Document:

leaseagreement4_13.htm

    
 

     

    FOURTH
AMENDMENT TO STANDARD FORM LEASE

     

     

    This
Fourth Amendment to Standard Form Lease (this "Fourth Amendment") is made and
entered into by and between KBS SOUTHPARK
COMMERCE CENTER II, LLC, a Delaware limited liability company
(hereinafter "Landlord"), the
successor-in-interest to Southpark Jack, L.L.C., and ZARLINK SEMICONDUCTOR
(U.S.) INC., a Delaware corporation (hereinafter "Tenant"), effective as of the
date on which Landlord executes this Fourth Amendment, (the "Effective
Date").

     

     

    WIT
N E SSE T H:

     

     

    WHEREAS,
Landlord's predecessor-in-interest and Tenant's predecessor-in-interest
previously entered into that certain Standard Form Lease dated effective as of
September 14, 2000 (the "Original Lease"), as amended by (i) that certain First
Amendment to Lease dated December 19, 2000 (the "First Amendment"), (ii) that
certain Second Amendment to Lease dated effective February 1, 2001 (the "Second
Amendment"), and (iii) that certain Third Amendment to Lease dated July 15, 2003
(the "Third Amendment", and together with the Original Lease, First Amendment
and Second Amendment, collectively hereinafter, the "Lease"), pursuant to which
Landlord is currently leasing to Tenant certain premises known as Suite 200
containing a total of 70,700 square feet of building space (the "Premises")
located in the Southpark Commerce Center, Phase II, Building 2 (the "Building")
located at 4509 Freidrich Lane, Austin, Texas 78744; and

     

     

    WHEREAS,
Landlord and Tenant desire to amend the terms of the Lease to extend the
Term of the Lease and to modify certain terms and provisions of the
Lease.

     

     

    NOW,
THEREFORE, pursuant to the foregoing, and in consideration of the mutual
covenants and agreements contained in the Lease and herein, the Lease, effective
as of the date of this Fourth Amendment, is hereby modified and amended as set
out below:

     

    1. All
capitalized terms used herein shall have the same meaning as defined in the
Lease, unless otherwise defined in this Fourth Amendment.

     

    2. On and
as of the Effective Date, the Term of the Lease is hereby extended for sixty
(60) additional months commencing on June 1, 2008 (the "Extension Term Commencement Date") and
ending on May 31, 2013 (the "Extension
Term").

     

    3.
Throughout the Extension Term, the Monthly Rent for the Premises shall be as
follows:

     

    (a)

    From the
Extension Term Commencement Date (June 1, 2008) through May 31, 2009, the
Monthly Rent shall be $61,862.50 ($10.50 per Premises Square
Footage);

    (b)

    From June
1, 2009 through May 31, 2010, the Monthly Rent shall be $67,754.17 ($11.50 per
Premises Square Footage);

    (c)

    From June
1, 2010 through May 31, 2011, the Monthly Rent shall be $73,645.83
($12.50 per Premises Square Footage);

    (d)

    From June
1, 2011 through May 31, 2012, the Monthly Rent shall be $79,537.50 ($13.50 per
Premises Square Footage); and

    (e)

    From June
1, 2012 through May 31, 2013, the Monthly Rent shall be $85,429.17
($14.50 per Premises Square Footage).

     

    4. During
the Extension Term, the Premises is hereby leased to Tenant, and Tenant agrees
to accept the Premises, in its "AS-IS", "WHERE-IS" and "WITH ALL FAULTS"
condition, and Tenant acknowledges that Landlord shall have no obligation to
refurbish or otherwise improve the Premises throughout the Extension Term;
provided, however, Landlord shall provide Tenant with an allowance of up to
$353,500.00 ($5.00 per Premises Square Footage) for the purpose of constructing
Tenant Improvements in the Premises, all in accordance with the terms and
conditions contained in Exhibit
A. Tenant further acknowledges and agrees that on and as of the Effective
Date, the leasehold improvements set forth and described in Exhibit C and
Exhibit C-l of the Original Lease and Exhibit B of the First Amendment have been
completed and satisfied and that such provisions are hereby deleted in their
entirety and are of no further force and effect.

     

    5. Paragraph
7 and Paragraph 10 of the Third Amendment are hereby deleted in their entirety
and shall be of no further force or effect.

     

    6. Paragraph
7.4 of the Original Lease is hereby amended to provide that, with respect
to the calculation of Real Property Taxes attributable to all periods from
and after January 1,2008, Real Property Taxes shall expressly include any tax,
assessment or similar charge on the rents or profits from the Premises or
Building (including, without limitation, any franchise or margin tax that
Landlord is required to pay under Chapter 171 of the Texas Tax Code or due
to House Bill No.3, 79th Legislative, 3rd Called Session, 2006) levied against
Landlord and/or the Project in lieu of ad valorem taxes on the Project or
otherwise as a result of property tax reform in the State
of Texas.

     

    7. Tenant
shall have one five year option to renew in accordance with the terms and
conditions set forth in Exhibit
B.

     

    8. Notwithstanding
anything contained in the Lease to the contrary, aside from the renewal option
referenced in the immediately preceding paragraph, Tenant has no preferential
rights or options under the Lease, as herein amended, including, without
limitation, any purchase, renewal, expansion, first offer, first refusal, or
termination rights or options.

     

    9. As
of the Effective Date, the Address of Landlord, as set forth in
Paragraph 1.1 of the Original Lease, shall be revised to the
following:

     

     

    KBS
Southpark Commerce Center II, LLC

     c/o
CB Richard Ellis, Inc.

