Exhibit 10.20
BUILD TO SUIT LEASE
BY AND BETWEEN
MICRON TECHNOLOGY, INC., a Delaware corporation,
as landlord
AND
PHOTRONICS, INC., a Connecticut corporation,
as tenant
<PAGE>
BUILD TO SUIT LEASE
BY AND BETWEEN
MICRON TECHNOLOGY, INC., a Delaware corporation,
------------------------------------------------
as landlord
AND
PHOTRONICS, INC. a Connecticut corporation,
as tenant
Dated: May ____, 2006
INDEX
Page
----
ARTICLE I.
DEFINITIONS.........................................................1
ARTICLE II.
DEMISE.............................................................8
ARTICLE III.
PREMISES..........................................................8
Section 3.1 Premises
Defined...........................................8
Section 3.2 Reservation of Oil, Gas, Mineral and Water
Rights..........9
Section 3.3 Permitted
Exceptions.......................................9
ARTICLE IV.
TERM..............................................................10
Section 4.1 Length of
Term............................................10
Section 4.2 Lease Commencement Date and Rent Commencement
Date........11
Section 4.3 Conveyance to Photronics Upon Expiration of Lease
Term or Prepayment; Micron Right of First
Refusal..............11
ARTICLE V.
RENT...............................................................11
Section 5.1 Base
Rent.................................................11
Section 5.2 Rent Defined; Additional
Rent.............................12
Section 5.3 Lease Prepayment; Principal Reduction
Payments............13
ARTICLE VI.
TAXES.............................................................15
Section 6.1 Real Property
Taxes.......................................15
Section 6.2 Separate Tax
Parcel.......................................16
Section 6.3 Other
Taxes...............................................17
Section 6.4 Right to
Contest..........................................17
ARTICLE VII. CONDUCT OF BUSINESS BY
PHOTRONICS................................17
Section 7.1 Use of
Premises...........................................17
Section 7.2 Restrictions on
Use.......................................18
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Section 7.3 Contest of
Requirements...................................19
Section 7.4 Exterior Signs and Sign
Monument(s).......................19
ARTICLE VIII. MAINTENANCE, REPAIRS AND
ALTERATIONS............................20
Section 8.1 Micron's
Obligations......................................20
Section 8.2 Photronics'
Obligations...................................20
Section 8.3 Alterations and
Additions.................................21
ARTICLE IX. INSURANCE;
INDEMNITY..............................................22
Section 9.1 Liability
Insurance.......................................22
Section 9.2 Casualty Insurance - Fixtures, Mask Shop Equipment,
Personal Property and Photronics'
Improvements.................23
Section 9.3 Insurance
Policies........................................24
Section 9.4 Waiver of
Subrogation.....................................24
Section 9.5
Indemnity.................................................25
Section 9.6 Exemption of
Micron.......................................25
Section 9.7
Notices...................................................26
Section 9.8 Builder's Risk Insurance to be Maintained by
Micron.......26
ARTICLE X. DAMAGE OR DESTRUCTION AND
APPROPRIATION............................26
Section 10.1 Damage or
Destruction....................................26
Section 10.2
Appropriation............................................28
Section 10.3 Termination of Lease upon Substantial Casualty
or Substantial
Appropriation...................................29
Section 10.4 No Micron Liability for Casualty or
Appropriation........30
ARTICLE XI. ASSIGNMENT AND
SUBLETTING.........................................30
Section 11.1 Micron's
Rights..........................................31
Section 11.2 No Release of
Photronics.................................31
ARTICLE XII.
RESERVED.........................................................32
ARTICLE XIII. UTILITY
SERVICES................................................32
Section 13.1 Utility
Charges..........................................32
Section 13.2 Interruption of
Service..................................32
ARTICLE XIV. DEFAULTS AND
REMEDIES............................................32
Section 14.1
Defaults.................................................32
Section 14.2
Remedies.................................................33
Section 14.3 Determination of
Rent....................................34
Section 14.4 Default by
Micron........................................35
Section 14.5 Expense of
Litigation....................................35
Section 14.6 Holding
Over.............................................35
Section 14.7 Micron's
Rights..........................................35
Section 14.8 Third-Party
Litigation...................................36
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<PAGE>
ARTICLE XV. HAZARDOUS
MATERIALS...............................................36
ARTICLE XVI. IMPROVEMENT OF THE
PREMISES......................................40
Section 16.1 Timeline; Commitment for Equipment Financing;
Coordination...................................................40
Section 16.2 Micron's
Work............................................40
Section 16.3 Photronics'
Work.........................................42
Section 16.4 Warranties and
Guaranties................................42
ARTICLE XVII.
MISCELLANEOUS...................................................43
Section 17.1 Offset
Statement.........................................43
Section 17.2 Micron's Right of
Access.................................43
Section 17.3 Transfer of Micron's
Interest............................44
Section 17.4
Separability.............................................44
Section 17.5 Interest on Past Due
Obligations.........................44
Section 17.6 Time of
Essence..........................................45
Section 17.7 Construction;
Interpretation.............................45
Section 17.8
Incorporation of Prior Agreements; Amendments............46
Section 17.9
Notices..................................................46
Section 17.10
Brokers.................................................47
Section 17.11
Waivers.................................................47
Section 17.12
Liens...................................................47
Section 17.13
Subordination...........................................48
Section 17.14 Force
Majeure...........................................49
Section 17.15 Yield Up Premises;
Quitclaim............................49
Section 17.16 Survival of
Indemnities.................................50
Section 17.17 Security
Deposit........................................50
Section 17.18 No
Option...............................................50
Section 17.19 Micron
Liability........................................50
Section 17.20
Termination.............................................51
Section 17.21 Accord and
Satisfaction.................................52
Section 17.22
Counterparts............................................52
Section 17.23 Building
Security.......................................53
Section 17.24
Publicity...............................................53
Section 17.25 Governing
Law...........................................53
Section 17.26 Rights and Remedies
Cumulative..........................53
Section
17.27 Dispute
Resolution......................................54
Section 17.28 Third-Party
Beneficiaries...............................54
Section 17.29 No
Recording............................................54
Section 17.30 Quiet
Enjoyment.........................................54
EXHIBIT A -
Plot Plan of Land
EXHIBIT B -
Legal Description of
Land
EXHIBIT C -
Form of Special
Warranty Deed
EXHIBIT D-1 - Form of Lease Payment Schedule
EXHIBIT D-2
- Sample Lease Payment Schedule (for
Illustrative Purposes Only)
EXHIBIT E -
Timeline
iii
<PAGE>
EXHIBIT F -
Reserved
EXHIBIT G -
Core and Shell Work
and Related Work
EXHIBIT H -
Form of Memorandum of
Lease
EXHIBIT I -
Form ofMemorandum of
Cancellation of Lease
iv
<PAGE>
BUILD TO SUIT LEASE
-------------------
THIS
BUILD TO SUIT LEASE ("Lease") is made and entered into as of
May ___, 2006, by and between MICRON TECHNOLOGY, INC., a Delaware
corporation
("Micron") and PHOTRONICS, INC., a Connecticut corporation
("Photronics") (each
a "Party" and collectively the "Parties").
RECITALS
(a) Micron
and Photronics are each in the business of the
development, fabrication and sale of photomasks.
(b)
Pursuant to certain Transaction Documents (defined in
Article I hereof), Micron and Photronics have entered into certain
contracts
with each other with respect formation and operation of the Company
dedicated to
the development, fabrication and sale of advanced photomasks for
Micron and
Photronics.
(c) In
order for Photronics to obtain a facility qualified to
produce the advanced photomasks for Micron pursuant to the
requirements of said
Transaction Documents, Micron and Photronics desire to enter into
this Lease for
the development, construction, leasing, equipping and ultimate
conveyance to
Photronics of a qualified "mask shop" production facility, subject
and pursuant
to the terms and conditions herein set forth.
ARTICLE I.
DEFINITIONS
"additional rent" shall have the meaning set forth in Section
5.2.
"Affiliate" of any specified Person means any other Person
Controlling or Controlled by or under common Control with such
specified Person.
"Alterations" shall have the meaning set forth in Section
8.3(a).
