EXHIBIT 10.29

LEASE AGREEMENT

THIS LEASE AGREEMENT is made this 5th day of December, 2011, between Prologis
Texas III LLC, a Delaware limited liability company (“Landlord”), and the Tenant
named below.

 

Tenant:    Superconductor Technologies Inc.    Tenant’s Representative, Address,
and Telephone:   

460 Ward Drive

Santa Barbara, CA 93111

(805) 690-4666

Attn: Bob Johnson Senior VP-Operations

   Premises:    That portion of the Building, containing approximately 35,083
rentable square feet, as determined by Landlord, as shown on Exhibit A.   
Project:    The project commonly known as Walnut Creek Corporate Center,
consisting of 217,200 rentable square feet.    Building:   

Walnut Creek Corporate Center, Building 13, consisting of 94,000 rentable square
feet.

9101 Wall Street

Austin, Texas 78754

   Tenant’s Proportionate Share of Project:    16.152%   

Tenant’s Proportionate

Share of Building:

   37.322%    Lease Term:    Sixty-three (63) full calendar months, beginning on
the Commencement Date and ending on the last day of the 63rd full month
following the Commencement Date.    Commencement Date:    January 1, 2012   
Initial Monthly Base Rent:    See Addendum 1    Initial Estimated Monthly
Operating Expense Payments: (estimates only and subject to adjustment to actual
costs and expenses according to the provisions of this Lease)   

1. Utilities: In CAM

2. Common Area Charges:

3. Taxes:

4. Insurance:

5. Others: Mgmt. Fee

   $

$

$

$

1,228.00

3,017.00

176.00

561.00

  

  

  

  

Initial Estimated Monthly Operating Expense Payments:       $ 4,982.00         

 

 

  Initial Monthly Base Rent and Estimated Operating Expense Payments:       $
19,015.20         

 

 

  Rent Payment Address:   

ProLogis Texas I LLC – NAIFIIILP

Bank of America Lockbox Services

Lockbox #847757

1950 N. Stemmons Freeway #5010

Dallas, TX 75207

   Security Deposit:    $180,000.00 (See Paragraph 5)    Broker:   

CB Richard Ellis for Tenant

Live Oak Gottesman for Landlord

  

 

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Addenda:    1. Base Rent Adjustments 2. HVAC Maintenance Contract 3. Move Out
Conditions 4. Right of First Refusal (Recurring) 5. Two Renewal Options at
Market 6. Miscellaneous Demising Wall Provisions 7. Temporary Lease of Bathrooms
Exhibits:    A. Site Plan B. Commencement Date Certificate C-1., C-1A and C-2.
Preliminary Plans D. Sign Criteria E. Project Rules and Regulations

1. Granting Clause. In consideration of the obligation of Tenant to pay rent as
herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.

2. Acceptance of Premises. Tenant shall accept the Premises in its condition as
of the Commencement Date, subject to all applicable laws, ordinances,
regulations, covenants and restrictions. Landlord has made no representation or
warranty as to the suitability of the Premises for the conduct of Tenant’s
business, and Tenant waives any implied warranty that the Premises are suitable
for Tenant’s intended purposes. In no event shall Landlord have any obligation
for any defects in the Premises or any limitation on its use. The taking of
possession of the Premises shall be conclusive evidence that Tenant accepts the
Premises and that the Premises were in good condition at the time possession was
taken except for items that are Landlord’s responsibility under Paragraph 10 and
any punchlist items agreed to in writing by Landlord and Tenant. No later than
10 days after written demand is made therefor by Landlord of Tenant, Tenant
shall execute and deliver to Landlord a Commencement Date Certificate in the
form of Exhibit B attached to and hereby made a part of this Lease.

3. Use. The Premises shall be used only for the purpose of receiving, storing,
manufacturing, shipping and selling (but specifically excluding retail selling)
products, materials and merchandise manufactured and/or distributed by Tenant
and for such other lawful purposes as may be incidental thereto. Tenant shall
not conduct or give notice of any auction, liquidation, or going out of business
sale on the Premises. Tenant will use the Premises in a careful, safe and proper
manner and will not commit waste, overload the floor or structure of the
Premises or subject the Premises to use that would damage the Premises.

Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas,
noise, or vibrations to emanate from the Premises, or take any other action that
would constitute a nuisance or would disturb, unreasonably interfere with, or
endanger Landlord or any tenants of the Project. Outside storage, including
without limitation, storage of trucks and other vehicles, is prohibited without
Landlord’s prior written consent; provided, however, Tenant shall have the right
to park operable vehicles and trailers overnight at the truck loading docks and
designated truck and trailer parking areas for the Premises and operable
automobiles in the designated automobile parking areas, and further provided
there is no interference with the access of other tenants to the Building and
Project parking lots and truck courts. Tenant, at its sole expense, shall use
and occupy the Premises in compliance with all laws, including, without
limitation, the Americans With Disabilities Act, orders, judgments, ordinances,
regulations, codes, directives, permits, licenses, covenants and restrictions
now or hereafter applicable to the Premises (collectively, “Legal
Requirements”). The Premises shall not be used as a place of public
accommodation under the Americans With Disabilities Act or similar state
statutes or local ordinances or any regulations promulgated thereunder, all as
may be amended from time to time. Tenant shall, at its expense, make any
alterations or modifications, within or without the Premises that are required
by Legal Requirements related to Tenant’s use or occupation of the Premises.
Tenant will not use or permit the Premises to be used for any purpose or in any
manner that would void Tenant’s or Landlord’s insurance, increase the insurance
risk, or cause the disallowance of any sprinkler credits. If any increase in the
cost of any insurance on the Premises or the Project is caused by Tenant’s use
or occupation of the Premises, or because Tenant vacates the Premises, then
Tenant shall pay the amount of such increase to Landlord. Any occupation of the
Premises by Tenant prior to the Commencement Date shall be subject to all
obligations of Tenant under this Lease.

Landlord agrees that it will include in all leases for the Building, a covenant
prohibiting the Building’s tenants from emitting unpleasant odors, smoke, dust,
gas or vibrations from its premises such as to effect in a materially adverse
way, the operations of Tenant hereunder. In the event that a Building 13 tenant
violates the afore-said covenant, Tenant shall give written notice of such
violation to Landlord and Landlord shall have a commercially reasonable time
following its receipt of such notice to cause the offending tenant to cease such
actions. In the event that Landlord fails to cure the violation within a
commercially reasonable time, Tenant shall be entitled to request that Landlord
assign to Tenant all of its rights and remedies against the offending tenant
under the lease between Landlord and the offending tenant and Landlord shall
assign same within three (3) business days of receiving a request for same.
Thereafter, Tenant shall be entitled to prosecute an action against the
offending tenant in Landlord’s or

 

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Tenant’s name, including, but not limited to, seeking and obtaining a temporary
or permanent injunction enjoining the offending tenant from continuing with the
prohibited actions. Tenant shall advise Landlord of any such prosecution actions
and allow Landlord to reasonably participate in such actions.

4. Base Rent. Tenant shall pay Base Rent in the amount set forth on Page 1 of
this Lease. The first month’s Base Rent, the Security Deposit, and the first
monthly installment of estimated Operating Expenses (as hereafter defined) shall
be due and payable on the date hereof, and Tenant promises to pay to Landlord in
advance, without demand, deduction or set-off, monthly installments of Base Rent
on or before the first day of each calendar month succeeding the Commencement
Date. Payments of Base Rent for any fractional calendar month shall be prorated.
All payments required to be made by Tenant to Landlord hereunder (or to such
other party as Landlord may from time to time specify in writing) shall be made
by check or by Electronic Fund Transfer (“EFT”) of immediately available federal
funds before 11:00 a.m., Eastern Time at the Rent Payment Address as provided
above or such other place, within the continental United States, as Landlord may
from time to time designate to Tenant in writing. The obligation of Tenant to
pay Base Rent and other sums to Landlord and the obligations of Landlord under
this Lease are independent obligations. Tenant shall have no right at any time
to abate, reduce, or set-off any rent due hereunder except as may be expressly
provided in this Lease. If Tenant is delinquent in any monthly installment of
Base Rent or of estimated Operating Expenses for more than 5 days, Tenant shall
pay to Landlord on demand a late charge equal to 8 percent of such delinquent
sum. The provision for such late charge shall be in addition to all of
Landlord’s other rights and remedies hereunder or at law and shall not be
construed as a penalty.

