Exhibit 10.9
LEASE
ENTERED INTO AS OF JUNE __, 2004
BETWEEN
VEECO COMPOUND SEMICONDUCTOR INC., Landlord
AND
APA OPTICS, INC., Tenant
<PAGE>
LEASE
1. PARTIES. THIS LEASE is entered into as of this _____ day of
June,
-------
2004, by and between Veeco Compound
Semiconductor Inc., a Minnesota corporation
(hereinafter "Landlord"), and APA Optics, Inc. a Minnesota corporation
(hereinafter "Tenant"). For good and valuable
consideration, the parties agree
to these terms as evidenced by their
signatures below. From
time to time this
agreement is referred to below as the "Lease."
2. EXHIBITS. Attached to and made a part of
this Lease are the following
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exhibits:
Exhibit A.
Site Plan
showing the Building, the Leased Premises and
the Common
Areas.
Exhibit B.
List of
Hazardous Materials to be used by Tenant in the
Leased Premises.
Exhibit C List
of all waste materials to be
generated by Tenant
on the Leased
Premises.
3. DEFINITIONS. The following terms as used in
this Lease shall have the
-----------
meanings set forth below:
(a) "BUILDING":
The structure located at 4900 Constellation
Drive,
St. Paul, Minnesota 55127, known as the Process Integration
Center (PIC) and shown on Exhibit A attached hereto, in which
the
---------
Leased Premises
are located.
(b) "COMMON
AREAS": The space marked as such on Exhibit A
attached
---------
hereto and
located in the PIC and available for the
common or
joint use and benefit of the occupants of the Building.
(c) "HAZARDOUS
MATERIALS": All
substances, materials and wastes that
are or become regulated or classified as hazardous, toxic
or
solid waste
under any Applicable Environmental Law,
including
without limitation,
oil, flammable explosives, asbestos, area
formaldehyde, radioactive materials or waste, or other
hazardous,
toxic, contaminated or polluting materials, substances or
wastes.
(d) "APPLICABLE
ENVIRONMENTAL
LAW": Any applicable law, statute,
ordinance, order,
rule or regulation relating to or imposing
liability or standards of conduct concerning any hazardous,
toxic
or dangerous
waste, substance or
materials pertaining to health
or the environment, including without limitation, the
Comprehensive
Environmental Response, Compensation and Liability
Act of 1980, as amended, and the Resource Conservation and
Recovery Act
of 1976, as amended.
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(e) "LEASED
PREMISES":
The space marked as such on Exhibit A
----------
attached hereto
and located in the PIC. The Leased Premises
include four
undesignated
parking spaces in the Landlord's
parking lot.
(f) "LANDLORD
PREMISES": That
portion of the Building which is not a
portion of
the Leased Premises or the Common Areas.
4. TERM. Landlord hereby leases to Tenant and Tenant
hereby leases from
----
Landlord the Leased Premises for a term of three (3) years
commencing on the
Rent Commencement Date (as defined in Section 5(a)
below). This Lease may
be
terminated by either party upon 90 days' prior written notice.
The Tenant
agrees that prior to, or upon, the effective date of the
termination of this
Lease, the Tenant will remove all equipment
associated with it's business, at
the Tenant's expense, and without
disruption to the Landlord's business. Tenant
agrees to the leave the Leased Premises in clean and
working order, ordinary
wear and tear excepted, and free of any
and all Hazardous Materials (other than
those which Tenant can prove were present when Tenant took possession).
5. RENT; SECURITY DEPOSIT.
-----------------------
(a) Tenant
shall pay no rent, and
the term shall not commence, until
the improvements
described in Section 5(d) of this Lease are
completed and
the Tenant Machine, as defined in Section 5(d)
below, is ready for initial tool startup as provided in the
agreement between
Landlord and Tenant for Tenant's purchase
of
the Tenant
Machine (the "Rent Commencement Date"). If
the Rent
Commencement Date
falls on a day other than the first day
of a
calendar month,
the rent for that
month shall be prorated based
on the actual number of days in that month.
(b) Prior to commencement of Tenant's occupancy, Tenant shall
pay
$28,200 as
a security deposit and shall pay the first
month's
rent ($9,400)
in advance. Thereafter, Tenant shall pay the
monthly rent
of $9,400 on or prior to the first of
every month
for the term of this Lease.
(c) Any rent payment due hereunder that is not
received by Landlord
within 5 business days after its due date
shall be subject to a
1% late fee for each 5
business day period (or fraction thereof)
this it is late.
(d) The Landlord
agrees to make the necessary lease hold improvements
to the clean room area necessary to house the Tenant owned,
Veeco
D180 MOCVD equipment
("Tenant Machine"). Landlord shall complete
the leasehold improvements in accordance with the requirements
of
applicable building
codes and shall be
responsible for building
code compliance for real property that houses the Tenant
Machine.
6. USE. Tenant shall use the Leased Premises only for the
growth and
---
characterization of GaN epitaxial wafers using a MOCVD reactor, and other
activities directly related thereto.