    100
Congress, Suite 500

    Austin,
Texas 78701 

     

     

    With a
copy to:

     

    KBS
Capital Advisors LLC 

    620
Newport Center Drive 

    Suite
1300 

    Newport
Beach, California 92660 

    Attn:
Walter C. Foster, Senior Vice President

     

     

    10. Notwithstanding
anything to the contrary contained in the Lease, as of the Effective Date,
Tenant shall mail all rent payments to the following address:

     

    KBS
Southpark Commerce Center II, LLC 

    P.O. Box
79003 

    City
of Industry, California 91716-9003

     

    11. Landlord
represents and warrants to Tenant, that Landlord has no agreements, oral or
written, to pay any other real estate broker, other than Transwestern
("Broker"), in connection with the negotiation and execution of this Fourth
Amendment. Tenant represents and warrants to Landlord, that Tenant has no
agreements, oral or written, with any other real estate broker regarding the
payment of any commission in connection with the negotiation and execution of
this Fourth Amendment. Tenant agrees to indemnify Landlord and hold Landlord
harmless from and against any and all costs, expenses or liability for
commissions or other compensations or charges claimed by any broker or agent,
including Staubach ("Claimant"), but excluding Broker, with respect to this
Fourth Amendment. Tenant's indemnification is conditioned upon the following:
(i) the Claimant alleges it represented Tenant in the negotiations and execution
of this Fourth Amendment (ii) Landlord promptly notifies Tenant in writing
of such claim; (iii) Landlord will give Tenant control over the defense,
negotiation or settlement of such claim, subject to Landlord's reasonable
approval of counsel; and (iv) Landlord will cooperate with Tenant in the
defense or settlement of such claim.

     

    12. With the
exception of those terms and conditions specifically modified and amended
herein, the herein referenced Lease shall remain in full force and effect in
accordance with all its terms and conditions. In the event of any conflict
between the terms and provisions of this Fourth Amendment and the terms and
provisions of the Lease, the terms and provisions of this Fourth Amendment shall
supersede and control.

     

    13. This
Fourth Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, and all of such counterparts shall constitute one
agreement. To facilitate execution of this Fourth Amendment, the parties may
execute and exchange facsimile counterparts of the signature pages and facsimile
counterparts shall serve as originals.

     

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to
Standard Form Office Lease to be effective as of the day and year as first
above written.

    
 

     

     

    LANDLORD:

     

     

    KBS
SOUTHPARK COMMERCE CENTER II, LLC, a Delaware limited liability
company

     

    By: KBS
Capital Advisors, LLC, a Delaware limited liability company, its
agent

     

     

     

    By:
/s/ Walter C. Foster

    Name:
Walter C. Foster, Senior Vice president

    Date:
March 14, 2008

     

     

    TENANT:

     

    ZARLINK
SEMICONDUCTOR (U.S.) INC., a Delaware corporation

     

     

    By:
/s/ Andre Levasseur

    Name:
Andre Levasseur

    Title:
Corporate Comptroller

    Date:
March 14, 2008

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

     

    EXHIBIT
A

     

     

    WORK
LETTER

     

     

    THIS WORK
LETTER is attached as Exhibit A
to the Fourth Amendment to Standard Form Lease between KBS Southpark Commerce
Center II, LLC, as Landlord, and Zarlink Semiconductor (U.S.) Inc., as Tenant,
and constitutes the further agreement between Landlord and Tenant as
follows:

     

    (a)    Tenant Improvements. Landlord, at
Tenant's sole cost and expense, agrees to furnish or perform those items of
construction and those improvements (the "Tenant Improvements") specified in the
Final Plans to be agreed to by Landlord and Tenant as set forth in Paragraph (b)
below; provided, however, Landlord shall pay for the cost of such Tenant
Improvements up to the extent of Landlord's Construction Allowance as set
forth in Paragraph (e) below.

     

    (b)    Space Planner. Landlord has retained a
space planner (the "Space
Planner") to prepare certain plans, drawings and specifications (the
"Temporary Plans") for the
construction of the Tenant Improvements to be installed in the Premises by a
general contractor selected by Landlord pursuant to this Work Letter. Tenant
shall deliver to Space Planner within thirty (30) days after the execution
of this Fourth Amendment all necessary information required by the Space
Planner to complete the Temporary Plans. Tenant shall have fifteen (15) days
after its receipt of the proposed Temporary Plans to review the same and notify
Landlord in writing of any comments or required changes, or to otherwise
give its approval or disapproval of such proposed Temporary Plans.
If Tenant fails to give written comments to or approve the Temporary Plans
within such fifteen (15) day period, then Tenant shall be deemed to have
approved the Temporary Plans as submitted. Landlord shall have fifteen (15) days
following its receipt of Tenant's comments and objections to redraw the
proposed Temporary Plans in compliance with Tenant's request and to resubmit the
same for Tenant's final review and approval or comment within fifteen (15) days
of Tenant's receipt of such revised plans. Such process shall be repeated
twice and if at such time final approval by Tenant of the proposed
Temporary Plans has not been obtained, then Landlord shall complete such
Temporary Plans, at Tenant's sole cost and expense, and it shall be deemed that
Tenant has approved the Temporary Plans. Once Tenant has approved or has been
deemed to have approved the Temporary Plans, then the approved (or deemed
approved) Temporary Plans shall be thereafter known as the "Final Plans". The Final Plans shall
include the complete and final layout, plans and specifications for the
Premises showing all doors, light fixtures, electrical outlets, telephone
outlets, wall coverings, plumbing improvements (if any), data systems wiring,
floor coverings, wall coverings, painting, any other improvements to the
Premises beyond the shell and core improvements provided by Landlord and any
demolition of existing improvements in the Premises. The improvements shown
in the Final Plans shall (i) utilize Landlord's building standard materials and
methods of construction, (ii) be compatible with the shell and core improvements
and the design, construction and equipment of the Premises, and (iii)
comply with all applicable laws, rules, regulations, codes and
ordinances.

     

    (c)    Bids. As soon as practicable following
the approval of the Final Plans, Landlord shall (i) obtain a written non-binding
itemized estimate of the costs of all Tenant Improvements shown in the Final
Plans as prepared by a general contractor selected by Landlord, and (ii)
if required by applicable law, codes or ordinances, submit the Final Plans
to the appropriate governmental agency for the issuance of a building permit or
other required governmental approvals prerequisite to commencement of
construction of such Tenant Improvements ("Permits"). Tenant acknowledges that any
cost estimates are prepared by the general contractor and Landlord shall not be
liable to Tenant for any inaccuracy in any such estimate. Within fifteen (15)
days after receipt of the written nonbinding cost estimate prepared by the
general contractor, Tenant shall either (A) give its written approval thereof
and authorization to proceed with construction or (B) immediately request the
Space Planner to modify or revise the Plans in any manner desired by Tenant to
decrease the cost of the Tenant Improvements. If Tenant is silent during
such fifteen (15) day period, then Tenant shall be deemed to have approved such
non-binding cost estimate as set forth in Clause (A) above. If the Final
Plans are revised pursuant to Clause (B) above, then Landlord shall request that
the general contractor provide a revised cost estimate to Tenant based upon the
revisions to the Final Plans. Such modifications and revisions shall be subject
to Landlord's reasonable approval and shall be in accordance with the standards
set forth in Paragraph (b) of this Work Letter. Within fifteen (15)
business days after receipt of the general contractor's original written
cost estimate and the description, if any, of any Tenant Delay, Tenant
shall give its final approval of the Final Plans to Landlord which shall
constitute authorization to commence the construction of the Tenant Improvements
in accordance with the Final Plans, as modified or revised. Tenant shall signify
its final approval by signing a copy of each sheet or page of the Final Plans
and delivering such signed copy to Landlord.

