SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 0-11691
DICEON ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-3534864
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
18522 Von Karman Avenue, Irvine, California 92715
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(Address of principal executive offices) (Zip Code)
(714) 833-0870
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No__
At February 6, 1995, there were 8,340,320 outstanding shares of common stock.
This report consists of 11 pages.
<PAGE>
DICEON ELECTRONICS, INC.
FORM 10-Q
INDEX
Page
PART I. Financial Information:
Item 1.
Consolidated Balance Sheets as of December 31, 1994 and
January 1, 1994................................................... 2
Consolidated Statements of Operations for the Three Months
Ended December 31, 1994 and January 1, 1994....................... 3
Consolidated Statements of Cash Flows for the Three Months
Ended December 31, 1994 and January 1, 1994........................ 4
Notes to the Consolidated Financial Statements.................... 5
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................ 6
PART II. Other Information ................................................ 10
<PAGE>
DICEON ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
December 31, September 30,
------------ -------------
1994 1994
------------ -------------
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 1,300 $ 1,562
Accounts receivable - net 10,018 9,063
Inventories 6,042 7,277
Prepaid expenses and other current assets 559 381
-------- --------
Total current assets 17,919 18,283
-------- --------
Property, plant and equipment 65,610 65,481
Less accumulated depreciation and amortization (48,770) (47,703)
-------- --------
Property, plant and equipment, net 16,840 17,778
-------- --------
Other assets 953 922
-------- --------
Total assets $ 35,712 $ 36,983
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,417 $ 6,170
Accrued payroll and related costs 1,824 1,950
Restructuring reserve 710 861
Other current liabilities 2,154 2,005
Short-term borrowings 2,827 3,456
Current portion of long-term debt 45 50
-------- --------
Total current liabilities 12,977 14,492
-------- --------
Long term debt 400 406
Convertible subordinated debentures 16,000 16,000
Stockholders' equity
Common stock, $1.00 par value, 20,000,000 shares
shares authorized, 8,334,960 shares issued and
outstanding 8,335 8,335
Additional paid-in capital 3,373 3,373
Accumulated deficit (5,373) (5,623)
-------- --------
Net stockholders' equity 6,335 6,085
-------- --------
Total liabilities and stockholders' equity $ 35,712 $ 36,983
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
DICEON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
December 31, January 1,
----------- ----------
1994 1994
-------- --------
Net sales $ 22,753 $ 24,311
Cost of sales 19,883 23,691
-------- --------
Gross profit 2,870 620
Operating expenses:
Selling, general and administrative 2,066 2,661
Research and development 123 266
Provision for restructuring of operations 0 600
-------- --------
Total operating expenses 2,189 3,527
-------- --------
Income (loss) from operations 681 (2,907)
Other (income) expense:
Interest expense 432 469
Interest income (1) (23)
-------- --------
Net income (loss) $ 250 $ (3,353)
======== ========
Earnings (loss) per common share $ 0.03 $ (0.65)
======== ========
Weighted average common shares outstanding 8,335 5,135
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
DICEON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Three Months Ended
December 31, January 1,
------------ ----------
1994 1994
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 250 $(3,353)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization 1,525 1,704
Provision for restructuring of operations 0 600
(Increase) decrease in accounts receivable (955) 976
Decrease in inventories 1,235 684
Increase in prepaid expenses and other
current assets (178) (393)
Decrease in accounts payable (753) (2,048)
Decrease in accrued payroll and related taxes (126) (563)
Decrease in restructuring reserve (151) (548)
Increase in other current liabilities 149 323
Increase in other assets (24) (128)
------- -------
Net cash provided (used) by operating activities 972 (2,746)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of short-term investments 0 4,000
Purchase of property, plant and equipment (594) (788)
------- -------
Net cash (used) provided by investing activities (594) 3,212
------- -------
CASH FLOWS USED BY FINANCING ACTIVITIES
Net borrowings (payments) on short-term borrowings (629) 0
Principal payments on long term debt (11) (11)
------- -------
Net cash used by financing activities (640) (11)
------- -------
Net (decrease) increase in cash and cash equivalents (262) 455
Cash and cash equivalents, beginning of period 1,562 2,415
------- -------
Cash and cash equivalents, end of period $ 1,300 $ 2,870
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest expense payments $ 16 $ 16
======= =======
Income tax payments $ 20 $ 4
======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
DICEON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Diceon
Electronics, Inc. and its subsidiaries (the "Company") contain all
adjustments, consisting of only normal recurring adjustments, which, in
the opinion of management, are necessary to present fairly the
financial position of the Company as of December 31, 1994 and September
30, 1994, the results of its operations for the three months ended
December 31, 1994 and January 1, 1994 and its cash flows for the three
months ended December 31, 1994 and January 1, 1994. Certain information
and footnote disclosures normally included in the financial statements
have been condensed or omitted pursuant to rules and regulations of the
Securities and Exchange Commission, although the Company believes that
the disclosures in the consolidated financial statements are adequate
to make the information presented not misleading.
The consolidated financial statements included herein should be read in
conjunction with the consolidated financial statements of the Company
for the year ended September 30, 1994, included in the Company's Annual
Report on Form 10-K for that fiscal year.
NOTE 2 - INVENTORIES
Inventories consist of the following (thousands of dollars):
December 31, September 30,
------------ -------------
1994 1994
------------ -------------
(Unaudited)
Raw materials $ 3,071 $ 4,233
Work in progress 2,971 3,044
---------- ----------
Totals $ 6,042 $ 7,277
========== ==========
NOTE 3 - EARNINGS (LOSS) PER COMMON SHARE
Earnings or loss per common share for the three months ended December
31, 1994 and January 1, 1994 has been computed based on weighted
average common shares outstanding as of the above dates and does not
include the effect of common stock equivalents as such effect would
have been anti-dilutive.
NOTE 4 - INCOME TAXES
As of September 30, 1994, the Company had net operating losses
carryforwards for federal and state income tax purposes of $29,636,000
and $25,296,000, respectively. Income before income taxes was applied
against the net operating loss carryforwards resulting in no income tax
provision for the quarter ended December 31, 1994. These carryforwards,
for which future benefit is not assured, expire through 2008.
<PAGE>
DICEON ELECTRONICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto contained elsewhere within this Report on
Form 10-Q.
RESULTS OF OPERATIONS
Net sales
Net sales for the three months ended December 31, 1994 decreased 6.4
percent compared to the first quarter of fiscal 1994. The decrease
resulted primarily from lower unit sales volume combined with a
reduction in average sales price. The decrease in sales volume was
attributable to a decrease in demand from the Company's recurring
customer base for all of the Company's products. The reduction in
average sales price was attributable to the continued highly
competitive nature of the circuit board industry. Management does not
expect improvement in the average sales price in the near-future.
Cost of sales
Cost of sales as a percentage of net sales decreased from 97.4 percent
in the first quarter of fiscal 1994 to 87.4 percent for the first
quarter of fiscal 1995. The decrease was attributable to lower labor
and benefit cost per units shipped and, to a lesser extent, lower
material cost per units shipped. The improvement in labor and benefit
costs was due to better utilization of labor after the January 6, 1994
and October 3, 1994 reductions in employees and improved operating
efficiencies. The improvement in material cost per units shipped was
due to a better product mix and cost reductions.
Selling, General and Administrative
Selling, general and administrative (SG&A) expense for the three months
ended December 31, 1994 decreased 22.4 percent compared to the first
quarter of fiscal 1994. As a percentage of net sales, SG&A decreased
from 10.9 percent for the first quarter of fiscal 1994 to 9.1 percent
for the first quarter of fiscal 1995. The decrease in SG&A for the
first quarter of fiscal 1995 from that incurred in the first quarter of
fiscal 1994, was primarily due to the inclusion in the first quarter of
fiscal 1994 of consulting fees associated with the Company's initial,
discontinued efforts to restructure its 5 1/2 percent Convertible
Subordinated Debentures and consulting fees associated with obtaining a
line of credit with an asset based lender. Also contributing to the
decrease in SG&A were lower labor costs for administrative and
executive functions due to the January 6 1994, and October 3, 1994
restructurings and associated reductions in the number of employees.
Partially offsetting these reduced costs were higher commissions paid
to outside sales representatives.
Research and development
Research and development expenditures decreased 53.8 percent during the
three months ended December 31, 1994 from the first quarter of fiscal
1994. The decrease in expenditures is directly attributable due to
lower labor and benefit costs of engineers related to the reduction of
employees on January 6, 1994. Currently, the Company is marketing the
products developed in prior years at its Advanced Development Center in
Chatsworth, California (the center was closed in fiscal 1993).
Restructure
On January 6, 1994, the Company announced the down-sizing of all of its
operations. In connection with the down-sizing, the Company reduced its
work force by approximately 150 employees and accrued a one-time charge
of $600,000, recognized during the quarter ended January 1, 1994. All
costs associated with this restructuring were paid during fiscal 1994.
<PAGE>
DICEON ELECTRONICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Interest income and interest expense
Interest income decreased 95.6 percent for the three months ended
December 31, 1994, from the first quarter of fiscal 1994. The decrease
was primarily due to a reduction in interest bearing investments held
by the Company. The Company had no interest bearing investments during
the first quarter of fiscal 1995.
Interest expense decreased 7.9 percent for the three months ended
December 31, 1994, from the first quarter of fiscal 1994. The decrease
is attributable to lower interest expense due to the exchange of
$16,000,000 in principal amount of Debentures held by Mr. Milan
Mandaric for 3,200,000 newly issued shares of the Company's common
stock in a two part transaction which closed on June 30, 1994 and July
13, 1994. Partially offsetting the lower interest expense was interest
due to short-term borrowings from the Company's asset-based lender.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994, the Company had cash, cash equivalents and
short-term investments of $1,300,000, which reflects a $262,000
decrease in the balance from September 30, 1994. Cash of $972,000 was
generated from operating activities. The decrease in inventories is
attributable to better purchasing practices of raw materials utilized
in the Company's backpanel product line. The Company's restructure
reserve decrease of $151,000 was attributable to the payment of wages
to executives who have severance agreements. The remaining $710,000 of
restructure reserve is expected to be paid over the next nine months,
mainly to those executives with severance agreements. All other
operating activities experienced normal fluctuations.
The cash generated from operating activities was offset by investing
activities of $594,000 for the purchase of capital equipment and by
financing activities for the repayment of a portion of the short term
borrowings. The purchase of capital equipment was for normal
replacements.
As of December 31, 1994, the Company had borrowed $4,668,000 under the
line of credit that was established December 17, 1993 with the
aforementioned lender. In the first quarter of fiscal 1995, the Company
repaid borrowings of $520,000, leaving net borrowings of $4,148,000.
Also, under the terms of the agreement, the Company's cash collections
are applied to any outstanding borrowings upon the receipts clearing
the bank. At December 31, 1994, the asset based lender was in
possession of $1,321,000 of the Company's cash collections and,
accordingly, such funds have been applied to the $4,148,000 borrowing.
As of December 31, 1994, the Company's ratio of current assets to
current liabilities was 1.4 to 1. In addition, the Company had
$1,300,000 in cash and cash equivalents which are available for current
operations, capital expenditures or other purposes. The Company has no
material cash obligations other than normal replacements. Management
believes that the Company's existing working capital, the remaining
borrowing capacity, and funds generated from operations will be
sufficient to meet presently anticipated working capital requirements.
<PAGE>
DICEON ELECTRONICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
In June 1994, the Company agreed with Mr. Milan Mandaric to exchange
$16,000,000 of 5 1/2 percent Convertible Subordinated Debentures due
2012 for 3,200,000 newly issued shares of common stock. The transaction
included a payment of $293,000 for accrued interest on the debentures
exchanged and reimbursement of $50,000 for Mr. Mandaric's professional
expenses. All legal and consulting costs related to those discussions
were accrued for in the third quarter of fiscal 1994 and were applied
against the extraordinary gain recorded in the third quarter of fiscal
1994. There was no cash infusion made by Mr. Mandaric as a result of
this transaction. The Company subsequently delivered those Debentures
to the Trustee for credit against future sinking fund payments under
the terms of the indenture relating to the Debentures.
Environmental
The Company's manufacturing processes utilize substantial quantities of
heavy metals, acids and other hazardous substances, as well as
substantial quantities of water. The Company is subject to federal,
state and local environmental laws and regulations regarding air, water
and land use, the generation, use, storage and disposal of hazardous
materials and wastes, and the operation and closure of manufacturing
facilities at which hazardous materials are used or hazardous wastes
are generated. The Company is aware of contamination of soil and
groundwater (principally by metals and solvents) at two of its former
facilities in Northern California. The Company incurred costs of
$109,000 to cleanup soil at one of the former facilities and the
property was returned to its owner during the second quarter of fiscal
1994. The likely future cost of groundwater cleanup at that facility is
not yet reasonably estimable, but investigative costs of $30,000 have
been estimated through March 1, 1995. At the other former facility in
Northern California the estimated cleanup cost for the soil
contamination is $137,000. In addition the facility is adjacent to an
existing State of California administered Superfund site and may become
part of a related State of California administered regional groundwater
investigation; the likely future cost to the Company in connection with
possible groundwater cleanup is not yet reasonably estimable. During
the second quarter of fiscal 1994, the Company also incurred costs of
$235,000 to clean up soil contamination at a former facility in
Southern California and the property was returned to its owner. At
another former facility in Southern California, the Company conducted
limited groundwater sampling in connection with a potential sale of the
property, and low concentrations of solvents were detected. At this
time, it is not possible to determine whether any response actions will
need to be taken; and accordingly, the likely future cost to the
Company is not yet reasonably estimable.
The Company is further aware of soil and groundwater contamination
(principally by metals and solvents) at two currently used facilities,
one in Northern California and one in Southern California. At its
Northern California facility, the Company is indemnified by the former
property owner who acknowledged his obligation. At its Southern
California facility, the Company's preliminary estimate of remedial
costs, expected to be incurred over five to seven years, ranges from
approximately, $880,000 to $1,480,000 (including between approximately
$300,000 and $400,000 estimated capital expenditures for waste
treatment equipment acquisition and installation costs). At its
Northern California facility, the Company also received notice that
regulatory authorities plan to reduce the discharge limits for
industrial waste water discharge containing heavy metals. New limits
are expected to become effective July 1, 1996. Depending on the
magnitude of the modifications needed to comply with the reduced
limits, the cost is preliminarily estimated by the Company at between
approximately $50,000 to $750,000.