The Tenant is
specifically prohibited from
using arsine (AsH3) or phosphine (PH3) gas within the Landlord's
building.
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<PAGE>
7. RENOVATIONS. Landlord shall retain a contractor (at Landlord's
-----------
expense) to undertake any renovations
Landlord deems necessary or appropriate in
order to separate the Leased Premises from the Landlord
Premises and Common
Areas, including without limitation firewalls,
dividing walls, cranes/winches,
card-key readers, etc., as well as a separate fan
and stack for exhausting any
air emissions, and for removing all of the
foregoing at the end of the term of
the Lease.
8. PEACEFUL POSSESSION. So long as Tenant is not in default
under this
--------------------
Lease and subject to the remainder of this Section
8, Tenant shall have quiet
and peaceful possession of the Leased
Premises, subject to all of the terms and
conditions set forth in this Lease.
Tenant shall designate
not more than four (
4) employees who shall have access to the
Leased Premises at all times and shall
provide Landlord with written notice of the names of such
employees. Tenant
shall perform suitable background, export clearance and other checks
of such
employees to ensure their suitability to work in a sensitive area like
the
Leased Premises. The four designated employees of Tenant will have 24-hour
access, 7 days per week, to the building,
but only the Tenant owned equipment,
common areas, and characterization area and
equipment. Any other
employees or
other persons associated with Tenant may
enter the Leased Premises only with the
prior written permission of Landlord. Tenant shall ensure that employees
of
Tenant and other persons associated with Tenant at the Leased Premises
will
communicate with Landlord personnel subject to the
conditions of Section 20 of
this Lease.
9. COMMON AREAS. Subject to Section 8 of this Lease, Landlord
hereby
-------------
grants to Tenant and its representatives, agents,
invitees and employees the
non-exclusive right of use of the Common Areas,
subject to reasonable rules and
regulations for the use thereof as may be prescribed from time to time
by
Landlord.
10. SIGNS. Other than those approved in writing by
Landlord in its sole
-----
discretion, Tenant shall place no signs (portable, mobile or fixed),
flags,
posters, or other advertising or
promotional materials anywhere within or around
the exterior of the Building without first having obtained
Landlord's prior
written approval of same.
11. REPAIRS; CLEANING; DISPOSAL OF HAZARDOUS MATERIALS WASTE.
--------------------------------------------------------------
(a) Tenant
shall, at its own cost
and expense, take good care of and
make necessary
repairs to the interior of the Leased
Premises,
upon notification
and approval of Landlord. Landlord is
responsible for
janitorial
services in the office and Common
Areas. Tenant
shall be responsible for janitorial
services or
self-cleaning in
the clean room housing the Tenant's MOCVD
reactor (the "Tenant
Machine"). Tenant shall maintain the Leased
Premises at a level of cleanliness and good repair as required
by
Landlord, ordinary
wear and tear excepted.
(b) Tenant
shall store and dispose of all of Tenant's waste
containing Hazardous
Materials at its own expense and in
accordance with
applicable laws. Without limiting the foregoing,
whenever such
waste is transported through the Building for
disposal, it
shall be properly packaged, and an authorized
employee of
Landlord shall accompany Tenant's personnel
throughout the
process. No Hazardous Materials shall be disposed
of in
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<PAGE>
any sink, drain, toilet or otherwise on the Leased
Premises or
other premises
of Landlord.
12. MECHANICS' LIENS. Should any mechanics' or other liens be filed
-----------------
against the Leased Premises or any part thereof by
reason of Tenant's acts or
omissions or because of a claim against Tenant,
Tenant shall cause the same to
be cancelled and discharged of record
by bond or otherwise within ten (10) days
following notice from Landlord of the filing of such lien.
However, in the
event Tenant believes such lien has been
wrongfully filed, Tenant shall have the
right to defend itself against any such lien so long as Tenant
notifies and
indemnifies Landlord.
13. UTILITY CHARGES. The rent shall include all utility
charges, included
---------------
water, CDA, sewer and septic, electrical,
HVAC, and reasonable amounts of pure
H2 and N2 as determined necessary, by Landlord, to run a Veeco D180
MOCVD
reactor in a 24/7 production mode. Unreasonable amount of utilities, as
determined by Landlord, will be charged to Tenant in addition
to the monthly
rent. In addition, Landlord will supply two office phone lines
to be used by
Tenant for business purposes only. Unreasonable charges to these
phone lines
will be charged separately to Tenant in
addition to the rent.
Tenant will not
have access to Landlord's computer
network. Landlord
will, at Tenant's request
and expense, install two analog phone lines for modem
access or two DSL phone
lines (if available), one in each office, to be used by Tenant
for internet
access, of which the billing of these lines will be direct to Tenant.