     

    (d)    Construction. Landlord shall commence
construction of the Tenant Improvements within ten (10) days following the later
of (i) the approval of the Final Plans, or (ii) Landlord's receipt of
any necessary Permits. Landlord shall diligently pursue completion
of construction of the Tenant Improvements and use its commercially
reasonable efforts to complete construction of the Tenant Improvements as soon
as reasonably practicable. Notwithstanding anything in this Fourth Amendment to
the contrary, Landlord's Construction Allowance shall be used only for the
construction of the Tenant Improvements, and if construction of the Tenant
Improvements is not completed within six (6) months following the Effective Date
of this Fourth Amendment ("Construction Termination Date"), then
Landlord's obligation to provide the Landlord's Construction Allowance shall
terminate and become null and void, and Tenant shall be deemed to have waived
its rights in and to said Landlord's Construction Allowance.

     

    (e)    Landlord's Construction Allowance.
Subject to the terms and provisions of this Work Letter, Landlord shall pay the
cost of the Tenant Improvements ("Work") up to the amount
of $353,500.00 ("Landlord's
Construction Allowance"). If the amount of the lowest qualified
bid to perform the Work exceeds the Landlord's Construction Allowance, Tenant
shall bear the cost of such excess and shall pay the estimated cost
of such excess to Landlord prior to commencement of construction
of such Tenant Improvements and a final adjusting payment based upon the
actual costs of the Tenant Improvements shall be made when the Tenant
Improvements are completed. If the cost of the Work is less than such
amount, then upon written request from Tenant, Landlord shall provide Tenant
with a credit towards the next payment(s) of Monthly Rent equal to
fifty percent (50%) of the difference between the actual cost
of the Work and Landlord's Construction Allowance; provided, however, in
the event Tenant fails to make such request within thirty (30) days after the
Substantial Completion, then Tenant's right to such credit shall be waived. All
remaining amounts due to Landlord shall be paid upon the earlier of
Substantial Completion of the Tenant Improvements or presentation of a
written statement of the sums due, which statement may be an estimate of
the cost of any component of the Work. The cost of the permits,
working drawings, hard construction costs, mechanical and electrical planning,
fees, permits, general contract overhead, and a coordination fee payable to
Landlord equal to five percent (5%) of the actual costs of construction and such
costs or permits, fees, planning and contractor overhead shall be payable out of
the Landlord's Construction Allowance and shall be included in the cost of the
Work. The cost of the Work shall not include any other fees payable to
Landlord.

     

    (f)    Change Order. If Tenant shall
desire any changes to the Final Plans, Tenant shall so advise Landlord in
writing and Landlord shall determine whether such changes can be made in a
reasonable and feasible manner. Any and all costs of reviewing any
requested changes, and any and all costs of making any changes to the Tenant
Improvements which Tenant may request and which Landlord may agree to shall be
at Tenant's sole cost and expense and shall be paid to Landlord upon demand and
before execution of the change order. In no event shall Landlord be obligated to
perform any Tenant Improvements which would extend the construction period past
the Construction Termination Date, unless such extension was mutually agreed to
in writing by Landlord and Tenant prior to the commencement of said
construction. If Landlord approves Tenant's requested change, addition, or
alteration, the Space Planner, at Tenant's sole cost and expense, shall complete
all working drawings necessary to show the change, addition or alteration being
requested by Tenant.

     

    (g)    Substantial Completion. "Substantial
Completion" of construction of the Tenant Improvements shall be defined as the
date upon which the Space Planner or other consultant engaged by Landlord
determines that the Tenant Improvements have been substantially completed in
accordance with the Final Plans except for Punch List items (defined below),
unless the completion of such improvements was delayed due to any Tenant
Delay (defined below), in which case the date of Substantial Completion shall be
the date such improvements would have been completed, but for the Tenant Delays.
The term "Punch List" items shall mean items that constitute minor defects or
adjustments which can be completed after occupancy without causing any material
interference with Tenant's use of the Premises. After the completion of the
Tenant Improvements, Tenant shall, upon demand, execute and deliver to Landlord
a letter of acceptance of improvements performed on the Premises. The term
"Tenant Delay" shall include, without limitation, any delay in the completion of
construction of Tenant Improvements resulting from (i) Tenant's failure to
comply with the provisions of this Work Letter, (ii) any additional time as
reasonably determined by Landlord required for ordering, receiving, fabricating
and/or installing items or materials or other components of the construction of
Tenant Improvements, including, without limitation, mill work, (iii) delay in
work caused by submission by Tenant of a request for any change order (defined
below) following Tenant's approval of the Final Plans, or for the
implementation of any change order, or (iv) any delay by Tenant in timely
submitting comments or approvals to the Temporary Plans or Final Plans. The
failure of Tenant to take possession of or to occupy the Premises shall not
serve to relieve Tenant of obligations arising on the Extension Term
Commencement Date or delay the payment of Rent by Tenant.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

     

     

    EXHIBIT B

     

     

    ONE
RENEWAL OPTION AT MARKET

     

    (a)    Provided
that as of the time of the giving of the Second Extension Notice
and the Commencement Date of the Second Extension 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 exists or would exist but for the passage of time
or the giving of notice, or both; then Tenant shall have the right to
extend the Lease Term for an additional term of five (5) years (such additional
term is hereinafter called the "Second
Extension Term") commencing on the day following the expiration
of the Extension Term (hereinafter referred to as the "Commencement Date of the Second
Extension Term"). Tenant shall give Landlord written notice (hereinafter
called the "Second Extension
Notice") of its election to extend the term of the Lease Term at least
six (6) months, but not more than nine (9) months, prior to the scheduled
expiration date of the Extension Term.

