CONFORMED COPY
ASSET PURCHASE AGREEMENT
dated as of January 8, 1998
by and between
RAYTHEON TI SYSTEMS, INC.
and
TRIQUINT SEMICONDUCTOR, INC.
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1 PURCHASE AND SALE .............................................. 2
Section 1.1 Acquired Assets ...................................... 2
Section 1.2 Excluded Assets ...................................... 3
Section 1.3 Determinations as to Mixed-Use Assets ................ 4
ARTICLE 2 ASSUMPTION OF CERTAIN OBLIGATIONS .............................. 5
ARTICLE 3 PURCHASE PRICE ................................................. 5
Section 3.1 Purchase Price ....................................... 5
Section 3.2 Purchase Price Adjustments ........................... 6
Section 3.3 Call Option on Shares ................................ 8
Section 3.4 Delays in Demand Registration ........................ 8
ARTICLE 4 CLOSING ........................................................ 9
Section 4.1 Time and Place ....................................... 9
Section 4.2 Transactions at Closing .............................. 9
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
OF THE SELLER .................................................. 10
Section 5.1 Incorporation; Authority ............................. 10
Section 5.2 Rights to Sell Acquired Assets;
Approvals; Binding Effect .......................... 10
Section 5.3 No Defaults .......................................... 10
Section 5.4 Title to Assets ...................................... 11
Section 5.5 Financial Statements ................................. 12
Section 5.6 Absence of Certain Changes ........................... 12
Section 5.7 Litigation, Etc. ..................................... 13
Section 5.8 Labor Relations ...................................... 13
Section 5.9 Contracts ............................................ 14
Section 5.10 Pensions and Benefits ................................ 15
Section 5.11 Intellectual Property ................................ 16
Section 5.12 Governmental Consent ................................ 17
Section 5.13 Compliance with Laws, Etc. ........................... 17
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Section 5.14 Equipment. ........................................... 17
Section 5.15 Location of Inventories .............................. 17
Section 5.16 Customers ............................................ 17
Section 5.17 Environmental Matters ................................ 17
Section 5.18 Brokers .............................................. 18
Section 5.19 Taxes ................................................ 18
Section 5.20 Absence of Undisclosed Liabilities ................... 19
Section 5.21 Licenses ............................................. 19
Section 5.22 Collectibility of Gross Accounts Receivable .......... 19
Section 5.23 Investment Representations ........................... 19
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF
THE BUYER ...................................................... 22
Section 6.1 Organization and Standing of the Buyer ............... 22
Section 6.2 Corporate Approval; Binding Effect ................... 22
Section 6.3 Non-Contravention .................................... 22
Section 6.4 Government Consents, Etc. ............................ 22
Section 6.5 Buyer's Capabilities ................................. 22
Section 6.6 Brokers .............................................. 23
Section 6.7 Capital Stock ........................................ 23
Section 6.8 Authorization for Shares ............................. 23
Section 6.9 Reports and Financial Statements ..................... 23
Section 6.10 Absence of Certain Changes or Events ................. 24
Section 6.11 Registration Statements .............................. 24
Section 6.12 Registration Rights Agreement ........................ 24
ARTICLE 7 CERTAIN REGULATORY APPROVALS ................................... 25
Section 7.1 Department of Justice and Department of
Defense .............................................. 25
Section 7.2 Xxxx-Xxxxx-Xxxxxx .................................... 25
ARTICLE 8 CONDUCT OF BUSINESS PENDING
CLOSING ........................................................ 25
Section 8.1 Full Access .......................................... 26
Section 8.2 Carry on in Regular Course ........................... 26
Section 8.3 No General Increases ................................. 26
Section 8.4 Sale of Capital Assets ............................... 26
Section 8.5 Insurance ............................................ 26
Section 8.6 Preservation of Organization ......................... 26
Section 8.7 Compliance with Final Judgment ....................... 27
Section 8.8 Advice of Change ..................................... 27
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Section 8.9 No Shopping .......................................... 27
ARTICLE 9 CONDITIONS PRECEDENT TO BUYER'S
OBLIGATIONS ................................................... 28
Section 9.1 Representations and Warranties ....................... 28
Section 9.2 Compliance with Agreement ............................ 28
Section 9.3 No Litigation ........................................ 28
Section 9.4 Regulatory Clearance ................................. 28
Section 9.5 Intellectual Property Agreement ...................... 29
Section 9.6 Supply Agreement ..................................... 29
Section 9.7 Master Services Agreement ............................ 29
Section 9.8 Sublease Agreements .................................. 29
Section 9.9 Amendment to Registration Rights Agreement ........... 29
Section 9.10 Non-Disclosure Agreement ............................. 29
Section 9.11 TI Amendment ......................................... 29
Section 9.12 Voting Trust Agreement ............................... 29
ARTICLE 10 CONDITIONS PRECEDENT TO SELLER'S
OBLIGATIONS ................................................... 30
Section 10.1 Representations and Warranties ....................... 30
Section 10.2 Compliance with Agreement ............................ 30
Section 10.3 No Litigation ........................................ 30
Section 10.4 Regulatory Clearance ................................. 30
Section 10.5 Intellectual Property Agreement ...................... 31
Section 10.6 Supply Agreement ..................................... 31
Section 10.7 Master Services Agreement ............................ 31
Section 10.8 Sublease Agreements .................................. 31
Section 10.9 Amendment to Registration Rights Agreement ........... 31
Section 10.10 Non-Disclosure Agreement ............................. 31
Section 10.11 TI Amendment ......................................... 31
Section 10.12 Voting Trust Agreement ............................... 31
ARTICLE 11 EMPLOYEES AND EMPLOYEE BENEFITS ............................... 31
Section 11.1 Hiring Employees ..................................... 31
Section 11.2 Benefit Plans Generally .............................. 33
Section 11.3 Savings Plan ......................................... 33
Section 11.4 Pension Plans ........................................ 33
Section 11.5 Incentive Plans ...................................... 34
Section 11.6 Stock Option Plans ................................... 34
Section 11.7 Accrued Vacation ..................................... 35
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ARTICLE 12 CERTAIN COVENANTS ............................................. 35
Section 12.1 Third Party Consents ................................. 35
Section 12.2 Novation of Government Contracts ..................... 35
Section 12.3 Access to Books and Records .......................... 36
Section 12.4 Use of Raytheon TI Systems Name ...................... 36
Section 12.5 Non-Solicitation ..................................... 37
Section 12.6 Compliance with Certain Agreements ................... 37
Section 12.7 Compliance with Final Judgment ....................... 37
Section 12.8 Best Efforts and Mutual Cooperation .................. 37
Section 12.9 Move to North Building ............................... 37
Section 12.10 Collection of Accounts Receivable .................... 38
Section 12.11 Buyer's Business ..................................... 39
ARTICLE 13 INDEMNITY ..................................................... 39
Section 13.1 Indemnification by the Seller ........................ 39
Section 13.2 Indemnification by the Buyer ......................... 40
Section 13.3 Indemnification Procedures ........................... 40
Section 13.4 Scope of Indemnity ................................... 41
Section 13.5 Waiver of Statutory Claims ........................... 41
ARTICLE 14 TAX MATTERS ................................................... 41
Section 14.1 General .............................................. 41
Section 14.2 Cooperation on Tax Matters; Conduct of
Proceedings .......................................... 41
Section 14.3 Allocation of Transfer and Property Taxes ............ 42
Section 14.4 Allowable Taxes ...................................... 43
Section 14.5 Scope of Article ..................................... 43
ARTICLE 15 TERMINATION ................................................... 45
ARTICLE 16 CONFIDENTIALITY ............................................... 45
Section 16.1 Confidentiality Agreement ............................ 45
Section 16.2 Classified Information ............................... 45
ARTICLE 17 DEFINITIONS ................................................... 46
ARTICLE 18 GENERAL ....................................................... 48
Section 18.1 Survival of Representations and Warranties ........... 48
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Section 18.2 Expenses.............................................. 48
Section 18.3 Assigns............................................... 48
Section 18.4 Entire Agreement, Etc. ............................... 49
Section 18.5 Waiver of Certain Damages............................. 49
Section 18.6 Construction ......................................... 49
Section 18.7 Governing Law ........................................ 49
Section 18.8 Notices .............................................. 49
Section 18.9 Counterparts ......................................... 50
Section 18.10 Section Headings ..................................... 50
Section 18.11 Public Statements or Releases ........................ 50
Section 18.12 Disclosure in Schedules .............................. 51
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is dated as of the 8th day
of January, 1998, by and between RAYTHEON TI SYSTEMS, INC., a Delaware
corporation (the "SELLER"), and TRIQUINT SEMICONDUCTOR, INC., a Delaware
corporation (the "BUYER").
On July 11, 1997, the Seller, a wholly-owned subsidiary of Raytheon
Company, a Delaware corporation (the "PARENT"), purchased the Gallium
Arsenide ("GAAS") foundry and Monolithic Microwave Integrated Circuit
("MMIC") business of the X/X Xxxxxxxxx Xxxxxxxx Xxxx xx Xxxxx Instruments
Incorporated, a Delaware corporation ("TI"), including, without limitation,
TI's GaAs Operations Group, TI's Microwave GaAs Products Business Unit, the
MMIC component of TI's Microwave Integrated Circuits Center of Excellence and
the MMIC research and development component of TI's Systems Component
Research Laboratory (collectively, the "MMIC BUSINESS");
Pursuant to a Final Judgment entered on November 6, 1997 (the "FINAL
JUDGMENT") in the United States District Court for the District of Columbia
in Civil Case No. 97-1515 known as UNITED STATES OF AMERICA V. RAYTHEON
COMPANY AND TEXAS INSTRUMENTS, INC., a related Stipulation and Order entered
in the same case on July 2, 1997, and a related Hold Separate and Partition
Plan Stipulation and Order entered in the same case on July 2, 1997 (the
"HOLD SEPARATE ORDER"), Parent has agreed to promptly divest the MMIC
Business and, pending such divestiture, to maintain the MMIC Business as an
independent competitor held separate from Parent; and
The Seller desires to sell and the Buyer desires to purchase the MMIC
Business.
In connection with the negotiation and preparation of this Agreement,
the Seller has prepared, and the Buyer has reviewed, a set of disclosure
schedules, dated the date hereof and delivered separately as one or more
volumes (the "DISCLOSURE SCHEDULE", with any reference in this Agreement to a
Schedule being a reference to the Disclosure Schedule).
Certain defined terms not defined elsewhere in this Agreement are
defined in Article 17.
In consideration of the mutual agreements and covenants herein
contained, the parties hereto agree as follows:
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ARTICLE 1
PURCHASE AND SALE
1.1. ACQUIRED ASSETS. Subject to the terms and conditions set forth
in this Agreement, at the Closing referred to in Article 4 hereof, the Seller
shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase, acquire and take assignment and delivery of, all of the following
assets of the Seller used in or relating to the MMIC Business, with the
exception of the Excluded Assets (as defined in Section 1.2) (all of which
assets are hereinafter referred to collectively as the "ACQUIRED ASSETS"):
(a) All machinery, equipment, installations, fixtures,
furniture, tools, supplies, materials and other personal property used
primarily in connection with the MMIC Business, including without
limitation those items described on SCHEDULE 1.1(a) hereto, with such
additions and deletions thereto as may arise, or may have arisen, from the
date as of which such Schedule was prepared in the ordinary course of
business prior to the Closing consistent with the Seller's obligations
under Article 8 hereof (the "EQUIPMENT");
(b) Except as set forth in SCHEDULE 5.22, all of the Seller's
accounts receivable relating to the MMIC Business outstanding on the
Closing Date, to the extent reflected on the Closing Balance Sheet (as
defined in Section 3.2), as finally adjusted pursuant to Section 3.2;
(c) All of the Seller's inventories held for use in the MMIC
Business, including raw materials, work in process and finished goods (the
"INVENTORIES"), to the extent reflected on the Closing Balance Sheet (as
finally adjusted pursuant to Section 3.2);
(d) All of the Seller's prepaid expenses relating to the MMIC
Business, to the extent reflected on the Closing Balance Sheet (as finally
adjusted pursuant to Section 3.2);
(e) all of the Seller's deferred charges relating to the MMIC
Business, to the extent reflected on the Closing Balance Sheet (as finally
adjusted pursuant to Section 3.2);
(f) All of the Seller's rights under all leases of personal
property used primarily in connection with the MMIC Business;
(g) All of the Seller's rights under all contracts and
agreements, including without limitation joint venture agreements, teaming
agreements, distribution agreements, supply agreements, license agreements,
personal property leases and development contracts, entered into by the
Seller
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primarily in connection with the MMIC Business, including without
limitation the contracts listed on SCHEDULE 1.1(g);
(h) All of the Seller's rights under purchase orders outstanding
on the Closing Date and relating primarily to the MMIC Business, including
without limitation the purchase orders listed on SCHEDULE 1.1(h);
(i) All of the Seller's rights with respect to all MMIC Business
Intellectual Property (as defined in Article 17) of the Seller;
(j) to the extent transferable, all of the Seller's rights with
respect to all computer software programs used primarily in the MMIC
Business;
(k) to the extent transferable, all of the Seller's rights with
respect to any licenses, permits, concessions, orders, authorizations,
approvals or registrations from, of or with any Governmental Entity (as
defined in Article 17) and relating primarily to the MMIC Business; and
(l) subject to Section 12.3, all records of the Seller relating
primarily to the MMIC Business, including, without limitation, financial
and tax records, property records, production records, purchasing and sales
records, personnel and payroll records, customer lists, credit records,
accounting records and such other records as the Buyer may reasonably
require to conduct the MMIC Business subsequent to the Closing.
1.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the Seller is not
selling and the Buyer is not purchasing pursuant to this Agreement, and the term
"ACQUIRED ASSETS" shall not include, any of the following assets (the "EXCLUDED
ASSETS"):
(a) any of the Seller's title to, interest in or rights with
respect to any real property other than to the extent set forth in the
Sublease Agreements (as hereinafter defined);
(b) any of the Seller's cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or in
bank accounts, and all of the Seller's bank accounts;
(c) any computers not used primarily in the MMIC Business, and
any software embodied in any such computers, any communication or data
network systems not used primarily in the MMIC Business, and any other
equipment used to support the MMIC Business but not located at the Seller's
facilities at 13510 and 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx (the
"NORTH BUILDING" and the "RESEARCH EAST BUILDING", respectively, and
collectively, the "MMIC FACILITIES");
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(d) any rights under the Asset Purchase Agreement dated as of
January 4, 1997 between Parent and TI (the "TI ASSET PURCHASE AGREEMENT"),
or under any agreement entered into in connection therewith;
(e) any other assets of the Seller not used primarily in the
MMIC Business except to the extent the use of such assets is determined
pursuant to Section 1.3;
(f) any rights to any patents, copyrights, mask works, invention
disclosures, know-how, trade secrets, technical information and other data,
operating procedures, technology or other intellectual property not
included in the MMIC Business Intellectual Property;
(g) any rights to any tradenames, trademarks or corporate names,
including, without limitation, the tradenames, trademarks or corporate
names "Raytheon", "TI", "Raytheon TI Systems" and any derivations thereof;
(h) any insurance policies relating to the MMIC Business;
(i) any rights under any ERISA Plan or Non-ERISA Plan retained
by the Seller pursuant to Article 11;
(j) any prepaid expenses relating to Excluded Liabilities;
(k) unless specifically listed on SCHEDULE 1.1(g) hereto, any
contracts primarily related to the design, manufacture or supply of modules
or the supply of related services and any contracts primarily related to
the design, manufacture or supply of other systems or the supply of related
services for which Seller, as of the Closing Date, will be granted a
license under Section 3.2 of the Intellectual Property Agreement (as
defined in Article 9); and
(l) all corporate records of the Seller and all other records
and files not relating primarily to the MMIC Business.
1.3. DETERMINATIONS AS TO MIXED-USE ASSETS. The Seller and the Buyer
shall cooperate in good faith to resolve any disputes as to whether any specific
assets (including, without limitation, any contracts and agreements) of the
Seller which relate to both the MMIC Business and another business of the Seller
are used primarily in, or relate primarily to, the MMIC Business. Further,
without limiting the foregoing, with respect to any asset necessary to and
presently used in connection with the MMIC Business that is also used by the
Seller in connection with another business, excluding any assets to be retained
by the Seller and used to provide services pursuant to the Master Services
Agreement, the parties shall cooperate in
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good faith to (i) determine which business predominantly uses such asset in
order that such party is vested with title thereof and (ii) coordinate the
shared used thereof by both parties. With respect to any contracts or
licenses applicable to both the MMIC Business and other businesses of the
Seller, the Seller and the Buyer will cooperate to structure contractual
arrangements providing them both with the relevant rights and obligations
under such contract or license. These arrangements may take the form of a
subcontract or sublicense or causing the other party to such contract or
license to agree to split the contract or license into two separate
agreements.
ARTICLE 2
ASSUMPTION OF CERTAIN OBLIGATIONS
At the Closing, the Buyer shall assume, and agree to pay, perform, fulfill
and discharge, all obligations and liabilities of the Seller relating primarily
to the MMIC Business of any nature, fixed or contingent, known or unknown,
including liabilities for product warranty claims and product returns and
including liabilities for outstanding orders for capital equipment listed on
SCHEDULE 1.1(h) (collectively, the "ASSUMED OBLIGATIONS"), EXCLUDING, HOWEVER,
(i) liabilities for Indebtedness (as defined in Article 17) of the Seller,
(ii) those liabilities for Taxes (as defined in Article 17) that remain the
responsibility of the Seller pursuant to Article 14, (iii) those liabilities of
the Seller under its pension and health and welfare benefit plans retained by it
pursuant to Article 11, and (iv) liabilities of the Seller under the Settlement
Agreement dated February 23, 1995 between Westinghouse Electric Corporation and
TI, other than the obligations restricting the sale of the F-22 ASEA product
referred to therein with respect to the MMIC Business (which obligations shall
be an Assumed Obligation) (collectively, the "EXCLUDED LIABILITIES").
ARTICLE 3
PURCHASE PRICE
3.1. PURCHASE PRICE. At the Closing, the Buyer shall deliver cash and
shares of the Buyer's Common Stock, $.001 par value (the "SHARES"), to the
Seller, as the aggregate purchase price for the Acquired Assets, subject to
adjustment as provided in Section 3.2 hereof (the "PURCHASE PRICE"). The
Purchase Price shall be payable as follows: (i) $19,500,000 shall be paid in
cash or by wire transfer of same day funds (the "CASH PORTION") and (ii) the
remainder of the Purchase Price shall be paid by delivery of Shares (the
"STOCK PORTION") having an aggregate value equal to $19,500,000, based on the
average of the closing bid prices of the Shares on the five trading days
preceding the Closing Date, as quoted through the NASDAQ National Market (the
"CLOSING TRADING PRICE"); PROVIDED, HOWEVER, that if the number of Shares
that would constitute the Stock Portion exceeds 9.9% of the number of Shares
outstanding as of the Closing Date after giving effect to the issuance of the
Shares
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constituting the Stock Portion, then (a) the Stock Portion shall consist of
9.9% of the number of Shares outstanding as of the Closing Date after giving
effect to the issuance of the Shares constituting the Stock Portion and (b)
the Cash Portion shall consist of (x) $39,000,000 LESS (y) the value, based
on the Closing Trading Price, of the Shares constituting the Stock Portion
referred to in clause [cad 240](a). The Shares comprising the Stock Portion
are entitled to the rights, and subject to the limitations, set forth in the
Registration Rights Agreement (as defined in Section 6.12), as amended by the
Amendment to Registration Rights Agreement (as defined in Article 9) (as so
amended, the "AMENDED REGISTRATION RIGHTS AGREEMENT"), which shall include
"demand" and "piggyback" registration rights beginning 180 days after the
Closing Date. The Purchase Price shall be allocated among the Acquired
Assets in the manner set forth on SCHEDULE 3.1 hereto. The Buyer and Seller
shall report the purchase and sale of the Acquired Assets, including, without
limitation, in all federal, foreign, state, local and other Tax Returns (as
defined in Article 17) prepared and filed by or for either of the Buyer or
the Seller, in accordance with the basis of allocation set forth on SCHEDULE
3.1 hereto. The Buyer and the Seller further agree that they will prepare
and file asset acquisition statements on Form 8594 reflecting such allocation
with their Federal income tax returns for the taxable year that includes the
Closing Date.
3.2. PURCHASE PRICE ADJUSTMENTS.
(a) Within sixty (60) days after the Closing Date, the Seller
shall prepare and deliver to the Buyer an audited statement of the Acquired
Assets and Assumed Obligations for the MMIC Business as of the close of
business on the day immediately preceding the Closing Date (the "CLOSING
BALANCE SHEET"). The Closing Balance Sheet shall be prepared in accordance
with GAAP applied on a basis consistent with the October Balance Sheet (as
defined in Section 5.5), except that the Closing Balance Sheet (i) will be
prepared in accordance with the accounting procedures set forth on SCHEDULE
3.2(a) hereto, (ii) will not include any cash or cash equivalents of the
MMIC Business, (iii) will not have an accrual for Income Taxes payable by
the Seller and (iv) will not contain any intercompany accounts.
(b) When the Seller delivers the Closing Balance Sheet, the
Seller shall also deliver a certificate (i) certifying that the Closing
Balance Sheet was prepared in accordance with paragraph (a) above, and
(ii) containing the Seller's calculations, based on the Closing Balance
Sheet and calculated in a manner consistent with the Model Statement (as
defined below) (the "SELLER'S PROPOSED CALCULATIONS"), of the Net Assets as
of the Closing Date. As used in this Agreement "NET ASSETS" means the
difference of (x) the book value of the total assets of the MMIC Business
(including, without limitation, equipment, accounts receivable, inventory,
prepaid expenses and deferred charges, but excluding cash and cash
equivalents and intercompany accounts) constituting part of the Acquired
Assets less (y) the book value of the total liabilities of the
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MMIC Business (including, without limitation accounts payable and accrued
expenses, but excluding pension and accumulated post-retirement benefits,
intercompany accounts and retained earnings) constituting part of the
Assumed Obligations. Attached hereto as SCHEDULE 3.2(B) is a preliminary
statement of Net Assets as of October 31, 1997, based upon the balance
sheet of the MMIC Business as of October 31, 1997 and the procedures for
calculating Net Assets as provided above (the "MODEL STATEMENT").
(c) Within thirty (30) days after receipt of the Closing Balance
Sheet and the accompanying certificate, the Buyer shall notify the Seller
of its agreement or disagreement with the Closing Balance Sheet and the
accuracy of any of the Seller's Proposed Calculations; PROVIDED, that the
Buyer may only dispute the Closing Balance Sheet and the Seller's Proposed
Calculations to the extent that they deviate from the requirements of
paragraphs (a) and (b) above. If the Buyer disputes any such aspect of the
Closing Balance Sheet or the amount of any of the Seller's Proposed
Calculations, then the Buyer shall have the right to direct its independent
accountants, at the Buyer's expense, to review and test the Closing Balance
Sheet. The Buyer's accountants shall complete their review and test within
thirty (30) days after the date the Buyer disputes the Seller's Proposed
Calculations. If the Buyer and its independent accountants, after such
review and test, still disagree with the Seller's Proposed Calculations,
and the Seller does not accept the Buyer's proposed alternative
calculations (the "BUYER'S PROPOSED CALCULATIONS"), then, within thirty
(30) days after the date of the Seller's rejection of the Buyer's Proposed
Calculations, the Seller and the Buyer shall select a third nationally
recognized independent accounting firm (the "INDEPENDENT ACCOUNTING FIRM")
to resolve the remaining disputed items (the "REMAINING DISPUTED ITEMS") by
conducting its own review and test of the Closing Balance Sheet and
thereafter selecting either the Buyer's Proposed Calculation of the
Remaining Disputed Items or the Seller's Proposed Calculation of the
Remaining Disputed Items or an amount in between the two. The Independent
Accounting Firm shall be instructed (i) that the scope of its review shall
be limited solely to the Remaining Disputed Items, (ii) that it shall
accept the Closing Balance Sheet and the Seller's Proposed Calculations
except to the extent that they deviate from the requirements of
paragraphs (a) and (b) above, and (iii) that it is to use every reasonable
effort to complete such assignment and deliver copies of such opinion and,
if required, a revised Closing Balance Sheet to the Buyer and the Seller
within thirty (30) days following the date such Remaining Disputed Items
are referred to it. The Buyer and the Seller agree that they shall be
bound by the determination of the Remaining Disputed Items by the
Independent Accounting Firm. The fees and expenses of the Independent
Accounting Firm shall be paid jointly by the Buyer and the Seller.
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(d) Upon the determination pursuant to paragraph (c) of this
Section 3.2 of the definitive Closing Balance Sheet and the Net Assets as
of the Closing Date, the Purchase Price shall be either (i) increased by
the amount, if any, by which the amount of Net Assets is greater than
$23,637,000 or (ii) decreased by the amount, if any, by which the amount of
Net Assets is less than $23,437,000 (the "ADJUSTMENT"). If the Purchase
Price is increased, the Buyer shall pay such amount to the Seller, and if
the Purchase Price is decreased, the Seller shall pay such amount to the
Buyer. Any such payment shall be made in cash or same day funds within ten
(10) days after the determination of the Adjustment pursuant to paragraph
(c). Any such payment shall bear interest at a rate equal to the "Prime
Rate" as set forth from time to time in THE WALL STREET JOURNAL "Money
Rates" column from the Closing Date to the date preceding payment.
3.3. CALL OPTION ON SHARES. For a period of 180 days after the Closing
Date, the Buyer may, at its option, repurchase from the Seller, and the Seller
will at the request of the Buyer sell to the Buyer, all (but not less than all)
of the Shares constituting the Stock Portion at a purchase price equal to
$19,500,000 (or, in the event that the proviso to the second sentence of Section
3.1 is applicable, such lesser amount corresponding to the value, based on the
Closing Trading Price, of the Shares constituting the Stock Portion) (the "CALL
PRICE"). By written notice to the Seller received not later than the 180th day
after the Closing Date, the Buyer may extend such period for an additional 180
days after such 180th day after the Closing Date, provided that the Buyer shall
pay the Seller interest on a monthly basis at the daily rate equivalent of 1%
per month on the amount of the Call Price for the portion of such additional 180
day period during which the Shares constituting the Stock Portion have not been
repurchased. The Buyer's call rights under this Section 3.3 shall be
exercisable by the Buyer by written notice to the Seller specifying the date and
time of a closing for the repurchase (the "CALL NOTICE"), which shall be held at
the offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, not
earlier than five (5) days nor later than ten (10) days after delivery of the
Call Notice to the Seller. The receipt of a Call Notice by the Seller shall
constitute a binding agreement of the Buyer to purchase the Shares constituting
the Stock Portion from the Seller in accordance with this Section 3.3. At the
closing of the call option, the Buyer shall pay the Seller the Call Price (plus
any accrued but unpaid interest thereon in accordance with this Section 3.3) in
cash or by wire transfer of same day funds, in exchange for the transfer of the
Shares constituting the Stock Portion from the Seller to the Buyer. The Buyer's
call rights set forth in this Section 3.3 shall lapse if not exercised within
the time periods specified above in accordance with the provisions hereof.
3.4. DELAY IN DEMAND REGISTRATION. In the event that (i) the Seller, at
any time after the 180th day after the Closing, requests the Buyer in writing to
file a registration statement with respect to any of the Shares pursuant to
Section 2 of the Amended Registration Rights Agreement, (ii) the Buyer requests
that the filing of
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such registration statement be delayed for a period not in excess of 180 days by
delivery to the Seller of a certificate signed by the Chairman of the Board of
the Buyer pursuant to Section 2(d)(ii) of the Amended Registration Rights
Agreement stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Buyer and its shareholders for such
registration statement to be filed and that it is therefore essential to defer
the filing of such registration statement, and (iii) the Buyer has not extended
its call option under Section 3.3 for an additional 180 days after the 180th day
after the Closing Date and is therefore not paying the Seller interest as
contemplated by Section 3.3, the Buyer shall pay the Seller interest on a
monthly basis at the daily rate equivalent of 1% per month on the amount of the
Call Price for the period of such delay.
ARTICLE 4
CLOSING
4.1. TIME AND PLACE. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions contemplated
by this Agreement (the "CLOSING") shall be held at the offices of Xxxxxxx Xxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, on the fifth business day
following completion of the regulatory approval referred to in Sections 7.1 and
7.2, but in any case on or before January 26, 1998, or at such other time or
such other place as the Buyer and the Seller may agree. The date on which the
Closing is actually held hereunder is sometimes referred to herein as the
"CLOSING DATE". The Closing will be deemed to be effective for purposes of this
Agreement as of 11:59 p.m. in Dallas, Texas on the Closing Date.
4.2. TRANSACTIONS AT CLOSING. At the Closing:
(a) The Seller shall duly execute and deliver to the Buyer or
its nominee or nominees such bills of sale, certificates of title and other
instruments of assignment or transfer with respect to the Acquired Assets
as the Buyer may reasonably request and as may be necessary to vest in the
Buyer all of the Seller's title to the Acquired Assets.
(b) The Buyer shall deliver the Cash Portion of the Purchase
Price by wire transfer to the Seller and the Stock Portion of the Purchase
Price by delivery of stock certificates in appropriate form.
(c) The Buyer shall duly execute and deliver to the Seller such
instruments of assumption with respect to the Assumed Obligations as the
Seller may reasonably request.
(d) The Buyer and the Seller, as applicable, shall each duly
execute and deliver the Intellectual Property Agreement, the Master
Services
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Agreement, the Supply Agreement, the Sublease Agreements, the Amendment to
Registration Rights Agreement and the Non-Disclosure Agreement (as such
terms are defined in Article 9 hereof and, collectively with this
Agreement, the "TRANSACTION DOCUMENTS").
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Buyer as follows:
5.1. INCORPORATION; AUTHORITY. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on the
MMIC Business as now conducted.
5.2. RIGHTS TO SELL ACQUIRED ASSETS; APPROVALS; BINDING EFFECT. The
Seller has all requisite corporate power and authority to enter into this
Agreement and the other Transaction Documents, to perform all of its agreements
and obligations hereunder and thereunder in accordance with their terms, and to
sell and transfer to the Buyer all of the Acquired Assets. This Agreement has
been duly executed and delivered by the Seller and constitutes, and the
Transaction Documents when executed and delivered by the Buyer will constitute,
the legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such validity, binding effect or
enforcement may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by equitable principles relating to the
availability of remedies.
5.3. NO DEFAULTS. Except for consents to transfer with respect to any
agreement that is part of the Acquired Assets and except as set forth on
SCHEDULE 5.3, and the consent referred to in Section 7.1 hereof, the entering
into of this Agreement and the other Transaction Documents, the performance and
compliance by the Seller with the terms hereof and thereof, and the consummation
of all the transactions contemplated hereby and thereby, will not either
currently, or after notice or lapse of time or both:
(a) result in a violation of any provision of the charter,
by-laws or other organizational documents of the Seller; or
(b) result in a violation by the Seller of any statute,
regulation, order, law, ordinance or restriction applicable to the Seller,
other than any violation which would not have a Material Adverse Effect; or
(c) result in a violation by the Seller of any judgment, order
or decree of any court or judicial or quasi-judicial tribunal applicable to
the
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Seller, other than any violation which would not have a Material Adverse
Effect; or
(d) violate or conflict with or result in a breach of, or
constitute a default or acceleration of or give rise to a right of
termination (or an event which with notice or lapse of time or both would
become a default) under, any provision of any contract, indenture,
mortgage, lease, agreement or other instrument primarily related to the
MMIC Business to which the Seller is a party or to which the MMIC Business
is subject, which would individually or in the aggregate have a Material
Adverse Effect.
5.4. TITLE TO ASSETS. (a) The Seller owns or has the right to transfer
all of the Acquired Assets. At and as of the Closing, the Seller will convey to
the Buyer good and marketable title to the Acquired Assets, free and clear of
all Encumbrances (as defined in Article 17) except for Permitted Encumbrances
(as defined in Article 17); PROVIDED, HOWEVER, that this paragraph (a) shall not
be considered a representation or warranty as to the non-infringement of any of
the intellectual property referred to in the Intellectual Property Agreement.
(b) Except as set forth on SCHEDULE 5.4, the Acquired Assets and
the Subleases, when utilized by a labor force substantially similar to that
utilized by the Seller for the MMIC Business as of the date of this Agreement,
and taken together with the services to be provided by the Seller pursuant to
the Master Services Agreement and the other assets to be made available to the
Buyer as provided in Section 1.3, are sufficient for the fulfillment by the
Buyer of its obligations under the Supply Agreement as they exist as of the
Closing Date and are adequate to conduct the MMIC Business after the Closing
Date in the same manner in all material respects as such business was conducted
immediately prior to the Closing Date. The preceding sentence shall not be
construed as a representation as to the adequacy or scope of the intellectual
property to be conveyed, licensed or sublicensed pursuant to the Intellectual
Property Agreement, with respect to which the Seller is making representations
and warranties as provided in Section 5.11.
(c) The Acquired Assets constituting tangible personal property are
in good working condition, ordinary wear and tear excepted, have been properly
maintained in all material respects, are suitable in all material respects for
the purposes for which they are used, and conform in all material respects to
the requirements of all laws, ordinances and regulations applicable to their use
and ownership or lease by the Seller; and the buildings and structures
containing the space to be leased to the Buyer pursuant to the Subleases are
suitable in all material respects and properly zoned for the purpose for which
they are currently used, have been properly maintained in all material respects
to the extent the Seller is required to do so, and there are no material
outstanding work orders with respect to any maintenance, repair or alterations
to be performed by the Seller thereon.
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5.5. FINANCIAL STATEMENTS. The Seller has furnished to the Buyer, and
attached as SCHEDULE 5.5 hereto are, copies of the unaudited balance sheet of
the MMIC Business as of October 31, 1997 (the "OCTOBER BALANCE SHEET"), and the
unaudited income statement of the MMIC Business for the one month period then
ended (the "OCTOBER INCOME STATEMENT"). Each of such financial statements has
been prepared in accordance with the Seller's accounting policies and practices
except as otherwise noted on SCHEDULE 5.5; and except as otherwise noted on
SCHEDULE 5.5, the October Balance Sheet fairly presents in all material respects
the financial condition of the MMIC Business as of October 31, 1997, with the
exception that the October Balance Sheet excludes an allocation for costs
associated with certain services currently provided to the MMIC Business by
Seller and Raytheon Company.
5.6. ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 5.6,
from October 31, 1997 to the date of this Agreement the MMIC Business has
operated only in the ordinary course and there has not been:
(a) any change in the condition (financial or otherwise),
results of operations, assets, liabilities or business of the MMIC Business
other than changes arising in the ordinary course of business, none of
which, individually or in the aggregate, has had a Material Adverse Effect
(as defined in Article 17);
(b) any acquisition or disposition by the Seller outside the
ordinary course of business of any asset or property used primarily in the
MMIC Business or necessary to and previously used in the MMIC Business;
(c) any damage, destruction or casualty loss to any asset of the
Seller and relating to the MMIC Business, whether or not covered by
insurance, which has had a Material Adverse Effect;
(d) any increase in (or commitment to increase) the
compensation, pension or other benefits payable or to become payable to any
of the officers, employees, agents or representatives of the MMIC Business
or any bonus payments or arrangements made to or with any of them, that
will constitute an Assumed Obligation, other than (i) increases amounting
to less than $25,000 in the aggregate and effected on a basis consistent
with the past practice of the Seller and (ii) any increase required under
the terms of any of the benefit plans listed on SCHEDULE 5.10(a) or (b)
hereto;
(e) any voluntary forgiveness or cancellation of any debt or
claim of the MMIC Business in excess of $5,000 or any voluntary waiver of
any right of material value other than compromises of accounts receivable
in the ordinary course of business;
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(f) the imposition of any Encumbrance on any of the assets of
the MMIC Business except for Permitted Encumbrances;
(g) any disposition of or lapse of any intellectual property
right or termination of any agreement under which the Seller (insofar as it
relates to the MMIC Business) has any right or license, the disposition,
lapse or termination of which would have a Material Adverse Effect;
(h) any lapse, termination or expiration of any contract or
agreement, including any joint venture agreement, teaming agreement,
distribution agreement, supply agreement, license agreement, personal
property lease or development contract, to which the Seller (insofar as it
relates to the MMIC Business) had been a party, the lapse, termination or
expiration of which would have a Material Adverse Effect; or
(i) any intercompany transactions relating to the MMIC Business
with any Affiliate (as defined in Article 17) of the Seller, except (i) in
the ordinary course operation of the MMIC Business or (ii) involving
consideration or transfers in any one transaction of not more than $25,000
and not more than $100,000 in the aggregate.
5.7. LITIGATION, ETC. As of the date of this Agreement, no proceeding,
arbitration, action or suit is pending or, to the knowledge of the Seller,
threatened against the Seller (insofar as it relates to the MMIC Business),
except as set forth on SCHEDULE 5.7 hereto and except for any such proceeding,
arbitration, action, or suit that alleges claims, singly or in the aggregate, in
excess of $100,000. As of the date of this Agreement, the Seller (insofar as it
relates to the MMIC Business) has not received any written notice from any
Governmental Entity of any pending or threatened governmental investigation
relating to the MMIC Business which, if concluded with a determination adverse
to the MMIC Business, would have a Material Adverse Effect.
5.8. LABOR RELATIONS. Except as set forth on SCHEDULE 5.8, as of the
date of this Agreement there is no charge pending or, to the knowledge of the
Seller, threatened against the Seller alleging, with respect to any employee or
employees of the MMIC Business, any violation of any statute or regulation
relating to employment and employment practices, or any violation of any
collective bargaining agreement, any unlawful discrimination in employment
practices or any unfair labor practices before any court, agency, or other
judicial or arbitral body, except for any such violation that would not
individually or in the aggregate be in excess of $100,000. As of the date of
this Agreement, there is no labor strike, dispute, slow-down or work stoppage
actually pending or, to the Seller's knowledge, threatened against the Seller
(with respect to employees of the MMIC Business). No employees of the MMIC
Business are covered by any collective bargaining agreement, and no collective
bargaining agreement or other labor union agreement or agreement with
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organized labor for employees of the MMIC Business is currently being negotiated
or pending negotiation. Except as set forth on SCHEDULE 5.8 hereto, there has
been no material concerted work stoppage with respect to the MMIC Business
during the last three years.
5.9. CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses listed on SCHEDULES 1.1(g), 1.1(h), 5.9, 5.10(a) or 5.10(b), as of
the date of this Agreement, the Seller (insofar as it relates primarily to the
MMIC Business) is not a party to or otherwise bound by:
(a) any contract or purchase order to sell products or provide
services to any customer (i) providing for payments in excess of $100,000
or (ii) having a term greater than one calendar year;
(b) except for any contract or agreement that is terminable upon
less than 90 days' notice by the Seller or that will not constitute an
Assumed Obligation, any contract or agreement with any director, officer or
employee of the MMIC Business (i) providing for total annual compensation
in excess of $100,000 or (ii) having a term greater than one calendar year;
(c) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property of the MMIC Business,
or any license of computer software used primarily in the MMIC Business,
requiring payments in excess of $25,000 per year;
(d) except for purchase orders issued in the ordinary course of
business, any contract requiring payments in excess of $25,000 for the
purchase or sale of any personal property used primarily in the MMIC
Business;
(e) any contract or agreement containing non-competition
covenants limiting the freedom of the Seller to operate the MMIC Business,
or any exclusive licensing agreement with respect to any MMIC Business
Intellectual Property;
(f) any partnership, joint venture, teaming, consortium, or
other similar contract, arrangement or agreement representing more than 5%
of the MMIC Business' sales in 1996 or that the Seller reasonably believes
as of the date of this Agreement will represent more than 5% of the MMIC
Business' sales in 1997;
(g) any development contracts relating primarily to the MMIC
Business and requiring estimated or actual annual expenditures by Seller in
1997 in excess of $100,000; or
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(h) any contract or agreement for guaranty, indemnity or
suretyship of Indebtedness of the MMIC Business in excess of $25,000.
Neither the Seller nor, to the knowledge of the Seller, any other party to
any contract, agreement, lease or instrument listed on SCHEDULES 1.1(g),
1.1(h), 5.9, 5.10(a) or 5.10(b) (collectively, the "CONTRACTS") is, as of the
date of this Agreement, in default in complying with any provisions thereof,
except for any such default that would not have a Material Adverse Effect. All
Contracts are valid, legally binding and enforceable in accordance with their
respective terms in all material respects. As of the date of this Agreement,
there is no pending written claim or request, or to the Seller's knowledge, no
threatened claim or request, for equitable adjustment under any Government
Contract (as defined in Article 17) that would reasonably be expected to have a
Material Adverse Effect. As of the date of this Agreement, except where the
same would not, individually or in the aggregate, have a Material Adverse
Effect, the Seller has not (i) received any written notice of the intention of
any party to terminate any Contract, whether as a termination for convenience
or for default of the Seller thereunder, or (ii) received any written cure
notice or show cause notice (as defined in the Federal Acquisition Regulations
Part 49, PARA 49.607(a) and (b), respectively) in respect of any Government
Contract. The MMIC Business is in compliance with all obligations relating to
any equipment or fixtures owned by any Governmental Entity and loaned, bailed
or otherwise furnished to or held by any part of the MMIC Business, except
where the failure to so comply would not, individually or in the aggregate,
have a Material Adverse Effect.
5.10. PENSIONS AND BENEFITS.
(a) Except as set forth on SCHEDULE 5.10(a) hereto, as of the
date of this Agreement, the Seller does not maintain or have any obligation
to make contributions to, any employee benefit plan (an "ERISA PLAN")
within the meaning of Section 3(3) of the United States Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any other retirement,
profit sharing, stock option, stock bonus or other benefit program (a
"NON-ERISA PLAN"), in either case, for the benefit of any officers,
employees or consultants of the MMIC Business. The Seller has heretofore
delivered or made available to the Buyer copies or summaries of each such
ERISA Plan and Non-ERISA Plan and any associated funding instruments and,
with respect to any such ERISA Plan, the most recently completed annual
report (with any required attachments), the most recent IRS determination
letter, and any other advisory opinions or rulings applicable to such Plan.
(b) To the Seller's knowledge, except as set forth on
SCHEDULE 5.10(b), all of Seller's ERISA Plans and Non-ERISA Plans have been
maintained and operated in all material respects in accordance with all
federal, state, provincial and local laws applicable to such plans, and the
terms and conditions of the respective plan documents.
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5.11. INTELLECTUAL PROPERTY. (a) SCHEDULE 5.11 hereto sets forth a list
of the patents, pending patent applications, invention disclosures and mask
works that will be transferred to the Buyer at the Closing. Pursuant to the
Intellectual Property Agreement (as defined in Article 9 hereof), and subject to
the terms, conditions and restrictions set forth therein, the Buyer shall, as of
the Closing Date, have the right to use, hold for use or otherwise exploit (to
the extent set forth in the Intellectual Property Agreement) all the MMIC
Business Intellectual Property, whether or not set forth in SCHEDULE 5.11, in a
manner not materially different than that in which such MMIC Business
Intellectual Property is or may be used, held for use or otherwise exploited by
the Seller in the MMIC Business as of the date hereof and as of the Closing
Date. The Seller and the Buyer acknowledge that the foregoing representation
and warranty is not intended to act as a limitation on the use by the Buyer of
the MMIC Business Intellectual Property.
(b) The Seller owns or has the right to use all material MMIC Business
Intellectual Property on the date hereof and as of the Closing Date. The MMIC
Business Intellectual Property is not subject to any material Encumbrances,
other than Permitted Encumbrances, and is not subject to any obligations
inconsistent with the terms of the Intellectual Property Agreement. The Seller
has used commercially reasonable measures to protect the secrecy,
confidentiality and value of the material MMIC Business Intellectual Property.
To the knowledge of the Seller, no material MMIC Business Intellectual Property
(other than unregistered copyrights) has been used, divulged or appropriated for
the benefit of any Person other than the Seller, except where such use,
divulgence or appropriation would not, individually or in the aggregate, have a
Material Adverse Effect.
(c) As of the date hereof, Seller has not made any claim in writing of
a violation, infringement, misuse or misappropriation by others of rights of the
Seller to or in connection with any material MMIC Business Intellectual
Property.
(d) As of the date hereof, there is no pending or to the knowledge of
the Seller, threatened claim by any third Person of a violation, infringement,
misuse or misappropriation by the Seller in connection with the MMIC Business of
any patents, trademarks, copyrights, mask works or trade secrets owned by any
third Person, or of the invalidity of any patent included in the MMIC Business
Intellectual Property, that would, individually or in the aggregate, have a
Material Adverse Effect. To the knowledge of the Seller, the conduct of the
MMIC Business by the Buyer following the Closing in the manner currently
conducted by the Seller will not result in the infringement of any patent,
trademark, copyright, mask work or trade secret owned by any third Person that
would, individually or in the aggregate, have a Material Adverse Effect. There
are no interferences or other contested inter partes proceedings, either pending
or, to the knowledge of the Seller, threatened, in any domestic or foreign
copyright office, patent and trademark office or any other
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Governmental Entity relating to any pending application with respect to any
material MMIC Business Intellectual Property.
5.12. GOVERNMENTAL CONSENT. Except for the approval required with
respect to the DOJ and DOD (as such terms are defined in Section 7.1) and the
other consents referred to in Section 7.2, consents to transfer required with
respect to contracts with governments or governmental agencies and for those
items set forth on SCHEDULE 5.12, no consent, approval or authorization of or
registration, designation, declaration or filing with any Governmental Entity,
on the part of the Seller, is required in connection with the consummation of
any of the transactions contemplated hereby, except for any approval,
authorization, registration, designation, declaration or filing that, if not
obtained or made, would not have a Material Adverse Effect, and would not
materially adversely affect the ability of the Seller to perform its obligations
under this Agreement.
5.13. COMPLIANCE WITH LAWS, ETC. Except as set forth on SCHEDULE 5.13
hereto, the Seller (insofar as it relates to the operation of the MMIC Business)
is in compliance with all laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments, writs and injunctions
applicable to it, except for any non-compliance that would not have a Material
Adverse Effect.
5.14 EQUIPMENT. SCHEDULE 1.1(a) hereto sets forth a complete and
accurate list as of September 30, 1997 of all of the Seller's Equipment having a
book value in excess of $500.
5.15. LOCATION OF INVENTORIES. Except for the MMIC Facilities,
SCHEDULE 5.15 hereto specifies all locations at which Inventories having an
aggregate value in excess of $100,000 are located as of the date of this
Agreement.
5.16. CUSTOMERS. SCHEDULE 5.16 hereto sets forth a list of each paying
account that represented more than 5% of gross sales in 1996 of the MMIC
Business.
5.17. ENVIRONMENTAL MATTERS. (a) (i) Except as referenced on SCHEDULE
5.17, the MMIC Business is in compliance with all applicable Environmental Laws
except where the failure to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect.
(ii) The MMIC Business has all licenses, permits, concessions,
orders, authorizations, approvals and registrations required under
Environmental Laws for the operation of the MMIC Business as presently
conducted (the "ENVIRONMENTAL PERMITS") and as of the date of this
Agreement there are no existing violations and there are no pending
investigations or proceedings by any Governmental Entity nor to the
knowledge of the Seller are any investigations or proceedings threatened,
with respect to the Environmental Permits except where the failure to have
such Environmental
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Permits or where the violation, investigation or proceeding relating
thereto would not, individually or in the aggregate, have a Material
Adverse Effect.
(iii) Since December 31, 1994, no notice, notification, demand,
request for information, citation, summons, complaint or order has been
received by the Seller or, to the knowledge of the Seller, is pending or
threatened by any Person against, any part of the MMIC Business nor has any
material penalty been assessed against any part of the MMIC Business with
respect to any alleged violation of any Environmental Law or liability
thereunder, other than where such notice, notification, demand, request for
information, citation, summons, complaint or order has been fully resolved,
or where resolution would not, individually or in the aggregate, have a
Material Adverse Effect.
(iv) To Seller's knowledge, as of the date of this Agreement, no
Hazardous Substance has been discharged, generated, treated, manufactured,
handled, stored, transported, emitted, released or is present at any
property now or previously owned, leased or operated by any part of the
MMIC Business in violation of any Environmental Law, which circumstance,
individually or in the aggregate, would have a Material Adverse Effect.
(b) Since January 1, 1994, there has been no environmental
investigation conducted of which the Seller has knowledge in relation to the
MMIC Business or any property or facility now or previously owned or leased with
respect to the MMIC Business with respect to any matter which has had or would,
individually or in the aggregate, have a Material Adverse Effect.
5.18. BROKERS. Except for Credit Suisse First Boston Corporation, whose
fees and expenses will be paid by the Seller, no finder, broker, agent or other
intermediary has worked for or on behalf of the Seller in connection with the
negotiation or consummation of the transactions contemplated hereby.
5.19 TAXES. Except as set forth on SCHEDULE 5.19, as of the date of
this Agreement the Seller has timely filed within the time period for filing or
any extension granted, or appropriately amended, with respect thereto all
federal, state, local and other returns, estimates and reports ("RETURNS")
relating to any and all Taxes or other governmental charges, obligations or fees
including any secondary or transferee liability for taxes and any related
interest or penalties it is required to file and such Returns were true and
correct when filed and were completed in accordance with applicable law in all
material respects. Except for Taxes contested in good faith and which are
disclosed in SCHEDULE 5.19, as of the date of this Agreement the Seller has paid
all Taxes it is required to pay and has withheld with respect to the Seller's
employees, all federal and state income Taxes, FICA, FUTA and other Taxes
required to be withheld. No Tax Return of the Seller relating to the MMIC
Business has been examined or audited by the IRS or any other taxing authority.
As of the
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date of this Agreement there are no pending or, to the Seller's knowledge,
threatened audits, examinations, assessments, asserted deficiencies or claims
for additional Taxes with respect to the Seller. There are (and as of the
Closing there will be) no Encumbrances, other than Permitted Encumbrances,
relating to or attributable to Taxes, which if adversely determined, would
result in an Encumbrance, other than a Permitted Encumbrance, on the Acquired
Assets or would otherwise have a Material Adverse Effect upon the MMIC Business.
5.20 ABSENCE OF UNDISCLOSED LIABILITIES.
(i) As of October 31, 1997, the Seller did not have any liability or
obligation (absolute, accrued, contingent or otherwise) primarily related to the
MMIC Business of a nature required by GAAP to be reflected on the October Income
Statement or October Balance Sheet or disclosed in the notes thereto, and from
October 31, 1997 to the date of this Agreement the Seller has not incurred any
liability primarily related to the MMIC Business, in each case except:
(i) liabilities stated or adequately reserved against in the October Balance
Sheet; and (ii) liabilities incurred in the ordinary course of business and
which are not individually or in the aggregate material to the financial
condition or earnings of the Seller insofar as it relates to the MMIC Business
or the value of the Acquired Assets; and
(ii) As of the date of this Agreement, the Seller has not been notified
in writing that any material supplier, client or customer of the Business had
made, or intends to make, a reduction in its present level of business with the
Seller as a result of this Agreement and the transactions contemplated hereby or
for any other reasons.
5.21 LICENSES. Except as disclosed on SCHEDULE 5.21, all rights to
operate under all governmental licenses, permits, franchises and approvals and
all related vendor numbers which are required to conduct the MMIC Business,
where and as such MMIC Business is conducted ("LICENSES") are, and will be
immediately before the Closing, valid and in full force and effect and
enforceable in all material respects. Except as noted on SCHEDULE 5.21, all of
such Licenses require the consent of, or a filing or qualification with, the
permitting or licensing authority with respect to the transactions contemplated
by this Agreement.
5.22 COLLECTIBILITY OF GROSS ACCOUNTS RECEIVABLE. Except as indicated
on SCHEDULE 5.22, as of the date of this Agreement the gross accounts receivable
reported on the October Balance Sheet represent valid claims against account
debtors for goods delivered or services rendered by the Seller. To the Seller's
knowledge, except as set forth on SCHEDULE 5.22 as of the date of this Agreement
there is no reason why all such gross accounts receivable will not be collected
in the ordinary course of business, and as of the date of this Agreement such
gross accounts receivable are not subject to set-off or counterclaim.
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5.23. INVESTMENT REPRESENTATIONS.
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the
Seller in reliance upon the Seller's representation to the Buyer, which by the
Seller's execution of this Agreement the Seller hereby confirms, that the Shares
to be acquired by the Seller will be acquired for investment for the Seller's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof except pursuant to the Amended Registration
Rights Agreement or the call option referred to in Section 3.3 hereof and that
the Seller has no present intention of selling, granting any participation in,
or otherwise distributing the same, except pursuant to the Amended Registration
Rights Agreement or the call option referred to in Section 3.3 hereof.
(b) DISCLOSURE OF INFORMATION. The Seller represents that it has had
an opportunity to ask questions and receive answers from the Buyer regarding the
terms and conditions of the transactions contemplated by this Agreement. The
foregoing, however, does not limit or modify the representations and warranties
of the Buyer in Article 6 of this Agreement or the right of the Seller to rely
thereon.
(c) INVESTMENT EXPERIENCE. The Seller understands that the Shares have
not been, and prior to an appropriate registration statement's becoming
effective will not be, registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Seller's
representations as expressed herein. The Seller acknowledges that it is able to
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Shares.
(d) LEGENDS. The Seller understands that the Shares may bear one or
all of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
(ii). Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by
the certificate so legended.
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A certificate shall not bear such legends if in the opinion of
counsel reasonably satisfactory to the Buyer the securities represented thereby
may be publicly sold without registration under the Securities Act and any
applicable state securities laws.
(e) RESTRICTED SECURITIES. The Seller understands that the Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Buyer in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares may be resold without registration under the Securities Act only in
certain limited circumstances. The Seller acknowledges that the Shares must be
held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(f) ACCREDITED INVESTOR. The Seller is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
6.1. ORGANIZATION AND STANDING OF THE BUYER. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all required corporate power and authority to
enter into this Agreement and the other Transaction Documents, to perform all of
its agreements and obligations hereunder and thereunder in accordance with their
terms and to purchase the Acquired Assets from the Seller.
6.2. CORPORATE APPROVAL; BINDING EFFECT. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes, and the other Transaction Documents when
executed and delivered will constitute, the legal, valid and binding obligation
of the Buyer enforceable against the Buyer in accordance with their terms,
except as such validity, binding effect or enforcement may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by equitable principles relating to the availability of remedies.
6.3. NON-CONTRAVENTION. The execution, delivery and performance by the
Buyer of this Agreement and the other Transaction Documents will not result in
any violation of or be in conflict with its Certificate of Incorporation or
By-Laws, or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to it, or be in conflict with or constitute a
default under any of the foregoing.
6.4. GOVERNMENT CONSENTS, ETC. Except for the approvals referred to in
Section 5.12, no consent, approval or authorization of or registration,
designation, declaration or filing with any Governmental Entity, Federal or
other, on the part of the Buyer is required in connection with the purchase of
the Acquired Assets pursuant to this Agreement or the consummation of any other
transaction contemplated hereby.
6.5. BUYER'S CAPABILITIES. The Buyer intends to use the Acquired Assets
as part of a viable, ongoing business or businesses engaged in the development,
production and sale of MMICs. The Buyer has the managerial, operational and
financial capability to compete effectively in the development, production and
sale of MMICs for advanced DOD (as hereinafter defined) radar systems and is
eligible to
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receive the applicable DOD security clearances necessary for such activities.
The Buyer has adequate financing or financial resources available to consummate
the transactions contemplated by this Agreement.
6.6. BROKERS. No finder, broker, agent or other intermediary has worked
for or on behalf of the Buyer in connection with the negotiation or consummation
of the transactions contemplated hereby.
