LEASE AGREEMENT
BY AND BETWEEN
MICRON TECHNOLOGY, INC., a Delaware
corporation,
as landlord
AND
PHOTRONICS, INC., a Connecticut
corporation,
as tenant
Dated May 19, 2009
LEASE AGREEMENT
BY AND BETWEEN
MICRON TECHNOLOGY, INC., a Delaware
corporation,
as landlord
AND
PHOTRONICS, INC. a Connecticut
corporation,
as tenant
Dated May 19, 2009
INDEX
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ARTICLE I.
DEFINITIONS
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|
1
|
|
ARTICLE II.
DEMISE
|
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5
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ARTICLE III.
PREMISES
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5
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Section 3.1 Premises Defined
|
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5
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|
Section 3.2 Reservation of Oil, Gas, Mineral and Water
Rights
|
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6
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ARTICLE IV.
TERM
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6
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Section 4.1 Length
of Term
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6
|
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ARTICLE V.
RENT
|
|
6
|
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Section 5.1 Base
Rent
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6
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Section 5.2 Rent
Defined; Additional Rent
|
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6
|
|
ARTICLE VI.
TAXES
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|
7
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Section 6.1 Real
Property Taxes
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7
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Section 6.2 Other
Taxes
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8
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Section 6.3 Right
to Contest
|
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9
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ARTICLE VII.
CONDUCT OF BUSINESS BY PHOTRONICS
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9
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Section 7.1 Use of
Premises
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9
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Section 7.2 Restrictions on Use
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10
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Section 7.3 Contest of Requirements
|
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10
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Section 7.4 Exterior Signs and Sign Monument(s)
|
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10
|
|
ARTICLE VIII.
MAINTENANCE, REPAIRS AND ALTERATIONS
|
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11
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Section 8.1 Micron’s Obligations
|
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11
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Section 8.2 Photronics’ Obligations
|
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11
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Section 8.3 Alterations and Additions
|
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12
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i
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ARTICLE IX.
INSURANCE; INDEMNITY
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13
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Section 9.1 Liability Insurance
|
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13
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Section 9.2 Casualty Insurance - Fixtures, Mask Shop
Equipment and Personal Property
|
|
14
|
|
Section 9.3 Insurance Policies
|
|
14
|
|
Section 9.4 Waiver of Subrogation
|
|
15
|
|
Section 9.5 Indemnity
|
|
15
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Section 9.6 Exemption of Micron
|
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16
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Section 9.7 Notices
|
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16
|
|
ARTICLE X.
DAMAGE OR DESTRUCTION AND APPROPRIATION
|
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16
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Section 10.1 Damage or Destruction
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16
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Section 10.2 Appropriation
|
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18
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Section 10.3 Termination of Lease upon Substantial Casualty
or Substantial Appropriation
|
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19
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Section 10.4 No
Micron Liability for Casualty or Appropriation
|
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19
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ARTICLE XI.
ASSIGNMENT AND SUBLETTING
|
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20
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Section 11.1 Micron’s Rights
|
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20
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Section 11.2 No
Release of Photronics
|
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20
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|
ARTICLE XII.
TERMINATION OF PRIOR LEASE
|
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20
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|
Section 12.1 Termination of Prior Lease
|
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20
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ARTICLE XIII.
UTILITY SERVICES
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21
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Section 13.1 Utility Charges
|
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21
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Section 13.2 Interruption of Service
|
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21
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|
ARTICLE XIV.
DEFAULTS AND REMEDIES
|
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21
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Section 14.1 Defaults
|
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21
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Section 14.2 Remedies
|
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22
|
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Section 14.3 Holdover Rent
|
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23
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Section 14.4 Default by Micron
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24
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Section 14.5 Expense of Litigation
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24
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Section 14.6 Holding Over
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24
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Section 14.7 Micron’s Rights
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24
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Section 14.8 Third-Party Litigation
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25
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ARTICLE XV.
HAZARDOUS MATERIALS
|
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25
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ARTICLE XVI.
