in Section 5.2 below) or the IC manufacturing process, such as UTMC
wafers, die, packages and lids. UTMC shall acquire responsibility for storage
conditions of, and the right to physically control, such UTMC materials upon
receipt from HSE of written notice of HSEs intention to vacate the Premises
within 90 days of the date of such notice. Upon delivery and receipt of such
notice, HSE and UTMC shall use their best efforts to minimize any disruption
caused by such transfer to UTMC of the right to physically control UTMCs
materials.
3.5 Severability of Services and Rights Provided. This Agreement shall be
construed as a separate and independent agreement for each and every service and
right provided under this Agreement. Each of the Schedules is hereby
incorporated in its entirety by reference herein. Any specific service or right
may be terminated at any time by the recipient of such service or beneficiary of
such right by delivery of written notice to such effect to the provider thereof.
Any termination of this Agreement with respect to any service or right shall not
terminate the Agreement with respect to any other service or right then being
provided pursuant to this Agreement.
ARTICLE IV
TERM; RENT AND SERVICE FEE
4.1 Term. The term of this Agreement shall commence on the date hereof and
shall expire at midnight on the second anniversary of the date hereof (the
Initial Term); provided, however, that HSE shall have the right to extend the
term of this Agreement for an additional twelve-month period, expiring at
midnight on the third anniversary of the date hereof (the Extension Term) by
providing UTMC with written notice of HSEs intention to extend, which notice to
be effective must be received by UTMC not later than 180 days prior to the
expiration of the Initial Term. The Initial Term, together with the Extension
Term (if any) are herein collectively referred to as the Term. Notwithstanding
the foregoing, in the event this Agreement shall be terminated in accordance
with Article VI or otherwise by agreement of all of the parties hereto, the Term
shall expire on the date of such termination.
4.2 Rent and Service Fee. In consideration of the leasehold interests
granted and rights and services to be provided by UTMC hereunder, and taking in
account the services to be provided by UTC to UTMC set forth in Article III, HSE
shall pay to UTMC as rent and a net service fee (Rent and Service Fee) with
respect to the Initial Term the sum of Six Million U.S. Dollars ($6,000,000),
payable in twenty-four (24) equal monthly installments of Two Hundred Fifty
Thousand U.S. Dollars ($250,000), beginning on the first day of the month
following the date hereof. In the event that HSE exercises its option to extend
this Agreement for the Extension Term, HSE shall pay to UTMC a reasonable Rent
and Service Fee with respect to such Extension Term, to be agreed upon at the
time between UTMC and HSE acting in good faith based upon the square footage of
the Premises to be occupied by HSE and the services to be provided by UTMC and
UTC during the Extension Term, not to exceed One Hundred Twenty- Eight U.S.
Dollars and Seventy-Six Cents ($128.76) times the number of square feet of the
Premises as of the first day of the Extension Term (after any adjustments to the
Premises in accordance with the provisions of Section 1.6 hereof), payable in
twelve equal monthly installments beginning on the first day of the month
following the first day of the Extension Period.
4.3 Abatement of Rent and Service Fee. In the event that UTMC physically
occupies any portion of the Premises relinquished by HSE pursuant to Section 1.6
during the Initial or Extended Term, other than the July 31 Footage, then the
Rent and Service Fee payable under Section 4.2 shall be abated by a reasonable
amount, to be agreed upon at the time between UTMC and HSE, based upon the
square footage of the Premises so relinquished and effective as of the monthly
installment payable on the first day of the month following such occupancy by
UTMC and each month thereafter for the remainder of the Initial or Extended
Term, as the case may be. Except as specifically provided herein, there shall be
no abatement of the Rent and Service Fee by reason of any relinquishment of any
portion of the Premises by HSE pursuant to Section 1.6 (including, without
limitation, the relinquishment of the July 31 Footage).
ARTICLE V
ADDITIONAL SERVICES; ALLOCATION OF EXPENSES
5.1 Reliability and Material Analysis Services. During the Initial Term,
UTMC will provide HSE with failure analysis services on substantially the same
terms and conditions, including, without limitation, response time, as UTMC
provided to the CCA Unit during the 1998 calendar year. In consideration for
UTMCs provision of such services, HSE shall pay to UTMC an annual amount equal
to Two Hundred Fifty Thousand U.S. Dollars ($250,000), which shall be in
addition to the Rent and Service Fee specified in Section 4.2 hereof. Such
payment shall be made in equal monthly installments of Twenty Thousand Eight
Hundred Thirty-Three U.S. Dollars ($20,833), beginning on the first day of the
month following the date hereof.