"Applicable Laws" shall mean all present and future laws,
ordinances, orders, rules, regulations and requirements of all
governmental
authorities having jurisdiction over the Premises, Micron or
Photronics and the
requirements of any applicable insurance underwriters, all of the
foregoing
applicable to the ownership, development, use, occupancy and
maintenance of the
Premises and any certificates of occupancy issued for the
Premises.
"Applicable Lease Prepayment Date" shall have the meaning set
forth in Section 5.3(a)(ii).
"Appropriation" shall mean any taking of or damage to all or
any
part of the Premises by reason of any exercise of the power of
eminent domain,
whether by condemnation proceedings or otherwise, or any transfer
of all or any
part of the Premises made in avoidance of an exercise of the power
of eminent
domain.
1
<PAGE>
"Appropriation Award" means any award(s) paid or payable
(whether
or not in a separate award) to either Party after the Lease
Commencement Date
because of or as compensation for any Appropriation, including: (1)
any award
made for any improvements that are the subject of the
Appropriation; (2) the
full amount paid or payable by the condemning authority for the
estate that is
the subject of the Appropriation, as determined in Appropriation;
(3) any
interest on such award; and (4) any other sums payable on account
of such
Appropriation.
"Appropriation Effective Date" shall mean, for any
Appropriation,
the first date when the condemning authority has acquired title to
or possession
of any Premises subject to the Appropriation.
"Base Rent" shall have the meaning set forth in Section 5.1(a).
"Building" shall mean a single building (unless otherwise
mutually approved by the Parties) containing approximately [****]
of rentable
floor area and functionally similar to Micron's Existing Mask
Shop.
"Business Day" shall mean any weekday on which State-chartered
banks are open to conduct regular business with bank personnel.
"Capacity Commitment" shall have the meaning ascribed in the
Photronics to Micron Supply Agreement.
"Casualty" shall mean any damage or destruction of any kind or
nature, ordinary or extraordinary, foreseen or unforeseen,
affecting the
Building, leasehold improvements and Photronics' Improvements,
whether or not
insured or insurable.
"City" shall mean the city or municipality in which the Land is
located.
"Closing Documents" shall have the meaning set forth in Section
4.3(a).
"Code" shall mean the United States Bankruptcy Code (11 U.S.C.,
Sec. 101 et seq.).
"Company" shall mean MP Mask Technology Center, LLC, a Delaware
limited liability company.
"Company Operating Agreement" shall mean that certain Limited
Liability Company Operating Agreement of MP Mask Technology Center,
LLC dated of
even date herewith between Micron and Photronics.
"Contribution and Purchase Agreement" shall mean that certain
Contribution and Units Purchase Agreement of even date herewith
between the
Parties.
2
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
"Control" shall mean the possession, directly or indirectly, of
either: (a) at least fifty-one percent (51%) direct or indirect
ownership of the
equity interests of a Person; or (b) the power to direct or cause
the direction
of the management and policies of such Person, whether by ownership
of equity
interests, by contract, or otherwise.
"Copy Exact" shall have the meaning ascribed in the Technology
License Agreement.
"Core and Shell Work" shall have the meaning set forth in
Section
16.2(b).
"Default" shall have the meaning set forth in Section 14.1.
"Default Rate" shall mean the maximum rate of interest then
permitted to be charged pursuant to applicable usury laws but not
to exceed
fifteen percent (15%) per annum simple interest.
"Default Termination Security" shall have the meaning set forth
in Section 5.3(a)(iii).
"Depository" shall mean the escrow services department of a
nationally recognized title insurance company such as Chicago Title
Insurance
Company.
"Development Costs" shall have the meaning set forth in Section
5.1(a).
"Development Cost Notice" shall have the meaning set forth in
Section 5.1(c).
"DEQ" shall have the meaning set forth in Section 16.2(d).
"Environmental Law" shall mean any Applicable Law about the
following at, in, under, above, or upon the Premises: (a) air,
water, land,
ground water, or soil conditions; or (b) clean-up, control,
disposal,
generation, storage, release, transportation, or use of, or
liability or
standards of conduct concerning hazardous materials.
"Existing Mask Shop" shall mean the Company's mask shop
facility
located in Boise, Idaho as originally constructed, which current
facility is
being contributed to the Company by Micron pursuant to the
Contribution and
Purchase Agreement.
"Form of Special Warranty Deed" shall mean the Form of Special
Warranty Deed attached hereto as Exhibit "C".
"hazardous materials" shall mean (a) asbestos, radioactive
materials, polychlorinated biphenyls, urea formaldehyde, and all
petroleum
substances, and (b) all hazardous materials, hazardous wastes and
hazardous or
toxic substances defined in or subject to control or regulation by
the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as
amended (42 U.S.C., Sec. 9601 et seq.) ("CERCLA"), the Resource
Conservation and
Recovery Act, as amended (42 U.S.C., Sec. 6901 et seq.), the
Toxic
3
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Substances Control Act, as amended (15 U.S.C. Sec. 2601 et seq.),
the Clean
Water Act (33 U.S.C. Sections 1321 et seq.), the Clean Air Act (42
U.S.C.
Sections 7412, et seq.), the Emergency Planning and Community
Right-to-Know Act
(42 U.S.C. Sections 11001 et seq.), the Federal Insecticide,
Fungicide, and
Rodenticide Act (7 U.S.C. Sections B6 et seq.), the Occupational
Safety and
Health Act (29 U.S.C. Sections 651 et seq.) or the Safe Drinking
Water Act (42
U.S.C. Sections 300f et seq.) and analogous state laws.
"Improvements" shall mean collectively the Micron Improvements
and the Photronics' Improvements.
"Land" shall mean the real property located in the Boise, Idaho
area, as shall be reasonably determined by Micron (subject to
Photronics'
approval rights pursuant to Section 16.2(e)), together with all
easements,
rights and other appurtenances thereto.
"Lease" shall have the meaning set forth in the Preamble.
"Lease Commencement Date" shall have the meaning set forth in
Section 4.2(a).
"Lease Payment Schedule" shall have the meaning set forth in
Section 5.1(a).
"Lease Prepayment" shall have the meaning set forth in Section
5.3(a).
"leasehold improvements" means collectively, the Building and
all
Alterations (inclusive of applicable Micron Improvements and
Photronics'
Improvements) which may be made or installed in, on, under or upon
the Premises
or any improvements thereon and which are attached to the floor,
walls or
ceiling of any improvements on the Premises and cannot be removed
without
material damage to the Building, and any floor covering which is
cemented or
otherwise affixed to the floor of any improvements on the Premises
and cannot be
removed without material damage to the Building.
"Liabilities" shall have the meaning set forth in Section 9.5.
"Loss" means any Casualty or Appropriation.
"Mask Shop Equipment" shall have the meaning set forth in
Section
16.3(b).
"Micron" shall have the meaning set forth in the Preamble.
"Micron Improvements" shall mean the improvements to be
constructed upon the Land pursuant to Article XVI hereof consisting
of the
Building, together with all landscaping, lighting, parking, and
other
improvements constructed by Micron pursuant to Article XVI below as
a part of
the Premises. As used herein, the term "Micron Improvements" shall
not include
any Photronics' Improvements constructed by Photronics pursuant to
Article XVI,
any alterations made or constructed by Photronics pursuant to
Section 8.3, or
any furniture, fixtures, equipment (including without limitation
the Mask Shop
Equipment) and/or miscellaneous personal property of
Photronics.
4
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
"Micron Party" and "Micron Parties" shall have the meaning set
forth in Article XV.
"Micron Retained Rights" shall have the meaning set forth in
Section 3.2.
"Micron's Work" shall have the meaning set forth in Section
16.2(a).
"No Default Lease Prepayment Date" shall have the meaning set
forth in Section 5.3(a)(i).
"Non-Restricted Default" shall mean any Default which (a) can
be
cured by the payment of money alone (and which is so cured) AND the
nature of
the breach giving rise to the Default is not such that potential
residual
liability to Micron might reasonably be expected to arise after
transfer to
Photronics of fee title to the Premises, or (b) [****].
"Non-Restricted Prepayment Date" shall have the meaning set
forth
in Section 5.3(a)(ii).
"Party" or "Parties" shall have the meaning set forth in the
Preamble.