MISCELLANEOUS
|
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28
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Section 16.1 Offset Statement
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28
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Section 16.2 Micron’s Right of Access
|
|
29
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Section 16.3 Transfer of Micron’s Interest
|
|
29
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Section 16.4 Separability
|
|
30
|
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Section 16.5 Interest on Past Due Obligations
|
|
30
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Section 16.6 Time
of Essence
|
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31
|
ii
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Section
16.7 Construction;
Interpretation
|
31
|
|
Section
16.8 Incorporation of Prior
Agreements; Amendments
|
32
|
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Section
16.9 Notices
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32
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Section
16.10 Brokers
|
32
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|
Section
16.11 Waivers
|
33
|
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Section
16.12 Liens
|
33
|
|
|
Section
16.13 Subordination
|
34
|
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Section
16.14 Force Majeure
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34
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Section
16.15 Yield Up Premises; Quitclaim
|
35
|
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Section
16.16 Survival of Indemnities
|
35
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Section
16.17 Security Deposit
|
35
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Section
16.18 No Option
|
36
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Section
16.19 Micron Liability
|
36
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Section
16.20 Termination
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36
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Section
16.21 Accord and Satisfaction
|
38
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Section
16.22 Counterparts
|
38
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Section
16.23 Building Security
|
38
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Section
16.24 Publicity
|
39
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Section
16.25 Governing Law
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39
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Section
16.26 Rights and Remedies Cumulative
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39
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Section
16.27 Dispute Resolution
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39
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Section
16.28 Third-Party Beneficiaries
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40
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Section
16.29 No Recording
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40
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Section
16.30 Quiet Enjoyment
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40
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iii
LEASE AGREEMENT
THIS LEASE AGREEMENT (“
Lease ”) is made and entered into as of May 19, 2009,
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) Micron and Photronics were
parties to that certain Build to Suit Lease, dated May 5, 2006 (the
“Prior Lease”), which the parties desire to
terminate.
(c) Photronics desires to lease the
Premises (as defined below) from Micron, and Micron desires to
lease the Premises to Photronics, all on the terms and conditions
set forth herein.
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.
“ 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.
“ Appropriation Award
” means any award(s) paid or payable (whether or not in a
separate award) to either Party 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.
1
“ Appropriation Effective
Date ” shall mean, for any Appropriation, the first date
when the condemning authority has acquired title to or possession
of any portion of the Premises subject to the
Appropriation.
“ Base Rent ”
shall have the meaning set forth in Section 5.1(a).
“ Building ”
shall mean the building located on the Land, with a street address
of 10136 S. federal Way, Boise, Idaho 83716, containing
approximately 50,000 square feet of rentable floor area.
“ 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
Premises, the Building and the leasehold improvements, whether or
not insured or insurable.
“ City ” shall
mean the city or municipality in which the Land is
located.
“ Code ” shall
mean the United States Bankruptcy Code (11 U.S.C., Sec. 101 et
seq. ).
“ 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.
“ 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.
“ 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.
“ 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.
2
“ 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 Substances Control Act, as amended (15
U.S.C. Sec. 2601 et seq .), the Clean Water Act (33 U.S.C.
§§ 1321 et seq .), the Clean Air Act (42 U.S.C.
§§ 7412, et seq .), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. §§ 11001 et
seq .), the Federal Insecticide, Fungicide, and Rodenticide Act
(7 U.S.C. §§ B6 et seq .), the Occupational Safety
and Health Act (29 U.S.C. §§ 651 et seq .) or the
Safe Drinking Water Act (42 U.S.C. §§ 300f et seq
.) and analogous state laws.
“ Land ” shall
mean the real property located in the Boise, Idaho area, as
depicted on Exhibit “A” hereto.
“ Lease ” shall
have the meaning set forth in the Preamble.
“ Lease Payment
Schedule ” shall have the meaning set forth in Section
5.1(a).