5.2 Circuit Card Assembly Services. During the Term, upon request, HSE will
provide circuit card assembly services (CCA Services) to UTMC, for so long as
and to the extent that HSE has the manufacturing and assembly capability in the
Premises to do so. Such services shall be rendered on the following terms and
conditions:
5.2.1 All CCA Services will be rendered on a purchase order basis. In
addition to setting forth in sufficient specificity the work to be performed
(which may cross- reference information previously set forth in a bid or quote),
the purchase order will specify the extent to which HSE is to procure materials,
parts and components to be assembled.
5.2.2 If a purchase order specifies that HSE is to procure materials, parts
or components, UTMC shall pay to HSE, in addition to the labor charges set forth
below, the cost to HSE of such materials, parts and components, plus thirteen
percent (13.0%) (Component Costs). HSE shall be entitled to invoice UTMC for
Component Costs upon delivery of the materials, parts and components to HSE.
Such invoice shall be due and payable by UTMC within thirty (30) days of
receipt.
5.2.3 For CCA Services with respect to which HSE provides a quote during
the Term, HSE shall provide such services at a rate of One Hundred U.S. Dollars
($100) per quoted direct labor hour.
5.2.4 HSE shall be entitled to invoice UTMC, in accordance with the
provisions of Section 5.2.3, for the direct labor charges in respect of a
purchase order upon completion of the work that is the subject of the purchase
order. Such invoice shall be due and payable by UTMC within thirty (30) days of
receipt.
5.2.5 Unless otherwise specified in the purchase order or agreed by UTMC
and HSE, all circuit cards assembled by HSE for UTMC shall be delivered to UTMC
upon completion.
5.2.6 For administrative convenience, UTMC and HSE may by mutual agreement
implement the foregoing terms and conditions through a blanket purchase order
and release orders for specific products based upon quotes from HSE.
5.3 Common Carrier Expenses. Promptly following the date hereof, UTMC will
enter into a separate contract with common carriers for the shipment of its
goods and products. Until such time, however, UTMC and HSE shall each be
responsible for its respective, pro rata share of the total combined freight and
transportation expenses of the two companies. HSE and UTMC will work together in
good faith to implement appropriate administrative measures to enable the
parties to determine such pro rata shares.
5.4 Additional Services. Nothing contained in this Agreement shall be
deemed to prohibit any party hereto from agreeing to render additional services
to another party hereto, at a price to be determined by the affected parties.
ARTICLE VI
SUPPLEMENTAL PROVISIONS
6.1 Authorized Use. HSE may use the Premises for general office purposes
and for the assembly of circuit cards and any other use incidental thereto not
prohibited by Applicable Laws (as defined below). HSE shall not commit any waste
of the Premises nor use or permit the use of the Premises in any manner that
creates a nuisance.
6.2 Condition of the Premises; Peaceable Possession. HSE acknowledges that
it has inspected the Premises and accepts them in their present AS IS condition,
except as otherwise expressly set forth herein. UTMC warrants that HSE shall
have peaceable possession and quiet enjoyment of the Premises during the Term.
6.3 Compliance with Laws. UTMC shall comply with all applicable laws,
ordinances, rules, regulations, standards and other requirements of governmental
authorities, in each case whether local, state or federal, as now or hereafter
in effect (Applicable Laws) regarding the Premises, except to the extent such
Applicable Laws relate to the use of the Premises and with which only HSE can
comply, such as laws governing maximum occupancy, workplace smoking and illegal
business operations, with which HSE hereby agrees to comply.
6.4 Payment of Taxes. UTMC shall pay before delinquency all real property
taxes with respect to the Building and the land on which it is situated. Each of
HSE and UTMC shall pay all personal property and income taxes relating to the
equipment and inventories owned by it and the operation of its business.
6.5 Repairs and Maintenance.
6.5.1 UTMC shall, upon HSEs request and at HSEs sole cost and expense
(which cost and expense shall be equal to UTMCs direct cost for such repair or
replacement), make or cause to be made repairs and replacements to the Premises
or Building needed because of HSEs misuse or negligence, except to the extent
UTMC files a claim with and actually recovers in respect of such repairs or
replacements from a third- party insurance carrier.