6.7. CAPITAL STOCK. The authorized capital stock of the Buyer consists
of (a) 5,000,000 shares of Preferred Stock, $.001 par value, and (b) 25,000,000
shares of Common Stock, $.001 par value. As of the close of business on
December 31, 1997, 8,497,427 shares of Common Stock of the Buyer and no shares
of Preferred Stock of the Buyer were issued and outstanding. All of the
outstanding shares of capital stock of the Buyer are duly authorized, validly
issued, fully paid and nonassessable. No class of capital stock of the Buyer is
entitled to preemptive rights. No options, warrants or other rights to acquire
capital stock from the Buyer are outstanding, other than as set forth in the
Buyer SEC Reports (as hereinafter defined) or as set forth in SCHEDULE 6.7
hereto. Except as set forth in the Buyer SEC Reports, there are no outstanding
bonds, debentures, notes or other obligations the holders of which have the
right to vote or which are convertible into or exercisable for securities having
the right to vote with stockholders of the Buyer on any matter. The Buyer SEC
Reports or SCHEDULE 6.7 hereto list, and the Buyer has delivered to the Seller
true and complete copies of, all agreements, contracts or understandings,
whether oral or written, relating to shares of capital stock of the Buyer or
options, warrants or other rights to acquire capital stock of the Buyer
(including, without limitation, any agreements, contracts or understandings
regarding registration rights), and all such agreements, contracts and
understandings are in full force and effect.
6.8. AUTHORIZATION FOR SHARES. The Buyer has taken all necessary action
to permit it to issue the number of Shares required to be issued pursuant to
Article 3. The Shares issued pursuant to Article 3 will, when issued, be duly
authorized, validly issued, fully paid, nonassessable and free of any
Encumbrance and no stockholder of the Buyer will have any preemptive right of
subscription or purchase in respect thereof. Assuming the accuracy of the
Seller's representations and warranties in Section 5.23 hereof, the Shares will,
when issued, be exempt from registration under the Securities Act and any
applicable state securities laws.
6.9. REPORTS AND FINANCIAL STATEMENTS. The Buyer has filed all reports
required to be filed with the Securities and Exchange Commission (the "SEC")
since November 1, 1996 through the date hereof (collectively, the "BUYER SEC
REPORTS"), and has previously furnished or made available to the Seller true and
complete copies of all Buyer SEC Reports. None of the Buyer SEC Reports, as of
their respective dates, contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the
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balance sheets (including the related notes) included in the Buyer SEC Reports
presents fairly, in all material respects, the consolidated financial position
of the Buyer and its subsidiaries as of the respective dates thereof, and the
other related statements (including the related notes) included therein present
fairly, in all material respects, the results of operations, the changes in
shareholders equity and cash flows of the Buyer and its subsidiaries for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described therein. The Buyer has provided
to the Seller true and correct copies of the Buyer's unaudited consolidated
statement of operations and statement of cash flows for the nine months ended,
and the Buyer's unaudited consolidated balance sheet as of, September 27, 1997
(the "BUYER UNAUDITED FINANCIAL STATEMENTS"). Such Buyer Unaudited Financial
Statements present fairly in all material respects the results of operations and
cash flows for the nine months ended, and the financial position of the Buyer
and its subsidiaries as of, September 27, 1997, all in conformity with generally
accepted accounting principles consistently applied during the period involved
except as otherwise noted therein and except for the absence of footnote
disclosures, and subject to normal year-end adjustments and any other
adjustments described therein. All of the Buyer SEC Reports, as of their
respective dates, complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended.
6.10. ABSENCE OF CERTAIN CHANGES OR EVENTS. During the period from
September 27, 1997 to the date of this Agreement, the business of the Buyer and
its subsidiaries has been conducted only in the ordinary course, consistent with
past practice, and neither the Buyer nor any subsidiary of the Buyer has entered
into any material transaction other than in the ordinary course, consistent with
past practice, and there has not been any change in the condition (financial or
otherwise), results of operations, assets, liabilities or business of the Buyer
other than changes arising in the ordinary course of business consistent with
past practices, none of which, individually or in the aggregate, has had, or is
reasonably expected to have, a material adverse effect on the business,
operations, assets, liabilities or financial condition of the Buyer and its
subsidiaries taken as a whole.
6.11. REGISTRATION STATEMENTS. Since the Buyer's Registration Statement
on Form S-1 dated December 13, 1993, and the amendments thereto, and the Buyer's
Registration Statement on Form S-3 dated August 4, 1995, and the amendments
thereto, the Buyer has not filed any registration statement with the SEC, other
than Registration Statements on Form S-8. The Buyer is eligible to file with
the SEC a Registration Statement on Form S-3 for shares of its Common Stock,
including the Shares.
6.12. REGISTRATION RIGHTS AGREEMENT. Attached as EXHIBIT E-1 hereto is a
true, complete and correct copy of the Registration Rights Agreement dated May
17,
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1991 between the Buyer and certain of its stockholders, including all amendments
thereto to date (as so amended, the "REGISTRATION RIGHTS AGREEMENT"). The
Registration Rights Agreement constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, and the Buyer is in compliance with all terms and conditions thereof.
The number of Registrable Securities (as such term is defined in the
Registration Rights Agreement) outstanding on the date hereof is 461,059 shares
of Common Stock of the Buyer, all of which shares are owned of record by Lucent
Technologies, Inc., which is the sole Holder (as such term is defined in the
Registration Rights Agreement) under the Registration Rights Agreement. A total
of three demand registrations remain available to Holders under Section 2 of the
Registration Rights Agreement. The right of first offer set forth in Section
16.3 of the Registration Rights Agreement has expired.
ARTICLE 7
CERTAIN REGULATORY APPROVALS
7.1. DEPARTMENT OF JUSTICE AND DEPARTMENT OF DEFENSE. As promptly as
practicable, and in any event within two (2) business days following the
execution of this Agreement by the parties, the Seller shall notify the U.S.
Department of Justice (the "DOJ") and the U.S. Department of Defense ("DOD") of
the proposed transaction, in accordance with the terms of Section VI of the
Final Judgment; the Seller and the Buyer shall respond with reasonable diligence
and dispatch to any request for additional information made in response to such
notice; and the Seller shall promptly inform the Buyer of any written notice of
objection or non-objection or other material written communications received
from the DOJ or the DOD.
7.2. XXXX-XXXXX-XXXXXX. To the extent required in connection with the
acquisition by the Seller of the Shares, as promptly as practicable, and in any
event within ten (10) business days following the execution and delivery of this
Agreement by the parties, the Seller and the Buyer shall each prepare and file
any required notification and report form under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), in connection with the
transactions contemplated hereby; the Seller and the Buyer shall request early
termination of the waiting period thereunder; and the Seller and the Buyer shall
respond with reasonable diligence and dispatch to any request for additional
information made in response to such filings.
ARTICLE 8
CONDUCT OF BUSINESS PENDING CLOSING
The Seller covenants and agrees that, from and after the date of this
Agreement and until the Closing, and to the extent the Seller is permitted under
the Final Judgment and Hold Separate Order to monitor or affect the actions of
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the MMIC Business, except as otherwise specifically consented to or approved by
the Buyer in writing:
8.1. FULL ACCESS. The Seller shall afford to the Buyer and its
authorized representatives such access during normal business hours to all
properties, books, records, contracts and documents of the MMIC Business as the
Buyer shall reasonably request in connection with its review of the MMIC
Business, and the Seller shall furnish or cause to be furnished to the Buyer and
its authorized representatives all such information with respect to the MMIC
Business as the Buyer may reasonably request. Any such investigation shall be
on reasonable prior notice and shall be carried out in such a manner as to
minimize any disruption of the MMIC Business.
8.2. CARRY ON IN REGULAR COURSE. Except as may be otherwise
contemplated by this Agreement or required by any of the documents listed in any
Schedule to this Agreement, the Seller shall carry on the MMIC Business in the
ordinary course substantially in the same manner as heretofore.
8.3. NO GENERAL INCREASES. Except for any increase required under the
terms of any employment agreement or benefit plan referred to in Section 5.10
and any increase in compensation that will not constitute an Assumed Obligation,
the Seller shall not (i) grant any general or uniform increase in the rates of
pay of employees of the MMIC Business, except for increases in salary or wages
in the ordinary course operation of the MMIC Business consistent with past
practice, or (ii) grant any general, uniform or individual increase in the
benefits under any bonus or pension plan or other contract or commitment for the
benefit of any employee of the MMIC Business, or to increase the compensation
payable or to become payable to officers, key salaried employees or
representatives of the MMIC Business, or (iii) increase any bonus, insurance,
pension or other benefit plan, payment or arrangement made to, for or with any
such officers, key salaried employees or representatives.
8.4. SALE OF CAPITAL ASSETS. Except as may be otherwise contemplated by
this Agreement, the Seller shall not sell or otherwise dispose of any capital
assets of the MMIC Business with a book value or fair market value in excess of
$5,000 without written consent of Buyer.
8.5. INSURANCE. The Seller shall maintain insurance coverage for the
MMIC Business comparable to the insurance coverage currently in effect.
8.6. PRESERVATION OF ORGANIZATION. Except as may be otherwise
contemplated by this Agreement, the Seller shall use reasonable efforts under
the applicable circumstances to keep the organization and material business
relationships of the MMIC Business intact in all material respects.
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8.7. COMPLIANCE WITH FINAL JUDGMENT. Except as may be otherwise
permitted by the DOJ or the DOD, the Seller shall use its reasonable efforts to
comply in all material respects with the terms of the Final Judgment and the
Hold Separate Order.
8.8. ADVICE OF CHANGE. The Seller shall advise the Buyer in writing,
promptly after becoming aware thereof, of any material change in the condition,
operations or assets of the MMIC Business.
8.9. NO SHOPPING. Prior to any termination of this Agreement pursuant
to Article 15 hereof, the Seller shall not solicit or enter into any agreement
with respect to the sale of any substantial portion of the MMIC Business or of
the Acquired Assets, or any merger or other business combination of the Seller
(solely as it relates to the MMIC Business), to or with any Person other than
the Buyer.
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ARTICLE 9
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
9.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Seller in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty), except to the
extent that such representations and warranties are no longer correct due to the
consummation prior to the Closing of transactions contemplated hereby.
9.2. COMPLIANCE WITH AGREEMENT. The Seller shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
9.3. NO LITIGATION. No restraining order or injunction shall prevent
the transactions contemplated by this Agreement and no action, suit or
proceeding shall be pending or threatened before any court or administrative
body in which it will be or is sought to restrain or prohibit or obtain damages
or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
9.4. REGULATORY CLEARANCE.
(a) All filings required to be made with the DOJ and the DOD
under the Final Judgment shall have been completed, and all applicable time
periods for review under the Final Judgment shall have expired or have been
earlier terminated without any requests for further information, or in the
event of such a request for further information, all applicable time
periods for review under the Final Judgment shall have expired without the
objection of the DOJ or the DOD.
(b) All required filings under the HSR Act shall have been
completed, and all applicable time limitations under the HSR Act shall have
expired or have been earlier terminated without a request for further
information by the relevant federal authorities under the HSR Act, or in
the event of such a request for further information, all applicable time
limitations
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under the HSR Act shall have expired without the objection of such federal
authorities.
9.5. INTELLECTUAL PROPERTY AGREEMENT. The Seller shall have entered
into the Intellectual Property Assignment, License and Sublicense Agreement in
the form of EXHIBIT A attached hereto (the "INTELLECTUAL PROPERTY AGREEMENT"),
and the Intellectual Property Agreement shall be in full force and effect.
9.6. SUPPLY AGREEMENT. The Seller shall have entered into the Supply
Agreement in the form of EXHIBIT B attached hereto (the "SUPPLY AGREEMENT"), and
the Supply Agreement shall be in full force and effect.
9.7. MASTER SERVICES AGREEMENT. The Seller shall have entered into the
Master Services Agreement in the form of EXHIBIT C attached hereto (the "MASTER
SERVICES AGREEMENT"), any necessary consent or amendment from TI shall have been
obtained, and the Master Services Agreement shall be in full force and effect.
9.8. SUBLEASE AGREEMENTS. The Seller shall have entered into the
Sublease Agreements in the form of EXHIBITS D-1 and D-2 attached hereto with
respect to that portion of the MMIC Facilities specified therein (the "SUBLEASE
AGREEMENTS"), the consent of TI, as lessor, shall have been obtained, and the
Sublease Agreements shall be in full force and effect.
9.9. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT. The Seller shall have
entered into the Amendment to Registration Rights Agreement in the form of
EXHIBIT E-2 attached hereto (the "AMENDMENT TO REGISTRATION RIGHTS AGREEMENT")
and the Amended Registration Rights Agreement shall be in full force and effect.
9.10. NON-DISCLOSURE AGREEMENT. The Seller shall have entered into the
Non-Disclosure Agreement in the form of EXHIBIT F attached hereto (the
"NON-DISCLOSURE AGREEMENT"), and the Non-Disclosure Agreement shall be in full
force and effect.
9.11. TI AMENDMENT. TI shall have entered into an amendment to the
Intellectual Property and License Agreement dated as of July 11, 1997, as
amended, (the "TI IP AGREEMENT"), in a form sufficient to permit the Seller to
enter into the Intellectual Property Agreement, including without limitation
such that the sublicense grants with respect to TI Licensed Intellectual
Property (as defined in the Intellectual Property Agreement) are consistent with
and not outside the scope of the TI IP Agreement (the "TI AMENDMENT"), and the
TI Amendment shall be in full force and effect.
9.12. VOTING TRUST AGREEMENT. To the extent requested by the DOJ, the
Seller shall have entered into a voting trust agreement with respect to the
Stock Portion, with such agreement to be in a form reasonably satisfactory to
the Seller and Buyer.
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ARTICLE 10
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the Closing is subject to the
satisfaction at or prior to the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Seller):
10.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Buyer in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty).
10.2. COMPLIANCE WITH AGREEMENT. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
10.3. NO LITIGATION. No restraining order or injunction shall prevent
the transactions contemplated by this Agreement and no action, suit or
proceeding shall be pending or threatened before any court or administrative
body in which it will be or is sought to restrain or prohibit or obtain damages
or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
10.4. REGULATORY CLEARANCE.
(a) All filings required to be made with the DOJ and the DOD
under the Final Judgment shall have been completed, and all applicable time
periods for review under the Final Judgment shall have expired or have been
earlier terminated without any requests for further information, or in the
event of such a request for further information, all applicable time
periods for review under the Final Judgment shall have expired without the
objection of the DOJ or the DOD.
(b) All required filings under the HSR Act shall have been
completed, and all applicable time limitations under the HSR Act shall have
expired or have been earlier terminated without a request for further
information by the relevant federal authorities under the HSR Act, or in
the event of such a request for further information, all applicable time
limitations under the HSR Act shall have expired without the objection of
such federal authorities.
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10.5. INTELLECTUAL PROPERTY AGREEMENT. The Buyer shall have entered into
the Intellectual Property Agreement, and the Intellectual Property Agreement
shall be in full force and effect.
10.6. SUPPLY AGREEMENT. The Buyer shall have entered into the Supply
Agreement, and the Supply Agreement shall be in full force and effect.
10.7. MASTER SERVICES AGREEMENT. The Buyer shall have entered into the
Master Services Agreement, any necessary consent or amendment from TI shall have
been obtained, and the Master Services Agreement shall be in full force and
effect.
10.8. SUBLEASE AGREEMENTS. The Buyer shall have entered into the
Sublease Agreements, the consent of TI, as lessor, shall have been obtained, and
the Sublease Agreements shall be in full force and effect.
10.9. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT. The Buyer shall have
entered into the Amendment to Registration Rights Agreement, and the Amended
Registration Rights Agreement shall be in full force and effect.
10.10. NON-DISCLOSURE AGREEMENT. The Buyer shall have entered into the
Non-Disclosure Agreement, and the Non-Disclosure Agreement shall be in full
force and effect.
10.11. TI AMENDMENT. TI shall have entered into the TI Amendment, and the
TI Amendment shall be in full force and effect.
10.12. VOTING TRUST AGREEMENT. To the extent requested by the DOJ, the
Seller shall have entered into a voting trust agreement with respect to the
Stock Portion, with such agreement to be in a form reasonably satisfactory to
the Seller and Buyer.
ARTICLE 11
EMPLOYEES AND EMPLOYEE BENEFITS
11.1. HIRING EMPLOYEES.
(a) At the Closing, the Buyer will offer employment to all
persons who are MMIC Business employees at Closing (including employees on
leave, disability or workers compensation) or are subject to outstanding
employment offers from the MMIC Business at Closing, except for any persons
listed on SCHEDULE 11.1 (as such schedule may be updated by the
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Buyer at the Closing, provided that the total number does not exceed 32).
All such offers shall be for the same pay and comparable benefits as those
in effect at Closing. Such offers and the benefits to be provided to the
Assumed Employees shall recognize the date of hire and time of service with
the Seller for all purposes. All employees accepting such offers are
referred to in this Agreement as "ASSUMED EMPLOYEES" and their employment
with the Buyer will be deemed to have commenced immediately after 11:59
p.m., Dallas local time, on the Closing Date.
(b) The Buyer agrees that, for a period of 60 days after the
Closing Date, it will not cause any of the Assumed Employees hired by it to
suffer "employment loss" for purposes of the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Sections 2101-2109, and related
regulations (the "WARN ACT") if such employment loss could create any
liability for the Seller, unless the Buyer delivers notices under the WARN
Act in such a manner and at such a time that the Seller bears no liability
with respect thereto.
(c) Subject to the Seller having obtained the prior written
consent of the DOJ to rehire employees of the MMIC Business pursuant to
this Section 11.1(c), the Buyer may at any time up to ninety (90) days
after the Closing by written notice to the Seller cause the Seller to offer
employment to up to 32 (LESS the number of employees listed on SCHEDULE
11.1, as such schedule may be updated by the Buyer at the Closing) of the
Assumed Employees, with such employees to be designated by the Buyer in the
notice. All such offers shall be for the same pay and comparable benefits
as in effect at the Closing. The persons accepting the Seller's offers of
employment are referred to herein as the "REHIRED EMPLOYEES". In the event
any persons designated by the Buyer for rehiring do not accept the Seller's
employment offer, if the Buyer within the next thirty (30) days terminates
such employees' employment and the Buyer is responsible for severance to
such employees consistent with Section 11.2(b) below, the Seller shall
reimburse the Buyer for such severance. In addition, in the event that by
the 90th day after the Closing the Seller has not obtained the prior
written consent of the DOJ to rehire employees of the MMIC Business
pursuant to this Section 11.1(c), the Buyer may by written notice to the
Seller designate up to 32 (LESS the number of employees listed on SCHEDULE
11.1, as such schedule may be updated by the Buyer at the Closing) of the
Assumed Employees that the Buyer intends to terminate within the next
thirty (30) days. In the event that the Buyer within such thirty (30) day
period terminates such employees' employment and the Buyer is responsible
for severance to such employees consistent with Section 11.2(b) below, the
Seller shall reimburse the Buyer for such severance.
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11.2. BENEFIT PLANS GENERALLY.
(a) LIABILITIES GENERALLY. Except as expressly provided in this
Agreement, Seller shall retain exclusive liability and responsibility for
providing any and all benefits due and payable to or in respect of all
employees of the MMIC Business and related participants and beneficiaries
under any ERISA Plan or Non-ERISA Plan in accordance with the terms of such
plans and applicable law.
(b) BENEFITS MAINTENANCE. Commencing as of the Closing Date and
continuing through December 31, 1998 (the "BENEFITS CONTINUATION PERIOD"),
with respect to the Assumed Employees and dependents and beneficiaries
thereof, Buyer shall provide compensation, employee welfare plans,
stock-based incentive plans and other employee benefits which are
substantially comparable in the aggregate to the compensation paid by the
Seller, and the plans and other benefits provided (without application of
any exclusion for a pre-existing condition) by applicable ERISA and
Non-ERISA Plans, immediately prior to the Closing Date, valuing any
stock-based compensation, for this purpose, under any reasonable method;
PROVIDED, that nothing herein shall be construed to require the Buyer to
provide Assumed Employees with any pension benefits or retiree medical
benefits. During the Benefits Continuation Period, the Buyer shall
maintain severance, reduction-in-force and pay-in-lieu-of-notice benefits
for the Assumed Employees no less favorable than the severance,
reduction-in-force and pay-in-lieu of notice benefits provided to such
Assumed Employees by Seller immediately prior to the Closing Date and
disclosed on SCHEDULE 5.10(a) or (b).
11.3 SAVINGS PLAN. The Seller will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Savings Plan (the "SAVINGS PLAN"), with respect to those employees (or their
beneficiaries) of the MMIC Business who, as of the Closing Date, are
participants in the Savings Plan. The Seller agrees that it will cause the
accounts in the Savings Plan of all such participants to be fully vested as of
the Closing Date. Effective as of the Closing Date, Seller shall amend the
Savings Plan if and as necessary (i) to cause the active participation of the
Assumed Employees therein to cease as of the Closing Date, and (ii) to permit
Assumed Employees to elect to take distributions (subject to applicable law) of
their accounts thereunder and, if such Assumed Employees so elect, to roll them
over, directly or otherwise, in accordance with applicable law and regulations,
to an individual retirement account or to one or more defined contribution
retirement plans qualified under Section 401(a) of the Code (the "BUYER DEFINED
CONTRIBUTION PLANS") and maintained by Buyer or one of its subsidiaries, and the
Buyer Defined Contribution Plans shall accept such rollovers (including to the
extent practicable any plan loans).
11.4 PENSION PLANS. The Seller will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Employees Pension Plan and the Raytheon TI Systems Supplemental Pension Plan
(collectively, the "PENSION
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PLANS"), with respect to those employees (or their beneficiaries) of the MMIC
Business who, as of the Closing Date, are participants in either of the Pension
Plans. Effective as of the Closing Date, Seller shall amend the Pension Plans
to recognize as service with the Seller for all plan purposes the service of the
Assumed Employees with the Buyer, if any, in the Benefits Continuation Period,
to recognize as compensation paid by the Seller any compensation paid the
Assumed Employees by the Buyer for services rendered in the Benefits
Continuation Period, and to recognize, for those Assumed Employees who have at
least 15 years of service and are at least age 50 as of the Closing Date, the
Seller's "Bridge to Retirement" additional service time benefit, provided the
Buyer shall have timely complied with any information request the Seller shall
reasonably make to effect all such recognitions. The Seller further agrees that
it will cause the accrued benefit of each such employee under the Pension Plans
as of the Closing Date and through the Benefits Continuation Period to be fully
vested as of the Closing Date.
11.5 INCENTIVE PLANS. Attached as SCHEDULE 11.5 hereto is a description
of the Seller's internal sales and marketing incentive plans and retention
agreements (the "INCENTIVE PLANS"). The Buyer agrees to assume as part of the
Assumed Obligations the Seller's obligations under the Incentive Plans,
including with respect to the retention agreements Seller's obligations for the
current plan year. With respect to any amounts to be paid with respect to 1997,
the Seller will pay the amounts due (as set forth in Schedule 11.5) without
giving effect to any plan requirement that the Assumed Employees remain
employees of the Seller as of February 1, 1998. The Seller agrees to either
reimburse the Buyer in cash for all disbursements made by the Buyer in
connection with the Incentive Plans or to create an accrued liability on the
Closing Balance Sheet for the amount to be disbursed.
11.6 STOCK OPTION PLAN. Seller shall, if appropriate, cause the stock
option plans of Raytheon Company (the "RAYTHEON STOCK PLANS") to be amended and
to make adjustments and take actions (and Buyer shall take such actions as are
reasonably required to implement the same) with respect to options (including,
without limitation, incentive stock options) on Raytheon Company Common Stock
which are outstanding under the Raytheon Stock Plans immediately prior to the
Closing Date and which are held by Assumed Employees and are not vested as of
the Closing Date (the "RAYTHEON OPTIONS") to provide that, pursuant to the
equitable adjustment provisions of the applicable Raytheon Stock Plan, such
Raytheon Options will be converted into and represent (pursuant to a methodology
consistent with Section 424 of the Code, with respect to the values of Raytheon
Common Stock and Buyer Common Stock which are reasonably agreed to by Buyer) the
right to acquire from Buyer shares of Buyer Common Stock, with such other
amendments and adjustments proposed by Buyer as are reasonable and appropriate
consistent with Buyer's current stock option plan. These actions and
adjustments shall be made and become effective as soon as reasonably
practicable. Any liabilities or other obligations with respect to such
converted Raytheon Options shall be Assumed Obligations.
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11.7 ACCRUED VACATION. The Seller agrees to pay the Assumed Employees,
as promptly as practicable after the Closing, an amount equal to their accrued
vacation as of the Closing, less any required withholding.
ARTICLE 12
CERTAIN COVENANTS
12.1. THIRD PARTY CONSENTS.
(a) To the extent that any agreement constituting part of the
Acquired Assets is not capable of being transferred by the Seller to the
Buyer pursuant to this Agreement without the consent, approval or waiver of
a third Person, and such consent is not obtained prior to the Closing, or
if such transfer or attempted transfer would constitute a breach thereof or
a violation of any law, rule or regulation in the absence of obtaining such
an approval, nothing in this Agreement will constitute a transfer or an
attempted transfer thereof. Each of the Buyer and the Seller shall use
reasonable efforts at its own expense to obtain any such approvals.
(b) In the event that such consents, approvals and waivers
referred to in paragraph (a) are not obtained then the Seller and the Buyer
will each use reasonable efforts, each at its own expense, to (i) provide
to the Buyer the benefits and burdens of any such agreement, (ii) cooperate
in any reasonable and lawful arrangement designed to provide such benefits
and burdens to the Buyer without incurring any obligation to any other
Person other than to provide such benefits to the Buyer, including without
limitation the appointment of the Buyer as the agent of the Seller for
purposes of such agreement, and (iii) enforce, at the request of the Buyer
for the account of the Buyer, any rights of the Seller arising from any
such agreement.
12.2 NOVATION OF GOVERNMENT CONTRACTS.
(a) As soon as practicable following the Closing, the Buyer
shall prepare (with the Seller's assistance), in accordance with Federal
Acquisition Regulations Part 42, (P) 42.12 and any applicable agency
regulations or policies, a written request meeting the requirements of the
Federal Acquisition Regulations Part 42, as reasonably interpreted by the
Responsible Contracting Officer (as such term is defined in Federal
Acquisition Regulations Part 42, (P) 42.1202(a)), which shall be submitted
by Seller to each Responsible Contracting Officer, for the United States
Government (i) to recognize the Buyer as the Seller's successor in interest
to all the Acquired Assets constituting a Government Contract; and (ii) to
enter into a novation
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agreement (a "NOVATION AGREEMENT") in form and substance reasonably
satisfactory to the Buyer and the Seller and their respective counsel,
pursuant to which, subject to the requirements of the Federal Acquisition
Regulations Part 42, all of Seller's right, title and interest in and to,
and all of the Seller's obligations and liabilities under, each such
Government Contract shall be validly conveyed, transferred and assigned and
novated to the Buyer by all parties thereto. The Seller shall provide to
the Buyer promptly any information regarding the Seller required in
connection with such request. The Seller and the Buyer shall each use all
reasonable efforts to obtain all consents, approvals and waivers required
for the purpose of processing, entering into and completing the Novation
Agreements with regard to any of the Government Contracts, including
responding to any requests for information by the United States Government
with regard to such Novation Agreements.
(b) In connection with obtaining the consents contemplated in
Section 12.2(a) hereof, the Seller shall not consent to any modification of
any Government Contract included in the Acquired Assets which would
adversely affect the rights of the Buyer under such Government Contract
without the prior written consent of the Buyer.
12.3. ACCESS TO BOOKS AND RECORDS.
(a) The Buyer agrees to cooperate with and to make available to
the Seller such documents, books, records or information relating to the
MMIC Business as of the Closing Date as the Seller may reasonably require
after the Closing.
(b) The Buyer agrees to preserve and protect all books, records,
files and data referred to in paragraph (a) above for a period of six (6)
years after the Closing Date.
(c) The Buyer agrees not to destroy any files or records which
are subject to this Section 12.3 (i) for the period described in clause (b)
of this Section 12.3, and (ii) thereafter, without giving at least thirty
(30) days' notice to the Seller. Upon receipt of such notice, the Seller
may (A) cause to be delivered to it the files or records intended to be
destroyed, at the Seller's expense, or (B) notify the Buyer that the Seller
will pay the cost of storing and maintaining such files or records
(including any necessary costs of moving such files or records to a
location under control of the Seller).
12.4. USE OF RAYTHEON TI SYSTEMS NAME. The Buyer agrees that promptly
after the Closing Date it will cease using any references to the Seller, Parent,
TI or any of their respective Affiliates, including any such use in connection
with the use of existing supplies of labels, signs, letterhead and other printed
materials, except
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that the Buyer may use up existing stocks of catalogs and other promotional
materials so long as they are stickered so as to indicate that the MMIC Business
is no longer affiliated with the Seller.
12.5 NON-SOLICITATION. After the Closing, for a period of two years
from July 2, 1997, except as provided in Section 11.1(c), the Seller shall not
(a) solicit to hire any individual who, on July 2, 1997, was an employee of the
MMIC Business, or (b) hire any individual who on July 2, 1997, was an employee
of the MMIC Business unless (in case of clause (b)) such individual has a
written offer of employment from a third Person for a like position.
12.6 COMPLIANCE WITH CERTAIN AGREEMENTS. After the Closing, the Buyer
agrees to be bound, insofar as it relates to the MMIC Business, by the
provisions of (i) the Settlement Agreement dated February 23, 1995 between
Westinghouse Electric Corporation and TI, but only to the extent included in the
Assumed Obligations, and (ii) the Supplemental Agreement, dated as of
August 28, 1997, between TI and the Seller.
12.7. COMPLIANCE WITH FINAL JUDGMENT. After the Closing, the Buyer
agrees to be bound by the provisions of the Final Judgment.
12.8. BEST EFFORTS AND MUTUAL COOPERATION. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. The parties hereto will cooperate with each other to obtain as
promptly as possible all consents, authorizations, orders or approvals of any
third party, whether private or a Governmental Entity, required in connection
with the transactions contemplated by this Agreement. The parties hereto agree
to coordinate and cooperate with one another in exchanging such information and
in executing and delivering such instruments as the others may request in
connection with all of the foregoing.
12.9. MOVE TO NORTH BUILDING. Within one year after the Closing, the
Seller and the Buyer will cooperate to move the Acquired Assets located in the
Research East Building to an approximately 18,000 square foot facility located
in the North Building contiguous to Buyer's operations in the North Building.
The Buyer and the Seller will use reasonable efforts to effect this move in a
manner that does not unreasonably disrupt the operations of the Seller or the
Buyer. The Seller agrees to pay (up to an aggregate of $8,764,000) (a) the
Buyer's reasonable out-of-pocket expenses incurred in connection with the move
and (b) the cost of constructing demising walls and other improvements in the
North Building required to set up the Buyer's research and development
operations and separate the Buyer's business from the Seller's business, in
accordance with plans and specifications to be mutually agreed upon by the
parties. Subject to the terms of the Sublease Agreements, any leasehold
improvements resulting from such payments shall be deemed to be owned
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by the Buyer as part of the Acquired Assets. As promptly as practicable after
the date of this Agreement, the Seller and the Buyer will designate appropriate
representatives to develop a timetable, budget and plans for the move and the
improvements and take other related actions.
12.10. COLLECTION OF CERTAIN ACCOUNTS RECEIVABLE.
(a) After the Closing Date, the Buyer shall use reasonable efforts,
consistent with the Seller's current collection practices and procedures, to
collect all accounts receivable included in the Acquired Assets which are aged
90 days or more as of the Closing Date, including, without limitation, those
listed on SCHEDULE 5.22 (collectively, the "COLLECTION RECEIVABLES"). All
payments received by the Buyer from any customers obligated in respect of any
Collection Receivables shall be deemed to have been made in respect of, and
shall be applied to, the Collection Receivable of such customer bearing the
earliest date unless the customer has specified the particular account to which
a remittance pertains, in which case the credit shall be made to the account
specified.
(b) The Buyer will not accept any returns of defective products or give
any credit for defective products with respect to any products relating to the
Collection Receivables without the Seller's prior consent, which consent shall
not be unreasonably withheld. The Buyer may accept returns of products or give
credits for products relating to the Collection Receivables for reasons other
than the products being defective. For purposes of paragraph (c) below, (i) any
Collection Receivables relating to product returns or credits made in compliance
with the first sentence of this paragraph (b) shall be considered unpaid at the
end of the applicable Collection Period (as defined below) and (ii) any
Collection Receivables relating to product returns or credits made pursuant to
the second sentence of this paragraph (b) or made pursuant to the first sentence
of this paragraph (b) but without the Seller's consent, shall be considered paid
in full.
(c) In the event that any Collection Receivable or any portion thereof
(less applicable reserves attributable to Collection Receivables set forth on
the Closing Balance Sheet) is not paid by the first anniversary of the recording
of such Collection Receivable (the "COLLECTION PERIOD"), within ten days after
the end of any such Collection Period, the Buyer shall deliver to the Seller a
final statement setting forth all amounts collected by the Buyer with respect to
such Collection Receivable, and listing all Collection Receivables (or portion
thereof) remaining unpaid after the Collection Period, after giving effect to
the provisions of paragraph (b) above (the "UNPAID ACCOUNTS"). Provided that
the Buyer has complied with its obligations under this Section 12.10, within
five business days of the delivery of such statement, the Seller will pay to the
Buyer the balance of the Unpaid Accounts, net of any reserve for uncollected
accounts set forth on the Closing Balance Sheet (as finally adjusted pursuant to
Section 3.2) which has not been previously applied to any Unpaid Account under
this paragraph (c). Any amounts collected by the Seller or the
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Buyer with respect to any Unpaid Accounts after the Collection Period for such
Unpaid Account shall be the property of the Seller and the Seller may take such
measures to enforce collection of the unpaid items as the Seller shall deem
necessary.
(d) In the event that the Buyer collects more with respect to the
Collection Receivables than the total amount attributable to the Collection
Receivables (net of any reserve) on the Closing Balance Sheet (as finally
adjusted pursuant to Section 3.2), the Buyer will remit to the Seller any such
excess amount.
12.11. BUYER'S BUSINESS. Except as may be otherwise contemplated by this
Agreement or required by any of the documents listed in any Schedule to this
Agreement, the Buyer covenants and agrees that, from and after the date of this
Agreement and until the Closing, it shall carry on its business in the ordinary
course substantially in the same manner as heretofore conducted.
ARTICLE 13
INDEMNITY
13.1. INDEMNIFICATION BY THE SELLER.
(a) The Seller agrees to indemnify and hold the Buyer (and its
Affiliates, directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of the foregoing) harmless from
and with respect to any and all claims, liabilities, losses, damages, costs
and expenses (including without limitation the reasonable fees and
disbursements of counsel) (collectively, "LOSSES"), arising out of (i) any
breach by the Seller of any representation or warranty made by the Seller
in this Agreement, (ii) any breach by the Seller of any covenant,
obligation or undertaking made by the Seller in this Agreement or (iii) the
Excluded Liabilities.
(b) No action or claim for Losses pursuant to Section 13.1(a)(i)
above may be brought or made unless such action or claim (a "CLAIM") has
been specified in reasonable detail in a written notice from the Buyer to
the Seller on or before the one year anniversary of the Closing, except for
Claims arising out of any breach of the Seller of Section 5.17, which must
be made on or before July 9, 1999, or Claims arising out of any breach of
the Seller of Section 5.19, which must be made on or before the expiration
of any applicable statute of limitations period.
(c) The Buyer shall not be entitled to indemnification under
Section 13.1(a)(i) above except to the extent that the cumulative amount of
Losses arising from Claims asserted under Section 13.1(a)(i) exceeds
$100,000, and then only to the extent of such excess. In addition, in no
event shall the aggregate liability of the Seller for Losses under
Section 13.1(a)(i)
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exceed ten percent (10%) of the Purchase Price (as finally adjusted
pursuant to Section 3.2) except in the case of Losses arising from any
breach by the Seller of Section 5.17 ("ENVIRONMENTAL CLAIMS"), for which
the maximum amount payable by the Seller shall be $10,000,000, or arising
from fraud.
13.2. INDEMNIFICATION BY THE BUYER.
(a) The Buyer agrees to indemnify and hold the Seller (and its
Affiliates, directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of the foregoing) harmless from and with
respect to any and all Losses arising out of (i) any breach by the Buyer of any
representation or warranty made by the Buyer in this Agreement, (ii) any breach
by the Buyer of any covenant, obligation or undertaking made by the Buyer in
this Agreement (including the assumption referred to in Article 2), or (iii) the
operation of the MMIC Business or the use of the Acquired Assets in the
operation thereof after the Closing Date.
(b) No action or claim for Losses pursuant to Section 13.2(a)(i)
above may be brought or made unless such action or claim (a "CLAIM") has been
specified in reasonable detail in a written notice from the Seller to the Buyer
on or before the one year anniversary of the Closing.
(c) The Seller shall not be entitled to indemnification under
Section 13.2(a)(i) above except to the extent that the cumulative amount of
Losses arising from Claims asserted under Section 13.2(a)(i) exceeds $100,000,
and then only to the extent of such excess. In addition, in no event shall the
aggregate liability of the Seller for Losses under Section 13.2(a)(i) exceed ten
percent (10%) of the Purchase Price (as finally adjusted pursuant to Section
3.2) except in the case of Losses arising from any breach by the Buyer of
Sections 6.7 or 6.8 or arising from fraud.
13.3. INDEMNIFICATION PROCEDURES.
(a) In the event that any party hereto (an "INDEMNIFIED PARTY")
desires to make a claim against another party hereto (the "INDEMNIFYING
PARTY", which term shall include all Indemnifying Parties if there be more
than one) in connection with any action, suit, proceeding or demand at any
time instituted against or made upon it for which it may seek
indemnification hereunder (a "THIRD-PARTY CLAIM"), the Indemnified Party
shall promptly notify the Indemnifying Party of such Third-Party Claim and
of its claims of indemnification with respect thereto; PROVIDED, HOWEVER,
that the failure to provide such notice shall not release the Indemnifying
Party from any obligation under this Article 13 except to the extent such
Indemnifying Party is prejudiced by such failure. Upon receipt of such
notice from the Indemnified Party, the Indemnifying Party shall be entitled
to participate in the defense of such Third-Party Claim, and assume the
defense of such Third-Party Claim, and in the case of such an assumption
the Indemnifying Party
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shall have the authority to negotiate, compromise and settle such
Third-Party Claim; PROVIDED, THAT (i) the Indemnifying Party shall not be
entitled to settle any such Third-Party Claim without the consent of the
Indemnified Party unless as part of such settlement the Indemnified Party
is released from all liability with respect to such Third-Party Claim and
(ii) the Indemnified Party shall cooperate with the Indemnifying Party in
connection with the defense of such Third Party Claim, and provide all
information possessed by the Indemnified Party relevant to the defense or
settlement of such Third Party Claim.
(b) The Indemnified Party shall retain the right to employ its
own counsel and to participate in the defense of any Third-Party Claim, the
defense of which has been assumed by an Indemnifying Party pursuant hereto,
but the claimant shall bear and shall be solely responsible for its own
costs and expenses in connection with such participation.
13.4 SCOPE OF INDEMNITY. Except as provided in Article 14, each of the
Seller and the Buyer acknowledges that, except for equitable relief, including
specific performance, its sole and inclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article 13.
13.5 WAIVER OF STATUTORY CLAIMS. The Buyer hereby waives and releases
the Seller from any and all Losses, known or unknown, it may have under CERCLA
(as defined in Article 17) or any other statutes relating to environmental
matters now or hereafter in effect or any other statute if the assertion of a
right under such statute would circumvent the intended effect of Section 13.4.
The Seller hereby waives and releases the Buyer from any and all Losses, known
or unknown, it may have under CERCLA or any other statutes relating to
environmental matters now or hereafter in effect or any other statute if the
assertion of a right under such statute would circumvent the intended effect of
Section 13.4.
ARTICLE 14
TAX MATTERS
14.1. GENERAL. The Seller shall remain responsible for all Income
Taxes (as defined in Article 17) of the Seller payable in connection with the
operation of the MMIC Business prior to the Closing. The Seller shall also
remain responsible for the filing of all related Tax Returns (as defined in
Article 17).
14.2. COOPERATION ON TAX MATTERS; CONDUCT OF PROCEEDINGS.
(a) The Buyer and the Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
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preparation and filing of Tax Returns pursuant to this Article 14 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to such preparation and filing and to any audit, litigation or
other proceeding relating thereto and making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(b) The Seller shall be responsible for defending any audit,
litigation or other proceeding with respect to any Taxes of the Seller for
which the Seller is wholly or partially responsible for payment pursuant to
this Article 14 and shall have the authority to negotiate, compromise and
settle any such audit, litigation or other proceeding.
14.3. ALLOCATION OF TRANSFER AND PROPERTY TAXES. (a) All excise, sales,
use, value added, registration stamp, recording, documentary, conveyancing,
franchise, property, transfer, gains and similar Taxes, levies, charges and fees
including any deficiencies, interest, penalties, additions to Tax or additional
amounts excluding any Income Taxes (collectively, "TRANSFER TAXES") incurred in
connection with the transactions contemplated by this Agreement shall be borne
by Seller. Buyer and Seller shall use reasonable efforts to minimize the amount
of all Transfer Taxes and shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar documentation.
The party that is required by applicable law to make the filings, reports or
returns and to handle any audits or controversies with respect to any applicable
Transfer Taxes shall do so, and the other party shall cooperate with respect
thereto as necessary.
(b) All real property taxes, personal property taxes and similar
AD VALOREM obligations levied with respect to the Acquired Assets for a
taxable period which includes (but does not end on) the Closing Date
(collectively, the "APPORTIONED OBLIGATIONS") shall be apportioned between
Seller and Buyer based on the number of days of such taxable period which
fall on or before the Closing Date (this and any other tax period which
includes one or more days falling on or before the Closing Date, a
"PRE-CLOSING TAX PERIOD") and the number of days of such taxable period
after the Closing Date (a "POST-CLOSING TAX PERIOD"). Seller shall be
liable for the proportionate amount of such taxes that is attributable to
the Pre-Closing Tax Period, and Buyer shall be liable for the proportionate
amount of such taxes that is attributable to the Post-Closing Tax Period.
Upon receipt of any xxxx for real or personal property taxes relating to
the Acquired Assets, each of Seller and Buyer shall present a statement to
the other setting forth the amount of reimbursement to which each is
entitled under this Section together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The proration
amount shall be paid by the party owing it to the other within 30 days
after delivery of such statement. In the event that either Seller or Buyer
shall make
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any payments for which it is entitled to reimbursement under this Section,
the other party shall make such reimbursement promptly but in no event
later than ten (10) days after the presentation of a statement setting
forth the amount of reimbursement to which the presenting party is entitled
along with such supporting evidence as is reasonably necessary to calculate
the amount of reimbursement.
14.4. ALLOWABLE TAXES. (a) For purposes of this Section, "ALLOWABLE
TAX" shall mean the allocable share of any Tax of Seller or any of its
Affiliates which is an allowable cost under the Federal Acquisition Regulation,
48 CFR Chapter 1, and associated regulations and agreements between Seller and
any U.S. governmental entity, allocated based on Seller's existing finance
policy (as it is in effect on the date hereof).
(b) If Seller has paid or reimbursed Buyer for any Allowable Tax
which is attributable to a Pre-Closing Tax Period, Buyer agrees to repay to
Seller promptly upon receipt any portion of such Allowable Tax that Buyer
or any of its Affiliates is ultimately able to recover from the United
States government.
(c) If Buyer or any of its Affiliates receives a refund with
respect to an Allowable Tax that is attributable to a Pre-Closing Tax
Period, Buyer shall pay to Seller the amount of such refund reduced by the
amount, if any, that Buyer will be required to pay to the United States
government or suffer by reason of offset in accordance with the Federal
Acquisition Regulation, 48 CFR Chapter 1, and associated regulations and
agreements between Seller and any U.S. governmental entity. If Seller
receives a refund after the Closing Date with respect to an Allowable Tax
that is attributable to a Pre-Closing Tax Period, Seller will pay to Buyer
the amount, if any, which Buyer will be required to pay to the U.S.
government, or suffers by reason of an offset, in accordance with the
foregoing regulations.
(d) Seller and Buyer agree to cooperate with respect to the
calculation of any amounts payable pursuant to this Section and to give
each other written notice of events reasonably likely to result in the
increase or decrease of any Allowable Tax attributable to a Pre-Closing Tax
Period.
14.5. SCOPE OF ARTICLE 14.
(a) Notwithstanding the provisions of Article 13, the provisions
of this Article 14 (and not Article 13) shall govern the allocation of
responsibility between the Seller and the Buyer for Taxes of the MMIC
Business.
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(b) Claims under this Article 14 may be made by the Buyer and
the Seller at any time prior to the expiration of the statute of
limitations applicable to the Tax matter to which the Claim relates.
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ARTICLE 15
TERMINATION
This Agreement may be terminated by either the Buyer or the Seller in
writing, without liability to the terminating party on account of such
termination (provided the terminating party is not otherwise in default or in
breach of this Agreement), if (a) the Closing shall not have occurred on or
before January 26, 1998, other than as a consequence of the intentional breach
or the intentional default by the terminating party, or (b) the DOJ or DOD
notify the Seller of their objection to the Buyer as a purchaser of the MMIC
Business. This Agreement may be terminated at any time prior to the Closing by
mutual written consent of the Seller and the Buyer. In the event of the
termination and abandonment of this Agreement by the Seller or the Buyer, as
herein provided, written notice thereof shall be given to the other party and
this Agreement shall terminate without any further action of the parties hereto.
If this Agreement is terminated as provided herein: (i) each party will
redeliver all documents, work papers and other material of the other party or
parties relating to the transactions contemplated hereby including such
memoranda, notes, lists, records or other documents compiled or derived from
such material, whether so obtained before or after the execution hereof, to the
party furnishing the same; (ii) all information received by any party hereto
with respect to the business of the other parties or their affiliated companies
shall remain subject to the terms of the Confidentiality Agreement (as defined
in Article 17); and (iii) no party shall have any liability or further
obligation to any other party to this Agreement except as provided by this
Article 15, and except that any termination of this Agreement pursuant to the
first sentence of this Article 15 shall not relieve a defaulting or breaching
party from any liability to the other party hereto. In addition, the provisions
of Article 18 shall survive any termination of this Agreement.
ARTICLE 16
CONFIDENTIALITY
16.1 CONFIDENTIALITY AGREEMENT. Any and all information disclosed by the
Buyer to the Seller or by the Seller to the Buyer as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Seller or to the Buyer,
as the case may be, shall be subject to the Confidentiality Agreement, dated as
of August 15, 1997, between the Buyer and the Seller (the "CONFIDENTIALITY
AGREEMENT"), all of the provisions of which are incorporated into this Section
16.1 by this reference. Notwithstanding the foregoing, the Confidentiality
Agreement shall terminate upon the Closing.
16.2. CLASSIFIED INFORMATION. Buyer acknowledges that Know-How (as
defined in the Intellectual Property Agreement) and other intellectual property
to be
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disclosed to Buyer pursuant to this Agreement and/or the Intellectual Property
Agreement may be considered as classified information by the United States
Government and nothing in this Agreement or the Intellectual Property Agreement
shall require Seller to disclose classified information to Buyer until such time
as Buyer has received necessary clearances from the United States Government to
receive same.
ARTICLE 17
DEFINITIONS
As used herein the following terms not otherwise defined have the following
respective meanings:
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "CONTROL" (including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"ENCUMBRANCE" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"ENVIRONMENTAL LAW" means any applicable Federal, state, local or foreign
law, treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, agreement or governmental restriction, each as in effect on
or prior to the Closing Date, relating to the environment or to any Hazardous
Substance.
"GAAP" means generally accepted accounting principles which are consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the applicable fiscal year.
"GOVERNMENT CONTRACT" means (i) any contract, agreement, lease or
instrument relating to the MMIC Business between Seller and any Governmental
Entity and (ii) any contract, agreement, lease or instrument relating to the
MMIC Business entered
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into by the Seller as subcontractor (at any tier) in connection with a contract
between another Person and any Governmental Entity.
"GOVERNMENTAL ENTITY" means any government or any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, Federal, state, local, transnational or foreign.
"HAZARDOUS SUBSTANCE" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products,
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable Federal, state, local or foreign law, treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, agreement or
governmental restriction.
"INCOME TAXES" means any Taxes based upon or related to income, including
any Taxes calculated in whole or in part based upon net revenues.
"INDEBTEDNESS" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including the endorsement
of checks and similar instruments.
"KNOWLEDGE OF THE SELLER" or "TO THE SELLER'S KNOWLEDGE" means and is
limited to the actual knowledge of the following persons: Xxxxxx Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx
Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxxxx and
Xxxxxx Xxxxxx.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
operations, assets or financial condition of the MMIC Business taken as a whole.
"MMIC BUSINESS INTELLECTUAL PROPERTY" shall have the meaning therefor set
forth in the Intellectual Property Agreement.
"NON-INCOME TAXES" means any Taxes other than Income Taxes.
"PERMITTED ENCUMBRANCES" means Encumbrances that (i) arise out of Taxes not
in default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings, (ii) are mechanics',
carriers', workers', repairmen's, or other similar liens that do not,
individually or in the aggregate, have a Material Adverse Effect, (iii) in
connection with any agreement or instrument constituting part of the Acquired
Assets, relate to restrictions on transfer embodied in the terms of such
agreement or instrument, (iv) represent the rights of customers, suppliers and
subcontractors in the ordinary course of business under
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contracts or under general principles of commercial law, (v) are referred to in
Section 2.4 of the Intellectual Property Agreement or (vi) that individually and
in the aggregate could not reasonably be expected to interfere with the use of
the Acquired Assets in the conduct of the normal business operations of the MMIC
Business.
"PERSON" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"TAX" Any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"TAX RETURN" Any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
ARTICLE 18
GENERAL
18.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and shall expire on the last day, if any, on which a
claim for indemnification for breach thereof may be made pursuant to Article 13.
18.2. EXPENSES. Each party shall pay its own expenses and costs
incidental to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.
18.3. ASSIGNS. This Agreement may not be assigned in whole or in part by
either party hereto without the prior written consent of the other party.
Notwithstanding the foregoing, (i) at the Closing, the Buyer may, pursuant to
written notice to the Seller, assign its rights hereunder to acquire the
Acquired Assets, to assume the Assumed Obligations and to enter into the
Intellectual Property Agreement, the Master Services Agreement, the Supply
Agreement, the Sublease Agreements and the Non-Disclosure Agreement to any
wholly-owned subsidiary of the Buyer (provided that (x) no such assignment shall
relieve the Buyer of any of its obligations hereunder, (y) both the Buyer and
such assignee shall be parties to the
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Non-Disclosure Agreement and (z) at the Closing, the Buyer shall execute and
deliver to the Seller a Guaranty Agreement in the form of EXHIBIT G attached
hereto), (ii) at the Closing, the Buyer may, pursuant to written notice to the
Seller, assign its rights hereunder to acquire those Acquired Assets consisting
of capital equipment to a lessor of its choosing in connection with a lease
agreement to be entered into as of the Closing Date between the Buyer and such
lessor, and (ii) either party may assign this Agreement to any successor in
interest (whether by sale, merger, consolidation or otherwise) to all or
substantially all of such party's business. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
18.4. ENTIRE AGREEMENT, ETC. This Agreement (including the Schedules and
Exhibits and the Confidentiality Agreement) contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto. EXCEPT AS SET FORTH IN
ARTICLE 5, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SALE OF
THE ACQUIRED ASSETS HEREUNDER OR THE MMIC BUSINESS.
18.5. WAIVER OF CERTAIN DAMAGES. EACH OF THE SELLER AND THE BUYER TO THE
FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO PUNITIVE OR MULTIPLE DAMAGES BASED UPON, OR ARISING OUT OF, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
18.6. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
18.7. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws (and not the choice-of-law
rules) of the State of New York.
18.8. NOTICES. All notices, requests, payments, instructions or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
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If to the Seller, to:
Raytheon TI Systems, Inc.
00000 X. Xxxxxxx Xxxxxxxxxx, XX 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
with a copy sent contemporaneously to:
Xxxx X. Xxxxxxxxxxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
If to the Buyer, to:
TriQuint Semiconductor, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy sent contemporaneously to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
18.9. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
18.10. SECTION HEADINGS. All enumerated subdivisions of this Agreement
are herein referred to as "section" or "subsection." The headings of sections
or subsections are for reference only and shall not limit or control the meaning
thereof.
18.11. PUBLIC STATEMENTS OR RELEASES. The parties hereto each agree that
prior to the Closing no party to this Agreement shall make, issue or release any
public announcement, statement or acknowledgment of the existence of, or reveal
the status
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of, this Agreement or the transactions provided for herein, without first
obtaining the consent of the other party hereto. Nothing contained in this
Section 18.11 shall prevent any party from making such public announcements as
such party may consider necessary in order to satisfy such party's legal
obligations, provided that such disclosing party shall to the extent practicable
give prior notice to the other party of the contents of, and requirement for,
such disclosure.
18.12. DISCLOSURE IN SCHEDULES. For purposes of this Agreement, with
respect to any matter that is clearly disclosed in any portion of the Disclosure
Schedule in such a way as to make its relevance to the information called for by
another Section of this Agreement readily apparent, such matter shall be deemed
to have been included in the Disclosure Schedule in response to such other
Section, notwithstanding the omission of any appropriate cross-reference
thereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
an instrument under seal as of the day and year first above written.
RAYTHEON TI SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Controller
TRIQUINT SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. X. Xxxx
-----------------------------------
Name: Xxxxxx X. X. Xxxx
Title: Executive Vice President
EXHIBIT A TO ASSET
PURCHASE AGREEMENT
INTELLECTUAL PROPERTY ASSIGNMENT,
LICENSE AND SUBLICENSE AGREEMENT
THIS INTELLECTUAL PROPERTY ASSIGNMENT, LICENSE AND SUBLICENSE AGREEMENT
(this "AGREEMENT"), dated as of this 13 day of January 1998, is made by and
between Raytheon TI Systems, Inc., a Delaware corporation having a place of
business at 00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx 00000, (hereinafter
"SELLER") and TriQuint Semiconductor Texas, Inc., a Delaware corporation having
a place of business at 0000 X.X. Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxx 00000
(hereinafter "BUYER").
WHEREAS, Seller is subject to a Final Judgment filed in the US District
Court for the District of Columbia on July 2, 1997 in connection with the matter
of UNITED STATES OF AMERICA V. RAYTHEON COMPANY, ET AL., Civil Action No. 97515
(the "FINAL JUDGMENT") related to the sale of the MMIC Business (as hereinafter
defined) currently owned and operated by Seller in accordance with a Hold
Separate and Partition Plan entered in the same case on July 2, 1997;
WHEREAS, pursuant to and in accordance with the Final Judgment, Seller and
TriQuint Semiconductor, Inc., a Delaware corporation and sole shareholder of the
Buyer ("TRIQUINT") have entered into an Asset Purchase Agreement dated as of
January 13, 1998 (the "ASSET PURCHASE AGREEMENT") which provides for the sale
of Seller's MMIC Business and TriQuint has assigned certain rights under the
Asset Purchase Agreement to the Buyer;
WHEREAS, Seller owns various intellectual property rights used in Seller's
MMIC Business which are to be assigned or licensed to Buyer pursuant to the
Asset Purchase Agreement;
WHEREAS, Seller and Texas Instruments Incorporated, a Delaware corporation
("TI"), are parties to an Intellectual Property Assignment and License Agreement
dated as of July 11, 1997, as amended (the "TI IP AGREEMENT"), pursuant to
which, among other things, TI conveyed to Seller certain intellectual property
applicable to Seller's MMIC Business, and granted to Seller certain nonexclusive
licenses under certain other TI intellectual property applicable to Seller's
MMIC Business;
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WHEREAS, certain of the TI intellectual property licensed to Seller under
the TI IP Agreement which has application to the MMIC Business is to be
sublicensed to Buyer pursuant to the Asset Purchase Agreement;
WHEREAS, Seller desires to be granted and Buyer is willing to grant to
Seller certain nonexclusive licenses under the intellectual property rights
being assigned to Buyer pursuant to this Agreement; and
WHEREAS, Buyer and Seller wish to provide for the above referenced
assignments, sublicenses and licenses under the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS OF TERMS USED IN THIS AGREEMENT
As used herein the following terms not otherwise defined have the following
respective meanings:
1.1. "AFFILIATE OF SELLER" means, with respect to Seller, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, Seller. As used in
this definition the term "CONTROL" (including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
1.2. "CLOSING DATE" means the time of the Closing as defined in the
Asset Purchase Agreement.