<PAGE>
DICEON ELECTRONICS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
As of December 31, 1994, the Company believes it has appropriately
recorded all known costs related to environmental matters, including
the minimum amounts where the estimated costs are within a range, and
are primarily accrued in other current liabilities. However, actual
future environmental related expenditures are subject to numerous
uncertainties, including the discovery of additional environmental
concerns, further development of cost estimates, new and changing
environmental laws and requirements, or new interpretations of existing
laws and requirements. Accordingly, there can be no assurance that
future environmental related expenditures will not exceed the Company's
current estimates, or that they will not have a materially adverse
effect on the Company.
<PAGE>
Part II. OTHER INFORMATION
Item 6 a. EXHIBITS
10.1 Lease for 1188 Bordeaux Drive, Sunnyvale, California, dated October 24,
1994, by and among Symtron Corporation and Redtree Properties, L.P.
b. CURRENT REPORTS ON FORM 8-K
During the first quarter of the current fiscal year, the Company did
not file any current reports on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DICEON ELECTRONICS, INC.
------------------------
(Registrant)
Date: February 6, 1995 By: /s/ MICHAEL S. SHIMADA
------------------------------
Michael S. Shimada
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
TABLE OF CONTENTS
Page
------
1. DEFINITIONS................................................... 1
1.1 Premises................................................. 1
1.2 Building................................................. 1
1.3 Direct Expenses.......................................... 1
1.4 Real Property Taxes...................................... 1
1.5 Common Area.............................................. 1
2. PREMISES...................................................... 1
3. LEASE TERM.................................................... 1
3.1 Early Entry.............................................. 1
3.2 Delivery of Possession................................... 1
3.3 Occupancy................................................ 1
3.4 Acceptance............................................... 2
4. RENT.......................................................... 2
4.1 Base Rent................................................ 2
4.2 Adjustments.............................................. 2
4.3 Lease Year............................................... 2
4.4 Late Charges............................................. 2
4.5 Additional Rent.......................................... 2
5. TAXES......................................................... 2
5.1 Tax Penalty.............................................. 2
5.2 Tax on Leasehold or Personalty........................... 2
6. CONDUCT OF BUSINESS BY TENANT................................. 3
6.1 Use of the Premises...................................... 3
6.2 Compliance with Law...................................... 2
7. MAINTENANCE, REPAIRS, AND ALTERATIONS......................... 3
7.1 Landlord's Responsibility................................ 3
7.2 Tenant's Responsibility.................................. 3
7.3 Condition Upon Surrender................................. 3
7.4 Improvements by Tenant................................... 3
7.5 Sanitary Condition....................................... 4
8. INSURANCE AND INDEMNITY....................................... 3
8.1 Tenant to Maintain....................................... 3
8.2 Insurance of Personalty.................................. 4
8.3 Landlord to Insure Premises.............................. 4
8.4 Landlord Approval........................................ 4
8.5 Waiver of Liability...................................... 4
8.6 Tenant to Hold Landlord Harmless......................... 4
8.7 Landlord's Disclaimer.................................... 4
9. REPAIRS AND RESTORATION....................................... 4
9.1 Insubstantial Insured Damage............................. 4
9.2 Substantial or Uninsured Damage.......................... 4
9.3 Damage Near End of Term.................................. 4
9.4 Notice, Rent Abatement, Refixturing...................... 4
9.5 Tenant's Option to Cancel................................ 5
9.6 "Substantial" Defined.................................... 5
<PAGE>
10. ASSIGNMENT AND SUBLETTING.................................... 5
10.1 Landlord's Consent Required............................ 5
10.2 Notice to Landlord..................................... 5
10.3 Landlord's Option...................................... 5
10.4 Collection of Rentals.................................. 5
10.5 Tenant Not Released.................................... 5
11. EMINENT DOMAIN............................................... 5
11.1 Automatic Termination.................................. 5
11.2 Rent Abatement......................................... 5
11.3 Condemnation Award..................................... 6
11.4 Sale Under Threat of Condemnation...................... 6
12. UTILITY SERVICES............................................. 6
13. DEFAULTS, REMEDIES........................................... 6
13.1 Defaults............................................... 6
13.2 Remedies............................................... 6
13.3 Default By Landlord.................................... 7
13.4 Expenses of Prevailing Party........................... 7
13.5 Chronic Delinquency.................................... 7
14. COMMON AREA.................................................. 7
15. DIRECT EXPENSES.............................................. 7
15.1 Assessment upon Tenant................................. 7
15.2 Apportionment of Assessment............................ 7
16. PARKING...................................................... 7
17. SIGNS........................................................ 7
18. TENANT STATEMENTS............................................ 7
18.1 Estoppel Certificate................................... 7
18.2 Financial Statements................................... 8
19. RIGHT OF ENTRY............................................... 8
20. TRANSFER OF LANDLORD'S INTEREST.............................. 8
21. RENTABLE AREA................................................ 8
22. SECURITY DEPOSIT............................................. 8
23. INTEREST..................................................... 8
24. GUARANTY..................................................... 8
25. MISCELLANEOUS................................................ 8
25.1 Time of Essence........................................ 8
25.2 Captions............................................... 8
25.3 Entire Agreement and Amendments........................ 8
25.4 Notice................................................. 8
25.5 Holdover............................................... 8
<PAGE>
25.6 Brokers................................................ 9
25.7 Acceptance............................................. 9
25.8 Waiver................................................. 9
25.9 Separability........................................... 9
25.10 Liens.................................................. 9
25.11 Subordination.......................................... 9
25.12 Recording.............................................. 9
25.13 Landlord's Right to Perform Tenant's Covenants......... 9
25.14 Tenant's Remedy........................................ 9
25.15 Mortgagee Protection................................... 9
25.16 Exhibits............................................... 10
25.17 Tenant Improvements.................................... 10
25.18 Conditions............................................. 10
25.19 No Partnership or Joint Venture........................ 10
25.20 Construction........................................... 10
25.21 Joint and Several Liability............................ 10
25.22 Binding Effect......................................... 10
Exhibit A - Premises Description
Exhibit B - Work Letter Agreement
Exhibit C - Lease Guaranty
<PAGE>
INDUSTRIAL BUILDING LEASE
-------------------------
(Single Tenant Net)
THIS LEASE for reference purposes only dated October 24, 1994, is
---------- --
entered into by and between Redtree Properties, L.P., a Delaware limited
--------------------------------------------
partnership ("Landlord") and Symtron Corporation ("Tenant").
- - - ----------- -------------------
1. DEFINITIONS. Unless the context otherwise specifies or requires,
the following terms shall have the following meanings:
1.1 Premises. That contain real property and improvements located
thereon with the common address indicated in the Basic Lease Information
and more particularly described on EXHIBIT A attached hereto.
1.2 Building. The building comprising a part of the Premises. The
Building contains the Rentable Area specified in the Basic Lease
Information.
1.3 Direct Expenses. All costs paid or incurred in connection
with the operation, maintenance, replacement and repair of the Premises by
Landlord (excluding these costs and expenses to be paid by Landlord
pursuant to Paragraph 7.1) including, without limitation, all costs and
expenses paid or incurred with respect to the following: premiums for
public liability, property damage insurance (including extended and broad
form coverage risks for the Common Area) and other insurance excluding
earthquake insurance maintained by Landlord in connection with the
Premises, and insurance deductibles; Real Property Taxes (defined in
Paragraph 1.4 except for any tax increases due to sale of property); and
any assessments or charges imposed in order to have the Premises comply
with statutes, ordinances, orders, requirements, laws, rules and
regulations of any governmental or quasi-governmental authority now or
hereafter in effect (collectively, "Laws").
1.4 Real Property Taxes: Any form of assessment, license, fee,
rent tax, levy, or tax (other than net income, estate, succession, or
inheritance taxes), now or hereafter imposed by any authority having the
direct or indirect power to tax, or by any city, county, state or federal
government or any improvement or other district or division thereof,
whether such tax is: (a) determined by the area of the Premises or any part
thereof or the Base Rent or other sums payable hereunder by Tenant or by
other tenants, including, but not limited to, any gross income or excise
tax levied by any of the foregoing authorities with respect to receipt of
such sums due under this Lease, to the extent not required to be paid by
Tenant pursuant to Paragraph 5.2; (b) upon any legal or equitable interest
of Landlord in the Premises or any part thereof; (c) upon this transaction
or any document to which Tenant is a party creating or transferring any
interest in all or any part of the Premises; or (d) levied or assessed in
lieu of, in substitution for, or in addition to existing or additional
taxes against the Premises, whether or not now customary or within the
contemplation of the parties, ordinary or extraordinary, general or
special, or resulting from increased rate or valuation. The term "Real
Property Taxes" shall also include all expenses reasonably incurred by
Landlord in seeking reduction by the taxing authorties of Real Property
Taxes applicable to the Premises.
1.5 Common Area. All areas within the exterior boundaries of the
Premises and outside the Building including, without limitation, streets,
driveways, truckways, covered walkways, all canopies (both decorative and
those which extend from exterior walls or the roof), parking lots, delivery
passages, loading docks, sidewalks, ramps, open and enclosed courts and
malls, landscaped and planted areas, exterior stairways, bus stops, and
retaining walls.
2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord the Premises for the Term, at the Rentals (defined in
Paragraph 4.5), and upon all of the conditions and agreements set forth
herein.
3. LEASE TERM. The term of this Lease ("Term") shall be as set forth
in the Basic Lease Information, commencing on the Commencement Date and
ending on the Expiration Date, subject to any renewal option granted herein
and earlier termination as provided in this Lease. "Lease Termination"
shall mean the expiration or sooner termination of this Lease.
3.1 Early Entry. If Tenant is permitted to occupy the Premises
prior to the Commencement Date for a fixturing period or any other purpose
permitted by Landlord, such early entry shall be at Tenant's sole risk and
subject to all the terms and provisions hereof, except for the payment of
Ease Rent and Direct Expenses which shall commence on the earlier of the
Commencement Date or the date Tenant first conducts business in the
Premises, subject to Paragraph 3.2. Landlord shall have the right to impose
such additional conditions on Tenant's early entry as Landlord shall deem
appropriate, and shall further have the right to require that Tenant
execute an early entry agreement containing such conditions prior to
Tenant's early entry.
3.2 Delivery of Possession. If Landlord is unable to deliver
possession of the Premises to Tenant on the Commencement Date, Landlord
shall not be subject to liability therefor, nor shall such failure affect
the validity of this Lease or the obligations of Tenant or extend the
Commencement Date or the Expiration Date; except that Tenant's payment of
Base Rent and Direct Expenses shall be abated beginning on the Commencement
Date for a period equal to the period of delay, unless delay in delivering
possession of the Premises was caused or contributed by Tenant or Tenant's
agents, officers, employees, contractors, servants or invitees
(collectively "Tenants Agents"). Landlord shall be deemed to have delivered
possession to Tenant on the earlier of (i) the date that Landlord gives
notice to Tenant that Landlord's Work (defined in EXHIBIT B) is
substantially completed as evidenced by the statement of Landlord's
architect and that the Premises are available for occupancy by Tenant
subject only to punch list items which do not prevent Tenant from using the
Premises for its intended use, (ii) the date on which Landlord's Work would
have been substantially completed but for delays caused by Tenant or
Tenant's Agents, or (iii) the date upon which Tenant commences operation
from the Premises, whichever is earlier. Notwithstanding the foregoing, if
Landlord has not delivered possession of the Premises within sixty (60)
days after the Commencement Date, Tenant may, at Tenant's option with
notice in writing to Landlord within ten (10) days thereafter, cancel this
Lease. If such notice is not received by Landlord within such ten (10) day
period, Tenant's right to cancel this Lease shall terminate and be of no
further force and effect.
3.3 Occupancy. Tenant shall physically occupy the Premises and
open the Premises for business in accordance with the uses specified in the
Basic Lease Information no later than thirty (30) days after the
Commencement Date; provided, however, that the date of Tenant's physical
occupancy shall in no event extend the Commencement Date, the Lease
Termination date or the date the payment of Rentals hereunder commences.
<PAGE>
3.4 Acceptance. By taking possession of the Premises, Tenant
shall be deemed to have accepted the Premises as being in good and sanitary
order, condition and repair, subject to all applicable Laws. If any tenant
improvements have been constructed by Landlord within the Premises, within
fifteen (15) days following the Commencement Date Tenant shall deliver to
Landlord a complete list of all items that Tenant deems is necessary for
Landlord to complete or correct in order for the tenant improvements to be
acceptable to Tenant. If Tenant does not deliver such list to Landlord
within this fifteen (15) day period, Tenant shall be deemed to have
accepted the Tenant improvements as constructed. Tenant acknowledges that
neither Landlord nor Landlord's agents have made any representation or
warranty as to the suitability of the Premises for the conduct of Tenant's
business, the condition of the Premises, or the use or occupancy which may
be made thereof and Tenant has independently investigated and is satisfied
that the Premises are suitable for Tenant's intended use.
4. RENT.
4.1 Base Rent. During each month of the Term, Tenant shall pay to
Landlord as Base Rent the amount set forth in the Basic Lease information,
subject to adjustment pursuant to Paragraph 4.2. Base Rent shall be paid in
advance on the first day of each calendar month throughout the Term without
offset, deduction, prior notice or demand, except that a full month's Base
Rent shall be paid upon the execution of this Lease by Tenant and the
prorated Base Rent payable for the period, if any, prior to the first full
calendar month of the Term shall be paid on the first day of said first
full calendar month. Base Rent shall be prorated based on a thirty (30) day
month for any partial calendar month of the Term.
4.2 Adjustments. The Base Rent shall be increased every twelve
(12) months during the Term, commencing on the First Adjustment Date set
forth in the Basic Lease Information.