"Permitted Alterations" shall have the meaning set forth in
Section 8.3(a). "Permitted Change in Control Transfer" shall
have
the meaning set forth in Section 11.1(b)(i).
"Permitted Development Easements" shall have the meaning set
forth in Section 3.3(b).
"Permitted Exceptions" shall have the meaning set forth in
Section 3.3(a).
"Permitted Photronics Change in Control" shall have the meaning
ascribed in the Company Operating Agreement.
"Permitted Use" shall mean the operation of a facility
dedicated
to the fabrication of advanced photomasks, in compliance with the
Transaction
Documents and activities directly ancillary thereto, all in
accordance with all
Applicable Laws.
"Person" means any association, corporation, Government,
individual, joint venture, joint-stock company, limited liability
company,
partnership, trust, unincorporated organization, or other entity of
any kind.
(This does not limit any Transfer restriction).
"Photronics" shall have the meaning set forth in the Preamble.
"Photronics' Improvements" shall have the meaning set forth in
Section 16.3(b).
"Photronics to Micron Supply Agreement" shall mean that certain
Photronics to Micron Supply Agreement of even date herewith by and
between the
Parties.
5
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
"Photronics' Party" and "Photronics' Parties" shall have the
meaning set forth in Article XV.
"Photronics' Property" shall have the meaning set forth in
Section 8.3(b).
"Photronics' Signage" shall have the meaning set forth in
Section
7.4(a).
"Photronics' Work" shall have the meaning set forth in Section
16.3(b).
"Premises" shall have the meaning set forth in Section 3.1.
"Prepayment Restricted Default" shall mean any Default which is
not a Non-Restricted Default.
"Principal Reduction Payment" shall mean the partial prepayment
of a portion of the outstanding principal balance of the Base Rent
pursuant to
the terms and conditions of Section 5.3(b).
"Prohibited Lien" means any mechanic's, vendor's, laborer's, or
material supplier's statutory lien or other similar lien arising
from work,
labor, services, equipment, or materials supplied, or claimed to
have been
supplied, to Photronics or any subtenant (or anyone claiming
through either),
which lien attaches to the fee estate.
"Property Insurance Proceeds" means proceeds of insurance to be
maintained by Photronics pursuant to Section 9.2 and, prior to the
date of
Substantial Completion for Rent Commencement, proceeds of insurance
to be
maintained by Micron pursuant to Section 9.8.
"Qual Period End Date" means [****].
"Qualification" and "Qualified" shall have the meaning of the
term "Qualified" set forth in the Photronics to Micron Supply
Agreement.
"Re-qualification" and "Re-qualified" shall have the same
meaning.
"real property taxes" shall mean (i) all taxes, assessments and
governmental charges and surcharges, (including, without
limitation, assessments
for public improvements or benefits whether or not commenced or
completed during
the term, water, sewer, storm drains and other rents, rates and
charges,
excises, levies, license fees, use fees, permit fees and other
authorization
fees) and all other charges (in each case whether general or
special, ordinary
or extraordinary, foreseen or unforeseen) of every kind and
character (including
all penalties and interest thereon), levied upon or with respect to
the
Premises, during the term, (ii) any tax or excise on or measured by
rents, and
(iii) any other tax, however described, levied against Micron on
account of the
rent reserved hereunder or on the business of renting the Premises.
Provided,
however, that the term "real property taxes" shall not include any
franchise,
estate, inheritance, succession, capital levy, net income or excess
profits
taxes imposed upon Micron except that in the event that real
property taxes are
withdrawn in whole or in part or any substitute tax is made
therefor or for any
increase therein, such tax shall in any event for the purpose of
this Lease be
6
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
considered a real property tax regardless of how denominated or the
source from
which it is collected.
"Related Work" shall have the meaning set forth in Section
16.2(a).
"Release" means any accidental or intentional spilling,
leaking,
pumping, pouring, emitting, discharging, injecting, escaping,
leaching,
migrating, dumping or disposing in, over, on, under, through, or
about the air,
land, surface water, ground water, or the environment (including
without
limitation the abandonment or discarding of receptacles containing
any hazardous
materials), unless and to the extent permitted or authorized by a
governmental
agency.
"rent" shall have the meaning set forth in Section 5.2.
"Rent Commencement Date" shall have the meaning set forth in
Section 4.2(b).
"Restoration" means, after a Loss, the alteration, clearing,
rebuilding, reconstruction, repair, replacement, restoration, and
safeguarding
of the damaged or remaining leasehold improvements and Photronics'
Property
(including, without limitation, the Mask Shop Equipment), at least
comparable to
their condition and function before the Loss and such that
re-certification of
the Premises is obtained and re-Qualification is achieved.
"Restoration Funds" means Appropriation Award(s) and Property
Insurance Proceeds (plus deficiency deposits to be made by
Photronics) to be
applied to Restoration.
"Restore" means accomplish a Restoration.
"Right of First Refusal" shall have the meaning set forth in
Section 4.3(b).
"Security System" shall have the meaning set forth in Section
17.23(b).
"SNDA" shall have the meaning set forth in Section 17.13.
"Special Warranty Deed" shall have the meaning set forth in
Section 4.3(a).
"Substantial Appropriation" means such taking which, in
Micron's
sole determination, shall necessitate Restoration which is
estimated to equal or
exceed $15,000,000.
"Substantial Casualty" means such damage or destruction to the
Premises which, in Micron's sole determination, shall necessitate
Restoration
which is estimated to equal or exceed $[****].
"Substantial Completion for Photronics' Installation" shall
mean
[****].
"Substantial Completion for Rent Commencement" shall mean, with
respect to the Core and Shell Work and the Related Work, that
[****].
7
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
"Technology License Agreement" shall mean that certain
Technology
License Agreement dated of even date herewith executed by and among
the Parties
and the Company.
"Temporary Certificate of Occupancy" shall mean a temporary
certificate of occupancy with respect to the Premises which is
sufficient to
permit Photronics the right to occupy the Premises for the purpose
of commencing
such portions of Photronics' Work which are to be performed on and
with respect
to the Premises.
"term" shall have the meaning set forth in Section 4.1.
"termination date" shall mean the effective date of any
termination of the Lease pursuant to the provisions of the
Lease.
"Timeline" shall have the meaning set forth in Section 16.1(a).
"Transaction Documents" shall mean those certain documents
listed
in Schedule "B" to the Contribution and Purchase Agreement.
"Transfer" shall have the meaning set forth in Section 11.1(a).
"UCC" shall mean the Uniform Commercial Code of the State of
Idaho, as amended.
ARTICLE II.
DEMISE
In consideration of Ten and No/100 Dollars ($10.00), the rents
and covenants hereinafter set forth and other good and valuable
consideration,
the receipt and adequacy of which is mutually acknowledged, Micron,
as landlord,
hereby leases and Photronics, as tenant, hereby rents from Micron,
the Premises,
upon the terms and conditions herein set forth.
ARTICLE III.
PREMISES
Section 3.1 Premises Defined
----------- ----------------
The "Premises" (herein so called) shall consist of the
following:
(a) The "Land". Once the Land has been determined, this Lease
will be amended to add as Exhibits "A" and "B", respectively, a
more particular
depiction of the Land and a legal description of the Land.
(b) The leasehold improvements.
(c) All references herein to the Premises shall, unless the
context clearly indicates to the contrary, mean and include the
Land and the
Micron Improvements.
8
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Section 3.2 Reservation of Oil,
Gas, Mineral and Water Rights
-----------
-------------------------------------------------
Micron reserves all oil, gas, hydrocarbons, mineral and water
rights in the Premises and attendant right and easement to access
and extract
same ("Micron Retained Rights"); provided that no such items shall
be extracted
in such manner as may cause or contribute to a lessening of the
support of the
Land and the leasehold improvements or adversely affect and
compromise the use
of the Premises for the Permitted Use. This reservation shall not
apply if the
Land is not land owned or adjacent to other land owned by Micron or
an Affiliate
of Micron as of the date of this Lease.