5. Security Deposit. The Security Deposit has been delivered to Landlord on the
date hereof and shall be held by Landlord as security for the performance of
Tenant’s obligations under this Lease. The Security Deposit is not an advance
rental deposit or a measure of Landlord’s damages in case of Tenant’s default.
Upon each occurrence of an Event of Default (hereinafter defined), Landlord may
use all or part of the Security Deposit to pay delinquent payments due under
this Lease, and the cost of any damage, injury, expense or liability caused by
such Event of Default, without prejudice to any other remedy provided herein or
provided by law. Tenant shall pay Landlord on demand the amount that will
restore the Security Deposit to its original amount. Landlord’s obligation
respecting the Security Deposit is that of a debtor, not a trustee; no interest
shall accrue thereon. The Security Deposit shall be the property of Landlord,
but shall be paid to Tenant when Tenant’s obligations under this Lease have been
completely fulfilled, except as otherwise provided below. Landlord shall not be
required to keep all or any part of the Security Deposit separate from its
general accounts. Landlord shall be released from any obligation with respect to
the Security Deposit upon transfer of this Lease and the Premises to a person or
entity assuming Landlord’s obligations under this Paragraph 5.

Provided that as of the first day of the 13th, 25th, 37th, 49th and 61st full
calendar months of the Lease Term, (x) Tenant is the Tenant originally named
herein, (y) Tenant actually occupies all of the Premises initially demised under
this Lease and any space added to the Premises, and (z) no Event of Default has
existed, exists, or would exist but for the passage of time or the giving of
notice, or both; the Security Deposit required under this Lease shall decrease
by $30,000.00 on the first day of the 13th, 25th, 37th, 49th and 61st full
calendar months following the Commencement Date and continuing until the
Security Deposit shall equal $60,000.00, so that as of such date and throughout
the remainder of the Lease Term, the Security Deposit shall reflect a total
amount of $60,000.00. In the event Tenant meets the foregoing obligation to meet
the reduction of the Security Deposit, Landlord shall pay to Tenant the reduced
amount no later than 30 days following the effective date of the reduction.

6. Operating Expense Payments. During each month of the Lease Term, on the same
date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of
the annual cost, as estimated by Landlord from time to time, of Tenant’s
Proportionate Share (hereinafter defined) of Operating Expenses for the Project.
Payments thereof for any fractional calendar month shall be prorated. The term
“Operating Expenses” means all costs and expenses incurred by Landlord with
respect to the ownership, maintenance, and operation of the Project including,
but not limited to costs of: Taxes (hereinafter defined) and fees payable to tax
consultants and attorneys for consultation and contesting taxes; insurance;
utilities, maintenance, repair and replacement of all portions of the Project,
including without limitation, paving and parking areas, roads, non-structural
components of the roofs (including the roof membrane), alleys, and driveways,
mowing, landscaping, snow removal, exterior painting, utility lines, heating,
ventilation and air conditioning systems, including, without limitation, the
chilled air system, lighting, electrical systems and other mechanical and
building systems; amounts paid to contractors and subcontractors for work or
services performed in connection with any of the foregoing; charges or
assessments of any association to which the Project is subject; property
management fees payable to a property manager, including any affiliate of
Landlord, or if there is no property manager, an administration fee of 15
percent of Operating Expenses payable to Landlord; security services, if any;
trash collection, sweeping and removal; and additions or alterations made by
Landlord to the Project or the Building in order to comply with Legal
Requirements (other than those expressly required herein to be made by Tenant),
provided that the cost of additions or alterations that are required to be
capitalized for

 

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federal income tax purposes shall be amortized on a straight line basis over a
period equal to the lesser of the useful life thereof for federal income tax
purposes or 10 years. Operating Expenses do not include costs, expenses,
depreciation or amortization for capital repairs and capital replacements
required to be made by Landlord under Paragraph 10 of this Lease, debt service
under mortgages or ground rent under ground leases, costs of restoration to the
extent of net insurance proceeds received by Landlord with respect thereto,
leasing commissions, or the costs of renovating space for tenants.

If Tenant’s total payments of Operating Expenses for any year are less than
Tenant’s Proportionate Share of actual Operating Expenses for such year, then
Tenant shall pay the difference to Landlord within 30 days after demand, and if
more, then Landlord shall retain such excess and credit it against Tenant’s next
payments except that during the last calendar year of the Lease Term or any
extension terms thereof, Landlord shall refund any such excess within 60 days
following the termination of the Lease Term or any extension terms thereof,
provided that Tenant is not in default of its obligations under this Lease. For
purposes of calculating Tenant’s Proportionate Share of Operating Expenses, a
year shall mean a calendar year except the first year, which shall begin on the
Commencement Date, and the last year, which shall end on the expiration of this
Lease. With respect to Operating Expenses which Landlord allocates to the entire
Project, Tenant’s “Proportionate Share” shall be the percentage set forth on the
first page of this Lease as Tenant’s Proportionate Share of the Project as
reasonably adjusted by Landlord in the future for changes in the physical size
of the Premises or the Project; and, with respect to Operating Expenses which
Landlord allocates only to the Building, Tenant’s “Proportionate Share” shall be
the percentage set forth on the first page of this Lease as Tenant’s
Proportionate Share of the Building as reasonably adjusted by Landlord in the
future for changes in the physical size of the Premises or the Building.
Landlord may equitably increase Tenant’s Proportionate Share for any item of
expense or cost reimbursable by Tenant that relates to a repair, replacement, or
service that benefits only the Premises or only a portion of the Project or
Building that includes the Premises or that varies with occupancy or use. The
estimated Operating Expenses for the Premises set forth on the first page of
this Lease are only estimates, and Landlord makes no guaranty or warranty that
such estimates will be accurate.

7. Utilities. Tenant shall pay for all water, gas, electricity, heat, light,
power, telephone, sewer, sprinkler services, refuse and trash collection, and
other utilities and services used on the Premises, all maintenance charges for
utilities, and any storm sewer charges or other similar charges for utilities
imposed by any governmental entity or utility provider, together with any taxes,
penalties, surcharges or the like pertaining to Tenant’s use of the Premises.
Except as may be expressly set forth in Addendum 6 (Miscellaneous Demising Wall
Provisions), Landlord may cause at Tenant’s expense any water and sewer
utilities to be separately metered or charged directly to Tenant by the provider
in the event Landlord reasonably determines that Tenant’s use of such jointly
metered utility materially exceeds the use of such jointly metered utility by
other tenants in the Building. Tenant shall pay its share of all charges for
jointly metered utilities, including, without limitation, the chilled air
system, based upon consumption, as reasonably determined by Landlord.
Furthermore, Tenant shall be responsible for all expenses related to the setup
of the chilled air system for Tenant’s use. No interruption or failure of
utilities shall result in the termination of this Lease or the abatement of
rent. Tenant agrees to limit use of water and sewer for normal restroom use.

Notwithstanding anything contained herein to the contrary, in the event that
such interruption or cessation of utilities results from Landlord’s negligent or
willful act or omission continues beyond five (5) business days from the date of
such interruption or cessation, then, provided Tenant has delivered Landlord
with prompt notice of such interruption, the rent under this Lease will abate,
commencing on the fifth (5th) business day the Premises remain untenantable, and
continuing until the date on which the utilities are restored and the Premises
are again tenantable. No abatement of rentals as hereinabove described will
apply in the event such interruption of utilities is the result of Tenant’s
alterations to the Premises, or any negligent act or omission of Tenant, its
agents, employees or contractors, or any cause other than the negligent or
willful act or omission of Landlord or its employees, agents or contractors.

8. Taxes. Landlord shall pay all taxes, assessments and governmental charges
(collectively referred to as “Taxes”) that accrue against the Project during the
Lease Term, excluding the Texas Margins Tax, which shall be included as part of
the Operating Expenses charged to Tenant. Landlord may contest by appropriate
legal proceedings the amount, validity, or application of any Taxes or liens
thereof. All capital levies or other taxes assessed or imposed on Landlord upon
the rents payable to Landlord under this Lease and any franchise tax, any
excise, use, margin, transaction, sales or privilege tax, assessment, levy or
charge measured by or based, in whole or in part, upon such rents from the
Premises and/or the Project or any portion thereof shall be paid by Tenant to
Landlord monthly in estimated installments or upon demand, at the option of
Landlord, as additional rent; provided, however, in no event shall Tenant be
liable for any net income taxes imposed on Landlord unless such net income taxes
are in substitution for any Taxes payable hereunder. If any such tax or excise
is levied or assessed directly against Tenant or results from any Tenant-Made
Alterations (defined below), then Tenant shall be responsible for and shall pay
the same at such times and in such manner as the taxing authority shall require.
Tenant shall be liable for all taxes levied or assessed against any personal
property or fixtures placed in the Premises, whether levied or assessed against
Landlord or Tenant.