6.5.2 Other than the repairs that are the responsibility of HSE pursuant to
Section 6.5.1, UTMC shall pay for and make or cause to be made all repairs and
replacements to the Premises, Common Areas, Building and Access Road necessary
to maintain the same in good order, including, without limitation:
. All structural maintenance and repairs that may be reasonably necessary,
including but not limited to repairs of the foundation, walls, floors,
windows, roof, and exterior painting;
. Adequate maintenance and repair of:
. the plumbing, electrical, heating and air-conditioning systems;
. all interior walls, ceilings, doors, windows, floors and floor coverings of
the Premises;
. all areas and facilities making up the Common Areas; and
. the sidewalks, driveways, service areas, curbs, parking areas and
landscaping, including snow and ice removal.
6.6 Removal of Property. At the end of the Term, as well as upon any
relinquishment of a portion of the Premises by HSE pursuant to Section 1.6, HSE
shall surrender to UTMC the Premises or such portion thereof, as the case may
be, in as good order and repair as of the date hereof, broom clean, except for
(i) ordinary wear and tear, (ii) damage by the elements, fire and other casualty
not the result of HSEs misuse or negligence, (iii) taking under power of eminent
domain and (iv) alteration permitted by UTMC under this Agreement unless consent
thereto was conditioned upon HSEs removal thereof at the end of the Term. All of
HSEs machinery, equipment, shelving, fixtures, furniture and personal property
(HSEs Property) shall be and shall remain the property of HSE and at any time
during the Term HSE may, at its option, remove all HSEs Property installed or
owned by HSE and located in the Building, and on or before the last day of the
Term, or the date on which HSE shall relinquish a portion of the Premises
pursuant to Section 1.6, HSE shall remove all HSEs Property installed or owned
by HSE and located in the Building or in such relinquished portion, as the case
may be, and HSE agrees to pay for the repair of any damage to the Premises that
may be caused by the removal of such items.
6.7 Casualty Insurance.
6.7.1 During the Term, UTMC shall maintain in full force, or cause to be
maintained in full force, all-risk property insurance covering the Building,
including the Premises, insuring against such hazards, casualties and
contingencies as are normally and usually covered by extended coverage policies
in effect where the Building is located, to the extent of eighty percent (80%)
of the full replacement cost of the Building subject to a Five Hundred Thousand
U.S. Dollar ($500,000) deductible.
6.7.2 With respect to any insurance that UTMC is required to procure
pursuant to this Section 6.7. and Section 6.9 below, UTMC shall promptly deliver
to HSE the corresponding policies or certificates of insurance, in form
reasonably satisfactory to HSE. UTMC shall procure and pay for all renewals of
such insurance from time to time before the expiration thereof, and shall
deliver to HSE evidence of such renewal at least thirty (30) days before the
expiration of any existing policy. All such policies shall be issued by
companies of recognized responsibility licensed to do business in Colorado. The
proceeds of policies providing all-risk property insurance shall be payable to
UTMC and HSE as their interests may appear.
6.8 Waiver of Subrogation. UTMC and HSE shall each obtain from their
respective insurance carriers a waiver of subrogation rights endorsement waiving
such rights against such other party and its agents, employees and rights
endorsement invitees. UTMC and HSE hereby waive all rights to recover against
each other for any loss or damage arising from any cause to the extent the party
suffering such loss or damage files a claim with and actually recovers in
respect of such loss or damage from a third-party insurance carrier. Such waiver
shall not apply to any loss or damage caused by a partys willful misconduct.
6.9 Public Liability Insurance. During the Term, UTMC shall obtain and keep
in full force, or cause to be obtained and kept in full force, for benefit of
UTMC and HSE, a commercial general liability policy of insurance against claims
for bodily injury, death and property damage occurring in, on or about the
Building and the Access Road with limits of not less than $10,000,000 combined
single limit for bodily injury and property damage liability in any one
occurrence. HSE shall be named as an additional insured on such policy.