1.3. "GAAS" means Gallium Arsenide.
1.4. "KNOW-HOW" means manufacturing know-how, processes, designs
(including, without limitation, design databases, design tools in any form
(including software) and circuit files), technical information and data,
operating procedures, trade secrets and similar information which is treated as
confidential and proprietary or is otherwise accorded trade secret status under
relevant law.
1.5. "MMIC" means Monolithic Microwave Integrated Circuit.
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1.6. "MMIC BUSINESS" shall have the meaning set forth in the Asset
Purchase Agreement.
1.7. "MMIC BUSINESS COPYRIGHTS" means those copyrights owned by Seller
and used or held for use primarily in the MMIC Business.
1.8. "MMIC BUSINESS INVENTION DISCLOSURES" means those written invention
disclosures owned by Seller which are used or held for use primarily in Seller's
MMIC Business, including those which are listed in ATTACHMENT 1 hereto.
1.9. "MMIC BUSINESS KNOW-HOW" means that Know-How of Seller used or held
for use primarily in Seller's MMIC Business.
1.10. "MMIC BUSINESS MASK WORKS" means those mask works owned by Seller
which are used or held for use primarily in Seller's MMIC Business, including
those which are listed on ATTACHMENT 2 hereto.
1.11. "MMIC BUSINESS PATENTS" means those patents and patent applications
owned by Seller which are used or held for use primarily in Seller's MMIC
Business and any patents based on or issued from such patents or patent
applications, including those which are listed on ATTACHMENT 3 hereto.
1.12. "MMIC BUSINESS INTELLECTUAL PROPERTY" means the MMIC Business
Copyrights, MMIC Business Invention Disclosures, MMIC Business Know-How, MMIC
Business Mask Works and MMIC Business Patents.
1.13. "PERSON" means any corporation, association, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
1.14. "RELATED PARTIES" means, with respect to the Buyer or the Seller, a
joint venture or similar business arrangement in which the Buyer or the Seller
is an ongoing participant and any of the other parties to such joint arrangement
in their capacities as such.
1.15. "SELLER COPYRIGHTS" means all copyrights (excluding MMIC Business
Copyrights) which are owned by Seller on the Closing Date and which are used in
or related to the conduct of the MMIC Business as of the Closing Date or at any
time prior thereto.
1.16. "SELLER KNOW-HOW" means all Know-How (excluding MMIC Business
Know-How) owned by Seller on the Closing Date, which is used in or related to
the conduct of the MMIC Business as of the Closing Date or at any time prior
thereto and which is incorporated or disclosed in the assets conveyed to Buyer
pursuant to the Asset Purchase Agreement.
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1.17. "SELLER PATENTS" means all patents and patent applications either
owned by Seller on the Closing Date or derived from invention disclosures owned
by Seller on the Closing Date (excluding MMIC Business Patents and MMIC Business
Invention Disclosures) and which have application to or are related to the MMIC
Business as conducted by Seller as of the Closing Date or at any time prior
thereto.
1.18. "SELLER INTELLECTUAL PROPERTY" means Seller Copyrights, Seller
Know-How and Seller Patents.
1.19. "SUPPLY AGREEMENT" means the Supply Agreement, dated as of the date
hereof, between the Seller and the Buyer, as in effect from time to time.
1.20. "TI LICENSED COPYRIGHTS" means all copyrights which are licensed to
Seller by TI under the TI IP Agreement and which are used in the conduct of the
MMIC Business as of the Closing Date or at any time prior thereto.
1.21. "TI LICENSED KNOW-HOW" means all Know-How which is licensed to
Seller by TI under the TI IP Agreement, which is used in the conduct of the MMIC
Business as of the Closing Date or at any time prior thereto and which is
incorporated or disclosed in the assets conveyed to Buyer pursuant to the Asset
Purchase Agreement.
1.22. "TI LICENSED MASK WORKS" means all mask works which are licensed to
Seller by TI under the TI IP Agreement and which are used in the conduct of the
MMIC Business as of the Closing Date or at any time prior thereto.
1.23. "TI LICENSED PATENTS" means all patents and patent applications
(including those derived from any invention disclosures licensed to Seller by TI
under the TI IP Agreement) which are licensed to Seller by TI under the TI IP
Agreement and which have application to the MMIC Business as conducted by Seller
as of the Closing Date or at any time prior thereto.
1.24. "TI LICENSED INTELLECTUAL PROPERTY" means TI Licensed Copyrights,
TI Licensed Know-How, TI Licensed Mask Works and TI Licensed Patents.
Capitalized terms used but not defined herein have the meanings given them
in the Asset Purchase Agreement.
ARTICLE 2
ASSIGNMENT BY SELLER
2.1. GENERAL. Subject to Sections 2.4, 3.2 and 4.2 below, Seller hereby
assigns and transfers to Buyer, effective on the Closing Date, all right, title
and interest of Seller in, to and under the MMIC Business Intellectual Property
and all
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rights to xxx or recover for the past or future infringement or misappropriation
of the MMIC Business Intellectual Property so assigned.
2.2. COSTS. Seller shall be responsible for all costs and expenses
associated with the preparation and recordation of any assignment documents and
for all costs and expenses associated with the performance of its obligations
under this Article 2.
2.3. DOCUMENTATION. At and after the Closing Date, Seller will execute
and deliver any deeds, bills of sale, assignments or assurances and take and do
any other actions and things reasonably necessary to vest in Buyer, and/or to
perfect or confirm Buyer's rights in, any and all of Seller's right, title and
interest in, to and under any of the MMIC Business Intellectual Property
acquired or to be acquired by Buyer as a result of, or in connection with, this
Agreement and the transactions contemplated hereby.
2.4. PRE-EXISTING RIGHTS. Buyer acknowledges that the MMIC Business
Intellectual Property to be assigned pursuant to this Agreement may be
subject to certain pre-existing rights or licenses which may have previously
been granted to, or acquired by, the United States Government or other third
parties. Any such pre-existing rights and licenses which Seller believes are
material to the conduct of the MMIC Business as conducted by Seller as of the
Closing Date are listed in ATTACHMENT 4 attached hereto. In particular and
without limiting the general applicability of the foregoing, the MMIC
Business Intellectual Property is subject to the licenses granted to TI with
respect to assets conveyed to Seller by TI pursuant to the TI IP Agreement.
2.5. TRADEMARKS. There are no trademarks being assigned, licensed or
sublicensed pursuant to this Agreement. The assignment pursuant to this Article
2 does not include any right to use any "Texas Instruments", "TI", "Raytheon TI
Systems", "RTIS" or similar trademarks or trade names incorporated into any mask
works included in the MMIC Business Intellectual Property. Buyer may continue
to use original mask works having such trademarks or trade names incorporated
therein for a transitional period extending from the Closing Date until the
earlier of either two years from the Closing Date or such time as a new
iteration of such mask work is generated. Buyer shall indemnify and hold Seller
and TI harmless from any liability arising out of any such permitted uses of
such trademarks and trade names.
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ARTICLE 3
LICENSES AND SUBLICENSES
3.1. LICENSES AND SUBLICENSES BY SELLER TO BUYER.
(a) SELLER INTELLECTUAL PROPERTY. Seller grants to Buyer an exclusive,
subject to the rights retained by the Seller under this Agreement, perpetual,
non-terminable, irrevocable, transferable, worldwide, royalty free, fully
paid-up license, including rights to sublicense, under the Seller Intellectual
Property for use in the operation of the MMIC Business and to make, have made,
use, sell, offer for sale, export and import MMIC chips, including the right to
reproduce, create derivative works from and distribute material covered by
Seller's Copyrights as necessary in conjunction with the exercise of the license
granted above in this Section 3.1(a) and including the right to perform services
related to such products. Nothing in this Section 3.1 shall be construed as
restricting the ability of the Buyer to use its MMIC chips in any product. The
rights and licenses granted under this Section 3.1(a) are limited to the field
of use described above, and shall, subject to the rights retained by or granted
to Seller pursuant to Section 3.1(f) and/or Section 3.2 below, be exclusive as
to such field of use.
(b) TI LICENSED INTELLECTUAL PROPERTY. Seller grants to Buyer an
exclusive, subject to the rights retained by the Seller under this Agreement and
any rights retained by TI, worldwide, royalty free, fully paid-up,
non-transferable (except as provided in Section 3.1(d) and 3.1(e) below)
sublicense under the TI Licensed Intellectual Property for use in the operation
of the MMIC Business and to make, have made (subject to Section 3.1(c) below)
use, sell, offer for sale, export and import MMIC chips, including the right to
reproduce, create derivative works from and distribute material covered by TI
Licensed Copyrights as necessary in connection with the exercise of the
sublicense granted above in this Section 3.1(b) and including the right to
perform services related to such products. Nothing in this Section 3.1 shall be
construed as restricting the ability of the Buyer to use its MMIC chips in any
products.
(c) EXCLUSIONS. The sublicenses granted by Seller under Section 3.1(b)
above do not include any right to (i) have products made or services performed
by others without the prior written consent of TI, which consent shall not be
unreasonably withheld; (ii) act as a sales agent, commission agent, broker or
factor of products made by third parties; (iii) act as distributor or a reseller
of products made by third parties; or (iv) use any "Texas Instruments", "TI",
"Raytheon TI Systems", "RTIS" or similar trademarks or trade names incorporated
into any mask works included in the TI Licensed Intellectual Property, except to
the extent provided for in Section 2.5.
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(d) SUBLICENSING. The sublicenses granted to Buyer under
Section 3.1(b) above do not include the right to grant sublicenses to others
except that (i) Buyer may sublicense to its subsidiaries in which it owns more
than fifty percent (50%) of the voting rights provided that any such subsidiary
agrees in writing to be bound by all applicable provisions of this Agreement in
the same way and to the extent as Buyer is bound and provided that any such
sublicense shall terminate if Buyer ceases to own more than fifty percent (50%)
of the sublicensed subsidiary and (ii) subject to the prior written consent of
each of the Seller and TI with respect to the sublicense under Section 3.1(b),
the Buyer may sublicense to a Related Party. The Seller agrees that in the
event TI consents to any proposed transfer under clause (ii), the Seller will
also consent.
(e) TRANSFERABILITY. The licenses granted to the Buyer under
Section 3.1(a) are transferable by the Buyer. The sublicenses granted to Buyer
under Section 3.1(b) above are not transferable by Buyer except (i) in any
merger in which Buyer is the surviving corporation and the shareholders of Buyer
immediately prior to the merger own more than fifty percent (50%) of the voting
rights of the surviving corporation immediately after the merger and (ii) that
the Buyer shall have the right to pass on such sublicenses to a successor in
interest to all or substantially all of the assets of the MMIC Business.
(f) CERTAIN RESTRICTIONS ON USE BY SELLER AND EXCLUSIONS TO BUYER'S
EXCLUSIVITY. Except as otherwise provided below in this Section 3.1(f) or in
Section 3.2, Seller agrees, to the extent permitted by law, not to use, or to
license or sublicense to any third party that is not an Affiliate of Seller, any
Seller Intellectual Property or TI Licensed Intellectual Property to make, have
made, use, sell, offer for sale, export or import MMIC chips or to perform
services related thereto, PROVIDED, HOWEVER:
(i) Seller retains, and shall continue to have, the right to use
the Seller Intellectual Property and the TI Licensed Intellectual Property
applicable to the subject matter described in Part I of ATTACHMENT 5 hereto
in connection with making, using, selling, offering for sale, exporting or
importing MMIC chips or to perform services related thereto provided that
Seller may use chips only for incorporation into Seller's products or
systems and may not sell or offer for sale MMIC chips on a stand-alone
basis;
(ii) Seller retains, and shall continue to have, the right to
use, and to license or sublicense to any Related Party, the Seller
Intellectual Property and the TI Licensed Intellectual Property applicable
to the subject matter described in Parts II, III and IV of ATTACHMENT 5
hereto in connection with making, having made, using, selling, offering for
sale, exporting or importing MMIC chips or to perform services related
thereto;
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(iii) Nothing in this Section 3.1(f) is intended to or shall
prevent Seller from (x) using, or licensing or sublicensing to any third
party, the Seller Intellectual Property or the TI Licensed Intellectual
Property to make, have made, use, sell, offer for sale, export or import
any products other than MMIC chips or to perform services not related to
MMIC chips or (y) fulfilling any continuing contractual obligations which
it may have to TI under the TI IP Agreement;
(iv) The restrictions contained in this Section 3.1(f) as they
apply with respect to any particular item of intellectual property shall
only apply for as long as such item of intellectual property is afforded
statutory protection, except that in the case of Know-How such restrictions
shall only apply until the first to occur of one of the following: (a) the
seventh anniversary of the Closing Date; or (b) that time when such
Know-How is no longer afforded trade secret status.
(v) The rights retained by Seller under this Section 3.1(f) may
be assigned or transferred by Seller to a successor in interest (whether by
sale, merger, consolidation or otherwise) to all or substantially all of
Seller's defense electronics business and/or to any successor in interest
(whether by sale, merger, consolidation or otherwise) to all or
substantially all of Raytheon Company's GaAs foundry business. In the
event of any transfer by the Seller of any of the Seller Intellectual
Property or any of the Seller's rights with respect to the TI Licensed
Intellectual Property, the transferee shall be bound by this Section 3.1(f)
but no such transferee shall be entitled to the exception provided by
paragraph (i) above; however, the exception provided by paragraph (i) above
shall extend to any transferee resulting from the merger and subsequent
restructuring between Raytheon Company and HE Holdings, Inc., which
occurred in December 1997, and any other transferee in connection with an
internal corporate reorganization. The rights retained by the Seller under
this Section 3.1(f) also run to the benefit of the Seller's Affiliates, but
only so long as they remain Affiliates of the Seller.
3.2. LICENSES AND RIGHTS GRANTED BY BUYER TO SELLER WITH RESPECT TO MMIC
BUSINESS INTELLECTUAL PROPERTY.
(a) GRANT (ATTACHMENT 5). Seller hereby reserves for itself and
Affiliates of Seller, and Buyer hereby grants to Seller and Affiliates of
Seller, a nonexclusive, irrevocable, worldwide, royalty free, fully paid-up,
nontransferable (except as provided in Section 3.2(d) below) license under any
MMIC Business Intellectual Property in existence as of the Closing Date and
described in ATTACHMENT 5 hereto, the scope of such license to be co-extensive
with the scope of the rights retained by the Seller with respect to Seller
Intellectual Property and TI Licensed Intellectual Property set forth in
Section 3.1(f). In connection with and for purposes of the above license and
the rights retained by Seller pursuant to Section 3.1(f), Seller may retain a
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copy of all technical documentation relating to the subject matter described on
ATTACHMENT 5 (including formulae and production and process control
documentation, but excluding production mask sets and product specific Know-How)
provided to Buyer pursuant to the Asset Purchase Agreement and, for a period of
six (6) months after the date hereof, Buyer agrees to make available to Seller,
at Seller's expense (at reasonable rates), up to ten (10) man days of consulting
by Buyer employees familiar with the use and implementation of the relevant MMIC
Business Intellectual Property in order to assist Seller with regard to the use
thereof.
(b)(i) GRANT (TERMINATION). In the event of termination by Seller based
upon Buyer's breach of its obligations under the Supply Agreement with respect
to any one or more particular products and associated services (the "AFFECTED
PRODUCT(S)"), Seller hereby reserves for itself and Affiliates of Seller, and
Buyer shall grant to Seller and Affiliates of Seller, a non-exclusive,
irrevocable, worldwide, royalty-free, fully paid-up, nontransferable (except as
provided in Section 3.2(d)(i)) license under and for designs related to the
Affected Products, the associated MMIC Business Intellectual Property including
process technology, and the intellectual property identified in ATTACHMENT 6, to
the extent required for and for the sole purpose of making, having made, using,
selling, offering for sale, distributing, exporting and importing any Affected
Products under any then unfilled purchase orders issued pursuant to the Supply
Agreement, including the right to reproduce, create derivative works from and
distribute copyrighted material in connection with the exercise of the licenses
granted above.
Upon the fulfillment of the requirements of the purchase orders for such
Affected Products, and prior to either the expiration of the Supply Agreement by
non-renewal or termination thereof in its entirety for cause, Seller may at its
election continue to use the MMIC Business Intellectual Property in accordance
with Sections 3.2(b)(ii)(a) and (b) and subject to the royalty provisions
therein contained, for the purpose of making, having made, using, selling,
offering for sale, distributing, exporting and importing the Affected Products
or iterations thereof under programs pursuant to which the Affected Products
were being made and follow-on programs thereto. For the purposes of this
Section, the restrictions on use in Section 3.1(f) shall not apply to the use of
associated Seller Intellectual Property and the associated TI Intellectual
Property in conjunction with and to the same extent as the license granted
hereunder.
3.2(b)(ii)(a) GRANT (NON-RENEWAL). In the event the Supply Agreement has
not been renewed in whole or in part with respect to any one or more
particular products and associated services (the "NON-RENEWED PRODUCTS"),
Seller hereby reserves for itself and Affiliates of Seller, and Buyer shall
grant to Seller and Affiliates of Seller, a non-exclusive, irrevocable,
worldwide, royalty-free, fully paid-up, nontransferable (except as provided
in Section 3.2(d)), right under and for designs related to the Non-renewed
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Products, the associated MMIC Business Intellectual Property, excluding
process technology and associated MMIC Business Intellectual Property, and
the intellectual property identified in ATTACHMENT 6, to the extent
required for and for the sole purpose of making, having made, using,
selling, offering for sale, distributing, exporting and importing any
Non-renewed Products and performing or having performed services related
thereto, including the right to reproduce, create derivative works from and
distribute copyrighted material in connection with the exercise of the
rights granted above, for programs pursuant to which the Non-renewed
Products were made and follow-on and related programs thereto; and
3.2(b)(ii)(b) At Seller's election, Seller hereby reserves for itself and
Affiliates of Seller, and Buyer shall grant to Seller and Affiliates of
Seller, a non-exclusive, royalty-bearing, irrevocable, worldwide,
nontransferable (except as provided in Section 3.2(d)), license under MMIC
Business process technology related to the Non-renewed Products and the
associated MMIC Business Intellectual Property, to the extent required for
and for the sole purpose of making, having made, using, selling, offering
for sale, distributing, exporting and importing any Non-renewed Products
and performing or having performed services related thereto, including the
right to reproduce, create derivative works from and distribute copyrighted
material in connection with the exercise of the licenses granted above, for
programs pursuant to which the Non-renewed Products were made and follow-on
and related programs thereto. The parties agree that Seller shall pay
Buyer a royalty of ______* of the annual Net Sales (as hereinafter defined)
of any MMIC chips manufactured using MMIC Business process technology under
the license granted above, said royalties to be paid semiannually not later
than February 1 and August 1 of each calendar year. For purposes of
calculating the royalty under this Section, "NET SALES" shall mean gross
sales as invoiced less (i) transportation and insurance on shipments to
customers; (ii) trade, quantity, cash or other discounts actually allowed
and taken; (iii) credits or allowances made or given on account of rejects
or returns; (iv) retroactive price adjustments for amounts not collected;
(v) taxes, duties or other governmental charges levied on Seller
transportation, delivery or use; (vi) commissions paid or payable to
dealers or representatives; and (vii) the royalty payable by Seller to
Buyer. In addition, with respect to any sales not made on an arms-length
basis to a third party the sales price for purposes of calculating Net
Sales will be based on (i) what an arms-length price would be if such
pricing is readily ascertainable and (ii) if not readily ascertainable, at
the price that would have been paid under the Supply Agreement if the
Supply Agreement were still in effect.
The Buyer shall be entitled to conduct reasonable audits of the Seller's
books and records to confirm compliance with this paragraph (b), but any
such audit must be conducted by a third party reasonably acceptable to the
Seller, and
------------------------
* Confidential treatment requested for omitted portion. A copy of the
omitted provisions has been filed with the Securities and Exchange
Commission.
-11-
conducted on at least five (5) business days' prior notice of its desire to
inspect, during normal business hours, in a manner that will not
unreasonably disrupt the Seller's operations. For the purposes of
Sections 3.2(b)(ii)(a) and (b), the restrictions on use in Section 3.1(f),
other than with respect to Section 3.1(f)(i), shall not apply to the use of
associated Seller Intellectual Property and the associated TI Intellectual
Property in conjunction with and to the same extent as the license and
rights granted under Section 3.2(b)(ii)(a) or this Section 3.2(b)(ii)(b).
(c) GRANT (DESIGN RIGHTS). Notwithstanding any other provisions to the
contrary in this Agreement, and subject to the provisions of the Supply
Agreement between the parties hereto of even date, Seller hereby reserves for
itself and Affiliates of Seller, and Buyer hereby grants to Seller and
Affiliates of Seller, a nonexclusive, irrevocable, worldwide, royalty free,
fully paid-up, nontransferable (except as specified in Section 3.2(d)) license
to use the MMIC Business Intellectual Property identified in ATTACHMENT 6, for
the purpose of performing or having performed design work and services for any
MMIC-related products for use in modules, RF subassemblies and RF subsystems of
the Seller, its Affiliates and Related Parties, including the right to
reproduce, create derivative works from and distribute copyrighted material.
Nothing in this Section 3.2(c) (other than the restrictions relating to
Section 3.1(f) applicable to Seller Intellectual Property and TI Licensed
Property as provided below and other than the restrictions set forth in
Section 3.1(f)(i)) shall be construed to limit Seller's ability or right to have
new designs manufactured by Seller, Seller's Affiliates or any third party. To
the extent there is any Seller Intellectual Property or TI Licensed Property
within the scope of ATTACHMENT 6, the restriction on use in Section 3.1(f) with
respect to the use of Seller Intellectual Property and TI Licensed Intellectual
Property in combination with and to the same extent as the license granted in
this Section 3.2(c) shall not apply. However, to the extent that any MMIC
Business Intellectual Property, Seller Intellectual Property and TI Licensed
Intellectual Property comes within the scope of ATTACHMENT 6 and also is
applicable to the subject matter of Part I of ATTACHMENT 5, this Intellectual
Property will be subject to the provisions of Section 3.1(f)(i) and
Section 3.2(a). The restrictions on use set forth above in this Section 3.2(c)
as they apply to any particular item of intellectual property shall apply only
for so long as such item of intellectual property is either afforded statutory
protection or, in the case of Know-How, is subject to continuing trade secret
status.
(d) SUBLICENSING AND TRANSFERABILITY. The licenses and rights granted
in Sections 3.2(a), (b) and (c) above are not transferable except (i) to any
successor in interest (whether by sale, merger, consolidation or otherwise) to
all or substantially all of Seller's defense electronics business and/or to any
successor in interest (whether by sale, merger, consolidation or otherwise) to
all or substantially all of Raytheon Company's GaAs foundry business, provided
that any successor in interest agrees in writing to be bound by all applicable
provisions of this Agreement in the
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same way and to the same extent the Seller is bound and (ii) Seller may
sublicense to a Related Party, except that the Seller may not sublicense to a
Related Party with respect to its rights under Section 3.2(a) with respect to
Part I of ATTACHMENT 5 or under Section 3.2(b)(i) or under
Section 3.2(b)(ii)(b).
(e) In connection with and for the sole purposes of the above licenses
and the rights retained by and granted to Seller pursuant to Sections 3.2(b) and
(c), upon the occurrence of the event giving rise to the grant of said
license(s), Seller may obtain and Buyer shall promptly deliver, at Seller's
expense, a copy of documentation sufficient to enable the practice of said
license(s) and right(s). For a period of six months from the event giving rise
to the grant of such license(s) and right(s), Buyer agrees to make available to
Seller, at Seller's expense (at reasonable rates), up to thirty (30) man-days of
consulting services under this Agreement by Buyer's employees familiar with the
use and implementation of the subject matter of said license(s) and right(s) in
order to assist Seller with regard to the use thereof.
(f) Except for the five (5) year limitation applicable to the rights
granted in Section 3.2(c), the restrictions on use and the obligations to pay
royalties otherwise contained in this Section 3.2 shall only apply until the
seventh anniversary of the effective date of this Agreement.
3.3. L-BAND INTRINSIC MODELS. Notwithstanding anything to the contrary
in this Agreement, no provision of this Agreement shall be construed so as to
grant Seller any license or other rights with respect to, and this Agreement
shall specifically prohibit Seller from retaining any rights with respect to,
any existing L-band intrinsic MMIC models included within the MMIC Business
Intellectual Property, the TI Intellectual Property and the Seller Intellectual
Property.
ARTICLE 4
CONFIDENTIALITY
4.1. GENERAL. The parties hereby incorporate by reference the
Non-Disclosure Agreement (as defined in the Asset Purchase Agreement) entered
into among them and TriQuint on the date hereof and agree that confidential
information of either party used in connection with this Agreement shall be
subject to the terms thereof.
4.2. CLASSIFIED INFORMATION. Buyer acknowledges that Know-How and other
intellectual property to be disclosed to Buyer pursuant to this Agreement and/or
the Asset Purchase Agreement may be considered as Classified Information by the
United States Government and nothing in this Agreement or in the Asset Purchase
Agreement shall require Seller to disclose Classified Information to Buyer until
such time as Buyer has received necessary clearances from the United States
Government to receive same.
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ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1. PATENT COOPERATION. Seller agrees to make its employees reasonably
available to Buyer, at Buyer's expense, to reasonably assist and otherwise
reasonably cooperate in the prosecution of all pending patent applications
included within the MMIC Business Patents and in the preparation and prosecution
of patent applications based on the MMIC Business Invention Disclosures and to
execute any and all oaths, declarations, assignments, affidavits and any other
papers in connection therewith necessary to perfect Buyer's rights therein.
Such assistance and cooperation includes, but is not limited to, communicating
to Buyer, or to its successors, assigns, and legal representatives, any facts
known to the employee respecting the invention and testifying in any legal
proceedings, signing all lawful papers, executing divisionals, continuations,
reissues and substitute applications and making all lawful oaths.
5.2. GOVERNING LAW. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT AND (UNLESS OTHERWISE EXPRESSLY PROVIDED HEREIN) ALL AMENDMENTS HEREOF
AND WAIVERS AND CONSENTS HEREUNDER SHALL, TO THE EXTENT THE PARTICULAR SUBJECT
MATTER IS CONTROLLED BY STATE LAW, BE GOVERNED BY AND BE CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF, EXCEPT THAT THE UNITED STATES FEDERAL LAW
SHALL GOVERN ANY PARTICULAR SUBJECT MATTER CONTROLLED THEREBY.
5.3. AMENDMENT OF AGREEMENT. No oral explanation or oral information by
either party hereto or its representatives shall alter the meaning or
interpretation of this Agreement. Except as expressly incorporated herein by
reference and except for applicable provisions of the Asset Purchase Agreement,
all prior proposals and/or understandings, either oral or written, with regard
to the subject matter of this Agreement are hereby canceled and this Agreement
constitutes the entire agreement between the parties with regard to the subject
matter hereof. No modification, alteration, addition or change in the terms
hereof shall be binding on either party other than as set forth on or subsequent
to the date hereof in a written document signed by a duly authorized
representative of the party to be bound thereby.
5.4. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given as follows:
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(i) If to Buyer:
TriQuint Semiconductor Texas, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: President and CEO
Telecopy:
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(ii) If to Seller:
Raytheon TI Systems, Inc.
0000 X. Xxxxxxx 000
XX- 000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Xx.
Chief Patent Counsel
Telecopy: (000) 000-0000
or such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other party. Each such notice, request
or other communication shall be effective if given by (a) by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) any other means, when
delivered at the address specified in this Section.
5.5. NO WAIVER. Failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right to insist later on adherence thereto, or
thereafter to insist upon
-15-
strict adherence to that term or any other term of this Agreement. Any waiver
must be in writing in order to be effective.
5.6. TRANSFERS AND ASSIGNMENTS. This Agreement shall inure to the
benefit of, and be binding upon, Seller and Buyer and, except to the extent
provided in Sections 3.1 and 3.2, may not be assigned, licensed or sublicensed
in whole or in part by either party, without the prior written consent of the
other party, or, as applicable, TI, and any such attempted transfer without such
consent(s) shall be null and void. Any valid transfer shall inure to the
benefit of, and be binding upon, the respective successor, assign, transferee or
sublicensee. Any such valid transfer by either party shall not relieve that
party of its continuing obligations under Article 4 above.
5.7. NO THIRD-PARTY BENEFICIARIES. Nothing herein is intended to, or
shall be construed to, confer upon any Person not a party hereto any rights or
benefits hereunder.
5.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
5.9. SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any party hereto or set of circumstances shall, in any
jurisdiction and to any extent, be finally held to be invalid or unenforceable,
such term or provision shall only be ineffective as to such jurisdiction, and
only to the extent of such invalidity or unenforceability, without invalidating
or rendering unenforceable any other terms or provisions of this Agreement or
under any other circumstances or in any other jurisdiction, and the parties
shall negotiate in good faith a substitute provision which comes as close as
possible to providing the rights and obligations intended to be provided by the
invalidated or unenforceable term or provision, and puts the parties in a
position as nearly comparable as possible to the position they would have been
in but for the finding of invalidity or unenforceability, while remaining valid
and enforceable. In the event of any conflict between the provisions of this
Agreement and the provisions of the Asset Purchase Agreement or the Supply
Agreement, the provisions of this Agreement shall be controlling; PROVIDED, that
nothing contained in this Agreement is intended to limit the rights of Buyer and
Seller pursuant to Article 4 of the Supply Agreement or Buyer's rights under any
of the Seller's representations and warranties in the Asset Purchase Agreement.
5.10. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. The effective
date of this Agreement is the Closing Date.
-16-
5.11. CONSENTS. Where agreement, approval, acceptance or consent of
either party is required by any provision of the Agreement, such action will not
be unreasonably delayed or withheld.
5.12. NO FURTHER REQUIREMENTS. Seller shall not be required by anything
contained in this Agreement to file in any country any application, mask work
registration, copyright or patent, or to secure any mask work registration,
copyright or patent, or once have obtained a mask work registration, copyright
or patent, to maintain the mask work registration, copyright or patent in force.
5.13. ASSUMPTION OF RISK. Except to the extent otherwise expressly
provided to the contrary in the Asset Purchase Agreement or this Agreement, each
party assumes all risk and liability arising from its use or reliance on
intellectual property rights assigned, licensed or sublicensed to it by the
other party pursuant to this Agreement.
5.14. DISCLAIMER OF WARRANTIES. (a) The Seller is making representations
and warranties in the Asset Purchase Agreement with respect to intellectual
property and with respect to this Agreement. Except as referred to in the
preceding sentence, neither party makes any representation, warranty or
indemnification to the other party pursuant to this Agreement. All
representations, warranties and indemnifications, if any, made by any party to
the other party regarding the subject matter of this Agreement shall be solely
as set forth in the Asset Purchase Agreement and without limiting the general
applicability of the foregoing, nothing in this Agreement shall be construed as:
(i) a warranty or representation by Seller or Buyer as to the validity
or scope of any intellectual property rights; or
(ii) a warranty or representation by Seller or Buyer that any
manufacture, sale, lease, import, use or other disposition of products or
services after the Closing Date made pursuant to the intellectual property
rights assigned, licensed or sublicensed hereunder will be free from
infringement of intellectual property rights of third parties; or
(iii) a requirement of Seller or Buyer to bring or prosecute actions or
suits against third parties for infringement or misappropriation of any
intellectual property rights assigned or licensed hereunder.
(b) THE BUYER AND THE SELLER ACKNOWLEDGE AND AGREE THAT THE PROVISIONS
OF ARTICLE 13 OF THE ASSET PURCHASE AGREEMENT PROVIDE THE BUYER'S SOLE REMEDY
WITH RESPECT TO ANY CLAIM RELATING TO INFRINGEMENT, THE SELLER'S ABILITY TO
CONVEY THE MMIC BUSINESS INTELLECTUAL PROPERTY OR TO GRANT LICENSE AND
SUBLICENSE RIGHTS WITH RESPECT TO THE SELLER
-17-
INTELLECTUAL PROPERTY OR TI LICENSED INTELLECTUAL PROPERTY OR THE VALIDITY OF
ANY OF THE MMIC BUSINESS INTELLECTUAL PROPERTY, SELLER INTELLECTUAL PROPERTY OR
TI LICENSED INTELLECTUAL PROPERTY. IN ADDITION, SELLER MAKES NO IMPLIED
REPRESENTATIONS OR WARRANTIES, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
5.15. COMPLIANCE WITH FINAL JUDGMENT. Buyer acknowledges that it has
previously been provided with a copy of the Final Judgment and, in accordance
with Section III.B of the Final Judgment, Buyer agrees to be bound by the
applicable provisions of the Final Judgment.
5.16. INADVERTENT OMISSION. Any MMIC Business Invention Disclosures,
MMIC Business Patents or MMIC Business Mask Works which are inadvertently
omitted by Seller from the attachments to this Agreement shall be deemed
included, and the rights and licenses granted hereunder shall apply thereto.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized representatives.
RAYTHEON TI SYSTEMS, INC. TRIQUINT SEMICONDUCTOR
TEXAS, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. X. Xxxx
--------------------------- ---------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. X. Xxxx
Title: Vice President, Controller Title: Executive Vice President
EXHIBIT B TO ASSET
PURCHASE AGREEMENT
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "AGREEMENT"), dated as of this 13 day of
January, 1998 (the "CLOSING DATE"), is made by and between Raytheon TI Systems,
Inc., a Delaware corporation having a place of business at 00000 X. Xxxxxxx
Xxxxxxxxxx, Xxxxxx, Xxxxx 00000 (hereinafter "RTIS"), and TriQuint Semiconductor
Texas, Inc., a Delaware corporation having a place of business at 0000 X.X.
Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxx 00000 (hereinafter "SUPPLIER").
WHEREAS, RTIS and TriQuint Semiconductor, Inc., a Delaware corporation and
sole shareholder of Supplier ("TRIQUINT"), are parties to an Asset Purchase
Agreement dated as of January 8, 1998 (the "ASSET PURCHASE AGREEMENT"),
pursuant to which RTIS has sold to Supplier (as assignee of TriQuint), and
Supplier (as assignee of TriQuint) has purchased from RTIS, substantially all
the assets relating to the MMIC Business (as such term is defined in the Asset
Purchase Agreement);
WHEREAS, the MMIC Business has historically provided microwave monolithic
integrated circuits ("MMICs") and MMIC design services to RTIS; and
WHEREAS, Supplier and RTIS desire to continue to have the MMIC Business as
operated by Supplier provide such products and services to RTIS pursuant to a
strategic supplier relationship under the terms and conditions of this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the parties hereby agree as follows:
ARTICLE 1
PRODUCT PURCHASES
1.1. GENERAL. Supplier agrees to provide, and RTIS agrees to purchase,
MMIC products, including where applicable related design services (collectively,
the "PRODUCTS"), on the terms set forth herein.
1.2. PRICES. (a) The prices for Products shall be determined as set
forth in this Section 1.2 and in Section 2.3, APPENDIX A, APPENDIX B and
APPENDIX C hereto. For a period of at least one year after the Closing Date,
Supplier agrees to continue to
-2-
use the historical wafer charging systems and cost estimating systems used by
the MMIC Business immediately prior to the Closing Date for all Product orders
for RTIS. These systems use the following three wafer processing charging
categories: (a) Development wafer account (used for the first lots of all new
designs); (b) Production wafer account (used for additional lots (beyond the
first lot) of new designs, for all repeat orders of existing designs (including
those that have minor changes, i.e., minor modifications of an existing design
where it is not considered a new design)); and (c) High Volume Production wafer
account (used for volume production orders for proven designs). In addition,
pre-existing and pending RTIS technology development contracts and independent
research and development ("IRAD") projects have separate charging systems.
(b) Notwithstanding the provisions of this Section 1.2, Section
2.3, APPENDIX A, APPENDIX B and APPENDIX C, other pricing methods may be used
for future products or purchase orders subject to the written agreement of both
parties.
(c) Pricing with respect to Teledesic will be negotiated on an
arm's-length, non-exclusive basis.
1.3. PURCHASE ORDERS. Products shall be ordered by purchase orders of
RTIS placed with Supplier, subject to acceptance by Supplier. Supplier shall
promptly respond to all requests for quotations and all purchase orders. If
Supplier does not accept a purchase order, it will enter into good faith
negotiations with RTIS to resolve any objections. Supplier shall accept all
purchase orders of RTIS within Supplier's capabilities. In the event purchase
orders are not accepted by Supplier, such purchase orders shall not be subject
to the provisions of Sections 1.5 and 2.3. In any case where the terms of this
Agreement and the terms of any purchase order are in conflict, the terms of the
purchase order shall take precedence. Requests for quotes and purchase orders
will follow the procedures specified in APPENDIX D attached hereto.
1.4. DELIVERY AND PAYMENT. All Product shall be delivered F.O.B. at
Supplier's Plant at Dallas, Texas, unless otherwise specified in the applicable
purchase order. Supplier will submit invoices to RTIS for each shipment of MMIC
wafers and die at the time of shipment. Payment terms for such shipments are
net thirty (30) days F.O.B. shipping point. Supplier will submit invoices to
RTIS for design and general labor services on a monthly basis. Payment terms
for such services are net thirty (30) days from the date of the invoice.
1.5. EXCLUSIVE RIGHT TO ORDERS. RTIS agrees that Supplier shall have
the exclusive right to RTIS orders for production procurement for all existing
Product designs (a)(i) for which the mask works were completed as of the Closing
Date or (ii) for which new mask works are required for any updated existing
designs (whether
-3-
due to conversion to 100mm, design modification or design iteration) and
(b) which meet the pricing criteria of Section 1.2 hereof, RTIS performance
criteria and reasonable schedule requirements. RTIS anticipates ordering
production quantities of the devices listed in APPENDIX E; the listed device ID
numbers are subject to change prior to the order date. RTIS is not obligated to
submit to Supplier requests for bids on other Product designs (including new
design starts), but may elect to do so in its sole discretion. The terms of
this Section 1.5 shall not survive in the event of any extension or renewal of
this Agreement beyond its initial two year term pursuant to Article 7, unless
otherwise agreed to by the parties at the time such extension or renewal is
agreed to.
1.6. ENHANCEMENTS AND ADVANCED DEVELOPMENTS. By mutual agreement, RTIS
may contract with Supplier for Product technology enhancements and/or advanced
Product technology developments required by RTIS. Subject to the provisions of
Section 4.4, ownership of technology developed under such contracts will be
determined on a case-by-case basis and documented in the related purchase order.
1.7. MOST ADVANCED TECHNOLOGY. Subject to any applicable licenses or
restrictions, in supplying Products and services to RTIS hereunder, Supplier
shall use its reasonable efforts to provide or use (as applicable) the most
advanced technology available to it.
1.8. CHANGES IN SUPPLY OR DEMAND. Supplier will endeavor to provide
RTIS with at least ninety (90) days advance notice of material changes in its
ability to supply Products hereunder. RTIS will endeavor to provide Supplier
with at least ninety (90) days advance notice of material changes in its
requirements for Products hereunder. Unless otherwise mutually agreed by
Supplier and RTIS, none of the foregoing notices shall be deemed to modify any
purchase orders which have been accepted by Supplier.
1.9. GOVERNMENT CONTRACT FLOWDOWN. To the extent RTIS is required to
flowdown these provisions to subcontractors, Supplier agrees to accept purchase
order provisions corresponding to all of RTIS's higher-tier subcontract or
prime-contract provisions. These purchase order provisions will be
appropriately tailored for subcontract use of Federal Acquisition Regulation
("FAR") clauses, Defense Federal Acquisition Regulation Supplement clauses,
other agency FAR supplement clauses and other clauses that appear in the prime
or higher-tier contract(s) or as are otherwise required by law and regulation.
1.10. WORK IN PROCESS. Supplier and RTIS agree to identify and document
all Supplier work in process existing on the Closing Date which is attributable
to an RTIS order. RTIS will use its reasonable efforts to issue purchase orders
for the identified work to be completed for all such work in process within
thirty (30) days
-4-
after the Closing Date, and in any event will issue all such purchase orders
within sixty (60) days after the Closing Date, PROVIDED, THAT Supplier shall
continue to process all such work in process without delays, whether or not a
purchase order has been prepared. RTIS purchase orders must be issued and
accepted before work in process is delivered. The price for such work in
process shall be determined in accordance with Section 1.2.
1.11. RTIS DEVELOPMENT CONTRACTS AND IRAD PROJECTS. For RTIS development
contracts and internal research and development ("IRAD") projects in existence
as of the Closing Date, including, without limitation, any outstanding proposals
for such contracts and projects that are at least 75% complete as of the Closing
Date (including, without limitation, the contracts and projects listed on
APPENDIX C hereto), (a) Supplier shall accept orders to complete existing work
in process or work in backlog; (b) Supplier shall accept orders for all new
research and development work where RTIS, with MMIC Business participation, has
previously delivered a proposal to a customer, or is in the process of
delivering a proposal to a customer that is at least 75% complete as of the
Closing Date, or where RTIS has a funded IRAD project in its 1998 plan as of the
Closing Date; (c) subject to Section 1.3 of this Agreement, Supplier shall
accept orders for all new research and development work that is a direct
follow-on (next phase) to the contracts and projects listed in APPENDIX C
hereto; and (d) RTIS and Supplier agree to negotiate participation or support
for any new development contracts or IRAD projects that are not follow-on
programs to those programs listed in APPENDIX C hereto on a case-by-case basis,
PROVIDED, that Supplier is not obligated to support any new development
contracts or IRAD projects other than those described in clauses (a), (b) and
(c) above. The fulfillment of all contracts having to do with the Supplier's
processing, characterization and analytical equipment (including epitaxial
equipment) in support of RTIS development and IRAD contracts is contingent upon
finding a solution agreeable to both parties concerning the operation and
maintenance of such equipment. In the event that Supplier chooses to sell the
equipment instead of moving it to the North Building as contemplated by the
Sublease Agreements, RTIS shall have a right of first refusal to purchase such
equipment on terms to be agreed.
ARTICLE 2
TECHNICAL RESOURCES AND SUPPORT
2.1. TECHNICAL RESOURCES. RTIS and Supplier each agree to assign
technical personnel, and make available other technical resources, to each
Product development project ordered by RTIS hereunder consistent with the task
responsibility specified in the related purchase order.
2.2. RELEASED PROCESSES AND DEVELOPMENT. Supplier shall support all
MMIC processes released as of the Closing Date (0.5um MESFET, 0.25 um pHEMT,
0.5um HFET, L-Band HBT and VPIN) at levels of engineering capabilities
sufficient
-5-
to meet RTIS' requirements under this Agreement until Supplier provides RTIS
with notice of discontinuance pursuant to Section 3.2 below.
2.3. DESIGN SERVICES. Under purchase orders issued under this
Agreement, Supplier shall provide RTIS with design support services provided by
MMIC design engineers and technicians, including, without limitation, mask
layout and generation. Supplier shall maintain a staff of trained and qualified
designers who have prior experience designing high performance military system
MMICs and are familiar with the design of the particular MMICs covered by the
development. RTIS and Supplier will use reasonable efforts to define suitable
staffing assignments for each purchase order line item. In the event Supplier
cannot provide appropriate staff, RTIS, upon notice to Supplier, shall have the
right to withdraw the design support request and assign its own personnel to the
design. Supplier's designers will only be used to design Products which are
intended for manufacture by Supplier except in situations where RTIS is
contractually required to provide a second source. Supplier's design personnel
will serve on RTIS design teams and will be expected to attend and support
program reviews, attend team meetings, conduct design reviews, participate in
peer design reviews, write progress reports, and account for all labor charged
to the development. Supplier shall comply with all labor charging practices and
procedures required of Department of Defense contractors. Supplier's design
personnel time shall be charged at a rate of ____* per hour in 1998 and
____* per hour in 1999. RTIS will provide periodic forecasts for Supplier's
design staff, updated at least quarterly, and will order design services
pursuant to a purchase order. RTIS intends to use Supplier design personnel for
a minimum of 60% of its new designs and design modifications (i.e., existing
designs requiring new mask works) in 1998 and a minimum of 30% in 1999;
provided, that the foregoing calculation does not include digital GaAs MMIC
designs (HI2L), as Supplier does not have capability for such designs.
2.4. OTHER SUPPORT. During the term of this Agreement, Supplier will
provide to RTIS the support functions and services specified on APPENDIX B
attached hereto on the terms and conditions specified for such function or
service thereon or in any separate supplemental agreement or work authorization
order agreed to by Supplier and RTIS after the Closing Date.
2.5. COOPERATION. RTIS and Supplier shall work together to improve
product development cycle time. RTIS will endeavor to involve Supplier at an
early stage in resolving problems arising under this Agreement and in
implementing joint programs. RTIS and Supplier will jointly participate in the
management of resolution of problems arising under this Agreement as
appropriate, including, without limitation, resolution of any technical problems
relating to manufacturability of Product designs.
------------------------
* Confidential treatment has been requested for the omitted provisions,
a copy of which has been filed with the Securities and Exchange
Commission.
-6-
ARTICLE 3
PROCESS CHANGES AND DISCONTINUANCE
3.1. PROCESS CHANGES. Supplier shall notify RTIS in advance of any GaAs
fabrication process changes which change the baseline process as defined in the
RTIS product assurance program document setting forth the specifications
applicable to the MMIC Business (the "PRODUCT ASSURANCE PROGRAM"). RTIS will
respond to such Supplier notifications within thirty (30) days regarding
supporting data and any qualification requirements prior to implementation of
the change in the manufacture of RTIS Products. In addition, Supplier shall
notify RTIS as soon as possible in advance, or if not possible in advance then
as soon as possible thereafter, in the case of any key GaAs fabrication process
changes which do not change the baseline process as defined in the Product
Assurance Program to which RTIS may respond at its option. Supplier will ensure
that all process revisions and changes can be traced to specific wafer lots of
Products in both cases.
3.2. PROCESS DISCONTINUANCE. Supplier may discontinue (i) any released
process used to manufacture a Product previously made or currently being made by
RTIS, or (ii) new technology for the RTIS programs referred to in Section 2.2 in
progress prior to the date hereof, with 180 days prior written notice to RTIS.
Upon receipt of such notice from Supplier, RTIS may request quotes and submit
purchase orders with delivery of Product scheduled to occur before the
expiration of such 180 day notice period; PROVIDED, HOWEVER, that RTIS may place
one final order within the last thirty days of the 180 day notice period and
Supplier will accept and schedule such order for delivery at Supplier's
discretion at the agreed-to price.
3.3. LICENSE OF PROCESS INFORMATION AFTER DISCONTINUANCE. RTIS has the
right to license process technology and associated MMIC Business Intellectual
Property relating to any manufacturing process discontinued by Supplier under
this Agreement as set forth in Section 3.2(b)(ii)(b) and Section 3.2(e) of the
Intellectual Property Assignment, License and Sublicense Agreement between RTIS
and the Supplier of even date herewith (the "INTELLECTUAL PROPERTY AGREEMENT").
ARTICLE 4
DESIGNS AND OTHER INTELLECTUAL PROPERTY
4.1. DESIGN GUIDELINES. RTIS will use its commercially reasonable
efforts to submit purchase orders hereunder only for Products which are
consistent with Supplier's design guidelines and MMIC technologies. Supplier
shall inform RTIS as soon as reasonably practical of any changes in Supplier's
design guidelines and supported technologies. Notwithstanding Section 1.3,
Supplier has no obligation to support designs which do not conform to its design
guidelines and MMIC technologies.
4.2. CHANGES IN DESIGNS. RTIS may change from time to time any of the
drawings, specifications or instructions for work covered by a purchase order,
and
-7-
Supplier shall comply with such change notices. If such changes result in a
decrease or increase in Supplier's cost that are directly attributable and
incurred as a result of such changes or in the time for performance, an
adjustment in the price and time for performance may be made by mutual written
agreement of the parties, provided, however, that Supplier notifies RTIS of the
request for such adjustments within thirty (30) days after receipt by it of the
change notice.
4.3. STATUTORY COMPLIANCE AND DESIGN RIGHTS. Rights to existing designs
shall be as set forth in the Intellectual Property Agreement. RTIS and Supplier
agree to comply with all applicable contractual, regulatory and legal
restrictions relating to existing and new Product designs, including, without
limitation, (a) customer restrictions, (b) Department of Defense security
requirements (including, without limitation, Special Access Required (SAR) and
Sensitive Compartmented Information (SCI) programs, (c) Department of Defense
Low/Counter Low Observable (LO/CLO) independent research and development program
guidelines issued by the office of the Undersecretary of Defense for
Acquisition, May 15, 1997, and subsequent revisions thereof, (d) provisions of
the Settlement Agreement dated February 23, 1995 between Westinghouse Electric
Corporation and Texas Instruments Incorporated relating to F-22 transmit/receive
module MMICs and (e) all applicable laws, regulations and guidelines regarding
export or re-export of products and/or technical data made available by one
party to the other pursuant to this Agreement.
4.4. RIGHTS TO NEW DESIGNS. Notwithstanding anything to the contrary in
Section 1.6 hereof, RTIS shall own all Product designs (including, without
limitation, the product specification, design database, circuit files, mask
works, wafer probe test programs, wafer probe test fixtures and all associated
data), exclusive of designs having existing mask works as of the Closing Date,
covered by RTIS purchase orders under this Agreement. Supplier shall have no
right to use any such Product designs (or make cosmetic changes to any such
Product designs) for offer or sale to third parties. RTIS agrees that Supplier
shall retain rights to Supplier's standard cells and Supplier's circuit elements
which may be used in any Product design, and that Supplier may use such cells
for its own benefit or for the benefit of third parties. In addition, RTIS
agrees that Supplier retains the right to re-use circuit elements of Product
designs created pursuant to Section 2.3 of this Agreement, but not to re-use any
standard cells or circuit elements furnished by RTIS.
4.5. RTIS PROPERTY. Supplier shall preserve all process and test data,
mask sets, special drawings, dies, patterns, tooling or other items supplied or
paid for by the RTIS Module Business (as defined in the Final Judgment referred
to in the Asset Purchase Agreement) in good condition; except to the extent
transferred pursuant to the Intellectual Property Agreement, such items are the
property of RTIS unless otherwise specified. Items owned or provided by RTIS
shall be returned in good condition after the work on the order has been
completed or terminated upon request
-8-
of RTIS or as otherwise stated in the applicable purchase order. No mask set,
special drawing, die, pattern, tool, standard cell, circuit element or other
item owned by RTIS or a third party that does not constitute MMIC Business
Intellectual Property, Seller Intellectual Property or TI Licensed Intellectual
Property (as such terms are defined in the Intellectual Property Agreement)
shall be used by Supplier for any purpose other than supplying RTIS, without
Supplier first obtaining the written consent of RTIS thereto.
ARTICLE 5
WARRANTY
5.1. WARRANTY. Products supplied by Supplier hereunder shall conform to
the product acceptance requirements for such Product included in the applicable
purchase order, statement of work or product specifications. This warranty
shall be effective for a period of one hundred and eighty (180) days from the
date of delivery of the Products to RTIS. All articles and material returned to
Supplier under warranty hereunder shall be at Supplier's expense. For warranty
purposes, Supplier will make process control data, inspection and test reports
covering the articles or goods and their parts available for review and subject
to examination by RTIS or its authorized representatives to verify conformance
to the applicable specifications and drawings.
5.2. INSPECTION. For warranty purposes, applicable inspection may be
performed at RTIS's option on a statistical sampling basis done in accordance
with industry standards or as otherwise set forth in a purchase order. The
entire lot may be rejected based on defects revealed by such sampling. At
RTIS's option, the rejected lot will be returned to Supplier for replacement or
repair of any defective units or wafers at Supplier's option. The initial
inspection performed at RTIS on receipt of material is a conditional acceptance,
and shall not waive the right of RTIS to return material to Supplier which
exhibits or develops defects due to latent causes during the warranty period.
EXCEPT AS SET FORTH IN SECTION 5.1, SUPPLIER DISCLAIMS ALL OTHER
WARRANTIES, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS AND SERVICES
DELIVERED TO RTIS HEREUNDER, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
IN NO EVENT SHALL SUPPLIER'S TOTAL AGGREGATE LIABILITY TO RTIS WITH RESPECT
TO ANY PURCHASE ORDER ARISING OUT OF OR RELATING TO THIS AGREEMENT EXCEED THE
AGGREGATE AMOUNTS PAID BY RTIS TO SUPPLIER UNDER SUCH PURCHASE ORDER.
-9-
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR LOST USE, PROFITS, REVENUE,
COST OF PROCUREMENT OR SUBSTITUTE GOODS, OR ANY OTHER SPECIAL, INDIRECT,
RELIANCE, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND UNDER ANY
THEORY OF LIABILITY, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR
OTHERWISE. THE FOREGOING LIMITATIONS SHALL APPLY REGARDLESS OF WHETHER THE
PARTY AGAINST WHOM LIABILITY IS ASSERTED HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
REMEDY.
ARTICLE 6
CONFIDENTIALITY AND PUBLICITY
6.1. CONFIDENTIALITY. The parties hereby incorporate by reference the
Non-Disclosure Agreement (as defined in the Asset Purchase Agreement) entered
into among them and TriQuint on the date hereof and any additional
non-disclosure or confidentiality agreements entered into between them in the
future relating to specific programs, and agree that confidential information of
either party used in connection with this Agreement shall be subject to the
terms thereof.
6.2. INSPECTION RIGHTS. RTIS, through its authorized financial and
legal advisors, shall have the right to inspect, on a confidential basis and on
reasonable notice, the books and records of Supplier to verify the accuracy of
Product Cost amounts and otherwise to confirm compliance by Supplier with the
terms of this Agreement.
ARTICLE 7
TERM AND TERMINATION
This Agreement shall commence as of the Closing Date, and shall continue to
be in effect for a period of two (2) years thereafter, and may be extended for
successive one (1) year terms by mutual written agreement of the parties entered
into at least 60 days prior to the end of the then-current term. This Agreement
may be terminated for cause by either party prior to the expiration thereof by
written notice to the other party. For purposes of this Article 7, "cause"
shall mean (a) a breach by the other party of any material covenant contained in
this Agreement, and such breach is not remedied within thirty (30) days after
written notice of such breach to the other party, or (b) (i) the filing of a
voluntary petition in bankruptcy of the other party, (ii) the passing of a
resolution for the bankruptcy, insolvency, winding up, liquidation of, or other
similar proceeding relating to the other party, (iii) the appointment of a
trustee, liquidator, custodian or similar person in a proceeding referred to in
clause (ii), which appointment has not been set aside or stayed within sixty
(60) days of such appointment, or (iv) the making by a court having jurisdiction
-10-
of an order winding up or otherwise confirming the bankruptcy or insolvency of
the other party, which order has not been set aside or stayed within sixty (60)
days. Expiration or termination of this Agreement shall not affect any purchase
orders issued under this Agreement prior to such expiration or termination.
Notwithstanding anything to the contrary contained herein, Sections 4.3-4.5,
5.1, 5.2, 6.1, 6.2, and 8.2 and Articles 9-11 of this Agreement shall survive
termination or expiration of this Agreement.
ARTICLE 8
COMMUNICATIONS
8.1. MANAGEMENT TEAM. The relationship between the parties under this
Agreement shall be monitored and reviewed by a management team of senior
managers representing each party who shall meet regularly and communicate
between meetings as necessary. The agenda for such meetings will address the
following and other appropriate items: (a) status of ongoing design and
production activities; (b) proposed MMIC process additions and/or
discontinuances; (c) RTIS new business opportunities; (d) Supplier capacity
availability changes and plans; (e) Supplier technology developments and plans;
and (f) issues and action items. For and on behalf of each party, the persons
designated in Section 8.2 below shall have respective liaison and general
administration of the Agreement for such party.