 

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9. Insurance. Landlord shall maintain all risk or special form property
insurance covering the full replacement cost of the Building and commercial
general liability insurance on the Project in forms and amounts customary for
properties substantially similar to the Project, subject to customary
deductibles. Landlord may, but is not obligated to, maintain such other
insurance and additional coverages as it may deem necessary, including but not
limited to, rent loss insurance. All such insurance shall be included as part of
the Operating Expenses charged to Tenant. The Project or Building may be
included in a blanket policy (in which case the cost of such insurance allocable
to the Project or Building will be determined by Landlord based upon the total
insurance cost calculations). Tenant shall also reimburse Landlord for any
increased premiums or additional insurance which Landlord reasonably deems
necessary as a result of Tenant’s use of the Premises.

Tenant, at its expense, shall maintain during the Lease Term the following
insurance, at Tenant’s sole cost and expense: (1) commercial general liability
insurance applicable to the Premises and its appurtenances providing, on an
occurrence basis, a minimum combined single limit of $2,000,000; and in the
event property of Tenant’s invitees or customers are kept in, or about the,
Premises, Tenant shall maintain warehouser’s legal liability or bailee customers
insurance for the full value of the property of such invitees or customers as
determined by the warehouse contract between Tenant and its customer; (2) all
risk or special form property insurance covering the full replacement cost of
all property and improvements installed or placed in the Premises by Tenant;
(3) workers’ compensation insurance as required by the state in which the
Premises is located and in amounts as may be required by applicable statute and
shall include a waiver of subrogation in favor of Landlord; (4) employers
liability insurance of at least $1,000,000, (5) business automobile liability
insurance having a combined single limit of not less than $2,000,000 per
occurrence insuring Tenant against liability arising out of the ownership
maintenance or use of any owned, hired or nonowned automobiles, and (6) business
interruption insurance with a limit of liability representing loss of at least
approximately 6 months of income. Any company writing any of Tenant’s insurance
shall have an A.M. Best rating of not less than A-VIII and provide primary
coverage to Landlord (any policy issued to Landlord providing duplicate or
similar coverage shall be deemed excess over Tenant’s policies). All commercial
general liability and, if applicable, warehouser’s legal liability or bailee
customers insurance policies shall name Tenant as a named insured and Landlord,
its property manager, and other designees of Landlord as the interest of such
designees shall appear, as additional insureds. The limits and types of
insurance maintained by Tenant shall not limit Tenant’s liability under this
Lease. Tenant shall provide Landlord with certificates of such insurance as
required under this Lease prior to the earlier to occur of the Commencement Date
or the date Tenant is provided with possession of the Premises, and thereafter
upon renewals at least 15 days prior to the expiration of the insurance
coverage. Acceptance by Landlord of delivery of any certificates of insurance
does not constitute approval or agreement by Landlord that the insurance
requirements of this section have been met, and failure of Landlord to identify
a deficiency from evidence provided will not be construed as a waiver of
Tenant’s obligation to maintain such insurance. In the event any of the
insurance policies required to be carried by Tenant under this Lease shall be
cancelled prior to the expiration date of such policy, or if Tenant receives
notice of any cancellation of such insurance policies from the insurer prior to
the expiration date of such policy, Tenant shall: (a) immediately deliver notice
to Landlord that such insurance has been, or is to be, cancelled, (b) shall
promptly replace such insurance policy in order to assure no lapse of coverage
shall occur, and (c) shall deliver to Landlord a certificate of insurance for
such policy.

The all risk or special form property insurance obtained by Landlord and Tenant
shall include a waiver of subrogation by the insurers and all rights based upon
an assignment from its insured, against Landlord or Tenant, their officers,
directors, employees, managers, agents, invitees and contractors, in connection
with any loss or damage thereby insured against. Neither party nor its officers,
directors, employees, managers, agents, invitees or contractors shall be liable
to the other for loss or damage caused by any risk coverable by all risk or
special form property insurance, and each party waives any claims against the
other party, and its officers, directors, employees, managers, agents, invitees
and contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Tenant and its agents, employees and
contractors shall not be liable for, and Landlord hereby waives all claims
against such parties for losses resulting from an interruption of Landlord’s
business, or any person claiming through Landlord, resulting from any accident
or occurrence in or upon the Premises or the Project from any cause whatsoever,
including without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Tenant or its agents, employees or contractors.
Landlord and its agents, employees and contractors shall not be liable for, and
Tenant hereby waives all claims against such parties for losses resulting from
an interruption of Tenant’s business, or any person claiming through Tenant,
resulting from any accident or occurrence in or upon the Premises or the Project
from any cause whatsoever, including without limitation, damage caused in whole
or in part, directly or indirectly, by the negligence of Landlord or its agents,
employees or contractors.

 

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10. Landlord’s Repairs. Landlord represents and warrants that as of the
Commencement Date the Building’s HVAC, chiller system, docks doors, levelers,
and automatic doors are in good working order. Landlord shall repair, at its
expense and without pass through as an Operating Expense, the structural
soundness of the roof (which does not include the roof membrane), the structural
soundness of the foundation, and the structural soundness of the exterior walls
of the Building in good repair, reasonable wear and tear and uninsured losses
and damages caused by Tenant, its agents and contractors excluded. The term
“walls” as used in this Paragraph 10 shall not include windows, glass or plate
glass, doors or overhead doors, special store fronts, dock bumpers, dock plates
or levelers, or office entries. Tenant shall promptly give Landlord written
notice of any repair required by Landlord pursuant to this Paragraph 10, after
which Landlord shall have a reasonable opportunity to repair.

11. Tenant’s Repairs. Landlord, at Tenant’s expense as provided in Paragraph 6,
shall maintain in good repair and condition the parking areas and other common
areas of the Building, including, but not limited to driveways, alleys,
landscape and grounds surrounding the Premises. Subject to Landlord’s obligation
in Paragraph 10 and subject to Paragraphs 9 and 15, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of the
Premises and all areas, improvements and systems exclusively serving the
Premises including, without limitation, dock and loading areas, truck doors,
plumbing, water and sewer lines up to points of common connection, fire
sprinklers and fire protection systems, entries, doors, ceilings, windows,
interior walls, and the interior side of demising walls, and heating,
ventilation and air conditioning systems. Such repair and replacements include
capital expenditures and repairs whose benefit may extend beyond the Term;
provided that with respect to the heating, ventilation and air conditioning
(“HVAC”) systems Landlord shall complete such HVAC capital repairs and such HVAC
capital expenditures shall be fully amortized in accordance with the Formula
(defined hereafter) and reimbursed to Landlord over the remainder of the Lease
Term, without regard to any extension or renewal option not then exercised. The
“Formula” shall mean that number, the numerator of which shall be the number of
months of the Lease Term remaining after such HVAC capital expenditures, and the
denominator of which shall be the amortization period (in months) equal to the
useful life of such HVAC repair or replacement multiplied by the cost of such
HVAC capital expenditure or repair. Landlord shall pay for such HVAC capital
expenditures and repairs and Tenant shall reimburse Landlord for its amortized
share of same (determined as hereinabove set forth) in equal monthly
installments in the same manner as the payment by Tenant to Landlord of the
Operating Expenses. In the event Tenant extends the Lease Term either by way of
an option or negotiated extension, such reimbursement by Tenant shall continue
as provided above until such amortization period has expired. Heating,
ventilation and air conditioning systems and other mechanical and building
systems exclusively serving the Premises shall be maintained at Tenant’s expense
pursuant to maintenance service contracts entered into by Tenant or, at
Landlord’s election, by Landlord, in which case the costs of such contracts
entered into by Landlord shall be included as an Operating Expense. The scope of
services and contractors under such maintenance contracts shall be reasonably
approved by Landlord. At Landlord’s request, Tenant shall enter into a joint
maintenance agreement with any railroad that services the Premises. If Tenant
fails to perform any repair or replacement for which it is responsible, Landlord
may perform such work and be reimbursed by Tenant within 10 days after demand
therefor. Subject to Paragraphs 9 and 15, Tenant shall bear the full cost of any
repair or replacement to any part of the Building or Project that results from
damage caused by Tenant, its agents, contractors, or invitees and any repair
that benefits only the Premises.

12. Tenant-Made Alterations and Trade Fixtures. Any alterations, additions, or
improvements made by or on behalf of Tenant to the Premises (“Tenant-Made
Alterations”) shall be subject to Landlord’s prior written consent. Tenant shall
cause, at its expense, all Tenant-Made Alterations to comply with insurance
requirements and with Legal Requirements and shall construct at its expense any
alteration or modification required by Legal Requirements as a result of any
Tenant-Made Alterations. All Tenant-Made Alterations shall be constructed in a
good and workmanlike manner by contractors reasonably acceptable to Landlord and
only good grades of materials shall be used.