6.10 Damage and Destruction.
6.10.1 If, during the Term, the Premises or any part of the Building which
provides any mode of access to the Premises, or which provides essential
services to the Premises including, without limitation, the Common Areas and the
Access Road (the Relevant Space), is damaged or destroyed in part or whole from
any cause not the result of misuse or negligence of HSE or its agents, employees
or invitees and UTMC has determined in its reasonable discretion (which
determination shall be made and notice thereof shall be sent to HSE no later
than the thirtieth (30th) day following the date on which the damage occurs (the
Determination Date)) that the Relevant Space can be substantially repaired and
restored within ninety (90) days from the date of damage, then UTMC shall, at
its sole cost and expense, use its best efforts to promptly and diligently
repair and restore the Relevant Space to substantially the same condition as
existed before such damage. Such repair and restoration shall be made within
ninety (90) days from the date of the damage. If the Relevant Space is not
repaired and restored within ninety (90) days from the date of the damage, then
HSE may terminate this Agreement at any time after the ninetieth (90th) day but
no later than the one hundred twentieth (120th) day following the date on which
such damage occurred, provided that HSE determines in its reasonable discretion
that the Relevant Space constitutes a material portion of the leasehold estate
granted to HSE hereunder, that the damage or destruction results in material
interference with an essential service to be provided hereunder to HSE, or that
the damage or destruction otherwise materially interferes with the conduct by
HSE of its business. The Rent and Service Fee shall be abated from the date upon
which damage occurs through and including the date upon which the repair and
restoration are completed, in proportion to that part of the Premises that is
unfit for the purposes for which HSE was using the Premises immediately prior to
the damage. The abatement shall take into account the nature and extent of
interference with HSEs use of the Premises due to damage to all of the Relevant
Spaces and HSEs loss of access and essential services. It is understood and
agreed that such an abatement may require a refund by UTMC to HSE of Rent and
Service Fee already paid by HSE with respect to such abatement period.
6.10.2 If (i) UTMC determines in its reasonable discretion that the damage
to the Relevant Space cannot be repaired and restored within such ninety (90)
day period and (ii) HSE determines in its reasonable discretion that the
Relevant Space constitutes a material portion of the leasehold estate granted to
HSE hereunder, that the damage or destruction results in material interference
with an essential service to be provided hereunder to HSE, or that the damage or
destruction otherwise materially interferes with the conduct by HSE of its
business, and provided that HSE delivers written notice of such determination to
UTMC within seven days after the Determination Date, then either UTMC or HSE
may, within ten days after the Determination Date, terminate this Agreement by
giving written notice to the other parties. If neither UTMC nor HSE elects to
terminate this Agreement, UTMC, at its sole cost and expense, will promptly and
diligently repair and restore the Relevant Space to substantially the same
condition as existed before such damage. In such event, the Rent and Service Fee
shall be abated from the date upon which the damage occurs through and including
the date upon which the repair and restoration are completed, in proportion to
that part of the Premises that is unfit for the purposes for which HSE was using
the Premises immediately prior to the damage. Such abatement shall take into
account the nature and extent of interference with HSEs use of the Premises due
to damage to all of the Relevant Spaces and HSEs loss of access and essential
services. It is understood and agreed that such an abatement may require a
refund by UTMC to HSE of Rent and Service Fee already paid by HSE with respect
to such abatement period.
6.10.3 If UTMC fails to send HSE notice of its determination with respect
to the time needed for the repair and restoration referred to above, then HSE
shall have the right, within forty-five (45) days after the date of damage, to
terminate this Agreement upon written notice to UTMC.
6.10.4 If either party terminates this Agreement as permitted in this
Section 6.10, the Rent and Service Fee shall be payable pro rata up to the date
of termination and shall take into account any abatement resulting from the
provisions of this Section 6.10. Upon such termination, UTMC shall promptly
refund to HSE any prepaid Rent and Service Fee.
6.11 Eminent Domain. If the whole or any substantial part of the Relevant
Space is taken by public authority under the power of eminent domain for either
a permanent or temporary use exceeding ninety (90) days, HSE, at its option, may
terminate this Agreement or continue in any portion of the Premises remaining
untaken under the terms and conditions of this Agreement, except that the Rent
and Services Fee shall be reduced in proportion to the portion of Premises taken
or that portion of the Premises which, due to such taking, is unfit for the
purposes for which HSE was using the Premises immediately prior to such taking.
The reduction in the Rent and Service Fee shall taken into account the nature
and extent of interference with HSEs use of the Premises due to the taking of
the Relevant Space and HSEs loss of access and essential services. Whenever any
portion of the Premises shall be taken under the power of eminent domain, and if
HSE does not terminate this Agreement as provided above, UTMC shall make any
reasonably necessary alternations so as to make the remaining Premises a
complete unit. In the event of any such taking, the entire award will be paid to
UTMC and HSE will have no right or claim to any part of it; provided, however,
that HSE shall have the right to assert a claim against the condemning or taking
authority for HSEs moving expenses, business dislocation damages, HSEs personal
property and fixtures, leasehold improvements owned by HSE and HSEs leasehold
estate and shall be entitled to retain any award thereafter. If HSE terminates
this Agreement as permitted in this Section 6.11, the Rent and Service Fee shall
be payable pro rata up to the date of termination and shall take into account
any abatement resulting from the provisions of this Section 6.11. Upon such
termination, UTMC shall promptly refund to HSE any prepaid Rent and Service Fee.