8.2. NOTICES. All statements, reports and notices relating to this
Agreement shall be in writing and shall be sent directly to the person and the
address listed below, or such other person and/or address as the party may
hereinafter specify for the purpose by notice to the other party hereto.
If to RTIS: Xxxxx X. Xxxxxxxx
Raytheon TI Systems, Inc.
00000 X. Xxxxxxx Xxxxxxxxxx, XX 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Supplier:Xxxxxx X. Xxxxx
TriQuint Semiconductor Texas, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
-11-
ARTICLE 9
GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF.
ARTICLE 10
ASSIGNS
This Agreement may not be assigned in whole or in part by either party
hereto without the prior written consent of the other party. Notwithstanding
the foregoing (but subject to the proviso in the immediately following
sentence), either party may assign this Agreement to any successor in interest
(whether by sale of substantially all of its assets, merger, consolidation or
otherwise) to all or substantially all of its business (including, without
limitation, RTIS's defense electronics business). This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns; PROVIDED, HOWEVER, that in the event of
any merger, consolidation or similar combination of RTIS with or into a
successor, the provisions of Section 1.5 hereof shall be binding on such
successor only with respect to that portion of its business representing the
historical business of RTIS, and shall not otherwise be binding on such
successor.
ARTICLE 11
GENERAL PROVISIONS
11.1. ENTIRE AGREEMENT. This Agreement, including Appendices, the Asset
Purchase Agreement, the Intellectual Property Agreement, the Master Services
Agreement, the Non-Disclosure Agreement and any purchase order which is issued
pursuant hereto constitute the entire understanding between the parties relating
to the subject matter hereof and supersede all previous communications,
representations, or agreements, either oral or written, with respect to the
subject matter hereof, and no representation or statements of any kind made by
any representative of Supplier or RTIS which are not stated in this Agreement or
any purchase order issued pursuant hereto, shall be binding on Supplier or RTIS.
11.2 INDEPENDENT CONTRACTORS. The parties hereto shall act in all
matters pertaining to this Agreement as independent contractors and nothing
contained herein and no action taken with respect to the provisions hereof shall
constitute one party to be the agent, partner or joint venturer of any other
party for any purpose whatsoever.
11.3 AMENDMENTS. This Agreement shall be modified only by an instrument
in writing executed by duly authorized representatives of the parties hereto.
11.4 WAIVERS. A waiver of breach, delay or failure to take action with
respect to any previous default or failure by a party to fulfill its obligations
under this
-12-
Agreement shall not be deemed to constitute a waiver of any other or subsequent
default or failure by such party to fulfill such obligations and shall not
constitute or be construed as a continuing waiver and/or as a waiver of other
subsequent defaults or breaches of the same or other (similar or otherwise)
obligations or as a waiver of any remedy available.
11.5 HEADINGS AND DEFINED TERMS. The article headings and section
captions of this Agreement are inserted for convenience only, and shall not be
deemed to constitute part thereof or to affect the construction thereof.
Capitalized terms not otherwise defined herein will have the meanings provided
in the Asset Purchase Agreement.
11.6. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11.7. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
-13-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the Closing Date.
RAYTHEON TI SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Controller
TRIQUINT SEMICONDUCTOR TEXAS, INC.
By: /s/ Xxxxxx X.X. Xxxx
-----------------------------------
Name: Xxxxxx X.X. Xxxx
Title: Executive Vice President
EXHIBIT C TO ASSET
PURCHASE AGREEMENT
MASTER SERVICES AGREEMENT
BY AND BETWEEN
RAYTHEON TI SYSTEMS, INC.
AND
TRIQUINT SEMICONDUCTOR TEXAS, INC.
THIS MASTER SERVICES AGREEMENT (this "AGREEMENT") is made effective as of
the opening of business on January 13, 1998 (the "CLOSING DATE") by and between
Raytheon TI Systems, Inc., a Delaware corporation ("SELLER"), and TriQuint
Semiconductor Texas, Inc., a Delaware corporation, ("BUYER").
WITNESSETH
WHEREAS, Seller and TriQuint Semiconductor, Inc., a Delaware corporation
and sole shareholder of the Buyer ("TRIQUINT"), have entered into that certain
Asset Purchase Agreement dated as of January 13, 1998 (the "ASSET PURCHASE
AGREEMENT"), pursuant to which Seller has sold to Buyer (as assignee of
TriQuint) substantially all the assets of the "MMIC BUSINESS", consisting of the
"ACQUIRED ASSETS" and the "ASSUMED OBLIGATIONS" (as such quoted terms are
defined in the Asset Purchase Agreement);
WHEREAS, on July 11, 1997, Seller purchased substantially all the assets of
the MMIC Business from Texas Instruments Incorporated, a Delaware corporation
("TI"), and, in connection therewith, entered into a Master Services Agreement,
certain Supplemental Agreements thereunder and the related Systems and Services
Transition Agreement (collectively, the "TI SERVICES AGREEMENT") providing for
TI and Seller to provide certain services to each other during the transition
period specified therein;
WHEREAS, in consideration of the historical interconnections between the
MMIC Business on the one hand, and the Seller on the other hand, Seller has
agreed to provide to Buyer, and Buyer has agreed to purchase from Seller,
certain services in order to promote the efficient operation of the MMIC
Business as more particularly set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein set forth, Seller and Buyer, intending to be legally bound, hereby agree
as follows:
-2-
ARTICLE 1
NATURE OF THE AGREEMENT
1.1 GENERAL. The following are general terms and conditions under
which Seller will provide to Buyer certain support, services, and facilities
(collectively "SERVICES"). Services will be provided in accordance with these
general terms and conditions and in accordance with the terms and conditions and
any work authorization agreement entered into on the date hereof or in the
future between Seller and Buyer referencing this Agreement ("WORK
AUTHORIZATION").
1.2 WORK AUTHORIZATION. The terms of both this Agreement and any
applicable Work Authorization shall both apply to the Services being performed.
To the extent general terms contained herein are not specifically contradicted
by the terms of any applicable Work Authorization, the general terms in this
Agreement shall govern. In any case where the terms of this Agreement and the
terms of a particular Work Authorization are in conflict, however, the terms of
the applicable Work Authorization shall take precedence.
1.3 PURCHASE ORDERS. Preprinted terms on any purchase order that may
be used between Seller and Buyer relating to the Services shall be disregarded,
whether or not they conflict with the terms of this Agreement or the terms of
any Work Authorization.
ARTICLE 2
SERVICES
2.1 GENERAL. Seller shall provide Buyer with each Service specified in
SCHEDULE 1 hereto. Such Services shall be provided from the Closing Date until
such date as is specified in SCHEDULE 1 or in the applicable Work Authorization.
2.2 CHANGES; ASSIGNMENT AND SUBCONTRACTING. Except where otherwise
specified in any Work Authorization, Seller shall retain the right in its
reasonable discretion to select, change, modify, and substitute any equipment,
materials, procedures or personnel (including vendors, suppliers, or
contractors) used in performing the Services so long as any required
specifications herein or in or pursuant to any applicable Work Authorization are
satisfied. At its option, Seller, without the consent of the Buyer, may assign
or subcontract any or all of its rights and/or obligations hereunder which are
covered by corresponding provisions in the TI Services Agreement (or any
Supplemental Agreement entered into thereunder) to TI. In addition, at its
option, Seller, without the consent of the Buyer, may assign or subcontract any
or all of its rights and/or obligations hereunder to Raytheon Company or any
subsidiary of Raytheon Company or any entity acquiring substantially all of the
assets of Seller or substantially all the assets of the business unit of Seller
for whom or by which any particular service is provided under any Work
Authorization. As used herein, "subsidiary" means (i) any corporation of which
such party owns, either directly or through its subsidiaries, more than 50% of
-3-
the total combined voting power of all classes of voting securities of such
corporation or (ii) any partnership, association, joint venture or other form of
business organization, whether or not it constitutes a legal entity, in which
such party, directly or indirectly, owns more than 50% of the total equity
interests. If Seller intends to assign or subcontract its rights and
obligations hereunder or under any of the Work Authorizations as permitted by
this Section 2.2, Seller shall notify Buyer within thirty (30) days prior to
such assignment or subcontracting. Further, any permitted assignee or
subcontractor shall be bound by the terms of this Agreement and any applicable
Work Authorization.
2.3. TI SERVICES. Notwithstanding anything contained herein or in any
Work Authorization to the contrary, in the event that any Service to be provided
hereunder is to be provided by Seller pursuant to the TI Services Agreement or
Supplemental Agreement or work authorization entered into thereunder, and the TI
Services Agreement, Supplemental Agreement or work authorization or the
applicable service thereunder is terminated, Seller shall have no further
obligation to provide such Service hereunder.
2.4. SUPPLY AGREEMENT. The parties acknowledge and agree that the terms
of this Agreement shall not apply to the Supply Agreement being entered into by
the parties on or about the date hereof, or to any goods or services provided in
connection therewith.
-4-
ARTICLE 3
COMPENSATION
3.1 CHARGES. Unless specifically addressed in an attachment hereto,
all charges for Services shall be charged by Seller to Buyer by using the
computerized cross-charging system consistent with Seller's internal practices.
3.2 STANDARD FOR CHARGES. Except where a specific charge is set forth
in Schedule 1, the amount payable for each Service shall be the cost of such
service to Seller (including, without limitation, labor, out of pocket costs
payable to third parties and a reasonable allocation for overhead costs).
3.3 TERMINATION. In the event a Service is terminated for any reason,
Buyer shall be liable for charges for such Service performed accruing through
the effective date of termination.
3.4 TAXES. All prices for Services are exclusive of any applicable
sales and use taxes and Buyer shall be responsible for any taxes it may incur
attributable to goods and services it receives hereunder.
ARTICLE 4
COMMUNICATION AND ADMINISTRATION
4.1 NOTICES. Unless otherwise indicated in the relevant Work
Authorization, all notices, approvals, and other communications required or
permitted by this Agreement to be given to Seller or Buyer shall be in writing
and shall be delivered (i) in person or by a reputable courier service that
provides receipt of delivery, (ii) by deposit in the U.S. mail, postage prepaid,
by certified or registered mail, return receipt requested, provided, however,
the delivery of payment of routine invoices shall not be required to be by
certified or registered mail; (iii) by a nationally recognized overnight courier
service; or (iv) by electronic mail or facsimile delivery confirmed by delivery
in accordance with subparagraphs (i) or (iii) above; in each case addressed to
the party concerned at its address or facsimile number as set forth below (or at
such other address as a party may specify by written notice pursuant to this
paragraph to the other party):
IF TO SELLER: Raytheon TI Systems, Inc.
0000 Xxxxx Xxxxxxx 121
P.O.B. 405, M/S 3409
Xxxxxxxxxx, XX 00000
Attention: Manager, Contracts
Facsimile No.: (000) 000-0000
with a copy to: Raytheon TI Systems, Inc.
00000 X. Xxxxxxx Xxxxxxxxxx
-0-
XX-000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
IF TO BUYER: TriQuint Semiconductor Texas, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Communications sent by personal delivery, courier service, electronic or
facsimile transmission as set forth above shall be effective upon receipt,
provided any required confirmatory delivery is made. Communications sent by
mail as set forth above shall be effective ten (10) days after deposit in the
U.S. mail.
ARTICLE 5
STANDARD OF CARE; DISCLAIMER
5.1 STANDARD OF CARE. Seller hereby represents to Buyer that the
Services to be performed hereunder and under each of the Work Authorizations
shall be performed in a professional and competent manner consistent with
historical provision of such Services prior to the separation of the MMIC
Business from the other business operations of Seller.
5.2 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN A WORK
AUTHORIZATION, SELLER HEREBY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO THE SERVICES (OR ANY SERVICES PROVIDED BY THIRD PARTIES WITH
WHOM EITHER PARTY CONTRACTS IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES)
OR GOODS OR PRODUCTS FURNISHED IN CONNECTION THEREWITH. SUCH DISCLAIMER IS NOT
INTENDED TO AFFECT ANY DIRECT CLAIMS EITHER PARTY MAY ASSERT AGAINST ANY THIRD
PARTY, NOR PREVENT THE PASS-THROUGH OR ASSIGNMENT OF ANY RIGHTS EITHER PARTY MAY
HAVE AGAINST ANY THIRD PARTY.
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5.3 ASSIGNMENT OF THIRD PARTY WARRANTIES. To the maximum extent
allowed by law and any applicable contract, Seller hereby assigns and passes
through to the other party any warranties, express or implied, made by any third
party provider of goods or services furnished to Buyer party in connection with
the performance of the Services, and any claims and causes of action against any
such third parties. To the extent any such warranty, claim or cause of action
is not enforceable or able to be asserted by Buyer in its own name, upon written
request, Seller through such third party shall take all reasonable action
requested by Buyer, at Buyer's cost, to enforce any such warranty or assert any
such claim or cause of action that is enforceable or assertable by Seller.
5.4 GOVERNMENTAL APPROVALS. Seller shall not be liable for failure to
deliver Services where such failure results from the denial of necessary
government approvals or consents, PROVIDED that Seller shall make all reasonable
efforts to obtain such approvals or consents.
5.5 LIMITATIONS ON LIABILITY. Notwithstanding anything to the contrary
contained herein, in no event shall Seller have any liability with respect to
any Services provided under this Agreement or any Work Authorization in excess
of the actual amount paid by Buyer to Seller for such Service. SELLER SHALL
HAVE NO LIABILITY TO BUYER UNDER THIS AGREEMENT OR ANY WORK AUTHORIZATION FOR
LOSS OF PRODUCT, LOSS OF PROFIT, LOSS OF USE, OR ANY OTHER INDIRECT, INCIDENTAL,
SPECIAL (INCLUDING PUNITIVE OR MULTIPLE) OR CONSEQUENTIAL DAMAGE.
ARTICLE 6
CONFIDENTIALITY
The parties hereby incorporate by reference the Non-Disclosure Agreement
(as defined in the Asset Purchase Agreement) entered into among them and
TriQuint on the date hereof and agree that confidential information of either
party used in connection with this Agreement shall be subject to the terms
thereof.
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ARTICLE 7
TERM AND TERMINATION
7.1 TERM. This Agreement shall commence as of the Closing Date and
shall remain in effect only for so long as (i) any Work Authorization hereto
shall continue to be in effect or (ii) any Service is to be provided, pursuant
to the terms of this Agreement, whichever is longer.
7.2 EARLY TERMINATION. Either party may terminate its obligations
hereunder with respect to any Service with effect sixty (60) days after written
notice to the other party (the "BREACHING PARTY") that the Breaching Party is in
breach of its obligations hereunder with respect to such Service, provided the
Breaching Party has failed to cure its breach during that period.
7.3 NO WAIVER. This Article 7 shall not be deemed to waive, prejudice
or diminish any rights Buyer or Seller may have at law or in equity for any
breach of this Agreement.
ARTICLE 8
FORCE MAJEURE
Neither party shall be responsible for any delay or failure in performance
or for any loss, damage, costs, charges and expenses incurred or suffered by the
other party by reason thereof if such delay or failure results from the
occurrence of an event beyond the reasonable control of such party and without
the fault or negligence of such party ("FORCE MAJEURE") including, but not
limited to, acts of God or the public enemy, acts of the Government in either
its sovereign or contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, unusually severe weather, failure of
suppliers, terrorism, or civil strife. If any party to this Agreement is
rendered wholly or partially unable by an event of force majeure to carry out
its obligations under this Agreement, and if that party gives prompt written
notice and full particulars of such event of force majeure to the other party,
the notifying party shall be excused from performance of its obligations
hereunder during the continuance of any inability so caused, but for no longer
period. Both parties shall use all commercially reasonable efforts to remove or
avoid the condition as soon as commercially practicable.
ARTICLE 9
GOVERNING LAW
This Agreement and the Work Authorizations shall be governed by, construed
and interpreted and the rights of the parties determined in accordance with the
laws of the State of New York without regard to the choice of law principles
thereof.
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ARTICLE 10
ASSIGNS
Except as expressly provided in Section 2.2 hereof, no assignment of this
Agreement or any Work Authorization by any party hereto shall be permitted
without the prior written consent of the other party. Notwithstanding the
foregoing, Seller may assign this Agreement and any Work Authorization to any
successor in interest (whether by sale, merger consolidation or otherwise) to
all or substantially all of Seller's defense electronics business. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.
ARTICLE 11
ADDITIONAL DOCUMENTS
Each party shall promptly execute and deliver or cause to be executed and
delivered such additional documents, including but not limited to the Work
Authorizations, as are reasonably required by any other party for the purpose of
implementing this Agreement.
ARTICLE 12
GENERAL PROVISIONS
12.1 ENTIRE AGREEMENT. This Agreement, the Work Authorizations and the
other Agreements referred to herein constitute the entire Agreement between the
parties with respect to the subject matter hereof, and supersede all previous
communications, representations, understandings and agreements, either written
or oral, between the parties.
12.2 VALIDITY. If any provision of this Agreement or of any Work
Authorization or the application thereof to any party or circumstance shall be
held to be invalid and unenforceable to any extent, the remainder of this
Agreement or such Work Authorization or the application thereof to any other
party or circumstance shall not be affected thereby and each provision shall be
valid and shall be enforced to the fullest extent permitted by law.
12.3 INDEPENDENT CONTRACTORS. The parties hereto shall act in all
matters pertaining to this Agreement and the Work Authorizations as independent
contractors and nothing contained herein or in any of the Work Authorizations
and no action taken with respect to the provision of the Services shall
constitute one party to be the agent, partner or joint venturer of any other
party for any purpose whatsoever.
12.4 AMENDMENTS. This Agreement and any Work Authorization shall be
modified only by an instrument in writing executed by duly authorized
representatives of the parties thereto.
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12.5 WAIVERS. A waiver of breach, delay or failure to take action with
respect to any previous default or failure by a party to fulfill its obligations
under this Agreement or any Work Authorization shall not be deemed to constitute
a waiver of any other or subsequent default or failure by such party to fulfill
such obligations and shall not constitute or be construed as a continuing waiver
and/or as a waiver of other subsequent defaults or breaches of the same or other
(similar or otherwise) obligations or as a waiver of any remedy available.
12.6 GENDER. Words of any gender used in this Agreement or any Work
Authorization shall be held and construed to include any other gender, and words
in the singular number shall be held to include the plural, and vice versa,
unless the context requires otherwise.
12.7 HEADINGS. The article headings and section captions of this
Agreement or any Work Authorization are inserted for convenience only, and shall
not be deemed to constitute part thereof or to affect the construction thereof.
12.8 CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against either party.
ARTICLE 13
INTENT OF PARTIES
13.1 GENERAL. Except as otherwise expressly provided herein or in a
Work Authorization, it is the intent of the parties that services performed
prior to the date hereof by Seller for the MMIC Business will continue to be
made available to Buyer as of and after the Closing Date as necessary and
desirable to promote a smooth and efficient functional separation of the MMIC
Business from the operations of Seller.
13.2 MISCELLANEOUS SERVICES. The parties acknowledge and agree that
there may be some services Seller provided to the MMIC Business or the MMIC
Business provided to other internal Seller customers that are not specifically
identified in this Agreement or the Work Authorizations or the other agreements
referred to herein of which Buyer or Seller may not be aware until the time such
service is needed, but which the parties are willing to continue to provide on
the terms and conditions set forth herein in order to provide for a smooth and
orderly transition by Buyer into the operation of the MMIC Business (such
services being referred to herein as "MISCELLANEOUS TRANSITION SERVICES"). As
Miscellaneous Transition Services to be provided hereunder are identified and
mutually agreed upon, Buyer and Seller shall document the inclusion of such
services hereunder by an amendment, letter agreement, or memorandum signed by
duly authorized representatives of both parties. The terms on which such
Miscellaneous Transition Services will be provided will be substantially
consistent with the terms on which other Services are provided hereunder.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the Closing Date indicated above.
RAYTHEON TI SYSTEMS, TRIQUINT SEMICONDUCTOR INC.
TEXAS, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X.X. Xxxx
---------------------- ---------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X.X. Xxxx
--------------- --------------------
Title: Vice President, Controller Title: Executive Vice President
------------------- -------------------
EXHIBIT D-1 TO
ASSET PURCHASE AGREEMENT
SUBLEASE (1)
(RESEARCH EAST)
Effective January 13, 1998, RAYTHEON TI SYSTEMS, INC., a Delaware
corporation, having an address c/o Raytheon Company, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("RAYTHEON") and TRIQUINT SEMICONDUCTOR TEXAS,
INC., a Delaware corporation having an address at 0000 X.X. Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxx 00000 ("SUBTENANT") hereby act and agree as follows:
1. XXXXXXXXX; TRANSITION AGREEMENT. As used herein, the term "Xxxxxxxxx"
shall mean the July 11, 1997 Lease from Texas Instruments Incorporated (the
"OVERLANDLORD") to Raytheon, of certain premises located at 13588 North
Central Expressway ("RESEARCH EAST"), Dallas, Texas (the "OVERLEASED
PREMISES"), more fully described in such Xxxxxxxxx. A copy of the
Xxxxxxxxx is attached hereto as Exhibit A.
As used herein, the term "TRANSITION AGREEMENT" shall mean the Transition
Agreement, of even date herewith, between Subtenant and Raytheon. A copy
of the Transition Agreement is attached as EXHIBIT C to the Sublease, of
even date herewith, between Subtenant and Raytheon related to the premises
located at 00000 Xxxxx Xxxxxxx Xxxxxxxxxx ("XXXXX XXXXXXXX"), Xxxxxx,
Xxxxx.
2. SUBLEASE.
(a) Raytheon hereby subleases to Subtenant those portions of the
Overleased Premises, more particularly described on EXHIBIT B attached
hereto, subject to the terms and conditions hereof (the "SUBLEASE
PREMISES").
(b) This Sublease shall be deemed to contain all of the same covenants,
agreements, conditions, terms and provisions as contained in the Xxxxxxxxx,
MUTATIS MUTANDIS (the necessary changes being made to reflect the fact that
Raytheon is the
----------------------------
(1) Subject to review by, and consent of, Texas Instruments Incorporated.
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Landlord, Subtenant is the Tenant and that not all of the Overleased Premises is
being subleased to Subtenant), and except that the following sections of the
Xxxxxxxxx shall not apply hereto:
(a) Article 1, Section 1.01 as to Leased Premises and Primary
Term;
(b) Article 1, Section 1.04 as to Renewal Option;
(c) Article 1, Section 1.05 as to Transition Activities;
(d) Article 2, Section 2.01 as to Base Rent;
(e) Article 2, Section 2.03 as to Utility Charges;
(f) Article 2, Section 2.04 as to Payment of Rent;
(g) Article 6 as to Assignments; Subleases; Mortgages; and
Encumbrances (any assignment, subletting, licensing or
mortgage rights of Subtenant under this Sublease shall be
governed by Section 14 of this Sublease);
(h) Sections 9.01 and 9.02 as to Insurance;
(i) Article 14 as to Taxes; and
(j) Article 28 as to Notices.
3. NON-INTERFERENCE.
Subtenant acknowledges that Raytheon may have operations at those portions
of the Overleased Premises other than the Sublease Premises. Subtenant
agrees not to interfere with such operations. In addition, Raytheon agrees
not to interfere with Subtenant's operations on the Sublease Premises, to
the extent such operations are in accordance with the terms of this
Sublease.
4. OBLIGATIONS OF PARTIES.
Except as to those Sections of the Xxxxxxxxx excepted from this Sublease
under Section 2(b) above, Subtenant hereby agrees to perform all of the
remaining obligations imposed on Raytheon as Lessee under the Xxxxxxxxx as
to the Sublease Premises.
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With respect to repairs and maintenance required of Raytheon, as Lessee
under Article 8 of the Xxxxxxxxx, EXHIBIT C attached hereto sets forth an
allocation of the repair and maintenance responsibilities that have been
agreed shall be performed and conducted between Raytheon and Subtenant.
EXHIBIT C sets forth those repair responsibilities that are allocated
solely to Raytheon, solely to Subtenant and those for which the costs are
to be shared by both Raytheon and Subtenant. Raytheon and Subtenant
understand and agree that they shall work in good faith with one another to
coordinate the repairs for which each is responsible.
Provided that Subtenant is not in default hereunder, Raytheon agrees to use
its best efforts to cause the Overlandlord to perform all of the
obligations imposed upon the Overlandlord under the Xxxxxxxxx; however,
Raytheon shall in no event be responsible for any failure by Overlandlord
to perform such obligations.
Following notice from Overlandlord to Raytheon and Subtenant that, pursuant
to Section 24.01 of the Xxxxxxxxx, a default exists under the Xxxxxxxxx, as
a result of any act or omission of Subtenant, then Raytheon, at its option,
after written notice to Subtenant, may take the necessary action to cure
said default of Subtenant within the applicable grace period of said
Sections 24.01(a) and (b) of the Xxxxxxxxx. Subtenant shall promptly
reimburse Raytheon for any monies expended by Raytheon in curing any such
default. Raytheon shall invoice Subtenant for such expenses, which shall
be reasonably documented. Subtenant's failure to reimburse Raytheon within
thirty (30) days after such invoice shall constitute a default by Subtenant
under this Sublease.
This Sublease is subject and subordinate to the Xxxxxxxxx and shall
terminate upon the expiration or earlier termination of the Xxxxxxxxx,
provided that, so long as Subtenant is not in default hereunder, Raytheon
agrees not to take any action or omit to take any action (other than the
purchase of the Overleased Premises by Raytheon) which would cause a
termination of the Xxxxxxxxx prior to the end of the term thereof, except
with the express written consent of Subtenant. Notwithstanding anything to
the contrary contained herein, in the event that Raytheon purchases the
Overleased Premises from the Overlandlord during the term hereof, this
Sublease shall continue in full force and effect as a direct lease between
Raytheon as landlord and Subtenant as tenant, and the provisions of the
Xxxxxxxxx applicable hereto pursuant to Section 2(b) hereof shall be deemed
incorporated herein by this reference and shall continue to apply hereto,
notwithstanding the expiration or termination of the Xxxxxxxxx as a result
of such purchase. Raytheon agrees to indemnify and hold Subtenant harmless
from and against any and all claims, suits, damages, liabilities and
expenses, including reasonable attorneys' fees, arising out of Raytheon's
use and occupancy of the Overleased Premises prior to the Commencement Date
of this Sublease. Subtenant agrees to indemnify and hold Raytheon harmless
from and against any and all claims, suits, damages, liabilities and
expenses, including reasonable attorneys' fees, arising out of Subtenant's
use and occupancy of the
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portions of Overleased Premises from and after the Commencement Date under
this Sublease.
To the extent that the Overlandlord is given rights to inspection of, or
access to, the Sublease Premises or to make audits or obtain documents or
information from Raytheon, as Lessee under the Xxxxxxxxx, Subtenant hereby
grants all such rights to Overlandlord such that Overlandlord shall have
the same rights to inspections, access, audits, documents and information
from Subtenant.
5. TERM; CONDITION OF SUBLEASE PREMISES.
(a) The term of this Sublease shall begin upon the execution date hereof
referenced in the preamble of this Sublease (the "COMMENCEMENT DATE"), and
shall expire upon the first to occur of (a) the termination of the
Xxxxxxxxx (subject, however, to the second sentence of the fifth paragraph
of Section 4 hereof regarding purchase of the Overleased Premises by
Raytheon), (b) the last day of the month on which the Subtenant completes
its move to the North Building as contemplated by Section 16 hereof and the
Transition Agreement, (c) in the event that the Subtenant fails to give the
termination notice referred to in the Sublease between Raytheon and
Subtenant relating to the North Building, 90 days after the date hereof,
and (d) one year from the date hereof.
(b) Subtenant agrees to accept those portions of the Overleased Premises
to be occupied by Subtenant "as-is", "where-is" on the Commencement Date,
and in substantially the same condition as said Overleased Premises now
are, and Raytheon makes no representation or warranty with respect to the
condition thereof except that the relevant portions of the Overleased
Premises currently are in compliance with the Xxxxxxxxx and will be in
compliance therewith on the Commencement Date.
(c) It is expressly understood and agreed that upon expiration of this
Sublease pursuant to clause (a) of this Section 5, the Subtenant shall have
no further obligation to pay rent under Section 6 hereof with respect to
any periods after the expiration of this Sublease.
6. RENT. During the term of this Sublease, Subtenant shall pay to Raytheon a
monthly rental equal to the Applicable Percentage of the monthly charges
paid by Raytheon under the Xxxxxxxxx for occupancy of the Overleased
Premises, including, without limitation, the Applicable Percentage of all
Additional Rent and Special Services Charges, Costs of Insurance (as
defined in Section 9(a) below), increases in premiums and Taxes under
Sections 2.02, 9.04 and Article 14 of the Xxxxxxxxx and Section 9(a) of
this Sublease, but excluding Base Rent and Utility Charges (as defined
below) (which shall be calculated and paid in accordance with Section 8
below), which monthly rental shall be payable in advance by the first (1st)
day of each calendar month during the term of this Sublease (or, with
respect to the initial
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partial calendar month, on the date of this Sublease). The Applicable
Percentage is calculated by dividing the net square feet (the "NSF") of the
Sublease Premises by 85,638 square feet, the NSF of the Overleased
Premises. As of the date of this Sublease, the Applicable Percentage,
based on an initial Sublease Premises of 30,082 square feet, is 35.1%.
7. PAYMENT OF RENT. Payments of Rent shall be sent to the following address:
Raytheon TI Systems, Inc.
c/o Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
If paid by wire transfer to:
Bank of Boston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX
ABA: 000000000
Account: Raytheon Company Account No. 326-8007
8. UTILITY CHARGES; SPECIAL SERVICES. For purposes of this Sublease, the
following terms shall have the following meanings:
(a) "SUBTENANT'S UTILITIES" shall mean the electricity, natural gas,
water (city), sewer, and fire suppression water as Subtenant may reasonably
require and request from time to time during the term of this Sublease for
the conduct of its business and consistent with historical usage by
Raytheon within the Sublease Premises;
(b) "COST OF SUBTENANT'S UTILITIES" shall mean the sum of (x) the cost
paid by Raytheon to a third party provider (including, without limitation,
the Overlandlord) of the electricity, sewer, water (city) and natural gas
utilities consumed as Subtenant's Utilities (including without limitation
any such utilities consumed to provide the heating, ventilation and air
conditioning and the fire suppression water consumed by Subtenant as a
Subtenant Utility) plus (y) reasonable cost of delivery of Subtenant's
Utilities incurred by Raytheon.
(c) "SPECIAL SERVICES" and "SPECIAL SERVICES CHARGES" shall mean those
Special Services and Special Services Charges described in Section 3.02 of
the Xxxxxxxxx; and
(d) "UTILITY CHARGES" shall mean the cost of Subtenant's Utilities and
applicable sales taxes that are paid by Raytheon, whether Subtenant's
Utilities are separately metered or equitably allocated.
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Except to the extent Utility Charges and/or Special Service Charges are
directly invoiced to Subtenant by a third-party utility provider or by the
Overlandlord or some other third party (in which case Subtenant shall
promptly pay any amounts owed), Subtenant shall reimburse Raytheon for the
Cost of Subtenant's Utilities and Special Services as metered (where
separately metered) and as equitably allocated (where not metered),
together with applicable sales taxes. Subtenant shall cooperate with
Raytheon in providing data on Subtenant's operations necessary to calculate
such allocation. Attached hereto as EXHIBIT D is a schedule setting forth
the estimated monthly Utility Charges and Special Services Charges agreed
between Raytheon and Subtenant. Subtenant shall pay to Raytheon as
Additional Rent, due upon execution of this Sublease and one (1) month in
advance of the first day of every succeeding month, without notice, setoff,
demand or deduction, an estimated amount for such Utility Charges and
Special Services Charges which shall be $47,330.00 per month (until revised
in accordance with EXHIBIT D), irrespective of the actual consumption
period.
Commencing on June 15, 1998, and continuing quarterly on September 15,
1998, December 15, 1998 and March 15, 1999, Raytheon shall determine and
provide notice to the Subtenant of the actual Utility Charges payable by
Subtenant for the previous three (3) calendar month period (or period from
the date of this Sublease through May 31, 1998, in case of the initial
notice). If the estimated amount of Utility Charges paid by Subtenant for
such period differs from the actual amount, then Subtenant shall pay to
Raytheon any underpayment within thirty (30) days following receipt of such
statement or Raytheon shall credit against the next rentals payable by
Subtenant the amount of any overpayment as the case may require; provided,
however, that if this Sublease has terminated or expired, any overpayments
shall be remitted to Subtenant by Raytheon together with Raytheon's
reconciliation notice. The obligations under this Section 8 shall survive
termination, expiration or abandonment of this Sublease.
Subtenant shall make arrangements for Subtenant's telephone requirements
and shall timely pay all charges in connection with Subtenant's telephone
usage and needs.
9. INSURANCE.
(a) During the term of this Sublease, Raytheon agrees to obtain, carry and
continue in force, or cause to be obtained, carried and continued in force,
all risk property insurance on Research East and on Raytheon's personal
property and fixtures located therein, in each case to Raytheon's full
replacement value thereof, but excluding Subtenant's personal property
located in the Sublease Premises or Research East. The cost of such
insurance on Research East (but excluding the cost of such insurance on
Raytheon's personal property and fixtures located therein) is herein
referred to as the "COSTS OF INSURANCE".
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(b) Subtenant agrees to obtain, carry and continue in force during the
term of this Sublease, from an insurance company with a Best Rating of A
and Financial Size Category of XIII or better, all insurance, with
appropriate endorsements, as specified below:
(1) All risk property insurance on the Subtenant's personal property
located in the Sublease Premises or on the TI Expressway Site (as
defined in the Xxxxxxxxx), to Subtenant's full replacement value
thereof.
(2) Workers' Compensation Insurance in compliance with the laws of
the State of Texas, and Employer's Liability Insurance with minimum
limits as follows:
(A) Bodily injury by accident - $500,000/accident
(B) Bodily injury by disease - $500,000 limit; and
(C) Bodily injury by disease - $500,000/employee.
(3) Commercial General Liability Insurance, including contractual
liability endorsement coverage, written on an "occurrence" form, fully
insuring Subtenant against liability for injury or death of any person
or persons, including TI or Raytheon employees or third parties within
the Sublease Premises or on the TI Expressway Site, or loss or damage
to property with minimum limits as follows:
(A) General aggregate limit - $2 million;
(B) Products/completed operations aggregate limit - $2 million;
(C) Personal injury limit - $1 million;
(D) Each occurrence limit - $1 million;
(E) Fire damage limit - $50,000; and
(F) Medical payments - $5,000.
(4) Automobile Liability Insurance fully insuring Subtenant's
furnished automobiles and trucks and those owned or rented by
Subtenant or its employees in connection with its operations at the
Sublease Premises at the TI Expressway Site with minimum limits as
follows:
(A) Bodily injury and property damage - $1 million;
(B) Hired/non-owned auto - $10,000; and
(C) Physical damage - $250,000.
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All such insurance policies required of Subtenant under Section 9(b)(3)
shall name Overlandlord and Raytheon as additional insureds.
(c) Subtenant shall provide Raytheon and Overlandlord, if requested by
Overlandlord, with certificates of insurance as provided in Section 9.05 of
the Xxxxxxxxx evidencing the insurance required under Section 9(b) above.
Raytheon and Subtenant expressly agree that for purposes of this Sublease,
the phrase "the insurance required by this Article 9" and similar phrases,
as used in Sections 9.03 through 9.08 of the Xxxxxxxxx (which Sections are
incorporated herein by Section 2(b) hereof), shall mean the insurance
required by Section 9 of this Sublease.
10. ACCESS TO CERTAIN AREAS.
(a) Notwithstanding anything in this Sublease to the contrary, Subtenant
agrees that use of the Pipe Space portion of the Sublease Premises, as
depicted on EXHIBIT B, shall be limited to (i) repairs, maintenance and
other work related to equipment in the Pipe Space, (ii) storage of items in
an orderly fashion that does not significantly interfere with or hinder
access in or around the Pipe Space, and (iii) other uses in effect on the
Commencement Date or as may be reasonably agreed between Raytheon and
Subtenant. Raytheon is hereby granted an irrevocable license for periodic
escorted access to the Pipe Space portion of the Sublease Premises as
reasonably necessary for inspection, maintenance and repairs of such Pipe
Space.
(b) Raytheon is hereby granted an irrevocable license for periodic
escorted access on the Ground Floor portion of the Sublease Premises as
reasonably necessary for inspection, maintenance and repairs to the
electrical transformers contained in the vaults.
11. SPECIFIC CONDITIONS AND ACKNOWLEDGMENTS.
(a) Notwithstanding anything in this Sublease to the contrary, Subtenant
understands and agrees that this Sublease is subject to the prior consent
of the Overlandlord under Article 6 of the Xxxxxxxxx.
(b) Subtenant understands and agrees that any alterations and improvements
to be made to the Sublease Premises by Subtenant at any time during the
term of this Sublease require the prior consent of Raytheon and the
Overlandlord under Article 5 of the Xxxxxxxxx (as incorporated by reference
into this Sublease under Section 2(b) of this Sublease).
(c) Under Section 3.02 of the Xxxxxxxxx, Raytheon can request that Special
Services, as identified in said Section 3.02, be provided by the
Overlandlord, but the Overlandlord is not required to provide or make
available any of the Special Services to Raytheon. Raytheon shall request
the Overlandlord to provide those Special
-9-
Services requested by Subtenant to the Sublease Premises, provided,
however, Raytheon shall have no liability or obligation whatsoever to
Subtenant should the Overlandlord fail or refuse to provide or make
available such Special Services to Raytheon or Subtenant or the Sublease
Premises.
(d) Subtenant is aware of the provisions of Article 21 of the Xxxxxxxxx
and understands and acknowledges the importance of the need of Overlandlord
and Raytheon to shut down one or more of the Utility Systems serving the
Overleased Premises, including the Sublease Premises.
12. NOTICES. All notices and demands shall be given in writing by personal
delivery, courier service, or U.S. registered or certified mail, postage
prepaid, return receipt requested. Notice shall be deemed given upon
delivery to the addressee. Notices shall be addressed as set forth below
for the respective party, provided that if any party gives notice of a
change of name or address, notices to that party shall thereafter be given
as specified in that notice. Facsimile communication may be used to
expedite communication only.
To Subtenant: TriQuint Semiconductor Texas, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Vice President, Finance
Tel: 000-000-0000
Fax: 000-000-0000
To Raytheon: Raytheon TI Systems, Inc.
c/o Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
With a copy to: Raytheon TI Systems, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Plant Manager
13. BROKER. Each of Subtenant and Raytheon represents and warrants to the
other party that it has not directly or indirectly dealt, with respect to
leasing the Overleased Premises, with any Broker or had its attention
called to the Overleased Premises by any Broker. Each party agrees to save
harmless and indemnify the other party against any claims for commissions
arising out of the execution and delivery of this Sublease, or arising out
of a breach of such party's representations and warranties in this Section
13.
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14. ASSIGNMENT; SUBLEASES; MORTGAGES; AND ENCUMBRANCES. Subtenant shall not
assign this Sublease, sublet, license, mortgage or otherwise encumber the
Sublease Premises, or any part thereof, without the prior consent of both
Raytheon and Overlandlord, which may be given or withheld in Overlandlord's
and Raytheon's sole discretion.
15. EARLY TERMINATION RIGHTS OF SUBLEASE. None.
16. RELOCATION TO NORTH BUILDING. Concurrently with the execution of this
Sublease, Subtenant is executing a separate Sublease with Raytheon for the
sublease of certain premises located at the North Building. In accordance
with the terms of the Transition Agreement, Subtenant will relocate its
research and development operations from the Sublease Premises to the North
Building by December 31, 1998.
17. EXCAVATION RESTRICTION. Subtenant shall not do any of the following (an
"Excavation") at the Sublease Premises without the prior written consent of
each of Raytheon and the Overlandlord: (i) intentionally penetrate the
soil; (ii) excavate, dig into or remove the soil; (iii) take any samples of
soil or groundwater; (iv) drill any holes into soil or the floor of any
building or pavement covering the soil; or (v) remove any part of any
building or pavement directly covering the soil. In the event that
Subtenant is required to undertake any Excavation as a consequence of any
local, state or federal law, rule, ordinance, code, requirement, statute,
regulation or any order, injunction, decree or ruling issued by a court of
competent jurisdiction or any other governmental entity applicable to the
Sublease Premises or Subtenant's operations thereon (a "REQUIRED
EXCAVATION"), Subtenant shall promptly notify Raytheon and the Overlandlord
in writing, describing in reasonable detail the nature and purpose of such
Required Excavation. Raytheon shall not unreasonably withhold its consent
to any Required Excavation, and Raytheon shall reasonably cooperate with
Subtenant in obtaining the consent of the Overlandlord to any Required
Excavation, provided that (i) Raytheon may elect to undertake to perform
such Required Excavation at its own cost, (ii) Raytheon may delay
performance of the Required Excavation and contest such obligation to
perform (or have a third party contest such obligation), so long as such
contest is not reasonably likely to (x) result in a material adverse effect
to Subtenant or a material disruption of the operations of Subtenant at the
Sublease Premises or (y) subject Subtenant to criminal liability and (iii)
Raytheon shall have no liability if the Overlandlord fails to consent to
any Required Excavation.
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WITNESS the execution hereof under seal as of the date first above written.
RAYTHEON TI SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title: Vice President Controller
----------------------------------
TRIQUINT SEMICONDUCTOR TEXAS, INC.
By: /s/ Xxxxxx X.X. Xxxx
-----------------------------------
Name: Xxxxxx X.X. Xxxx
-----------------------------------
Title: Executive Vice President
----------------------------------
EXHIBIT A TO SUBLEASE
LEASE AGREEMENT
By and Between
TEXAS INSTRUMENTS INCORPORATED, AS LESSOR
and
RAYTHEON TI SYSTEMS, INC., AS LESSEE
for premises located at
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
(Research East)
TABLE OF CONTENTS
PAGE
----
ARTICLE I - PREMISES AND TERM. . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.01. LEASED PREMISES AND PRIMARILY TERM. . . . . . . . . . 5
SECTION 1.02. USE . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.03. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . 7
SECTION 1.04. RENEWAL OPTION. . . . . . . . . . . . . . . . . . . . 7
SECTION 1.05. TRANSITION ACTIVITIES . . . . . . . . . . . . . . . . 7
ARTICLE 2 - RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.01. BASE RENT . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02. ADDITIONAL RENT AND SPECIAL SERVICES CHARGES. . . . . 9
SECTION 2.03. UTILITY CHARGES . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. PAYMENT OF RENT . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 - SERVICES AND FACILITIES. . . . . . . . . . . . . . . . . . . . 11
SECTION 3.01. SERVICES PROVIDED BY LESSOR . . . . . . . . . . . . . 11
SECTION 3.02. SPECIAL SERVICES AND SPECIAL SERVICES CHARGES . . . . 12
SECTION 3.03. INTEREST. . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 - PARKING, SECURITY, AND ACCESS RIGHTS . . . . . . . . . . . . . 13
SECTION 4.01. PARKING . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.02. SECURITY. . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. ACCESS RIGHTS . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 - LESSEE'S ALTERATIONS AND IMPROVEMENTS. . . . . . . . . . . . . 14
ARTICLE 6 - ASSIGNMENTS; SUBLEASES; MORTGAGES; AND ENCUMBRANCES. . . . . . 15
ARTICLE 7 - SIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 8 - REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 9 - INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.01 LESSOR INSURANCE. . . . . . . . . . . . . . . . . . . 17
SECTION 9.02. LESSEE INSURANCE. . . . . . . . . . . . . . . . . . . 17
SECTION 9.03. MUTUAL WAIVER OF SUBROGATION. . . . . . . . . . . . . 18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
SECTION 9.04. LESSEE RESPONSIBLE FOR INCREASE IN PREMIUMS . . . . . 18
SECTION 9.05. CERTIFICATES OF INSURANCE . . . . . . . . . . . . . . 18
SECTION 9.06. INSURANCE PROCEEDS. . . . . . . . . . . . . . . . . . 19
SECTION 9.07. DEDUCTIBLES . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.08. LOSS PREVENTION . . . . . . . . . . . . . . . . . . . 19
ARTICLE 10 - FIRE AND OTHER CASUALTIES . . . . . . . . . . . . . . . . . . 19
SECTION 10.01. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10.02. DAMAGE. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10.03. LESSOR'S RIGHTS TO TERMINATE. . . . . . . . . . . . . 20
SECTION 10.04. TERMINATION OF THE LEASE. . . . . . . . . . . . . . . 20
SECTION 10.05. REPAIR AND RESTORATION. . . . . . . . . . . . . . . . 21
ARTICLE 11 - CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 12 - LIABILITY/ENVIRONMENTAL INDEMNITY . . . . . . . . . . . . . . 21
SECTION 12.01. LESSEE'S LIABILITY. . . . . . . . . . . . . . . . . . 21
SECTION 12.02. LESSOR'S LIABILITY. . . . . . . . . . . . . . . . . . 22
SECTION 12.03. LESSEE'S ENVIRONMENTAL INDEMNIFICATION. . . . . . . . 22
SECTION 12.04. LESSOR'S ENVIRONMENTAL INDEMNIFICATION. . . . . . . . 23
ARTICLE 13 - EMERGENCIES/REPORTING OBLIGATIONS . . . . . . . . . . . . . . 24
SECTION 13.01. REPORTING TO LESSOR . . . . . . . . . . . . . . . . . 24
SECTION 13.02. REPORTING TO GOVERNMENTAL AGENCIES. . . . . . . . . . 25
ARTICLE 14 - TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 15 - NO JOINT VENTURE, PARTNERSHIP, OR AGENT RELATIONSHIP. . . . . 26
ARTICLE 16 - ILLEGAL SUBSTANCE SCREENING . . . . . . . . . . . . . . . . . 26
ARTICLE 17 - LESSEE'S ENVIRONMENTAL, INDUSTRIAL HYGIENE AND SAFETY
COVENANTS, REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 26
ARTICLE 18 - DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . 29
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 19 - LESSOR'S AUDIT RIGHTS . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 20 - ENTRY/RIGHT OF ACCESS . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 21 - BUILDING SYSTEMS SHUTDOWNS. . . . . . . . . . . . . . . . . . 31
ARTICLE 22 - HOLDING-OVER. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 23 - SURRENDER OF THE LEASED PREMISES. . . . . . . . . . . . . . . 32
ARTICLE 24 - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 24.01. LESSEE'S EVENTS OF DEFAULT. . . . . . . . . . . . . . 32
SECTION 24.02. EVENTS OF DEFAULT BY LESSOR . . . . . . . . . . . . . 32
ARTICLE 25 - REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 25.01. LESSOR'S REMEDIES . . . . . . . . . . . . . . . . . . 33
SECTION 25.02. LESSEE'S REMEDIES . . . . . . . . . . . . . . . . . . 34
ARTICLE 26 - ENFORCEMENT COSTS . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 27 - NO WAIVER, EXPRESS OR IMPLIED . . . . . . . . . . . . . . . . 35
ARTICLE 28 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 29 - NO ORAL MODIFICATION. . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 30 - EFFECT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 31 - GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 32 - SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 33 - ESTOPPEL CERTIFICATES/FURTHER ACTS. . . . . . . . . . . . . . 37
ARTICLE 34 - SUBORDINATION, ATTORNMENT AND NONDISTURBANCE. . . . . . . . . 37
ARTICLE 35 - FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . 37
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 36 - BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 37 - GENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 38 - CONSTRUCTION AND INTENT . . . . . . . . . . . . . . . . . . . 38
ARTICLE 39 - NO INCIDENTAL OR CONSEQUENTIAL DAMAGES. . . . . . . . . . . . 38
ARTICLE 40 - AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 41 - CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 42 - COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 39
-iv-
LEASE AGREEMENT
RECITALS
WHEREAS, Texas Instruments Incorporated,. a Delaware corporation, ("TI" or
"Lessor"), and Raytheon Company, a Delaware corporation ("Raytheon") have
entered into that certain Asset Purchase Agreement dated as of January 4. 1997
(the "Asset Purchase Agreement"), pursuant to which, effective concurrently with
this Lease, TI sold to Raytheon TI Systems, Inc. a Delaware corporation, a
wholly-owned subsidiary of Raytheon ("Buyer" or "Lessee"), the "Acquired
Business," consisting of the "Acquired Assets" and "Assumed Liabilities" (as
such quoted terms are defined in Section 1.01(a) of the Asset Purchase
Agreement);
WHEREAS, TI desires to lease to Lessee and Lessee desires to lease from TI
the Leased Premises, as more particularly defined herein, in order to continue
to conduct the Acquired Business.
ARTICLE I PREMISES AND TERM. . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.01. Leased Premises and Primarily Term. . . . . . . . . . . 5
SECTION 1.02. Use . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.03. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.04. Renewal Option. . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.05. Transition Activities . . . . . . . . . . . . . . . . . 7
ARTICLE 2 RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.01. Base Rent . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02. Additional Rent and Special Services Charges. . . . . . 9
SECTION 2.03. Utility Charges . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. Payment of Rent . . . . . . . . . . . . . . . . . . . .10
ARTICLE 3 SERVICES AND FACILITIES. . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.01. Services Provided by Lessor . . . . . . . . . . . . . .11
SECTION 3.02. Special Services and Special Services Charges . . . . .12
SECTION 3.03. Interest. . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 4 PARKING, SECURITY, AND ACCESS RIGHTS . . . . . . . . . . . . . . .13
SECTION 4.01. Parking . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 4.02. Security. . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 4.03. Access Rights . . . . . . . . . . . . . . . . . . . . .13
ARTICLE 5 LESSEE'S ALTERATIONS AND IMPROVEMENTS. . . . . . . . . . . . . . .14
ARTICLE 6 ASSIGNMENTS; SUBLEASES; MORTGAGES; AND ENCUMBRANCES. . . . . . . .15
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ARTICLE 7 SIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 8 REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 9 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 9.01 Lessor Insurance. . . . . . . . . . . . . . . . . . . .17
SECTION 9.02. Lessee Insurance. . . . . . . . . . . . . . . . . . . .17
SECTION 9.03. Mutual Waiver of Subrogation. . . . . . . . . . . . . .18
SECTION 9.04. Lessee Responsible for Increase in Premiums . . . . . .18
SECTION 9.05. Certificates of Insurance . . . . . . . . . . . . . . .18
SECTION 9.06. Insurance Proceeds. . . . . . . . . . . . . . . . . . .18
SECTION 9.07. Deductibles . . . . . . . . . . . . . . . . . . . . . .19
SECTION 9.08. Loss Prevention . . . . . . . . . . . . . . . . . . . .19
ARTICLE 10 FIRE AND OTHER CASUALTIES . . . . . . . . . . . . . . . . . . . .19
SECTION 10.01. Notice. . . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 10.02. Damage. . . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 10.03. Lessor's Rights to Terminate. . . . . . . . . . . . . .20
SECTION 10.04. Termination of the Lease. . . . . . . . . . . . . . . .20
SECTION 10.05. Repair and Restoration. . . . . . . . . . . . . . . . .21
ARTICLE 11 CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 12 LIABILITY/ENVIRONMENTAL INDEMNITY . . . . . . . . . . . . . . . .21
SECTION 12.01. Lessee's Liability. . . . . . . . . . . . . . . . . . .22
SECTION 12.02. Lessor's Liability. . . . . . . . . . . . . . . . . . .22
SECTION 12.03. Lessee's Environmental Indemnification. . . . . . . . .22
SECTION 12.04. Lessor's Environmental Indemnification. . . . . . . . .23
ARTICLE 13 EMERGENCIES/REPORTING OBLIGATIONS . . . . . . . . . . . . . . . .24
SECTION 13.01. Reporting to Lessor . . . . . . . . . . . . . . . . . .24
SECTION 13.02. Reporting to Governmental Agencies. . . . . . . . . . .25
ARTICLE 14 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE 15 NO JOINT VENTURE, PARTNERSHIP, OR AGENT RELATIONSHIP. . . . . . .26
ARTICLE 16 ILLEGAL SUBSTANCE SCREENING . . . . . . . . . . . . . . . . . . .26
ARTICLE 17 LESSEE'S ENVIRONMENTAL, INDUSTRIAL HYGIENE AND SAFETY
COVENANTS, REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . .26
ARTICLE 18 DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
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ARTICLE 19 LESSOR'S AUDIT RIGHTS . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 20 ENTRY/RIGHT OF ACCESS . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE 21 BUILDING SYSTEMS SHUTDOWNS. . . . . . . . . . . . . . . . . . . .31
ARTICLE 22 HOLDING-OVER. . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE 23 SURRENDER OF THE LEASED PREMISES. . . . . . . . . . . . . . . . .32
ARTICLE 24 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .32
SECTION 24.01. Lessee's Events of Default. . . . . . . . . . . . . . .32
SECTION 24.02. Events of Default by Lessor . . . . . . . . . . . . . .32
ARTICLE 25 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 25.01. Lessor's Remedies . . . . . . . . . . . . . . . . . . .33
SECTION 25.02. Lessee's Remedies . . . . . . . . . . . . . . . . . . .34
ARTICLE 26 ENFORCEMENT COSTS . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 27 NO WAIVER, EXPRESS OR IMPLIED . . . . . . . . . . . . . . . . . .35
ARTICLE 28 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 29 NO ORAL MODIFICATION. . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 30 EFFECT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 31 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 32 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 33 ESTOPPEL CERTIFICATES/FURTHER ACTS. . . . . . . . . . . . . . . .37
ARTICLE 34 SUBORDINATION, ATTORNMENT AND NONDISTURBANCE. . . . . . . . . . .37
ARTICLE 35 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE 36 BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 37 GENDER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 38 CONSTRUCTION AND INTENT . . . . . . . . . . . . . . . . . . . . .38
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ARTICLE 39 NO INCIDENTAL OR CONSEQUENTIAL DAMAGES. . . . . . . . . . . . . .38
ARTICLE 40 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 41 CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE 42 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE I
PREMISES AND TERM
SECTION 1.01. LEASED PREMISES AND PRIMARILY TERM.
This Lease Agreement ("Lease") is entered into as of July 11, 1997, by and
between Lessor and Lessee. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Leased Premises for a primary term of sixty (60) months
beginning at 11:59 p.m. on July 11, 1997 (the "Commencement Date") and ending at
11::59 p.m. July 11, 2002 (the "Primary Term"). The term "Leased Premises" as
used in this Lease shall mean: (i) as of the Commencement Date, the premises
described on Exhibit "A-1" attached hereto and made a part hereof; (ii) at the
end of the Transition Period (hereinafter defined), the premises described on
Exhibit "A-2" attached hereto and made a part hereof, as the same may be
modified by the agreement of both parties in writing during the Transition
Period (the "Post-Transition Premises"); and (iii) during the Transition Period,
those portions of the premises described on Exhibit "A-1" and/or Exhibit "A-2"
that are then occupied by Lessee. The Leased Premises are located in the City
of Dallas, State of Texas, and comprise initially an area of 46,000 net square
feet ("NSF') of building area together with certain equipment located on the
exterior of the building and the pads on which such equipment is located (the
"Exterior Equipment Locations") as shown on Exhibit "A-4, and will include after
the Transition Period (as defined below), approximately 73,071 NSF of building
area, substantially in the configuration shown on Exhibit "A-2," together with
the Exterior Equipment Locations, being part of TI's Research East Building
located on TI's Expressway Site at 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx
(the "Research East Building"). TI's facility at the intersection of LBJ
Freeway and North Central Expressway in Dallas, Texas, bounded on the west by
Central Expressway, on the south by LBJ 635 the east by Xxxxx Road (but
including TI's fleet maintenance facility and TI's Waste Chemical Center on the
east side of Xxxxx Road), and on the north by TI's property line is hereinafter
referred to as the"TI Expressway Site" and is included on the map shown in
Exhibit "A-3."
SECTION 1.02. USE.