(a) Subject to the foregoing, Tenant shall be entitled (but shall not be
obligated) to construct, install and/or upgrade the finish-out for all or any
portion of the Premises in relation to its initial occupancy of the Premises
(hereafter the “Initial Finish-Out”). Attached hereto as Exhibit C-1, C-1A and
C-2 are architectural renderings prepared by Tenant’s architect showing Tenant’s
plans generally for the Initial Finish-Out in two phases, Phase One of the
Initial Finish-Out will be done to the clean room in the Premises and Phase Two
of the Initial Finish-Out will be done to the office component of the Premises
(referred to collectively herein as “Tenant’s Preliminary Plans”). By Landlord’s
execution of this Lease, Landlord approves the Initial Finish-Out as shown on
Tenant’s Preliminary Plans.

(b) As Tenant develops its plans and specifications for the Initial Finish-Out
(which may be in one or more phases) (hereafter “Construction Drawings”) for
submittal to all governing authorities for approval thereof and to support the
issuance of all necessary permits for the construction and/or operation of such
improvements, Tenant shall submit the Construction Drawings to Landlord for its
review and approval. To the extent that the Construction Drawings are in
substantial compliance with Tenant’s

 

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Preliminary Plans, Landlord shall approve same within ten (10) business days
after receipt of the Construction Drawings. In the event that Landlord fails to
approve the Construction Drawings, Landlord shall, at the time of notification
to Tenant of its rejection, provide written comments of all rejected matters
with proposals which, if followed by Tenant would result in Landlord’s approval
of the Construction Drawings. Thereafter, Tenant shall revise the Construction
Drawings and resubmit same to Landlord for review and approval. Within five
(5) business days of Landlord’s receipt of Tenant’s revised Construction
Drawings, Landlord shall approve or reject the revised Construction Drawings,
and again, if any matters are rejected, include proposals which if followed by
Tenant will result in Landlord approving the Construction Drawings. This process
of submittal and revision and/or comment shall continue each 5 business days
until the Preliminary Plans are prepared to Landlord’s and Tenant’s
satisfaction. Landlord acknowledges that time is of the essence in obtaining
it’s approval of the Construction Drawings.

(c) Landlord shall have 30 days after receiving all future plans and
specifications for Tenant-Made Alterations (excluding the Initial Finish Out) to
approve or reject same. In the event that Landlord fails to approve any future
plans and specifications and following the initial 30-day review period, the
review and approval periods set forth in subsection (b) shall apply.

(d) Tenant shall reimburse Landlord for its reasonable costs in reviewing plans
and specifications/Construction Drawings and in monitoring construction in an
amount which is equal to Landlord’s actual costs. Landlord’s right to review
plans and specifications/Construction Drawings and to monitor construction shall
be solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications/Construction Drawings or construction comply with
applicable laws, codes, rules and regulations.

(e) Tenant shall provide Landlord with the identities and mailing addresses of
all persons performing work or supplying materials, prior to beginning such
construction, and Landlord may post on and about the Premises notices of
non-responsibility pursuant to applicable law. Tenant shall furnish security or
make other arrangements satisfactory to Landlord to assure payment for the
completion of all work free and clear of liens and shall provide certificates of
insurance for worker’s compensation and other coverage in amounts and from an
insurance company satisfactory to Landlord protecting Landlord against liability
for personal injury or property damage during construction. Upon completion of
any Tenant-Made Alterations, Tenant shall deliver to Landlord sworn statements
setting forth the names of all contractors and subcontractors who did work on
the Tenant-Made Alterations and final lien waivers from all such contractors and
subcontractors.

(f) Upon surrender of the Premises, all Tenant-Made Alterations and any
leasehold improvements constructed by Landlord or Tenant shall remain on the
Premises as Landlord’s property, except to the extent Landlord requires removal
at Tenant’s expense of any such items or Landlord and Tenant have otherwise
agreed in writing in connection with Landlord’s consent to any Tenant-Made
Alterations. Upon Tenant’s written request, Landlord shall provide Tenant, at
the time of Tenant’s request for approval of Tenant-Made Alterations, a list of
which Tenant-Made Alterations Landlord will require Tenant to remove upon
surrender of the Premises. Tenant shall repair any damage caused by the removal
of such Tenant-Made Alterations upon surrender of the Premises.

(g) Notwithstanding the foregoing, Tenant, at its own cost and expense and
without Landlord’s prior approval, may erect such shelves, racking, bins,
machinery and trade fixtures (collectively “Trade Fixtures”) in the ordinary
course of its business provided that such items do not alter the basic character
of the Premises, do not overload or damage the Premises, and may be removed
without injury to the Premises, and the construction, erection, and installation
thereof complies with all Legal Requirements and with Landlord’s requirements
set forth above. Tenant shall remove its Trade Fixtures and shall repair any
damage caused by such removal upon surrender of the Premises.

13. Signs. Tenant shall not make any changes to the exterior of the Premises,
install any exterior lights, decorations, balloons, flags, pennants, banners, or
painting, or erect or install any signs, windows or door lettering, placards,
decorations, or advertising media of any type which can be viewed from the
exterior of the Premises, without Landlord’s prior written consent, which
consent may be withheld in Landlord’s sole discretion. Attached as Exhibit “D”
is the signage criteria, and Tenant shall be permitted to install, at Tenant’s
sole cost and expense, Tenant’s proposed signage, provided it complies with such
signage criteria and all Legal Requirements. Upon surrender or vacation of the
Premises, Tenant shall have removed all signs and repair, paint, and/or replace
the building facia surface to which its signs are attached. Tenant shall obtain
all applicable governmental permits and approvals for sign and exterior
treatments. All signs, decorations, advertising media, blinds, draperies and
other window treatment or bars or other security installations visible from
outside the Premises shall be subject to Landlord’s approval and conform in all
respects to Landlord’s requirements.

14. Parking. Tenant shall be entitled to park in common with other tenants of
the Project in those areas designated for nonreserved parking. Landlord may
allocate parking spaces among Tenant and other tenants in the Project if
Landlord reasonably determines that such parking facilities are becoming
crowded. Landlord shall not be responsible for enforcing Tenant’s parking rights
against any third parties.

 

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15. Restoration. If at any time during the Lease Term the Premises are damaged
by a fire or other casualty, Landlord shall notify Tenant within 60 days after
such damage as to the amount of time Landlord reasonably estimates it will take
to restore the Premises. If the restoration time is estimated to exceed 6
months, either Landlord or Tenant may elect to terminate this Lease upon notice
to the other party given no later than 30 days after Landlord’s notice. If
neither party elects to terminate this Lease or if Landlord estimates that
restoration will take 6 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant’s expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events
(as defined in Paragraph 33), all repairs or restoration not required to be done
by Landlord and shall promptly re-enter the Premises and commence doing business
in accordance with this Lease. Notwithstanding the foregoing, either party may
terminate this Lease if the Premises are damaged during the last year of the
Lease Term and Landlord reasonably estimates that it will take more than one
month to repair such damage. Base Rent and Operating Expenses shall be abated
for the period of repair and restoration commencing on the date of such casualty
event in the proportion which the area of the Premises, if any, which is not
usable by Tenant bears to the total area of the Premises. Such abatement shall
be the sole remedy of Tenant, and except as provided herein, Tenant waives any
right to terminate the Lease by reason of damage or casualty loss.

Notwithstanding anything contained in the Lease to the contrary, to the extent
the damage to the Project is attributable to Tenant, Tenant shall pay to
Landlord with respect to any damage to the Project an amount of the commercially
reasonable deductible under Landlord’s insurance policy, not to exceed
$10,000.00, within 30 days after presentment of Landlord’s invoice.