6.12 UTMCs Right to UTC Services. If HSE provides written notice to UTMC of
its intent to terminate this Agreement as permitted in Section 6.10 or Section
6.11 and UTMC shall have provided written notice to UTC within fifteen (15) days
of such date of such notice that UTMC desires to continue to receive the UTC
Services for the duration of the Term, then the provisions of this Agreement
pertaining to the rights and obligations of UTC and UTMC with respect to the UTC
Services (but only such rights and obligations) shall survive such termination,
in accordance with Section 3.5. In the event UTMC elects, in the manner and
within the time period specified above, to continue to receive the UTC Services,
UTC shall be entitled to invoice UTMC for such services at a rate equal to the
actual costs and expenses incurred by UTC in connection with the provision of
the UTC Services to UTMC. Such invoices will be due and payable by UTMC within
thirty (30) days of receipt thereof.
6.13 Alterations. HSE agrees not to make any material alterations,
improvements or additions to the Premises except as set forth in this Section
6.13. HSE shall have the right at its own expense with the prior written consent
of UTMC, which consent shall not be unreasonably withheld or delayed, to make
such alterations, additions, installations, changes and improvements to the
Premises (HSE Improvements) as may be necessary for HSEs purposes, provided,
that such HSE Improvements (i) comply with Applicable Laws, (ii) comply with the
reasonable requirements of UTMC and (iii) shall not change the general character
of the Building or the Premises or diminish the value thereof below its fair
market value prior to such HSE Improvements. As a condition to giving any such
consent, UTMC may reasonably require that HSE remove any such HSE Improvements
at the end of the Term and restore the Premises to their original condition
(subject to the provisions of Section 6.6). HSE shall keep the Premises and
Building free from all mechanics and materialmens liens in connection with the
making of any HSE Improvements.
6.14 Assignment and Subletting. This Agreement may not be assigned by UTMC,
UTC or HSE without the prior written consent of the other parties, except as
follows:
(i) Each of HSE, UTC and UTMC may assign this Agreement to any
corporation, limited liability company or partnership resulting from
the merger or consolidation of such party or to any entity that
acquires all or substantially all of such partys assets as a going
concern, as long as such entity assumes the obligations of assignor.
In the event of any assignment of this Agreement, the assignor (to the
extent it shall continue in existence) shall guarantee the performance
of the assignees obligations hereunder; and
(ii) HSE may sublet the Premises to any corporation, limited liability
company or partnership that controls, is controlled by or is under
common control with HSE, provided that the Premises are to be used in
connection with operations substantially similar to the operations of
HSE or other operations compatible with UTMCs activities in the
Building. In the event of any such subletting of the Premises, HSE
shall guarantee the performance of the subtenants obligations
hereunder.
6.15 Environmental Matters.
6.15.1 During the Term, each of HSE and UTMC shall (i) comply with all
Environmental Laws (as defined below) concerning or relating to the use, storage
or disposal of Chemical Substances (as defined below) and (ii) operate its
business in compliance with the conditions of all permits necessary under the
Environmental Laws and maintain all such permits valid and in force. HSE shall
also comply with UTMC's reasonable rules and requirements regarding the
management, use, storage and disposal of Chemical Substances. Chemical Substance
means any chemical substance, including but not limited to, petroleum or any
fraction thereof; asbestos or asbestos-containing material; polychlorinated
biphenyls; tetrahydrofuran; methylene chloride; methylethylketone or
chlorofluorocarbons; and without limitation, any substances, materials, or
wastes which are identified or regulated under the Clear Air Act, as amended;
the Clean Water Act, as amended; the Occupational Safety and Health Act, as
amended; the Toxic Substances Control Act, as amended; the Comprehensive
Environmental Response, Compensation and Liability Act, as amended; or any
analogous state, local or other Environmental Law. Environment includes real
property and the physical buildings and structures thereon, and also includes,
but is not limited to, ambient air, surface water, drinking water, groundwater,
land surface, subsurface strata, river sediment, flora and fauna; Environmental
Laws means all Applicable Laws as (now or hereafter in effect) relating to human
health or safety or pollution, protection or clean up of the Environment,
including, without limiting the generality of the foregoing, the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act, the Toxic Substance Control Act, The Clean Air Act, the
Occupational, Safety and Health Act, and the provisions of the laws of the State
of Colorado applicable to environmental, health and safety matters and any
regulations promulgated thereunder. Release means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing of any Chemical Substance into the Environment.