     

    (b)    The
Monthly Rent payable by Tenant to Landlord for the first year of the Second
Extension Term ("Initial Monthly
Rent") and for subsequent years during the Second Extension Term ("Subsequent Years Monthly Rent") (such
rent to increase over the term of the Second Extension Term) shall be the then
Fair Market Rent as defined in Paragraphs (c) and (d) below. Within fifteen (15)
days following Tenant's delivery of the Second Extension Notice to Landlord,
Landlord shall deliver to Tenant in writing Landlord's opinion as to the Fair
Market Rent, the Initial Monthly Rent and the Subsequent Years Monthly Rent for
the Premises for the Second Extension Term ("Landlord's Offer") and Tenant shall
have fifteen (15) days following receipt of Landlord's Offer to either
accept or reject such offer ("Fifteen
Day Period"). If Tenant accepts Landlord's Offer, then Tenant shall
notify Landlord in writing of such the parties shall promptly execute an
amendment to Lease evidencing the Fair Market Rent, the Initial Monthly Rent,
and the Subsequent Years Monthly Rent for the Second Extension Term and any
other material terms relating to such Second Extension Term. If Tenant rejects
the Landlord's Offer and Tenant is not able to obtain Landlord's consent on an
alternative determination of Fair Market Rent, the Initial Monthly Rent and the
Subsequent Years Monthly Rent for the Premises for the Second Extension Term
within the Fifteen Day Period, then the parties shall promptly commence the
selection of a Representative as set forth in Paragraph (d) below.

     

    (c)    The term
"Fair Market Rent" shall mean the Initial Monthly Rent and the Subsequent Years
Monthly Rent, expressed as an annual rent per Premises Square Feet, which
Landlord would have received from leasing the Premises for the Second Extension
Term to any person or entity unaffiliated with Tenant, assuming that such space
were to be delivered in its "as-is" condition, and taking into account the
prevailing market rate for comparable space in the Building and comparable
buildings in the vicinity of the Building (as evidenced by recent lease
transactions in the past six ( 6) months), taking into account the size of the
Lease, the length of the renewal term, annual market base rent escalations and
the credit of Tenant. The Fair Market Rent, the Initial Monthly Rent and the
Subsequent Years Monthly Rent shall not be reduced by reason of any costs
or expenses saved by Landlord by reason of Landlord not having to find a new
tenant for such premises (including, without limitation, brokerage commissions,
costs of improvements, rent concessions or lost rental income during any vacancy
period). The determination of Fair Market Rent as described below shall not
affect or otherwise reduce or modify the Tenant's obligation to pay or
reimburse Landlord for Operating Expenses and other reimbursable items during
the Second Extension Term.

     

    (d)    If,
Landlord and Tenant do not reach an agreement during the Fifteen Day Period on
the Initial Monthly Rent and the Subsequent Years Monthly Rent for the Premises
during the Second Extension Term, then Landlord and Tenant shall each, within
ten (10) days following the Fifteen Day Period, appoint an independent third
party representative who shall (i) be a real estate broker or sales person
licensed in the State of Texas, and (ii) have at least ten (10) years
experience in the leasing of commercial office space (including at least
two (2) years experience in the Austin, Texas metropolitan area), with each such
independent third party representative being herein referred to as a "Representative." In the event either
party fails to appoint a Representative within the ten (10) day period provided
above, then the one appointed Representative shall determine the Initial Monthly
Rent and the Subsequent Years Monthly Rent for the Premises during the Second
Extension Term. The appointed Representatives shall, within thirty (30) days
after their appointment, each advise Landlord and Tenant in writing as to their
determination of the Initial Monthly Rent, and the Subsequent Years Monthly Rent
for the Premises during the Second Extension Term. In the event the lower
of the two (2) determinations of the Initial Monthly Rent and the
Subsequent Years Monthly Rent established by the Representatives is equal to or
less than five percent (5%) lower than the determination of the Initial Monthly
Rent, and the Subsequent Years Monthly Rent established by the other
Representative, the two (2) determinations of the Initial Monthly Rent and the
Subsequent Years Monthly Rent shall be averaged, and the average of such two (2)
determinations shall constitute the Initial Monthly Rent and the Subsequent
Years Monthly Rent for the Premises during the Second Extension Term. In the
event the lower of the two (2) determinations of the Initial Monthly
Rent and the Subsequent Years Monthly Rent established by the Representatives is
more than five percent (5%) lower than the determination of the Initial
Monthly Rent and the Subsequent Years Monthly Rent established by the other
Representative, the appointed Representatives shall, within fifteen (15) days,
mutually select an independent third party real estate appraiser who (i) has at
least ten (10) years of experience in commercial real estate appraisal and
valuation in the Austin, Texas metropolitan area, and (ii) is a member of the
Appraisal Institute and is in good standing in the State of Texas as a
licensed real estate appraiser (with such third party appraiser being
hereinafter referred to as the "Appraiser"). If the
Representatives are unable to agree, in writing and within said fifteen (15) day
period, on an Appraiser, the Appraiser shall be selected by the Austin Chapter
of the Appraisal Institute, or if such organization no longer exists, its
successor organization. Within thirty (30) days after the selection of the
Appraiser, the Appraiser shall make a determination as to the Initial Monthly
Rent and the Subsequent Years Monthly Rent (which determination of the Initial
Monthly Rent and the Subsequent Years Monthly Rent shall neither be lower than
the lowest of the two (2) determinations of the Initial Monthly Rent and the
Subsequent Years Monthly Rent established by the Representatives, nor higher
than the highest of the two (2) determinations of the Initial Monthly Rent
and the Subsequent Years Monthly Rent established by the Representatives), and
such determination of the Initial Monthly Rent and the Subsequent Years Monthly
Rent shall constitute the Initial Monthly Rent and the Subsequent Years Monthly
Rent for the Premises during the Second Extension Term. Landlord and Tenant
shall each pay all costs and expenses associated with the Representative each
selected and one-half (1/2) of any costs and expenses associated with the
Appraiser.