4.3 Lease Year. The term "Lease Year" as used in this Lease shall
refer to each full (twelve month) calendar year occurring during the Term,
except that the first Lease year shall be the period from the Commencement
Date until December 31 of the calendar year in which the Commencement Date
occurs, and the last Lease Year shall be the period from January 1 in the
year in which the Lease terminates until the last day of the Term.
4.4 Late Charges. If Base Rent is unpaid after the fifth day
after the due date, Tenant shall pay a late charge of ten percent (10%) of
the amount overdue. The parties agree that this late charge represents a
fair and reasonable estimate of the costs that Landlord will incur by
reason of the late payment by Tenant. The late charge shall be paid without
offset, deduction, prior notice or demand. Any dishonored check shall be
treated as rent unpaid and shall be subject to late charges. In no event
shall this provision for a late charge be deemed to grant to Tenant a grace
period or extension of time within which to pay any installment of Base
Rent or prevent Landlord from exercising any right or remedy available to
Landlord upon Tenant's failure to pay such amounts when due, including,
without limitation the right to terminate this Lease. Any installment of
Base Rent not received by Landlord by the thirtieth (30th) day after its
due date shall bear interest at the Stipulated Rate commencing on the
thirty-first (31st) day after the due date for such installment and
continuing until such installment is paid in full.
4.5 Additional Rent. All amounts which Tenant is required to pay
under this Lease, and all damages, costs and expenses which Landlord may
incur by reason of any default by Tenant under this Lease shall be deemed
to be additional rent hereunder ("Additional Rent"). Upon nonpayment of
Additional Rent, Landlord shall have all of the rights and remedies with
respect thereto as Landlord has for the non-payment of Base Rent. "Rentals"
as used in this Lease shall mean Base Rent and all Additional Rent. All
Rentals shall be paid in lawful money of the United States to Landlord at
the address specified in this Lease for purposes of notice, or to such
other persons or at such other places as may be designated in writing by
Landlord from time to time. All rentals shall be paid without deduction or
offset and, except as otherwise expressly provided in this Lease, without
prior notice or demand.
5. TAXES.
5.1 Tax Penalty. If Tenant fails to timely pay Direct Expenses,
Tenant shall be responsible for payment of any penalty assessed on Real
Property Taxes.
5.2 Tax on Leasehold or Personalty. Tenant shall be responsible
for and shall pay before delinquency all municipal, county or state taxes,
levies and fees of every kind and nature including, but not limited to,
general or special assessments assessed during the Term against any
leasehold interest or trade fixtures or personal property of any kind,
owned by or placed in, upon or about the Premises by Tenant. Tenant agrees
to pay before delinquency the amount of all taxes levied upon or measured
by the rent payable hereunder, whether as a so-called sales tax,
transaction privilege tax, excise tax, or otherwise. If such taxes, levies
or fees are assessed, levied, or imposed upon Landlord or any portion of
the Premises, Landlord shall give Tenant a statement of the amount
applicable to the Premises. If a separate assessment of the improvements is
not available from the appropriate governmental authority, Landlord's good
faith allocation shall be binding on Tenant. In such event, Tenant shall
pay Landlord on demand for such taxes, levies and fees applicable to the
Premises.
6. CONDUCT OF BUSINESS BY TENANT.
6.1 Use of the Premises. Tenant shall use the Premises solely for
the purpose set forth in the Basic Lease Information and for no other
purposes without the prior written consent of Landlord which shall be given
at Landlord's sole discretion.
6.2 Compliance with Law. Tenant at its expense shall comply
promptly with all applicable Laws regulating the use by Tenant of the
Premises which, subject to Article 7, shall include required structural
alterations. Tenant at its expense shall take all steps required to cause
the Premises to be kept, maintained, used and occupied in compliance with
the Americans With Disabilities Act of 1990, as the same may be amended
from time to time. Tenant shall
<PAGE>
not use or permit the use of the Premises in any manner, that will tend
to create a nuisance or tend to injure the reputation of the Premises.
Tenant shall place no loads upon the floors, walls or ceilings in excess
of the maximum designed load determined by Landlord or which endanger
the structure; nor place any harmful liquids in the drainage systems;
nor dump or store waste materials or refuse or allow such to remain
outside the Premises proper, except in the enclosed trash areas
provided, if any. Tenant shall not store or permit to be stored or
otherwise placed any other material of any nature whatsoever outside the
Building. Tenant and Tenant's Agents shall not use, store or dispose,
or allow the use, storage or disposal of, any Hazardous Materials on any
portion of the Premises. Tenant shall indemnify, defend, and hold
Landlord and Landlord's employees, agents and partners harmless from and
against any and all claims, losses, damages, liabilities, or expenses
(including without limitation attorneys' fees) arising in connection
with the breach of the obligations described in the previous sentence.
As used in this paragraph, Hazardous Materials means any chemical,
substance or material which has been or is hereafter determined by any
federal, state or local governmental authority to be capable of posing
risk of injury to health or safety, including without limitation,
petroleum, asbestos, polychlorinated biphenyls, radioactive materials
and radon gas. Tenant's obligation to defend, hold harmless and
indemnify pursuant to this Paragraph shall survive Lease Termination.
7. MAINTENANCE, REPAIRS, AND ALTERATIONS.
7.1 Landlord's Responsibility. Subject to the provisions of
Article 9, Landlord shall, during the Term, keep in good order, condition
and repair the Building's roof and structure, except for any damage thereto
caused by the negligence or willful misconduct of Tenant or Tenant's
Agents, and except for reasonable wear and tear; provided, however, that
Landlord shall have no obligation to repair until a reasonable time after
the receipt by Landlord of a written notice of the need for repairs. Tenant
waives the provisions of California Civil Code Sections 1941 and 1942 and
any similar Law now or hereafter in effect. The cost and expense incurred
by Landlord in maintaining and repairing the Building's roof and structure
shall be paid for by Landlord, except to the extent that any costs are
incurred as a result of the acts or negligence of Tenant or Tenant's
Agents, in which event Tenant shall reimburse Landlord for such costs and
expenses upon written demand for payment by Landlord.
7.2 Tenant's Responsibility. Except as provided in Paragraph 7.1
above, Tenant shall, during the Term, keep in first-class order, condition
and repair the Premises and every part thereof, including, without
limitation, all fixtures, interior walls and interior surface of exterior
walls, exterior walls (excluding structural repairs), Common Areas
(including without limitation landscaped areas, sidewalks and parking
areas), electrical and plumbing systems, all equipment, windows, plate
glass, downspouts, gutters, ceilings, floors and floor coverings, and
doors. Tenant's obligations under this Paragraph shall include the
obligation to replace any of the foregoing items, or any portion thereof,
which cannot be fully repaired. Tenant shall also maintain a preventative
maintenance contract providing for the regular inspection and maintenance
of the heating, ventilating and air conditioning system, at Tenant's
expense, with a contractor or maintenance firm approved by Landlord, which
approval shall not be unreasonably withheld. Tenant shall provide Landlord
with a copy of such maintenance agreement prior to the Commencement Date,
and prior to the expiration of any such contract shall provide to Landlord
a copy of any renewal of such maintenance agreement or replacement
agreement, which agreements shall provide that the maintenance company
shall notify Landlord in writing if the maintenance agreement expires or
terminates for any reason. The Premises shall be maintained by Tenant in an
attractive, safe, first-class and fully operative condition at all times
during the Term. In no event shall Landlord have any repair or maintenance
responsibility except as expressly set forth in Paragraph 7.1 above.
If Tenant fails to perform its obligations under this Paragraph 7.2,
notwithstanding any other provision hereof and without waiving any other
right or remedy Landlord may have, Landlord may, at its option, after five
(5) days' written notice to Tenant, enter upon the Premises and put the
same in good order, condition and repair and at Landlord's further option,
continue such maintenance and repair obligation for the remainder of the
Term, and the cost thereof shall become due and payable as Additional Rent
by Tenant to Landlord upon demand.
7.3 Condition Upon Surrender. On Lease Termination, Tenant shall
remove its personal property and trade fixtures from the Premises,
surrender the Premises to Landlord in the same condition as when received,
damage by fire or the elements (except to the extent not covered by Net
Insurance Proceeds and caused by Tenant or Tenant's Agents) and ordinary
wear and tear excepted. At Landlord's option, Landlord shall have the right
to require that Tenant remove any and all alterations, additions, signs or
improvements made by Tenant and perform any necessary repair caused by such
removal.
7.4 Improvements by Tenant. Tenant shall not, without prior
written consent of Landlord, not to be unreasonably withheld, make any
alterations, improvements, or additions (collectively, "Alterations") to
the Premises or to fixtures installed therein in accordance with approved
fixture plans, or mark, paint, drill or in any way deface any portion of
the Premises. Before commencing any Alterations, Tenant shall submit plans
and specifications to Landlord for Landlord's approval, not to be
unreasonably withheld. Notwithstanding the foregoing, in no event shall
Tenant make any structural Alterations without Landlord's approval, which
approval Landlord may withhold in its sole discretion. At least ten (10)
days prior to undertaking construction of any Alterations, Tenant shall
give written notice to Landlord setting forth the date work is to commence.
Landlord shall have the right at all reasonable times to post and keep
posted on the Premises such notices of nonresponsibility as Landlord may
deem necessary for the protection of Landlord and the Premises from
mechanic's and materialman's liens. All Alterations shall be installed at
Tenant's sole expense, in compliance with all applicable Laws, permit
requirements and any covenants, conditions or restrictions of record, by a
licensed contractor, shall be done in a good and workmanlike manner
conforming in quality and design with the Premises existing as of the
Commencement Date, and shall not diminish the value of the Premises. All
Alterations made by Tenant shall be and become the property of Landlord
upon installation and shall not be deemed Tenant's personal property;
provided, however, that Landlord may, at its option, require that Tenant,
at Tenant's expense, remove any or all Alterations installed by Tenant and
return the Premises to their condition as of the Commencement Date, normal
wear and tear excepted. Notwithstanding any other provision of this Lease,
Tenant shall be solely responsible for the maintenance and repair of any
Alterations made by Tenant or Landlord to the Premises.
7.5 Sanitary Condition. Tenant shall keep the Premises at all
times in a neat, clean and sanitary condition, shall neither commit nor
permit any waste or nuisance thereon, and shall keep the walks and
corridors adjacent thereto free from Tenant's waste or debris.
8. INSURANCE AND INDEMNITY.
8.1 Tenant to Maintain. Tenant shall at all times during the
Term, at Tenant's cost and expense, maintain in effect workmen's
compensation insurance and comprehensive general liability and property
damage insurance in the minimum amounts set forth in the Basic Lease
Information, combined single limit for both bodily injury and property
damage which includes blanket contractual liability, broad form property
damage, personal injury, completed operations, products liability, and fire
damage legal (which fire damage legal amount shall not be less than
$25,000.00). The minimum limits specified above are the minimum amounts
required by Landlord, and may be reasonably revised by Landlord from time
to time to meet changed circumstances, including
<PAGE>
without limitation changes in the purchasing power of the dollar and
changes consistent with the standards required by other landlords in the
county in which the Premises is located. All such insurance shall
specifically insure Tenant's performance of the indemnity, defense and
hold harmless agreements contained in Paragraph 8.6, although Tenant's
obligations pursuant to Paragraph 8.6 shall not be limited to the amount
of any insurance required of or carried by Tenant under this Paragraph
8.1 and Tenant is responsible for insuring that the amount of liability
insurance carried by Tenant is sufficient for Tenant's purposes.
8.2 Insurance of Personalty. Tenant shall at all times during the
Term, at its cost and expense, maintain in effect policies of insurance
covering its trade fixtures, personal property and equipment located on the
Premises, and all Alterations made to the Premises by Tenant, in an amount
not less than their full replacement value, providing protection on an "All
Risk" basis, which shall include, without limitation, insurance against
sprinkler damage, vandalism and malicious mischief. The proceeds of such
insurance, so long as this Lease remains in effect, shall be used to repair
or replace the fixtures, personal property, equipment and Alterations so
insured. Following Lease Termination, any proceeds of insurance covering
Alterations shall be paid over to Landlord.
8.3 Landlord to Insure Premises. During the Term Landlord shall
maintain "All Risk" property insurance (including inflation endorsement,
sprinkler leakage endorsement, and, at Landlord's option, earthquake and
flood coverage and such other endorsements desired by Landlord) on the
Premises, excluding coverage of all Tenant's trade fixtures, personal
property, Alterations and equipment located on or in the Premises. Such
insurance shall also include insurance against loss of rents on an "All
Risk" basis in an amount equal to the Base Rent payable under the Lease,
for a period of at least six (6) months commencing on the date of loss.
Tenant shall reimburse Landlord for Landlord's annual cost of such
insurance as Additional Rent pursuant to Article 15.
8.4 Landlord Approval. All insurance required to be carried by
Tenant hereunder shall be in companies, on forms and with loss payable
clauses satisfactory to Landlord and copies of policies of such insurance,
certified by the insurer to be a true and correct copy of the insurance
policies, evidencing such insurance shall be delivered by Landlord by
Tenant prior to Tenant's entry on the Premises; a new certified policy
shall be delivered to Landlord at least thirty (30) days before expiration
of the old policy. No such policy shall be cancellable except after thirty
(30) days' written notice to Landlord. All policies to be carried by Tenant
under this Lease shall name Landlord and its agents and designated lenders
as additional insureds. Such insurance shall be the primary insurance as
respects Landlord and shall contain a cross liability endorsement. Such
policies shall provide coverage on an occurrence basis and not on a claims
made basis. In no event shall the limits of such policies be considered as
limiting the liability of Tenant under this Lease.
8.5 Waiver of Liability. Landlord and Tenant each hereby waives
any and all rights of recovery against the other or against the officers,
partners, employees and agents of such other party for loss of or damage to
such waiving party or its property or the property of others under its
control, arising from any cause to the extent insured against under any
insurance policy carried by such waiving party and to the extent such
waiver is permitted under such insurance policy and does not prejudice
coverage under such policy. Tenant shall obtain and furnish evidence to
Landlord of the waiver by Tenant's insurance carries of any right of
subrogation against Landlord.