6.16 Hold Harmless and Indemnity.
6.16.1 HSE shall indemnify, defend and hold harmless UTMC from and against
any and all losses, costs, damages, claims, liabilities (whether based on strict
liability or otherwise), demands, judgments or expenses whatsoever (including
reasonable legal fees and expenses) (Losses) arising out of or in connection
with:
(i) any personal injury, death or property damage resulting from incidents
occurring in or about the Premises and the Common Areas and caused by
HSE or its agents, employees or invitees;
(ii) any breach or default in the performance of any covenant or obligation
to be performed by HSE under this Agreement, other than a breach or
default in the performance of the covenants and obligations set forth
in Section 6.15.1;
(iii)any contamination of soil, water, air or groundwater on or at the
Building or the land upon which it is situated to the extent that such
contamination is attributable to actions or omissions to take actions
of HSE or any of its employees, agents or invitees respecting such
land, the Building or Premises during the Term;
(iv) any contamination of soil, water, air or groundwater at any property
other than the land upon which the Building is situated that is caused
by or results from the generation, use, disposal or Release of any
Chemical Substance by HSE at or from the Building (including the
Premises) or the land upon which it is situated; or
(v) any breach or default in the performance of any covenant or obligation
to be performed by HSE under Section 6.15.1.
provided that, in the case of (i) and (ii) above, HSE receives written notice of
UTMCs claim in respect of such Losses, specifying in reasonable detail the basis
therefor, on or before the date one (1) year following the earlier of (x) the
last day of the Term and (y) the date on which this Agreement is terminated by
HSE pursuant to Section 6.10 or 6.11; and that, in the case of (iii), (iv) and
(v) above, HSE receives written notice of UTMCs claim in respect of such Losses,
specifying in reasonable detail the basis therefor, on or before the date five
(5) years following the earlier of (x) the last day of the Term and (y) the date
on which this Agreement is terminated by HSE pursuant to Section 6.10 or 6.11.
6.16.2 UTC shall indemnify, defend and hold harmless UTMC from and against
any and all Losses arising out of or in connection with any breach or default in
the performance of any obligation to be performed by UTC under this Agreement;
provided that UTC receives written notice of UTMCs claim in respect of such
Losses, specifying in detail the basis therefor, on or before the date one (1)
year following the earlier of (x) the last day of the Term and (y) the date on
which this Agreement is terminated by HSE pursuant to Section 6.10 or 6.11 if
UTMC fails to duly exercise its rights pursuant to Section 6.12.
6.16.3 UTMC shall indemnify, defend and hold harmless HSE and UTC from and
against any and all Losses arising out of or in connection with:
(i) any personal injury, death or property damage resulting from incidents
occurring in or about the Building (including the Premises) and the
land upon which it is situated and caused by UTMC or its agents,
employees or invitees;
(ii) any breach or default in the performance of any obligation to be
performed by UTMC under this Agreement, other than a breach or default
in the performance of the covenants and obligations set forth in
Section 6.15.1;
(iii)any contamination of soil, water, air or groundwater on or at the
Building or the land upon which it is situated; provided, however,
that UTMC shall have no obligation to indemnify HSE for contamination
to the extent that such contamination is attributable to actions or
omissions to take actions of HSE or any of its agents, employees or
invitees respecting such land, the Building or Premises during the
Term;
(iv) any contamination of soil, water, air or groundwater at any property
other than the land upon which the Building is situated that is caused
by or results from the generation, use, disposal or Release of any
Chemical Substance by UTMC at or from the Land or Building (including
the Premises) or the land upon which it is situated; or
(v) any breach or default in the performance of any covenant or obligation
to be performed by UTMC under Section 6.15.1.
provided that, in the case of (i) and (ii) above, UTMC receives written notice
of HSEs claim in respect of such Losses, specifying in reasonable detail the
basis therefor, on or before the date one (1) year following the earlier of (x)
the last day of the Term and (y) the date on which this Agreement is terminated
by HSE pursuant to Section 6.10 or 6.11; and that, in the case of (iii), (iv)
and (v) above, UTMC receives written notice of HSEs claim in respect of such
Losses, specifying in reasonable detail the basis therefor, on or before the
date five (5) years following the earlier of (x) the last day of the Term and
(y) the date on which this Agreement is terminated by HSE pursuant to Section
6.10 or 6.11; and
provided further that, in the case of (i) and (ii) above, UTMC receives written
notice of UTCs claim in respect of such Losses, specifying in reasonable detail
the basis therefor, on or before the date one (1) year following the earlier of
(x) the last day of the Term and (y) the date on which this Agreement is
terminated by HSE pursuant to Section 6.10 or 6.11 if UTMC fails to duly
exercise its rights pursuant to Section 6.12; and that, in the case of (iii),
(iv) and (v) above, UTMC receives written notice of UTCs claim in respect of
such Losses, specifying in reasonable detail the basis therefor, on or before
the date five (5) years following the earlier of (x) the last day of the Term
and (y) the date on which this Agreement is terminated by HSE pursuant to
Section 6.10 or 6.11 if UTMC fails to duly exercise its rights pursuant to
Section 6.12.