Subject to the terms, provisions, covenants, agreements and conditions
herein, the Leased Premises are to be used by Lessee solely for (i) operations
as currently conducted in the Leased Premises as part of the Acquired Business
(together with such changes thereto as may be comparable in general nature and
character); (ii) similar manufacturing operations as currently conducted
elsewhere by the Acquired Business. or any comparable business of Raytheon or
its subsidiaries as of the Commencement Date (together with such changes thereto
as may be comparable in general nature and character), including electronics
assembly and light manufacturing, warehousing, research and development, and
-5-
related activities, provided any such activities do not violate applicable
zoning requirements; or (iii) any office use or warehouse use, provided such
uses comply with applicable zoning requirements. Notwithstanding the foregoing,
Lessee shall not use, store, process or package in the Leased Premises (a) any
chemical in quantities sufficient to trigger either the Occupational Safety and
Health Act's ("OSHA") Process Safety Management ("PSM") rules, 29 C.F.R. Section
1910.119, or the United States Environmental Protection Agency's ("EPA") Clean
Air Act Accidental Release Prevention rules, 40 C.F.R. Pt. 68 Subpart. G, or
(b) without the prior approval of Lessor, which approval shall not be
unreasonably withheld. any hazardous or toxic chemical or radioactive material
not currently used, stored or processed at the Leased Premises. Other proposed
uses shall be allowed with Lessor's prior consent, which shall not be
unreasonably withheld. Lessee agrees to use the Leased premises only for the
intended uses specified herein, and without unreasonable interference with TI's
operations or those of any other lessee or other occupant of the TI Expressway
Site. Lessee further agrees that Lessee and its employees, agents, contractors,
and visitors (while at the TI Expressway Site) will adhere to, and the use of
the Leased Premises and other areas of the TI Expressway Site to which access is
granted hereunder will be consistent with, the following specific rules:
(1) No firearms or explosives (other than potentially reactive or
flammable materials used in manufacturing processes allowed by and otherwise
used, stored and handled in conformance with this Lease Agreement) will be
permitted on the TI Expressway Site;
(2) No intoxicants or illegal drugs will be permitted on the TI
Expressway Site;
(3) Lessee shall, upon becoming aware of such person, remove from the
TI Expressway Site any employee, agent, contractor or other visitor of Lessee
under the influence of intoxicants or illegal drugs while on the TI Expressway
Site;
(4) Smocking will be prohibited inside all buildings located on the
TI Expressway site. Subject to other safety-related restrictions that may be
imposed by TI from time to time, smoking will be allowed outdoors on the TI
Expressway Site except within approximately 100 feet of an outside door;
(5) No conduct which is unreasonable or indecent will be permitted on
the TI Expressway Site, and
(6) Except for any use within the Leased Premises, no cameras or
video recorders (other than security cameras or cameras for construction, health
and safety documentation) will be used on the TI Expressway Site except in
accordance with any applicable TI security requirements.
In addition to the foregoing, TI may from time to time adopt other rules or
regulations generally applying to occupants, including tenants, of the TI
Expressway Site for the management, safety, care and cleanliness of, and
preservation of good order and protection of property in, the Leased Premises
and the TI Expressway Site. Any such rules and regulations or changes and
amendments thereto sent by Lessor to Lessee and conforming to the foregoing
standards shall be carried out and observed by Lessee.
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Subject to any more specific articulation of compliance responsibilities
with respect to environmental matters as set forth herein, Lessee further agrees
to comply with all applicable City, County, State and Federal laws and
regulations, including, without limitation, building codes, electrical codes and
fire codes which now are or hereafter become applicable to the Leased Premises
and, to the extent made necessary in connection with Lessee's use of the Leased
Premises, to any other portion of the TI Expressway Site.
Nothing contained in this Lease, however, shall be construed to prevent
Lessee from adopting or otherwise implementing standards or policies with
respect to Lessee's occupancy, use or operations on the Leased Premises that are
more stringent than required by applicable laws and regulations.
SECTION 1.03. QUIET ENJOYMENT.
Subject to Article 25, and except as otherwise provided herein, Lessee
shall have quiet and peaceful enjoyment of the Leased Premises during the Lease
Term.
SECTION 1.04. RENEWAL OPTION.
While this Lease is in full force and effect, provided that there is no
uncured material default beyond expiration of any application grace or cure
period by Lessee of any of the terms, covenants, and conditions hereof, Lessee
shall have three (3) separate options to extend the term of this Lease for the
further term of sixty (60) months each (each such term being referred to herein
as a "Renewal Term"). Except as specifically stated elsewhere in this Lease,
and subject to adjustment of rent as described in Section 2.01 below, such
renewals shall be on the same terms, covenants, and conditions as provided for
in this Lease. Notice of Lessee's intention to exercise its option to renew
this Lease as permitted by this Section 1.04 (the "Renewal Notice") must be
given to Lessor not less than twelve (12) nor more than eighteen (18) months
prior to the expiration of the Primary Term or the then current Renewal Term, as
applicable. The Primary Term and any and all Renewal Terms are collectively
referred to herein as the "Lease Term."
SECTION 1.05. TRANSITION ACTIVITIES.
Lessor and Lessee acknowledge that certain relocations, consolidation,
construction, and modifications to the Leased Premises, TI Expressway Site
and/or other premises owned or operated by Lessor or Lessee and related
activities (the "Transition Activities") are necessary and will occur following
commencement of the Primary Term to accommodate certain requirements and
expectations of Lessee and Lessor. Such Transition Activities shall be
implemented by Lessor and conducted in accordance with the mutual agreement of
the parties acting in good faith. The period during which Transition Activities
are occurring that affect the final configuration of the Leased Premises is
referred to herein as the "Research East Transition Period."
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ARTICLE 2
RENTAL
SECTION 2.01. BASE RENT.
Lessee shall pay Base Rent to Lessor in advance on the Commencement Date
and on the first day of each month thereafter, without (subject to Article 34,
below) setoff, demand, or deduction during the Lease Term. During the first
year of the Primary Term of this Lease, the Base Rent shall be Two Hundred
Twenty-Two Thousand and No/100 Dollars ($222.000.00) per annum, payable in equal
monthly installments of Eighteen Thousand Five Hundred and No/100 Dollars
($18,500.00) per month. During the Primary Term, the Base Rent shall be
adjusted annually on each anniversary of the Commencement Date so that Base Rent
payable during the Primary Term shall be paid as follows:
Lease Period Annual Rent Monthly Rent
------------ ----------- ------------
1st Year $222,000 $18,500
2nd Year $414,996 $34,583
3rd Year $607,902 $50,666
4th Year $800,000 $66,667
5th Year $800,000 $66,667
Payment shall be made in accordance with Section 2.04 below. Base Rent shall
include the Basic Services set forth in Section 3.01, below.
Base Rent shall be subject to adjustment at the commencement of each
Renewal Term (in each case, "Adjustment Date") as follows:
(a) The base for computing the adjustment is the Consumer Price index,
published bimonthly by the United States Department of Labor, Bureau of Labor
Statistics ("BLS") in CPI DETAILED REPORT. Consumer Price Index All Urban
Consumers (CPI-U): Selected Areas, All Items Index (Dallas/Fort Worth)
(1982-1984=100) ("Index"). The number indicated in the Index for the month and
the year in which the Commencement Date occurs shall be the "Base Index." The
number in the Index for the month and the year which is 45 days prior to the
month and the year in which the rent adjustment occurs shall be the "Current
Index." The Current Index shall take into consideration any changes arising
from the BLS publishing data on a base period other than 1982-1984=100.
(b) Except as set forth in clause (c) below, forty-five (45) days prior to
each Adjustment Date, if the Current Index has increased over the Base Index,
the Base Rent for the Renewal Term (until the next rent adjustment) shall be set
by multiplying the Base Rent for the fifth year of the Primary Term by a
fraction, the numerator of which is the Current Index and the denominator of
which is the Base Index. If the Current Index has decreased from the Index
employed at the previous Adjustment Date, the Base Rent for the Renewal Term
(until the next rent adjustment) shall be set by multiplying the Base Rent for
the fifth year of the Primary Term by a fraction, the numerator of which is the
Current Index and the denominator of which is the Base Index, such that the Base
Rent for the Renewal Term shall be less than the Base Rent for the previous
term. Provided however, that in no case shall the Base Rent be less than the
Base Rent for the fifth year of the Primary Term. The new Base Rent shall take
effect on the Adjustment Date and Tenant shall be provided with written notice
of such new Base Rent thirty (30) days prior to the Adjustment Date.
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(c) If forty-five (45) days prior to the Adjustment Date, the Current
Index for such date is not yet available, Lessee shall pay Lessor the Base Rent
for the Primary Term as it may have been previously increased or decreased,
until such Current Index is published and available, at which time Lessee shall
pay Lessor the increase, if any, retroactively from the applicable Adjustment
Date.
(d) If the Index is discontinued or revised during the Lease Term, such
other government index or computation with which it is replaced shall be used in
order to obtain substantially the same result as would be obtained if the Index
had not been discontinued or revised.
SECTION 2.02. ADDITIONAL RENT AND SPECIAL SERVICES CHARGES.
As additional rent ("Additional Rent"), which shall also be due on a
monthly basis and payable in accordance with Section 2.04, Lessee shall pay to
Lessor all other amounts that Lessee is obligated to pay under the terms of this
Lease, including, without limitation, Special Services Charges for Special
Services described in Section 3.02 below and requested by Lessee.
SECTION 2.03. UTILITY CHARGES.
For the purpose of this Lease, the following terms shall have the following
meanings:
(a) "Lessee's Utilities" shall mean the electricity, natural gas, water
(city), sewer, and fire suppression water as Lessee may reasonably require and
request from time to time during the Lease Term for the conduct of its business
and consistent with historical usage by the Defense Business within the Leased
Premises; and
(b) "Cost of Lessee's Utilities" shall mean the sum of (X) the cost paid
by Lessor to a third party provider of the electricity, sewer, water (city) and
natural gas utilities consumed as Lessee's Utilities (including without
limitation any such utilities consumed to provide the heating, ventilation and
air conditioning and the fire suppression water consumed by Lessee as a Lessee's
Utility) plus (Y) reasonable cost of delivery of Lessee's Utilities incurred by
Lessor.
Except to the extent Utility Charges (as defined below) are directly
invoiced to Lessee by a third-party utility provider (in which case Lessee shall
promptly pay any amounts owed), Lessee shall reimburse Lessor for the Cost of
Lessee's Utilities as metered (where separately metered) and as equitably
allocated (where not metered), together with applicable sales taxes (the
"Utility Charges"). Lessee shall pay to Lessor as Additional Rent, due one (1)
month in advance on the first day of every month, without setoff, demand or
deduction, an estimated amount for such Utility Charges which initially shall be
Forty-Eight Thousand Eight Hundred Thirty-Three and No/100 Dollars ($48,833.00)
per month, irrespective of the actual consumption period, based on Lessor's
Annual Utility Plan for 1997, if available, or the actual cost of the Lessee's
Utilities for calendar year 1996.
On or before February 15, 1998 and each February 15 thereafter during the
Lease Term, Lessor shall reasonably estimate, and notify Lessee of, the amount
to be paid by Lessee as Utility Charges for each month of the ensuing twelve
month period, based on forecasts of the cost of Lessor's Utilities for
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that calendar year,. if available, or the actual cost of the Lessee's Utilities
during the previous calendar year. Such estimated monthly amounts shall also be
due and payable to Lessor one (1) month in advance on the first day of every
month without setoff, demand or deduction.
Commencing on the first such date to occur after a period of three (3) full
calendar months after the expiration of the Research East Transition Period and
continuing quarterly on each February 15, May 15, August 15, and November 15,
Lessor shall determine and provide notice to Lessee of the actual Utility
Charges payable by Lessee for the previous three (3) calendar month period. If
the estimated amount of Utility Charges paid by Lessee for such three (3) month
period differs from the actual amount, then Lessee shall pay to Lessor any
underpayment within thirty (30) days following receipt of such statement or
Lessor shall credit against the next rentals payable by Lessee the amount of any
overpayment as the case may require; provided, however, that if this Lease has
terminated or expired, any overpayment shall be remitted to Lessee by Lessor
together with the Lessor's reconciliation notice. The obligations under this
Section 2.03 shall survive termination, expiration or abandonment of this Lease.
SECTION 2.04. PAYMENT OF RENT.
Lessee shall pay Ease Rent and Additional Rent (sometimes collectively
referred to herein as "Rent"), in U.S. dollars or other currency that, at the
time of the payment, is lawful money of, and legal tender for debts in, the
United States of America. Payments of Base Rent and Additional Rent for any
partial months shall be prorated based on a 365 day year. Payments of Rent
shall be sent to the following address:
TEXAS INSTRUMENTS INCORPORATED
X.X. Xxx 000000, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (U.S. mail delivery)
0000 XXX Xxxxxxx, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (on-site deliveries)
Attention: Financial Accounting Services Department
In lieu of the foregoing, Lessee may, in its discretion, upon notice to the copy
address for mail payments set forth above. wire transfer its payments to:
Nations Bank of Texas, Dallas
Dallas, Texas
ABA Routing No. 1110 0001 2
for credit to the account of
TEXAS INSTRUMENTS INCORPORATED,
Account No. 125-210-404-0,
(Raytheon - Rent)
with a copy cf the remittance advice being sent via facsimile to Lessor's
Financial Accounting Services Department at Facsimile No. (000) 000-0000.
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If Lessee desires to change from the payment method (mail or wire
transfer), Lessee shall notify Lessor in advance at the copy address for mail
payments set forth above.
Lessor may designate by thirty (30) days' prior notice to Lessee an
alternative address or an alternative wire transfer instruction or facsimile
number for payment, from time to time, at Lessor's sole discretion.
Lessee's obligation to pay Rent for the Leased Premises during the Lease
Term shall be governed solely by the provisions of this Article 2.
ARTICLE 3
SERVICES AND FACILITIES
SECTION 3.01. SERVICES PROVIDED BY LESSOR.
At all times during the Lease Term, Lessor shall provide or cause to be
provided to Lessee at the Leased Premises as appropriate, the following services
("Basic Services") as an incident to this Lease (the charges for these services
are included in Base Rent):
(1) Lessor shall maintain the roof and structural elements of the
Leased Premises in good operable condition and repair, reasonable wear and tear
excepted, including, without limitation, the making of any capital repairs or
capital improvements required to comply, in all material respects, with any law,
building code, rule, regulation, judicial mandate, or other governmental
requirement, excluding, however, (i) any maintenance requirements necessitated
by Alterations (as defined below) made by Lessee, and (ii) requirements to be
performed by Lessee under Section 17b, below.
(2) Lessor shall maintain the grounds of the TI Expressway Site in
good condition and repair, including without limitation:
(A) maintenance of parking lots. roads, building grounds,
outside lighting, underground utility lines for electricity, water, storm and
other sewers, cooling and heating water, fire protection sprinklers and piping,
and other utilities serving the areas of the TI Expressway Site outside of the
Leased Premises,
(B) clearing of ice and snow from sidewalks; and
(C) landscaping, including replacement and trimming of plants
outside the Leased Premises.
The services provided hereunder shall be available during the hours
similar services are provided by Lessor to other occupants of the TI Expressway
Site. All such services shall be provided by personnel designated in the sole
discretion of Lessor.
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Subject to Articles 21 and 35, this Lease has been entered into by
Lessor and Lessee with the understanding that Lessee's Utilities will be
available for such consumption and use in the Leased Premises during the Lease
Term at volumes and pressures of such utilities historically consumed and used
by the Defense Business operations being conducted in the Leased Premises as if
the Defense Business had been conducted in the entire Leased Premises. Lessor
agrees that it will take no actions which will materially and adversely affect
the volume, pressure, and availability of the Lessee's Utilities, without the
prior consent of Lessee. Subject to the foregoing sentence, in no event shall
Lessor be liable for any failure of a gas, electricity, water, telephone, sewer
utility or other utility to provide a sufficient, uninterrupted quantity of
water, electricity, gas, telephone or sewer or other utility service to the
Leased Premises, except to the extent (a) such failure results from Lessor's
non-payments to the supplier (unless such non-payment results from Lessee's
failure to reimburse Lessor for such utility service as required by this Lease),
or (b) Lessor's failure to maintain orders/contracts with a supplier for
delivery of such utility as previously consumed and used by the Defense Business
operations being conducted at the Leased Premises. Lessor will reasonably
cooperate with Lessee to pass through to Lessee any rights Lessor may have
against any provider of such utilities in the event of any interruption or
failure of service by such utility provider.
SECTION 3.02. SPECIAL SERVICES AND SPECIAL SERVICES CHARGES.
In addition to the above-referenced items, Lessee may request other
services which Lessor may make available ("Special Services"). Lessor and
Lessee acknowledge that Special Services shall be charged at an agreed upon rate
consistent with fair market value to be negotiated at arm's length by the
parties. Special Services may include, but are not limited to: provision of
deionized/reverse osmosis water engineering, maintenance. construction and other
related services for equipment installation located within the Leased Premises;
equipment or facilities rearrangement or additions; general cleaning of the
interior of the Leased Premises (janitorial and nonhazardous trash removal
services, interior window washing, and lavatory supplies); special cleaning
services within the Leased Premises; application of ESD wax within the Leased
Premises; interior painting within the Leased Premises; ceiling and floor
maintenance within the Leased Premises; floor waxing within the Leased Premises;
wall maintenance within the Leased Premises; light bulb and fluorescent tube
replacement within the Leased Premises; special building maintenance services
provided for any designated area within the Leased Premises; chemical analysis
services; and other services which Lessor can reasonably provide to the Leased
Premises. Charges for Special Services shall be Additional Rent and shall be
payable by Lessee in accordance with Section 2.04.
SECTION 3.03. INTEREST.
Interest on all payments required by either party hereunder, upon the
occurrence and during the continuation of an Event of Default, shall accrue at a
rate of ten percent (10%) per annum; provided nothing herein contained will be
construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under the laws of the State of Texas or any
other applicable laws.
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ARTICLE 4
PARKING, SECURITY, AND ACCESS RIGHTS
SECTION 4.01. PARKING.
Subject to Lessor's site-wide parking rules and regulations, parking spaces
will be provided for Lessee's employees, visitors, contractors, suppliers and
invites, in areas designated for parking on a non-exclusive basis. Sufficient
spaces will be provided to meet applicable codes. Lessee shall not park or
install any trailers, semitrailers, portable or modular structures at the TI
Expressway Site without the prior consent of Lessor, except for routine parking
of delivery/shipping vehicles during normal loading and unloading activities at
any dock area included in the Leased Premises.
SECTION 4.02. SECURITY.
Notwithstanding anything contained in this Lease to the contrary, each
party and their employees, agents, contractors, suppliers and visitors shall
comply with all classified information restrictions and security measures
imposed upon the other party by the U.S. Government within that portion of the
TI Expressway Site under such party's control. Without limiting the generality
of the foregoing, to the extent necessitated by security requirements of the
U.S. Government (including Department of Defense activities which may be subject
to export control regulations), Lessee may restrict or deny access by non-U.S.
citizens or non-permanent residents or Lessor or Lessor's agents to certain
portions of the Leased Premises and Lessor may restrict or deny access by
non-U.S. citizens or non-permanent residents or Lessee or Lessee's agents to
certain portions of the TI Expressway Site (other than the Leased Premises).
SECTION 4.03. ACCESS RIGHTS.
Lessee, Lessee's agents, employees, suppliers, contractors, and visitors
shall have reasonable access and the nonexclusive right to use roads, parking
lots, walkways and courtyards within the boundaries of the TI Expressway Site as
reasonably required to provide vehicular and pedestrian access to the Leased
Premises, and as reasonably necessary for the business operations conducted by
Lessee on the Leased Premises. Further, in the event of any internal or
external union organizing activity involving Lessee's employees, Lessor shall be
entitled to reasonably restrict or prevent access by any of Lessee's employees
involved in such union organizing activity to portions of the TI Expressway Site
other than the Leased Premises, and as otherwise necessary to prevent
disturbance of Lessor's operations on the TI Expressway Site. In the event of
any internal or external union organizing activities involving Lessor's
employees, Lessor shall to the extent allowed by law, reasonably restrict or
prevent access by any of Lessor's employees involved in such union organizing
activities to the Leased Premises and as otherwise necessary to prevent
disturbance of Lessee's operations at the Leased Premises.
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ARTICLE 5
LESSEE'S ALTERATIONS AND IMPROVEMENTS
Material Changes to the Leased Premises shall require the prior consent of
Lessor, which consent shall not be unreasonably withheld. As used herein,
Material Change shall mean any addition, alteration, or improvement including
installation or modification of equipment (hereinafter, "Alteration"), where
such Alteration involves connections to any Lessee's Utility Systems (defined as
the Lessor-owned or controlled lines, pumps. equipment and facilities which
deliver, provide and/or produce the Lessee's Utilities) or to the building-wide
plumbed process gas distribution system including, without limitation: fire
suppression systems, structural modifications (including any penetrations of the
floor, roof or outside walls); electrical, gas, water, sewer, or exhaust
distribution systems; any control systems monitored or maintained by Lessor, any
tele/data communications systems maintained by Lessor, and where such Alteration
or any process change has or could reasonably be expected to have a material
adverse effect on the Lessee's Utility Systems, building-wide plumbed process
gas distribution system or the structural integrity of the Leased Premises or
any other portion of the TI Expressway Site.
Lessor shall review and respond to Lessee within fifteen (15) days from
Lessor's receipt of Lessee's notice of Lessee's intent to make any Alteration
which Lessee reasonably believes could constitute a Material Change. If Lessor
fails to respond to Lessee within said fifteen (15) day period, Lessor shall be
deemed to have approved the proposed Alteration. Any notices made pursuant to
this Article will describe the nature of the Alteration and will include the
estimated date and time at which Lessee proposes to commence such Alteration.
In the event Lessee uses a contractor to make any Material Change, Lessee shall
use a contractor (i) that carries at least One Million Dollars ($1.000.000) of
general liability insurance and all workers' compensation and employers
liability insurance required by applicable law with respect to the workers on
the TI Expressway Site or that is otherwise insured to Lessor's satisfaction and
whose subcontractors are likewise insured and (ii) has been approved in advance
by Lessor's Facilities Manager for the TI Expressway Site or his designee, said
approval not to be unreasonably withheld or delayed, provided, however, any
connections to Lessee's Utility Systems or to the building-wide plumbed process
gas distribution system shall be performed at Lessee's cost by or under the
direction of TI, which shall commence and complete such activity requested by
Lessee in a timely and diligent manner. Lessor, in its discretion. may require
Lessee's contractors and their subcontractors to be bonded for projects having
an estimated cost in excess of $250,000.00 by a bond reasonably satisfactory to
Lessor.
All Alterations, including Material Changes, shall comply with all
applicable laws, regulations, building, electrical and fire codes, as well as
with the requirements of any casualty insurer of the TI Expressway Site.
Upon the request of Lessee, Lessor shall advise Lessee within sixty (60)
days whether it reserves the right to require Lessee to remove any Alterations
from the Leased Premises upon termination of the Lease. If Lessee so requests
and Lessor does not so reserve the right to require Lessee to remove any
Alterations present at the time of request from the Leased Premises, Lessor may
not require Lessee to remove such Alterations from the Leased Premises upon the
expiration or sooner termination of the Lease.
Subject to any abandonment as described in Article 23 below, all
Alterations, trade fixtures, equipment, and personal property (i) installed in
the Leased Premises after the Commencement Date at
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Lessee's expense, excluding, unless otherwise agreed by Lessor and
Lessee,.Alterations, trade fixtures, equipment, and personal property installed
as part of the Transition Activities, or (ii) located in the Leased Premises on
the Commencement Date and owned by Lessee ("Lessee's Property") shall at all
times remain Lessee's property and Lessee shall be entitled to all depreciation,
amortization and other tax benefits with respect thereto. Except for
Alterations which cannot be removed without structural injury to the Leased
Premises, at any time Lessee may remove Lessee's Property from the Leased
Premises, provided Lessee repairs at its expense all damage caused by such
removal.
Lessee shall pay for any and all such Alterations and any costs incurred in
connection therewith, including, with respect to any services provided by Lessor
as a Special Service, reimbursement of Lessor's cost as a Special Service
charge. To the extent Lessee manages the Alteration, Lessee will obtain waivers
of all mechanic's liens which may arise as a result of such Alteration,
provided, however, if Lessee is unable to obtain any such waiver after the use
of its reasonable efforts, Lessee shall indemnify, defend, and hold harmless
Lessor from any reasonable actual cost or damage with respect to the existence
of any such mechanic's lien and shall take all necessary legal actions,
including the posting of any sums at issue with a court of competent
jurisdiction, to clear the lien within thirty (30) days after Lessee becomes
aware that the lien has been filed. To the extent Lessee requests and Lessor
agrees to manage the Alteration, Lessor will obtain waivers of all mechanic's
liens which may arise as a result of such Alteration, provided, however, if
Lessor is unable to obtain any such waiver after the use of its reasonable
efforts, Lessor shall take all necessary legal actions, including the posting of
any sums at issue with a court of competent jurisdiction to clear the lien
within sixty (60) days after Lessor receives notice from Lessee that the lien
has been filed, except to the extent resulting from Lessee's failure to pay the
charges for the services performed that Lessee is responsible for hereunder
within thirty (30) days following delivery to Lessee of notice and demand,
either to the contractor or supplier or to Lessor.
ARTICLE 6
ASSIGNMENTS; SUBLEASES; MORTGAGES; AND ENCUMBRANCES
Lessee shall not assign this Lease, sublet, license, mortgage or otherwise
encumber the Leased Premises, or any part thereof, without the prior consent of
Lessor, which consent shall not be unreasonably withheld. For purposes of
Lessor's approval under this section, both creditworthiness and non-monetary
considerations may constitute grounds for Lessor's objection. Notwithstanding
the foregoing, neither the transfer of all or substantially all of the assets or
capital stock of Lessee, whether by merger, consolidation or otherwise, to a
person or entity with credit comparable to, or better than, that of Lessee. or
the sale or issuance of Lessee's equity securities, nor any change in percentage
of ownership, if any, of Lessee's equity securities resulting therefrom. through
a public exchange or as part of any institutional or publicly offered financing,
shall be deemed to be (i) an assignment or in any manner a transfer of the Lease
or any estate or interest therein, (ii) a sublease of Lessee's interest in the
Leased Premises, or any part thereof, (iii) a change in control or ownership of
Lessee or (iv) a breach or default under the Lease or an event which, with the
passage of time, the giving of notice, or both, would constitute a breach or
default under the Lease. With the prior consent of Lessor, which consent shall
not be unreasonably withheld, Lessee may assign this Lease or sublease the
Leased Premises, or any portions
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thereof to any subsidiary, affiliate, or division of Lessee, except that
assignment to any subsidiary, affiliate or division of Lessee as may exist as of
the Commencement Date shall not require Lessor's consent. Any purported
assignment, sublease, license, mortgage or other encumbrance entered into by
Lessee shall not relieve Lessee of its obligations under this Lease and, if not
in compliance with this Article 6, shall be void AB INITIO.
ARTICLE 7
SIGNS
With the prior consent of Lessor, which consent shall not be unreasonably
withheld, Lessee may install such exterior signs and interior signs as it may
deem necessary for the operation of its business at the Leased Premises,
including signs on portions of the TI Expressway Site other than the Leased
Premises, so long as such signs do not unreasonably interfere with Lessor's
operations on the TI Expressway Site. Notwithstanding anything in this Lease to
the contrary, Lessee may install signage in the interior of the Leased Premises
without Lessor's consent under this Article 7 so long as such signs are not
readily viewable from any portion of the TI Expressway Site other than the
Leased Premises.
ARTICLE 8
REPAIR
In recognition of the connections between the site-wide distribution system
for process gases and liquids and the building distribution systems, Lessor and
Lessee have agreed to the following division of responsibility for repair of
such systems serving the Leased Premises. Lessee shall be responsible for the
maintenance and repair of piping for delivery of cryogenic gases for use in the
Leased Premises, beginning at the supply tank. The parties acknowledge and
agree that although the supply tank is expected to be the responsibility of the
gas supplier, as between Lessor and Lessee, the tank supplying cryogenic gas to
the Leased Premises shall be the responsibility of Lessee. Lessor shall be
responsible for generation, delivery, and the repair of lines, meters and
regulators for delivery of compressed air, process gases and deionized water for
use in the Leased Premises up to the inlet valve to the building main filter, if
there is one, and, if not, to the outlet valve to the building meter, from which
point repair shall be the responsibility of Lessee. Lessor and Lessee shall
cooperate to place and maintain labels on the lines and distribution systems
described in this paragraph to delineate maintenance responsibility.
Notwithstanding anything herein to the contrary, to the extent that any
utility lines, pipes, or other conduits for assisting in the site-wide
distribution systems for the TI Expressway Site go through the Leased Premises,
Lessee shall have no liability or obligation for maintenance or repair of such
utility lines, pipes, or conduits, except for laterals of such lines, pipes, or
conduits which in fact serve the Leased Premises.
Lessee shall maintain in good operable condition and repair, reasonable
wear and tear excepted, all mechanical, electrical, heating, ventilation and air
conditioning, power, plumbing, sewer, water (city), industrial waste water, gas,
fire sprinkler, and other equipment and systems owned by Lessor within the
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Leased Premises. Lessee shall bear the cost and hereby assumes financial
responsibility and liability for repairs occasioned by damage to Lessor's
equipment and systems resulting directly or indirectly from any acts or
omissions of Lessee. Lessee's employees, agents, contractors, vendors,
suppliers or visitors. Further, Lessee shall pay for all repairs resulting from
damage to the surrounding structure and improvements caused by the installation,
repair, replacement or removal of any of Lessee's equipment in the Leased
Premises.
ARTICLE 9
INSURANCE
SECTION 9.01 LESSOR INSURANCE.
Lessor agrees to obtain, carry, and continue in force, or cause to be
obtained, carried, and continued, during the Lease Term all risk property
insurance on the improved portions of the TI Expressway Site (other than the
Research East Building or the Leased Premises), on Lessor's personal property
and fixtures located therein, and on Lessor's personal property in the Research
East Building or the Leased Premises to Lessor's full replacement value thereof,
but excluding Lessee's personal property located in the Leased Premises or on
the TI Expressway Site.
SECTION 9.02. LESSEE INSURANCE.
Lessee agrees to obtain, carry and continue in force during the Lease Term,
from an insurance company with a Best Rating of A and Financial Size Category of
XIII or better, all insurance, with appropriate endorsements, as specified
below:
(1) All risk property insurance on the Research East Building and the
Leased Premises, which shall also insure against damage or loss to Lessee's
personal property located in the Leased Premises or on the TI Expressway Site,
but shall exclude Lessor's personal property in the Research East Building or
the Leased Premises, in each case, to Lessee's full replacement value thereof;
(2) Workers' Compensation Insurance in compliance with the laws of the
State of Texas, and Employer's Liability Insurance with minimum limits as
follows:
(A) Bodily injury by accident - $500,000/accident;
(B) Bodily injury by disease - $500,000 limit; and
(C) Bodily injury by disease - $500,000/employee.
(3) Commercial General Liability Insurance, including contractual
liability endorsement coverage, written on an "occurrence" form, fully insuring
Lessee against liability for injury or death of any person or persons, including
TI employees or third parties within the Leased Premises or on TI Expressway
Site, or loss or damage to property with minimum limits as follows:
(A) General aggregate limit - $2 million;
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(B) Products/completed operations aggregate limit - $2 million;
(C) Personal injury limit - $1 million;
(D) Each occurrence limit - $1 million;
(E) Fire damage limit - $50.000; and
(F) Medical payments - $5.000.
(4) Automobile Liability Insurance fully insuring Lessee's furnished
automobiles and trucks and those owned or rented by Lessee or its employees in
connection with its operations at the Leased Premises at the TI Expressway Site
with minimum limits as follows:
(A) Bodily injury and property damage - $1 million;
(B) Hired/non-owned auto - $10,000; and
(C) Physical damage - $250,000.
SECTION 9.03. MUTUAL WAIVER OF SUBROGATION.
Notwithstanding anything to the contrary contained in this Lease, with the
exception of the deductibles specified in Section 9.07 below, Lessor and Lessee
each hereby waive their rights to recover against, and their respective
insurer(s) right of subrogation against. the other, its officers, agents,
employees, tenants, subtenants, successors and assigns for injury, loss or
damage incurred where such injury, loss or damage is or would be insured against
under the policies either in force at the time of such loss or damage or
required to be carried under the terms of this Lease. Each of Lessor and Lessee
shall secure from their respective insurers, and shall provide to the other
party, an endorsement or other such reasonable evidence providing for such
waiver of subrogation under Lessee's and Lessor's policies. This Section 9.03
shall survive termination, expiration, or abandonment of this Lease.
SECTION 9.04. LESSEE RESPONSIBLE FOR INCREASE IN PREMIUMS.
Lessee shall bear the full expense of any additional premium(s) or increase
of premium rate(s) incurred by Lessor with respect to the Leased Premises or TI
Expressway Site, to the extent resulting from or caused by Lessee's Alterations
or Lessee installation of or modification to any process or equipment or change
in use which adversely affects Lessor's premium rate(s), as reasonably
determined by Lessor's insurance auditor, or by claims made and paid as a result
of Lessee's breach of its obligations and indemnities contained herein
SECTION 9.05. CERTIFICATES OF INSURANCE.
Upon Lessor's request, Lessee shall provide Lessor with certificates of
insurance evidencing the insurance required in Section 9.02 above. These
certificates of insurance shall (i) name Lessor as an additional insured with
respect to the policies required to Section 9.02(1) (to the extent of Lessor's
interest, if any, in the property and to the extent of Lessee's obligations
under the indemnity provisions of this Lease), Section 9.0.2(3) (to the extent
of Lessee's obligations under the indemnity provisions of this Lease), and
Section 9.02(4) above, (ii) contain a provision that Lessee shall not terminate
or cancel
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any of the above-described coverages without thirty (30) days' advance written
notice to Lessor, and (iii) by endorsement provide for waiver of subrogation
under Lessee's policies.
SECTION 9.06. INSURANCE PROCEEDS.
Lessor shall be entitled to receive any insurance proceeds attributable to
damage to the Leased Premises (other than to property owned by the Lessee).
Notwithstanding anything contained herein to the contrary, and subject to
Section 9.07 below, no party shall be required to pay or reimburse the other for
any matter to the extent covered by and proceeds are received under insurance
carried by the other party as required by this Article 9, or to the extent the
other party is in default of its insurance obligations, which would have been
covered by insurance carried by the other party if said party had carried the
insurance required by this Article 9 and, further, the amount of any liability
of any party hereunder shall be offset by the amount of insurance or any other
third-party proceeds, if any, actually received by the other party hereto in
respect of such liability.
SECTION 9.07. DEDUCTIBLES.
Notwithstanding anything contained herein to the contrary, to the extent a
claim relates to injury, loss or damage arising out of a breach of the
obligations and indemnities contained herein, the breaching party shall pay or
reimburse the other party for any deductible in respect of such claim, if the
injury, loss, or damage is covered by insurance carried by such other party or
would have been had said party carried the insurance required by Article 9.
SECTION 9.08. LOSS PREVENTION.
Lessee shall implement the loss prevention recommendations from Lessor's
insurers (or their designated representative) as it pertains to Lessee's
property or operations, within a reasonable period of time. Any increase in
premium to Lessor from Lessee's noncompliance with this section will be borne by
Lessee.
ARTICLE 10
FIRE AND OTHER CASUALTIES
SECTION 10.01. NOTICE.
If the Leased Premises, or any portion thereof, are damaged by fire or
other casualty, Lessee shall give immediate oral and written notice thereof to
Lessor, and this Lease shall continue in full force and effect except as
hereinafter set forth.
SECTION 10.02. DAMAGE.
Subject to the provisions of Sections 10.03 and 12.01 below, if the Leased
Premises are damaged or rendered unusable by fire or other casualty, unless this
Lease is terminated by Lessor or Lessee as
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herein provided, any damage shall be repaired by and at the expense of Lessor,
and the Rent (including Base Rent and Additional Rent) shall be equitably abated
from the day of the casualty as to that portion of the Leased Premises which is
unusable in the reasonable determination of Lessor and Lessee. Except to the
extent this Lease is terminated by Lessor or Lessee as provided under this
Article 10, Lessee's full liability for Rent shall resume on the date on which
Lessee is able to resume in all material respects its use of the damaged portion
of the Leased Premises. Notwithstanding the foregoing, should such partial
damage materially interfere with Lessee's ability to operate its business and
reasonably be estimated to require more than one hundred eighty (180) days to
complete, Lessee may by notice to Lessor within thirty (30) days from the date
of the casualty, terminate this Lease. Lessor shall commence any repairs
required by this Section 10.02 within thirty (30) days of any said fire or other
casualty. Lessor shall complete any repairs required by this Section 10.02
within one hundred eighty (180) days of the date repairs are required to
commence. If all repairs required by this Section 10.02 are not substantially
completed such that Lessee can substantially resume its operations within said
one hundred eighty (180) day period. Lessee may terminate this Lease by notice
to Lessor. If all repairs required by this Section 10.02 are not fully
completed within said one hundred eighty (180) days but substantial completion
of the repairs has been achieved and Lessee can resume its operations in all
material respects, Lessor shall so notify Lessee of the repairs completed and
said one hundred eighty (180) day period shall be extended for up to, but not
exceeding, an additional ninety (90) days to facilitate completion of the
restoration. If all repairs required by this Section 10.02 are not fully
completed within said ninety (90) day extension, Lessee may terminate this Lease
by notice to Lessor.
SECTION 10.03. LESSOR'S RIGHTS TO TERMINATE.
If the Leased Premises or the building in which the Leased Premises are
located shall be so substantially damaged that Lessor shall decide to demolish
the Leased Premises or the entire building in which the Leased Premises are
located, then Lessor may terminate this Lease by giving notice to Lessee within
forty-five (45) days after such fire or casualty.
SECTION 10.04. TERMINATION OF THE LEASE.
If Lessor or Lessee elects to terminate this Lease pursuant to this
Article 10, this Lease shall terminate as of the date of Lessee's surrender of
the Leased Premises, which shall occur within a reasonable time, which will not
be longer than ninety (90) days after the date of the termination notice.
Subject to the preceding sentence, in the event either party elects to terminate
this Lease pursuant to this Article 10, as of the date of such termination, the
term of this Lease shall expire as completely and as fully as if such date were
the date set forth above for the termination of the then current term of this
Lease. Lessee shall surrender the Leased Premises in accordance with the
provisions of Article 23 hereof without prejudice to either party's rights and
remedies against the other under the Lease provisions in effect prior to such
surrender, and any Rent owing shall be paid up to such date (after giving effect
to any abatement), and any payments of Rent made by Lessee which were on account
of any period subsequent to such date shall be immediately returned to Lessee.
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SECTION 10.05. REPAIR AND RESTORATION.
Unless a termination notice is delivered by Lessor or Lessee as provided
for herein, Lessor shall make the repairs and restorations under the conditions
of Section 10.02 hereof, subject to force majeure as provided in Article 35.
Lessor and Lessee agree to reasonably cooperate to enable repair and restoration
to be undertaken as soon as practical.
ARTICLE 11
CONDEMNATION
If all or greater than sixty percent (60%) of the Leased Premises shall be
taken under the power of eminent domain by any competent governmental authority,
this Lease shall terminate as of the date of such taking as if such date were
the date set forth above for the termination of the then current term of the
Lease. If sixty percent (60%) or less of the Leased Premises shall be taken
under such power of eminent domain, as of the date of such taking, the Rent
shall be equitably reduced. Notwithstanding the foregoing and in any event,
should any taking materially interfere with Lessee's ability to use the Leased
Premises for their intended purposes, Lessee may, in its reasonable discretion,
by notice to Lessor, elect to terminate this Lease as set forth herein. The
Rent shall be pro-rated or reduced as of the date of any such taking. In any
condemnation proceeding, Lessor and Lessee shall each be entitled to bring suit
and receive awards with respect to their respective interests in the Research
East Building.
ARTICLE 12
LIABILITY/ENVIRONMENTAL INDEMNITY
SECTION 12.01. LESSEE'S LIABILITY.
Except for insured casualty which subrogation is waived pursuant to
Section 9.03, above, any injury, breakage, damage or harm to the Leased Premises
(ordinary wear and tear excepted) caused by any act or omission of the Lessee or
Lessee's officers, directors, employees, contractors, agents or visitors, shall
immediately be caused to be repaired at the sole expense of Lessee, with such
repairs commencing as soon as possible and, in any event, within seven (7) days
of the discovery of such injury, breakage, carnage, or harm. If Lessee does not
undertake appropriate repairs (or notify Lessor and seek Lessor's repair as
Special Services), Lessor may, after notice to and opportunity to cure of Lessee
in accordance with Article 24, repair the damage and charge Lessee for the cost
of such repairs as Additional Rent.
Lessee shall defend, indemnify, protect and save Lessor, its officers,
employees, servants, agents, successors and assigns, harmless from and against
all claims, liabilities, losses, judgments, actions, administrative proceedings,
costs, expenses, penalties, fines, damages and expenses (including, but not
limited to, attorneys' fees, consultants' fees and court costs) for bodily
injury, harm, sickness, disease and death and for property loss or damage
("Claims") to the extent arising from the acts or omissions of Lessee, its
employees, contractors, servants, invitees or agents, including Claims based on
strict liability,
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which relate to Lessee's use or occupancy of the Leased Premises or Lessee's use
of the TI Expressway Site. If any loss or damage is attributable to both Lessor
and Lessee, Lessee agrees, without regard to any concurrent or other negligence
by Lessor (if any), to provide Lessor with comparative indemnification for that
portion of the loss or damage which is attributable to Lessee or Lessee's
officers, directors, employees, contractors, agents or visitors; provided
however Lessee shall provide complete indemnification for that portion of any
such loss or damage attributable to the operations of the Defense Business (as
defined in the Asset Purchase Agreement) which are Assumed Liabilities on or
prior to the Commencement Date, irrespective of either party's negligence.
Notwithstanding anything to the contrary in this Lease, Lessee's liability under
this Article 12 shall survive termination, expiration, or abandonment of this
Lease and shall be reduced by any insurance or third-party recovery for the
Claim actually received by Lessor.
SECTION 12.02. LESSOR'S LIABILITY.
Except for insured casualty for which subrogation is waived pursuant to
Section 9.03, above, any injury, breakage, damage, or harm to the Leased
Premises (ordinary wear and tear excepted) caused by any act or omission of the
Lessor or Lessor's officers, directors, employees, contractors, agents or
visitors, shall immediately be caused to be repaired at the sole expense of
Lessor, with such repairs commencing as soon as possible and, in any event,
within seven (7) days of the discovery of such injury, breakage, damage. or
harm. If Lessor does not undertake appropriate repairs, Lessee may, after
notice to and opportunity to cure of Lessor in accordance with Article 24,
repair the damage and charge the Lessor the cost for such repairs.
Lessor shall defend, indemnify, protect and save Lessee its officers,
employees, agents, and assigns harmless from and against all Claims, to the
extent arising from the acts or omissions of Lessor, its employees, contractors,
servants, invitees or agents, including Claims based on strict liability, which
relate to Lessor's use or occupancy of the TI Expressway Site. In the event any
loss or damage is attributable to both Lessor and Lessee, and Lessor agrees,
without regard to any concurrent or other negligence by Lessee (if any), to
provide Lessee with comparative indemnification for that portion of the loss or
damage which is attributable to Lessor and/or Lessor's officers, directors,
employees, contractors, agents or visitors, excluding any portion of such loss
or damage attributable to the operations of the Defense Business which are
Assumed Liabilities on or prior to the Commencement Date, irrespective of either
party's negligence. Notwithstanding anything to the contrary in this Lease,
Lessor's liability under this Article 12 shall survive termination, expiration,
or abandonment of this Lease and shall be reduced by any insurance or
third-party recovery for the Claim actually received by Lessee.
SECTION 12.03. LESSEE'S ENVIRONMENTAL INDEMNIFICATION.
Lessee agrees to defend, indemnify, protect and hold Lessor, its' officers,
directors, employees, representatives, agents, affiliates, successors, and
assigns harmless from and against, and, upon demand, to pay or reimburse each
such party promptly with respect to, any and all claims, actions, losses, costs,
damages, liabilities, administrative proceedings, judgments, fines, penalties,
and expenses (including reasonable attorneys' fees, consultants' fees and
remediation, monitoring, investigation, characterization, removal and disposal
costs) of any and every kind or character ("Environmental Claims"), to the
extent
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incurred by Lessor or asserted against Lessor by any governmental authority,
person, or entity, at any time, and from time to time, by reason of, in
connection with or arising out of (1) Lessee's breach of or noncompliance with
any environmental, health or safety law (including, without limitation,
principles of common law), regulation, ordinance, rule, permit, or license
relating to (i) Lessee's occupancy or use of the Leased Premises or the TI
Expressway Site on or after the Commencement Date, or (ii) the Defense Business,
to the extent constituting Assumed Liabilities, (2) the breach of any covenant,
representation, warranty, or indemnification obligation of Lessee expressly set
forth in this Agreement relating to any environmental, health, or safety
standard, (3) the failure of Lessee to perform any obligation required to be
performed by Lessee or make or file any report required to be made or filed by
Lessee pursuant to any environmental, health, or safety permit, license,
regulation, law or other standard relating to (i) Lessee's occupancy or use of
the Leased Premises or use of the TI Expressway Site on or after the
Commencement Date, or (ii) the Defense Business, to the extent constituting
Assumed Liabilities, (4) any act. omission, event or circumstance resulting in
any release, discharge, disposal or emission on or adjacent to the Leased
Premises or the TI Expressway Site. or release, discharge, disposal or emission
from or adjacent to the Leased Premises, of hazardous, toxic or radioactive
substances, solid wastes or air contaminants requiring removal, remediation or
other action under applicable environmental, health or safety laws, regardless
of whether the act, omission, event or circumstance constituted a violation of
any environmental, "health or safety law or standard at the time of the
existence or occurrence. to the extent (i) caused by the acts or omissions of
Lessee, its employees, contractors or other invitees, agents, officers or
directors, occurring on or after the Commencement Date or (ii) associated with
the Defense Business, to the extent constituting Assumed Liabilities, and
(5) any and all claims or proceedings made or brought (whether brought by an
employee or other private party or governmental agency) for bodily injury,
property impairment or any other injury or damage resulting from or relating to
any hazardous, toxic or radioactive substance, contaminated material or air
contaminant located upon cr migrating into, from or through the Leased Premises
to the extent (i) caused by Lessee, its employees, contractors or other
invitees, agents, officers or directors, occurring on or after the Commencement
Date, or (ii) associated with the Defense Business to the extent constituting
Assumed Liabilities; in each case whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or disposal of
such substance, including claims based on strict liability. In the event any
loss or damage is attributable to both Lessor and Lessee, Lessee agrees, without
regard to any concurrent or other negligence by Lessor (if any), to provide
Lessor with comparative indemnification for that portion of the loss or damage
which is attributable to Lessee and/or Lessee's officers, directors, employees,
contractors, agents, or visitors; provided however Lessee shall provide complete
indemnification for that portion of any such loss or damage attributable to the
operations of the Defense Business which are Assumed Liabilities on or prior to
the Commencement Date, irrespective of either party's negligence.
Notwithstanding anything to the contrary in this Lease, Lessee's obligations
under this Article 12 shall survive termination, expiration or abandonment of
this Lease.
SECTION 12.04. LESSOR'S ENVIRONMENTAL INDEMNIFICATION.
Lessor agrees to defend, indemnify, protect and hold Lessee, its officers,
directors, employees, representatives, agents, affiliates, successors, and
assigns harmless from and against, and, upon demand, to pay or reimburse each
such party promptly with respect to, any and all Environmental Claims (other
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than Environmental Claims associated with or resulting from the operations of
the Defense Business which are Assumed Liabilities) to the extent incurred by
Lessee or asserted by any governmental authority, person or entity, at any time,
and from time to time, by reason of, in connection with or arising out of
(1) Lessor's breach of or noncompliance with any environmental, health or safety
law (including, without limitation, principles of common law), regulation,
ordinance, rule, permit, or license relating to the TI Expressway Site or
Lessor's use of the TI Expressway Site, (2) the failure of Lessor to perform any
obligation required to be performed or make or file any report required to be
made or filed by Lessor pursuant to any environmental, health, or safety permit,
license, regulation, law or other standard relating to the TI Expressway Site or
Lessor s use of the TI Expressway Site, (3) any act, omission, event or
circumstance existing or occurring before the term of this Lease resulting in
any release, discharge, disposal or emission from on or adjacent to the Leased
Premises or the TI Expressway Site or release, discharge, disposal, or emission
from or adjacent to the TI Space (defined below) of hazardous, toxic or
radioactive substances, solid wastes or air contaminants requiring removal,
remediation or other action under applicable environmental, health and safety
laws, regardless of whether the act, omission, event or circumstance constituted
a violation of any environmental, health or safety law or standard at the time
of the existence or occurrence to the extent caused by the acts or omissions of
Lessor, its employee, contractors, agents, officers or directors, and (4) any
and all claims or proceedings made or brought (whether brought by an employee or
other private party or governmental agency) for bodily injury, property
impairment or any other injury or damage resulting from or relating to, and/or
any legally imposed requirements for the monitoring, remediation, investigation
or removal of any hazardous, toxic or radioactive substance, contaminated
material, or air contaminant located upon or migrating into, from or through the
TI Expressway Site to the extent caused by the acts or omissions of Lessor, its
employees, contractors, agents, officers or directors, whether or not the
alleged liability is attributable to the handling, storage, generation,
transportation or disposal of such substance or the mere presence of the
substance on the TI Expressway Site; including claims based on strict liability.
In the event any loss or damage is attributable to both Lessor and Lessee,
Lessor agrees, without regard to any concurrent or other negligence by Lessee
(if any), to provide Lessee with comparative indemnification for that portion of
the loss or damage which is attributable to Lessor and/or Lessor's officers,
directors, employees, contractors, agents or visitors, excluding any portion of
such loss or damage attributable to the operations of the Defense Business which
are Assumed Liabilities on or prior to the Commencement Date, irrespective of
either Party's negligence. Notwithstanding anything to the contrary in this
Lease, Lessor's obligations under this Article 12 shall survive termination,
expiration or abandonment of this Lease. As used herein, "TI Space" shall mean
any portion of the TI Expressway Site which is not (i) part of the Leased
Premises or (ii) otherwise leased by Lessee at the time of such event or
activity.
ARTICLE 13
EMERGENCIES/REPORTING OBLIGATIONS
SECTION 13.01. REPORTING TO LESSOR.
In the event of emergency situations of which Lessee is aware (including,
without limitation, fires, accidental chemical spills or exposures, unauthorized
air emissions. unauthorized radiation
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emissions or exposures, unauthorized discharges into waste streams, or other
environmental, industrial hygiene or safety emergencies), Lessee shall
immediately report such occurrence to Lessor.
SECTION 13.02. REPORTING TO GOVERNMENTAL AGENCIES.
With respect to Lessee's use of the Leased Premises during the Lease Term,
Lessee shall be solely responsible for compliance with all governmental
reporting duties imposed upon Lessee by applicable laws, and (in addition to
reporting to Lessor as provided in the preceding paragraph) Lessee shall report
any emergency situation to the applicable governmental agency (if any) to the
extent required by, and within the time periods prescribed by, applicable laws.
In the event Lessee fails to comply with its statutory or contractual duty to
report such emergency situations to any governmental agency, Lessor may, but
shall not be obligated to, upon learning of such failure, report such matters.
The parties shall coordinate in an effort to avoid duplicate reporting of any
emergency situation. Under no circumstances, however, shall this provision be
construed to be an assumption by Lessor of any reporting duty on behalf of
Lessee.
ARTICLE 14
TAXES
Ad valorem taxes for the Leased Premises will be charged by Lessor to
Lessee during the Lease Term, and Lessee shall pay and discharge as Additional
Rent such ad valorem taxes for the Research East Building, based on Lessee's
proportionate share thereof, which shall be that percentage derived by dividing
(1) the NSF of the Leased Premises in the building (exclusive of the Exterior
Equipment Locations), by (2) the total of (a) the NSF of the Leased Premises in
the building (exclusive of the Exterior Equipment Locations); and (b) the NSF of
any TI space, if any, in the building (i.e. any net square footage in the
building that is not included in the Leased Premises). Ad valorem taxes for a
building at a multiple building site will be determined based on the Research
East Building's pro rata share of TI Expressway Site site-wide taxes, calculated
on the basis of net book value, as reflected in the records maintained by
Lessor's Corporate Services Finance Department prepared in accordance with
disclosure statement approved by the Defense Logistics Agency/DCAA or with
generally accepted accounting principles. Such taxes shall be due and payable
fifteen (15) days after notice from Lessor. Lessor and Lessee shall reasonably
cooperate regarding ad valorem tax issues, and avoid actions which would result
in unfair discrimination with regard to allocation or distribution of ad valorem
taxes or the property assessments on which such taxes are based.
Except for ad valorem taxes assessed directly on the TI Expressway Site,
all taxes and assessments now or hereinafter imposed upon Lessee with respect to
its operations or property, now or hereinafter imposed, shall be borne and
timely paid directly by Lessee to the taxing authority.
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ARTICLE 15
NO JOINT VENTURE, PARTNERSHIP, OR AGENT RELATIONSHIP
The relationship between Lessor and Lessee, with regard to this Lease. is
strictly that of lessor/lessee and contracting parties; Lessor and Lessee are
not partners, joint venturers or agents of each other.
Additionally, notwithstanding any services or assistance provided by Lessor
or Lessee to the other hereunder or under any other agreement;
(a) Neither party shall be responsible, either directly or indirectly,
expressly or impliedly, for compliance with any laws applicable to the other's
particular use of the TI Expressway Site;
(b) Lessee shall be solely responsible for its compliance with
environmental, health, and safety laws and regulations relating to Lessee's
operations in or about the Leased Premises. and Lessee shall prepare or cause to
be prepared all documentation and make all arrangements for disposal or other
handling of its hazardous waste, potentially recyclable hazardous materials, and
any other waste generated by Lessee or its agents or contractors requiring
manifests under applicable law;
(c) Lessee shall not be responsible, either directly or indirectly,
expressly or impliedly, for Lessor's compliance with any laws, regulations,
ordinances, permits, or licenses applicable to Lessor's use of the TI Expressway
Site; and
(d) Lessor shall be solely responsible for its compliance with
environmental, health, and safety laws and regulations relating to Lessor's
operations in or about the TI Expressway Site, and Lessor shall prepare or cause
to be prepared all documentation and make all arrangements for disposal or other
handling of its hazardous waste, potentially recyclable hazardous materials, and
any other waste generated by Lessor or its agents or contractors requiring
manifests under applicable law.
ARTICLE 16
ILLEGAL SUBSTANCE SCREENING
For so long as TI shall remain Lessor under this Lease, Lessee will comply
with a drug-free workplace policy reasonably acceptable to TI.