     

    (e)    Notwithstanding
anything herein to the contrary, the rent determination procedure in this
Exhibit B must be completed at least three (3) months prior to the commencement
of the Second Extension Term.

     

    (f)    Except
for the Initial Monthly Rent, and the Subsequent Years Monthly Rent as
determined above, Tenant's occupancy of the Premises during the Second
Extension Term shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the Extension Term.

     

    (g)    If Tenant
does not give the Second Extension Notice within the period set forth in
Paragraph (a) above, Tenant's right to extend the Lease Term shall automatically
terminate. Time is of the essence as to the giving of the Second
Extension Notice.

     

    (h)    If the
Lease is extended for the Second Extension Term, then Landlord shall prepare and
Tenant shall execute an amendment to the Lease confirming the extension
of the Lease Term and the Initial Monthly Rent, and the Subsequent Years
Monthly Rent as determined above.

     

    (i)    If Tenant
exercises its right to extend the term of the Lease for the Second Extension
Term pursuant to this Exhibit B, the term "Lease Term" as used in the Lease,
shall be construed to include, when practicable, the Second Extension
Term.executiveemployment4_14.htm

     

    August 1,
2007

     

     

    Gary
Tanner

    4509
Freidrich Lane

    Building
2 Suite 200

    Austin,
Texas 78744-1857

    
 

     

     

    Dear
Gary:

     

     

    I am
pleased to offer you employment with Zarlink Semiconductor LE Inc. ("Zarlink" or
"Company") on the following terms and conditions. This offer and its acceptance
are conditional upon Zarlink Semiconductor Inc. completing the acquisition
of Legerity Holdings, Inc.

     

    All
amounts are in United States dollars.

     

    Zarlink
is an "at will" employer and your employment with Zarlink is an at-will
relationship, subject to any payments or other consideration due to you in the
event of your termination without Cause. This means that either Zarlink or you
may terminate the employment relationship at any time for any reason, with or
without cause or advance notice. You acknowledge and agree that this Agreement
does not create an express or implied contract for a term of employment and that
no specific duration of employment is guaranteed.

     

    1. Work
Responsibilities

     

    You will
be employed in the position of Sr. Vice President, WW Operations, reporting to
Kirk Mandy, Company CEO and will be based in the Company's Austin, Texas
offices. Your start date will be immediately following the close of the Legerity
acquisition.

     

    In this
position, you will devote your best efforts, and your full working time, skill
and attention, to carrying out your duties and to promoting the interests of the
Company. You will be expected to perform all services and duties customarily
associated with your position, together with such additional duties and
responsibilities as assigned from time to time.

     

    2. Salary and
Incentives

     

    Your
annual base salary will be $255,672

     

    In
addition, you will be eligible to participate in the Zarlink Bonus Plan at 50%
of base salary. Details of the plan will be communicated to
you.

     

    In order
to provide you with an incentive to remain in the employ of the Company, you
will be entitled to receive a retention bonus equal to $256,000. The retention
bonus, less applicable statutory deductions and withholdings, will be payable as
follows: 50% of the bonus after the completion of one (1) year of employment and
the remaining 50% after the completion of two (2) years of employment; provided,
however, if your employment is terminated by the Company without Cause, you will
be entitled to receive 100% of the retention bonus or any unpaid portion thereof
upon termination. The retention bonus payments will be made within 30 days of
each respective anniversary date of employment, or in the case of termination
without Cause, of the Termination Date.

     

    3. Signing
Bonus

     

    The
Company agrees to pay you a signing bonus in an amount equal to $59,500 within
30 days following the closing of the Legerity acquisition. This amount will be
repayable by you in full to the Company if you voluntarily leave your employment
with the Company before 6 months after the closing of the Legerity
acquisition.

     

    4. Stock
Options

     

    We are
pleased to offer you 250,000 Zarlink stock options. These options will be
granted by the Company's Board of Directors within 20 days following your start
date with the Company. The formula for pricing options will be the US dollar
exchange equivalent to the Canadian dollar price determined by the greater of
the average of the closing sales price on the TSX (Toronto Stock Exchange) for
the five (5) day trading period immediately preceding the date of the grant or
the closing price on the date of the grant.

     

    5. Health, Dental and Related
Benefits

     

    Zarlink
will initially maintain Legerity's current comprehensive group employee benefits
plan. Your eligibility for coverage and for benefits will be determined in
accordance with the specific terms and conditions of the plan. We reserve the
right to terminate or amend any of these plans from time to time.

     

    6. Pension

     

    You will
be entitled to participate in the Zarlink U.S. employee 401K Plan. Zarlink will
provide an annual company match payment in accordance with the terms of the
Plan. We reserve the right to terminate or amend this Plan at any
time.

     

    7. Vacation

     

    Zarlink
will provide you four (4) weeks paid vacation leave per fiscal year, accrued in
equal biweekly installments. In accordance with Zarlink's U.S. Vacation Policy,
vacation accrual will cease at anytime during the year that your accrual reaches
160 hours. The accrual will re-start once that total comes back down below 160
hours. You will be offered a reasonable time to reduce your current vacation
accrual to the 160 hour cap, if applicable. In addition Zarlink will provide
paid U.S. statutory holidays in accordance with company policy from time to time
and any other leave you are legally entitled to receive, all in accordance with
U.S. employment standards legislation and Zarlink's policies.

     

    8. Expenses

     

    The
Company will pay or reimburse you for all reasonable and necessary
out-of-pocket expenses actually incurred by you in the performance of your
services under this Agreement, provided you provide proper records and/or
receipts for such expenses and otherwise properly account for such expenses in
accordance with the Company's policy as presently in effect and amended from
time to time.

     

    9. D&O Insurance
Coverage

     

    You will
be entitled to director and officer insurance coverage for your acts and
omissions while employed as an officer of the Company on a basis no less
favorable to you than the coverage provided to all other similarly situated
officers.