6.16.4 Notwithstanding Sections 6.16.1, 6.16.2 and 6.16.3, any claim for
any Loss that HSE, UTC or UTMC may have against another under such Sections
shall be reduced to the extent such party files a claim with and actually
recovers in respect of such Loss from a third-party insurance carrier.
6.16.5 The rights and remedies under this Section 6.16 shall be deemed to
be exclusive of all other rights and remedies that would otherwise be available
to the parties hereto; provided that each of the parties hereto shall have the
right to enforce their respective rights hereunder by an action or actions for
specific performance, injunction or other appropriate equitable remedy.
6.17 Method of Asserting Claims, etc. The party or parties making a claim
under Section 6.10 is, for purposes of this Agreement, referred to as the
"Indemnified Party" and the party or parties against whom such claims are
asserted under such Section is, for the purposes of this Agreement, referred to
as the "Indemnifying Party." All claims by an Indemnified Party under this
Agreement shall be asserted and resolved only as follows:
6.17.1 In the event that (i) any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against or
sought to be collected from such Indemnified Party by a third party (such claim
or demand, a "Third Party Claim") or (ii) any Indemnified Party hereunder should
have a claim or demand against any Indemnifying Party hereunder which does not
involve a claim or demand being asserted against or sought to be collected from
it by a third party (such claim or demand a "Direct Claim"), the Indemnified
Party shall with reasonable promptness notify in writing the Indemnifying Party
of such claim or demand and the amount or the estimated amount thereof to the
extent then feasible to determine (which estimate shall not be conclusive of the
final amount of such claim or demand) (a "Claim Notice"); provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
actually prejudiced.
6.17.2 In the event of a Third Party Claim, the Indemnifying Party may, and
upon request of the Indemnified Party shall, retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and any
others the Indemnifying Party may designate in connection with such claim or
demand and shall pay the fees and disbursements of such counsel with regard
thereto. In the event an Indemnifying Party shall retain such counsel, an
Indemnified Party shall have the right to retain its own counsel, but the fees
and disbursements of the Indemnified Party's counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and such Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii)
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. It is understood that the Indemnifying Party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and disbursements of more than one separate
firm qualified in such jurisdiction to act as counsel for the Indemnified Party.
No Indemnifying Party shall be liable to an Indemnified Party for any settlement
of any action or claim without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment that (i) does not include as
an unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect of such claim or (ii)
includes a statement or an admission of fault, culpability or a failure to act,
by or on behalf of the Indemnified Party.
6.17.3 In the event of a Direct Claim, if the Indemnifying Party notifies
the Indemnified Party within sixty (60) days of receipt of a Claim Notice that
it does not dispute such claim, the amount of such claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder and shall be paid to the
Indemnified Party immediately.
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed by the laws of the
State of New York (regardless of the laws that might be applicable under the
principles of conflicts of law) as to all matters, including but not limited to
matters of validity, construction, effect and performance.
7.2 Notices. Unless otherwise specifically provided herein, all notices,
consents, demands, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
party hereto shall be in writing and shall become effective when telecopied
(provided a copy thereof is placed in the U.S. mail, postage prepaid, within 24
hours after telecopied), delivered by hand or overnight courier or three (3)
business days after being mailed by registered first-class mail, postage
prepaid, return receipt requested, and addressed to such party as provided below
or at such other address as shall have been designated by such party for
purposes of notice hereunder by notice to the other party hereto:
If to UTMC:
UTMC Microelectronic Systems Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx, 00000
Telecopier: 000-000-0000
Attention: President
With required copy to:
Aeroflex, Incorporated
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: President
If to HSE:
Xxxxxxxx Standard Electronics, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx, 00000
Telecopier: 000-000-0000
Attention: President
With required copy to:
United Technologies Corporation
Xxxxxxxx Standard Division
One Xxxxxxxx Road, M/S 0-0-XX00
Xxxxxxx Xxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Vice President, Contracts and Counsel
If to UTC:
United Technologies Corporation
Xxxxxxxx Standard Division
One Xxxxxxxx Road, M/S 0-0-XX00
Xxxxxxx Xxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Presidents Office
With required copy to:
United Technologies Corporation
Xxxxxxxx Standard Division
One Xxxxxxxx Road, M/S 0-0-XX00
Xxxxxxx Xxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Vice President, Contracts and Counsel
7.3 Dispute Resolution Procedure. Each party agrees that any legal
disagreement, dispute, controversy or claim arising out of or relating to this
Agreement, the interpretation hereof, the relationship contemplated hereby, or
the breach, termination or invalidity hereof (a Legal Dispute) shall be settled
as set forth below. Except as specifically provided in Section 7.3.4, it is
understood and agreed that no action at law or equity in respect of any Legal
Dispute shall be commenced until the dispute resolution mechanism set forth
below has been exhausted completely.