Section 3.3 Permitted
Exceptions
-----------
--------------------
This Lease and the conveyance of the Premises contemplated
herein
is and shall be made subject to the following:
(a) The lien of all ad valorem real estate taxes due and
payable
in the calendar year 2006 and subsequent calendar years; (b) all
matters of
record relating to the Land in the official records of the county
in which the
Land is located; (c) local, state and federal laws, ordinances or
governmental
regulations and the like, including but not limited to building and
zoning laws,
ordinances and regulations, now or hereafter in effect relating
such real
property; (d) any matters that would be shown on an accurate survey
of current
date of the Land; (e) matters resulting from the acts of Photronics
or any party
acting by, for, through or under Photronics; (f) the Micron
Retained Rights
reserved in Section 3.2; and (g) Micron's Right of First Refusal
(collectively
with the Permitted Development Easements, the "Permitted
Exceptions").
Notwithstanding the foregoing, (a) any mortgage (and related
security documents
such as a UCC fixture filing) recorded against the Land in
connection with
financing obtained by Micron shall not be a Permitted Exception and
shall be
removed prior to conveyance of fee title by Micron to Photronics
pursuant to
this Lease; (b) any mechanic's or materialmans' lien recorded
against the Land
in connection with Micron's Work; (c) the lien of all real property
taxes for
the period prior to the Lease Commencement Date; and (d) any other
lien,
attachment or lis pendens recorded against the Premises caused
solely by the
acts or omissions of Micron shall not be a Permitted Exception and
shall either
be removed of record or otherwise adequately bonded to Photronics'
reasonable
satisfaction prior to conveyance of fee title by Micron to
Photronics pursuant
to this Lease.
(b) Micron and Photronics recognize that, in connection with
developing the Premises, Micron may be required or may find it
reasonably
necessary to grant and record (i) customary public utility,
drainage and other
developmental easements for the benefit of the Premises for the
Permitted Use;
(ii) a mortgage and related security instruments against the
Premises (or any
part thereof) in connection with the construction and/or permanent
financing of
the Premises, and (iii) certain easements, covenants, declarations
and/or
restrictions for the benefit of adjacent land owned by Micron, if
applicable.
Such easements, covenants, rights, declarations and restrictions,
to the extent
the creation or existence of same are reasonable and customary and
do not
materially adversely affect the development or use of the Premises
for the
Permitted Use shall be referred to herein as the "Permitted
Development
Easements."
9
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
ARTICLE IV.
TERM
Section 4.1 Length of Term
----------- --------------
The term (the "term") of this Lease shall be from the date of
the
last execution and delivery of this Lease by Micron and Photronics,
and shall
continue for a period of twenty full calendar quarters following
the Rent
Commencement Date, subject to any early termination of this Lease
or
acceleration of the expiration date pursuant to the provisions of
Section
5.3(a). The occurrence of the expiration of the Lease term upon
either the last
day of the term or, if applicable, upon the Applicable Lease
Prepayment Date
shall not be deemed a termination of this Lease for purpose of the
Parties'
respective rights and remedies provided for herein upon a
termination of this
Lease.
Section 4.2 Lease Commencement
Date and Rent Commencement Date
-----------
--------------------------------------------------
(a) The "Lease Commencement Date" shall be the date of
Substantial Completion for Photronics' Installation. Delivery of
possession
shall be accomplished by written notice to Photronics setting forth
the
effective date of the Temporary Certificate of Occupancy. Upon
Substantial
Completion for Photronics' Installation and delivery of possession
of the
Premises to Photronics, Photronics shall take possession of the
Premises and
commence the installation of Photronics' Improvements (inclusive of
the Mask
Shop Equipment) in the Building. From and after the Lease
Commencement Date,
Photronics shall observe or perform all obligations of the tenant
pursuant to
this Lease, provided that Base Rent and additional rent (other than
any non-Base
Rent sums specified herein to be due and payable when incurred)
shall not be
payable until the Rent Commencement Date. Pending the occurrence of
the Lease
Commencement Date as to the Premises, each Party shall observe or
perform all
obligations of such Party pursuant to this Lease not dependent upon
the
occurrence of the Lease Commencement Date including the performance
of all
obligations of such Party in accordance with the Timeline.
(b) The "Rent Commencement Date" shall be [****]. Upon the Rent
Commencement Date, Photronics shall commence payment of Base Rent
and all
additional rent (other than any non-Base Rent sums specified herein
to be due
and payable prior to the Rent Commencement Date) and from and after
the Rent
Commencement Date Photronics shall continue to perform all
obligations of the
tenant pursuant to this Lease.
(c) Within thirty (30) days following the date of Substantial
Completion for Rent Commencement, Micron and Photronics shall
execute and
acknowledge a supplemental agreement setting forth the Lease
Commencement Date
and Rent Commencement Date of this Lease. Notwithstanding the
foregoing, failure
of Photronics to execute such supplemental agreement shall not
affect the Lease
Commencement Date or the Rent Commencement Date in accordance with
the
provisions of this Lease.
10
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Section 4.3 Conveyance to
Photronics Upon Expiration of Lease Term or
------------------------------------------------------------------------
Prepayment; Micron Right of First Refusal
-----------------------------------------
(a) Provided Photronics has satisfied, complied with and
performed all of its obligations hereunder (subject to the terms
and conditions
of Section 5.3(a)), as soon as reasonably practicable but in no
event more than
thirty (30) days following the date of expiration of the Lease term
(as same may
be accelerated pursuant to Section 5.3(a)), Micron shall execute
(effective as
of the applicable expiration date of the Lease term) and deliver to
Photronics a
special warranty deed in form and substance as attached hereto as
Exhibit "C"
conveying Micron's right, title and interest in the Premises to
Photronics
subject to (a) the Permitted Exceptions, inclusive of Micron's
Right of First
Refusal (the "Special Warranty Deed"). In connection with any
conveyance to
Photronics by Micron under this Section 4.3, the Parties shall
execute and
deliver additional reasonably customary closing documents (such as
transfer tax
declarations, 1099 certification, and FIRPTA certificate) including
standard
title company required documents, if applicable (the "Closing
Documents").
[****].
(b) So long as Photronics or an Affiliate of Photronics is a
member of, or holds any ownership interest in the Company or any
successor joint
venture between Micron (or any Affiliate thereof) and Photronics
(or any
Affiliate thereof) and no unrescinded notice of termination of the
Company has
been delivered by either Party to the other, in the event of any
voluntary or
involuntary sale or other conveyance of the Premises (or any part
thereof) other
than in connection with a Permitted Photronics Change in Control,
Micron shall
have ongoing right of first refusal (the "Right of First Refusal")
for the
purchase of the Building and the Land alone. If Photronics'
proposed third party
sale contract includes the sale of other real or personal property
or
incorporates other terms and conditions (such as service or supply
contracts to
be entered into with such third party) then Photronics and Micron
shall agree
upon the purchase price to be applicable solely with respect to the
Building and
Land. [****].
ARTICLE V.
RENT
Section 5.1
Base Rent
----------- ---------
(a) Commencing on the Rent Commencement Date and on the first
day
of each calendar quarter thereafter during the Lease, Photronics
shall pay to
Micron in advance, at Photronics' sole expense and without
deduction or offset,
as base rent (the "Base Rent"), by wire transfer pursuant to wire
instructions
to be provided to Photronics in writing by Micron prior to the Rent
Commencement
Date (and as may be changed by Micron by written notice during the
term), an
amount to be set forth on the lease payment schedule, in the form
of Exhibit
"D-1" attached hereto, to be prepared by Micron following
Substantial Completion
for Photronics' Installation and prior to the Rent Commencement
Date, which
Exhibit when completed shall be incorporated herein by this
reference (the
"Lease Payment Schedule"). [****]. Interest shall be computed on a
per diem
basis of a 365-day year. As used herein, the term "Development
Costs" shall mean
all costs and fees incurred in the design and construction of all
Core and Shell
Work and all Related Work with respect to the Premises, including
but not
limited to the following:
11
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
(i)
[****];
(ii)
[****].;
(iii)
[****];
(iv)
[****];
(v)
[****];
(vi)
[****];
(vii)
[****];
(viii) [****];
(ix)
[****];
(x)
[****];
(xi)
[****];
(xii)
[****];
(xiii) [****];
(xiv)
[****];
(xv) [****]; and
(xvi)
[****].
[****].
(b)
[****].
c)
[****].
(d)
[****].