     

    10. Confidentiality of
Information and Ownership of Proprietary Property

     

    The
Company agrees to and will impart to you and provide you with access to its
Confidential Information. "Confidential Information"
means all information and compilations of information of any kind, type
or nature (tangible and intangible, written or oral, and including information
contained, stored, or transmitted through any electronic medium), whether owned
by the Company or licensed from third parties, which, at any time during your
employment, is devised, developed, designed or discovered or otherwise acquired
or learned by you to the extent it relates to the Company, including without
limitation, products and services, including without limitation, plans,
procedures, formulae, processes, pricing, and costs; customers, including
without limitation, lists, contact information, pricing, preferences, and other
non-public information concerning customers; sources of supply and vendors;
good-will; marketing plans, strategies, and budget; management and employees,
including without limitation, compensation, personal data, contact information,
and other non-public information concerning employees; technology, technical
data, research, manuals, drawings, designs, and documentation; financial
condition, including without limitation, product or service fees, sales
information, volume, pricing, costs, properties, assets, analysis, and reports
and the information contained therein; accounting and business methods and
plans; business development, including without limitation, plans, prospects,
strategies, fees, costs, pricing, and new ideas and developments; inventions
made, developed or conceived by the Company and/or its subsidiaries and
affiliates; trade secrets; and computer software, specifications, source code,
and executable code.

     

    You
acknowledge and agree that the Confidential Information is valuable and is a
unique asset that provides the Company an advantage over competitors; is
developed or acquired by the Company at considerable time and expense, and is
proprietary to the Company and is intended to be used solely for the benefit of
the Company. You acknowledge and agree that, but for your agreement to the terms
and conditions of this Agreement, the Company would not impart or provide access
to such Confidential Information.

     

    As a
condition of your acceptance of this offer, you are required to provide Zarlink
with an executed original of the enclosed Intellectual Property Rights &
Non-Solicitation Agreement. Please note the ongoing nature of the obligations
set out in the Agreement. The terms of this Agreement form part of the terms and
conditions of this employment agreement. In addition, you will be required to
sign Zarlink's "Code of Ethics and Business Conduct" as a condition of
employment. This will be provided to you on your start date.

     

    11. Notification of Materials or
Documents from Other Employers

     

    You
warrant that you will not bring to Zarlink or use in the performance of your
responsibilities at Zarlink any information, materials or documents of a former
employer that are not generally available to the public, unless you obtained
express written authorization from the former employer for their possession and
use, and disclosed such circumstances to Zarlink.

     

    12. Notification of Other
Post-Employment Obligations

     

    As part
of your employment with Zarlink, you are not to breach any obligation of
confidentiality that you have to former employers (other than Legerity), and you
agree to honor all such obligations to former employers during your employment
with Zarlink. You warrant that you are not subject to an employment agreement or
restrictive covenant preventing full performance of your duties under this
Agreement.

     

    13. Director, CEO and Executive
Stock Ownership

     

    As an
executive of Zarlink reporting directly to the CEO, you will be required to
establish and hold specified stock ownership levels in the Company within
defined periods of time in accordance with the terms and conditions as set out
in the Directors, CEO and Executive Stock Ownership Policy (policy available at
www.Zarlink.com).

     

    14. Cessation of
Employment

     

    a.
Definitions

     

    For the
purposes of this employment agreement, the following definitions
apply:

     

    "Cause"
means (i) your commission of any act of dishonesty, fraud, misrepresentation,
misappropriation, embezzlement or the like, which was intended to result in
substantial gain or personal enrichment for you at the expense of the Company;
(ii) your unauthorized use or intentional disclosure of any confidential
information or trade secrets of the Company (not including inadvertent or
non-injurious disclosures), including your breach of that certain Intellectual
Property Rights & Non-Solicitation Agreement entered into in connection
herewith; (iii) any willful or intentional violation by you of a law or
regulation applicable to the Company's business, which violation, in the
reasonable discretion of the Board, is or is reasonably likely to be injurious
to the Company; (iv) your commission of (a) a felony or (b) any other crime
which involves moral turpitude or which would seriously damage the reputation of
the Company; (v) gross negligence or willful misconduct in the performance of
your duties after written notice from the Company identifying the misconduct,
and if reasonably capable of being cured, a reasonable cure period of not less
than thirty (30) days; or (vi) your willful or intentional violation of a
material Company policy or procedure that is injurious to the
Company.

     

    "Incapacity" means any
permanent physical or mental incapacity, disability or condition which prevents
you from performing the essential duties of your position, even with reasonable
accommodation, for a period of not less than 90 consecutive days and with no
reasonable prospect of recovery, as determined in good faith by Zarlink on the
basis of medical evidence satisfactory to the Board.

     

    "Termination
Date" means:

     

    (i)    if
Zarlink terminates your employment, the date designated by the Company as the
last day of your employment (without reference to any applicable notice period
to which you may be entitled, whether under statute, common law, contract, or
otherwise) ;

     

    (ii)    if you
resign your employment with Zarlink, the date which is the end of the
three-month notice period or such shorter notice period as the parties
agree;

     

    (iii)   if you
die, the date of death;

     

    (iv)   in the
event of Incapacity, the date designated by Zarlink as the last day of your
employment after determination that such Incapacity exists.

     

    b. Notice of
Resignation

     

    You may
resign at any time, for any reason, upon giving a minimum of three month advance
written notice or such shorter notice period as the parties agree. Zarlink
reserves the right to accelerate the Termination Date.

     

    c. Entitlements upon
Resignation, Termination for Cause

     

    If you
resign or your employment is terminated for Cause, then you will be entitled to
receive any compensation, benefits and perquisites which have accrued up to the
Termination Date. Your rights respecting any options, which have been granted to
you, will be determined in accordance with the terms of the Zarlink 1991
Stock Option Plan, as it may be amended from time to time.

     

    d. Entitlements upon Death,
Incapacity

     

    If you
die, or determined to suffer an Incapacity, then you (or your estate, in the
event of your death) will be entitled to receive any compensation, benefits and
perquisites which have accrued up to the Termination Date. Your rights
respecting any options, which have been granted to you, will be determined in
accordance with the terms of the Zarlink 1991 Stock Option Plan, as it may be
amended from time to time.

     

    e. Entitlements upon
Termination without Cause

     

    If your
employment is terminated without Cause you will be provided with the following
termination package (which is inclusive of any statutory entitlements you may
have under applicable employment standards legislation, and will be provided net
of required deductions):

     

    (i)    You will
be paid for all time worked and your accrued vacation balance through the
Termination Date. This payment will be made on the Termination Date.