ARTICLE 17
LESSEE'S ENVIRONMENTAL, INDUSTRIAL HYGIENE AND SAFETY COVENANTS,
REPRESENTATIONS AND WARRANTIES
In addition to the other provisions of this Lease, Lessee covenants,
represents and warrants that, during the term of this Lease and so long as
Lessee or any of Lessee's employees, contractors, agents or visitors are located
in the Leased Premises or are on the TI Expressway Site, Lessee shall comply
with the following:
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(a) Lessee shall not violate, and Lessee shall not take any action that
would cause Lessor to be out of compliance with, any environmental, safety, or
industrial hygiene law (including, without limitation, principles of common law)
or any applicable permit, license, or authorization; Lessee shall comply with
each and every environmental permit issued to Lessee with respect to its use of
the Leased Premises as a result of Lessee's use or occupancy of the Leased
Premises, whether any such permit is issued in the name of Lessor, Lessee or any
third party; Lessee shall be responsible for obtaining and maintaining any and
all permits, licenses, authorizations, approvals, and exemptions as required for
Lessee's operations on the Leased Premises or Lessee's use of the TI Expressway
Site under this Lease under applicable environmental, safety, and industrial
hygiene laws, and Lessee shall pay for all fees and costs associated with
environmental permit applications, permit amendments, modifications or
revisions, registrations, governmental assessments or other governmental charges
of every type whatsoever relating to Lessee's operations on the Leased Premises
or its use of the TI Expressway Site under this Lease. The parties acknowledge
and agree that because of the nature and configuration of the TI Expressway
Site, (1) Lessor and Lessee shall petition the Texas Natural Resource
Conservation Commission (TNRCC) to designate the Leased Premises and the balance
of the TI Expressway Site as a single property for purposes of evaluating air
quality impacts pursuant to 30 Texas Administrative Code Section 101.2(b) and
shall enter into a single property designation agreement effective as of the
Commencement Date substantially in the form attached as Exhibit "B" hereto and
made a part hereof; and (2) During the Research East Transition Period, Lessor
and Lessee may both discharge under Lessor's waste water permit from the City of
Dallas, Permit No. 040224 (together with any renewals, reissuances or
modifications thereto,. the "TI Waste Water Permit"), a copy of which has been
provided by Lessor to Lessee. provided, however Lessee shall be responsible for
ensuring that its discharges comply with the terms of such permit, provided,
however, either prior to or during the Research East Transition Period, Lessee
shall apply for and diligently pursue issuance of a separate waste water
discharge permit covering its waste water discharges from the TI Expressway Site
(prior to the point such discharges commingle with those of Lessor). Upon
issuance of such separate permit, Lessee's waste water discharges at the TI
Expressway Site, including those from the Research East Building, will be
governed by such permit up to the point they commingle with the waste water
discharges of TI, from which point to combined outfall CWTP-16 they will be
covered by the TI Waste Water Permit. At Lessor's request, Lessee agrees at its
cost to sample Lessee's waste water sampling ports concurrently with Lessor's
sampling of its waste water sampling ports.
(b) Lessee shall comply with all applicable federal, state and local laws
and lawful orders of any governmental entity, public authority or judicial
authority applicable to its use of the Leased Premises and Lessee's operations
thereon, including, without limitation, any notice, reporting, and record
keeping obligations imposed by any of the foregoing. Without limiting the
generality of the foregoing, Lessee acknowledges it shall comply with all
reporting obligations under laws relating to the health or safety of persons or
property or their protection from damage, injury or loss, and with the
requirements of the Americans with Disabilities Act and Texas Architectural
Barriers Act to the extent such requirements first become applicable as a result
of Lessee's Alterations, repairs or improvements or Lessee's specific use of the
Leased Premises.
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(c) Lessee shall designate a responsible member of its organization at the
Leased Premises, to function as the liaison between Lessor and Lessee in the
event either party deems it necessary to contact the other for purposes of
environmental, safety or industrial hygiene matters.
(d) Lessee shall exercise at least the level of care and skill customary
in its industry, and conduct all dangerous activities on the Leased Premises
under the supervision of properly qualified personnel; any hazardous, toxic or
radioactive materials, substances or wastes will be properly containerized,
labeled and stored; Material Safety Data Sheets, as defined in 29 C.F.R. Section
1910.1200 or any successor regulation, will be properly kept by Lessee and
furnished to the TI Facilities Coordinator. Hazardous materials will not be
stored in stairwells, along emergency egress routes, near air handlers or
systems or otherwise in a manner that poses a hazard; gas cylinders will be
secured at all times.
(e) Lessee shall obtain its own EPA and TNRCC Identification Numbers,
arrange for disposal, and be identified on manifests as the generator, of all
hazardous or other waste generated from or otherwise arising out of Lessee's
operations on the Leased Premises.
(f) Lessee shall comply with all hazardous, toxic and radioactive waste
and materials handling and storage requirements under applicable laws,
regulations, ordinances and permits, and will exercise the utmost care when
handling and transporting such materials across the TI Expressway Site.
(g) All hazardous, toxic or radioactive materials or substances delivered
or brought to the TI Expressway Site by Lessee, its employees, contractors, or
suppliers, will be received at a dock authorized to receive such materials. All
docks which receive such materials shall have the following spill control
measures: areas are to be sized for a free liquid volume capacity the greater
of 1.0 x the largest tank volume involved, or ten percent (10%) of the volume of
all tanks involved, or two percent (2%) of the total volume stored in drums,
carboys, or smaller containers at the location. Spill control secondary
containment structures must be free of cracks and impermeable to leakage or
migration of any spills to the ground or support foundation.
(h) Lessee shall ensure that all emergency exits, fire extinguishers,
electrical panels and equipment, aisles and passageways will be accessible and
kept clear at all times and maintained in compliance with applicable OSHA
requirements; Lessee shall apply good housekeeping practices throughout the
Leased Premises.
(i) Lessee shall not make any changes in the character of (including
specific specification changes) or increase the volume of its actual air
emissions, other than de minimis increases, without the prior approval of TI.
(j) Lessee shall implement best management practices and, to the extent
applicable, adhere to the other requirements of the storm water general permit
promulgated by EPA pursuant to 40 C.F.R Section 122.28(c) and covering storm
water discharges at the TI Expressway Site.
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(k) Lessee shall retain one or more Laser and Radiation Safety Officers,
trained and licensed to the extent required by applicable laws, to oversee and
ensure compliance with all radiation requirements applicable to the Leased
Premises.
Any action based upon any breach of the foregoing representations,
warranties or covenants by Lessee, its agents, employees, contractors, tenants
and assigns, shall survive termination, abandonment, or expiration of this
Lease.
ARTICLE 18
DISCLAIMER
Except as expressly set forth in this Lease, neither Lessee nor Lessor
makes any warranties, express or implied or otherwise, with respect to this
Lease; and subject to the terms of this Lease, Lessee acknowledges and agrees
that this Lease is made on an "as is" and "where is" basis. Lessee further
acknowledges that Lessor makes no implied covenants with respect to this Lease.
Without limiting the generality of the foregoing, no receipt, review, consent,
approval, acquiescence or other knowledge of a party of, in or to any plans,
specifications, additions, alterations, improvements, equipment or process
changes proposed or taken by Lessee or Lessor shall be deemed, or in any way
construed, to be any representation, warranty or guaranty with respect to such
plan, specification, addition, alteration, improvement, equipment or process
change and shall not relieve the other party of any responsibility or liability
therefor.
ARTICLE 19
LESSOR'S AUDIT RIGHTS
Upon not less than forty-eight (48) hours prior notice to Lessee, Lessor,
at its sole cost, may, but shall not be obligated to, enter the Leased Premises
and inspect Lessee's environmental records and operations, and sample/monitor
Lessee's waste streams, radiation and air emissions, for the sole purpose of
determining whether Lessee is in compliance with this Lease, provided that any
entry shall minimize to the extent reasonably possible any interference with the
business or operations conducted in the Leased Premises. Lessee shall have the
right to designate a representative of Lessee to accompany Lessor and its
representatives during the audit; provided, exercise of such right does not
alter the scheduling of the audit. Audits conducted by Lessor pursuant to this
Article 19 are for Lessor's benefit only. Lessor shall not disclose any such
audit, or information learned through such audit to any third party, including
any governmental authority, without the prior consent of Lessee, except for an
emergency situation as set forth in Article 13, and except as otherwise required
by law. Lessor shall, at Lessee's request, disclose all findings within the
scope of such audit to Lessee, and in all cases, shall provide a copy of such
audit to Lessee. In the event Lessor discovers that Lessee is not in compliance
with applicable laws or other covenants of this Lease in any material respect,
whenever reasonably necessary Lessor may, but shall have no obligation to, take
the least disruptive action necessary to remedy such noncompliance by Lessee and
protect the legitimate interests of Lessor; provided however, except in
emergency situations, Lessor shall afford Lessee the prior opportunity to take
such action
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within a ten (10) day period (or shorter if warranted by the circumstances)
before instituting any such action, and Lessor shall only act, if at all, if
Lessee fails to take any action within the prescribed period or fails to
diligently continue to implement such action. In the event Lessor takes any
such remedial action, Lessor shall not be liable for inconvenience, annoyance,
disturbance, loss or interruption of business, by reason of making such
reasonable and good faith determination and taking such action; provided,
however, Lessor shall be liable to Lessee for any negligence or reckless
disregard caused by Lessor, its employees, agents, consultants, and contractors
with respect to any action under this Article 19. Lessor agrees in exercising
its rights under this Article 19 to act in good faith to avoid unreasonable
interference with Lessee's operations at the TI Expressway Site.
ARTICLE 20
ENTRY/RIGHT OF ACCESS
Due to the interconnectedness of the infrastructure serving the various
buildings on the TI Expressway Site, Lessor will require and Lessee hereby
agrees to grant to authorized personnel of Lessor (i) access to certain
infrastructure and utilities systems located in those areas of the Research East
Building indicated as "TI required access" areas on Exhibit A-4 hereto, as and
to the extent reasonably required by Lessor, and (ii) the right to continue to
monitor on Lessor's supervisory control and data acquisition ("SCADA") system,
utilities and process gas and fluid distribution systems located in the Leased
Premises that connect to the site-wide distribution system.
Lessor and its representatives may, acting in good faith to minimize to the
extent reasonably possible interference with Lessee's operations at the Leased
Premises and upon at least twenty-four (24) hours' prior notice to Lessee
(except in the case of emergency), and subject to any applicable U.S. Government
security requirements, enter the Leased Premises for any of the following
purposes
(a) to make repairs to the Leased Premises required of Lessor under this
Lease;
(b) to provide access to the Leased Premises during normal business hour
for authorized third parties, including without limitation, governmental
agencies and, with the consent of Lessee, which shall not be unreasonably
withheld or delayed, lenders, brokers, purchasers, appraisers and, during the
last eighteen (18) months of the Lease Term prospective tenants;
(c) to inspect the Leased Premises and determine Lessee's compliance with
this Lease;
(d) to audit the compliance by Lessee as permitted in Article 19;
(e) to respond to emergency situations;
(f) to perform any work, which Lessor elects and is entitled to undertake,
made necessary by reason of any default by Lessee under the terms of this Lease
(g) to carry out any other activity of Lessor permitted under this Lease;
and
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(h) to perform services for Lessee hereunder.
Nothing herein shall be construed to impose or imply any duty upon Lessor
to do any such work which, under any provision of this Lease, it is not required
to perform; and the performance thereof by Lessor shall not constitute a waiver
of Lessee's default. Lessee shall reasonably cooperate with Lessor to ensure
provision of keys, combinations or codes as necessary to ensure adequate and
(where appropriate) immediate access to the Leased Premises as reasonably
required to provide Lessor with the access granted, above. Lessee shall have
the right to designate a representative of Lessee to accompany Lessor and its
representatives when Lessor or its representatives are present on the Leased
Premises.
ARTICLE 21
BUILDING SYSTEMS SHUTDOWNS
Lessee acknowledges that Lessor may, from time to time during emergencies
or for purposes of building maintenance, need to shut down one or more of the
Utility Systems serving the buildings in which the Leased Premises are located.
Lessee agrees to reasonably cooperate with Lessor to allow Lessor to shut
down building systems for up to five (5) days annually to perform Utilities
Systems maintenance. Except in the case of an emergency, Lessor shall schedule
such shutdown with at least two (2) months notice to Lessee and prior approval
by Lessee, which approval shall not be unreasonably withheld or delayed. Lessor
will cooperate with Lessee regarding all shutdowns so as to minimize any
potential disruption to Lessee's operations.
Lessee acknowledges Utilities Systems shutdowns performed in accordance
with this Article 21 will benefit Lessee and Lessee's operations. Lessor shall
not be liable for inconvenience, annoyance, disturbance, loss or interruption of
business to Lessee. Lessor shall not be liable for any other claimed damage to
Lessee, by reason of any such Utilities Systems shutdown, except to the extent
due to the gross negligence or willful misconduct of Lessor or its agents,
employees, or contractors, nor shall Lessee be entitled to any abatement of Rent
by reason of any such Utilities Systems shutdown.
ARTICLE 22
HOLDING-OVER
If Lessee continues to occupy the Leased Premises beyond the Lease Term of
this Lease in the absence of a mutually agreed upon extended term, such
holding-over shall constitute a tenancy at will, except upon hold-over all the
monthly Rent rates shall increase to a sum of 150% of the then current Rent in
effect at the time of expiration of this Lease.
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ARTICLE 23
SURRENDER OF THE LEASED PREMISES
Upon surrender of the Leased Premises for any reason, including
termination, abandonment, expiration or breach by Lessor, Lessee, at its expense
(except as otherwise expressly provided herein) shall remove from the Leased
Premises Lessee's Property, except for such Alterations that Lessor has agreed
that may at Lessee's election, be surrendered. Lessee will use all reasonable
efforts to avoid causing damage to the surrounding structure and to minimize
disruption of Lessor's operations. Subject to Articles 10 and 11, Lessee, at
its expense, will promptly repair any damage to the Leased Premises caused by
any removal of Lessee's property and Alterations therefrom and restore the
Leased Premises substantially to the same condition as at the commencement of
the Lease (without such equipment as Lessee is removing), reasonable wear and
tear and Alterations that Lessor states in writing may be surrendered at the
termination of the Lease excepted. Lessor's acceptance of any surrender of the
Leased Premises by Lessee shall not be deemed to constitute a waiver by Lessor
of any default by Lessee. Any of Lessee's Property not removed after surrender
shall become the property of Lessor. Upon such surrender, Lessee shall not
allow or cause any environmental, health, or safety permits or authorizations
relating to Lessee's use or occupancy of the Leased Premises to expire,
terminate, or lapse for a period of sixty (60) days after such surrender and
shall, at Lessor's request, execute such documentation as may be necessary or
desirable to transfer any such permits or authorizations to Lessor or Lessor's
designee.
ARTICLE 24
EVENTS OF DEFAULT
SECTION 24.01. LESSEE'S EVENTS OF DEFAULT.
The following events shall be deemed to be "Events of Default" by Lessee
under this Lease:
(a) Lessee's failure to timely pay any installment of Rent or to make any
other payment as specified herein within ten (10) days after actual receipt by
Lessee of notice from Lessor of Lessee's failure to pay the past due amounts; or
(b) For non-monetary obligations, Lessee's breach of or failure to comply
with any term, provision, representation, warranty, or covenant of this Lease,
and Lessee's failure to cure such breach or noncompliance within thirty (30)
days after actual receipt by Lessee of notice thereof from Lessor or with
Lessor's consent, which shall not be unreasonably withheld, within such longer
time as may reasonably be required to cure the default.
SECTION 24.02. EVENTS OF DEFAULT BY LESSOR.
The following events shall be deemed to be "Events of Default" by Lessor
under this Lease:
(a) Lessor's breach of or failure to comply with any term, provision,
representation, warranty or covenant of this Lease, and
(i) Lessor's failure to make a payment due from Lessor under this
Lease or apply appropriate credit to Lessee as specified herein within ten
(10) days after actual receipt by Lessor
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of notice from Lessee of Lessor's failure to pay the past due amounts or
apply the appropriate credit, or
(ii) For nonmonetary obligations, Lessor's failure to cure such
breach or non-compliance within thirty (30) days after actual receipt of
notice thereof from Lessee or such longer time as may reasonably be
required to cure the default.
ARTICLE 25
REMEDIES
SECTION 25.01. LESSOR'S REMEDIES.
If an Event of Default by Lessee shall have occurred, Lessor shall have the
right, at its election, then or at any time thereafter while such Event of
Default shall continue, to pursue any one or more of the following remedies,
without any notice or demand whatsoever:
(a) Terminate this Lease, without any liability whatsoever, in which
event, Lessee shall immediately surrender the Leased Premises to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
it may have for possession or arrearages in Rent, enter upon or take possession
of the Leased Premises and expel or remove Lessee and any other person who may
be occupying the Leased Premises or any part thereof without being liable for
prosecution or any claim for damages therefor, and Lessee agrees to pay to
Lessor, on demand, the amount of all loss and damage, including attorneys' fees,
which Lessor may suffer by reason of such termination;
(b) Enter upon the Leased Premises without being liable for prosecution or
any claim for damages therefor, correct such default and, upon demand, recover
from Lessee all reasonable amounts expended, as Rent; or otherwise do whatever
Lessee is obligated to do under the terms of this Lease; and Lessee agrees to
reimburse Lessor, on demand, for any expenses, including attorneys' fees, which
Lessor may incur in connection with its attempts to effect compliance with
Lessee's obligations under this Lease, and Lessee further agrees that Lessor
shall not be liable for any damages resulting to Lessee from such action, except
to the extent caused by the gross negligence or willful misconduct of Lessor; or
(c) Enter upon and take custodial possession of the Leased Premises, and
use reasonable efforts to re-let the Leased Premises for a use comparable to
that of Lessee for the balance of the then current term without thereby causing
a termination or anticipatory breach of the Lease.
Pursuit of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or any other remedies provided by law or equity, nor
shall pursuit herein provided constitute a forfeiture or waiver of any Rent due
to Lessor hereunder or any damages accruing to Lessor by reason of the violation
of any of the terms, provisions or covenants herein contained. Failure by
Lessor to enforce one or more of the remedies provided herein upon an Event of
Default by Lessee shall not be deemed or construed to constitute a waiver of
such default, or any other violation or breach of any of the terms, provisions
or covenants herein contained.
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SECTION 25.02. LESSEE'S REMEDIES.
If an Event of Default by Lessor shall have occurred, Lessee shall have the
right, at its election, then or at any time while such Event of Default shall
continue, to pursue any one or more of the following remedies without any notice
or demand whatsoever:
(a) Terminate this Lease, in which event, Lessee shall immediately
surrender the Leased Premises to Lessor, and such date of surrender shall be
treated as if it were the date set forth above for the termination of the then
current term of the Lease; provided, however, Lessee may also assert any claim
Lessee may have against Lessor for amounts due from Lessor to Lessee hereunder
or for any other breach by Lessor hereunder. Lessor agrees to pay to Lessee, on
demand, the amount of all loss and damage, including attorneys fees, which
Lessee may suffer by reason of such termination, and provided, however, Lessee
shall at all times be entitled to remove Lessee's property and Alterations
installed and paid for by Lessee from the Leased Premises, or
(b) Correct such default and, upon demand, recover from the Lessor, upon
invoice, all amounts reasonably expended; or otherwise do whatever Lessor is
obligated to do under the terms of this Lease; and Lessor agrees to reimburse
Lessee promptly, on demand, for any reasonable expenses, including attorneys
fees, which Lessee may incur in connection with its attempts to effect
compliance with Lessor's obligations under this Lease, and Lessor further agrees
that Lessee shall not be liable for any damages resulting,- to the Lessor from
such action, except to the extent caused by the gross negligence or willful
misconduct of Lessee.
Pursuit of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or any other remedies provided by law or equity; nor
shall pursuit herein provided constitute a forfeiture or waiver of any amount
due from Lessor to Lessee hereunder or any damages accruing to Lessee by reason
of the violation or otherwise due pursuant to any of the terms, provisions, or
covenants herein contained. Failure by Lessee to enforce one or more of the
remedies provided herein upon an Event of Default by Lessor shall not be deemed
or construed to constitute a waiver of such default, or any other violation or
breach of any of the terms, provisions or covenants herein contained.
ARTICLE 26
ENFORCEMENT COSTS
The court, costs and attorneys fees incurred by the party who successfully
prosecutes or defends any legal or equitable proceeding to enforce any right or
obligation hereunder, shall be borne by the other party. Such costs and fees
shall be due and payable from the date a final, non-appealable judgment is
entered.
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ARTICLE 27
NO WAIVER, EXPRESS OR IMPLIED
No waiver or failure to object to a breach of any of the provisions of this
Lease, whether express or implied, in any instance, shall be construed to be, or
operate as, a waiver of any prior or succeeding breach of the same or any other
provision of this Lease.
ARTICLE 28
NOTICES
Solely for the purpose of giving notices under this Lease, the addresses of
the parties hereto, to which all notices hereunder (other than notices required
under Sections 5, 7, 10.01, 12, 13, 17, 20, and 21, which notices need only be
given to those persons identified with an asterisk below) are to be sent, are as
follows:
IF TO LESSOR: Texas Instruments Incorporated
0000 XXX Xxxxxxx, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (on-site deliveries), or
X.X. Xxx 000000, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (U.S. mail delivery)
Attention: Manager, Corporate Facilities;
Leasing & Property Management
Facsimile No: 972-997-5083
E-Mail: x-xxxxx@xx.xxx
with a copy to: *Texas Instruments Incorporated
Xxxxxx, Xxxxx 00000
X.X. Xxx 000000, Xxxx Xxxxxxx 0000 (X.X. mail
deliveries), or
0000 XXX Xxxxxxx, Xxxxxx, Xxxxx 00000
Mail Station 8379 (on-site deliveries)
Attention: North Texas Facilities Manager
Facsimile No: 000-000-0000
E-Mail: xxxxxxxx@xx.xxx
IF TO LESSEE: *Raytheon TI Systems, Inc.
c/o Raytheon Company
0 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
with a copy to: *Raytheon TI Systems, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Plant Manager
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All notices, approvals, and other communications required or permitted by
this Lease to be given to Lessor or Lessee shall be in writing and shall be
delivered (i) in person or by a reputable courier service that provides receipt
of delivery, (ii) by deposit in the U.S. mail, postage prepaid, by certified or
registered mail, return receipt requested, provided, however, the delivery of
payment of routine invoices shall not be required to be by certified or
registered mail; (iii) by a nationally recognized overnight courier service; or
(iv) by electronic mail or facsimile delivery confirmed by delivery in
accordance with subparagraphs (i) or (iii) above; in each case addressed to the
party concerned at the addresses or facsimile numbers set forth above or with
respect to payments to Lessor, to the addresses set forth in Section 2.04
hereof, (or at such other address as a party may specify by written notice
pursuant to this paragraph to the other party). Communications sent by personal
delivery, courier service, electronic or facsimile transmission as set forth
above shall be effective upon receipt, provided the required confirmatory
delivery is made. Communications sent by mail as set forth above shall be
effective five (5) days after proper deposit in the U.S. mail.
ARTICLE 29
NO ORAL MODIFICATION
This Lease may only be amended in writing, executed by an authorized
representative of each party, respectively.
ARTICLE 30
EFFECT OF AGREEMENT
This Lease supersedes any prior understanding or written or oral agreements
between the parties concerning the Leased Premises.
ARTICLE 31
GOVERNING LAW
This Lease shall be construed and interpreted under the laws of the State
cf Texas.
ARTICLE 32
SEVERABILITY
If any term or provision of this Lease or the application thereof to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is invalid or unenforceable,
shall not affected thereby.
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ARTICLE 33
ESTOPPEL CERTIFICATES/FURTHER ACTS
Either party will, at any time and from time to time, within ten (10) days
after receipt of a request by the other party, execute, acknowledge and deliver
to the requesting party, a signed statement certifying that this Lease is
unmodified and in full effect (or, if there have been modifications, that this
Lease is in full effect as modified, and setting forth such modifications) and
the date to which the Rent has been paid, and either stating that no default
exists hereunder or specifying each such default of which the signer may have
knowledge and specifying such other matter as may be reasonably requested.
Either party will, at any time and from time to time, perform or cause to
be performed upon or after execution of this Lease, any and all further acts as
may be reasonably necessary to consummate the transaction contemplated hereby.
ARTICLE 34
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE
Nothing in this Lease shall be construed to limit TI's right to sell,
convey or divest TI's ownership of any or all of the TI Expressway Site or the
Leased Premises. In the event of any such sale, conveyance, or divestiture of
title to the Leased Premises, by Lessor or subsequent owners of such title, and
provided that the successor enters into a nondisturbance and attornment
agreement with Lessee, which shall provide that in the event of foreclosure or
other action, this Lease and the rights of Lessee hereunder shall not be
disturbed but shall continue in full force and effect so long as Lessee shall
not be in material default hereunder beyond expiration of any applicable grace
or cure period, Lessee shall subordinate this Lease to the lien of any mortgage
or deed of Trust, and the Lessor, person or corporation, or other entity who is
divested of title shall be entirely freed and relieved of all covenants and
obligations thereafter accruing hereunder, and the grantee, person, corporation
or other entity or entities who otherwise succeeds or succeed to title shall be
deemed to have assumed the covenants and obligations of Lessor thereafter
accruing hereunder until the next conveyance or divestiture of title. Lessee
shall look to said grantee or successor for the observance and performance of
covenants and obligations of Lessor hereunder assumed by such grantee or
successor. Lessee agrees to attorn to any such grantee or successor. In the
event Lessor sells, conveys or assigns its ownership of the Leased Premises to
an entity having a total net worth of less than one hundred million dollars
($100,000,000), the prohibition on set off, demand or deduction by Lessee set
forth in Section 2.01, above, shall no longer apply.
ARTICLE 35
FORCE MAJEURE
Neither party shall be responsible for any delay or failure in performance,
or for any loss, damage, costs, charges and expenses incurred or suffered by the
other party by reason thereof, if such delay or failure results from the
occurrence of an event beyond the reasonable control of such party and
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without the fault or negligence of such party ("force majeure") including, but
not limited to, acts of God or the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods, epidemics,
quarantine restrictions, strikes, freight embargoes, unusually severe weather,
failure of suppliers, terrorism, or civil strife. If any party to this Lease is
rendered wholly or partially unable by an event of force majeure to carry out
its obligations under this Lease, and if that party gives prompt notice and full
particulars of such event of force majeure to the other party, the performance
of the notifying party of its obligations under this Lease shall be suspended
during the continuance of the force majeure event, but for no longer period.
Upon the cessation of such event, the party claiming force majeure shall
(a) notify the other party, and (b) resume performance of its obligations as
soon as practicable.
ARTICLE 36
BINDING EFFECT
This Lease and all rights and obligations hereunder shall inure to and be
binding upon the successors and assigns of Lessor and shall inure to and be
binding upon the permitted successors and assigns (if any) of Lessee.
ARTICLE 37
GENDER
Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, and vice versa, unless the context requires otherwise.
ARTICLE 38
CONSTRUCTION AND INTENT
The parties hereto acknowledge that the terms of this Lease have been
negotiated at arm's length, and that each party and its counsel have reviewed
and revised this Lease, and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party, shall not be employed
in the interpretation of this Lease, or any exhibits, schedules or amendments
hereto.
ARTICLE 39
NO INCIDENTAL OR CONSEQUENTIAL DAMAGES
Notwithstanding any other provision of this Lease (including without
limitation the default and environmental indemnification provisions), in the
event of any breach of this Lease, the parties agree that neither party shall be
liable to the other for any incidental, consequential or punitive damages,
including
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without limitation losses due to inconvenience, annoyance, disturbance, or loss
or interruption of business.
ARTICLE 40
AUTHORITY
Each individual executing or attesting the Lease on behalf of Lessor hereby
covenants, warrants and represents that he or she is duly authorized to execute
and/or attest and deliver the Lease on behalf of Lessor in accordance with a
duly adopted resolution of the Lessor's board of directors and in accordance
with such corporation s articles of incorporation and bylaws: (i) the Lease is
binding upon Lessor in accordance with its terms; and (ii) Lessor is a duly
organized and legally existing corporation under the laws of Delaware and is
qualified to do business in and is in good standing in the State of Texas.
Lessee hereby covenants, warrants and represents (i) that the individual
executing the Lease on behalf of Lessee is duly authorized to execute and
deliver the Lease on behalf of Lessee; (ii) the Lease is binding upon Lessee in
accordance with its terms; and (iii) Lessee is a duly organized and legally
existing corporation under the laws of Delaware and is qualified to do business
in and is in good standing in the State of Texas.
ARTICLE 41
CAPTIONS
The article and paragraph captions contained in this Lease are for
convenience of reference only and are not intended to define, limit or describe
the scope or intent of any provision contained herein.
ARTICLE 42
COUNTERPARTS
This Lease may be executed in any number of counterparts with the same
effect as if all parties thereto had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one instrument.
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IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be executed by
their duly authorized representatives.
LESSOR: LESSEE:
TEXAS INSTRUMENTS INCORPORATED, RAYTHEON TI SYSTEMS, INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxx
-------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxx
Title: Senior Vice President, Treasurer Title: President
and Chief Financial Officer
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EXHIBIT D-2 TO
ASSET PURCHASE AGREEMENT
SUBLEASE (1)
(NORTH BUILDING)
Effective January 13, 1998, RAYTHEON TI SYSTEMS, INC., a Delaware
corporation, having an address c/o Raytheon Company, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("RAYTHEON") and TRIQUINT SEMICONDUCTOR TEXAS,
INC., a Delaware corporation having an address at 0000 X.X. Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxx 00000 ("SUBTENANT") hereby act and agree as follows:
1. XXXXXXXXX; TRANSITION AGREEMENT. As used herein, the term "Xxxxxxxxx"
shall mean the July 11, 1997 Lease from Texas Instruments Incorporated (the
"OVERLANDLORD") to Raytheon, of certain premises located at 00000 Xxxxx
Xxxxxxx Xxxxxxxxxx ("XXXXX XXXXXXXX"), Xxxxxx, Xxxxx (the "OVERLEASED
PREMISES"), more fully described in such Xxxxxxxxx. A copy of the
Xxxxxxxxx is attached hereto as EXHIBIT A.
As used herein, the term "TRANSITION AGREEMENT" shall mean the Transition
Agreement, of even date herewith, between Subtenant and Raytheon. A copy
of the Transition Agreement is attached hereto as EXHIBIT C.
2. SUBLEASE.
(a) Raytheon hereby subleases to Subtenant those portions of the
Overleased Premises, more particularly described on EXHIBIT B attached
hereto, subject to the terms and conditions hereof (the "SUBLEASE
PREMISES"). Raytheon shall construct, at its sole cost and expense,
demising walls and other improvements pursuant to plans and specifications
to be mutually agreed upon by the parties and described generally in the
Transition Agreement.
(b) EXHIBIT B attached hereto identifies approximately 17,500 square feet
of space (the "RELEASE SPACE") which is included as part of the Sublease
Premises on the Mezzanine and Manufacturing Floors of the North Building.
On the Commencement
--------------------------
(1) Subject to review by, and consent of, Texas Instruments Incorporated.
-2-
Date (as defined in Section 5), Raytheon has certain personnel and
furniture, fixtures and equipment located within the Release Space.
Subtenant hereby grants Raytheon a license, revocable by written notice
given to Raytheon at any time within ninety (90) days from the date hereof,
to continue to use and enjoy the Release Space without disruption or
interference by Subtenant. At any time prior to ninety (90) days after the
date hereof, Subtenant may, after giving Raytheon thirty (30) days prior
written notice (the "TERMINATION NOTICE"), terminate the license for the
Release Space and request that Raytheon vacate the Release Space within
such thirty (30) day period after Raytheon's receipt of the termination
notice. Within such thirty (30) day period, Raytheon shall vacate the
Release Space at its sole cost and expense and promptly thereafter
construct, at Raytheon's sole cost and expense (not to exceed the maximum
amount specified in the Transition Agreement), walls and other improvements
with respect to the Release Space pursuant to plans and specifications to
be mutually agreed upon by the parties and described generally in the
Transition Agreement. Should Subtenant fail to give the termination notice
to Raytheon within ninety (90) days from the date hereof, then under such
circumstances, (i) the Sublease Premises shall be reduced for all purposes
by deleting the Release Space from the Sublease Premises, (ii) to the
extent appropriate, Raytheon shall construct, at its sole cost and expense,
demising walls and other improvements separating the Release Space from the
Sublease Premises pursuant to plans and specifications to be mutually
agreed between the parties, (iii) the Applicable Percentage of monthly
rental provided under Section 6 below shall be reduced to 11.7%, and (iv)
the CAM Costs shall be reduced as provided under Section 3(b) below. In
the event that Subtenant elects to take over the Release Space, Raytheon
acknowledges that Subtenant may use portions of the mezzanine area for a
lobby and miscellaneous manufacturing.
(c) This Sublease shall be deemed to contain all of the same covenants,
agreements, conditions, terms and provisions as contained in the Xxxxxxxxx,
MUTATIS MUTANDIS (the necessary changes being made to reflect the fact that
Raytheon is the Landlord, Subtenant is the Tenant and that not all of the
Overleased Premises is being subleased to Subtenant), and except that the
following sections of the Xxxxxxxxx shall not apply hereto:
(a) Article 1, Section 1.01 as to Leased Premises and Primary
Term;
(b) Article 1, Section 1.04 as to Renewal Option;
(c) Article 1, Section 1.05 as to Transition Activities;
(d) Article 2, Section 2.01 as to Base Rent;
(e) Article 2, Section 2.03 as to Utility Charges;
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(f) Article 2, Section 2.04 as to Payment of Rent;
(g) Article 6 as to Assignments; Subleases; Mortgages; and
Encumbrances (any assignment, subletting, licensing or
mortgage rights of Subtenant under this Sublease shall be
governed by Section 14 of this Sublease);
(h) Sections 9.01 and 9.02 as to Insurance;
(i) Article 14 as to Taxes; and
(j) Article 28 as to Notices.
3. COMMON AREAS:
(a) The areas color coded in blue and green on EXHIBIT B attached hereto
are Common Areas ("COMMON AREAS") and Restricted Common Areas ("RESTRICTED
COMMON AREAS"), respectively. The Common Areas are those areas within the
North Building available for use and benefit of both Raytheon and
Subtenant. The Restricted Common Areas are those areas within the North
Building available for use only by individuals specifically identified and
designated by Raytheon and Subtenant respectively.
(b) Raytheon and Subtenant each acknowledge and agree that they both
benefit from, and should share the costs and expenses associated with, the
Common Areas and Restricted Common Areas. Raytheon shall provide
maintenance, repairs, cleaning and janitorial, utilities, insurance,
equipment and supplies for the Common Areas and Restricted Common Areas as
well as maintenance for shared systems (the "CAM COSTS"). In addition to
the monthly rental provided in Section 6 below, Subtenant shall pay
Raytheon monthly, as Additional Rent, an amount equal to all amounts
estimated to be paid or incurred by Raytheon for monthly CAM Costs
applicable to the Sublease Premises. As of the date of this Sublease,
Subtenant's monthly CAM Costs shall be $4,810.00. Should Subtenant fail to
give to Raytheon the termination notice under Section 2(b) above, then
under such circumstances, from and after the ninety-first (91st) day after
the date hereof, Subtenant's monthly CAM Costs shall be $4,319.00.
Subtenant shall pay to Raytheon, as Additional Rent, due upon execution of
this Sublease, and on the first day of every succeeding month, the agreed
amount for such CAM Costs as set forth in the applicable sentence of the
two immediately preceding sentences. This amount has been stipulated and
agreed between the parties as fair and is agreed irrespective of the actual
CAM Costs incurred or paid by Raytheon. This agreed amount shall remain
constant until revised in accordance with the immediately succeeding
paragraph.
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CAM Costs shall be subject to adjustment at the commencement of each
anniversary date of the Commencement Date (in each case, "ADJUSTMENT DATE")
as follows:
(1) The base for computing the adjustment is the Consumer Price
Index, published bimonthly by the United Sates Department of Labor,
Bureau of Labor Statistics ("BLS") in CPI DETAILED REPORT, Consumer
Price Index All Urban Consumers, Selected Areas, All Items Index
(Dallas/Fort Worth) (1982-1984=100) ("INDEX"). The number indicated
in the Index for the month and the year in which the Commencement Date
occurs shall be the "BASE INDEX". The number in the Index for the
month and the year which is 45 days prior to the month and the year in
which the rent adjustment occurs shall be the "CURRENT INDEX". The
Current Index shall take into consideration any changes arising from
the BLS publishing data on a base period other than 1982-1984=100.
(2) Except as set forth in clause (3) below, forty-five (45) days
prior to each Adjustment Date, if the Current Index has increased over
the Base Index, the CAM Costs for the next succeeding year of this
Sublease (until the next rent adjustment) shall be set by multiplying
the CAM Costs for the first year of this Sublease by a fraction, the
numerator of which is the Current Index and the denominator of which
is the Base Index. If the Current Index has decreased from the Index
employed at the previous Adjustment Date, the CAM Costs for the next
succeeding lease year (until the next rent adjustment) shall be the
same as the previous lease year. In no case shall the CAM Costs be
less than the CAM Costs for the previous lease year. The new CAM
Costs shall take effect on the Adjustment Date and Subtenant shall be
provided with written notice of such new CAM Costs thirty (30) days
prior to the Adjustment Date.
(3) If, forty-five (45) days prior to the Adjustment Date, the
Current Index for such date is not yet available, Subtenant shall pay
Raytheon the CAM Costs for the next succeeding year of this Sublease
as it may have been previously increased until such Current Index is
published and available, at which time Subtenant shall pay Raytheon
the increase, if any, retroactively from the applicable Adjustment
Date.
(4) If the Index is discontinued or revised during the term of this
Sublease, such other government index or computation with which it is
replaced shall be used in order to obtain substantially the same
result as would be obtained if the Index had not been discontinued or
revised.
(c) Raytheon shall have the right to prepare and revise, from time to
time, and enforce reasonable rules and regulations for use of the Common
Areas and Restricted
-5-
Common Areas. All such rules and regulations shall be applied to both
Raytheon and Subtenant.
(d) The conference rooms in the cafeteria on the ground floor shall be
available on a first-come, first serve basis to the Subtenant and Raytheon.
Until changed by Raytheon, reservations for use of such conference rooms
shall be made through the computer system provided for such purpose.
4. OBLIGATIONS OF PARTIES.
Except as to those Sections of the Xxxxxxxxx excepted from this Sublease
under Section 2(c) above, Subtenant hereby agrees to perform all of the
remaining obligations imposed on Raytheon as Lessee under the Xxxxxxxxx as
to the Sublease Premises.
With respect to repairs and maintenance required of Raytheon, as Lessee
under Article 8 of the Xxxxxxxxx, EXHIBIT D attached hereto sets forth an
allocation of the repair and maintenance responsibilities that have been
agreed shall be performed and conducted between Raytheon and Subtenant.
EXHIBIT D sets forth those repair responsibilities that are allocated
solely to Raytheon, solely to Subtenant and those for which the costs are
to be shared by both Raytheon and Subtenant. Raytheon and Subtenant
understand and agree that they shall work in good faith with one another to
coordinate the repairs for which each is responsible.
Provided that Subtenant is not in default hereunder, Raytheon agrees to use
its best efforts to cause the Overlandlord to perform all of the
obligations imposed upon the Overlandlord under the Xxxxxxxxx; however,
Raytheon shall in no event be responsible for any failure by Overlandlord
to perform such obligations.
Following notice from Overlandlord to Raytheon and Subtenant that, pursuant
to Section 24.01 of the Xxxxxxxxx, a default exists under the Xxxxxxxxx, as
a result of any act or omission of Subtenant, then Raytheon, at its option,
after written notice to Subtenant, may take the necessary action to cure
said default of Subtenant within the applicable grace period of said
Sections 24.01(a) and (b) of the Xxxxxxxxx. Subtenant shall promptly
reimburse Raytheon for any monies expended by Raytheon in curing any such
default. Raytheon shall invoice Subtenant for such expenses, which shall
be reasonably documented. Subtenant's failure to reimburse Raytheon within
thirty (30) days after such invoice shall constitute a default by Subtenant
under this Sublease.
This Sublease is subject and subordinate to the Xxxxxxxxx and shall
terminate upon the expiration or earlier termination of the Xxxxxxxxx,
provided that, so long as Subtenant is not in default hereunder, Raytheon
agrees not to take any action or omit to take any action (other than the
purchase of the Overleased Premises by Raytheon)
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which would cause a termination of the Xxxxxxxxx prior to the end of the
term thereof, except with the express written consent of Subtenant.
Notwithstanding anything to the contrary contained herein, in the event
that Raytheon purchases the Overleased Premises from the Overlandlord
during the term hereof, this Sublease shall continue in full force and
effect as a direct lease between Raytheon as landlord and Subtenant as
tenant, and the provisions of the Xxxxxxxxx applicable hereto pursuant to
Section 2(c) hereof shall be deemed incorporated herein by this reference
and shall continue to apply hereto, notwithstanding the expiration or
termination of the Xxxxxxxxx as a result of such purchase. Raytheon agrees
to indemnify and hold Subtenant harmless from and against any and all
claims, suits, damages, liabilities and expenses, including reasonable
attorneys' fees, arising out of Raytheon's use and occupancy of the
Overleased Premises prior to the Commencement Date of this Sublease.
Subtenant agrees to indemnify and hold Raytheon harmless from and against
any and all claims, suits, damages, liabilities and expenses, including
reasonable attorneys' fees, arising out of Subtenant's use and occupancy of
the portions of Overleased Premises from and after the Commencement Date
under this Sublease.
To the extent that the Overlandlord is given rights to inspection of, or
access to, the Sublease Premises or to make audits or obtain documents or
information from Raytheon, as Lessee under the Xxxxxxxxx, Subtenant hereby
grants all such rights to Overlandlord such that Overlandlord shall have
the same rights to inspections, access, audits, documents and information
from Subtenant.
5. TERM; CONDITION OF SUBLEASE PREMISES.
(a) The term of this Sublease shall begin upon the execution date hereof
referenced in the preamble of this Sublease (the "COMMENCEMENT DATE"), and
shall expire upon the first to occur of the termination of the Xxxxxxxxx
(subject, however, to the second sentence of the fifth paragraph of Section
4 hereof regarding purchase of the Overleased Premises by Raytheon) or
(unless this Sublease is extended as hereinafter provided) 11:59 P.M. on
July 10, 2002.
(b) Subtenant understands that Raytheon has options under Section 1.04 of
the Xxxxxxxxx to extend the term of the Xxxxxxxxx until July 10, 2007, and,
again, to July 10, 2012, and, finally, to July 10, 2017; PROVIDED, HOWEVER,
Raytheon shall have no obligation to extend the Xxxxxxxxx for any of such
extension periods. Should Raytheon elect to extend the term of the
Xxxxxxxxx past July 10, 2002, and, thereafter, past July 10, 2007, and
thereafter, past July 10, 2012, then, if Subtenant is not in default under
this Sublease, Subtenant shall have the right to extend the term of this
Sublease for the identical extended terms(s) of the Xxxxxxxxx. As a
condition precedent to Subtenant's right to so extend the term of this
Sublease, Subtenant shall first give notice to Raytheon of Subtenant's
election not more than nineteen (19) months nor less than thirteen (13)
months prior to the expiration of the initial term or
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the current renewal term, as applicable. After receipt of Subtenant's
notice, Raytheon shall notify Subtenant as to whether or not Raytheon will
be exercising the applicable renewal option under Section 1.04 of the
Xxxxxxxxx. Subject to adjustments of rent as described in Section 2.01 of
the Xxxxxxxxx, such renewals of this Sublease shall be on the same terms,
covenants and conditions provided for in this Sublease and the Xxxxxxxxx.
(c) Subtenant agrees to accept those portions of the Overleased Premises
to be occupied by Subtenant (including any additional portions of the
Overleased Premises taken by Subtenant following the execution date hereof)
on an "as-is", "where-is" basis on the Commencement Date or such subsequent
date for additional portions, and in substantially the same condition as
said Overleased Premises now are, and Raytheon makes no representation or
warranty with respect to the condition thereof except that the relevant
portions of the Overleased Premises currently are in compliance with the
Xxxxxxxxx and will be in compliance therewith on the Commencement Date.
6. RENT. During the term of this Sublease, Subtenant shall pay to Raytheon a
monthly rental equal to the Applicable Percentage of the monthly charges
paid by Raytheon under the Xxxxxxxxx for occupancy of the Overleased
Premises, including, without limitation, the Applicable Percentage of all
Base Rent, Additional Rent and Special Services Charges, Costs of Insurance
(as defined in Section 9(a) below), increases in premiums and Taxes under
Sections 2.01, 2.02, 9.04 and Article 14 of the Xxxxxxxxx and Section 9(a)
of this Sublease, but excluding Utility Charges (as defined below) (which
shall be calculated and paid in accordance with Section 8 below), which
monthly rental shall be payable in advance by the first (1st) day of each
calendar month during the term of this Sublease (or, with respect to the
initial partial calendar month, on the date of this Sublease). The
Applicable Percentage is calculated by dividing the net square feet (the
"NSF") of the Sublease Premises by 659,769 square feet, the NSF of the
Overleased Premises. As of the date of this Sublease, the Applicable
Percentage, based on an initial Sublease Premises of 95,000 square feet, is
14.4%.
7. PAYMENT OF RENT. Payments of Rent shall be sent to the following address:
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Raytheon TI Systems, Inc.
c/o Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
If paid by wire transfer, to:
Bank of Boston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX
ABA: 000000000
Account: Raytheon Company Account No.
326-8007
8. UTILITY CHARGES; SPECIAL SERVICES. For purposes of this Sublease, the
following terms shall have the following meanings:
(a) "SUBTENANT'S UTILITIES" shall mean the electricity, natural gas,
water (city), sewer, and fire suppression water as Subtenant may reasonably
require and request from time to time during the term of this Sublease for
the conduct of its business and consistent with historical usage by
Raytheon within the Sublease Premises;
(b) "COST OF SUBTENANT'S UTILITIES" shall mean the sum of (x) the cost
paid by Raytheon to a third party provider (including, without limitation,
the Overlandlord) of the electricity, sewer, water (city) and natural gas
utilities consumed as Subtenant's Utilities (including without limitation
any such utilities consumed to provide the heating, ventilation and air
conditioning and the fire suppression water consumed by Subtenant as a
Subtenant Utility) plus (y) reasonable cost of delivery of Subtenant's
Utilities incurred by Raytheon.
(c) "SPECIAL SERVICES" and "SPECIAL SERVICES CHARGES" shall mean those
Special Services and Special Services Charges described in Section 3.02 of
the Xxxxxxxxx; and
(d) "UTILITY CHARGES" shall mean the cost of Subtenant's Utilities and
applicable sales taxes that are paid by Raytheon, whether Subtenant's
Utilities are separately metered or equitably allocated.
Except to the extent Utility Charges and/or Special Service Charges are
directly invoiced to Subtenant by a third-party utility provider or by the
Overlandlord or some
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other third party (in which case Subtenant shall promptly pay any amounts
owed), Subtenant shall reimburse Raytheon for the Cost of Subtenant's
Utilities and Special Services as metered (where separately metered) and as
equitably allocated (where not metered), together with applicable sales
taxes. Subtenant shall cooperate with Raytheon in providing data on
Subtenant's operations necessary to calculate such allocation. Attached
hereto as EXHIBIT E is a schedule setting forth the estimated monthly
Utility Charges and Special Services Charges agreed between Raytheon and
Subtenant. Subtenant shall pay to Raytheon as Additional Rent, due upon
execution of this Sublease and one (1) month in advance of the first day of
every succeeding month, without notice, setoff, demand or deduction, an
estimated amount for such Utility Charges and Special Services Charges
which initially shall be $134,460 per month (until revised in accordance
with EXHIBIT E and/or the immediately succeeding paragraph, as applicable),
irrespective of the actual consumption period.
On or before March 15, 1999 and each March 15th thereafter during the term
of this Sublease, Raytheon shall reasonably estimate, and notify Subtenant
of, the amount to be paid by Subtenant as Utility Charges for each month of
the ensuing twelve month period, based on forecasts of the Cost of
Subtenant's Utilities for that calendar year, if available, or the actual
Cost of the Subtenant's Utilities during the previous calendar year. Such
estimated monthly amounts shall be due and payable to Raytheon one (1)
month in advance on the first day of every month without setoff, demand or
deduction, in lieu of the estimated monthly amount payable referred to in
the immediately preceding paragraph.
Commencing on June 15, 1998, and continuing quarterly on each September
15th, December 15th, March 15th and June 15th thereafter, Raytheon shall
determine and provide notice to the Subtenant of the actual Utility Charges
payable by Subtenant for the previous three (3) calendar month period (or
period from the date of this Sublease through May 31, 1998, in case of the
initial notice). If the estimated amount of Utility Charges paid by
Subtenant for such period differs from the actual amount, then Subtenant
shall pay to Raytheon any underpayment within thirty (30) days following
receipt of such statement or Raytheon shall credit against the next rentals
payable by Subtenant the amount of any overpayment as the case may require;
provided, however, that if this Sublease has terminated or expired, any
overpayments shall be remitted to Subtenant by Raytheon together with
Raytheon's reconciliation notice. The obligations under this Section 8
shall survive termination, expiration or abandonment of this Sublease.
Subtenant shall make arrangements for Subtenant's telephone requirements
and shall timely pay all charges in connection with Subtenant's telephone
usage and needs.
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9. INSURANCE.
(a) During the term of this Sublease, Raytheon agrees to obtain, carry and
continue in force, or cause to be obtained, carried and continued in force,
all risk property insurance on the North Building and on Raytheon's
personal property and fixtures located therein, in each case to Raytheon's
full replacement value thereof, but excluding Subtenant's personal property
located in the Sublease Premises or the North Building. The cost of such
insurance on the North Building (but excluding the cost of such insurance
on Raytheon's personal property and fixtures located therein) is herein
referred to as the "COSTS OF INSURANCE".
(b) Subtenant agrees to obtain, carry and continue in force during the
term of this Sublease, from an insurance company with a Best Rating of A
and Financial Size Category of XIII or better, all insurance, with
appropriate endorsements, as specified below:
(1) All risk property insurance on the Subtenant's personal property
located in the Sublease Premises or on the TI Expressway Site (as
defined in the Xxxxxxxxx), to Subtenant's full replacement value
thereof.
(2) Workers' Compensation Insurance in compliance with the laws of
the State of Texas, and Employer's Liability Insurance with minimum
limits as follows:
(A) Bodily injury by accident - $500,000/accident
(B) Bodily injury by disease - $500,000 limit; and
(C) Bodily injury by disease - $500,000/employee.
(3) Commercial General Liability Insurance, including contractual
liability endorsement coverage, written on an "occurrence" form,
fully insuring Subtenant against liability for injury or death of
any person or persons, including TI or Raytheon employees or
third parties within the Sublease Premises or on the TI
Expressway Site, or loss or damage to property with minimum
limits as follows:
(A) General aggregate limit - $2 million;
(B) Products/completed operations aggregate limit - $2 million;
(C) Personal injury limit - $1 million;
(D) Each occurrence limit - $1 million;
(E) Fire damage limit - $50,000; and
(F) Medical payments - $5,000.
(4) Automobile Liability Insurance fully insuring Subtenant's
furnished automobiles and trucks and those owned or rented by
Subtenant or its
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employees in connection with its operations at the Sublease
Premises at the TI Expressway Site with minimum limits as
follows:
(A) Bodily injury and property damage - $1 million;
(B) Hired/non-owned auto - $10,000; and
(C) Physical damage - $250,000.
All such insurance policies required of Subtenant under Section 9(b)(3)
shall name Overlandlord and Raytheon as additional insureds.
(c) Subtenant shall provide Raytheon and Overlandlord, if requested by
Overlandlord, with certificates of insurance as provided in Section 9.05 of
the Xxxxxxxxx evidencing the insurance required under Section 9(b) above.
Raytheon and Subtenant expressly agree that for purposes of this Sublease,
the phrase "the insurance required by this Article 9" and similar phrases,
as used in Sections 9.03 through 9.08 of the Xxxxxxxxx (which Sections are
incorporated herein by Section 2(c) hereof), shall mean the insurance
required by Section 9 of this Sublease.
10. ACCESS TO CERTAIN AREAS.
(a) Notwithstanding anything in this Sublease to the contrary, Subtenant
agrees that use of the Pipe Space portion of the Sublease Premises, as
depicted on EXHIBIT B, shall be limited to (i) repairs, maintenance and
other work related to equipment in the Pipe Space, (ii) storage of items in
an orderly fashion that does not significantly interfere with or hinder
access in or around the Pipe Space, and (iii) other uses in effect on the
Commencement Date or as may be reasonably agreed between Raytheon and
Subtenant. Raytheon is hereby granted an irrevocable license for periodic
escorted access to the Pipe Space portion of the Sublease Premises as
reasonably necessary for inspection, maintenance and repairs of such Pipe
Space.
(b) Raytheon is hereby granted an irrevocable license for periodic
escorted access on the Ground Floor portion of the Sublease Premises as
reasonably necessary for inspection, maintenance and repairs to the
electrical transformers contained in the vaults.
(c) Raytheon agrees that, with respect to the mini-auditorium identified
on Exhibit B, Subtenant shall be entitled to use the mini-auditorium up to
4 times per year, to the extent the mini-auditorium still exists and is
available. Such use shall be at no cost to Subtenant, except to the extent
such use creates related costs, such as hiring additional security guards
for the applicable event.
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11. SPECIFIC CONDITIONS AND ACKNOWLEDGMENTS.
(a) Notwithstanding anything in this Sublease to the contrary, Subtenant
understands and agrees that this Sublease is subject to the prior consent
of the Overlandlord under Article 6 of the Xxxxxxxxx.
(b) Subtenant and Raytheon acknowledge that certain alterations and
improvements to be made pursuant to this Sublease and Transition Agreement
will require review and approval as provided in the Transition Agreement.
All alterations and modifications by Subtenant require the prior consent of
the Overlandlord under Article 5 of the Xxxxxxxxx. All alterations and
improvements to be made to the Sublease Premises by Subtenant at any time
during the term of this Sublease also require the prior consent of Raytheon
under Article 5 of the Xxxxxxxxx (as incorporated by reference into this
Sublease under Section 2(c) of this Sublease).
(c) Under Section 3.02 of the Xxxxxxxxx, Raytheon can request that Special
Services, as identified in said Section 3.02, be provided by the
Overlandlord, but the Overlandlord is not required to provide or make
available any of the Special Services to Raytheon. Raytheon shall request
the Overlandlord to provide those Special Services requested by Subtenant
to the Sublease Premises, provided, however, Raytheon shall have no
liability or obligation whatsoever to Subtenant should the Overlandlord
fail or refuse to provide or make available such Special Services to
Raytheon or Subtenant or the Sublease Premises.
(d) Subtenant is aware of the provisions of Article 21 of the Xxxxxxxxx
and understands and acknowledges the importance of the need of Overlandlord
and Raytheon to shut down one or more of the Utility Systems serving the
Overleased Premises, including the Sublease Premises.
12. NOTICES. All notices and demands shall be given in writing by personal
delivery, courier service, or U.S. registered or certified mail, postage
prepaid, return receipt requested. Notice shall be deemed given upon
delivery to the addressee. Notices shall be addressed as set forth below
for the respective party, provided that if any party gives notice of a
change of name or address, notices to that party shall thereafter be given
as specified in that notice. Facsimile communication may be used to
expedite communication only.
-13-
To Subtenant: TriQuint Semiconductor Texas, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Vice President, Finance
Tel: 000-000-0000
Fax: 000-000-0000
To Raytheon: Raytheon TI Systems, Inc.
c/o Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
With a copy to: Raytheon TI Systems, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Plant Manager
13. BROKER. Each of Subtenant and Raytheon represents and warrants to the
other party that it has not directly or indirectly dealt, with respect to
leasing the Overleased Premises, with any Broker or had its attention
called to the Overleased Premises by any Broker. Each party agrees to save
harmless and indemnify the other party against any claims for commissions
arising out of the execution and delivery of this Sublease, or arising out
of a breach of such party's representations and warranties in this Section
12.
14. ASSIGNMENT; SUBLEASES; MORTGAGES; AND ENCUMBRANCES. Subtenant shall not
assign this Sublease, sublet, license, mortgage or otherwise encumber the
Sublease Premises, or any part thereof, without the prior written consent
of both Raytheon (not to be unreasonably withheld) and Overlandlord (which
may be given or withheld in Overlandlord's sole discretion); provided,
however, that Subtenant may assign this Sublease or sublet the Sublease
Premises to any successor in interest (whether by sale of substantially all
of its assets, merger, consolidation or otherwise) to all or substantially
all of its business without the prior written consent of Raytheon (but
subject to the prior written consent of Overlandlord, as provided for
above).
15. TRANSITION ACTIVITIES. Raytheon and Subtenant acknowledge that certain
relocations, consolidation, construction and modifications to the Sublease
Premises and/or other premises owned or operated by Raytheon or Subtenant
and related activities (the "TRANSITION ACTIVITIES") are necessary and will
occur following commencement of the term of this Sublease to accommodate
certain requirements and expectations of Subtenant and Raytheon. Such
Transition
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Activities shall be implemented and conducted in accordance with the mutual
agreement of the parties acting in good faith as set forth in the
Transition Agreement.