Section 5.2 Rent Defined;
Additional Rent
-----------
-----------------------------
As used in this Lease, the term "rent" shall mean quarterly
Base
Rent and additional rent, and the term "additional rent" shall mean
all amounts
payable by Photronics pursuant to this Lease other than Base Rent,
including,
without limitation, the real property taxes payable by Photronics
pursuant to
Article VI below, insurance as required pursuant to Article IX and
any
reimbursements and interest due Micron pursuant hereto. For the
avoidance of any
12
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
doubt or dispute, this Lease constitutes an absolutely "net lease."
The Base
Rent shall give Micron an absolutely "net" return for the term,
free of any
expenses or charges for the Premises, except as this Lease
expressly provides.
Photronics shall pay as additional rent and discharge before
failure to pay
creates a material risk of forfeiture or penalty, each and every
item of
expense, of every kind and nature whatsoever, related to or arising
from the
Premises, or by reason of or in any manner connected with or
arising from the
leasing, operation, management, maintenance, repair, use, or
occupancy of, or
Photronics' Work relating to, the Premises. All Base Rent and
additional rent
shall be paid without deduction or offset in lawful money of the
United States
of America which shall be legal tender at the time of payment. When
no other
time is stated herein for payment, payment of any amount due from
Photronics to
Micron hereunder shall be made within thirty (30) business days
after delivery
of Micron's invoice or statement therefor.
Section 5.3 Lease Prepayment;
Principal Reduction Payments.
-----------
-----------------------------------------------
(a) Lease Prepayment. Subject to the terms and conditions
herein
set forth, at any time after (but not on or prior to) the
occurrence of the
[****], Photronics shall have the right to prepay this Lease in
full (the "Lease
Prepayment") and shorten the Lease term to expire as herein
provided:
(i) Provided no Default then exists, Photronics shall have
the right to make the Lease Prepayment upon at least ten (10)
Business Days
prior written notice to Micron of its intent to prepay and shall
designate the
Lease Prepayment date in said notice (the "No Default Lease
Prepayment Date").
(ii) In the event a [****] exists either as of the date of
written notice to Micron of Photronics' desire to make the Lease
Prepayment or
upon the date of payment of the Lease Prepayment, Photronics shall
have the
right to make the Lease Prepayment upon such date which is the
later of (1) a
date at least ten (10) Business Days following the date of delivery
of written
notice to Micron of Photronics' desire to prepay and (2) a date at
least ten
(10) Business Days following the date of Photronics' satisfaction
of the
conditions which qualify such Default as a Non-Restricted Default
(the
"Non-Restricted Prepayment Date".
(iii) In the event a Prepayment Restricted Default exists
either as of the date of written notice to Micron of Photronics'
desire to make
the Lease Prepayment or upon the date of payment of the Lease
Prepayment,
Photronics shall have the right to make the Lease Prepayment
PROVIDED that the
foregoing Lease Prepayment shall be subject to satisfaction of the
following
requirements. [****]. Regardless of the form or nature of the
Default
Termination Security, Photronics shall also grant Micron and Micron
Parties the
[****].
(iv) Notwithstanding Section 4.1 to the contrary, the Lease
term shall expire upon the Applicable Lease Prepayment Date
provided all the
conditions for Lease Prepayment have been satisfied in accordance
with this
Section 5.3(a) and Micron shall deliver the Special Warranty Deed
to Photronics
within thirty (30) days following the Applicable Lease Prepayment
Date.
13
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
(v) If the Applicable Lease Prepayment Date occurs on the
first day of a calendar quarter, the Base Rent portion of such
Lease Prepayment
shall be in such amount as shall be set forth in the column
entitled "Prepayment
Amount/Balance" in the then current Lease Payment Schedule. If the
Applicable
Lease Prepayment Date occurs on a date other than the first day of
a calendar
quarter, the Base Rent portion of such Lease Prepayment shall be in
such amount
as determined by Micron based upon the methodology used for
calculation of the
"Prepayment Amount/Balance" referenced above. The Lease Prepayment
shall be made
in the same manner as then required for payment of Base Rent (e.g.,
wire
transfer). In addition to payment of the "Prepayment
Amount/Balance" amount (and
satisfaction of all other conditions set forth in this Section
5.3(a)), as a
condition to Lease Prepayment and conveyance of fee title to the
Premises to
Photronics, Photronics shall pay all additional rent accrued
through the
Applicable Lease Prepayment Date.
(b) Principal Reduction Payments. Photronics shall have the
right
to make Principal Reduction Payments in addition to the Base Rent
due and
payable under this Lease subject to and upon satisfaction of the
following terms
and conditions:
(i) No uncured monetary Default then exists;
(ii) A Principal Reduction Payment shall be made no more
frequently than one time in each calendar quarter of the term (and
shall be made
in the same manner as then required for payment of Base Rent (e.g.,
wire
transfer)) following at least ten (10) Business Days' prior written
notice
thereof to Micron specifying the amount and the date upon which
such partial
prepayment shall be made;
(iii) Such Principal Reduction Payment shall constitute an
advance payment to be applied first towards outstanding principal
payable under
the Lease and not an early payment of the immediately succeeding
quarterly
installment of Base Rent or principal then payable hereunder. For
purposes of
the foregoing, principal means the principal portion of the Base
Rent payable
under this Lease and shall be such amount as would be set forth in
a then
current Lease Payment Schedule reflecting all then current
adjustments, if any,
to Base Rent as of such date pursuant to this Lease (e.g., taking
into account
prior Partial Prepayments). Following any such Principal Reduction
Payment, the
Lease Payment Schedule shall be modified to reflect the aforesaid
interest and
principal prepayment and the amounts payable under the Base Rent,
Interest,
Principal, Repayment Amount/Balance, Cumulative Interest Paid and
Principal Paid
and Default Rent Reimbursement columns of the Lease Payment
Schedule shall be
appropriately adjusted for the quarter after the date of such
Principal
Reduction Payment through the balance of the payments to be made
for the term
taking into account such adjustments; and
(iv) Prior to the occurrence of the [****], Photronics
shall not have the right to prepay more than [****] of the
principal balance of
the Base Rent which is payable for the period from the Rent
Commencement Date
through the Qual Period End Date.
(c) Under no circumstances shall Photronics be entitled to
conveyance of fee title to the Premises prior to the occurrence of
the Qual
Period End Date. Photronics
14
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
acknowledges that
Micron's retention of ownership of the Premises at least
through the Qual Period End Date was a material inducement to
Micron's agreement
to enter into this Lease and the Photronics to Micron Supply
Agreement. For the
avoidance of doubt,
this Section 5.3(c) supersedes and controls in the event of
any conflict or inconsistency with any other provision of this
Lease.
ARTICLE VI.
TAXES
Section 6.1 Real Property
Taxes
-----------
-------------------
Photronics shall pay, as additional rent, all real property
taxes
levied or assessed by, or becoming payable to any governmental
authority having
jurisdiction, for or in respect of the Premises, for each tax
period wholly
included in the period between the Lease Commencement Date and the
expiration of
the term (as same may be accelerated by prepayment). All such
payments shall be
made directly to the authority charged with the collection thereof
not less than
ten (10) business days prior to the earlier of the last date on
which the same
may be paid without interest or penalty or upon which it would
otherwise be
deemed "delinquent" as provided in Section 6.3. Micron and
Photronics shall use
commercially reasonable efforts to cause the Premises to be
separately assessed
with the bills for real property taxes to be delivered directly to
Photronics.
In the event that such bills are delivered to Micron, Micron shall
promptly
deliver copies thereof to Photronics. Photronics shall provide to
Micron at
least seven (7) Business Days prior to the due date for payment of
such taxes, a
copy of a receipted tax bill or other documentary evidence
reasonably
satisfactory to Micron, showing the amount of the taxes due and the
payment of
same as required herein. For any fraction of a tax period included
in the period
between the Lease Commencement Date and the expiration of the term
(as same may
be accelerated by prepayment), Photronics shall pay to Micron,
within thirty
(30) days after receipt of Micron's invoice therefor, that portion
of the total
taxes levied or assessed or becoming payable which is allocable to
such included
period, determined by multiplying the total taxes by a fraction
whose
denominator is the number of days in the tax period and whose
numerator is the
number of days in the period between the Lease Commencement Date
and the
expiration of the term (as same may be accelerated by prepayment).