7.3.1 In the event a Legal Dispute arises, upon written request of UTMC, on
the one hand, or UTC or HSE, on the other, the President of each of UTMC and HSE
shall meet within ten (10) days of such request to attempt through good faith
negotiation to reach a common decision concerning the Legal Dispute. If a
resolution is reached it will be binding upon the parties hereto.
7.3.2 If the President of UTMC and the President of HSE have not been able
to resolve the Legal Dispute within fifteen (15) days following such written
request, then the President of the Xxxxxxxx Standard Division of UTC shall meet
with the President of Aeroflex to attempt through good faith negotiation to
reach a common decision concerning the Legal Dispute. If a resolution is reached
it will be binding upon the parties hereto.
7.3.3 In the event the President of the Xxxxxxxx Standard Division and the
President of Aeroflex have not been able to resolve the Legal Dispute within
thirty (30) days following such written request, the parties to the Legal
Dispute shall be free to pursue any and all available remedies at law or in
equity.
7.3.4 This Section 7.3 shall not prohibit or limit in any way any party
hereto from seeking or obtaining preliminary or interim injunctive or other
equitable relief from a court of competent jurisdiction.
7.4 No Consequential Damages. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall a party hereto be liable to
another for any special, punitive, incidental or consequential damages.
7.5 Benefits Cumulative. Each and every right, remedy and benefit provided
by this Agreement shall be cumulative and shall not be exclusive of any other of
said rights, remedies, and benefits allowed by law.
7.6 Waiver. Waiver by any party of strict performance of any provision of
this Agreement shall not be a waiver of or prejudice the partys right to require
strict performance of the same provision in the future. Any waiver, to be
effective, must be in writing and signed by the party waiving compliance.
7.7 Legally Binding. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, representatives, successors
and permitted assigns.
7.8 Section Headings. Section headings are inserted in this Agreement for
convenience only and are not to be construed as restricting the meaning of the
section to which they refer.
7.9 Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto (as such Schedules may be updated pursuant to Section 3.3)
embody the entire agreement of the parties with regard to the subject matter of
this Agreement. This Agreement supersedes all prior communications,
representations, or agreements, verbal or written, between the parties to it and
may not be amended except in a writing signed by the party affected by the
change.
7.10 Recording. At the request of HSE, the parties shall promptly execute
and record, at HSEs cost and expense, a short form agreement or memorandum of
agreement describing the Premises and stating the Term and such other
information as is appropriate to effect a valid filing.
7.11 Severability. If any provision of this Agreement is found by a court
of competent jurisdiction to be illegal, invalid or unenforceable, the remainder
of this Agreement will not be affected and shall continue in effect and be
enforceable to the fullest extent permitted by law.
7.12 Construction Against Drafter. UTMC, UTC, HSE and each of their
advisors agree that this Agreement is the product of all of their efforts, that
it expresses their agreement, and that it should not be interpreted in favor of
UTMC, UTC or HSE or against UTMC, UTC or HSE merely because of their efforts in
preparing it.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers thereunto duly authorized, as of the day and year first above
written.
UTMC MICROELECTRONIC SYSTEMS INC.
By: /s/ Xxxxxxx Xxxxx
Name:
Title:
XXXXXXXX STANDARD ELECTRONICS, INC.
By: /s/ Xxx Xxxxx
Name:
Title:
UNITED TECHNOLOGIES CORPORATION
Xxxxxxxx Standard Division
By: /s/ Xxxxxxx Xxxx Xxxxx, Jr.
Name: Xxxxxxx Xxxx Xxxxx, Jr.
Title: Vice President,
Contracts and Counsel
Agreed with respect to Section 7.3 only:
AEROFLEX, INC.
By:________________________________
Name: Xxxxxxx Xxxxx
Title: President