16. EARLY TERMINATION RIGHTS OF SUBLEASE. None.
17. EXCAVATION RESTRICTION. Subtenant shall not do any of the following (an
"EXCAVATION") at the Sublease Premises without the prior written consent of
each of Raytheon and the Overlandlord: (i) intentionally penetrate the
soil; (ii) excavate, dig into or remove the soil; (iii) take any samples of
soil or groundwater; (iv) drill any holes into soil or the floor of any
building or pavement covering the soil; or (v) remove any part of any
building or pavement directly covering the soil. In the event that
Subtenant is required to undertake any Excavation as a consequence of any
local, state or federal law, rule, ordinance, code, requirement, statute,
regulation or any order, injunction, decree or ruling issued by a court of
competent jurisdiction or any other governmental entity applicable to the
Sublease Premises or Subtenant's operations thereon (a "REQUIRED
EXCAVATION"), Subtenant shall promptly notify Raytheon and Overlandlord in
writing, describing in reasonable detail the nature and purpose of such
Required Excavation. Raytheon shall not unreasonably withhold its consent
to any Required Excavation, and Raytheon shall reasonably cooperate with
Subtenant in obtaining the consent of the Overlandlord to any Required
Excavation, provided that (i) Raytheon may elect to undertake to perform
such Required Excavation at its own cost, (ii) Raytheon may delay
performance of the Required Excavation and contest such obligation to
perform (or have a third party contest such obligation), so long as such
contest is not reasonably likely to (x) result in a material adverse effect
to Subtenant or a material disruption of the operations of Subtenant at the
Sublease Premises or (y) subject Subtenant to criminal liability and (iii)
Raytheon shall have no liability if the Overlandlord fails to consent to
any Required Excavation.
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WITNESS the execution hereof under seal as of the date first above written.
RAYTHEON TI SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
----------------------------------
Title: Vice President, Controller
----------------------------------
TRIQUINT SEMICONDUCTOR TEXAS, INC.
By: /s/ Xxxxxx X.X. Xxxx
----------------------------------
Name: Xxxxxx X.X. Xxxx
----------------------------------
Title: Executive Vice President
----------------------------------
EXHIBIT A TO SUBLEASE
LEASE AGREEMENT
By and Between
TEXAS INSTRUMENTS INCORPORATED, AS LESSOR
and
RAYTHEON TI SYSTEMS, INC., AS LESSEE
for premises located at
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
(North Building)
TABLE OF CONTENTS
PAGE
ARTICLE 1 - PREMISES AND TERM. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Leased Premises and Primary Term . . . . . . . . . . . 1
SECTION 1.02. Use. . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . 3
SECTION 1.04. Renewal Option.. . . . . . . . . . . . . . . . . . . . 3
SECTION 1.05. Transition Activities. . . . . . . . . . . . . . . . . 4
ARTICLE 2 - RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.01. Base Rent. . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Additional Rent and Special Services Charges. . . . . 5
SECTION 2.03. Utility Charges. . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. Payment of Rent. . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 - SERVICE AND FACILITIES . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.01. Services Provided by Lessor. . . . . . . . . . . . . . 7
SECTION 3.02. Special Services and Special Services Charges. . . . . 9
SECTION 3.03. Interest.. . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 - PARKING, SECURITY, AND ACCESS RIGHTS . . . . . . . . . . . . . . 9
SECTION 4.01. Parking. . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02. Security.. . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03. Access Rights. . . . . . . . . . . . . . . . . . . . .10
ARTICLE 5 - LESSEE'S ALTERATIONS AND IMPROVEMENTS . . . . . . . . . . . . .10
ARTICLE 6 - ASSIGNMENTS; SUBLEASES; MORTAGES; AND ENCUMBRANCES . . . . . . .12
ARTICLE 7 - SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 8 - REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE 9 - INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 9.01. Lessor Insurance.. . . . . . . . . . . . . . . . . . .14
SECTION 9.02. Lessee Insurance . . . . . . . . . . . . . . . . . . .14
SECTION 9.03. Mutual Waiver of Subrogation . . . . . . . . . . . . .15
SECTION 9.04. Lessee Responsible for Increase in Premiums. . . . . .15
SECTION 9.05. Certificate of Insurance . . . . . . . . . . . . . . .15
SECTION 9.06. Insurance Proceeds . . . . . . . . . . . . . . . . . .16
SECTION 9.07. Deductibles. . . . . . . . . . . . . . . . . . . . . .16
SECTION 9.08. Loss Prevention. . . . . . . . . . . . . . . . . . . .16
ARTICLE 10 - FIRE AND OTHER CASUALTIES . . . . . . . . . . . . . . . . . . .16
SECTION 10.01. Notice . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 10.02. Damage . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 10.03. Lessor's Rights to Terminate . . . . . . . . . . . . .17
SECTION 10.04. Termination of the Lease . . . . . . . . . . . . . . .17
SECTION 10.05. Repair and Restoration . . . . . . . . . . . . . . . .18
ARTICLE 11 - CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE 12 - LIABILITY/ENVIRONMENTAL INDEMNITY . . . . . . . . . . . . . . .18
SECTION 12.01. Lessee's Liability . . . . . . . . . . . . . . . . . .18
SECTION 12.02. Lessor's Liability . . . . . . . . . . . . . . . . . .19
SECTION 12.03. Lessee's Environmental Indemnification . . . . . . . .19
SECTION 12.04. Lessor's Environmental Indemnification . . . . . . . .21
ARTICLE 13 - EMERGENCIES/REPORTING OBLIGATIONS . . . . . . . . . . . . . . .22
SECTION 13.01. Reporting to Lessor. . . . . . . . . . . . . . . . . .22
SECTION 13.02. Reporting to Governmental Agencies . . . . . . . . . .22
ARTICLE 14 - TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE 15 - NO JOINT VENTURE, PARTNERSHIP, OR AGENT RELATIONSHIP. . . . . .23
ARTICLE 16 - ILLEGAL SUBSTANCE SCREENING . . . . . . . . . . . . . . . . . .23
ARTICLE 17 - LESSEE'S ENVIRONMENTAL, INDUSTRIAL HYGIENE AND SAFETY
COVENANTS, REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . .24
ARTICLE 18 - DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 19 - LESSOR'S AUDIT RIGHTS . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 20 - ENTRY/RIGHT OF ACCESS . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 21 - BUILDING SYSTEMS SHUTDOWNS. . . . . . . . . . . . . . . . . . .28
ARTICLE 22 - HOLDING-OVER. . . . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE 23 - SURRENDER OF THE LEASED PREMISES. . . . . . . . . . . . . . . .29
ARTICLE 24 - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 24.01. Lessee's Events of Default . . . . . . . . . . . . . .29
SECTION 24.02. Events of Default by Lessor. . . . . . . . . . . . . .30
ARTICLE 25 - REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 25.01. Lessor's Remedies. . . . . . . . . . . . . . . . . . .30
SECTION 25.02. Lessee's Remedies. . . . . . . . . . . . . . . . . . .31
ARTICLE 26 - ENFORCEMENT COSTS . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 27 - NO WAIVER, EXPRESS OR IMPLIED . . . . . . . . . . . . . . . . .32
ARTICLE 28 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
ARTICLE 29 - NO ORAL MODIFICATION. . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 30 - EFFECT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 31 - GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 32 - SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 33 - ESTOPPEL CERTIFICATES/FURTHER ACTS. . . . . . . . . . . . . . .34
ARTICLE 34 - SUBORDINATION, ATTORNMENT AND NONDISTURBANCE. . . . . . . . . .35
ARTICLE 35 - FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE 36 - BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 37 - GENDER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 38 - CONSTRUCTION AND INTENT . . . . . . . . . . . . . . . . . . . .36
ARTICLE 39 - NO INCIDENTAL OR CONSEQUENTIAL DAMAGES. . . . . . . . . . . . .36
ARTICLE 40 - AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE 41 - CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE 42 - COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . .37
EXHIBIT "A-1"
FLOOR PLANS SHOWING PREMISES BEFORE TRANSITION PERIOD
EXHIBIT "A-2"
FLOOR PLANS SHOWING LEASED PREMISES AFTER TRANSITION PERIOD
EXHIBIT "A-3"
MAP OF TI EXPRESSWAY SITE
EXHIBIT "A-4"
EXTERIOR EQUIPMENT PADS/TI ACCESS AREAS
EXHIBIT "B"
SINGLE PROPERTY DESIGNATION DOCUMENTS
LEASE AGREEMENT
RECITALS
WHEREAS, Texas Instruments Incorporated, a Delaware corporation ("TI" or
"Lessor"), and Raytheon Company, a Delaware corporation ("Raytheon") have
entered into that certain Asset Purchase Agreement dated as of January 4, 1997
(the "Asset Purchase Agreement"), pursuant to which, effective concurrently with
this Lease, TI sold to Raytheon TI Systems, Inc., a Delaware corporation, a
wholly-owned subsidiary of Raytheon ("Buyer" or "Lessee"), the "Acquired
Business," consisting of the "Acquired Assets" and "Assumed Liabilities" (as
such quoted terms are defined in Section 1.01(a) of the Asset Purchase
Agreement);
WHEREAS, TI desires to lease to Lessee and Lessee desires to lease from TI
the Leased Premises, as more particularly defined herein, in order to continue
to conduct the Acquired Business.
ARTICLE 1
PREMISES AND TERM
SECTION 1.01. LEASED PREMISES AND PRIMARY TERM.
This Lease Agreement ("Lease") is entered into as of July 11, 1997, by ad
between Lessor and Lessee. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Leased Premises for a primary term of sixty (60) months
beginning at 11:59 p.m. on July 11, 1997 (the "Commencement Date") and ending at
11:59 p.m., July 11, 2002 (the "Primary Term"). The term "Leased Premises" as
used in this Lease shall mean: (i) as of the Commencement Date, the premises
described on Exhibit "A-1" attached hereto and made a part hereof; (ii) at the
end of the Transition Period (hereinafter defined), the premises described on
Exhibit "A-2" attached hereto and made a part hereof, as the same may be
modified by the agreement of both parties in writing during the Transition
Period (the "Post-Transition Premises"); and (iii) during the Transition Period,
those portions of the premises described on Exhibit "A-1" and/or Exhibit "A-2"
that are then occupied by Lessee. The Leased Premises are located in the City
of Dallas, State of Texas, and comprise initially an area of 427,479 net square
feet ("NSF") of building area together with certain equipment located on the
exterior of the building and the pads on which such equipment is located (the
"Exterior Equipment Locations") as shown on Exhibit "A-4," and will include
after the Transition Period (as defined below), approximately 637,553 NSF of
building area, substantially in the configuration shown on Exhibit "A-2,"
together with the Exterior Equipment Locations, being part of TI's North
Building facility located at 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx 00000
(the "North Building"). TI's facility at the intersection of LBJ Freeway and
North Central Expressway in Dallas. Texas, bounded on the west by Central
Expressway, on the south by LBJ 635, the east by Xxxxx Road (but including TI's
fleet maintenance facility and TI's Waste Chemical Center on the east side of
Xxxxx Road), and on the north by TI's property line is hereinafter referred to
as the "TI Expressway Site" and is included on the map shown on Exhibit "A-3."
SECTION 1.02. USE.
Subject to the terms, provisions, covenants, agreements and conditions
herein, the Leased Premises are to be used by Lessee solely for (i) operations
as currently conducted in the Leased Premises as part of the Acquired Business
(together with such changes thereto as may be comparable in general nature and
character); (ii) similar manufacturing operations as currently conducted
elsewhere by the Acquired Business, or any comparable business of Raytheon or
its subsidiaries as of the Commencement Date (together with such changes thereto
as may be comparable in general nature and character), including electronics
assembly and light manufacturing, warehousing, research and development, and
related activities, provided any such activities do not violate applicable
zoning requirements; or (iii) any office use or warehouse use, provided such
uses comply with applicable zoning requirements. Notwithstanding the foregoing,
Lessee shall not use, store, process or package in the Leased Premises (a) any
chemical in quantities sufficient to trigger either the Occupational Safety and
Health Act's ("OSHA") Process Safety Management (PSM) rules, 29 C.F.R. Section
1910.119, or the United States Environmental Protection Agency's ("EPA") Clean
Air Act Accidental Release Prevention rules, 40 C.F.R. Pt. 68 Subpt. G, or
(b) without the prior approval of Lessor, which approval shall not be
unreasonably withheld, any hazardous or toxic chemical or radioactive material
not currently used, stored or processed at the Leased Premises. Other proposed
uses shall be allowed with Lessor's prior consent, which consent shall not be
unreasonably withheld. Lessee agrees to use the Leased Premises only for the
intended uses specified herein, and without unreasonable interference with TI's
operations or those of any other lessee or other occupant of the TI Expressway
Site. Lessee further agrees that Lessee and its employees, agents, contractors,
and visitors (while at the TI Expressway Site) will adhere to, and the use of
the Leased Premises and other areas of the TI Expressway Site to which access is
granted hereunder will be consistent with, the following specific rules:
(1) No firearms or explosives (other than potentially reactive or
flammable materials used in manufacturing processes allowed by and otherwise
used, stored and handled in conformance with this Lease Agreement) will be
permitted on the TI Expressway Site;
(2) No intoxicants or illegal drugs will be permitted on the
TI Expressway Site;
(3) Lessee shall, upon becoming aware of such person, remove from
the TI Expressway Site any employee, agent, contractor or other visitor of
Lessee under the influence of intoxicants or illegal drugs while on the
TI Expressway Site;
(4) Smoking will be prohibited inside all buildings located on the
TI Expressway Site. Subject to other safety-related restrictions that may be
imposed by TI from time to time, smoking will be allowed outdoors on the TI
Expressway Site except within approximately 100 feet of an outside door;
(5) No conduct which is unreasonable or indecent will be permitted
on the TI Expressway Site; and
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(6) Except for any use within the Leased Premises, no cameras or
video recorders (other than security cameras or cameras for construction, health
and safety documentation) will be used on the TI Expressway Site except in
accordance with any applicable TI security requirements.
In addition to the foregoing, TI may from time to time adopt other
rules or regulations generally applying to occupants, including tenants, of the
TI Expressway Site for the management, safety, care and cleanliness of, and
preservation of good order and protection of property in the Leased Premises and
the TI Expressway Site. Any such rules and regulations or changes and
amendments thereto sent by Lessor to Lessee and conforming to the foregoing
standards shall be carried out and observed by Lessee.
Subject to any more specific articulation of compliance
responsibilities with respect to environmental matters as set forth herein,
Lessee further agrees to comply with all applicable City, County, State and
Federal laws and regulations, including, without limitation, building codes,
electrical codes and fire codes which now are or hereafter become applicable to
the Leased Premises and, to the extent made necessary in connection with
Lessee's use of the Leased Premises, to any other portion of the TI Expressway
Site.
Nothing contained in this Lease, however, shall be construed to
prevent Lessee from adopting or otherwise implementing standards or policies
with respect to Lessee's occupancy, use or operations on the Leased Premises
that are more stringent than required by applicable laws and regulations.
SECTION 1.03. QUIET ENJOYMENT.
Subject to Article 25, and except as otherwise provided herein, Lessee
shall have quiet and peaceful enjoyment of the Leased Premises during the Lease
Term.
SECTION 1.04. RENEWAL OPTION.
While this Lease is in full force and effect, provided that there is no
uncured material default beyond expiration of any applicable grace or cure
period by Lessee of any of the terms, covenants, and conditions hereof, Lessee
shall have three (3) separate options to extend the term of this Lease for the
further term of sixty (60) months each (each such term being referred to herein
as a "Renewal Term"). Except as specifically stated elsewhere in this Lease,
and subject to adjustment of rent as described in Section 2.01 below, such
renewals shall be on the same terms, covenants, and conditions as provided for
in this Lease. Notice of Lessee's intention to exercise its option to renew
this Lease as permitted by this Section 1.04 (the "Renewal Notice") must be
given to Lessor not less than twelve (12) nor more than eighteen (18) months
prior to the expiration of the Primary Term or the then current Renewal Term, as
applicable. The Primary Term and any and all Renewal Terms are collectively
referred to herein as the "Lease Term."
-3-
SECTION 1.05. TRANSITION ACTIVITIES.
Lessor and Lessee acknowledge that certain relocations, consolidation,
construction, and modifications to the Leased Premises, TI Expressway Site
and/or other premises owned or operated by Lessor or Lessee and related
activities (the "Transition Activities") are necessary and will occur following
commencement of the Primary Term to accommodate certain requirements and
expectations of Lessee and Lessor. Such Transition Activities shall be
implemented by Lessor and conducted in accordance with the mutual agreement of
the parties acting in good faith. The period during which Transition Activities
are occurring that affect the final configuration of the Leased Premises is
referred to herein as the "North Building Transition Period."
ARTICLE 2
RENTAL
SECTION 2.01. BASE RENT.
Lessee shall pay Base Rent to Lessor in advance on the Commencement Date
and on the first day of each month thereafter, without (subject to Article 34,
below) setoff, demand, or deduction during the Lease Term. During the first
year of the Primary Term of this Lease, the Base Rent shall be Three Million One
Hundred Seventy-Five Thousand and No/100 Dollars ($3,175,000.00) per annum,
payable in equal monthly installments of Two Hundred Sixty-Four Thousand Five
Hundred Eighty-Three and No/100 Dollars ($264,583.00) per month. During the
Primary Term, Base Rent shall be adjusted annually on each anniversary of the
Commencement Date, so that Base Rent payable during the Primary Term shall be
paid as follows:
Lease Period Annual Rent Monthly Rent
------------ ----------- ------------
1st Year $ 3,175,000. $ 264,585
2nd Year $ 5,728,000. $ 477,333
3rd Year $ 9,341,000. $ 778,417
4th Year $ 12,954,000. $ 1,079,500
5th Year $ 12,954,000. $ 1,079,500
Payment shall be made in accordance with Section 2.04 below. Base Rent
shall include the Basic Services set forth in Section 3.01. below.
Base Rent shall be subject to adjustment at the commencement of each
Renewal Term (in each case, "Adjustment Date") as follows:
(a) The base for computing the adjustment is the Consumer Price Index,
published bimonthly by the United States Department of Labor, Bureau of Labor
Statistics ("BLS") in CPI DETAILED REPORT, Consumer Price Index All Urban
Consumers (CPI-U): Selected Areas, All Items Index (Dallas/Fort Worth)
(1982-1984=100) ("Index"). The number indicated in the Index for the
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month and the year in which the Commencement Date occurs shall be the "Base
Index." The number in the Index for the month and the year which is 45 days
prior to the month and the year in which the rent adjustment occurs shall be the
"Current Index." The Current Index shall take into consideration any changes
arising from the BLS publishing data on a base period other than 1982-1984=100.
(b) Except as set forth in clause (c) below, forty-five (45) days prior to
each Adjustment Date, if the Current Index has increased over the Base Index,
the Base Rent for the Renewal Term (until the next rent adjustment) shall be set
by multiplying the Base Rent for the fifth year of the Primary Term by a
fraction, the numerator of which is the Current Index and the denominator of
which is the Base Index. If the Current Index has decreased from the Index
employed at the previous Adjustment Date, the Base Rent for the Renewal Term
(until the next rent adjustment) shall be set by multiplying the Base Rent for
the fifth year of the Primary Term by a faction, the numerator of which is the
Current Index and the denominator of which is the Base Index, such that the Base
Rent for the Renewal Term shall be less than the Base Rent for the previous
term. Provided however, that in no case shall the Base Rent be less than the
Base Rent for the fifth year of the Primary Term. The new Base Rent shall take
effect on the Adjustment Date and Tenant shall be provided with written notice
of such new Base Rent thirty (30) days prior to the Adjustment Date.
(c) If, forty-five (45) days prior to the Adjustment Date, the Current
Index for such date is not yet available, Lessee shall pay Lessor the Base Rent
for the Primary Term as it may have been previously increased or decreased,
until such Current Index is published and available, at which time Lessee shall
pay Lessor the increase, if any, retroactively from the applicable Adjustment
Date.
(d) If the index is discontinued or revised during the Lease Term, such
other government index or computation with which it is replaced shall be used in
order to obtain substantially the same result as would be obtained if the index
had not been discontinued or revised.
SECTION 2.02. ADDITIONAL RENT AND SPECIAL SERVICES CHARGES.
As additional rent ("Additional Rent"), which shall also be due on a
monthly basis and payable in accordance with Section 2.04, Lessee shall pay to
Lessor all other amounts that Lessee is obligated to pay under the terms of this
Lease, including, without limitation, Special Services Charges for Special
Services described in Section 3.02 below and requested by Lessee.
SECTION 2.03. UTILITY CHARGES.
For the purpose of this Lease, the following terms shall have the following
meanings:
(a) "Lessee's Utilities" shall mean the electricity, natural gas, water
(city), sewer, and fire suppression water as Lessee may reasonably require and
request from time to time during the Lease Term for the conduct of its business
and consistent with historical usage by the Defense Business within the Leased
Premises; and
-5-
(b) "Cost of Lessee's Utilities" shall mean the sum of (X) the cost paid
by Lessor to a third party provider of the electricity, sewer, water (city) and
natural gas utilities consumed as Lessee's Utilities (including without
limitation any such utilities consumed to provide the heating, ventilation and
air conditioning and the fire suppression water consumed by Lessee as a Lessee's
Utility) plus (Y) reasonable cost of delivery of Lessee's Utilities incurred by
Lessor.
Except to the extent Utility Charges (as defined below) are directly
invoiced to Lessee by a third-party utility provider (in which case Lessee shall
promptly pay any amounts owed), Lessee shall reimburse Lessor for the Cost of
Lessee's Utilities as metered (where separately metered) and as equitably
allocated (where not metered), together with applicable sales taxes (the
"Utility Charges"). Lessee shall pay to Lessor as Additional Rent, due one (1)
month in advance on the first day of every month, without setoff, demand or
deduction, an estimated amount for such Utility Charges which initially shall be
Three Hundred Forty Thousand Five Hundred and No/100 Dollars ($340,500) per
month, irrespective of the actual consumption period, based on Lessor's Annual
Utility Plan for 1997, if available, or the actual cost of the Lessee's
Utilities for calendar year 1996.
On or before February 15, 1998 and each February 15 thereafter during the
Lease Term, Lessor shall reasonably estimate, and notify Lessee of, the amount
to be paid by Lessee as Utility Charges for each month of the ensuing twelve
month period, based on forecasts of the cost of Lessor's Utilities for that
calendar year, if available, or the actual cost of the Lessee's Utilities during
the previous calendar year. Such estimated monthly amounts shall also be due
and payable to Lessor one (1) month in advance on the first day of every month
without setoff, demand or deduction.
Commencing on the first such date to occur after a period of three (3) full
calendar months after the expiration of the North Building Transition Period and
continuing quarterly on each February 15, May 15, August 15, and November 15,
Lessor shall determine and provide notice to Lessee of the actual Utility
Charges payable by Lessee for the previous three (3) calendar month period. If
the estimated amount of Utility Charges paid by Lessee for such three (3) month
period differs from the actual amount, then Lessee shall pay to Lessor any
underpayment within thirty (30) days following receipt of such statement or
Lessor shall credit against the next rentals payable by Lessee the amount of any
overpayment as the case may require; provided, however, that if this Lease has
terminated or expired, any overpayment shall be remitted to Lessee by Lessor
together with the Lessor's reconciliation notice. The obligations under this
Section 2.03 shall survive termination, expiration or abandonment of this Lease.
SECTION 2.04. PAYMENT OF RENT.
Lessee shall pay Base Rent and Additional Rent (sometimes collectively
referred to herein as "Rent"), in U.S. dollars or other currency that, at the
time of the payment, is lawful money of, and legal tender for debts in, the
United States of America. Payments of Base Rent and Additional Rent for any
partial months shall be prorated based on a 365 day year. Payments of Rent
shall be sent to the following address:
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TEXAS INSTRUMENTS INCORPORATED
X.X. Xxx 000000, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (U.S. mail delivery)
0000 XXX Xxxxxxx, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (on-site deliveries)
Attention: Financial Accounting Services Department
In lieu of the foregoing, Lessee may, in its discretion, upon notice to the copy
address for mail payments set forth above, wire transfer its payments to:
NationsBank of Texas, Dallas
Dallas, Texas
ABA Routing No. 1110 0001 2
for credit to the account of
TEXAS INSTRUMENTS INCORPORATED,
Account No. 125-210-404-0,
(Raytheon - Rent)
with a copy of the remittance advice being sent via facsimile to Lessor's
Financial Accounting Services Department at Facsimile No. (000) 000-0000.
If Lessee desires to change from the payment method (mail or wire
transfer), Lessee shall notify Lessor in advance at the copy address for mail
payments set forth above.
Lessor may designate by thirty (30) days prior notice to Lessee an
alternative address or an alternative wire transfer instruction or facsimile
number for payment, from time to time, at Lessor's sole discretion.
Lessee's obligation to pay Rent for the Leased Premises during the Lease
Term shall be governed solely by the provisions of this Article 2.
ARTICLE 3
SERVICE AND FACILITIES
SECTION 3.01. SERVICES PROVIDED BY LESSOR.
At all times during the Lease Term, Lessor shall provide or cause to be
provided to Lessee at the Leased Premises as appropriate, the following services
("Basic Services") as an incident to this Lease (the charges for these services
are included in Base Rent):
(1) Lessor shall maintain the roof and structural elements of the
Leased Premises in good operable condition and repair, reasonable
wear and tear excepted, including, without limitation, the making
of any capital repairs or capital
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improvements required to comply, in all material respects, with
any law, building code, rule, regulation, judicial mandate, or
other governmental requirement, excluding, however, (i) any
maintenance requirements necessitated by Alterations (as defined
below) made by Lessee, and (ii) requirements to be performed by
Lessee under Section 17b, below.
(2) Lessor shall maintain the grounds of the TI Expressway Site in
good condition and repair, including without limitation:
(A) maintenance of parking lots, roads, building grounds,
outside lighting, underground utility lines for
electricity, water, storm and other sewers, cooling and
heating water, fire protection sprinklers and piping, and
other utilities serving the areas of the TI Expressway
Site outside of the Leased Premises.
(B) clearing of ice and snow from sidewalks; and
(C) landscaping, including replacement and trimming of plants
outside the Leased Premises.
The services provided hereunder shall be available during the hours
similar services are provided by Lessor to other occupants of the TI Expressway
Site. All such services shall be provided by personnel designated in the sole
discretion of Lessor.
Subject to Articles 21 and 35, this Lease has been entered into by
Lessor and Lessee with the understanding that Lessee's Utilities will be
available for consumption and use in the Leased Premises during the Leased Term
at volumes and pressures of such utilities historically consumed and used by the
Defense Business operations being conducted in the Leased Premises as if the
Defense Business had been conducted in the entire Leased Premises. Lessor
agrees that it will take no actions which will materially and adversely affect
the volume, pressure, and availability of the Lessee's Utilities, without the
prior consent of Lessee. Subject to the foregoing sentence, in no event shall
Lessor be liable for any failure of a gas, electricity, water, telephone, sewer
utility or other utility to provide a sufficient, uninterrupted quantity of
water, electricity, gas, telephone or sewer or other utility service to the
Leased Premises, except to the extent (a) such failure results from Lessor's
non-payments to the supplier (unless such non-payment results from Lessee's
failure to reimburse Lessor for such utility service as required by this Lease),
or (b) Lessor's failure to maintain orders/contracts with a supplier for
delivery of such utility as previously consumed and used by the Defense Business
operations being conducted in the Leased Premises. Lessor will reasonably
cooperate with Lessee to pass through to Lessee any rights Lessor may have
against any provider of such utilities in the event of any interruption or
failure of services by such utility provider.
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SECTION 3.02. SPECIAL SERVICES AND SPECIAL SERVICES CHARGES.
In addition to the above-referenced items, Lessee may request other
services which Lessor may make available ("Special Services"). Lessor and
Lessee acknowledge that Special Services shall be charged at an agreed upon rate
consistent with fair market value to be negotiated at arm's length by the
parties. Special Services may include, but are not limited to: provision of
deionized/reverse osmosis water engineering, maintenance, construction and other
related services for equipment installation located within the Leased Premises;
equipment or facilities rearrangement or additions; general cleaning of the
interior of the Leased Premises (janitorial and non-hazardous trash removal
services, interior window washing, and lavatory supplies); special cleaning
services within the Leased Premises; application of ESD wax within the Leased
Premises; interior painting within the Leased Premises; ceiling and floor
maintenance within the Leased Premises; floor waxing within the Leased Premises;
wall maintenance within the Leased Premises; light bulb and fluorescent tube
replacement within the Leased Premises; special building maintenance services
provided for any designated area within the Leased Premises; chemical analysis
services; and other services which Lessor can reasonably provide to the Leased
Premises. Charges for Special Services shall be Additional Rent and shall be
payable by Lessee in accordance with Section 2.04.
SECTION 3.03. INTEREST.
Interest on all payments required by either party hereunder, upon the
occurrence and during the continuation of an Event of Default, shall accrue at a
rate of ten percent (10%) per annum; provided nothing herein contained will be
construed as permitting the charging or collection of interest at a rate
exceeding the maximum rate permitted under the laws of the State of Texas or any
other applicable laws.
ARTICLE 4
PARKING, SECURITY, AND ACCESS RIGHTS
SECTION 4.01. PARKING.
Subject to Lessor's site-wide parking rules and regulations, parking spaces
will be provided for Lessee's employees, visitors, contractors, suppliers and
invitees, in areas designated for parking on a non-exclusive basis. Sufficient
spaces will be provided to meet applicable codes. Lessee shall not park or
install any trailers, semi-trailers, portable or modular structures at the TI
Expressway Site without the prior consent of Lessor, except for routine parking
of delivery/shipping vehicles during normal loading and unloading activities at
any dock area included in the Leased Premises.
SECTION 4.02. SECURITY.
Notwithstanding anything contained in this Lease to the contrary, each
party and their employees, agents, contractors, suppliers and visitors shall
comply with all classified information restrictions and security measures
imposed upon the other party by the U.S. Government within that
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portion of the TI Expressway Site under such party's control. Without limiting
the generality of the foregoing, it is expressly understood that, to the extent
necessitated by security requirements of the U.S. government (including
Department of Defense activities which may be subject to export control
regulations), Lessee may restrict or deny access by non-U.S. citizens or
non-permanent residents or Lessee or Lessee's agents to certain portions of the
TI Expressway Site (other than the Leased Premises).
SECTION 4.03. ACCESS RIGHTS.
Lessee. Lessee's agents, employees, suppliers, contractors, and visitors
shall have reasonable access to and the nonexclusive right to use roads, parking
lots, walkways and courtyards within the boundaries of the TI Expressway Site as
reasonably required to provide vehicular and pedestrian access to the Leased
Premises, and as reasonably necessary for the business operations conducted by
Lessee on the Leased Premises. Further, in the event of any internal or
external union organizing activity involving Lessee's employees, Lessor shall be
entitled to reasonably restrict or prevent access by any of Lessee's employees
involved in such union organizing activity to portions of the TI Expressway Site
other than the Leased Premises, and as otherwise necessary to prevent
disturbance of Lessor's operations on the TI Expressway Site. In the event of
any internal or external union organizing activities involving Lessor's
employees, Lessor shall, to the extent allowed by law, reasonably restrict or
prevent access by any of Lessor's employees involved in such union organizing
activities to the Leased Premises and as otherwise necessary to prevent
disturbance of Lessee's operations at the Leased Premises.
ARTICLE 5
LESSEE'S ALTERATIONS AND IMPROVEMENTS
Material Changes to the Leased Premises shall require the prior consent of
Lessor, which consent shall not be unreasonably withheld. As used herein,
Material Change shall mean any addition, alteration, or improvement including
installation or modification of equipment (hereinafter, "Alteration"), where
such Alteration involves connections to any Lessee's Utility Systems (defined as
the Lessor-owned or controlled lines, pumps, equipment and facilities which
deliver, provide and/or produce the Lessee's Utilities) or to the building-wide
plumbed process gas distribution system including, without limitation: fire
suppression systems; structural modifications (including any penetrations of the
floor, roof or outside walls); electrical, gas, water, sewer, or exhaust
distribution systems; any control systems monitored or maintained by Lessor; any
tele/data communications systems maintained by Lessor, and where such Alteration
or any process change has or could reasonably be expected to have a material
adverse effect on the Lessee's Utility Systems, building-wide plumbed process
gas distribution system or the structural integrity of the Leased Premises or
any other portion of the TI Expressway Site.
Lessor shall review and respond to Lessee within fifteen (15) days from
Lessor's receipt of Lessee's notice of Lessee's intent to make any Alteration
which Lessee reasonably believes could constitute a Material Change. If Lessor
fails to respond to Lessee within said fifteen (15) day period,
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Lessor shall be deemed to have approved the proposed Alteration. Any notices
made pursuant to this Article will describe the nature of the Alteration and
will include the estimated date and time at which Lessee proposes to commence
such Alteration. In the event Lessee uses a contractor to make any Material
Change, Lessee shall use a contractor (i) that carries at least One Million
Dollars ($1,000,000) of general liability insurance and all workers'
compensation and employers liability insurance required by applicable law with
respect to the workers on the TI Expressway Site or that is otherwise insured to
Lessor's satisfaction and whose subcontractors are likewise insured, and
(ii) has been approved in advance by Lessor's Facilities Manager for the TI
Expressway Site or his designee, said approval not to be unreasonably withheld
or delayed: provided, however, any connections to Lessee's Utility Systems or to
the building-wide plumbed process gas distribution system shall be performed at
Lessee's cost by or under the direction of TI, which shall commence and complete
such activity requested by Lessee in a timely and diligent manner. Lessor, in
its discretion, may require Lessee's contractors and their subcontractors to be
bonded for projects having an estimated cost in excess of $250,000.00 by a bond
reasonably satisfactory to Lessor.
All Alterations, including Material Changes, shall comply with all
applicable laws, regulations, building, electrical and fire codes, as well as
with the requirements of any casualty insurer of the TI Expressway Site.
Upon the request of Lessee, Lessor shall advise Lessee within sixty (60)
days whether it reserves the right to require Lessee to remove any Alterations
from the Leased Premises upon termination of the Lease. If Lessee so requests
and Lessor does not so reserve the right to require Lessee to remove any
Alterations present at the time of request from the Leased Premises, Lessor may
not require Lessee to remove such Alterations from the Leased Premises upon the
expiration or sooner termination of the Lease.
Subject to any abandonment as described in Article 23 below, all
Alterations, trade fixtures, equipment, and personal property (i) installed in
the Leased Premises after the Commencement Date at Lessee's expense, excluding,
unless otherwise agreed by Lessor and Lessee, Alterations, trade fixtures,
equipment, and personal property installed as part of the Transition Activities,
or (ii) located in the Leased Premises on the Commencement Date and owned by
Lessee ("Lessee's Property") shall at all times remain Lessee's property and
Lessee shall be entitled to all depreciation, amortization and other tax
benefits with respect thereto. Except for Alterations which cannot be removed
without structural injury to the Leased Premises, at any time Lessee may remove
Lessee's Property from the Leased Premises, provided Lessee repairs at its
expense all damage caused by such removal.
Lessee shall pay for any and all such Alterations and any costs incurred in
connection therewith, including, with respect to any services provided by Lessor
as a Special Service, reimbursement of Lessor's cost as a Special Service
charge. To the extent Lessee manages the Alteration, Lessee will obtain waivers
of all mechanic's liens which may arise as a result of such Alteration,
provided, however, if Lessee is unable to obtain any such waiver after the use
of its reasonable efforts, Lessees shall indemnify, defend, and hold harmless
Lessor from any reasonable actual cost or damage with respect to the existence
of any such mechanic's lien and shall take all necessary legal actions,
including the posting of any sums at issue with a court of competent
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jurisdiction to clear the lien within thirty (30) days after Lessee becomes
aware that the lien has been filed. To the extent Lessee requests and Lessor
agrees to manage the Alteration. Lessor will obtain waivers of all mechanic's
liens which may arise as a result of such Alteration. Provided, however, if
Lessor is unable to obtain any such waiver after the use of its reasonable
efforts, Lessor shall take all necessary legal actions, including the posting of
any sums at issue with a court of competent jurisdiction to clear the lien
within sixty (60) days after Lessor receives notice from Lessee that the lien
has been filed, except to the extent resulting from Lessee's failure to pay the
charges for the services performed that Lessee is responsible for hereunder
within thirty (30) days following delivery to Lessee of notice and demand,
either to the contractor or supplier or to Lessor.
ARTICLE 6
ASSIGNMENTS; SUBLEASES; MORTAGES; AND ENCUMBRANCES
Lessee shall not assign this Lease, sublet, license, mortgage or otherwise
encumber the Leased Premises, or any part thereof, without the prior written
consent of Lessor, which consent shall not be unreasonably withheld. For
purposes of Lessor's approval under this section, both creditworthiness and
non-monetary considerations may constitute grounds for Lessor's objection.
Notwithstanding the foregoing, neither the transafer of all or substantially all
of the assets or capital stock of Lessee, whether by merger, consolidation or
otherwise, to a person or entity with credit comparable to, or better than, that
of Lessee, or the sale or issuance of Lessee's equity securities, nor any change
in percentage of ownership, if any, of Lessee's equity securities resulting
therefrom through a public exchange or as part of any institutional or publicly
offered financing, shall be deemed to be (i) an assignment or in any manner a
transfer of the Lease or any estate or interest therein, (ii) a sublease of
Lessee's interest in the Leased Premises, or any part thereof, (iii) a change in
control of ownership of Lessee or (iv) a breach of default under the Lease or an
event which, with the passage of time, the giving of notice, or both, would
constitute a breach of default under the Lease. With the prior consent of
Lessor, which consent shall not be unreasonably wihheld, Lesee may assign this
Lease or sublease the Leased Premises, or any portions thereof to any
subsidiary, affiliate, or division of Lessee, except that assignment to any
subsidiary, affiliate or division of Lesee as may exist as of the Commencement
Date shall not require Lessor's consent. Any purported assignment, sublease,
license, mortgage or other encumbrance entered into by Lessee shall not relieve
Leseee of its obligations under this Lease and, if not in compliance with this
Article 6, shall be void AB INITIO.
ARTICLE 7
SIGNS
With the prior written consent of Lessor, which consent shall not be
unreasonably withheld, Lesee may install such exterior signs and interior signs
as it may deem necessary for the operation of its business at the Leased
Premises, including signs on portions of the TI Expressway Site other than the
Leased Premises, so long as such signs do not unreasonably interefere with
Lessor's operations on the TI Expressway Site. Notwithstanding anyting in this
Lease to the contrary, Lessee may install
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signate in the interior of the Leased Premises without Lessor's consent under
this Article 7 so long as such signs are not readily viewable from any portion
of the TI Expressway Site other than the Leased Premises.
ARTICLE 8
REPAIR
In recognition of the connections between the site-wide distribution system
for process gases and liquids and the building distribution systems, Lessor and
Lessee have agreed to the following division of responsibility for repair of
such systems serving the Leased Premises. Lessee shall be responsible for the
maintenance and repair of piping for delivery of cryogenic gases for use in the
Leased Premises, beginning at the supply tank. The parties acknowledge and
agree that although the supply tank is expected to be the responsibility of the
gas supplier, as between Lessor and Lessee, the tank sypplying cryogenic gas to
the Leased Premises shall be the responsibility of Lessee. Lessor shall be
responsible for generation, delivery, and the repair of lines, meters and
regulators for delivery of compressed air, process and deionized water for use
in the Leased Premises up to the inlet value to the building main filter, if
there is one, and, if not, to the outlet valve to the building meter, from which
point repair shall be the responsibility of Lessee. Lessor and Lessee shall
cooperate to place and maintain labels on the lines and distribution systems
described in this paragraph to delineate maintenance responsibility.
Nothwithstanding anything herein to the contrary, to the extent that any
utility lines, pipes, or other conduits for assisting in the site-wide
distribution systems for the TI Expressway Site go through the Leased Premises,
Lessee shall have no liability or obligation for maintenance or repair of such
utility lines, or conduits, except for laterals of such lines, pipes, or
conduits which in fact serve the Leased Premises.
Lessee shall maintain in good operable condition and repair, reasonable
wear and tear excepted, all mechanical, electrical, heating, ventilation and air
conditioing, power, plumbing, sewer, water (city), industrial waste water, gas,
fire sprinkler, and other equipment and systems owned by Lessor within the
Leased Premises. Lessee shall bear the cost and hereby assumes financial
responsibility for repairs occasioned by damage to Lessor's equipment and
systems resulting directly or indirectly from any acts or omissions of Lessee.
Lessee's employees, agents, contractors, vendors, suppliers or visitors.
Further, Lessee shall pay for all repairs resulting from damage to the
surrounding structure and improvements caused by the installation, repair,
replacement or removal of any of Lessee's equipment in the Leased Premises.
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ARTICLE 9
INSURANCE
SECTION 9.01. LESSOR INSURANCE.
Lessor agrees to obtain, carry, and continue in force, or cause to be
obtained, carried, and continued in force, during the Lease Term all risk
property insurance on the improved portions of the TI Expressway Site (other
than the North Building or the Leased Premises), on Lessor's persoanl property
and fixtures located therein, and on Lessor's personal property in the North
Building or the Leased Premises, in each case to Lessor's full replacement value
thereof, but excluding Lessee's personal property located in the Leased Premises
or on the TI Expressway Site.
SECTION 9.02. LESSEE INSURANCE.
Lessee agrees to obtain, carry and continue in force during the Lease Term,
from an insurance company with a Best Rating of A and Financial Size Category of
XIII or better, all insurance, with appropriate endorsements, as specified
below:
(1) All risk property insurance on the North Building and the Leased
Premises, which shall also insure against damage or loss ro Lessee's
personal property located in the Leased Premises or on the TI
Expressway Site, but shall exclude Lessor's personal property in the
North Building or the Leased Premises, in each case to Lessee's full
replacement value thereof:
(2) Workers' Compensation Insurance in compliance with the laws of the
State of Texas, and Employer's Liability Insurance with minimum limits
as follows:
(A) Bodily injury by accident - $500,000/accident;
(B) Bodily injury by accident - $500,000 limit; and
(C) Bodily injury by disease - $500,000/employee.
(3) Commercial General Liability Insurance, including contractual
liability endorsement coverage; written on an "occurrence" form, fully
insuring Lessee against liability for injury or death of any person or
persons, including TI employees or third parties within the Leased
Premises or on TI Expressway Site, or loss or damage to property with
minimum limits as follows:
(A) General aggregate limit - $2 million;
(B) Products/completed operations aggregate limit - $2 million
(C) Personal injury limit - $1 million;
(D) Each occurrence limit - $1 million;
(E) Fire damage limit - $50,000; and
(F) Medical payments - $5,000.
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(4) Automobile Liability Insurance fully insuring Lessee's finished automobiles
and trucks and those owned or rented by Lessee or its employees in
connection with its operations at the Leased Premises at the TI Expressway
Site with minimum limits as follows:
(A) Bodily injury and property damage - $1 million;
(B) Hired/non-owned auto - $10,000; and
(C) Physical damage - $250,000
SECTION 9.03. MUTUAL WAIVER OF SUBROGATION.
Notwithstanding anything to the contrary contained in this Lease, with the
exception of the deductibles specified in Section 9.07 below, Lessor and Lessee
each hereby waive their rights to recover against and their respective
insurer(s) right of subrogation against the other, its officers, employees,
tenants, subtenants, successors and assigns for injury, loss or damage incurred
where such injury, loss or damage is or would be insured against under the
policies either in force at the time of such loss or damage or required to be
carried under the terms of this Lease. Each of Lessor and Lessee shall secure
from their respective insurers, and shall provide to the other party, an
endorsement or other such reasonable evidence providing for such waiver of
subrogation under Lessee's and Lessor's policies. This Section 9.03 shall
survive termination, expiration, or abandonment of this Lease.
SECTION 9.04. LESSEE RESPONSIBLE FOR INCREASE IN PREMIUMS.
Lessee shall bear the full expense of any additional premium(s) or increase
of premium rate(s) incurred by Lessor with respect to the Leased Premises or TI
Expressway Site, to the extent resulting from or caused by Lessee's Alterations
or Lessee installation of or modification to any process or equipment or change
in use which adversely affects Lessor's premium rate(s), as reasonably
determined by Lessor's insurance auditor or by claims made and paid as a result
of Lessee's breach of its obligations and indemnities contained herein.
SECTION 9.05. CERTIFICATE OF INSURANCE.
Upon Lessor's request, Lessee shall provide Lessor with certificates of
insurance evidencing the insurance required in Section 9.02 above. These
certificates of insurance shall (i) name Lessor as an additional insured with
respect to the policies required by Section 9.02(1) (to the extent of Lessor's
interest, if any, in the property and to the extent of Lessee's obligations
under the indemnity provisions of this Lease). Section 9.02(3) (to the extent
of Lessee's obligations under the indemnity provisions of this Lease), and
Section 9.02(4) above, (ii) contain a provision that Lessee shall not terminate
or cancel any of the above-described coverages without thirty (30) days' advance
written notice to Lessor, and (iii) by endorsement, provide for waiver of
subrogation under Lessee's policies.
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SECTION 9.06. INSURANCE PROCEEDS.
Lessor shall be entitled to receive any insurance proceeds attributable to
damage to the Leased Premises (other than to property owned by the Lessee.)
Notwithstanding anything contained herein to the contrary, and subject to
Section 9.07 below, no party shall be required to pay or reimburse the other for
any matter to the extent covered by and proceeds are received under insurance
carried by the other party as required by this Article 9, or to the extent the
other party is in default of its insurance obligations, which would have been
covered by insurance carried by the other party if said party had carried the
insurance required by this Article 9 and, further, the amount of any liability
of any party hereunder shall be offset by the amount of insurance or any other
third-party proceeds, if any, actually received by the other party hereto in
respect of such liability.
SECTION 9.07. DEDUCTIBLES.
Notwithstanding anything contained herein to the contrary, to the extent a
claim relates to injury, loss or damage arising out of a breach of the
obligations and indemnities contained herein, the breaching party shall pay or
reimburse the other party for any deductible in respect of such claim, if the
injury, loss, or damage is covered by insurance carried by such other party or
would have been had said party carried the insurance required by Article 9.
SECTION 9.08. LOSS PREVENTION.
Lessee shall implement the loss prevention recommendations from Lessor's
insurers (or their designated representative) as it pertains to Lessee's
property or operations within a reasonable period ot time. Any increase in
premium to Lessor from Lessee's noncompliance with this section will be borne by
Lessee.
ARTICLE 10
FIRE AND OTHER CASUALTIES
SECTION 10.01. NOTICE.
If the Leased Premises, or any portion thereof, are damaged by fire or
other casualty, Lessee shall give immediate oral and written notice thereof to
Lessor, and this Lease shall continue in full force and effect except as
hereinafter set forth.
SECTION 10.02. DAMAGE.
Subject to the provisions of Sections 10.03 and 12.01 below, if the Leased
Premises are damaged or rendered unusable by fire or other casualty, unless this
Lease is terminated by Lessor or Lessee as herein provided, any damage shall be
repaired by and at the expense of Lessor, and the Rent (including Base Rent and
Additional Rent) shall be equitably abated from the day of the casualty as to
that portion of the Leased Premises which is unusable in the reasonable
determination
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of Lessor and Lessee. Except to the extent this Lease is terminated by Lessor
or Lessee as provided under this Article 10, Lessee's full liability for Rent
shall resume on the date on which Lessee is able to resume in all material
respects its use of the damaged portion of the Leased Premises. Notwithstanding
the foregoing, should such partial damage materially interfere with Lessee's
ability to operate its business and reasonably be estimated to require more than
one hundred eighty (180) days to complete, Lessee may by notice to Lessor within
thirty (30) days from the date of the casualty, terminate this Lease. Lessor
shall commence any repairs required by this Section 10.02 within thirty (30)
days of any said fire or other casualty. Lessor shall complete any repairs
required by this Section 10.02 within one hundred eighty (180) days of the date
repairs are required to commence. If all repairs required by this Section 10.02
are not substantially completed such that Lessee can substantially resume its
operations within said one hundred eighty (180) day period. Lessee may
terminate this Lease by notice to Lessor. If all repairs required by this
Section 10.02 are not fully completed within said one hundred eighty (180) days
but substantial completion of the repairs has been achieved and Lessee can
resume its operations in all material respects, Lessor shall so notify Lessee of
the repairs completed and said one hundred eighty (180) day period shall be
extended for up to, but not exceeding, an additional ninety (90) days to
facilitate completion of the restoration. If all repairs required by this
Section 10.02 are not fully completed within said ninety (90) day extension,
Lessee may terminate this Lease by notice to Lessor.
SECTION 10.03. LESSOR'S RIGHTS TO TERMINATE.
If the Leased Premises or the building in which the Leased Premises are
located shall be so substantially damaged that Lessor shall decide to demolish
the Leased Premises or the entire building in which the Leased Premises are
located, then Lessor may terminate this Lease by giving notice to Lessee within
forty-five (45) days after such fire or casualty.
SECTION 10.04. TERMINATION OF THE LEASE.
If Lessor or Lessee elects to terminate this Lease pursuant to this
Article 10, this Lease shall terminate as of the date of Lessee's surrender of
the Leased Premises, which shall occur within a reasonable time, which will not
be longer than ninety (90) days after the date of the termination notice.
Subject to the preceding sentence, in the event either party elects to terminate
this Lease pursuant to this Article 10, as of the date of such termination, the
term of this Lease shall expire as completely and as fully as if such date were
the date set forth above for the termination of the then current term of this
Lease. Lessee shall surrender the Leased Premises in accordance with the
provisions of Article 23 hereof without prejudice to either party's rights and
remedies against the other under the Lease provisions in effect prior to such
surrender, and any Rent owing shall be paid up to such date (after giving effect
to any abatement), and any payments of Rent made by Lessee which were on account
of any period subsequent to such date shall be immediately returned to Lessee.
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SECTION 10.05. REPAIR AND RESTORATION.
Unless a termination notice is delivered by Lessor or Lessee as provided
for herein, Lessor shall make the repairs and restorations under the conditions
of Section 10.02 hereof, subject to force majeure as provided in Article 35.
Lessor and Lessee agree to reasonably cooperate to enable repair and restoration
to be undertaken as soon as practical.
ARTICLE 11
CONDEMNATION
If all or greater than sixty percent (60%) of the Leased Premises shall be
taken under the power of eminent domain by any competent governmental authority,
this Lease shall terminate as of the date of such taking as if such date were
the date set forth above for the termination of the then current term of the
Lease. If sixty percent (60%) or less of the Leased Premises shall be taken
under such power of eminent domain, as of the date of such taking, the Rent
shall be equitably reduced. Notwithstanding the foregoing and in any event,
should any taking materially interfere with Lessee's ability to use the Leased
Premises for their intended purposes, Lessee may, in its reasonable discretion,
by notice to Lessor, elect to terminate this Lease as set forth herein. The
Rent shall be pro-rated or reduced as of the date of any such taking. In any
condemnation proceeding, Lessor and Lessee shall each be entitled to bring suit
and receive awards with respect to their respective interests in the North
Building.
ARTICLE 12
LIABILITY/ENVIRONMENTAL INDEMNITY
SECTION 12.01. LESSEE'S LIABILITY.
Except for insured casualty which subrogation is waived pursuant to
Section 9.03, above, any injury, breakage, damage or harm to the Leased Premises
(ordinary wear and tear excepted) caused by any act or omission of the Lessee or
Lessee's officers, directors, employees, contractors, agents or visitors, shall
immediately be caused to be repaired at the sole expense of Lessee, with such
repairs commencing as soon as possible and, in any event, within seven (7) days
of the discovery of such injury, breakage, damage, or harm. If Lessee does not
undertake appropriate repairs (or notify Lessor and seek Lessor's repair as
Special Services), Lessor may, after notice to and opportunity to cure of Lessee
in accordance with Article 24, repair the damage and charge Lessee for the cost
of such repairs as Additional Rent.
Lessee shall defend, indemnify, protect and save Lessor, its officers,
employees, servants, agents, successors and assigns, harmless from and against
all claims, liabilities, losses, judgments, actions, administrative proceedings,
costs, expenses, penalties, fines, damages and expenses (including, but not
limited to, attorneys' fees, consultants' fees and court costs) for bodily
injury, harm, sickness, disease and death and for property loss or damage
("Claims") to the extent arising
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from the acts or omissions of Lessee, its employees, contractors, servants,
invitees or agents, including Claims based on strict liability, which relate to
Lessee's use or occupancy of the Leased Premises or Lessee's use of the TI
Expressway Site. If any loss or damage is attributable to both Lessor and
Lessee, Lessee agrees, without regard to any concurrent or other negligence by
Lessor (if any), to provide Lessor with comparative indemnification for that
portion of the loss or damage which is attributable to Lessee or Lessee's
officers, directors, employees, contractors, agents or visitors; provided
however Lessee shall provide complete indemnification for that portion of any
such loss or damage attributable to the operations of the Defense Business (as
defined in the Asset Purchase Agreement) which are Assumed Liabilities on or
prior to the Commencement Date, irrespective of either party's negligence.
Notwithstanding anything to the contrary in this Lease, Lessee's liability under
this Article 12 shall survive termination, expiration, or abandonment of this
Lease and shall be reduced by any insurance or third-party recovery for the
Claim actually received by Lessor.
SECTION 12.02. LESSOR'S LIABILITY.
Except for insured casualty for which subrogation is waived pursuant to
Section 9.03, above, any injury, breakage. damage, or harm to the Leased
Premises (ordinary wear and tear excepted) caused by any act or omission of the
Lessor or Lessor's officers, directors, employees, contractors, agents or
visitors, shall immediately be caused to be repaired at the sole expense of
Lessor, with such repairs commencing as soon as possible and, in any event,
within seven (7) days of the discovery of such injury, breakage, damage, or
harm. If Lessor does not undertake appropriate repairs, Lessee may, after
notice to and opportunity to cure of Lessor in accordance with Article 24,
repair the damage and charge the Lessor the cost for such repairs.
Lessor shall defend, indemnify, protect and save Lessee its officers,
employees, agents, and assigns harmless from and against all Claims, to the
extent arising from the acts or omissions of Lessor, its employees, contractors,
servants, invitees or agents, including Claims based on strict liability, which
relate to Lessor's use or occupancy of the TI Expressway Site. In the event any
loss or damage is attributable to both Lessor and Lessee, and Lessor agrees,
without regard to any concurrent or other negligence by Lessee (if any), to
provide Lessee with comparative indemnification for that portion of the loss or
damage which is attributable to Lessor and/or Lessor's officers, directors,
employees, contractors, agents or visitors, excluding any portion of such loss
or damage attributable to the operations of the Defense Business which are
Assumed Liabilities on or prior to the Commencement Date, irrespective of either
party's negligence. Notwithstanding anything to the contrary in this Lease,
Lessor's liability under this Article 12 shall survive termination, expiration,
or abandonment of this Lease and shall be reduced by any insurance or
third-party recovery for the Claim actually received by Lessee.
SECTION 12.03. LESSEE'S ENVIRONMENTAL INDEMNIFICATION.