In the event
Photronics fails to pay any real property tax bill before the
delinquency date
thereof, Micron may, but need not, pay the same on behalf of
Photronics and such
amount thereafter shall become immediately due and payable as
additional rent by
Photronics to Micron upon delivery of Micron's written demand
therefor. The
obligation of Photronics pursuant to this Section 6.1 shall extend
to any
increase in real property taxes resulting from any reassessment of
the Premises
and shall survive the expiration or termination of this Lease. For
the purposes
of this Article VI, real property taxes which are levied on a
fiscal year (which
is different from a calendar year) basis shall be deemed to apply
one-twelfth
(1/12) to each calendar month in such fiscal year.
15
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Section 6.2 Separate Tax
Parcel
-----------
-------------------
(a) In the event that the Premises is not levied and assessed
as
a separate tax parcel, Micron shall use its commercially reasonable
efforts to
cause the Premises to be assessed and taxed as a separate tax
parcel as soon as
practicable.
(b) If the Premises is not assessed and taxed as a separate tax
parcel, then notwithstanding anything to the contrary set forth in
this Article
VI, "real property taxes" shall mean, as to the Premises:
(i) That portion of the real property taxes assessed
against the land underlying the tax parcel which the square footage
of the
Premises bears to the aggregate square footage of all land within
the applicable
tax parcel; plus
(ii) That portion of the real property taxes assessed
against the leasehold improvements included within the tax parcel
which the
valuation assigned by the taxing authorities to the leasehold
improvements
included within the Premises bears to the valuation so assigned to
all of the
leasehold improvements included within such tax parcel. If such
separate
valuations are available from the county tax assessor, then such
separate
valuations shall be conclusive. If such separate valuations are not
reasonably
available to Micron, then Micron shall determine, reasonably and in
good faith,
from the best information reasonably available to it, the
proportion of the real
property taxes assessed against the leasehold improvements included
within such
tax parcel which is attributable to the leasehold improvements upon
the
Premises.
(iii) With respect to other types of taxes, a proportion
thereof based upon the assessment methodology used by the assessor,
or if such
methodology cannot be used to determine Photronics' portion, then a
reasonable
proportion as determined by Micron.
In the event that the Premises is not assessed and taxed as a
separate tax parcel, then real property taxes for or in respect of
the Premises
shall be paid by Photronics to Micron not later than the earlier of
(A) thirty
(30) days after Micron's delivery of written notice of the amount
thereof and
(B) ten (10) days prior to the delinquency date therefor.
Photronics shall be
solely liable for any late penalties or interest resulting from any
failure to
timely pay Micron or the taxing authority. There shall be no
administrative or
overhead fee payable to Micron with respect to real property taxes
payable by
Photronics. Micron and Photronics acknowledge and agree that it is
their intent
that real property taxes be billed to and paid directly by
Photronics.
Accordingly, Micron and Photronics agree that:
(A) Each shall take all steps reasonably necessary to cause
the real property tax bills with respect to the Premises to be
mailed directly
to Photronics; and
(B) Neither Party shall take any action to cause the
Premises to be taxed other than as a separate tax parcel.
16
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Section 6.3 Other Taxes
----------- -----------
Photronics shall be responsible for and shall pay or cause to
be
paid not later than ten (10) business days prior to delinquency all
municipal,
county and state taxes, levies and fees of every kind and nature,
including but
not limited to general or special assessments assessed during the
term against
any leasehold interest, leasehold improvements, Mask Shop Equipment
or other
personal property of any kind, owned by or placed in, upon or about
the Premises
by Photronics or its sublessees, concessionaires, franchisees or
licensees, if
any. Photronics shall cause all taxes imposed upon any personal
property
situated in or on the Premises to be levied or assessed separately
from the
Premises and not as a lien thereon. Upon request of Micron,
Photronics shall,
not later than the delinquency date for any such tax, furnish to
Micron
documentary proof of payment of said tax.
Section 6.4 Right to Contest
----------- ----------------
Provided that the Premises are separately assessed and taxed,
Photronics shall have the right, at Photronics' sole risk and cost,
to contest
the amount and/or validity of the applicable real property taxes by
appropriate
legal proceedings; provided, however, that said right shall be
availed of by
Photronics only upon the condition that Photronics shall indemnify,
defend and
hold Micron and the Premises harmless from any loss, cost or
expense, including,
but not limited to, Micron's reasonable attorneys' fees, court
costs and
expenses of litigation, which in any manner arise from or with
respect to such
contest and upon the further condition that Photronics shall take
any and all
actions, including, but not limited to, the payment of any judgment
or bonding
requirement, so as to prevent the loss or forfeiture of the
Premises or any part
thereof or of any other property of Micron. The foregoing shall
not, however, be
deemed or construed to relieve, modify, or extend Photronics'
covenant to pay
any such real property taxes at the time and in the manner provided
in this
Article VI, unless such proceedings shall operate to prevent the
sale of the
Premises or any part thereof or any other property of Micron or the
placing of
any lien thereon or on any other property of Micron to satisfy such
taxes prior
to the final determination of such proceedings. Under such
circumstances, upon
the termination of such proceedings, Photronics shall promptly pay
all real
property taxes, if any, then payable as the result of such
proceedings and the
interest and penalties in connection therewith, and the charges
accruing in such
proceedings. To the extent Micron receives any refund for any real
property
taxes paid by Photronics hereunder, Micron shall promptly pay and
deliver such
refund to Photronics.
ARTICLE VII.
CONDUCT OF BUSINESS BY PHOTRONICS
Section 7.1 Use of Premises
----------- ---------------
(a)
Photronics shall use the Premises only for the Permitted Use
and for no other use or purpose.
17
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
(b) Photronics shall continuously operate the Premises for the
Permitted Use throughout the Lease term. In furtherance and not in
limitation of
the foregoing obligation, Photronics hereby covenants to operate
the Premises in
such a manner to [****].
(c) Photronics shall not use the Premises in violation of any
Applicable Laws, including without limitation, the certificate of
occupancy
issued for the Premises. Without limitation of Photronics'
obligations pursuant
to the immediately preceding sentence, subject to the provisions of
Section 7.3,
Photronics shall promptly comply with Applicable Laws together with
all
protective covenants and architectural standards, if any,
applicable to the
Premises upon five (5) Business Days written notice from Micron or
within the
time specified in any notice received from any governmental
authority, whichever
is earlier, discontinue any use of the Premises which is a
violation thereof.
(d) Photronics shall not do or permit anything to be done in or
about the Premises which will allow the Premises to be used for any
improper,
immoral, unlawful or objectionable purpose, nor shall Photronics
cause, maintain
or permit any nuisance or commit any waste in, on or about the
Premises.
Photronics shall not (i) place a load upon any floor of the
Premises which
exceeds the floor load per square foot which such floor was
designed to carry or
(ii) violate any mandatory restrictions generally imposed by any
governmental
authority with respect to conservation of energy, water, gas or
electricity or
reduction of automobile or other emissions. Photronics shall not do
or permit to
be done anything which will injure the Premises or invalidate any
insurance
policy(ies) covering the Premises or property located therein.
Photronics shall
maintain no outside storage which is not appropriately screened
from the view of
the public.
(e) Photronics shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises
without first
having obtained Micron's prior written consent.
Section 7.2 Restrictions on
Use
-----------
-------------------
Photronics shall, at Photronics' sole cost and expense, procure
any and all governmental licenses and permits required for
Photronics' use of
the Premises and shall at all times comply with all requirements of
such
licenses or permits; provided, however, to the extent such permits
(such as
applicable Department of Environmental Quality permits pursuant to
Section
16.2(b)) shall be obtained by Micron on behalf of Photronics in the
course of
Micron's Work, Photronics shall reimburse Micron for its cost and
expenses
(including employee time and expense) within thirty (30) days of
delivery of an
invoice therefor. Photronics shall not use or permit the use of the
Premises in
any manner that will damage or deface the Premises. Photronics
shall not do, or
suffer to be done, or keep or suffer to be kept, anything on the
Premises or on
any property therein which will prevent the obtaining of any
insurance on the
Premises or on any property therein, including, but without
limiting the
generality of the foregoing, fire, all risk coverage, and public
liability
insurance, or which may make void any such insurance.