14. INDEMNITY AND RELATED PROVISIONS.
Tenant will indemnify
Landlord and
---------------------------------
save it harmless from and against any and all claims, actions, damages,
liability, expenses and attorneys' fees in connection with loss of life,
personal injury, and/or damage to property
arising from or out of any occurrence
in, upon, or at the Leased Premises, or the
occupancy or use by Tenant of the
Leased Premises, or any part thereof, or
occasioned wholly or in part by any act
or omission of Tenant, its agents, contractors,
employees, servants, lessees,
concessionaires, or invitees, including,
without limitation, any and all claims,
actions, damages, liability, penalties, assessments,
natural resource damages,
response costs (such as the cost of any testing,
medical or other monitoring,
cleanup, or other required response action) expenses and consultants and
attorneys' fees resulting from or in any way connected with the
presence,
release, threatened release, or disposal by Tenant, in
on, or under the Leased
Premises of any hazardous substances (as defined
in CERCLA), hazardous wastes
(as defined in RCRA), oils, radioactive materials, asbestos in any form
or
condition, any pollutant or contaminant or hazardous, dangerous or toxic
chemicals, materials or substances within the meaning of any Applicable
Environmental Law, provided that in the event
that both Landlord and Tenant are
at fault in any respect of any such claim, Tenant
shall have no liability to
Landlord hereunder, except to the extent of the gross negligence or
willful
misconduct of Landlord. In case Landlord shall be made a party to any
litigation commenced by or against Tenant, then Tenant
shall protect and hold
Landlord harmless and shall pay all costs, expenses,
and reasonable attorneys'
fees incurred or paid by Landlord in
connection with such litigation. except to
the extent of the gross negligence or
willful misconduct of Landlord, or Tenant
action against Landlord for any default hereunder or breach of
this Lease by
Landlord.
Landlord will indemnify Tenant and save it
harmless from and against any and all
claims, actions, damages, liability,
expenses and attorneys' fees in connection
with loss of life, personal injury, and/or
damage to property arising from or
out of any occurrence in, upon, or at
the
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<PAGE>
Landlord Premises, or the occupancy or use
by Landlord of the Landlord Premises,
or any part thereof, or occasioned wholly
or in part by any act or omission of
Landlord, its agents, contractors,
employees, servants, lessees,
concessionaires, or invitees, including,
without limitation, any and all claims,
actions, damages, liability, expenses and
attorneys' fees resulting from or in
any way connected with the presence,
release or disposal, in or under the
Landlord Premises of any hazardous
substances (as defined in CERCLA), hazardous
wastes (as defined in RCRA), oils,
radioactive materials, asbestos in any form
or condition, any pollutant or contaminant
or hazardous, dangerous or toxic
chemicals, materials or substances within
the meaning of any Applicable
Environmental Law; provided, that in the
event that both Landlord and Tenant are
at fault in respect of any such claim,
Landlord shall have no liability to
Tenant hereunder, except to the extent of
the gross negligence or willful
misconduct of Tenant. In case Tenant shall be made a
party to any litigation
commenced by or against Landlord , then
Landlord shall protect and hold Tenant
harmless and shall pay all costs, expenses,
and reasonable attorneys' fees
incurred or paid by Tenant in connection
with such litigation. except to the
extent of the gross negligence or willful
misconduct of Tenant, or any action by
Landlord against Tenant for any default
hereunder or breach of this Lease by
Tenant.
15. INSURANCE.
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(a) Landlord shall
maintain insurance against fire, vandalism and
malicious mischief
and other perils as are from time to time
commonly included in the type of insurance known as "special
form
coverage" (or
its equivalent), insuring the building
structure
for its full insurable value.
(b) During
the Term, at Tenant's
sole cost and expense, Tenant shall
maintain: (i)
insurance against fire, vandalism and malicious
mischief and such
other perils as are from time to time commonly
included in
the type of insurance known as "special form
coverage" (or its equivalent) and business interruption,
insuring
Tenant's fixtures,
furniture,
furnishings, floor
coverings and
other Tenant
improvements, alterations or additions in or to the
Leased Premises
for 100% of the full replacement cost; (ii)
commercial general
liability insurance for claims for
personal
injury, death and
property damage for risks occurring in or upon
or about the Leased Premises and on any sidewalks directly
adjacent to the Leased Premises with combined single limits in
an
amount not
less than $6,000,000; (iii) in a like amount,
contractual liability
insurance covering Tenant's indemnity
obligations hereunder;
(iv) commercial automobile liability
coverage; $1,000,000
combined single limit; must indicate
coverage for any auto
or owned, hired or borrowed, and non-owned
vehicles; and
(v) workers'
compensation and employers liability
coverage of
$500,000 each accident, $500,000 disease-policy
limit, $500,000
disease - each employee. All such policies shall
show Landlord as an
additional insured and shall be satisfactory
to Landlord. All such policies shall contain express
endorsements
that (i) such insurance may not be cancelled or amended
with
respect to
Landlord without ten (10) days written notice by
certified mail
to Landlord by the insurance company, and
(ii)
Tenant and
insurer
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<PAGE>
waive their
right of subrogation against Landlord and its
affiliates. Policies should have minimum AM Best rating of A-
and
a financial size of
VII or higher. Satisfactory evidence of such
insurance shall
be delivered to Landlord prior to Tenant's
possession of
the Leased Premises, and