16. Condemnation. If any part of the Premises or the Project should be taken for
any public or quasi-public use under governmental law, ordinance, or regulation,
or by right of eminent domain, or by private purchase in lieu thereof (a
“Taking” or “Taken”), and the Taking would materially interfere with or impair
Landlord’s ownership or operation of the Project, then upon written notice by
Landlord this Lease shall terminate and Base Rent shall be apportioned as of
said date. In the event (i) more than thirty percent (30%) of the Premises is
involved in a Taking as described in this Paragraph 16, or (ii) more than thirty
percent (30%) of the parking spaces for the Building are Taken and not replaced
by Landlord with other parking spaces in the Project proximate to the Building,
and in either case the Taking, in Tenant’s reasonable judgment, would materially
interfere with or impair Tenant’s operations at the Premises, then in any such
event Tenant shall have the right to terminate this Lease by giving written
notice of termination to Landlord within thirty (30) days of such Taking. If
part of the Premises shall be Taken, and this Lease is not terminated as
provided above, the Base Rent payable hereunder during the unexpired Lease Term
shall be reduced to such extent as may be fair and reasonable under the
circumstances. In the event of any such Taking, Landlord shall be entitled to
receive the entire price or award from any such Taking without any payment to
Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such
award. Tenant shall have the right, to the extent that same shall not diminish
Landlord’s award, to make a separate claim against the condemning authority (but
not Landlord) for such compensation as may be separately awarded or recoverable
by Tenant for moving expenses and damage to Tenant’s Trade Fixtures, if a
separate award for such items is made to Tenant.

17. Assignment and Subletting. Without Landlord’s prior written consent, which
shall not be unreasonably withheld conditioned or delayed, Tenant shall not
assign this Lease or sublease the Premises or any part thereof or mortgage,
pledge, or hypothecate its leasehold interest or grant any concession or license
within the Premises and any attempt to do any of the foregoing shall be void and
of no effect. It shall be reasonable for the Landlord to withhold, delay or
condition its consent, where required, to any assignment or sublease in any of
the following instances: (i) the assignee or sublessee does not have a net worth
calculated according to generally accepted accounting principles at least equal
to the greater of the net worth of Tenant immediately prior to such assignment
or sublease or the net worth of the Tenant at the time it executed the Lease;
(ii) occupancy of the Premises by the assignee or sublessee would, in Landlord’s
opinion, violate any agreement binding upon Landlord or the Project with regard
to the identity of tenants, usage in the Project, or similar matters; (iii) the
identity or business reputation of the assignee or sublessee will, in the good
faith judgment of Landlord, tend to damage the goodwill or reputation of the
Project; (iv) the assignment or sublease is to another tenant in the Project and
is at rates which are below those charged by Landlord for comparable space in
the Project; or (v) in the case of a sublease, the subtenant has not
acknowledged that the Lease controls over any inconsistent provision in the
sublease. The foregoing criteria shall not exclude any other reasonable basis
for Landlord to refuse its consent to such assignment or sublease. Any approved
assignment or sublease shall be expressly subject to the terms and conditions of
this Lease. Tenant shall provide to Landlord all information concerning the
assignee or sublessee as Landlord may reasonably request. Landlord may revoke
its consent immediately

 

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and without notice if, as of the effective date of the assignment or sublease,
there has occurred and is continuing any default under the Lease. For purposes
of this paragraph, a transfer of the ownership interests controlling Tenant
shall be deemed an assignment of this Lease unless such ownership interests are
publicly traded. Notwithstanding the above, Tenant may assign or sublet the
Premises, or any part thereof, to any entity controlling Tenant, controlled by
Tenant or under common control with Tenant (a “Tenant Affiliate”), without the
prior written consent of Landlord. Tenant shall reimburse Landlord for all of
Landlord’s reasonable expenses in connection with any assignment or sublease not
to exceed $1,500.00. This Lease shall be binding upon Tenant and its successors
and permitted assigns. Upon Landlord’s receipt of Tenant’s written notice of a
desire to assign or sublet the Premises, or any part thereof (other than to a
Tenant Affiliate), Landlord may, by giving written notice to Tenant within 30
days after receipt of Tenant’s notice, terminate this Lease with respect to the
space described in Tenant’s notice, as of the date specified in Tenant’s notice
for the commencement of the proposed assignment or sublease. Tenant may withdraw
its notice to sublease or assign by notifying Landlord within 10 days after
Landlord has given Tenant notice of such termination, in which case the Lease
shall not terminate but shall continue.

Notwithstanding any assignment or subletting, Tenant and any guarantor or surety
of Tenant’s obligations under this Lease shall at all times remain fully
responsible and liable for the payment of the rent and for compliance with all
of Tenant’s other obligations under this Lease (regardless of whether Landlord’s
approval has been obtained for any such assignments or sublettings). In the
event that the rent due and payable by a sublessee or assignee (or a combination
of the rental payable under such sublease or assignment plus any bonus or other
consideration therefor or incident thereto) exceeds the rental payable under
this Lease, then Tenant shall be bound and obligated to pay Landlord as
additional rent hereunder all such excess rental and other excess consideration
within 10 days following receipt thereof by Tenant; provided in the event of a
sublease which is less than 100% of the Premises such excess rental and other
consideration shall be applied on a square foot basis.

If this Lease be assigned or if the Premises be subleased (whether in whole or
in part) or in the event of the mortgage, pledge, or hypothecation of Tenant’s
leasehold interest or grant of any concession or license within the Premises or
if the Premises be occupied in whole or in part by anyone other than Tenant,
then upon a default by Tenant hereunder Landlord may collect rent from the
assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest
was hypothecated, concessionee or licensee or other occupant and, except to the
extent set forth in the preceding paragraph, apply the amount collected to the
next rent payable hereunder; and all such rentals collected by Tenant shall be
held in trust for Landlord and immediately forwarded to Landlord. No such
transaction or collection of rent or application thereof by Landlord, however,
shall be deemed a waiver of these provisions or a release of Tenant from the
further performance by Tenant of its covenants, duties, or obligations
hereunder.

18. Indemnification. Except for the intentional misconduct or negligence of
Landlord, its agents, employees or contractors, and to the extent permitted by
law, Tenant agrees to indemnify, defend and hold harmless Landlord, and
Landlord’s agents, employees and contractors, from and against any and all
losses, liabilities, damages, costs and expenses (including attorneys’ fees)
resulting from claims by third parties for injuries to any person and damage to
or theft or misappropriation or loss of property occurring in or about the
Project and arising from the use and occupancy of the Premises or from any
activity, work, or thing done, permitted or suffered by Tenant in or about the
Premises or due to any other act or omission of Tenant, its subtenants,
assignees, invitees, employees, contractors and agents. The furnishing of
insurance required hereunder shall not be deemed to limit Tenant’s obligations
under this Paragraph 18.

19. Inspection and Access. With 24-hours’ notice (except in the event of an
emergency) to Tenant and with a Tenant representative as an accompaniment,
Landlord and its agents, representatives, and contractors may enter the Premises
at any reasonable time to inspect the Premises and to make such repairs as may
be required or permitted pursuant to this Lease and for any other business
purpose. With the accompaniment of a Tenant representative, Landlord and
Landlord’s representatives may enter the Premises during business hours for the
purpose of showing the Premises to prospective purchasers and, during the last
year of the Lease Term, to prospective tenants. Landlord may erect a suitable
sign on the Premises stating the Premises are available to let or that the
Project is available for sale. Landlord may grant easements, make public
dedications, designate and modify common areas and create restrictions on or
about the Premises, provided that no such easement, dedication, designation,
modification or restriction materially interferes with Tenant’s use or occupancy
of the Premises. At Landlord’s request, Tenant shall execute such instruments as
may be necessary for such easements, dedications or restrictions.

20. Quiet Enjoyment. If Tenant shall perform all of the covenants and agreements
herein required to be performed by Tenant, Tenant shall, subject to the terms of
this Lease, at all times during the Lease Term, have peaceful and quiet
enjoyment of the Premises against any person claiming by, through or under
Landlord.

 

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21. Surrender. Upon termination of the Lease Term or earlier termination of
Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received ordinary wear and tear, casualty loss and
condemnation covered by Paragraphs 15 and 16 excepted and otherwise in
accordance with the Move Out Conditions Addendum attached hereto. Without
limiting the foregoing, Tenant shall remove any odor which may exist in the
Premises resulting from Tenant’s occupancy of the Premises upon the termination
of the Lease Term or earlier termination of Tenant’s right of possession. Any
Trade Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord’s retention and
disposition of such property. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Operating Expenses and obligations concerning the
condition and repair of the Premises.

22. Holding Over. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to 150% of
the Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over. All other payments shall
continue under the terms of this Lease. In addition, Tenant shall be liable for
all damages incurred by Landlord as a result of such holding over. No holding
over by Tenant, whether with or without consent of Landlord, shall operate to
extend this Lease except as otherwise expressly provided, and this Paragraph 22
shall not be construed as consent for Tenant to retain possession of the
Premises. For purposes of this Paragraph 22, “possession of the Premises” shall
continue until, among other things, Tenant has delivered all keys to the
Premises to Landlord, Landlord has complete and total dominion and control over
the Premises, and Tenant has completely fulfilled all obligations required of it
upon termination of the Lease as set forth in this Lease, including, without
limitation, those concerning the condition and repair of the Premises.