18
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Section 7.3 Contest of
Requirements
-----------
-----------------------
Notwithstanding the foregoing, Photronics may contest any
Applicable Law or alleged violation thereof, so long as Micron's
interest in the
Premises and the Land are not thereby adversely affected and such
contest may
not impact or jeopardize Photronics' ability to satisfy its
obligations under
the Photronics to Micron Supply Agreement or, before the [****],
any other
Transaction Documents, and Micron shall, at Photronics' request,
join in such
contest if its participation is necessary and unobjectionable to
Micron, but at
no expense to Micron. If any security must be posted, or any order
must be
obtained to forestall compliance with such requirement pending the
determination
of such contest, Photronics shall post such security or shall
obtain such order
prior to commencing such contest and such action shall be a
condition to
Photronics' right to contest. If such contest is finally determined
adversely to
Photronics, Photronics shall promptly comply with the
requirement(s) determined
to be applicable to the Premises and shall indemnify and hold
Micron harmless
from all liabilities, damages, costs (including costs and
attorneys' fees
incurred or awarded in such contest) and expenses occasioned by
any
non-compliance by Photronics and any delay in effecting compliance,
including
any delay occasioned by a contest determined adversely to
Photronics.
Section 7.4 Exterior Signs and
Sign Monument(s)
-----------
-----------------------------------
(a) Photronics shall have sign rights for the Premises,
including
both exterior signage on the Building and any monument signage
placed upon any
sign monument(s) constructed by Photronics. All such signage
("Photronics'
Signage") shall be subject to the following:
(i) All Photronics' Signage shall be the sole
responsibility of Photronics, as to fabrication, construction and
erection
thereof and payment of the costs thereof.
(ii) All Photronics' Signage (including location) shall be
subject to the prior written approval of Micron based upon drawings
and
specifications therefor prepared by Photronics and reasonably
approved by
Micron, and all Photronics' Signage shall conform to the drawings
and
specifications therefor approved by Micron, which approval shall
not be
unreasonably withheld or delayed.
(iii) All Photronics' Signage shall comply with all
Applicable Laws and shall be professionally done, neat and
attractive and of a
quality consistent with the quality of the Building.
(iv) Photronics shall maintain, repair, remove and replace
Photronics' Signage as a part of Photronics' obligations pursuant
to Section 8.2
so that Photronics' Signage is at all times maintained in a neat,
clean, good
condition.
(b) Within ten (10) days after any termination of this Lease
(as
provided in the last sentence of Section 4.1) or Photronics' right
to possession
of the Premises pursuant hereto,
19
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
Photronics shall, at Photronics' sole cost, remove all Photronics'
Signage and
repair all damage to the Building and/or the sign monument(s)
caused by such
removal.
ARTICLE VIII.
MAINTENANCE, REPAIRS AND ALTERATIONS
Section 8.1 Micron's
Obligations
-----------
--------------------
(a) Except as provided in subsection (b) below, Micron shall
not
be obligated or required at any time to maintain or repair the
Premises or any
leasehold improvements thereon or bear any part of the expense of
any
improvement, alteration or change of any nature in or about the
Premises or any
part thereof.
(b) Notwithstanding the provisions of subsection (a) above or
anything else to the contrary contained in this Lease, for a period
[****],
Micron shall, at Micron's sole cost and expense, promptly repair or
replace, or
cause to be repaired or replaced, any portion of Micron's Work
which shall be
materially defective. Such repair or replacement shall be commenced
within a
reasonable period after Micron's receipt of written notice from
Photronics of
the need for such work, but only if such notice is given within
such [****] and
shall be completed regardless of any claim by Micron against any
contractor
whether under a warranty or otherwise. For the purposes of this
subsection:
(i) Micron may satisfy its obligation pursuant to this
subsection by causing Micron's general contractor or any
subcontractor who has
provided a warranty or guaranty to perform such repair or
replacement. Micron
shall use commercially reasonable efforts to obtain commercially
standard
warranties under its construction contract at no additional cost
therefor.
(ii) The provisions of this subsection shall not apply to
any damage to Micron's Work caused by Photronics, any employee,
agent or
contractor of Photronics, any business visitor or guest of
Photronics, any
vandal or any casualty (fire, wind, rain, lightning, etc.).
Micron's obligations
hereunder shall be limited to defects in the original construction,
repair or
replacement (without extending the original [****] warranty period)
of Micron's
Work.
Upon the expiration of the [****] specified in this subsection,
Micron shall,
upon request of Photronics, assign to Photronics all warranties and
guaranties
received by Micron with respect to Micron's Work to the extent
assignable by,
and without cost to, Micron.
Section 8.2 Photronics'
Obligations
-----------
-----------------------
(a) Subject to the provisions of Section 8.1 and Article X,
Photronics shall (i) from and after the Lease Commencement Date
keep in good
order, condition and repair (excepting only reasonable wear and
tear) all of the
Premises and all leasehold improvements thereon and every part
thereof,
including the Building, Mask Shop Equipment, furnishings and other
personal
property of Photronics, and all landscaped and parking areas (which
shall be
kept
20
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
free of weeds and debris). Photronics shall promptly at Photronics'
own cost and
expense make all necessary repairs and replacements, interior and
exterior,
structural and nonstructural, ordinary and extraordinary, foreseen
and
unforeseen, as necessary to maintain the Premises and all leasehold
improvements
thereon and every part thereof, in good condition and, prior to the
[****], such
that full Qualification can be and is maintained. Photronics shall
provide
whatever treatment may be necessary, as often as may be required,
to keep the
Premises and all leasehold improvements thereon and every part
thereof neat and
attractive. Photronics' maintenance and repair obligations pursuant
to this
subsection shall specifically include the roof and roof membrane of
the
Building. In furtherance of the foregoing, Photronics shall at all
times during
the term of this Lease maintain in effect a maintenance contract
covering the
heating, ventilating and air-conditioning equipment serving the
Building with a
maintenance firm and containing such service requirements as shall
be reasonably
acceptable to Micron.
(b) If Photronics fails to perform its obligations under this
Section 8.2, Micron may at its option, after thirty (30) days
written notice to
Photronics and failure of Photronics to perform such obligations
within such
thirty (30) day period, enter upon the Premises and put the same in
good order,
condition and repair and the cost thereof shall become due and
payable as
additional rent by Photronics to Micron upon demand. Micron need
not, however,
wait for the expiration of such thirty (30) day period to remedy
any condition
which poses a danger to persons or property or which will or may
result in the
imposition of a fine or penalty upon Micron if not cured prior to
the expiration
of such period.
Section 8.3 Alterations and
Additions
-----------
-------------------------
(a) Photronics shall not, without the prior written consent of
Micron, which consent shall not unreasonably be withheld or delayed
so long as
same is not reasonably anticipated to interfere with Photronics'
continuous
operations and satisfaction of its Capacity Commitment, make any
alterations,
improvements, remodeling or additions (collectively, "Alterations")
to the
Premises. Notwithstanding the foregoing, any Alteration which does
not affect
(i) any structural elements of the Building, (ii) any mechanical,
electrical or
plumbing systems of the Building, (iii) the "Clean Room" or any
support systems
or facilities therefor (i.e. only impact the "office" portion of
the Building),
and (iv) are commercially reasonably estimated to cost [****] for
all work
pertaining to such Alteration and such Alteration does not
otherwise affect the
matters set forth in (i), (ii), or (iii) above (the "Permitted
Alterations"),
may be performed upon seven (7) days' prior written notice to
Micron. All
Alterations made by Photronics shall be done with diligence, in a
good and
workmanlike manner, consistent with the construction quality of
Micron's Work
and in compliance with all Applicable Laws and the requirements of
this Lease.
The cost of any Alterations shall be paid or discharged by
Photronics so that
the Premises and all leasehold improvements thereon shall at all
times be free
of liens resulting therefrom. Photronics shall supply to Micron,
promptly upon
completion thereof, a set of as-built drawings therefor on mylar
for all
Alterations.