8.6 Tenant to Hold Landlord Harmless. Tenant hereby agrees to
defend, indemnify and hold harmless Landlord and Landlord's employees,
partners and agents from and against any and all claims, damage, loss,
liability or expense, including without limitation attorneys' fees and
legal costs, due to any cause including without limitation, bodily injury
and property damage, which arises out of or is in any way attributable to
the use or occupancy of the Premises or any part thereof by Tenant or
Tenant's Agents, the acts or omissions of Tenant or Tenant's Agents or
Tenant's breach of this Lease, except to the extent caused by the willful
misconduct or sole negligence of Landlord. This provision shall survive the
expiration or sooner termination of this Lease.
8.7 Landlord's Disclaimer. Landlord shall not be liable for
injury or damage which may be sustained by the person, goods, wares,
merchandise or property of Tenant, its employees, invitees or customers or
any other person in or about the Premises caused by or resulting from fire,
storm, electricity, gas, water or rain which may leak or flow from or into
any part of the Premises, or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures of the same, or from any other cause,
whether such damage or injury resulted from conditions arising upon the
Premises or from other sources.
9. REPAIRS AND RESTORATION.
9.1 Insubstantial Insured Damage. Subject to the provisions of
Paragraph 9.3, if at any time during the Term the Premises are damaged and
such damage is not "Substantial" as that term is defined in Paragraph 9.6,
and insurance proceeds net of costs of recovery ("Net Insurance Proceeds")
are available to cover the cost of restoration, then Landlord shall
promptly repair such damage at Landlord's expense and this Lease shall
continue in full force and effect.
9.2 Substantial or Uninsured Damage. Subject to the provisions of
Paragraph 9.3, if at any time during the Term the Premises are damaged and
(a) if such damage is "Substantial" as defined in Paragraph 9.6, or (b) if
such damage was caused by a casualty for which no insurance proceeds are
available or the Net Insurance Proceeds are insufficiant to meet the cost
of restoration, then Landlord may at its option either (i) promptly repair
such damage at Landlord's expense, in which event this Lease shall continue
in full force and effect, or (ii) cancel and terminate this Lease, by
giving Tenant written notice of its election to do so within sixty (60)
days after the date of occurrence of such damage.
9.3 Damage Near End of Term. If the Premises are damaged during
the last nine (9) months of the Term, and the estimated cost of repair
exceeds ten percent (10%) of the Base Rent then remaining to be paid by
Tenant for the balance of the Term, Landlord may at its option cancel and
terminate this Lease upon written notice to Tenant. If Landlord does not
elect to so terminate this Lease, the repair of such damage shall be
governed by Paragraph 9.1 or Paragraph 9.2, as the case may be.
9.4 Notice, Rent Abatement, Refixturing. Tenant shall notify
Landlord in writing immediately upon the occurrence of any damage or
destruction to all or any portion of the Premises. If the Premises are
damaged and Landlord repairs or restores them pursuant to the provisions of
this Article, Tenant shall continue the operation of its business in the
Premises to the extent reasonably practicable from the standpoint of
prudent business management, and the Base Rent payable hereunder for the
period during which such damage, repair or restoration continues shall, to
the extent covered by rental loss insurance maintained by Landlord, be
abated in proportion to the degree to which Tenant's use of the Premises is
impaired, as reasonably determined by Landlord. There shall be no abatement
of other Rentals payable hereunder and Tenant shall have no claim against
Landlord for any damage suffered by Tenant by reason of any such damage,
destruction, repair or restoration. Upon completion of such repair or
restoration Tenant shall promptly refixture the Premises to the condition
prior to the casualty and shall reopen for business if closed by the
casualty.
9.5 Tenant's Option to Cancel. If Landlord is obligated to repair
or restore the Premises under the provisions of this Article and does not
commence such repair or restoration within sixty (60) days after such
obligation accrues, Tenant may at its option cancel and terminate this
Lease by giving Landlord written notice of its election to do so at any
time prior to the commencement of such repair or restoration, which
termination shall be effective on the date such notice is received by
Landlord.
9.6 "Substantial" Defined. For the purpose of this article,
"Substantial" damage to the Premises shall mean damage to the Premises, the
estimated cost of repairs of which exceeds one-fifth (1/5) of the then
estimated replacement cost of the same. The determination in good faith by
Landlord of the estimated cost of repair of any damage and/or of the
estimated replacement costs shall be conclusive for the purpose of this
Article. In no event shall Landlord be obligated to repair or restore any
Alterations made by Tenant or equipment fixtures, inventory, fixtures or
personal property in or about the Premises. Tenant waives the provisions of
California Civil Code Sections 1932 and 1933(4) and any similar law now or
hereunder in effect.
10. ASSIGNMENT AND SUBLETTING.
10.1 Landlord's Consent Required. Tenant shall not, either
voluntarily, involuntarily or by operation of law (i) assign, sell or
otherwise trasnsfer all or any part of the Tenant's interest in this Lease
or in the Premises, or (ii) permit any part of the Premises to be sublet,
occupied or used by anyone other than Tenant or (iii) permit any person to
succeed to any interest in this Lease or the Premises, (all of the
foregoing being collectively referred to as a "Transfer"), without
Landlord's prior written consent in each instance, which consent shall not
be unreasonably withheld. Any Transfer shall be subject in each instance to
the recapture option of Landlord set forth in Paragraph 10.3 below. In
making its determination as to a proposed Transfer, it shall be deemed
reasonable to consider the financial soundness of ownership, experience and
management of the assignee, subtenant, permittee or transferee
(collectively, "Transferee"). In no event shall Landlord be required to
give its consent to a Transfer if a use different from the use allowed by
Paragraph 6.1 is proposed. Consent by Landlord to one or more Transfers
shall not operate to exhaust Landlord's rights under this Article to
receive consent to subsequent Tranfers. The voluntary or other surrender of
this Lease by Tenant or a mutual cancellation hereof shall not work a
merger and Landlord shall have the option of terminating all or any
existing subtenancies or Transfers or shall operate as an assignment to
Landlord of all or any such subtenancies or Transfers. If Tenant is a
corporation which, under the then current guidelines published by the
Commissioner of Corporations of the State of California, is not deemed a
public corporation, any dissolution, merger, consolidation or
reorganization of Tenant, the transfer, assignment or hypothecation of any
stock or interest in such corporation in the aggregate in excess of
twenty-five percent (25%), or the sale (cumulatively) of fifty percent
(50%) or more of the value of Tenant's assets shall be deemed a Transfer.
If Tenant is a partnership, a withdrawal or substitution of any partner(s)
owning twenty-five percent (25%) or more of the partnership (cumulatively),
any assignment(s) of twenty-five percent (25%) or more (cumulatively) of
any interest in the capital or profits of the partnership, the sale
(cumulatively) of fifty percent (50%) or more of the value of Tenant's
assets, or the dissolution of the partnership shall be deemed a Transfer.
Tenant agrees to reimburse Landlord for Landlord's reasonable costs and
attorney's fees incurred in conjunction with the processing and
documentation of any requested Transfer, whether or not consent is granted.
In no event shall Tenant hypothecate, mortgage, pledge or encumber Tenant's
interest in this Lease or in the Premises or otherwise use the Lease as a
security device in any manner, nor shall Tenant transfer any right
appurtenant to this Lease or the Premises separate from a permitted
Transfer, without the consent of Landlord, which consent Landlord may
withhold in its sole discretion. Tenant expressly agrees that the
provisions of this Article are not unreasonable standards or conditions for
purposes of Section 1951.4(b)(2) of the California Civil Code, as amended
from time to time, under the federal Bankruptcy Code, or for any other
purpose.
10.2 Notice to Landlord. If Tenant desires at any time to effect
Transfer, it shall first notify Landlord of its desire to do so and shall
submit in writing to Landlord (a) the name of the proposed Transferee; (b)
the nature of the proposed Transferee's business to be carried on in the
Premises; (c) the terms and provisions of the proposed Transfer; (d) such
reasonable financial information, including financial statements, and
information regarding the Transferee's experience as Landlord may request
concerning the proposed Transferee; and (e) such other information as
Landlord may reasonably request to evaluate the Transfer and Transferee.
10.3 Landlord's Option. At any time within fifteen (15) days
after Landlord's receipt of all of the information described in Paragraph
10.2 above, Landlord may by written notice to Tenant elect to either (a)
consent to the Transfer, (b) deny its consent on reasonable grounds, or
(c) terminate this Lease as to the portion (including all) of the Premises
proposed to be Transfered, with a proportionate abatement in the Base Rent
and Direct Expenses payable hereunder and lease the Premises or the portion
thereof as shall be specified in Tenant's notice to Tenant's proposed
Transferee or to a third party. If for any proposed Transfer, Tenant
receives rent or any other consideration, either initially or over the term
of the Transfer in excess of the Rentals called for hereunder, or, in case
of the sublease of a portion of the Premises, in excess of such Rentals
fairly allocable to such portion, Tenant shall pay to Landlord as
Additional Rent hereunder one-half (1/2) of the excess of each payment of
rent or other consideration received by Tenant promptly after its receipt.
If Landlord consents to the Transfer within such fifteen (15) day period,
Tenant may thereafter within ninety (90) days after the expiration of such
fifteen (15) day period enter into a valid Transfer, upon the terms and
conditions described in the information required to be furnished by Tenant
to Landlord pursuant to Paragraph 10.2.
10.4 Collection of Rentals. Tenant irrevocably assigns to
Landlord, as security for Tenant's obligations under this Lease, all rent
and other consideration payable by a Transferee and not otherwise payable
to Landlord by reason of any Transfer. Landlord, as assignee of Tenant, or
a receiver for Tenant appointed on Landlord's application, may collect such
rent and other consideration and apply it toward Tenant's obligations under
this Lease; provided, however, that until the occurrence of any default by
Tenant, Tenant shall have the right to collect such rent and other
consideration.
10.5 Tenant Not Released. No Transfer, even with the consent of
Landlord, shall relieve Tenant of its obligation to pay the Rentals and
perform all of the other obligations to be performed by Tenant hereunder.
The acceptance of Rentals by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any Transfer.
11. EMINENT DOMAIN.
11.1 Automatic Termination. If the entire Premises, or so much of
either as to make the Premises not reasonably adequate for the conduct of
Tenant's business in Landlord's reasonable judgment notwithstanding
restoration by Landlord as hereinafter provided, shall be taken under the
power of eminent domain, this Lease shall automatically terminate as of the
date on which the condemning authority takes possession.
11.2 Rent Abatement. Upon any taking of any portion of the
Building under the power of eminent domain which does not result in a
termination of this Lease, the Base Rent payable hereunder shall be
reduced, effective as of the date on which the condemning authority takes
possession, in the same proportion which the Rentable Area of the portion
of the Building taken bears to the Rentable Area of the entire Building
prior to the taking. Landlord shall promptly at its expense restore the
portion of the Premises not taken to as near its former condition as is
reasonably possible, and this Lease shall continue in full force and
effect.
11.3 Condemnation Award. Any award for any taking of all or any
part of the Premises under the power of eminent domain shall be the
property of Landlord, whether such award shall be made as compensation for
diminution in value of the leasehold or for taking of the fee. Nothing
contained herein, however, shall be deemed to preclude Tenant from
obtaining, or to give Landlord any interest in, any award to Tenant for
loss of or damage to Tenant's trade fixtures and removal of personal
property and Tenant's loss of goodwill and moving expenses.
11.4 Sale Under Threat of Condemnation. A sale by Landlord to any
authority having the power of eminent domain, either under threat of
condemnation or while condemnation proceedings are pending, shall be deemed
a taking under the power of eminent domain for all purposes under this
Article. Each party waives the provisions of California Code of Civil
Procedure Section 1265.130 allowing either party to petition the Superior
Court to terminate this Lease in the event of a taking.
12. UTILITY SERVICES. Tenant shall arrange for, and shall timely
pay directly to the appropriate utlilty or service supplier all charges
for, water, gas, heat, light, power, sewer, electricity, refuse and
waste disposal, telephone, janitorial service, or any other service or
utility metered, supplied or provided to the Premises during the Term of
this Lease. Landlord shall not be liable in damages or otherwise for any
failure or interruption of any utility or service being furnished to the
Premises and no such failure or interruption shall entitle Tenant to
terminate this Lease or shall otherwise affect Tenant's obligations
under this Lease. Landlord shall be entitled to cooperate voluntarily and
Tenant agrees to cooperate, with the efforts of governmental authorities
or utility suppliers in reducing energy or other resource consumption.
13. DEFAULTS, REMEDIES.
13.1 Defaults. The occurrence of any one or more of the following
events shall constitute a default hereunder by Tenant:
13.1.1 The abandonment of the Promises by Tenant.
Abandonment is defined to include, but is not limited to, any absence by
Tenant from the Premises for five (5) consecutive days or longer.
13.1.2 The failure by Tenant to make any payment of Base
Rent or other Rentals as and when due.
13.1.3 The failure by Tenant to timely observe or perform
any of the express or implied covenants or provisions of this Lease to be
observed or performed by Tenant, other than as specified in Paragraphs
13.1.1 or 13.1.2 above.
13.1.4 (a) The making by Tenant of any general assignment
for the benefit of creditors; (b) the appointment of a trustee or receiver
to take possession of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within thirty (30) days, or (c) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where
seizure is not discharged within thirty (30) days.
13.2 Remedies. Upon a default, Landlord shall have the following
remedies, in addition to all other rights and remedies provided by law
or otherwise provided in this Lease, to which Landlord may resort
cumulatively or in the alternative:
13.2.1 Landlord may continue this Lease in full force and
effect, and this Lease shall continue in full force and effect as long as
Landlord does not terminate this Lease, and Landlord shall have the right
to collect Rentals when due. No act by Landlord other than giving written
notice to Tenant shall terminate this Lease. Acts of maintenance, efforts
to relet the Premises or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this Lease shall not
constitute a termination of Tenant's right to possession.