“ leasehold
improvements ” means collectively, the Building and all
Alterations 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 mean all tools, equipment, fixtures, trade fixtures,
personal property and other non-leasehold improvements equipping,
and required in the future to equip, the Premises as equipped on
the date hereof and sufficient to carry out the Permitted
Use.
“ Micron ” shall
have the meaning set forth in the Preamble.
“ Micron Party ”
and “ Micron Parties ” shall have the meaning
set forth in Article XV.
“ 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 Use ”
shall mean the operation of a facility dedicated to the fabrication
of advanced photomasks, 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).
3
“ Photronics ”
shall have the meaning set forth in the Preamble.
“ Photronics to Micron
Supply Agreement ” shall mean that certain Photronics to
Micron Supply Agreement dated May 5, 2006, as amended, by and
between the Parties.
“ 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).
“ Premises ”
shall have the meaning set forth in Section 3.1.
“ 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.
“ 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 considered
a real property tax regardless of how denominated or the source
from which it is collected.
“ 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 Free Period” shall
have the meaning set forth in Section 5.1(b).
4
“ 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.
“ 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.
“ Security Deposit
” shall have the meaning set forth in Section
16.17.
“ Security System
” shall have the meaning set forth in Section
16.23(b).
“
SNDA ” shall have the meaning set forth in
Section 16.13.
“ 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 $15,000,000.
“ 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 this Lease.
“ Transfer ”
shall have the meaning set forth in Section 11.1(a).
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
to Photronics, 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.
(b) The Building and other improvements located on
the Land.
(c) All references herein to the Premises shall,
unless the context clearly indicates to the contrary, mean and
include the Land.
5
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; 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.
ARTICLE IV.
TERM
Section 4.1 Length of Term
The term (the “ term
”) of this Lease shall commence on May 19, 2009, and shall
terminate on December 31, 2014. The occurrence of the expiration of
the Lease term upon either the last day of the term or any other
termination hereof 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.
ARTICLE V.
RENT
Section 5.1 Base Rent
(a) Commencing on the date of this Lease, and on or
prior to the first day of each calendar quarter thereafter,
Photronics shall pay to Micron One Million Nine Hundred Eighty
Seven Thousand Two Hundred Twenty Three Dollars and 68/100
($1,987,223.68) 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 (and
as may be changed by Micron by written notice during the
term).
(b) Notwithstanding the obligations set forth in
Subsection (a) above, Photronics shall not be obligated to pay Base
Rent for the period of time commencing on the date hereof and
ending on November 12, 2009 (“ Rent Free Period
”). On or before October 1, 2009, Photronics shall pay Base
Rent for the fourth calendar quarter of 2009 in the prorated amount
of One Million Forty Two Thousand Six Hundred Seventy Six Dollars
and 4/100 ($1,042,676.04). Except as expressly set forth in this
Subsection (b), during the Rent Free Period Photronics shall comply
with all Photronics obligations under this Lease including, without
limitation, the obligation to pay additional rent and any other
amounts due hereunder and maintenance and repair obligations under
Article VIII hereof.
Section 5.2 Rent Defined; Additional
Rent
As used in this Lease, the term
“rent” shall mean 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 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, 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.
6
ARTICLE VI.
TAXES
Section 6.1 Real Property
Taxes
(a) 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
after the date hereof and before the expiration of the term. 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. 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 date hereof and the expiration of the term,
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 date hereof and the expiration of the term. 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.
7
(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.
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.
Section 6.2 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.
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Section 6.3 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.
(b) Photronics shall continuously operate the
Premises for the Permitted Use throughout the Lease
term.
(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.
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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. 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.
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, 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.
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(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, 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 .
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.
Section 8.2 Photronics’
Obligations
(a) Subject to the provisions of Article X,
Photronics shall (i) 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 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. 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, without
limitation, the roof and roof membrane, foundation, exterior and
interior walls, windows, doors, drainage systems, driveways,
parking lot and landscaping. 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.