Lessee agrees to defend, indemnify, protect and hold Lessor, its officers,
directors, employees, representatives, agents, affiliates, successors, and
assigns harmless from and against, and, upon demand, to pay or reimburse each
such party promptly with respect to, any and all claims,
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actions, losses, costs, damages, liabilities, administrative proceedings,
judgments, fines, penalties, and expenses (including reasonable attorneys' fees,
consultants' fees and remediation, monitoring, investigation, characterization,
removal and disposal costs) of any and every kind or character ("Environmental
Claims"), to the extent incurred by Lessor or asserted against Lessor by any
governmental authority, person, or entity, at any time, and from time to time,
by reason of, in connection with or arising out of (1) Lessee's breach of or
noncompliance with any environmental, health or safety law (including, without
limitation, principles of common law), regulation, ordinance, rule, permit, or
license relating to (i) Lessee's occupancy or use of the Leased Premises or the
TI Expressway Site on or after the Commencement Date, or (ii) the Defense
Business, to the extent constituting Assumed Liabilities, (2) the breach of any
covenant, representation, warranty, or indemnification obligation of Lessee
expressly set forth in this Agreement relating to any environmental, health, or
safety standard, (3) the failure of Lessee to perform any obligation required to
be performed by Lessee or make or file any report required to be made or filed
by Lessee pursuant to any environmental, health, or safety permit, license,
regulation, law or other standard relating to (i) Lessee's occupancy or use of
the Leased Premises or use of the TI Expressway Site on or after the
Commencement Date, or (ii) the Defense Business, to the extent constituting
Assumed Liabilities, (4) any act, omission, event or circumstance resulting in
any release, discharge, disposal or emission on or adjacent to the Leased
Premises or the TI Expressway Site, or release, discharge, disposal or emission
from or adjacent to the Leased Premises, of hazardous, toxic or radioactive
substances, solid wastes or air contaminants requiring removal, remediation or
other action under applicable environmental, health or safety laws, regardless
of whether the act, omission, event or circumstance constituted a violation of
any environmental, "health or safety law or standard at the time of the
existence or occurrence, to the extent (i) caused by the acts or omissions of
Lessee, its employees, contractors or other invitees, agents, officers or
directors, occurring on or after the Commencement Date or (ii) associated with
the Defense Business, to the extent constituting Assumed Liabilities, and
(5) any and all claims or proceedings made or brought (whether brought by an
employee or other private party or governmental agency) for bodily injury,
property impairment or any other injury or damage resulting from or relating to
any hazardous, toxic or radioactive substance, contaminated material or air
contaminant located upon or migrating into, from or through the Leased Premises
to the extent (i) caused by Lessee, its employees, contractors or other
invitees, agents, officers or directors, occurring on or after the Commencement
Date, or (ii) associated with the Defense Business to the extent constituting
Assumed Liabilities; in each case whether or not the alleged liability is
attributable to the handling, storage, generation, transportation or disposal of
such substance, including claims based on strict liability. In the event any
loss or damage is attributable to both Lessor and Lessee, Lessee agrees, without
regard to any concurrent or other negligence by Lessor (if any), to provide
Lessor with comparative indemnification for that portion of the loss or damage
which is attributable to Lessee and/or Lessee's officers, directors, employees,
contractors, agents, or visitors; provided however Lessee shall provide complete
indemnification for that portion of any such loss or damage attributable to the
operations of the Defense Business which are Assumed Liabilities on or prior to
the Commencement Date, irrespective of either party's negligence.
Notwithstanding anything to the contrary in this Lease, Lessee's obligations
under this Article 12 shall survive termination, expiration or abandonment of
this Lease.
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SECTION 12.04. LESSOR'S ENVIRONMENTAL INDEMNIFICATION.
Lessor agrees to defend, indemnify, protect and hold Lessee, its officers,
directors, employees, representatives, agents, affiliates, successors, and
assigns harmless from and against, and, upon demand, to pay or reimburse each
such party promptly with respect to, any and all Environmental Claims (other
than Environmental Claims associated with or resulting from the operations of
the Defense Business which are Assumed Liabilities) to the extent incurred by
Lessee or asserted by any governmental authority, person or entity, at any time,
and from time to time, by reason of, in connection with or arising out of
(1) Lessor's breach of or noncompliance with any environmental, health or safety
law (including, without limitation, principles of common law), regulation,
ordinance, rule, permit, or license relating to the TI Expressway Site or
Lessor's use of the TI Expressway Site, (2) the failure of Lessor to perform any
obligation required to be performed or make or file any report required to be
made or filed by Lessor pursuant to any environmental, health, or safety permit,
license, regulation, law or other standard relating to the TI Expressway Site or
Lessor's use of the TI Expressway Site, (3) any act, omission, event or
circumstance existing or occurring before the term of this Lease resulting in
any release, discharge, disposal, or emission on or adjacent to the Leased
Premises or the TI Expressway Site, or release, discharge, disposal, or emission
from or adjacent to the TI Space (defined below) of hazardous, toxic or
radioactive substances, solid wastes or air contaminants requiring removal,
remediation or other action under applicable environmental, health and safety
laws, regardless of whether the act, omission, event or circumstance constituted
a violation of any environmental, health or safety law or standard at the time
of the existence or occurrence to the extent caused by the acts or omissions of
Lessor, its employee, contractors, agents, officers or directors, and (4) any
and all claims or proceedings made or brought (whether brought by an employee or
other private party or governmental agency) for bodily injury, property
impairment or any other injury or damage resulting from or relating to, and/or
any legally imposed requirements for the monitoring, remediation, investigation
or removal of any hazardous, toxic or radioactive substance, contaminated
material, or air contaminant located upon or migrating into, from or through the
TI Expressway Site to the extent caused by the acts or omissions of Lessor, its
employees, contractors, agents, officers or directors, whether or not the
alleged liability is attributable to the handling, storage, generation,
transportation or disposal of such substance or the mere presence of the
substance on the TI Expressway Site; including claims based on strict liability.
In the event any loss or damage is attributable to both Lessor and Lessee,
Lessor agrees, without regard to any concurrent or other negligence by Lessee
(if any), to provide Lessee with comparative indemnification for that portion of
the loss or damage which is attributable to Lessor and/or Lessor's officers,
directors, employees, contractors, agents or visitors, excluding any portion of
such loss or damage attributable to the operations of the Defense Business which
are Assumed Liabilities on or prior to the Commencement Date, irrespective of
either Party's negligence. Notwithstanding anything to the contrary in this
Lease, Lessor's obligations under this Article 12 shall survive termination,
expiration or abandonment of this Lease. As used herein, "TI Space" shall mean
any portion of the TI Expressway Site which is not (i) part of the Leased
Premises or (ii) otherwise leased by Lessee at the time of such event or
activity.
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ARTICLE 13
EMERGENCIES/REPORTING OBLIGATIONS
SECTION 13.01. REPORTING TO LESSOR.
In the event of emergency situations of which Lessee is aware (including,
without limitation, fires, accidental chemical spills or exposures, unauthorized
air emissions, unauthorized radiation emissions or exposures, unauthorized
discharges into waste streams, or other environmental, industrial hygiene or
safety emergencies), Lessee shall immediately report such occurrence to Lessor.
SECTION 13.02. REPORTING TO GOVERNMENTAL AGENCIES.
With respect to Lessee's use of the Leased Premises during the Lease Term,
Lessee shall be solely responsible for compliance with all governmental
reporting duties imposed upon Lessee by applicable laws, and (in addition to
reporting to Lessor as provided in the preceding paragraph) Lessee shall report
any emergency situation to the applicable governmental agency (if any) to the
extent required by, and within the time periods prescribed by, applicable laws.
In the event Lessee fails to comply with its statutory or contractual duty to
report such emergency situations to any governmental agency, Lessor may, but
shall not be obligated to, upon learning of such failure, report such matters.
The parties shall coordinate in an effort to avoid duplicate reporting of any
emergency situation. Under no circumstances, however, shall this provision be
construed to be an assumption by Lessor of any reporting duty on behalf of
Lessee.
ARTICLE 14
TAXES
Ad valorem taxes for the Leased Premises will be charged by Lessor to
Lessee during the Lease Term, and Lessee shall pay and discharge as Additional
Rent such ad valorem taxes for the North Building, based on Lessee's
proportionate share thereof, which shall be that percentage derived by dividing
(1) the NSF of the Leased Premises in the building (exclusive of the Exterior
Equipment Locations), by (2) the total of (a) the NSF of the Leased Premises in
the building (exclusive of the Exterior Equipment Locations), and (b) the NSF of
any TI space, if any, in the building (i.e. any net square footage in the
building that is not included in the Leased Premises). Ad valorem taxes for the
North Building will be determined based on the North Building's pro rata share
of TI Expressway Site site-wide taxes, calculated on the basis of net book
value, as reflected in the records maintained by Lessor's Corporate Services
Finance Department prepared in accordance with disclosure statement approved by
the Defense Logistics Agency/DCAA or with generally accepted accounting
principles. Such taxes shall be due and payable fifteen (15) days after notice
from Lessor. Lessor and Lessee shall reasonably cooperate regarding ad valorem
tax issues, and avoid actions which would result in unfair discrimination with
regard to allocation or distribution of ad valorem taxes or the property
assessments on which such taxes are based.
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Except for ad valorem taxes assessed directly on the TI Expressway Site,
all taxes and assessments now or hereinafter imposed upon Lessee with respect to
its operations or property, now or hereinafter imposed, shall be borne and
timely paid directly by Lessee to the taxing authority.
ARTICLE 15
NO JOINT VENTURE, PARTNERSHIP, OR AGENT RELATIONSHIP
The relationship between Lessor and Lessee, with regard to this Lease, is
strictly that of lessor/lessee and contracting parties; Lessor and Lessee are
not partners, joint venturers or agents of each other.
Additionally, notwithstanding any services or assistance provided by Lessor
or Lessee to the other hereunder or under any other agreement;
(a) Neither party shall be responsible, either directly or indirectly,
expressly or impliedly, for compliance with any laws applicable to the other's
particular use of the TI Expressway Site;
(b) Lessee shall be solely responsible for its compliance with
environmental, health, and safety laws and regulations relating to Lessee's
operations in or about the Leased Premises, and Lessee shall prepare or cause to
be prepared all documentation and make all arrangements for disposal or other
handling of its hazardous waste, potentially recyclable hazardous materials, and
any other waste generated by Lessee or its agents or contractors requiring
manifests under applicable law;
(c) Lessee shall not be responsible, either directly or indirectly,
expressly or impliedly, for Lessor's compliance with any laws, regulations,
ordinances, permits, or licenses applicable to Lessor's use of the TI Expressway
Site; and
(d) Lessor shall be solely responsible for its compliance with
environmental, health, and safety laws and regulations relating to Lessor's
operations in or about the TI Space, and Lessor shall prepare or cause to be
prepared all documentation and make all arrangements for disposal or other
handling of its hazardous waste, potentially recyclable hazardous materials, and
any other waste generated by Lessor or its agents or contractors requiring
manifests under applicable law.
ARTICLE 16
ILLEGAL SUBSTANCE SCREENING
For so long as TI shall remain Lessor under this Lease, Lessee will comply
with a drug-free workplace policy reasonably acceptable to TI.
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ARTICLE 17
LESSEE'S ENVIRONMENTAL, INDUSTRIAL HYGIENE AND SAFETY COVENANTS,
REPRESENTATIONS AND WARRANTIES
In addition to the other provisions of this Lease, Lessee covenants,
represents and warrants that, during the term of this Lease and so long as
Lessee or any of Lessee's employees, contractors, agents or visitors are located
in the Leased Premises or are on the TI Expressway Site, Lessee shall comply
with the following:
(a) Lessee shall not violate, and Lessee shall not take any action that
would cause Lessor to be out of compliance with, any environmental, safety, or
industrial hygiene law (including, without limitation, principles of common law)
or any applicable permit, license, or authorization; Lessee shall comply with
each and every environmental permit issued to Lessee with respect to its use of
the Leased Premises as a result of Lessee's use or occupancy of the Leased
Premises, whether any such permit is issued in the name of Lessor, Lessee or any
third party; Lessee shall be responsible for obtaining and maintaining any and
all permits, licenses, authorizations, approvals, and exemptions as required for
Lessee's operations on the Leased Premises or Lessee's use of the TI Expressway
Site under this Lease under applicable environmental, safety, and industrial
hygiene laws, and Lessee shall pay for all fees and costs associated with
environmental permit applications, permit amendments, modifications or
revisions, registrations, governmental assessments or other governmental charges
of every type whatsoever relating to Lessee's operations on the Leased Premises
or its use of the TI Expressway Site under this Lease. The parties acknowledge
and agree that because of the nature and configuration of the TI Expressway
Site, (1) Lessor and Lessee shall petition the Texas Natural Resource
Conservation Commission (TNRCC) to designate the Leased Premises and the balance
of the TI Expressway Site as a single property for purposes of evaluating air
quality impacts pursuant to 30 Texas Administrative Code Section 101.2(b) and
shall enter into a single property designation agreement effective as of the
Commencement Date substantially in the form attached as Exhibit "B" hereto and
made a part hereof; and (2) during the North Building Transition Period, Lessor
and Lessee may both discharge under Lessor's waste water permit from the City of
Dallas, Permit No. 040224, together with any renewals, reissuances, or
modifications thereof (the "TI Waste Water Permit"), a copy of which has been
provided by Lessor to Lessee, provided, however, Lessee shall be responsible for
ensuring that its discharges comply with the terms of such permit, provided,
however, either prior to or during the North Building Transition Period, Lessee
shall apply for and diligently pursue issuance of a separate waste water
discharge permit covering its waste water discharges from the TI Expressway Site
(prior to the point such discharges commingle with those of Lessor). Upon
issuance of such separate permit, Lessee's waste water discharges at the TI
Expressway Site, including those from the North Building, will be governed by
such permit up to the point they commingle with the waste water discharges of
TI, from which point to combined outfall CWTP-16 they will be covered by the TI
Waste Water Permit. At Lessor's request, Lessee agrees at its cost to sample
Lessee's waste water sampling ports concurrently with Lessor's sampling of its
waste water sampling ports.
(b) Lessee shall comply with all applicable federal, state and local laws
and lawful orders of any governmental entity, public authority or judicial
authority applicable to its use of the Leased
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Premises and Lessee's operations thereon, including, without limitation, any
notice, reporting, and record keeping obligations imposed by any of the
foregoing. Without limiting the generality of the foregoing, Lessee
acknowledges it shall comply with all reporting obligations under laws relating
to the health or safety of persons or property or their protection from damage,
injury or loss, and with the requirements of the Americans with Disabilities Act
and Texas Architectural Barriers Act to the extent such requirements first
become applicable as a result of Lessee's Alterations, repairs or improvements
or Lessee's specific use of the Leased Premises.
(c) Lessee shall designate a responsible member of its organization at the
Leased Premises, to function as the liaison between Lessor and Lessee in the
event either party deems it necessary to contact the other for purposes of
environmental, safety or industrial hygiene matters.
(d) Lessee shall exercise at least the level of care and skill customary
in its industry, and conduct all dangerous activities on the Leased Premises
under the supervision of properly qualified personnel; any hazardous, toxic or
radioactive materials, substances or wastes will be properly containerized,
labeled and stored; Material Safety Data Sheets, as defined in 29 C.F.R. Section
1910.1200 or any successor regulation, will be properly kept by Lessee and
furnished to the TI Facilities Coordinator. Hazardous materials will not be
stored in stairwells, along emergency egress routes, near air handlers or
systems or otherwise in a manner that poses a hazard; gas cylinders will be
secured at all times.
(e) Lessee shall obtain its own EPA and TNRCC Identification Numbers,
arrange for disposal, and be identified on manifests as the generator, of all
hazardous or other waste generated from or otherwise arising out of Lessee's
operations on the Leased Premises.
(f) Lessee shall comply with all hazardous, toxic and radioactive waste
and materials handling and storage requirements under applicable laws,
regulations, ordinances and permits, and will exercise the utmost care when
handling and transporting such materials across the TI Space to which Lessee may
have access in the buildings in which the Leased Premises are located, and
across the TI Expressway Site.
(g) All hazardous, toxic or radioactive materials or substances delivered
or brought to the TI Expressway Site by Lessee, its employees, contractors, or
suppliers, will be received at a dock authorized to receive such materials. All
docks which receive such materials shall have the following spill control
measures: areas are to be sized for a free liquid volume capacity the greater
of 1.0 x the largest tank volume involved, or ten percent (10%) of the volume of
all tanks involved, or two percent (2%) of the total volume stored in drums,
carboys, or smaller containers at the location. Spill control secondary
containment structures must be free of cracks and impermeable to leakage or
migration of any spills to the ground or support foundation.
(h) Lessee shall ensure that all emergency exits, fire extinguishers,
electrical panels and equipment, aisles and passageways will be accessible and
kept clear at all times and maintained in compliance with applicable OSHA
requirements; Lessee shall apply good housekeeping practices throughout the
Leased Premises.
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(i) Lessee shall not make any changes in the character of (including
specific specification changes) or increase the volume of its actual air
emissions, other than de minimis increases, without the prior approval of TI.
In the event such approval is received, prior to applying for any air permit
amendment and during the application process, Lessee shall coordinate with the
TI Expressway Site Environmental Manager or his or her designee in determining
anticipated impacts of the requested changes.
(j) Lessee shall implement best management practices and, to the extent
applicable, adhere to the other requirements of the storm water general permit
promulgated by EPA pursuant to 40 C.F.R. Section 122.28(c) and covering storm
water discharges at the TI Expressway Site.
(k) Lessee shall retain one or more Laser and Radiation Safety Officers,
trained and licensed to the extent required by applicable laws, to oversee and
ensure compliance with all radiation requirements applicable to the Leased
Premises.
Any action based upon any breach of the foregoing representations,
warranties or covenants by Lessee, its agents, employees, contractors, tenants
and assigns, shall survive termination, abandonment, or expiration of this
Lease.
ARTICLE 18
DISCLAIMER
Except as expressly set forth in this Lease, neither Lessee nor Lessor
makes any warranties, express or implied or otherwise, with respect to this
Lease; and subject to the terms of this Lease, Lessee acknowledges and agrees
that this Lease is made on an "as is" and "where is" basis. Lessee further
acknowledges that Lessor makes no implied covenants with respect to this Lease.
Without limiting the generality of the foregoing, no receipt, review, consent,
approval, acquiescence or other knowledge of a party of, in or to any plans,
specifications, additions, alterations, improvements, equipment or process
changes proposed or taken by Lessee or Lessor shall be deemed, or in any way
construed, to be any representation, warranty or guaranty with respect to such
plan, specification, addition, alteration, improvement, equipment or process
change and shall not relieve the other party of any responsibility or liability
therefor.
ARTICLE 19
LESSOR'S AUDIT RIGHTS
Upon not less than forty-eight (48) hours prior notice to Lessee, Lessor,
at its sole cost, may, but shall not be obligated to, enter the Leased Premises
and inspect Lessee's environmental records and operations, and sample/monitor
Lessee's waste streams, radiation and air emissions, for the sole purpose of
determining whether Lessee is in compliance with this Lease, provided that any
entry shall minimize to the extent reasonably possible any interference with the
business or operations conducted in the Leased Premises. Lessee shall have the
right to designate a representative of Lessee
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to accompany Lessor and its representatives during the audit; provided, exercise
of such right does not alter the scheduling of the audit. Audits conducted by
Lessor pursuant to this Article 19 are for Lessor's benefit only. Lessor shall
not disclose any such audit, or information learned through such audit to any
third party, including any governmental authority, without the prior consent of
Lessee, except for an emergency situation as set forth in Article 13, and except
as otherwise required by law. Lessor shall, at Lessee's request, disclose all
findings within the scope of such audit to Lessee, and in all cases, shall
provide a copy of such audit to Lessee. In the event Lessor discovers that
Lessee is not in compliance with applicable laws or other covenants of this
Lease in any material respect, whenever reasonably necessary Lessor may, but
shall have no obligation to, take the least disruptive action necessary to
remedy such noncompliance by Lessee and protect the legitimate interests of
Lessor; provided however, except in emergency situations, Lessor shall afford
Lessee the prior opportunity to take such action within a ten (10) day period
(or shorter if warranted by the circumstances) before instituting any such
action, and Lessor shall only act, if at all, if Lessee fails to take any action
within the prescribed period or fails to diligently continue to implement such
action. In the event Lessor takes any such remedial action, Lessor shall not be
liable for inconvenience, annoyance, disturbance, loss or interruption of
business, by reason of making such reasonable and good faith determination and
taking such action; provided, however, Lessor shall be liable to Lessee for any
negligence or reckless disregard caused by Lessor, its employees, agents,
consultants, and contractors with respect to any action under this Article 19.
Lessor agrees in exercising its rights under this Article 19 to act in good
faith to avoid unreasonable interference with Lessee's operations at the TI
Expressway Site.
ARTICLE 20
ENTRY/RIGHT OF ACCESS
Due to the interconnectedness of the infrastructure serving the various
buildings on the TI Expressway Site, Lessor will require and Lessee hereby
agrees to grant to authorized personnel of Lessor (i) access to certain
infrastructure and utilities systems located in those areas of the North
Building indicated as "TI required access" areas on Exhibit A-4 hereto, as and
to the extent reasonably required by Lessor, and (ii) the right to continue to
monitor on Lessor's supervisory control and data acquisition ("SCADA") system,
utilities and process gas and fluid distribution systems located in the Leased
Premises that connect to the site-wide distribution system.
Lessor and its representatives may, acting in good faith to minimize to the
extent reasonably possible interference with Lessee's operations at the Leased
Premises and upon at least twenty-four (24) hours' prior notice to Lessee
(except in the case of emergency), and subject to any applicable U.S. Government
security requirements, enter the Leased Premises for any of the following
purposes:
(a) to make repairs to the Leased Premises required of Lessor under this
Lease;
(b) to provide access to the Leased Premises during normal business hours
for authorized third parties, including without limitation, governmental
agencies and, with the consent of Lessee,
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which shall not be unreasonably withheld or delayed, lenders, brokers,
purchasers, appraisers and, during the last eighteen (18) months of the Lease
Term prospective tenants;
(c) to inspect the Leased Premises and determine Lessee's compliance with
this Lease;
(d) to audit the compliance by Lessee as permitted in Article 19;
(e) to respond to emergency situations;
(f) to perform any work, which Lessor elects and is entitled to undertake,
made necessary by reason of any default by Lessee under the terms of this Lease;
(g) to carry out any other activity of Lessor permitted under this Lease;
and
(h) to perform services for Lessee hereunder.
Nothing herein shall be construed to impose or imply any duty upon Lessor
to do any such work which, under any provision of this Lease, it is not required
to perform; and the performance thereof by Lessor shall not constitute a waiver
of Lessee's default. Lessee shall reasonably cooperate with Lessor to ensure
provision of keys, combinations or codes as necessary to ensure adequate and
(where appropriate) immediate access to the Leased Premises as reasonably
required to provide Lessor with the access granted above. Lessee shall have the
right to designate a representative of Lessee to accompany Lessor and its
representatives when Lessor or its representatives are present on the Leased
Premises.
ARTICLE 21
BUILDING SYSTEMS SHUTDOWNS
Lessee acknowledges that Lessor may, from time to time during emergencies
or for purposes of building maintenance, need to shut down one or more of the
Utility Systems serving the buildings in which the Leased Premises are located.
Lessee agrees to reasonably cooperate with Lessor to allow Lessor to shut
down building systems for up to five (5) days annually to perform Utilities
Systems maintenance. Except in the case of an emergency, Lessor shall schedule
such shutdown with at least two (2) months notice to Lessee and prior approval
by Lessee, which approval shall not be unreasonably withheld or delayed. Lessor
will cooperate with Lessee regarding all shutdowns so as to minimize any
potential disruption to Lessee's operations.
Lessee acknowledges that Utilities Systems shutdowns performed in
accordance with this Article 21 will benefit Lessee and Lessee's operations.
Lessor shall not be liable for inconvenience, annoyance, disturbance, loss or
interruption of business to Lessee. Lessor shall not be liable for any other
claimed damage to Lessee, by reason of any such Utilities Systems shutdown,
except to the
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extent due to the gross negligence or willful misconduct of Lessor or its
agents, employees, or contractors, nor shall Lessee be entitled to any abatement
of Rent by reason of any such Utilities Systems shutdown.
ARTICLE 22
HOLDING-OVER
If Lessee continues to occupy the Leased Premises beyond the Lease Term of
this Lease in the absence of a mutually agreed upon extended term, such
holding-over shall constitute a tenancy at will, except upon hold-over all the
monthly Rent rates shall increase to a sum of 150% of the then current Rent in
effect at the time of expiration of this Lease.
ARTICLE 23
SURRENDER OF THE LEASED PREMISES
Upon surrender of the Leased Premises for any reason, including
termination, abandonment, expiration or breach by Lessor, Lessee, at its expense
(except as otherwise expressly provided herein) shall remove from the Leased
Premises Lessee's Property, except for such Alterations that Lessor has agreed
that may at Lessee's election, be surrendered. Lessee will use all reasonable
efforts to avoid causing damage to the surrounding structure and to minimize
disruption of Lessor's operations. Subject to Articles 10 and 11, Lessee, at
its expense, will promptly repair any damage to the Leased Premises caused by
any removal of Lessee's property and Alterations therefrom and restore the
Leased Premises substantially to the same condition as at the commencement of
the Lease (without such equipment as Lessee is removing), reasonable wear and
tear and Alterations that Lessor states in writing may be surrendered at the
termination of the Lease excepted. Lessor's acceptance of any surrender of the
Leased Premises by Lessee shall not be deemed to constitute a waiver by Lessor
of any default by Lessee. Any of Lessee's Property not removed after surrender
shall become the property of Lessor. Upon such surrender, Lessee shall not
allow or cause any environmental, health, or safety permits or authorizations
relating to Lessee's use or occupancy of the Leased Premises to expire,
terminate, or lapse for a period of sixty (60) days after such surrender and
shall, at Lessor's request, execute such documentation as may be necessary or
desirable to transfer any such permits or authorizations to Lessor or Lessor's
designee.
ARTICLE 24
EVENTS OF DEFAULT
SECTION 24.01. LESSEE'S EVENTS OF DEFAULT.
The following events shall be deemed to be "Events of Default" by Lessee
under this Lease:
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(a) Lessee's failure to timely pay any installment of Rent or to make any
other payment as specified herein within ten (10) days after actual receipt by
Lessee of notice from Lessor of Lessee's failure to pay the past due amounts; or
(b) For non-monetary obligations, Lessee's breach of or failure to comply
with any term, provision, representation, warranty, or covenant of this Lease,
and Lessee's failure to cure such breach or noncompliance within thirty (30)
days after actual receipt by Lessee of notice thereof from Lessor or with
Lessor's consent, which shall not be unreasonably withheld, within such longer
time as may reasonably be required to cure the default.
SECTION 24.02. EVENTS OF DEFAULT BY LESSOR.
The following events shall be deemed to be "Events of Default" by Lessor
under this Lease:
(a) Lessor's breach of or failure to comply with any term, provision,
representation, warranty or covenant of this Lease, and
(i) Lessor's failure to make a payment due from Lessor under this
Lease or apply appropriate credit to Lessee as specified herein within ten
(10) days after actual receipt by Lessor of notice from Lessee of Lessor's
failure to pay the past due amounts or apply the appropriate credit, or
(ii) For nonmonetary obligations, Lessor's failure to cure such
breach or non-compliance within thirty (30) days after actual receipt of
notice thereof from Lessee or such longer time as may reasonably be
required to cure the default.
ARTICLE 25
REMEDIES
SECTION 25.01. LESSOR'S REMEDIES.
If an Event of Default by Lessee shall have occurred, Lessor shall have the
right, at its election, then or at any time thereafter while such Event of
Default shall continue, to pursue any one or more of the following remedies,
without any notice or demand whatsoever:
(a) Terminate this Lease, without any liability whatsoever, in which
event, Lessee shall immediately surrender the Leased Premises to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
it may have for possession or arrearages in Rent, enter upon or take possession
of the Leased Premises and expel or remove Lessee and any other person who may
be occupying the Leased Premises or any part thereof without being liable for
prosecution or any claim for damages therefor, and Lessee agrees to pay to
Lessor, on demand, the amount of all loss and damage, including attorneys' fees,
which Lessor may suffer by reason of such termination;
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(b) Enter upon the Leased Premises without being liable for prosecution or
any claim for damages therefor, correct such default and, upon demand, recover
from Lessee all reasonable amounts expended, as Rent; or otherwise do whatever
Lessee is obligated to do under the terms of this Lease; and Lessee agrees to
reimburse Lessor, on demand, for any expenses, including attorneys' fees, which
Lessor may incur in connection with its attempts to effect compliance with
Lessee's obligations under this Lease, and Lessee further agrees that Lessor
shall not be liable for any damages resulting to Lessee from such action, except
to the extent caused by the gross negligence or willful misconduct of Lessor; or
(c) Enter upon and take custodial possession of the Leased Premises, and
use reasonable efforts to re-let the Leased Premises for a use comparable to
that of Lessee for the balance of the then current term without thereby causing
a termination or anticipatory breach of the Lease.
Pursuit of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or any other remedies provided by law or equity, nor
shall pursuit herein provided constitute a forfeiture or waiver of any Rent due
to Lessor hereunder or any damages accruing to Lessor by reason of the violation
of any of the terms, provisions or covenants herein contained. Failure by
Lessor to enforce one or more of the remedies provided herein upon an Event of
Default by Lessee shall not be deemed or construed to constitute a waiver of
such default, or any other violation or breach of any of the terms, provisions
or covenants herein contained.
SECTION 25.02. LESSEE'S REMEDIES.
If an Event of Default by Lessor shall have occurred, Lessee shall have the
right, at its election, then or at any time while such Event of Default shall
continue, to pursue any one or more of the following remedies without any notice
or demand whatsoever:
(a) Terminate this Lease, in which event, Lessee shall immediately
surrender the Leased Premises to Lessor, and such date of surrender shall be
treated as if it were the date set forth above for the termination of the then
current term of the Lease; provided, however, Lessee may also assert any claim
Lessee may have against Lessor for amounts due from Lessor to Lessee hereunder
or for any other breach by Lessor hereunder. Lessor agrees to pay to Lessee, on
demand, the amount of all loss and damage, including attorneys' fees, which
Lessee may suffer by reason of such termination, and provided, however, Lessee
shall at all times be entitled to remove Lessee's property and Alterations
installed and paid for by Lessee from the Leased Premises, or
(b) Correct such default and, upon demand, recover from the Lessor, upon
invoice, all amounts reasonably expended; or otherwise do whatever Lessor is
obligated to do under the terms of this Lease; and Lessor agrees to reimburse
Lessee promptly, on demand, for any reasonable expenses, including attorneys'
fees, which Lessee may incur in connection with its attempts to effect
compliance with Lessor's obligations under this Lease, and Lessor further agrees
that Lessee shall not be liable for any damages resulting, to the Lessor from
such action, except to the extent caused by the gross negligence or willful
misconduct of Lessee.
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Pursuit of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or any other remedies provided by law or equity; nor
shall pursuit herein provided constitute a forfeiture or waiver of any amount
due from Lessor to Lessee hereunder or any damages accruing to Lessee by reason
of the violation or otherwise due pursuant to any of the terms, provisions, or
covenants herein contained. Failure by Lessee to enforce one or more of the
remedies provided herein upon an Event of Default by Lessor shall not be deemed
or construed to constitute a waiver of such default, or any other violation or
breach of any of the terms, provisions or covenants herein contained.
ARTICLE 26
ENFORCEMENT COSTS
The court costs and attorneys' fees incurred by the party who successfully
prosecutes or defends any legal or equitable proceeding to enforce any right or
obligation hereunder, shall be borne by the other party. Such costs and fees
shall be due and payable from the date a final, non-appealable judgment is
entered.
ARTICLE 27
NO WAIVER, EXPRESS OR IMPLIED
No waiver or failure to object to a breach of any of the provisions of this
Lease, whether express or implied, in any instance, shall be construed to be, or
operate as, a waiver of any prior or succeeding breach of the same or any other
provision of this Lease.
ARTICLE 28
NOTICES
Solely for the purpose of giving notices under this Lease, the addresses of
the parties hereto, to which all notices hereunder (other than notices required
under Sections 5, 7, 10.01, 12, 13, 17, 20, and 21, which notices need only be
given to those persons identified with an asterisk below) are to be sent, are as
follows:
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IF TO LESSOR: Texas Instruments Incorporated
0000 XXX Xxxxxxx, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (on-site deliveries), or
X.X. Xxx 000000, Xxxx Xxxxxxx 0000
Xxxxxx, Xxxxx 00000 (U.S. mail delivery)
Attention: Manager, Corporate Facilities;
Leasing & Property Management
Facsimile No: 972-997-5083
E-Mail: x-xxxxx@xx.xxx.xxx
with a copy to: *Texas Instruments Incorporated
Xxxxxx, Xxxxx 00000
X.X. Xxx 000000, Xxxx Xxxxxxx 0000 (X.X. mail deliveries), or
0000 XXX Xxxxxxx, Xxxxxx, Xxxxx 00000
Mail Station 8379 (on-site deliveries)
Attention: North Texas Facilities Manager
Facsimile No: 000-000-0000
E-Mail: xxxxxxxx@xx.xxx
IF TO LESSEE: Raytheon TI Systems, Inc.
c/o Raytheon Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Director, Real Estate
Facsimile No: 000-000-0000
with a copy to: *Raytheon TI Systems, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Plant Manager
All notices, approvals, and other communications required or permitted by
this Lease to be given to Lessor or Lessee shall be in writing and shall be
delivered (i) in person or by a reputable courier service that provides receipt
of delivery, (ii) by deposit in the U.S. mail, postage prepaid, by certified or
registered mail, return receipt requested, provided, however, the delivery of
payment of routine invoices shall not be required to be by certified or
registered mail; (iii) by a nationally recognized overnight courier service; or
(iv) by electronic mail or facsimile delivery confirmed by delivery in
accordance with subparagraphs (i) or (iii) above; in each case addressed to the
party concerned at the addresses or facsimile numbers set forth above or with
respect to payments to Lessor, to the addresses set forth in Section 2.04 hereof
(or at such other address as a party may specify by written notice pursuant to
this paragraph to the other party). Communications sent by personal delivery,
courier service, electronic or facsimile transmission as set forth above shall
be effective upon receipt, provided the required confirmatory delivery is made.
Communications sent by mail as set forth above shall be effective five (5) days
after proper deposit in the U.S. mail.
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ARTICLE 29
NO ORAL MODIFICATION
This Lease may only be amended in writing, executed by an authorized
representative of each party, respectively.
ARTICLE 30
EFFECT OF AGREEMENT
This Lease supersedes any prior understanding or written or oral agreements
between the parties concerning the Leased Premises.
ARTICLE 31
GOVERNING LAW
This Lease shall be construed and interpreted under the laws of the State
cf Texas.
ARTICLE 32
SEVERABILITY
If any term or provision of this Lease or the application thereof to any
person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is invalid or unenforceable,
shall not affected thereby.
ARTICLE 33
ESTOPPEL CERTIFICATES/FURTHER ACTS
Either party will, at any time and from time to time, within ten (10) days
after receipt of a request by the other party, execute, acknowledge and deliver
to the requesting party, a signed statement certifying that this Lease is
unmodified and in full effect (or, if there have been modifications, that this
Lease is in full effect as modified, and setting forth such modifications) and
the date to which the Rent has been paid, and either stating that no default
exists hereunder or specifying each such default of which the signer may have
knowledge and specifying such other matter as may be reasonably requested.
Either party will, at any time and from time to time, perform or cause to
be performed upon or after execution of this Lease, any and all further acts as
may be reasonably necessary to consummate the transaction contemplated hereby.
-34-
ARTICLE 34
SUBORDINATION, ATTORNMENT AND NONDISTURBANCE
Nothing in this Lease shall be construed to limit TI's right to sell,
convey or divest TI's ownership of any or all of the TI Expressway Site or the
Leased Premises. In the event of any such sale, conveyance, or divestiture of
title to the Leased Premises, by Lessor or subsequent owners of such title, and
provided that the successor enters into a nondisturbance and attornment
agreement with Lessee, which shall provide that in the event of foreclosure or
other action, this Lease and the rights of Lessee hereunder shall not be
disturbed but shall continue in full force and effect so long as Lessee shall
not be in material default hereunder beyond expiration of any applicable grace
or cure period, Lessee shall subordinate this Lease to the lien of any mortgage
or deed of trust, and the Lessor, person or corporation, or other entity who is
divested of title shall be entirely freed and relieved of all covenants and
obligations thereafter accruing hereunder, and the grantee, person, corporation
or other entity or entities who otherwise succeeds or succeed to title shall be
deemed to have assumed the covenants and obligations of Lessor thereafter
accruing hereunder until the next conveyance or divestiture of title. Lessee
shall look to said grantee or successor for the observance and performance of
covenants and obligations of Lessor hereunder assumed by such grantee or
successor. Lessee agrees to attorn to any such grantee or successor. In the
event Lessor sells, conveys or assigns its ownership of the Leased Premises to
an entity having a total net worth of less than one hundred million dollars
($100,000,000), the prohibition on set off, demand or deduction by Lessee set
forth in Section 2.01, above, shall no longer apply.
ARTICLE 35
FORCE MAJEURE
Neither party shall be responsible for any delay or failure in performance,
or for any loss, damage, costs, charges and expenses incurred or suffered by the
other party by reason thereof, if such delay or failure results from the
occurrence of an event beyond the reasonable control of such party and without
the fault or negligence of such party ("force majeure") including, but not
limited to, acts of God or the public enemy, acts of the Government in either
its sovereign or contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, unusually severe weather, failure of
suppliers, terrorism, or civil strife. If any party to this Lease is rendered
wholly or partially unable by an event of force majeure to carry out its
obligations under this Lease, and if that party gives prompt notice and full
particulars of such event of force majeure to the other party, the performance
of the notifying party of its obligations under this Lease shall be suspended
during the continuance of the force majeure event, but for no longer period.
Upon the cessation of such event, the party claiming force majeure shall
(a) notify the other party, and (b) resume performance of its obligations as
soon as practicable.
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ARTICLE 36
BINDING EFFECT
This Lease and all rights and obligations hereunder shall inure to and be
binding upon the successors and assigns of Lessor and shall inure to and be
binding upon the permitted successors and assigns (if any) of Lessee.
ARTICLE 37
GENDER
Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, and vice versa, unless the context requires otherwise.
ARTICLE 38
CONSTRUCTION AND INTENT
The parties hereto acknowledge that the terms of this Lease have been
negotiated at arm's length, and that each party and its counsel have reviewed
and revised this Lease, and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party, shall not be employed
in the interpretation of this Lease, or any exhibits, schedules or amendments
hereto.
ARTICLE 39
NO INCIDENTAL OR CONSEQUENTIAL DAMAGES
Notwithstanding any other provision of this Lease (including without
limitation the default and environmental indemnification provisions), in the
event of any breach of this Lease, the parties agree that neither party shall be
liable to the other for any incidental, consequential or punitive damages,
including without limitation losses due to inconvenience, annoyance,
disturbance, or loss or interruption of business.
ARTICLE 40
AUTHORITY
Each individual executing or attesting the Lease on behalf of Lessor hereby
covenants, warrants and represents that he or she is duly authorized to execute
and/or attest and deliver the Lease on behalf of Lessor in accordance with a
duly adopted resolution of the Lessor's board of directors and in accordance
with such corporation's articles of incorporation and bylaws: (i) the Lease is
binding upon Lessor in accordance with its terms; and (ii) Lessor is a duly
organized and legally existing corporation under the laws of Delaware and is
qualified to do business in and is in
-36-
good standing in the State of Texas. Lessee hereby covenants, warrants and
represents (i) that the individual executing the Lease on behalf of Lessee is
duly authorized to execute and deliver the Lease on behalf of Lessee; (ii) the
Lease is binding upon Lessee in accordance with its terms; and (iii) Lessee is a
duly organized and legally existing corporation under the laws of Delaware and
is qualified to do business in and is in good standing in the State of Texas.
ARTICLE 41
CAPTIONS
The article and paragraph captions contained in this Lease are for
convenience of reference only and are not intended to define, limit or describe
the scope or intent of any provision contained herein.
ARTICLE 42
COUNTERPARTS
This Lease may be executed in any number of counterparts with the same
effect as if all parties thereto had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one instrument.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be executed by
their duly authorized representatives.
LESSOR: LESSEE:
TEXAS INSTRUMENTS INCORPORATED, RAYTHEON TI SYSTEMS, INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxx
--------------------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxx
Title: Senior Vice President, Title: President
Treasurer and Chief
Financial Officer
Exhibit E-1 to
Asset Purchase
Agreement
Registration Rights Agreement
(as amended through May 1991)
* incorporated by reference from
Registrant's Form 10-K for
the period ended December 31, 1996.
Exhibit E-2
to Asset Purchase
Agreement
AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
This Amendment ("AMENDMENT") is made as of the 13 day of January, 1998, by
and among TRIQUINT SEMICONDUCTOR, INC., a Delaware corporation (the "COMPANY"),
RAYTHEON TI SYSTEMS, INC., a Delaware corporation ("RTIS"), and the undersigned
holders of shares of Common Stock of the Company (the "EXISTING HOLDERS"),
amending that certain Registration Rights Agreement dated May 17, 1991, as
amended on September 5, 1991, September 3, 1992, July 1, 1993, September 24,
1993 and December 19, 1994 (the "REGISTRATION RIGHTS AGREEMENT") between the
Company and the Existing Holders.
WHEREAS, the Company and the Existing Holders are parties to the
Registration Rights Agreement;
WHEREAS, in connection with an Asset Purchase Agreement dated as of January
__, 1998 between the Company and RTIS, the Company is issuing to RTIS shares of
Common Stock of the Company having the value specified in the Asset Purchase
Agreement (the "NEW SHARES"), and in connection therewith has agreed to grant to
RTIS certain registration rights with respect to the New Shares; and
WHEREAS, the Company and the Existing Holders now desire to amend the
Registration Rights Agreement to provide for the grant to RTIS of certain
registration rights with respect to the New Shares;
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms which are not defined herein shall have the
meaning assigned to them in the Registration Rights Agreement.
2. RTIS shall hereinafter be considered a party to the Registration
Rights Agreement, and entitled to all of the rights and benefits, and subject to
all of the obligations, of a party thereunder.
3. Section 1(b) of the Registration Rights Agreement is hereby amended
to include the New Shares, and by way of clarification and not limitation, all
shares of Common Stock held by Lucent Technologies, Inc. and all shares of
Common Stock issuable upon the exercise of warrants held by Lucent Technologies,
Inc., within the definition of "Registrable Securities" therein.
4. Section 2(a) of the Registration Rights Agreement, as amended by
Amendment No. 3 thereto, dated May 17, 1991, shall be amended to add the
following sentence as the last sentence of such Section:
-2-
No Holder shall be entitled to make more than two (2) such initial requests
under the first sentence of this Section 2(a).
5. This Amendment shall become effective upon the receipt by the
Company of signature pages executed by the Holders of at least two-thirds of the
currently outstanding Registrable Securities.
6. This Amendment may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which together shall
constitute one document.
7. This Amendment shall be governed in all respects by the laws of the
State of California.
-3-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of January 13, 1998.
TRIQUINT SEMICONDUCTOR, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
LUCENT TECHNOLOGIES INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
RAYTHEON TI SYSTEMS, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
EXHIBIT G TO
ASSET PURCHASE AGREEMENT
TRIQUINT SEMICONDUCTOR, INC.
GUARANTY AGREEMENT
This is a GUARANTY AGREEMENT, dated as of January 13, 1998 (the
"GUARANTY"), between TriQuint Semiconductor, Inc., a Delaware corporation (the
"GUARANTOR"), and Raytheon TI Systems, Inc., a Delaware corporation (the
"SELLER").
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of
January 8, 1998 (the "ASSET PURCHASE AGREEMENT"), between the Seller and the
Guarantor, the Guarantor has agreed to purchase certain assets, and assume
certain liabilities of the Seller on the terms and conditions set forth in the
Asset Purchase Agreement;
WHEREAS, the Guarantor has assigned its rights to purchase such assets, and
assume such liabilities, under the Asset Purchase Agreement to its wholly-owned
subsidiary, TriQuint Semiconductor Texas, Inc., a Delaware corporation (the
"BUYER"); and
WHEREAS, the Seller has required that the Guarantor, as the holder of all
of the issued and outstanding capital stock of the Buyer, guarantee all
obligations of the Buyer under or in connection with the Asset Purchase
Agreement, in connection with the performance by the Buyer of its obligations
under or in connection with the Asset Purchase Agreement in order to induce the
Seller to consummate the transactions contemplated by the Asset Purchase
Agreement and as consideration for the benefits accruing to the Guarantor as a
result of the transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. GUARANTY OF PAYMENT AND PERFORMANCE OF OBLIGATIONS. The
Guarantor hereby unconditionally guaranties to the Seller the payment and
performance in full of each Obligation (as hereinafter defined), when and as
such Obligation becomes due and payable or is otherwise required to be
performed, including all Obligations which would become due but for the
operation of the automatic stay pursuant to Section 362(a) of the Federal
Bankruptcy Code and the operation of Sections 502(b) and 506(b) of the Federal
Bankruptcy Code. As used herein, "Obligations" means all indebtedness,
obligations and liabilities of the Buyer to the Seller and its Affiliates,
existing on the date of this Guaranty or arising thereafter, direct or indirect,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising under or pursuant to the Asset Purchase
-2-
Agreement, the Intellectual Property Agreement, the Supply Agreement, the Master
Services Agreement, the Sublease Agreements (each as defined in the Asset
Purchase Agreement), the Transition Agreements referred to in the Sublease
Agreements, the Non-Disclosure Agreement or any subcontract or work
authorization agreement entered into pursuant to the Asset Purchase Agreement or
the Master Services Agreement. The Guarantor agrees that if the Buyer shall
fail to pay or perform any Obligation when and as such Obligation shall be due
and payable or is otherwise required to be performed as set forth in the Asset
Purchase Agreement or the other applicable agreement or instrument, then the
Guarantor will make such payment of such Obligation in funds immediately
available to the Seller or otherwise perform such Obligation if such Obligation
does not entail the payment of money. This Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual payment and
performance by the Buyer of the Obligations and not of their collectibility
only, and is in no way conditioned upon any requirement that the Seller first
attempt to collect any of the Obligations from the Buyer or resort to any
security or other means of obtaining payment of the Obligations that the Seller
now has or may acquire after the date hereof, or upon any other contingency
whatsoever. Payments or performance by the Guarantor hereunder may be required
by the Seller on any number of occasions.
Section 2. GUARANTOR'S FURTHER AGREEMENTS TO PAY. The Guarantor
further agrees, as the principal obligor and not as the guarantor only, to pay
to the Seller forthwith upon demand by the Seller in funds immediately available
to the Seller, all costs and expenses (including court costs and reasonable
legal expenses) incurred or expended by the Seller in connection with collecting
under this Guaranty and the enforcement hereof, together with interest on
amounts recoverable under this Guaranty from the later of (i) the date that such
amounts have become due and payable under the Asset Purchase Agreement or other
applicable agreement or instrument executed pursuant thereto, as finally
determined in accordance with the provisions of the Asset Purchase Agreement or
such other agreement or instrument, and (ii) the date demand for payment
hereunder is made, until payment, at a rate per annum equal to the "prime rate"
as in effect from time to time (determined based on the prime rate published in
the Wall Street Journal under the heading "Money Rates") plus 2%, provided that
the maximum amount of interest that may be charged to or collected from the
Guarantor under this Guaranty shall be absolutely limited to, and shall in no
event exceed, the maximum amount of interest that could lawfully be charged or
collected under applicable law.
Section 3. TERMINATION OF GUARANTY. The obligations of the Guarantor
under this Guaranty shall continue in full force and effect until the
Obligations are finally paid and satisfied in full, provided that this Guaranty
shall continue to be effective or shall be reinstated, as the case may be, if at
any time payment or other satisfaction of any of the Obligations is rescinded or
must otherwise be restored or returned upon the bankruptcy, insolvency, or
reorganization of the Buyer, or otherwise, as though such payment had not been
made or other satisfaction occurred.
-3-
No invalidity, irregularity or unenforceability by reason of the federal
Bankruptcy Code or any insolvency or other similar law, or any law or order of
any government or agency thereof purporting to reduce, amend or otherwise affect
the Obligations shall impair, affect, or be a defense to or claim against the
obligations of the Guarantor under this Guaranty.
Section 4. WAIVERS BY GUARANTOR; SELLER'S FREEDOM TO ACT. The
Guarantor agrees that the Obligations will be paid and performed strictly in
accordance with their respective terms, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Seller with respect thereto. The Guarantor waives
promptness, diligence, presentment, demand, protest, notice of acceptance,
notice of any Obligations incurred and all other notices of any kind, other than
demand for payment hereunder, and all defenses which may be available by virtue
of any valuation, stay, moratorium law or other similar law now or hereafter in
effect, any right to require the marshalling of assets of the Buyer or any other
entity or other Person (as defined in the Asset Purchase Agreement) primarily or
secondarily liable with respect to any of the Obligations, and all suretyship
defenses generally. Without limiting the generality of the foregoing, the
Guarantor agrees to the provisions of any instrument evidencing, securing or
otherwise executed in connection with any Obligation and agrees that the
obligations of the Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by (i) the failure of the Seller to
assert any claim or demand or to enforce any right or remedy against the Buyer
or any other entity or other Person primarily or secondarily liable with respect
to any of the Obligations; (ii) any extensions, compromise, consolidation or
renewals of any Obligation; (iii) any change in the time, place or manner of
payment of any of the Obligations or any rescissions, waivers, compromise,
consolidation, amendments or modifications of any of the terms or provisions of
the Asset Purchase Agreement or any other agreement evidencing, securing or
otherwise executed in connection with any of the Obligations; (iv) the addition,
substitution or release of any entity or other Person primarily or secondarily
liable for any Obligation; (v) the adequacy of any rights which the Seller may
have against any collateral security or other means of obtaining repayment of
any of the Obligations; (vi) the impairment of any collateral securing any of
the Obligations, including without limitation the failure to perfect or preserve
any rights which the Seller might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (vii) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a
release or discharge of the Guarantor, all of which may be done without notice
to the Guarantor. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of (A) any
"one action" or "anti-deficiency" law which would otherwise prevent the Seller
from bringing any action, including any claim for a deficiency, or exercising
any other right or remedy (including any right of set-off), against the
Guarantor before or after the Seller's commencement or completion of any action,
whether judicially, by exercise of power of sale or
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otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by the Seller.
Section 5. BUYER'S DEFENSES AVAILABLE TO GUARANTOR. Notwithstanding
anything to the contrary contained herein, but without in any way affecting the
Guarantor's waiver of suretyship defenses generally pursuant to Section 4, the
Guarantor shall be entitled to rely on any defenses to the payment or
performance of any Obligation that the Buyer is entitled to rely on pursuant to
the Asset Purchase Agreement, other than any defenses that are personal to the
Buyer such as lack of capacity or authority or discharge in bankruptcy.
Section 6. UNENFORCEABILITY OF OBLIGATIONS AGAINST THE BUYER. If for
any reason the Buyer has no legal existence or is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations have become
irrecoverable from the Buyer by reason of the Buyer's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on the Guarantor to the same extent as if
the Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment or
performance of any of the Obligations is stayed upon the insolvency, bankruptcy
or reorganization of the Buyer, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of the Asset Purchase
Agreement or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by the
Guarantor.
Section 7. SUBROGATION. Until the final payment and performance in
full of all of the Obligations: (i) the Guarantor shall not exercise any rights
against the Buyer arising as a result of payment or performance by the Guarantor
hereunder, by way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the Seller in
respect of any payment hereunder in any bankruptcy, insolvency or reorganization
case or proceedings of any nature; (ii) the Guarantor will not claim any setoff,
recoupment or counterclaim against the Buyer in respect of any liability of the
Guarantor to the Buyer; and (iii) the Guarantor waives any benefit of and any
right to participate in any collateral security which may be held by the Seller.
Section 8. FURTHER ASSURANCES. The Guarantor agrees to do all such
things and execute all such documents as the Seller may consider necessary or
desirable to give full effect to this Guaranty and to perfect and preserve the
rights and powers of the Seller hereunder. The Guarantor acknowledges and
confirms that the Guarantor itself has established its own adequate means of
obtaining from the Buyer on a continuing basis all information desired by the
Guarantor concerning the financial condition of the Buyer and that the Guarantor
will look to the Buyer and not to the Seller in order for the Guarantor to keep
adequately informed of changes in the financial condition of the Buyer.
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Section 9. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR. The
Guarantor represents and warrants to the Seller as follows:
Section 9.1. ORGANIZATION; AUTHORITY. The Guarantor is a
corporation validly existing and in good standing under the laws of the state of
Delaware with corporate power and authority to enter into this Guaranty and to
perform its obligations hereunder.
Section 9.2. BINDING EFFECT. This Guaranty has been duly
authorized, executed and delivered by the Guarantor and constitutes the legal,
valid and binding obligation of the Guarantor enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by equitable principles relating to the
availability of remedies.
Section 9.3. NON-CONTRAVENTION. Neither the execution and
delivery of this Guaranty by the Guarantor nor the consummation by the Guarantor
of the transactions contemplated hereby will constitute a violation of, or be in
conflict with, or constitute or create a default under, or result in the
creation or imposition of any Encumbrance (as defined in the Asset Purchase
Agreement) upon any property of the Guarantor pursuant to any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge or
other restriction of any government, governmental agency or court or other
tribunal or arbitral authority to which the Guarantor or any of its properties
is subject.
Section 10. NOTICES, ETC. All notices and other communications made or
required to be given to the Guarantor or the Seller pursuant to this Guaranty
shall be in writing and shall be deemed to have been duly given when delivered
by hand, three days after being mailed by United States registered or certified
first-class mail, postage prepaid, one day after being sent by overnight courier
or one day after being sent by facsimile with a confirmation copy sent by
overnight courier, addressed as follows:
If to Guarantor, at:
TriQuint Semiconductor, Inc.
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
or at such other address for notice as the Guarantor shall last have
furnished in writing to the person giving the notice.
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If to the Seller, at:
Raytheon TI Systems, Inc.
00000 X. Xxxxxxx Xxxxxxxxxx, XX000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
or at such other address for notice as the Seller shall last have furnished
in writing to the person giving the notice.
Section 11. AMENDMENTS, WAIVERS, ETC. No provision of this Guaranty can
be changed, waived, discharged or terminated except by an instrument in writing
signed by the Seller and the Guarantor expressly referring to the provision of
this Guaranty to which such instrument relates. No such waiver shall extend to,
affect or impair any right with respect to any Obligation that is not expressly
dealt with therein. No course of dealing or delay or omission on the part of
the Seller in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto.
Section 12. WAIVER OF JURY TRIAL. THE GUARANTOR AND THE SELLER EACH
HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS.
Section 13. SURVIVAL OF BANKRUPTCY. This Guaranty shall survive the
insolvency of the Guarantor and the commencement of any case or proceeding by or
against the Guarantor under the federal Bankruptcy Code or other federal, state,
provincial or other applicable bankruptcy, insolvency or reorganization
statutes.
Section 14. COUNTERPARTS. This Guaranty may be executed in any number
of counterparts, but all of such counterparts together shall constitute but one
and the same agreement. In making proof of this Guaranty, it shall not be
necessary to produce or account for more than one counterpart hereof signed by
the party against whom enforcement is sought.
Section 15. HEADINGS; CONSTRUCTION. The descriptive section headings
have been inserted for convenience of reference only and do not define or limit
the provisions hereof. The language used in this Guaranty will be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.
-7-
Section 16. SEVERABILITY. In the event any provision of this shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof, and this Guaranty shall be interpreted and construed as if
such provision to the extent the same shall have been invalid, illegal or
unenforceable had never been contained herein. The parties hereto agree that
they will negotiate in good faith to replace any provision hereof so held
invalid, illegal or unenforceable with a valid provision that is as similar as
possible in substance to the invalid, illegal or unenforceable provision.
Section 17. ACKNOWLEDGMENT. The Guarantor acknowledges receipt of a
copy of this Guaranty.
Section 18. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ITS CHOICE OF LAW RULES).
Section 19. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Notwithstanding the foregoing, this Guaranty
may not be assigned (by operation of law or otherwise) by the Guarantor. The
Seller may assign this Guaranty to any successor in interest (whether by sale,
merger, consolidation or otherwise) to all or substantially all of the Seller's
business.
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed by their proper and duly authorized officers as of the day first above
written.
The Guarantor:
TRIQUINT SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. X. Xxxx
-----------------------------------
Name: Xxxxxx X. X. Xxxx
Title: Executive Vice President
Accepted by the Seller:
RAYTHEON TI SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Controller