(b) Other than leasehold improvements, all installations by
Photronics, including Mask Shop Equipment and all other personal
property of
Photronics placed in or on the Premises are herein referred to as
"Photronics'
Property." All Photronics Property shall
21
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
remain the sole and exclusive property of Photronics subject to
Micron's right
to purchase and/or obtain a security interest in the Mask Shop
Equipment under
Section 14.2. Except as expressly provided to the contrary in this
Article VIII,
all leasehold improvements shall be the property of Micron through
the Lease
term. Such leasehold improvements shall remain upon and be
surrendered with the
Premises at any termination of this Lease in accordance with the
provisions of
this Lease relating to termination hereof other than in connection
with a
conveyance of fee title to the Premises to Photronics; provided,
however, if
requested instead Photronics shall remove any leasehold
improvements at
Photronics' sole cost within ten (10) days following any such
termination and
restore the Premises to substantially the same condition as the
Premises existed
at the time Micron tendered delivery of possession thereof to
Photronics, less
reasonable wear and tear.
(c) Photronics shall promptly in writing notify Micron of the
filing of any mechanics' lien against the Premises arising out of
work performed
by or for Photronics and shall cause the same to be removed
consistent with the
provisions of Section 17.12.
(d) The approval by Micron of any specifications, working
drawings or other plans with regard to Photronic's Work, and
including, without
limitation, Alterations to be made by Photronics of or to the
Premises or with
respect to the Mask Shop Equipment or other Photronics'
Improvements, or at any
time during the term of this Lease, shall not be deemed to be a
representation
or warranty by Micron as to the adequacy or sufficiency of such
specifications,
working drawings or other plans or of the improvements or
construction
contemplated thereby for any use or purpose. By its approval
thereof, Micron
assumes no liability or responsibility therefor, or for any defect
in any
improvements, equipment, or construction made pursuant thereto.
(e) Before commencement of any work of improvement in the
Premises, Photronics shall give Micron fifteen (15) days written
notice thereof,
specifying precisely the expected date of commencement. For the
period from ten
(10) days prior to commencement of such work and during the
performance thereof
(or such other period required by Applicable Law), Micron may
maintain in the
Premises or otherwise post where and as required by Applicable Law
such notices
of non-responsibility or other notices as may be necessary to
protect Micron
against liability for liens and claims.
ARTICLE IX.
INSURANCE; INDEMNITY
Section 9.1 Liability
Insurance
-----------
-------------------
Photronics shall at all times from and after the Lease
Commencement Date (or any such earlier date on which Photronics
shall have the
right to access the Premises for any purpose), and at its sole cost
and expense,
for the protection of Photronics and Micron, as their interests may
appear,
maintain in full force and effect a policy or policies of insurance
which afford
the following coverages:
22
**** Material omitted pursuant to a request for confidential
treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
(a) Worker's Compensation in the statutorily required amount,
including employer's liability with a liability limit of not less
than [****]
per occurrence.
(b) Comprehensive General Liability Insurance or Commercial
Liability Insurance with an aggregate liability amount not less
than [****]
combined single limit for both bodily injury and property damage,
including
blanket contractual liability (including Photronics'
indemnification obligation
under Section 9.5 subject only to commercially standard exclusions
and
limitations to such indemnification coverage), broad form property
damage,
personal injury, completed operations, products liability and host
liquor
liability. Such coverage shall be provided by a combination of a
primary and/or
excess liability policy. The liability insurance policy required to
be
maintained by Photronics pursuant to this subsection shall be on an
occurrence
(as opposed to claims made) basis.
(c) Business Automobile Liability insurance providing bodily
injury and property damage liability coverage for not less than
[****] each
accident limit. Business Automobile Liability insurance shall be
written on a
standard ISO policy form, or an equivalent form, providing coverage
for
liability arising out of owned, hired, or non-owned vehicles in
connection with
Photronics' performance of the Photronics' Work as well as
operations upon the
Premises.
Section 9.2 Casualty Insurance -
Fixtures, Mask Shop Equipment,
------------------------------------------------------------------
Personal Property and Photronics' Improvements
----------------------------------------------
(a) Photronics shall at all times from and after the Lease
Commencement Date (or any such earlier date on which Photronics
shall have the
right to access the Premises for any purpose), and at Photronics'
sole cost and
expense, maintain in effect policies of insurance covering all
Photronics'
Property located in, on or about the Premises, including without
limitation the
Mask Shop Equipment, fixtures, furnishings, equipment, furniture,
inventory and
stock in trade, in an amount not less than their full replacement
value,
providing protection against any peril included within the
classification "All
Risk," including but not limited to insurance against fire,
sprinkler leakage,
vandalism and malicious mischief, and flood coverage and earth
movement.
Sublimits, if any, would be applied to the leasehold improvements
as described
in Section 9.2(b). The insurance required by this subsection shall
be the
primary insurance with respect to the property covered thereby.
Micron shall not
be named as a loss payee with respect to property damage insurance
for
Photronics' Property. Photronics is responsible for all deductibles
or
self-insurance reserve.
(b) Photronics shall at all times from and after the Lease
Commencement Date (or any such earlier date on which Photronics
shall have the
right to access the Premises for any purpose) during the term
maintain in effect
policies of insurance covering all leasehold improvements,
including without
limitation, the Building and all leasehold improvements, providing
protection
against any risk included within the classification "All Risk,"
including all
coverages listed in Section 9.2(a), such insurance to be in an
amount no less
than the full replacement value of such Improvements and naming
Micron as loss
payee for such interest (other than under Section 9.2(a)). The
deductible or
self-insurance reserve for the insurance
23
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treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately
with the
Securities and Exchange Commission.
<PAGE>
pursuant to Sections 9.1 and this Section 9.2 shall not exceed
[****] per
occurrence. The insurance required by this subsection shall be the
primary
insurance with respect to the property covered thereby. Micron
shall be named as
a loss payee and additional insured with respect to the insurance
covering the
Building and all leasehold improvements.
(c) Property Insurance Proceeds shall be payable as provided in
Article X.
Section 9.3 Insurance Policies
----------- ------------------
(a) Micron, and any other persons designated by Micron and
having
an insurable interest in the Premises, shall be additional insureds
as their
interests may appear pursuant to the policies required by Section
9.1(b) and (c)
and Section 9.2. From and after the Lease Commencement Date, the
insurance
required by Sections 9.1 and 9.2 shall be the primary insurance as
respects
Micron (and any other additional insureds designated by Micron) and
not
contributory with any other available insurance. The policy or
policies
providing the coverage required by these Sections (other than
Section 9.1(a))
shall contain an endorsement providing, in substance, that "such
insurance as is
afforded hereby for the benefit of Micron and any additional
insureds designated
by Micron shall be primary and any insurance carried by Micron and
any
additional insureds or insureds designated by Micron shall not be
contributory."
In no event shall the limits of any coverage maintained by
Photronics pursuant
to Sections 9.1 and 9.2 be considered as limiting the liability of
Photronics
pursuant to this Lease.
(b) All insurance required to be carried by Photronics shall be
with companies rated A:VIII, or better, in the then most recent
version of
Best's Key Rating Guide. Photronics shall deliver to Micron at
least ten (10)
days prior to the time such insurance is first required to be
carried, and
thereafter at least ten (10) days prior to the expiration or
renewal date of any
policy so maintained, copies of the policies or certificates
evidencing such
insurance. All policies and certificates delivered pursuant to this
Section
shall contain liability limits not less than those set forth in
Sections 9.1 and
9.2, shall list the additional insureds and shall specify all
endorsements and
special coverages required by Sections 9.1 and 9.2. Each such
policy shall
contain a provision (by endorsement or otherwise) requiring not
less than thirty
(30) days written notice to each Party prior to any cancellation,
non-renewal or
material amendment thereof. Any insurance required to be maintained
hereunder
may be provided by means of a so-called "blanket" policy, so long
as the
Premises is specifically covered therein (by rider, endorsement or
otherwise)
and the policy otherwise complies with the provisions of this
Lease. If, on
account of Photronics' failure to comply with any provision of this
Article IX,
Micron or any other additional insured is adjudged a co-insurer by
its insurance
carrier, then any loss or damage to Micron or such additional
insured shall
sustain by reason thereof shall be borne by Photronics and shall be
paid by
Photronics upon receipt of a bill therefor and evidence of such
loss.
Section 9.4 Waiver of
Subrogation
-----------
---------------------
Micron and Photronics each hereby waives any and all rights of
recovery against the other, and against the partners, officers,