23. Events of Default. Each of the following events shall be an event of default
(“Event of Default”) by Tenant under this Lease:

(i) Tenant shall fail to pay any installment of Base Rent or any other payment
required herein when due, and such failure shall continue for a period of 5 days
after written notice from Landlord to Tenant that such payment was due;
provided, however, that Landlord shall not be obligated to provide written
notice of such failure more than 2 times in any consecutive 12-month period, and
the failure of Tenant to pay any third or subsequent installment of Base Rent or
any other payment required herein when due in any consecutive 12-month period
shall constitute an Event of Default by Tenant under this Lease without the
requirement of notice or opportunity to cure; provided, however, that any such
notice shall be in lieu of, and not in addition to, any notice required under
applicable law.

(ii) Tenant or any guarantor or surety of Tenant’s obligations hereunder shall
(A) make a general assignment for the benefit of creditors; (B) commence any
case, proceeding or other action seeking to have an order for relief entered on
its behalf as a debtor or to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition
of it or its debts or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or of any substantial part of its
property (collectively a “proceeding for relief”); (C) become the subject of any
proceeding for relief which is not dismissed within 60 days of its filing or
entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or surety
is an individual) or be dissolved or otherwise fail to maintain its legal
existence (if Tenant, guarantor or surety is a corporation, partnership or other
entity).

(iii) Any insurance required to be maintained by Tenant pursuant to this Lease
shall be cancelled or terminated or shall expire or shall be reduced or
materially changed, except, in each case, as permitted in this Lease.

(iv) Tenant shall not occupy or shall vacate the Premises whether or not Tenant
is in monetary or other default under this Lease. Tenant’s vacating of the
Premises shall not constitute an Event of Default if, prior to vacating the
Premises, Tenant has made arrangements reasonably acceptable to Landlord to
(a) ensure that Tenant’s insurance for the Premises will not be voided or
cancelled with respect to the Premises as a result of such vacancy, (b) ensure
that the Premises are secured and not subject to vandalism, and (c) ensure that
the Premises will be properly maintained after such vacation, including, but not
limited to, keeping the heating, ventilation and cooling systems maintenance
contracts required by this Lease in full force and effect and maintaining the
utility services. Tenant shall inspect the Premises at least once each month and
report monthly in writing to Landlord on the condition of the Premises.

 

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(v) Tenant shall attempt or there shall occur any assignment, subleasing or
other transfer of Tenant’s interest in or with respect to this Lease except as
otherwise permitted in this Lease.

(vi) Tenant shall fail to discharge any lien placed upon the Premises in
violation of this Lease within 30 days after receiving notice from any source
that any such lien or encumbrance is filed against the Premises.

(vii) Tenant shall fail to comply with any provision of this Lease other than
those specifically referred to in this Paragraph 23, and except as otherwise
expressly provided herein, such default shall continue for more than 30 days
after Landlord shall have given Tenant written notice of such default (unless
such performance will, due to the nature of the obligation, require a period of
time in excess of 30 days, then after such period of time as is reasonably
necessary if Tenant has made diligent efforts to cure such default within the
thirty (30) day period described therein, and thereafter proceeds continuously
and diligently to cure such default within a commercially reasonable time) (said
notice being in lieu of, and not in addition to, any notice required as a
prerequisite to a forcible entry and detainer or similar action for possession
of the Premises).

24. Landlord’s Remedies. Upon each occurrence of an Event of Default and so long
as such Event of Default shall be continuing, Landlord may at any time
thereafter at its election: terminate this Lease or Tenant’s right of
possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity. Upon the termination of this
Lease or termination of Tenant’s right of possession, it shall be lawful for
Landlord, without formal demand or notice of any kind, to re-enter the Premises
by summary dispossession proceedings or any other action or proceeding
authorized by law and to remove Tenant and all persons and property therefrom.
If Landlord re-enters the Premises, Landlord shall have the right to keep in
place and use, or remove and store, all of the furniture, fixtures and equipment
at the Premises.

If Landlord terminates this Lease, Landlord may recover from Tenant the sum of:
all Base Rent and all other amounts accrued hereunder to the date of such
termination; the value of the Base Rent for any periods of abated Monthly Base
Rent based on the Monthly Base Rent amount that immediately follows such period
of abatement; the cost of reletting the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing commissions incurred
by Landlord, and costs of removing and storing Tenant’s or any other occupant’s
property, repairing, altering, remodeling, or otherwise putting the Premises
into condition acceptable to a new tenant or tenants, and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys’ fees and court costs; and the excess of the then present value of the
Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the present value
of any net amounts which Tenant establishes Landlord can reasonably expect to
recover by reletting the Premises for such period, taking into consideration the
availability of acceptable tenants and other market conditions affecting
leasing. Such present values shall be calculated at a discount rate equal to the
90-day U.S. Treasury bill rate at the date of such termination.

If Landlord terminates Tenant’s right to possession (but not this Lease) without
terminating the Lease after an Event of Default, Landlord shall use commercially
reasonable efforts to relet the Premises without thereby releasing Tenant from
any liability hereunder and without demand or notice of any kind to Tenant;
provided, however, (a) Landlord shall not be obligated to accept any tenant
proposed by Tenant, (b) Landlord shall have the right to lease any other space
controlled by Landlord first, and (c) any proposed tenant shall meet all of
Landlord’s leasing criteria. For the purpose of such reletting Landlord is
authorized to make any repairs, changes, alterations, or additions in or to the
Premises as Landlord deems reasonably necessary or desirable. If the Premises
are not relet, then Tenant shall pay to Landlord as damages a sum equal to the
amount of the rental reserved in this Lease for such period or periods, plus the
cost of recovering possession of the Premises (including attorneys’ fees and
costs of suit), the unpaid Base Rent and other amounts accrued hereunder at the
time of repossession, and the costs incurred in any attempt by Landlord to relet
the Premises. If the Premises are relet and a sufficient sum shall not be
realized from such reletting [after first deducting therefrom, for retention by
Landlord, the unpaid Base Rent and other amounts accrued hereunder at the time
of reletting, the cost of recovering possession (including attorneys’ fees and
costs of suit), all of the costs and expense of repairs, changes, alterations,
and additions, the expense of such reletting (including without limitation
brokerage fees and leasing commissions) and the cost of collection of the rent
accruing therefrom] to satisfy the rent provided for in this Lease to be paid,
then Tenant shall immediately satisfy and pay any such deficiency.

 

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Any such payments due Landlord shall be made upon demand therefor from time to
time and Tenant agrees that Landlord may file suit to recover any sums falling
due from time to time. Notwithstanding any such reletting without termination,
Landlord may at any time thereafter elect in writing to terminate this Lease for
such previous breach.

Exercise by Landlord of any one or more remedies hereunder granted or otherwise
available shall not be deemed to be an acceptance of surrender of the Premises
and/or a termination of this Lease by Landlord, whether by agreement or by
operation of law, it being understood that such surrender and/or termination can
be effected only by the written agreement of Landlord and Tenant. Any law,
usage, or custom to the contrary notwithstanding, Landlord shall have the right
at all times to enforce the provisions of this Lease in strict accordance with
the terms hereof; and the failure of Landlord at any time to enforce its rights
under this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same. Tenant
and Landlord further agree that forbearance or waiver by Landlord to enforce its
rights pursuant to this Lease or at law or in equity, shall not be a waiver of
Landlord’s right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord’s intention to re-enter as provided for in any statute, or to institute
legal proceedings to that end, and also waives all right of redemption in case
Tenant shall be dispossessed by a judgment or by warrant of any court or judge.
The terms “enter,” “re-enter,” “entry” or “re-entry,” as used in this Lease, are
not restricted to their technical legal meanings. Any reletting of the Premises
shall be on such terms and conditions as Landlord in its sole discretion may
determine (including without limitation a term different than the remaining
Lease Term, rental concessions, alterations and repair of the Premises, lease of
less than the entire Premises to any tenant and leasing any or all other
portions of the Project before reletting the Premises). Except as otherwise
provided by law, Landlord shall not be liable, nor shall Tenant’s obligations
hereunder be diminished because of, Landlord’s failure to relet the Premises or
collect rent due in respect of such reletting.

25. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default
hereunder unless Landlord fails to perform any of its obligations hereunder
within 30 days after written notice from Tenant specifying such failure (unless
such performance will, due to the nature of the obligation, require a period of
time in excess of 30 days, then after such period of time as is reasonably
necessary). All obligations of Landlord hereunder shall be construed as
covenants, not conditions; and, except as may be otherwise expressly provided in
this Lease, Tenant may not terminate this Lease for breach of Landlord’s
obligations hereunder. All obligations of Landlord under this Lease will be
binding upon Landlord only during the period of its ownership of the Premises
and not thereafter. The term “Landlord” in this Lease shall mean only the owner,
for the time being of the Premises, and in the event of the transfer by such
owner of its interest in the Premises, such owner shall thereupon be released
and discharged from all obligations of Landlord thereafter accruing, but such
obligations shall be binding during the Lease Term upon each new owner for the
duration of such owner’s ownership. Any liability of Landlord under this Lease
shall be limited solely to its interest in the Project, and in no event shall
any personal liability be asserted against Landlord in connection with this
Lease nor shall any recourse be had to any other property or assets of Landlord.

26. Landlord’s Lien/Security Interest. Intentionally Deleted.

27. Subordination. This Lease and Tenant’s interest and rights hereunder are and
shall be subject and subordinate at all times to the lien of any first mortgage,
now existing or hereafter created on or against the Project or the Premises, and
all amendments, restatements, renewals, modifications, consolidations,
refinancing, assignments and extensions thereof, without the necessity of any
further instrument or act on the part of Tenant and Tenant agrees to attorn to
any such holder thereof, provided that Landlord and Landlord’s mortgagee,
simultaneously with the execution of this Lease, execute a commercially
reasonable subordination, non-disturbance and attornment agreement.
Notwithstanding the foregoing, any such holder may at any time subordinate its
mortgage to this Lease, without Tenant’s consent, by notice in writing to
Tenant, and thereupon this Lease shall be deemed prior to such mortgage without
regard to their respective dates of execution, delivery or recording and in that
event such holder shall have the same rights with respect to this Lease as
though this Lease had been executed prior to the execution, delivery and
recording of such mortgage and had been assigned to such holder. The term
“mortgage” whenever used in this Lease shall be deemed to include deeds of
trust, security assignments and any other encumbrances, and any reference to the
“holder” of a mortgage shall be deemed to include the beneficiary under a deed
of trust.

28. Mechanic’s Liens. Tenant has no express or implied authority to create or
place any lien or encumbrance of any kind upon, or in any manner to bind the
interest of Landlord or Tenant in, the Premises or to charge the rentals payable
hereunder for any claim in favor of any person dealing with

 

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Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant covenants and agrees that it will pay or cause
to be paid all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises and that it will save and hold Landlord harmless from all loss, cost or
expense based on or arising out of asserted claims or liens against the
leasehold estate or against the interest of Landlord in the Premises or under
this Lease. Tenant shall give Landlord immediate written notice of the placing
of any lien or encumbrance against the Premises and cause such lien or
encumbrance to be discharged within 30 days of Tenant obtaining knowledge from
any source of the filing or recording thereof; provided, however, Tenant may
contest such liens or encumbrances as long as such contest prevents foreclosure
of the lien or encumbrance and Tenant causes such lien or encumbrance to be
bonded or insured over in a manner satisfactory to Landlord within such 20 day
period.

29. Estoppel Certificates. Each party agrees, from time to time, within 10 days
after request of the requesting party, to execute and deliver to the requesting
party, or the requesting party’s designee, any estoppel certificate requested by
the other, stating, if true, that this Lease is in full force and effect, the
date to which rent has been paid, that the requesting party is not in default
hereunder (or specifying in detail the nature of the requesting party’s
default), the termination date of this Lease and such other matters pertaining
to this Lease as may be reasonably requested by the requesting party. Each
party’s obligation to furnish each estoppel certificate in a timely fashion is a
material inducement for each party’s execution of this Lease. No cure or grace
period provided in this Lease shall apply to either party’s obligations to
timely deliver an estoppel certificate.

30. Environmental Requirements. Except for Hazardous Material contained in
products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, and except for propane used in Tenant’s forklifts in the normal
course of its business, and except for Hazardous Materials contained in products
stored and/or distributed during Tenant’s normal course of business in their
original, sealed, and unopened containers, Tenant shall not permit or cause any
party to bring any Hazardous Material upon the Premises or transport, store,
use, generate, manufacture or release any Hazardous Material in or about the
Premises without Landlord’s prior written consent. Tenant, at its sole cost and
expense, shall operate its business in the Premises in strict compliance with
all Environmental Requirements and shall remediate in a manner satisfactory to
Landlord any Hazardous Materials released on or from the Project by Tenant, its
agents, employees, contractors, subtenants or invitees. Tenant shall complete
and certify to disclosure statements as requested by Landlord from time to time
relating to Tenant’s transportation, storage, use, generation, manufacture or
release of Hazardous Materials on the Premises. The term “Environmental
Requirements” means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act; the Resource Conservation and Recovery
Act; and all state and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. The term “Hazardous Materials” means
and includes any substance, material, waste, pollutant, or contaminant listed or
defined as hazardous or toxic, under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). As defined in Environmental Requirements, Tenant is
and shall be deemed to be the “operator” of Tenant’s “facility” and the “owner”
of all Hazardous Materials brought on the Premises by Tenant, its agents,
employees, contractors or invitees, and the wastes, by-products, or residues
generated, resulting, or produced therefrom. No cure or grace period provided in
this Lease shall apply to Tenant’s obligations to comply with the terms and
conditions of this Paragraph 30.

Notwithstanding anything to the contrary in this Paragraph 30, Tenant shall have
no liability of any kind to Landlord as to Hazardous Materials (i) on the
Premises prior to the date that Tenant accesses the Premises under the license
granted in Section 37(q) or (ii) caused or permitted by (1) Landlord, its
agents, employees, contractors or invitees; or (2) any other tenants in the
Project or their agents, employees, contractors, subtenants, assignees or
invitees.

Tenant shall indemnify, defend, and hold Landlord harmless from and against any
and all losses (including, without limitation, diminution in value of the
Premises or the Project and loss of rental income from the Project), claims,
demands, actions, suits, damages (including, without limitation, punitive
damages), expenses (including, without limitation, remediation, removal, repair,
corrective action, or cleanup expenses), and costs (including, without
limitation, actual attorneys’ fees, consultant fees or expert fees and
including, without limitation, removal or management of any asbestos brought
into the property or disturbed in breach of the requirements of this Paragraph
30, regardless of whether such removal or management is required by law) which
are brought or recoverable against, or suffered or incurred by Landlord as a
result of any release of Hazardous Materials for which Tenant is obligated to
remediate as provided above or any other breach of the requirements under this
Paragraph 30 by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, regardless of whether Tenant had knowledge of such
noncompliance. The obligations of Tenant under this Paragraph 30 shall survive
any termination of this Lease.

 

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Landlord shall have access to, and a right to perform inspections and tests of,
the Premises to determine Tenant’s compliance with Environmental Requirements,
its obligations under this Paragraph 30, or the environmental condition of the
Premises. Access shall be granted to Landlord upon Landlord’s prior notice to
Tenant and at such times so as to minimize, so far as may be reasonable under
the circumstances, any disturbance to Tenant’s operations. Such inspections and
tests shall be conducted at Landlord’s expense, unless such inspections or tests
reveal that Tenant has not complied with any Environmental Requirement, in which
case Tenant shall reimburse Landlord for the reasonable cost of such inspection
and tests. Landlord’s receipt of or satisfaction with any environmental
assessment in no way waives any rights that Landlord holds against Tenant.

31. Rules and Regulations. Tenant shall, at all times during the Lease Term and
any extension thereof, comply with all reasonable rules and regulations at any
time or from time to time established by Landlord covering use of the Premises
and the Project. The current Project rules and regulations are attached hereto
as Exhibit E In the event of any conflict between said rules and regulations and
other provisions of this Lease, the other terms and provisions of this Lease
shall control. Landlord shall not have any liability or obligation for the
breach of any rules or regulations by other tenants in the Project.

32. Security Service. Tenant acknowledges and agrees that, while Landlord may
patrol the Project, Landlord is not providing any security services with respect
to the Premises and that Landlord shall not be liable to Tenant for, and Tenant
waives any claim against Landlord with respect to, any loss by theft or any
other damage suffered or incurred by Tenant in connection with any unauthorized
entry into the Premises or any other breach of security with respect to the
Premises.

33. Force Majeure. Except for monetary obligations, neither Landlord nor Tenant
shall be held responsible for delays in the performance of its obligations
hereunder when caused by strikes, lockouts, labor disputes, acts of God,
inability to obtain labor or materials or reasonable substitutes therefor,
governmental restrictions, governmental regulations, governmental controls,
delay in issuance of permits, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable
control of Landlord or Tenant, as the case may be (“Force Majeure”).