     

    (ii)    You will
be paid in a lump sum an amount equal to twelve (12) months of your then current
annual base salary net of required tax and other withholdings. This payment will
be made within 30 days following the Termination Date.

     

    (iii)    You will
be paid in a lump sum an amount in lieu of bonus equal to one times your
target annual bonus. This payment will be made within 30 days following the
Termination Date.

     

    (iv)    You will
be paid a gross mount in cash, less statutory deductions, sufficient to pay for
twelve (12) months of insurance premiums, such as COBRA premiums, in order to
obtain, if you are eligible, life, health and dental insurance coverage at
the same or similar premium basis and level that was available to you at the
time of your termination. You will need to contact our insurance carrier
(currently Unum) for conversion or portability of your life insurance
policy.

     

    (v)    You will
have ninety (90) days following the Termination Date (or until the natural
expiry date of your stock options, whichever is earlier), to exercise any stock
options which have been granted to you under the Zarlink 1991 Stock Option Plan,
as it may be amended from time to time, and which have vested as of the last day
of that three (30) month period. In all other respects, your rights respecting
any options, which have been granted to you, will be determined in accordance
with the terms of the Zarlink 1991 Stock Option Plan, as it may be amended from
time to time.

     

    (vi)    All other
perquisites, if any, will cease 30 days following the Termination
Date.

     

    f. Resignation of
Office

     

    If your
employment ends for any reason, you agree to resign in writing effective upon
the Termination Date from any office or directorship held with Zarlink or with
any subsidiary or affiliated company.

     

    15. Non-Competition and
Non-Solicitation Obligations

     

    You
acknowledge and agree that your training, work and experience with the Company
will enhance your value to competitors, and that the nature of the Confidential
Information will make it difficult, if not impossible for you to work in any
business that competes directly with the principal business of the Company
without disclosing or utilizing the Confidential Information to which you have
access during the course of your employment. You further acknowledge and agree
that the Company's agreement to impart to and to provide you with access to its
Confidential Information is ancillary to and contingent upon your agreement that
you will not, for a period of twelve (12) months immediately following the
Termination Date:

     

    a.    participate
(as an employee or consultant, executive, director or significant investor
(greater than 20%) in any business operating anywhere in the world that competes
directly with the principal businesses of Zarlink (or its
successors);

     

    b.    directly
or indirectly solicit any of Zarlink's customers for business in competition
with Zarlink (or its successors); and,

     

    c.    solicit,
entice, approach or induce any of Zarlink's employees or consultants to leave
their employment or to end their consultancy arrangements with Zarlink (or its
successors) or to join another business or organization.

     

    16. Notices

     

    All
notices, requests, and other communications hereunder must be in writing and
will be deemed to have been duly given only if (i) delivered personally to a
person authorized to accept, (ii) delivered by facsimile transmission with
transmission confirmation, (iii) mailed (by U.S. certified or registered mail,
return receipt requested), or (iv) delivered by overnight courier at the
following addresses and facsimile numbers:

     

    To the
Company:

     

    Zarlink
Semiconductor Inc. 

    400 March
Road 

    Ottawa,
Ontario, Canada K2K 3H4 

    Facsimile:
613 270-7403 

    Attn: Don
McIntyre

     

     

    To the
Employee:

     

    Gary
Tanner

    
      4509
Freidrich Lane

      Building
2 Suite 200

      Austin,
Texas 78744-1857

    

     

    All such
notices, requests, and other written communications will (i) if delivered
personally or by overnight carrier to the address as provided herein, be deemed
given upon delivery and (ii) if delivered by facsimile transmission or by U.S.
mail in the manner and to the address as provided herein, be deemed given three
(3) days after the date of the facsimile transmission verification or after
deposit in the U.S. mail. Any party from time to time may change its address,
facsimile number, or other information for the purpose of notices to that party
by giving written notice specifying such change to the other parties
hereto.

     

    17. Choice of Law and
Jurisdiction

     

    This
employment agreement will be governed by and construed in accordance with the
laws of the State of Texas, U.S.A., without regard to the principles of
conflicts of law, and will in all respects be treated as a Texas contract. In
the event of a dispute, you agree that any legal proceedings must be brought in
the state or federal courts in the County of Travis in the State of Texas, and
you hereby submit to personal jurisdiction in such courts in connection with any
such dispute.

     

    18. Whole
Agreement

     

    By
accepting this offer of employment, you are agreeing that the terms and
conditions set out in this offer (including the terms and conditions of any
documents enclosed) represent the entire agreement relating to your employment
with the Company; that any and all previous agreements or representations,
written or oral, are hereby terminated and cancelled; and that you hereby
release Zarlink from any and all claims whatsoever under or in respect of any
such previous agreements or representations. If any provision of this Agreement
is held to be unenforceable in whole or in part, the remaining provisions shall
remain in full force and effect, and such unenforceable provision shall be
deemed to be automatically amended and replaced by a legal, valid and
enforceable provision which accomplishes as far as possible the purposes and
intent of such original provision.

     

    We trust
that you will find this offer of employment responsive to your needs. To signify
your acceptance, please sign below, and return one complete signed original of
this offer and of the enclosed Agreement to the attention of Don McIntyre, no
later than 10 days before the closing of the Legerity acquisition.

     

    All of us
at Zarlink look forward to working with you.

     

     

    Zarlink
Semiconductor Inc.

     

     

     

    /s/
Don McIntyre

     

    Per:
Don
McIntyre

    Sr. VP
General Counsel and Secretary

     

     

    

     

     

    Acknowledgement
and Acceptance

     

     

    I, Gary
Tanner, have read and reviewed, in their entirety, this offer of employment
dated August 1, 2007 and the documents enclosed. I have had an opportunity to
ensure that I clearly understand the terms and conditions of my employment with
Zarlink, and I have had the opportunity to confer with an independent legal
advisor if I so wished, in advance of accepting this offer of employment. I
hereby represent and confirm to Zarlink that, assuming the closing of the
acquisition of Legerity by Zarlink, I am not under any contractual or other
legal obligation (other than my obligations to Legerity), which prevents me from
accepting this conditional offer of employment or from abiding by the terms and
conditions of my employment with Zarlink. I accept this conditional offer of
employment, to be effective as of and conditioned on the closing of the
acquisition of Legerity by Zarlink, and agree to the terms and conditions
as set out.