13.2.2 Landlord may terminate this Lease and Tenant's right
to possession of the Premises at any time if (i) such default is in the
payment of Rentals and it is not cured within three (3) days after written
notice from Landlord, or, (ii) with respect to the defaults referred to in
Paragraphs 13.1.1, or 13.1.3 such default is not cured within ten (10) days
after written notice from Landlord; provided, however, that if the nature
of Tenant's default is such that more than ten (10) days are resonably
required for its cure, if Tenant does not commence to cure the default
within the ten (10) day period or does not diligently and in good faith
prosecute the cure to completion within a reasonable time thereafter, or
(iii) with respect to the default specified in Paragraph 13.1.4, such
default is not cured within the respective time specified in that
paragraph. The parties agree that any notice given by Landlord to Tenant
pursuant to this Paragraph 13.2.2 shall be sufficient notice for purposes
of California Code of Civil Procedure Section 1161 and Landlord shall not
be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding. On termination, Landlord has the
right to remove all Tenant's personal property, signs and trade fixtures
and store same at Tenant's cost and to recover from Tenant as damages:
13.2.2.1 The worth at the time of award of unpaid
Rentals and other sums due and payable which had been earned at the time of
termination; plus
13.2.2.2 The worth at the time of award of the amount
by which the unpaid Rentals and other sums due and payable which would have
been payable after termination until the time of award exceeds the amount
of such Rental loss that Tenant proves could have been reasonably avoided;
plus
13.2.2.3 The worth at the time of award of the amount
by which the unpaid Rentals and other sums due and payable for the balance
of the Term after the time of award exceeds the amount of such Rental loss
that Tenant proves could be reasonably avoided; plus
13.2.2.4 Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform Tenant's obligations under this Lease, or which, in the ordinary
course of things, would be likely to result therefrom, including, without
limitation, any costs or expenses incurred by Landlord: (a) in retaking
possession of the Premises; (b) in maintaining, repairing, preserving,
restoring, replacing, cleaning, altering or rehabilitating the Premises or
any portion thereof, including such acts for reletting to a new tenant or
tenants; (c) for leasing commissions; or (d) for any other costs necessary
or appropriate to relet the Premises; plus
<PAGE>
13.2.2.5 Such other amounts in addition to or in lieu
of the foregoing as may be permitted from time-to-time by the laws of the
State of California.
The "worth at the time of award" of the amounts referred to in
Paragraphs 13.2.2.1 and 13.2.2.2 is computed by allowing interest at the
Stipulated Rate. The "worth at the time of award" of the amount referred
to in Paragraph 13.2.2.3 is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time
of award plus one percent (1%).
13.2.3 Tenant hereby waives any right of redemption or
relief from forfeiture under California Code of Civil Procedure Sections
1174 or 1179, or under any other present or future similar law, if Tenant
is evicted or Landlord takes possession of the Premises by reason of any
default by Tenant hereunder.
13.2.4 No delay or omission of Landlord to exercise any
right or remedy shall be construed as a waiver of any such right or remedy
or of any default by Tenant hereunder.
13.3 Default by Landlord. Landlord shall not be deemed to be in
default in the performance of any obligation required to be performed by it
hereunder unless and until it has failed to perform such obligation within
thirty (30) days after written notice by Tenant to Landlord specifying
wherein Landlord has failed to perform such obligation; provided, however,
that if the nature of Landlord's obligation is such that more than thirty
(30) days are required for its performance then Landlord shall not be
deemed to be in default if it shall commence such performance within such
thirty-day period and thereafter diligently prosecute the same to
completion. Notwithstanding any other provision of this Lease, in no event
shall Landlord be liable to Tenant for consequential damages, or loss of or
interference with Tenant's business, including without limitation lost
profits.
13.4 Expenses of Prevailing Party. If either party incurs any
expense, including reasonable attorneys' fees, in connection with any
action or proceeding instituted by either party arising out of this
Lease, the party prevailing in such action or proceeding shall be
entitled to recover its reasonable expenses including attorneys' fees
from the other party.
13.5 Chronic Delinquency. "Chronic delinquency" means failure by
Tenant to pay or submit when due any Rentals due under this Lease three (3)
times (consecutive or nonconsecutive) during any twelve (12) month period.
In the event of a Chronic Delinquency Landlord shall have the right,
without waiving any other rights and remedies Landlord may have, to require
that Base Rent and Direct Expenses be paid by Tenant quarterly, in advance.
14. COMMON AREA. Tenant shall operate, manage, equip, light, repair,
clean and maintain and replace the Common Area in a clean, safe and
first-class manner throughout the Term at Tenant's sole cost; provided,
however, that Landlord may temporarily close any Common Area, including
parking areas, to prevent a dedication thereof or the accrual of
prescriptive rights therein.
15. DIRECT EXPENSES.
15.1 Assessment upon Tenant. Tenant shall pay to Landlord, as
Additional Rent, in the manner and at the time provided below, all Direct
Expenses incurred by Landlord during the Term.
15.2 Apportionment of Assessment. Within thirty (30) days after
the commencement of each Lease Year, Landlord shall give Tenant a written
estimate of Direct Expenses for the ensuing Lease Year. Tenant shall pay
such estimated amount to Landlord, as Additional Rent, in monthly
installments in advance on the first day of each calendar month of the
Term, without deduction, offset, prior notice or demand, prorated for any
partial month. Landlord may at any time during the Term, but not more
frequently than quarterly, adjust estimates of Direct Expenses to reflect
current expenditures. Following written notice to Tenant of such revised
estimate, subsequent payment by Tenant shall be based upon such revised
estimate. Within ninety (90) days after the end of each Lease Year,
Landlord shall furnish to Tenant a statement showing in reasonable detail
the Direct Expenses incurred by Landlord during such Lease Year, and the
parties shall, within thirty (30) days after the date of such statement,
make any payment necessary to adjust Tenant's estimated payments for such
Lease Year to the actual Direct Expenses incurred for such Lease Year as
shown by such annual statement.
16. PARKING. If Landlord is required by any law to limit or control
parking on the Premises, by validation of parking tickets or any other method,
then Tenant agrees to participate in such validation or other program under
such reasonable rules and regulations as are from time to time established by
Landlord. Landlord shall have the right to close all or any portion of the
parking areas at reasonable times to prevent a dedication thereof, or the
accrual of rights in any person or the public therein. The parking areas shall
not be used by Tenant or Tenant's Agents for any purpose other than the
parking of motor vehicles and the ingress and egress of pedestrians and motor
vehicles. Tenant agrees to pay to Landlord, as Additional Rent, upon demand,
any parking charges, or any other costs levied, assessed or imposed by, or at
the direction of, or resulting from Laws, or interpretations thereof,
promulgated by any government authority in connection with the use
or occupancy of the Premises or the parking facilities serving the
Premises.
17. SIGNS. Tenant shall not, without Landlord's prior written consent
(which consent may be withheld in Landlord's sole discretion), install or
affix to any portion of the Premises any exterior or interior window, door
or other signs, lettering, placards or the like (collectively "Signs"). If
Landlord consents to the erection of any Signs, such Signs shall comply
with any sign criteria imposed by Landlord and all Laws. Tenant may use as
its advertised business address the name of the Premises as it appears in
the Basic Lease Information. Tenant shall not use the name of the Premises
for any purpose other than as the address of the business to be conducted
by Tenant in the Premises, and Tenant shall not acquire any property right
in or to any name which contains such name or a part thereof. Any permitted
use by Tenant of the name of the Premises during the Term shall not permit
Tenant to use, and Tenant shall not use, such words either after Lease
Termination or at any other location. Landlord reserves the right to change
the name of the Premises at any time.
18. TENANT STATEMENTS.
18.1 Estoppel Certificato. Tenant shall at any time and from time
to time upon not less than seven (7) days' prior written notice from
Landlord execute, acknowledge and deliver to Landlord a statement in
writing (a) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect)
and the dates to which the Base Rent and other charges are paid in advance,
if any, (b) acknowledging that there are not, to Tenant's knowledge, any
uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed and (c) certifying and acknowledging such other
facts as may be reasonably requested by Landlord. Any such statement may be
relied upon by any prospective purchaser or encumbrancer of the Premises or
of all or any portion of the real property of which the Premises are a
part. Tenant's failure to deliver such statement within such time shall, in
addition to constituting a default under this Lease, be conclusive upon
Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are
no uncured defaults in Landlord's performance, and (iii) that not more than
one month's Base Rent has been paid in advance.
18.2 Financial Statements. Tenant shall within seven (7) days
following written request by Landlord, deliver to Landlord the current
financial statements of Tenant and financial statements of the two (2)
years prior to the current year, with an opinion of a certified public
accountant, including a balance sheet and profit and loss statement for the
most recent prior year, all prepared in accordance with generally accepted
accounting principles or on a tax basis, whichever method is consistently
used by Tenant.
19. RIGHT OF ENTRY. Landlord and its agents shall have free access to
the Premises during all reasonable hours for the purpose of examining the same
to ascertain if they are in good repair, making repairs or installations which
Landlord may be required or permitted to make hereunder, performing Landlord's
obligations under this Lease, protecting the Premises, posting notices of
nonresponsibility, and exhibiting the same to prospective purchasers, lenders
or tenants.
20. TRANSFER OF LANDLORD'S INTEREST. Upon any transfer or transfers of
Landlord's interest in the Premises, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer. Tenant shall attorn to
any transferee of Landlord's interest in the Premises.
21. RENTABLE AREA. "Rentable Area" shall be determined in accordance
with the Building Owners/Managers Association standard method of measuring
rentable square feet in office buildings in effect on the date this Lease
is executed by the Landlord and Tenant.
22. SECURITY DEPOSIT. Tenant has deposited with Landlord the security
deposit described in the Basic Lease Information as security for the full
and faithful performance of every provision of this Lease to be performed
by Tenant. If Tenant defaults with respect to any provision of this Lease
including, but not limited to, the provisions relating to the payment of
Rentals, Landlord may use, apply or retain all or any part of this security
deposit for the payment of any Rentals in default, or for the payment of
any other amount which Landlord may spend or become obligated to spend by
reason of Tenant's default, or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant's default. If any
portion of such deposit is so used or applied, Tenant shall within five (5)
days after written demand therefor deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount and
Tenant's failure to do so shall be a material breach of this Lease.
Landlord is not a trustee of the security deposit, and shall not be
required to keep the security deposit separate from its general funds.
Tenant shall not be entitled to interest on such deposit. If Tenant fully
and faithfully performs every provision of this Lease to be performed by
it, the remaining balance of the security deposit shall be returned to
Tenant or, at Landlord's option, to the last assignee of Tenant's interest
hereunder, within the time required by law.
23. INTEREST. Any amount due from Tenant to Landlord hereunder which
is not paid when due (except for Base Rent, which shall be governed by
Paragraph 4.4) shall bear interest at the rate of ten percent (10%) per
annum, but in no event to exceed the maximum ratio allowed by law, (the
"Stipulated Ratio") from the due date until paid. Payment of such interest
shall not excuse or cure any default by Tenant under this Lease.
24. GUARANTY. This Lease shall be guaranteed by the Guarantor
referenced in the Basic Lease Information pursuant to terms of the Guaranty
attached as EXHIBIT C.
25. MISCELLANEOUS.
25.1 Time of Essence. Time is of the essence with respect to the
performance of every provision of this Lease (except delivery of possession
of the Premises to Tenant).
25.2 Captions. The article and paragraph captions contained in
this Lease are for convenience only and shall not be considered in the
construction or interpretation of any provision thereof.
25.3 Entire Agreement and Amendments. This Lease contains all of
the agreements of the parties hereto with respect to any matter covered or
mentioned in this Lease, and no other agreement or understanding pertaining
to any such matter shall be effective for any purpose. No provision of this
Lease may be amended or added to except by an agreement in writing signed
by the parties hereto or their respective successors in interest.
25.4 Notice. Any notice required or permitted to be given
hereunder shall be in writing and may be served personally or by mail. If
served by mail it shall be addressed as specific in the Basic Lease
Information. Any notice so given by mail shall be deemed effectively given
three (3) days after being deposited in the United States mail, registered
or certified, postage prepaid and addressed as specified herein. Either
party may by written notice to the other specify a different address for
notice purposes. Notwithstanding the foregoing, any legal notices required
to be sent by one party to the other (including without limitation, a
notice pursuant to California Code of Civil Procedure Section 1161) shall
be delivered in the manner required or allowed by law
25.5 Holdover. This Lease shall terminate without further notice
at the expiration of the Term. Any holding over after Lease Termination
with the consent of Landlord shall be construed to be a tenancy from month
to month, at one hundred twenty-five percent (125%) of the Base Rent for
the month immediately preceding Lease Termination in addition to all other
Rentals payable hereunder, and shall otherwise be on the terms and
conditions herein specified insofar as applicable. If Tenant remains in
possession of the Premises after Lease Termination without Landlord's
consent, Tenant shall indemnify, defend and hold Landlord and Landlord's
employees, agents and partners harmless from and against any claim, loss,
damage, expense or liability resulting from Tenant's failure to surrender
the Premises, including without limitation, any claims made by any
succeeding tenant based upon delay in the availability of the Premises.
25.6 Brokers. Tenant warrants and represents that it has had no
dealings with any real estate broker or agent in connection with the
negotiation of this Lease, except for the broker(s) referred to in the
Basic Lease Information and that it knows of no other real estate broker or
agent who is or might be entitled to a commission in connection with this
Lease. Tenant agrees to defend, indemnify and hold Landlord and Landlord's
employees, agents and partners harmless from and against any and all
liabilities or expenses, including attorney's fees and costs, arising out
of or in connection with claims made by any other broker or individual for
commissions or fees resulting from Tenant's execution of this Lease.
25.7 Acceptance. Delivery of this Lease, duly executed by Tenant,
constitutes an offer to lease the Premises, and under no circumstances
shall such delivery be deemed to create an option or reservation to lease
the Premises for the benefit of Tenant. This lease shall only become
effective and binding upon full execution hereof by Landlord and delivery
of a signed copy to Tenant.