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(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 less than Two
Hundred Fifty Thousand and No/100 Dollars ($250,000) 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 the Building 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 and any
Alterations, 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 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 and Alterations shall be the property of
Micron through the Lease term and following termination of the
Lease. 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; provided, however, if requested instead
Photronics shall remove any leasehold improvements and Alterations
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.
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(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 16.12.
(d) The approval by Micron of any specifications,
working drawings or other plans with regard to Photonics’
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 work by Photronics, 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, 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:
(a) Worker’s Compensation in the statutorily
required amount, including employer’s liability with a
liability limit of not less than One Million and No/100 Dollars
($1,000,000) per occurrence.
(b) Comprehensive General Liability Insurance or
Commercial Liability Insurance with an aggregate liability amount
not less than Ten Million and No/100 Dollars ($10,000,000) 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.
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(c) Business Automobile Liability insurance
providing bodily injury and property damage liability coverage for
not less than One Million and No/100 Dollars ($1,000,000) 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 operations upon the
Premises.
Section 9.2 Casualty Insurance - Fixtures,
Mask Shop Equipment and Personal Property
(a) Photronics shall at all times, 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 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 pursuant to Sections 9.1 and this Section
9.2 shall not exceed Five Million and No/100 Dollars ($5,000,000)
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. 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.
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(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, employees, agents, representatives,
customers and business visitors of such other Party, for loss of or
damage to such waiving Party or its property or the property of
others under its control, arising from any cause insured against
under any policy of insurance required to be carried by such
waiving Party pursuant to the provisions of this Lease (or any
other policy of insurance carried by such waiving Party in lieu
thereof) at the time of such loss or damage. The foregoing waiver
shall be effective whether or not a waiving Party shall actually
obtain and maintain the insurance which such waiving Party is
required to obtain and maintain pursuant to this Lease (or any
substitute therefor). Each Party shall, upon obtaining the policies
of insurance which it is required to maintain hereunder, give
notice to its insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
Section 9.5 Indemnity
To the fullest extent permitted by
law, and subject to the last sentence of this subsection,
Photronics shall indemnify, defend and hold Micron, its officers,
agents, employees and partners harmless from and against any
Liabilities or expense (including but not limited to loss of life
and reasonable attorneys’ fees and costs of defense) which
may result from the use or occupation of the Premises or any
improvements thereon by Photronics, its employees, agents, invitees
and contractors or the breach of the provisions of this Lease by
Photronics, its agents, employees, contractors, or other persons
claiming under Photronics. Such indemnification shall extend to
Liabilities arising from any activity, work, or thing done,
permitted or suffered by Photronics or any such person in or about
the Premises and shall further extend to any Liabilities arising
from any default in the performance of any obligation on
Photronics’ part hereunder. “ Liabilities
” shall include all suits, actions, claims and demands and
all expenses (including attorneys’ fees and costs of defense)
incurred in or about any such Liability and any action or
proceeding brought thereon. It is understood and agreed that
payment shall not be a condition precedent to enforcement of the
foregoing indemnification obligations. Photronics’ defense
obligations hereunder shall include the obligation, upon demand, to
defend Micron against any claim or action of the types herein
specified by legal counsel reasonably satisfactory to Micron.
Notwithstanding anything to the contrary in this Lease, this
subsection shall not apply to any damage or injury which Photronics
establishes in a court of competent jurisdiction was proximately
caused by the gross negligence or willful misconduct of Micron, its
agents, employees or contractors.
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Section 9.6 Exemption of
Micron
Neither Micron nor its agents or
employees shall be liable for any loss of any property by theft nor
for injury or damage which may be sustained by the person, goods,
wares, or property of Photronics, its employees, invitees or
customers or any other person in or about the Premises, or for loss
or interruption of business, caused by or resulting from any peril
which may affect the Premises, including, but not limited to fire,
steam, electricity, gas, water or rain, which may leak or flow from
or into any part of the Premises, or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the
same, whether such damage or injury results from conditions arising
upon the Premises, or from other sources. Photronics, as a material
consideration to Micron, assumes all risk of damages to property
and injury t