34. Entire Agreement. This Lease constitutes the complete agreement of Landlord
and Tenant with respect to the subject matter hereof. No representations,
inducements, promises or agreements, oral or written, have been made by Landlord
or Tenant, or anyone acting on behalf of Landlord or Tenant, which are not
contained herein, and any prior agreements, promises, negotiations, or
representations are superseded by this Lease. This Lease may not be amended
except by an instrument in writing signed by both parties hereto.

35. Severability. If any clause or provision of this Lease is illegal, invalid
or unenforceable under present or future laws, then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby. It is also the intention of the parties to this Lease that in
lieu of each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added, as a part of this Lease, a clause or provision as
similar in terms to such illegal, invalid or unenforceable clause or provision
as may be possible and be legal, valid and enforceable.

36. Brokers. Tenant and Landlord represent and warrant to the other that it has
dealt with no broker, agent or other person in connection with this transaction
and that no broker, agent or other person brought about this transaction, other
than the broker, if any, set forth on the first page of this Lease, and each
party agrees to indemnify and hold the other harmless from and against any
claims by any other broker, agent or other person claiming a commission or other
form of compensation by virtue of having dealt with such party with regard to
this leasing transaction.

37. Miscellaneous. (a) Any payments or charges due from Tenant to Landlord
hereunder shall be considered rent for all purposes of this Lease.

(b) If and when included within the term “Tenant,” as used in this instrument,
there is more than one person, firm or corporation, each shall be jointly and
severally liable for the obligations of Tenant.

(c) All notices required or permitted to be given under this Lease shall be in
writing and shall be sent by registered or certified mail, return receipt
requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to Landlord at 4330 Gaines Ranch Loop,
Suite 100, Austin, Texas 78735, with a copy sent to Landlord at 4545 Airport
Way, Denver, Colorado 80239, Attention: General Counsel, and to Tenant at 460
Ward Drive Santa Barbara California 93111 with a copy sent to Tenant at the
Premises. Either party may by notice given aforesaid change its address for all
subsequent notices or add an additional party to be copied on all subsequent
notices. Except where otherwise expressly provided to the contrary, notice shall
be deemed given upon delivery.

 

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(d) Except as otherwise expressly provided in this Lease or as otherwise
required by law, Landlord retains the absolute right to withhold any consent or
approval.

(e) At Landlord’s request from time to time Tenant shall furnish Landlord with
true and complete copies of its most recent annual and quarterly financial
statements prepared by Tenant or Tenant’s accountants and any other financial
information or summaries that Tenant typically provides to its lenders or
shareholders.

(f) Neither this Lease nor a memorandum of lease shall be filed by or on behalf
of Tenant in any public record. Landlord may prepare and file, and upon request
by Landlord Tenant will execute, a memorandum of lease.

(g) The normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Lease or any exhibits or amendments hereto.

(h) The submission by Landlord to Tenant of this Lease shall have no binding
force or effect, shall not constitute an option for the leasing of the Premises,
nor confer any right or impose any obligations upon either party until execution
of this Lease by both parties.

(i) Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.

(j) Any amount not paid by Tenant within 5 days after its due date in accordance
with the terms of this Lease shall bear interest from such due date until paid
in full at the lesser of the highest rate permitted by applicable law or 15
percent per year. It is expressly the intent of Landlord and Tenant at all times
to comply with applicable law governing the maximum rate or amount of any
interest payable on or in connection with this Lease. If applicable law is ever
judicially interpreted so as to render usurious any interest called for under
this Lease, or contracted for, charged, taken, reserved, or received with
respect to this Lease, then it is Landlord’s and Tenant’s express intent that
all excess amounts theretofore collected by Landlord be credited on the
applicable obligation (or, if the obligation has been or would thereby be paid
in full, refunded to Tenant), and the provisions of this Lease immediately shall
be deemed reformed and the amounts thereafter collectible hereunder reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder.

(k) Construction and interpretation of this Lease shall be governed by the laws
of the state in which the Project is located, excluding any principles of
conflicts of laws.

(l) Time is of the essence as to the performance of Tenant’s and Landlord’s
obligations under this Lease.

(m) All exhibits and addenda attached hereto are hereby incorporated into this
Lease and made a part hereof. In the event of any conflict between such exhibits
or addenda and the terms of this Lease, such exhibits or addenda shall control.

(n) In the event either party hereto initiates litigation to enforce the terms
and provisions of this Lease, the non-prevailing party in such action shall
reimburse the prevailing party for its reasonable attorney’s fees, filing fees,
and court costs.

(o) Tenant agrees and understands that Landlord shall have the right (provided
that the exercise of Landlord’s rights does not adversely affect Tenant’s use
and occupancy of the Premises or subject Tenant to additional costs), without
Tenant’s consent, to place a solar electric generating system on the roof of the
Building or enter into a lease for the roof of the Building whereby such roof
tenant shall have the right to install a solar electric generating system on the
roof of the Building.

(p) This Lease may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of such counterparts shall constitute
one Lease. Execution copies of this Lease may be delivered by facsimile or
email, and the parties hereto agree to accept and be bound by facsimile
signatures or scanned signatures transmitted via email hereto, which signatures
shall be considered as original signatures with the transmitted Lease having the
same binding effect as an original

 

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signature on an original Lease. At the request of either party, any facsimile
document or scanned document transmitted via email is to be re-executed in
original form by the party who executed the original facsimile document or
scanned document. Neither party may raise the use of a facsimile machine or
scanned document or the fact that any signature was transmitted through the use
of a facsimile machine or email as a defense to the enforcement of this Lease.

(q) Tenant is hereby granted a license by Landlord to (1) have access to enter
the Premises prior to the Commencement Date to allow Tenant, at Tenant’s expense
and in its sole discretion, to prepare the Premises for occupancy including, but
not limited to, commencing construction of the Initial Finish-Out and (ii) for
Tenant to store certain of its equipment in the area next to the shipping docks,
subject to applicable ordinances and building codes governing Tenant’s right to
occupy or perform in the Premises, and so long as Tenant has provided Landlord
with the Security Deposit, the first month’s Base Rent, and certificates of
insurance satisfying the insurance requirements of Paragraph 9. During such
early occupancy period prior to the Commencement Date, Tenant shall be bound by
its obligations under the Lease, but shall not be obligated to pay the Monthly
Base Rent or Operating Expenses payable by Tenant to Landlord as set forth in
the Lease. Tenant shall not interfere with the completion of construction or
cause any labor dispute as a result of such installations, and provided further
that Tenant does hereby agree to indemnify, defend, and hold Landlord harmless
from any loss or damage to such property, and all liability, loss, or damage
arising from any injury to the Project or the property of Landlord, its
contractors, subcontractors, or materialmen, and any death or personal injury to
any person or persons arising out of such installations, unless any such loss,
damage, liability, death, or personal injury was caused by Landlord’s
negligence. Delay in putting Tenant in possession of the Premises shall not
serve to extend the term of this Lease or to make Landlord liable for any
damages arising therefrom.

(r) Landlord acknowledges that Tenant is seeking certain economic grants from
the City of Austin and the Texas Enterprise Fund related to its occupation of
the Premises (“Economic Incentives”). In relation thereto, Landlord agrees to
reasonably cooperate, at no out-of-pocket expense to Landlord, with Tenant in
the application and/or processing of such Economic Incentives, and Landlord
hereby acknowledges that all right, title and interest in and to the Economic
Incentives that do not relate to Taxes or Landlord’s Building or Project belong
to Tenant and Landlord waives any and all right, if any, to claim any interest
in and to such Economic Incentives that do not relate to Taxes or Landlord’s
Building or Project at any time, except during an Event of Default.

38. Limitation of Liability of Trustees, Shareholders, and Officers of Landlord.
Any obligation or liability whatsoever of Landlord which may arise at any time
under this Lease or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction, or undertaking contemplated
hereby shall not be personally binding upon, nor shall resort for the
enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort, or otherwise.

39. WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY
OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first above written.

 

TENANT:     LANDLORD: Superconductor Technologies Inc.    

PROLOGIS TEXAS III LLC

a Delaware limited liability company

      By:  

ProLogis Management Incorporated

a Delaware corporation

its Agent

By:  

/s/ R L Johnson

    By:  

/s/ Jeff Folkmann

Name:  

R L Johnson

    Name:  

Jeff Folkmann

Title:  

Senior Vice President, Operations

    Title:  

Vice President

 

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