25.8 Waiver. The waiver by Landlord of any breach of any term,
condition or covenant of this Lease shall not be deemed to be a waiver of
such provision or any subsequent breach of the same or any other term,
condition or covenant of this Lease. The subsequent acceptance of Rentals
hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach at the time of acceptance of such payment. No covenant, term or
condition of this Lease shall be deemed to have been waived by Landlord
unless such waiver is in writing signed by Landlord.
25.9 Separability. If one or more of the provisions contained
herein, except for the payment of Rentals, is for any reason held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Lease, but this Lease shall be construed as if such invalid, illegal or
unenforceable provision had not been contained herein.
25.10 Liens. Tenant shall pay for all labor and services
performed for, and all materials used by or furnished to Tenant or Tenant's
Agents and keep the Premises free from any liens arising out of work
performed, materials furnished, or obligations incurred by Tenant or
Tenant's Agents with respect to the Premises. Tenant shall indemnify, hold
harmless and defend Landlord and Landlord's employees, agents and partners
from and against any liens, demands, claims, judgments or encumbrances
(including all attorneys' fees) arising out of any work or services
performed for or materials used by or furnished to Tenant or Tenant's
Agents with respect to the Premises. Tenant shall do all things necessary
to prevent the filing of any mechanic's or other liens against the Premises
or any part thereof by reason of work, labor, services or materials
supplied or claimed to have been supplied to Tenant, or anyone holding the
Premises, or any part thereof, through or under Tenant. If any such lien
shall at any time be filed against the Premises, Tenant shall either cause
the same to be discharged of record within ten (10) days after the date of
filing of the same, or, if Tenant in Tenant's discretion and in good faith
determines that such lien should be contested, Tenant shall furnish such
security as may be necessary or required to (a) prevent any foreclosure
proceedings against the Premises during the pendency of such contest, and
(b) cause a mutually satisfactory title company to remove such lien as a
matter affecting title to the Premises. If Tenant shall fail to discharge
such lien within such period or fail to furnish such security, then, in
addition to any other right or remedy of Landlord resulting from Tenant's
said default, Landlord may, but shall not be obligated to, discharge the
same either by paying the amount claimed to be due or by procuring the
discharge of such lien by giving security or in such other manner as is, or
may be, prescribed by law. Tenant shall repay to Landlord on demand all
sums disbursed or deposited by Landlord pursuant to the foregoing
provisions of this Paragraph 25.10 including Landlord's costs, expenses and
reasonable attorneys' fees incurred by Landlord in connection therewith,
with interest thereon at the Stipulated Rate. Nothing contained herein
shall imply any consent or agreement on the part of Landlord to subject
Landlord's estate to liability under any mechanics' or the lien law. Tenant
shall give Landlord adequate opportunity and Landlord shall have the right
to post such notices of nonresponsibility as are provided for in the
mechanics' lien laws of California.
25.11 Subordination. This Lease is subject and subordinate to
ground and underlying leases, mortgages and deeds of trust (collectively
"Encumbrances") which may now affect the Premises, to any covenants,
conditions or restrictions of record, and to all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, if
the holder or holders of any such Encumbrances ("Holder") shall require
that this Lease be prior and superior thereto, within seven (7) days after
written request of Landlord to Tenant, Tenant shall execute, have
acknowledged and deliver any and all documents or instruments, in the form
presented to Tenant, which Landlord or Holder deems necessary or desirable
for such purposes. Landlord shall have the right to cause this Lease to be
and become and remain subject and subordinate to any and all Encumbrances
which are now or may hereafter be executed covering the Premises or any
renewals, modifications, consolidations, replacements or extensions
thereof, for the full amount of all advances made or to be made thereunder
and without regard to the time or character of such advances, together with
interest thereon and subject to all the terms and provisions thereof;
provided only, that in the event of termination of any such lease or upon
the foreclosure of any such mortgage or deed of trust, Holder agrees to
recognize Tenant's rights under this Lease as long as Tenant is not then in
default and continues to pay the Rentals and observe and perform all the
provisions of this Lease to be observed and performed by Tenant. Within ten
(10) days after Landlord's written request, Tenant shall execute any and
all documents required by Landlord or the Holder to make this Lease
subordinate to any lien of the Encumbrance. If Tenant fails to do so, then
in addition to such failure constituting a default by Tenant, it shall be
deemed that this Lease is so subordinated to such Encumbrance.
Notwithstanding anything to the contrary set forth in this paragraph,
Tenant hereby attorns and agrees to attorn to any entity purchasing or
otherwise acquiring the Premises at any sale or other proceeding or
pursuant to the exercise of any other rights, powers or remedies under such
Encumbrance.
25.12 Recording. Tenant shall not record this Lease or any
memorandum thereof.
25.13 Landlords's Right to Perform Tenant's Covenants. If Tenant
fails to make any payment or perform any other act on its part to be made
or performed under this Lease, Landlord may, but shall not be obligated to
and without waiving or releasing Tenant from any obligation of Tenant under
this Lease, make such payment or perform such other act to the extent
Landlord may deem desirable, and in connection therewith, pay expenses and
employ counsel. All sums so paid by Landlord and all penalties, interest
and costs in connection therewith shall be due and payable by Tenant
immediately on demand, together with interest at the Stipulated Rate from
the date of payment by Landlord to the date of payment by Tenant to
Landlord, plus collection costs and attorneys' fees.
25.14 Tenant's Remedy. If, because of a default by Landlord under
this Lease, Tenant revovers a money judgement against Landlord, such
judgement shall be satisfied only out of the proceeds of sale received upon
execution of such judgement and levied thereon against the right, title and
interest of Landlord in the Premises and out of rent or other income from
the Premises receivable by Landlord, and neither Landlord, its partners nor
its agents shall be personally liable for any deficiency. Neither
Landlord's partners nor agents, nor any other person or entity other than
Landlord, nor any of their respective assets, shall be liable for
Landlord's breach of this Lease.
25.15 Mortgage Protection. If Landlord defaults under this Lease,
Tenant will notify, by registered or certified mail, any beneficiary of a
deed of trust or mortgagee of a mortgage covering the Premises
("Beneficiary"), and offer such Beneficiary a reasonable opportunity to
cure the default, including time to obtain possession of the Premises by
power of sale or a judicial foreclosure, if such should prove necessary to
effect a cure. If any Beneficiary shall require any modification to this
Lease in connection with existing or future financing, Tenant shall enter
into an amendment to this Lease so required by such Beneficiary as long as
the same does not materially alter Tenant's rights and obligations
hereunder.
25.16 Exhibits. The Basic Lease Information, and all exhibits,
amendments, riders and addenda attached hereto are hereby incorporated
herein and made a part hereof.
25.17 Tenant Improvements. The construction of any initial
improvements to the interior of the Premises shall be subject to the terms
of EXHIBIT B.
25.18 Conditions. All agreements of Tenant contained in this
Lease, whether expressed as conditions or covenants, shall be construed to
be both conditions and covenants, conferring upon Landlord, in the event of
a breach thereof, the right to terminate this Lease.
25.19 No Partnership or Joint Venture. Nothing in this Lease
shall be construed as creating a partnership or joint venture between
Landlord, Tenant, or any other party, or cause Landlord to be responsible
for the debts or obligations of Tenant or any other party.
25.20 Construction. This Lease shall not be construed either for
or against Tenant or Landlord, but shall be construed in accordance with
the general tenor of the language. This Lease shall be construed in
accordance with the laws of the State of California.
25.21 Joint and Several Liability. If Tenant consists of more
than one (1) person or entity, the obligations of each Tenant under this
Lease shall be joint and several.
25.22 Binding Effect. Subject to the provisions of Paragraph 20
and Article 10, all of the provisions hereof shall bind and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
THIS LEASE is effective as of the date the last signatory necessary to
execute the Lease shall have executed this Lease.
TENANT:
Dated: 10/31/94 Symtron Corporation
By /s/ Milan Mandaric
Its President and CEO
By
Its
LANDLORD:
Dated: 11/4/94 REDTREE PROPERTIES, L.P.,
a Delaware limited partnership
By: TREEHAVEN L.P.
a California limited partnership
Its General Partner
By: Havermawr Inc.,
a California corporation
Its General Partner
By: /s/ Douglas P. Ley
Douglas P. Ley
President
<PAGE>
ADDENDUM TO INDUSTRIAL BUILDING LEASE (SINGLE TENANT NET)
This is an Addendum to that certain Industrial Building Lease (Single
Tenant Net) dated October 24, 1994 (the "Lease"), by and between REDTREE
PROPERTIES, L.P., a Delaware limited partnership ("Landlord") and
SYMTRON CORPORATION ("Tenant"), for that certain real property commonly
known as 1188 Bordeaux Drive, Sunnyvale, California, consisting of
approximately thirty thousand nine hundred ninety-six (30,996) square
feet.
26. Tenant shall have the right to occupy a portion of the Premises
(such portion being designated on Exhibit "A-1" attached hereto as the
"Early Occupancy Area") beginning on December 21, 1994 and continuing
until the Commencement Date (the "Early Occupancy Period").
Notwithstanding Paragraph 3.1 of the Lease, during the Early Occupancy
Period, but only so long as Tenant does not use or occupy any portion of
the Premises other than the Early Occupancy Area, Tenant shall not be
obligated to pay Base Rent or Direct Expenses. During the Early
Occupancy Period, Tenant shall otherwise be subject to all of the terms
and conditions of the Lease. If Landlord is unable to deliver possession
of the Early Occupancy Area to Tenant on December 21, 1994, Landlord
shall not be subject to liability therefor, nor shall such failure
affect the validity of this Lease or the obligations of Tenant or extend
the Commencement Date or the Expiration Date, except that (i) if such
possession is not delivered to Tenant by February 21, 1995, Tenant may,
at Tenant's option with notice in writing to Landlord within ten (10)
days thereafter, cancel this Lease, and (ii) if Tenant does not elect to
terminate the Lease, then for each day that possession is not delivered
to Tenant after January 21, 1995 through no fault of Tenant or Tenant's
Agents, Tenant's obligations to commence paying Base Rent and Direct
Expenses from and after the Commencement Date shall be delayed by one
(1) day. If such notice is not received by Landlord within such 10-day
period, Tenant's right to cancel this Lease shall terminate and be of no
further force and effect.
Tenant acknowledges and agrees that during the Early Occupancy
Period, Landlord will be pursuing completion of Landlord's Work in the
Premises. Tenant acknowledges that Landlord's construction activities in
the Premises may interfere with Tenant's use or occupancy of the
Early Occupation Space. Tenant hereby waives and releases Landlord from
any and all claims against Landlord for any interference with or
interruption of Tenant's business or other activities in the Premises
resulting from Landlord's construction activities in the Premises. In no
event shall Tenant have the right to occupy or utilize any portion of
the Premises during the Early Occupancy Period other than the Early
Occupancy Area. In addition, if Tenant's activities within the Premises
result in any delay in Landlord's Work, such delay shall be attributed
to Tenant for all purposes of this Lease, including Section 3.2 of the
Lease. Until Landlord's Work is complete, Tenant agrees to conduct its
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activities in the Early Occupancy Area in a manner that will not interfere
with, hinder or delay Landlord's Work.
27. Notwithstanding Paragraph 3.2 of the Lease, if Landlord is
delayed in delivering possession of the Premises to Tenant for a reason
other than a delay caused or contributed to by Tenant or Tenant's
Agents, then the Expiration Date of the Lease shall be extended for the
period of such delay. In addition, item (iii) of Paragraph 3.2 of the
Lease is hereby revised to read "(iii) the date upon which Tenant
commences operation from any portion of the Premises other than the Early
Occupancy Area, whichever is earlier."
28. Paragraph 3.3 of the Lease is hereby deleted in its entirety.
29. Landlord agrees to perform Landlord's Work in good and
workmanlike manner, using good materials, and complete such work
substantially in accordance with the Approved Interior Plans. By taking
possession of the Premises Tenant shall be deemed to have accepted the
Premises as having been constructed in accordance with the requirements
of this Addendum Paragraph 29, subject to the punchlist procedure
described in Paragraph 3.4 of the Lease. With respect to any material
latent defects not discovered in the course of the punchlist procedure
referenced in Paragraph 3.4, Tenant agrees to promptly notify
Landlord of the discovery of such defect, which Landlord agrees to
correct within a reasonable time thereafter.
30. Notwithstanding Paragraph 6.2 of the Lease, Tenant shall not be
required to perform structural alterations to the Premises in order
to comply with applicable Laws regulating Tenant's use of the Premises,
or to make any other changes to the Premises which may be required due
to an amendment to the Americans With Disabilities Act of 1990 after the
effective date of this Lease, unless such structural alterations or
changes are required due to (i) Tenant's particular use of the Premises
or Tenant's change in use of the Premises, (ii) Alterations or
improvements to the Premises made by or for Tenant, or (iii) Tenant's
application for any permits or governmental approval. Landlord agrees
that upon the Commencement Date, the Building shall be in compliance
with the Americans With Disabilities Act of 1990, except to the extent
of modifications which may be made by Tenant to the Premises.
31. Notwithstanding Paragraph 6.2 of the Lease, the Addendum
Paragraph 31 shall apply as it relates to Hazardous Materials. Tenant
and Tenant's Agents shall not use, store, release or dispose of
(collectively "Release"), or allow the Release of any Hazardous Materials
in or about the Premises, except that Tenant may, subject to the terms
of this Lease, use and store in the Premises those substances identified
as Permitted Materials on Attachment 1 attached hereto. Tenant may only
store or use Permitted Materials in such quantities as are necessary to
conduct Tenant's business in the Premises, but in no event shall the
quantity of any
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Permitted Materials stored at the Premises exceed the maximum quantity
identified on Attachment 1. In addition, Tenant shall have the right to use
customary quantities and types of materials typically contained in normal
office supplies and janitorial products in connection with Tenant's
operations at the Premises.
Tenant and Tenant's Agents shall strictly comply with all Laws
relating to Hazardous Materials in effect from time to time,
(collectively "Environmental Laws"), including without limitation any
obligation to notify Landlord with respect to Hazardous Materials.
Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant or the
Premises concerning Hazardous Materials. Tenant acknowledges that
Landlord shall have the right, but not the obligation, in Landlord's own
name, to negotiate, contest, defend, and approve, at Tenant's expense,
any action taken or threatened or order issued by a governmental
authority with regard to Tenant's failure to comply with the provisions
of this Paragraph 31 relating to Hazardous Materials. Tenant shall,
within fifteen (15) days after receipt by Tenant, submit to Landlord
copies of all inquiries, tests, investigations, and enforcement
proceedings described above and copies of all reports and responses
thereto prepared by or on behalf of Tenant relating to Hazardous
Materials. In connection with the transporting of any Hazardous
Materials to or from the Premises, Tenant shall list itself as the
generator. Tenant shall cause all Permitted Materials to be removed from the
Premises solely by duly licensed handlers and transported to duly
licensed facilities for final disposal of same, and in no event shall
Tenant allow any Hazardous Materials (including Permitted Materials) to
be discharged into the sanitary sewer system or otherwise disposed of at
the Premises; provided however, that the prohibition against discharging
any Hazardous Materials into the sanitary sewer system shall not apply
to allowable janitorial products, provided that any such discharge into
the sanitary sewer system is in compliance with all Environmental Laws.
Tenant shall indemnify, defend and hold Landlord and Landlord's
partners, affiliates and agents harmless from and against any and all
claims, actions, suits, proceedings, orders, judgments, losses, costs,
damages, liabilities, penalties, or expenses (including without
limitation attorneys' fees and costs of remediation and/or cleanup)
arising in connection with the Release by Tenant or Tenant's Agents of
any Hazardous Materials in, on, under or adjacent to the Premises, or
any Hazardous Materials shipped thereto or therefrom by Tenant or
Tenant's Agents, including, without limitation, (i) any cost, damage or
liability incurred or sustained by Landlord in connection with an order
or requirement of a governmental authority to remediate, remove or clean
up such Hazardous Materials, (ii) any third party claim resulting from
death, personal injury or property damage arising out of the Release of
such Hazardous Materials, and (iii) any consequential damages incurred
by Landlord as a result of such Hazardous Material including loss of
profits, reduction in value,
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and inability to sell, lease, or finance all or any portion of the
Premises. If any portion of the Premises or adjacent areas becomes
contaminated by Hazardous Materials Released by Tenant or Tenant's Agents,
Tenant shall promptly, at its sole cost, take all actions necessary to
clean up and remove such contamination, and restore the Premises and
adjacent areas to the condition existing prior to the appearance of such
Hazardous Materials. Tenant shall surrender the Premises to Landlord upon
expiration or earlier termination of the Lease free of all Hazardous
Materials Released by Tenant or Tenant's Agents, and in a condition which
complies with all Environmental Laws relating to any Release of Hazardous
Materials by Tenant or Tenant's Agents, recommendations of consultants
hired by Landlord and such other requirements as may be reasonably imposed
by Landlord. Tenant's obligations under this paragraph shall survive the
expiration or sooner termination of this Lease.
Landlord and its representatives shall have the right to enter the
Premises from time to time and to: (i) conduct any testing, monitoring
and analysis for Hazardous Materials; (ii) review any documents,
materials, inventory, financial data or notices of correspondence to or
from private parties or governmental or regulatory authorities in
connection therewith; and (iii) review all storage, use, transportation
and disposal facilities and procedures associated with storage, use,
transportation and disposal of Hazardous Materials. If Landlord
discovers that Tenant is in default of its obligations relating to
Hazardous Materials under this Lease or that a Release by Tenant or
Tenant's Agents has resulted in contamination of any portion of the
Premises by Hazardous Materials, then all costs and expenses incurred by
Landlord in connection with any inspection as provided herein shall
become due and payable by Tenant as Additional Rent, upon presentation
by Landlord of the invoice therefore.
The right to use or store the Permitted Materials in the Premises is
personal to Symtron Corporation and may not be assigned or otherwise
transferred by Symtron Corporation without the prior written consent of
Landlord, which consent may be withheld in Landlord's sole discretion.
Any consent by Landlord to a Transfer pursuant to this Lease shall not
constitute consent by Landlord to use or storage in the Premises of any
Hazardous Materials (including Permitted Materials) unless Landlord
expressly agrees otherwise in writing.)
Landlord hereby represents to Tenant, knowing and intending that
Tenant is relying hereon in executing this Lease, that except as
otherwise disclosed in any documents delivered to Tenant or Tenant's
Agents: (a) Landlord has received no notice from any governmental
authorities that the Premises is presently in violation of any
Environmental Laws; and (b) to Landlord's actual knowledge, without duty
to investigate, no generation, use, handling, storage, escape (whether
accidental or otherwise), treatment or disposal of any Hazardous
Materials in violation of Environmental Laws has occurred or is occuring
at the Premises.
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Landlord shall be solely responsible for and shall defend, indemnify
and hold Tenant harmless from and against all claims of third parties,
costs, liabilities and reasonable attorneys' fees, actions and expenses
arising out of any Hazardous Materials which are caused by Landlord's
storage, use or disposal of Hazardous Materials in or about the
Premises. Landlord's indemnification of Tenant hereunder shall not
extend to any Hazardous Materials migrating to the Premises. If
Hazardous Materials are discovered in or about the Premises and such
Hazardous Materials pose an actual, material and unreasonable risk or
harm to Tenant's employees, not caused by any Release of Hazardous
Materials by Tenant or Tenant's Agents, then, in addition to its other
rights and remedies hereunder, Tenant shall have the right to terminate
this Lease by giving Landlord written notice. Landlord agrees that
Tenant shall have no liability or obligation under this Lease as to any
Hazardous Materials on or about the Premises, to the extent not caused
or contributed to by Tenant or Tenant's Agents.
Landlord shall indemnify and hold Tenant harmless from and against
any all all losses, damages (compensatory, punitive and otherwise),
interest, judgements, costs, reasonable attorneys' fees and expenses of
every kind and nature which it may suffer, incur, pay or expend under
any Environmental Laws arising in any way from or relating to any use,
presence, transportation, storage, disposal, release or discharge of
Hazardous Materials by Landlord at the Premises, and the breach of any
representation by Landlord contained in this Paragraph 31.
32. In the second line of Paragraph 7.1 of the Lease, the words
"roof and structure," are hereby replaced with "building foundation,
exterior walls, roof and roofing, and all structural elements of the
Building". In the second and third lines of Paragraph 7.2 of the Lease,
the phrase "exterior walls (excluding structural repairs)" is hereby
deleted.
33. Notwithstanding Paragraph 7.4 of the Lease, Tenant shall not be
obligated to obtain Landlord's consent to Alterations meeting all of the
following criteria: (i) the Alterations do not affect the Building's
systems or structural elements, (ii) the Alterations do not require a
building permit or other governmental authorization, and (iii) the
aggregate cost of such Alterations made in any Lease Year does not
exceed Twenty-five Thousand Dollars ($25,000), prorated for partial
years.
34. Paragraph 8.7 of the Lease is hereby amended by adding the
following at the end of such paragraph:
, except to the extent such injury or damage is caused by the
active negligence or willful misconduct of Landlord or Landlord's
agents.
35. In Paragraph 13.2.2 of the Lease the references to "ten (10)"
is hereby revised to read "thirty (30)".
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36. Paragraph 15 of the Lease is hereby amended to include the
following:
15.3 Records Review. At Tenant's sole cost and expense, Tenant shall
have the right to review Landlord's records pertaining to the
computation of Direct Expenses for any Lease Year. Any such review
for a Lease Year shall be conducted not later than twelve (12) months
after receiving notice of the actual Direct Expenses for such Lease
Year from Landlord. Tenant's failure to review such records for any
Lease Year within the twelve (12)month period referenced in the prior
sentence shall be deemed a waiver by Tenant of the right to review
such records for such Lease Year. Tenant shall give Landlord not less
than thirty (30) days prior notice of its desire to review the
records relating to Direct Expenses. Such review shall be conducted
in Santa Clara County or Santa Cruz County, California, at a location
designated by Landlord. Tenant shall have no right whatsover pending
the review to withhold, or fail to make any payment for the
estimated, actual, or adjusted Direct Expenses as required pursuant
to Paragraph 15.2 of the Lease or any other amount owed by Tenant
under the Lease.
37. Paragraph 17 of the Lease is hereby amended to include the
following:
Subject to the approval by the City of Sunnyvale, Tenant shall
have the right to install one sign designating Tenant's name on
the monument sign located on the Premises and one sign designating
Tenant's name on the exterior of the Building.
38. Paragraph 18.2 of the Lease is hereby amended to include the
following:
During the time SYMTRON CORPORATION is the Tenant under the Lease,
SYMTRON CORPORATION remains a wholly owned subsidiary of Diceon
Electronics, and Diceon Electronics is a publicly traded
corporation, Tenant may comply with this Paragraph 18.2 by
submitting audited financial statements of Diceon Electronics.
39. Section 2 of Exhibit "B" (Work Letter Agreement) shall be
amended to include the following:
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Notwithstanding the provisions herein, if the total estimate of
Improvement Costs exceeds Three Hundred Eight Thousand Three
Hundred Sixty Dollars ($308,360), Tenant may elect, within ten
(10) days after receiving notice of such estimate, to (1)
reengineer the Approved Interior Plans, (2) solicit bids for
Landlord's Work from contractors reasonably acceptable to
Landlord, to demonstrate that the cost will be less than
Landlord's cost estimate, or (3) agree to pay that portion of
the Improvement loss in excess of Three Hundred Eight Thousand
Three Hundred Sixty Dollars ($308,360). If Tenant elects to pay
the excess Improvement Costs as described in the third option
above, such excess cost shall be paid to Landlord at the time
Tenant makes its election. If Tenant fails to elect any of the
options described in this Paragraph above within the required
ten (10) day period, or if Tenant elects the third option but
fails to pay the excess Improvement Cost to Landlord at the time
of making its election, Landlord shall have the right to
terminate the Lease by delivering written notice of termination
to Tenant, whereupon the Lease shall terminate on the date
designated in Landlord's notice of termination.
40. Base Rent. Subject to the provisions as outlined in Article 4
of the Lease, Base Rent for the initial Term shall be paid according to
the following schedule:
Months 1 - 12 $16,959.80 per month
Months 13 - 24 $17,576.52 per month
Months 25 - 36 $18,501.60 per month
Months 37 - 48 $19,426.68 per month
Months 49 - end
of initial Term $20,043.40 per month
41. Options to Extend. Landlord hereby grants to Tenant two (2)
options to extend the Term (the "Options") each for a consecutive period
of five (5) years, immediately following the expiration of the initial
Term (the "Extended Terms"), upon the following terms and conditions:
(a) Tenant shall give Landlord written notice of its exercise
of an Option to extend the Term not later than one hundred eighty (180)
days before the date the Term would end but for said exercise.
(b) Tenant shall not have the right to exercise an Option if
Tenant (i) has been in default under the Lease more than three (3) times
during the Term of the Lease, or (ii) is in default
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under the Lease at the time Tenant gives notice of its exercise of the
Option. Any notice to extend given by Tenant while Tenant is in default
shall be ineffective. The period of exercise for an Option shall not be
extended for any period for which Tenant is unable to exercise an Option
because the Tenant's default.
(c) All terms and conditions of the Lease shall apply during an
Extended Term, except that Base Rent shall be determined as provided
below in Paragraph 42, and Landlord shall have no obligation to
construct any tenant improvements in the Premises.
(d) Upon exercise of an Option, Tenant may not withdraw such
exercise, and such notice of exercise shall operate to automatically
extend the Term, subject to Paragraph 41(b); provided, however, if as of
the date the Extended Term is to commence Tenant has defaulted more than
three (3) times under the Lease or Tenant is in default on the date the
Extended Term is to begin, then at Landlord's option, the Lease shall
not be extended pursuant to the provisions of this Paragraph 41, but
shall terminate on the date the Term would end but for such extension.
(e) Upon expiration or sooner termination of the Lease, all
remaining Options shall terminate and be of no further force or effect.
42. Rent for Extended Term. Base Rent for the first year of an Extended
Term shall be in the fair market rental value of the Premises (defined
below). Base Rent during an Extended Term shall be subject to annual
adjustment, to the extent market conditions warrant adjustment, determined
at the time that fair market rental value of the Premises for the Extended
Term is determined, and based upon the then current market conditions. For
a period of thirty (30) days following Tenant's exercise of an Option for
the Extended Term, Landlord and Tenant shall endeavor to agree upon the
fair market rental value of the Premises for each year of the Extended Term.
If Landlord and Tenant are unable to agree upon such fair market rental
value within such thirty (30) day period (the "Negotiation Period"), then
the fair market rental value of the Premises for each year of the Extended
Term shall be established by appraiser(s) in accordance with the following
procedure:
(i) Within ten (10) days after the expiration of the
Negotiation Period, each party, at its cost and by giving notice to
the other party, shall appoint a real estate appraiser with at
least ten (10) years full-time commercial appraisar experience in
the Santa Clara County, California area to appraise and set the
fair market rental value of the Premises for the Extended Term,
which fair market rental value shall include cost of living and/or
other rental adjustments during the Extended Term based
on then existing market conditions. All appraisers selected
pursuant to the provisions hereof shall be impartial and unrelated,
directly or indirectly, so far as the employment of services is
concerned, to any
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of the parties hereto. If a party does not appoint an appraiser,
then twenty (20) days after the other party has given notice of the
name of its appraiser, the single appraiser appointed shall be the
sole appraiser and shall set the fair market rental value of the
Premises for the Extended Term. If two appraisers are appointed by
the parties as stated in this paragraph, they shall meet promptly
and render their respective appraisals within sixty (60) days after
they have been selected. If the two appraisers agree on the fair
market value of the Premises for the Extended Term, the value
determined by them shall be binding on the parties hereto. If the
appraisers do not concur, the two appraisers shall attempt to
select a third appraiser meeting the qualifications stated in this
paragraph within twenty (20) days after the last day the two
appraisers are given to set the fair market rental value of the
Premises for the Extended Term. If they are unable to agree on the
third appraiser, either of the parties to this Lease, by giving ten
(10) days notice to the other party, may apply to the presiding
judge of the Superior Court of Santa Clara County, California to
select a third appraiser who meets the qualifications stated in
this paragraph. Within thirty (30) days after the date of the
selection of the third appraiser, the third appraiser shall select
one of the two appraisals previously rendered to be the fair market
rental value for the Extended Term. The expenses related to the
selection and services of the third appraiser shall be shared
equally by the parties herein.