     

     

    DATED
AT  Austin, Texas this 2nd day of
August, 2007

     

     

     

    /s/ Gary
Tanner

     

     

    Gary
Tanner

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ZARLINK
SEMICONDUCTOR INTELLECTUAL PROPERTY RIGHTS & NON-SOLICITATION
AGREEMENT

     

     

    In
consideration of my employment with Zarlink Semiconductor (U.S.) Inc., Zarlink
Semiconductor V. N. Inc. or Zarlink Semiconductor LE Inc (hereinafter referred
to as "Zarlink Semi"), the salary or wages paid to me in connection with such
employment and other good and valuable consideration, the sufficiency of which
is hereby acknowledged, I agree as follows:

     

     

    
      	
              1.  

            	
              Ownership of Inventions.
      Every invention, discovery, art, device, design, apparatus, machine,
      practice, process, method, manufacture or composition of matter and any
      improvement thereof (each of which is hereinafter called an "invention")
      whether patentable or not, made, developed, perfected, devised, conceived,
      or first reduced to practice by me, either solely or in collaboration with
      others, during the period of my employment with Zarlink Semi, whether or
      not during regular working hours, relating in any way to the existing or
      anticipated business, products, developments, services, manufacture or
      activities of Zarlink Semi shall be the sole and exclusive property of
      Zarlink Semi. I will hold each and every invention in a fiduciary capacity
      for the benefit of Zarlink Semi and shall promptly disclose in writing
      full information concerning each and every such invention to the Zarlink
      Semi Legal Department or to any person specifically designated by Zarlink
      Semi.

            

    

     

     

    
      	
              2.  

            	
              Agreement to Assist. I
      will, during and after the period of my employment with Zarlink Semi,
      without charge to Zarlink Semi, but at its request and expense, assist
      Zarlink Semi and its nominees in every proper way to obtain and vest in it
      or them title to patents on such inventions in all countries by executing
      all necessary or desirable documents, including applications for patents
      and assignments thereof, I will also cooperate with Zarlink Semi and its
      nominees in the prosecution or defense of any patent claims, lawsuits or
      other proceedings arising from such inventions, without charge to Zarlink
      Semi, but at its expense and
request.

            

    

     

     

    
      	
              3.  

            	
              Records. I will keep and
      maintain adequate and current records of all such inventions and agree
      that these records shall be and remain the property of and available to
      Zarlink Semi at all times. I agree that on leaving the employ of Zarlink
      Semi, I will promptly hand over to Zarlink Semi's designated
      representative all such records in the form of notes, sketches, drawings,
      copy drawings, tables, notices, correspondence, engineering books provided
      by Zarlink Semi and other written, printed or photographed matter in my
      possession, power or control relating to such inventions and will not
      retain any such document or
writing.

            

    

     

     

    
      	
              4.  

            	
              Confidentiality/Non-Solicitation/Non-Recruitment.
      I recognize that during the period of my employment with Zarlink Semi, I
      will receive, develop or otherwise acquire information proprietary and/or
      confidential to Zarlink Semi, its other affiliates and associated
      companies or information in respect of which any of said companies owe an
      obligation of confidence. I will not directly or indirectly publish or
      disclose to any third-party or use at any time during (except within the
      scope of my employment) or subsequent to my employment, any information
      relating to inventions, products, trade secrets, source code, product
      specifications, processes, procedures, machinery, apparatus, manufacturing
      affairs, business affairs, future plans, marketing plans, ideas, technical
      data, customer lists or other information which is of a secret or
      confidential nature (whether or not obtained, acquired, or developed by
      me) without first obtaining the prior written authorization of Zarlink
      Semi for such publication, disclosure, or use. Likewise, I agree not to
      solicit Zarlink Semi's customers or accept business from them in regards
      to any products which compete with those marketed and sold by Zarlink Semi
      (during and after termination of my employment with Zarlink Semi), for a
      period of one (I) year after my employment with Zarlink Semi ends. I also
      agree for a period of one (I) year after my employment with Zarlink Semi
      ends, not to directly or indirectly solicit or recruit Zarlink Semi's
      employees to resign from Zarlink Semi in order to join a company or
      enterprise witl1 which I am directly or indirectly associated. During the
      term of my employment with Zarlink Semi, I will not engage in any business
      activity that competes with that of Zarlink Semi, nor shall I engage in
      any other activities that conflict with my obligations to Zarlink
      Semi.

            

    

     

     

    
      	
              5.  

            	
              Term. This Agreement
      shall be effective upon execution and shall survive the termination of my
      employment with Zarlink Semi.

            

    

     

     

    
      	
              6.  

            	
              Severability. If any
      provision of this Agreement, or any part thereof, shall be held to be
      invalid or unenforceable, such provision, or part thereof, shall be
      severable and of no force and effect without invalidating the
      remaining provisions hereof, and this Agreement shall continue in full
      force and effect as if same had not been a part
  hereof.

            

    

     

     

    
      	
              7.  

            	
              Successors, Assigns, etc.
      This Agreement shall ensure to the benefit of the successors and assigns
      of Zarlink Semi and be binding upon my heirs, executors, and
      administrators.

            

    

     

     

    
      	
              8.  

            	
              Not a Contract of
      Employment. Nothing stated herein shall be construed as creating a
      contract of employment or as changing the at will relationship of the
      parties.

            

    

     

     

    
      	
              9.  

            	
              Governing Law. This
      Agreement shall be governed by and construed in accordance with the laws
      of the State of California and the venue is agreed to be in San Diego,
      California in regards to employees of Zarlink Semiconductor (U.S.) Inc.,
      the laws of the State of Arizona and the venue is agreed to be in Phoenix,
      Arizona in regards to employees of Zarlink Semiconductor (U.S.) Inc. and
      the laws of the State of Texas and the venue is agreed to be in Austin,
      Texas.

            

    

     

     

    

     

     

    I HEREBY
ACKNOWLEDGE RECEIPT OF A FULLY EXECUTED COPY OF THIS AGREEMENT.

     

    /s/ Gary
Tanner

    Gary
Tanner

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