(ii) The fair market rental value for the Premises to be
determined in the manner stated above shall be based upon
rentals for leases of space comparable to the Premises, within
projects comparable to the project in Santa Clara County,
California.
43. Fire Sprinkler Alarm Maintenance. Notwithstanding any other
provision of the Lease, Landlord shall maintain the fire sprinkler
system servicing the Premises, and in connection therewith, Landlord
shall have the right to enter into an agreement for central station
monitoring of the fire sprinkler system servicing the Premises. All
costs incurred by Landlord in maintaining or repairing the fire
sprinkler system or the alarm system connected therewith shall be paid
by Tenant to Landlord within ten (10) days after demand for payment is
made.
44. HVAC. Notwithstanding any other provision of this Lease or
Exhibit B - Work Letter Agreement, Landlord shall deliver the Premises
with all existing HVAC units and Building mechanical systems in good
operating condition.
45. Insurance. In paragraph 8.4 of the Lease, the words "and
shall contain a cross-liability endorsement" shall be deleted from the
sixth line.
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46. Effect. Except as modified by the terms of this Addendum, the
Lease shall remain unchanged and in full force and effect. In the event
of any conflict between this Addendum and the Lease, the terms and
conditions of this Addendum will govern and control the intent and
agreement of the parties.
IN WITNESS WHEREOF, Landlord Tenant have executed and delivered
this Addendum on the date first above written.
TENANT:
SYMTRON CORPORATION
By /s/ Milan Mandaric
------------------------
Its President & CEO
------------------------
LANDLORD:
REDTREE PROPERTIES, L.P.,
a Delaware limited partnership
By: TREEHAVEN L.P.,
a California limited partnership
Its General Partner
By: HAVERMAWR INC.,
a California corporation
Its General Partner
By /s/ Douglas P. Ley
------------------------
Douglas P. Ley
President
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ATTACHMENT 1
PERMITTED MATERIALS
Description Maximum Quantities
The following is a list of chemicals that the Symtron Facility
at 1060 Lavenida, Mountain View stores and uses;
Isopropyl Alcohol: 2-Propanol: Dimethyl Carbinol. We order and use sixteen
gallons a month.
Cyclohexane: We use approximately 60 gallons per year. Currently we have
approximately 12 gallons on site.
Gold guard 2000 spray lubricant. We use approximately thirty 6.5 fl. oz. cans
per month.
Solder Flux. We use approximately 1 gallon per month.
Pepared by Eric Busche, 10/17/94
11.
<PAGE>
ADDITIONAL PROVISION FOR PARAGRAPH 31 OF THE ADDENDUM TO THAT CERTAIN LEASE
DATED OCTOBER 24, 1994 ON 1188 BORDEAUX DRIVE, SUNNYVALE BETWEEN SYMTRON
CORPORATION AS TENANT, AND REDTREE PROPERTIES, L.P. AS LANDLORD.
Regarding Tenant's requirement as described in Paragraph 31 on page three
(3) of the above referenced Addendum to the Lease, to, within fifteen (15)
days after receipt by Tenant, submit to Landlord copies of all inquiries,
tests, investigations and enforcement proceedings, and copies of all reports
and responses thereto prepared by or on behalf of Tenant relating to Hazardous
Materials, in addition, in no event shall Tenant test for Hazardous Materials
on the Premises without Landlord's prior constent, which consent may be
withheld in Landlord's sole discretion.
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please initial
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please initial
<PAGE>
EXHIBIT A
PREMISES DESCRIPTION
1188 Bordeaux, Sunnyvale, California, Santa Clara County, APN
#110-25-37, approximately thirty thousand nine hundred ninety six
(30,996) square foot free-standing building on approximately two and
435/1000th (2.435) acres.
MORE FULLY DESCRIBED AS
All that certain property in the City of Sunnyvale, County of Santa Clara,
State of California, described as follows:
All of Parcel 2, as shown upon that certain Map entitled, "Parcel Map lying
within the City of Sunnyvale being a resubdivision of Parcel B as shown on
Parcel Map recorded in Book 255 of Maps at Page 53 and Lots 8 and 9, Tract
No.4515 Moffett Industrial Park No. 1-2 recorded in Book 245 of Maps at Page 14
Santa Clara Co. Records", which Map was filed for record in the Office of
the Recorder of the County of Santa Clara, State of California, on June
28, 1976 in Book 373 of Maps, at Page 48.
<PAGE>
EXHIBIT A-1
ILLUSTRATION OF FLOOR PLAN
<PAGE>
EXHIBIT B
WORK LETTER AGREEMENT
This Work Letter Agreement ("Agreement") is made part of that Lease
dated October 24, 1994 by and between REDTREE PROPERTIES, L.P., a
----------------
Delaware limited partnership ("Landlord"), and Symtron Corporation,
-------------------
("Tenant"). Landlord and Tenant agree that the following terms are
hereby added to the Lease:
1. Definitions. Unless otherwise defined in this Agreement, capitalized
terms used herein shall have the same meaning and definition as set
forth for such terms in the Lease. The terms listed below, when used in
this Agreement, shall mean the following:
(a) Final Plans. The term "Final Plans" shall have the meaning set forth
in Paragraph 2(a) of this Agreement.
(b) Approved Interior Plans. The term "Approved Interior Plans" shall
have the meaning set forth in Paragraph 2(a) of this Agreement.
(c) Improvements. The term "Improvements" shall mean all improvements to
be constructed by Landlord within the Premises pursuant to the Approved
Interior Plans.
(d) Improvement costs. The term "Improvement costs" shall mean and
include all of the following:
(i) All "hard" construction costs for the construction of the
Improvements according to the Approved Interior Plans and all approved
changes thereto, including, but not limited to:
(A) All labor and supervision costs;
(B) Costs of all materials and supplies;
(C) Contract price for all construction work undertaken
by the Construction Manager, general contractors and sub-contractors;
(D) Fees, taxes or other charges levied by governmental
or quasi-governmental agencies (including public utilities) in connection
with the issuance of all authorizations, approvals, licenses, and permits
necessary to undertake construction of the Improvements;
(E) The cost of all equipment and fixtures provided for in
the Approved Interior Plans which are designated therein to be constructed by
Landlord, including the cost of installation;
(F) The cost of all concrete, welding, survey and
other testing expenses;
(G) The cost of premiuns for surety bonds, if any, including
but not limited to payment and performance bonds and mechanics' lien bonds;
(H) The cost of installing a meter or meters in the
Premises to measure the utility services supplied to and consumed in the
Premises; and
(I) The cost of installing standard utility services (i.e.,
standard HVAC controls and distribution facilities: standard electrical
panels, distribution facilities, wiring fixtures, switches and receptacles)
and special utility services (i.e., services other than those specified above).
(ii) All "soft" construction costs directly or indirectly related
to the construction of the Improvements including, but not limited to, the
following:
(A) Engineering, space planning and architectural fees for
perparation of all plans, specifications and working drawings and processing
of applications for all governmental authorizations, approvals, licenses and
permits;
(B) Fees of engineers, space planners, architects, attorneys
and others providing professional or extra services in connection with the
construction of the Improvements or the supervision of the construction; and
(C) Inspection fees, recording costs and filing fees.
Page 1 of 3
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(e) Architect and Construction Manager. The term "Architect" shall
mean such licensed architect as may be selected by Landlord, with whom
Landlord contracts for the design of the Improvements. "Construction Manager"
shall mean the licensed general contractor selected by Landlord, with whom
Landlord contracts for the construction management of the Improvements.
(f) Landlord's Work. The term "Landlord's Work" shall mean the
construction of the Improvements to be performed by Landlord pursuant to
this Agreement.
(g) Tenant's Cost Items. The term "Tenant's Cost Items" shall
mean the Improvement Costs related to those Improvements designated as
Tenant's Items on the Space Plans.
2. Construction of Improvements. Landlord agrees to construct the
Improvements in the Premises in conformance with the Approved Interior
Plans approved by Both Landlord and Tenant and developed pursuant to
this Paragraph 2.
(a) Approval of Plans. Landlord has caused to be prepared, &
Tenant has approved, final plans and specifications for the Improvements
prepared by George Ash Architect, dated 10/19/94 (collectively the "Final
-------------------- --------
Plans") which are attached hereto. Promptly following execution of this
Lease by Landlord and Tenant, Landlord shall submit such Final Plans to all
appropriate governmental agencies for approval. The Final Plans so approved,
and all change orders specifically permitted by this Agreement, are referred
to herein as the "Approved Interior Plans" and shall become part of this
Lease as though set forth in full.
(b) Cost Estimate. Prior to commencement of construction of the
Improvements, Landlord shall cause its Construction Manager to prepare and
submit to landlord and Tenant an estimated itemized breakdown of the "hard"
and "soft" costs (defined in Paragraph 1(d) of this Agreement).
(c) Changes to Approved Interior Plans. Once the Approved Interior
Plans have been finally approved by Landlord and Tenant and the construction
contracts for the Improvements signed with the respective contractors,
Tenant shall not have the right to order extra work or change orders with
respect to the construction of the Improvements without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. All extra work or change orders requested by Tenant shall be made
in writing, shall specify the amount of delay or the time saved resulting
therefrom, shall specify any added or reduced cost resulting therefrom, and
shall become effective and a part of the Approved Interior Plans once
approved in writing by both parties. Landlord shall have the right to
order extra work or changes without Tenant's approval, provided that such
extra work or changes do not materially affect the layout or quality of the
Improvements and do not increase Tenant's Cost Items. All extra work and
change orders by Landlord not meeting the requirements described in the
prior sentence shall be subject to Tenant's prior written consent,
which consent shall not be unreasonably withheld or delayed.
(d) Commencement and Completion of the Improvements. As soon as
(i) the Approved Interior Plans have been developed as provided above,
(ii) all necessary governmental approvals have been obtained, and (iii)
Landlord has entered into construction contracts with contractors for
construction of the Improvements, Landlord shall cause construction of the
Improvements to be commenced and prosecuted to completion within a
reasonable time, but without representation or warranty as to when the
Improvements will be completed.
(e) Payment of Improvement Costs. Landlord shall pay all
Improvement Costs relating to Landlord's Work, as detailed in the Cost
Estimate above (paragraph 2.(b)) except for Tenant's Cost
Items and increased costs resulting from extra work or change orders
requested by Tenant. Tenant shall pay all Tenant Cost Items and the amount
by which the Cost Estimate exceeds $10.00 per sq. ft. of the Premises to
Landlord in cash prior to commencement of construction of the Improvements,
which payment shall be made within ten (10) days following receipt of
demand for such payment from Landlord. Any added cost resulting from any
extra work or change orders requested by Tenant and approved by Landlord
shall be paid by Tenant to Landlord in cash prior to institution of such
additional work or change, which payment shall be made within ten (10) days
following approval of such extra work or change order by Landlord. If
Tenant fails to remit any sums owing by Tenant to Landlord with respect
to the Improvements when due, Landlord shall have the right to cease
construction of the Improvements, and any delay in completion of construction
as the result therefrom shall be attributable to
Tenant as a Tenant delay.
*In no event shall Landlord's costs exceed $10.00 per sq. ft. of
the Premises.
Page 2 of 3
<PAGE>
3. Tenant to Inspect. Tenant agrees that Tenant shall inspect or, if
Tenant lacks sufficient expertise to so inspect, shall employ experts of
Tenant's choosing, to inspect the plans and specifications for the
Improvements and that upon approval of such plans and specifications by
Tenant, Tenant shall be deemed fully satisfied that the Improvements
constructed in substantial accordance with such plans and specifications
are sufficient to meet Tenant's purpose. Tenant covenants that Tenant
will not pursue any action against Landlord, Construction Manager or
Architect if the Improvements made in accordance with such plans and
specifications fail to meet Tenant's purpose. Landlord makes no
warranty, express or implied, of fitness for purpose or merchantability,
of any equipment or fixtures included in the Premises. Tenant
acknowledges that Tenant shall rely upon the manufacturer of such
equipment or fixtures for any warranty with respect thereto.
4. Headings. The paragraph headings used in this Agreement are for
convenience of reference only. They shall not be construed to limit or
extend the meaning of any part of this Agreement, and shall not be
deemed relevant in resolving any questions of interpretation or
construction of any paragraph of this Agreement.
TENANT:
Symtron Corporation
-------------------------------------------------------
By: /s/ Milan Mandaric
----------------------------------------------------
Its: President & CEO
---------------------------------------------------
LANDLORD:
REDTREE PROPERTIES, L.P.,
a Delaware limited partnership
By: TREEHAVEN L.P.,
a California limited partnership
Its General Partner
By: Havermawr Inc.,
a California corporation
Its General Partner
By: /s/ Douglas P. Ley
--------------------------------------
Douglas P. Ley
President
Page 3 of 3
<PAGE>
EXHIBIT B(1)
[LOGO] GEORGE ASH
architect
OCTOBER 20, 1994/REVISED OCTOBER 27, 1994
OUTLINE SPECIFICATION: 1188 BORDEAUX-SYMTRON CORPORATION.
PHASE 1 AND PHASE 2 WORK INCLUDED:
GENERAL SPECIFICATION FOR ENTIRE SPACE:
A. PATCH EXISTING WALL FINISHES AS REQUIRED AND PAINT.
B. CLEAN ALL FLOOR SURFACES.
C. ENSURE THAT MECHANICAL SYSTEMS, LIGHTING AND ELECTRICAL
OUTLETS ARE ADEQUATE AND ARE IN PROPER WORKING ORDER.
D. INSTALL NEW PARKING LOT LIGHTING AS DETERMINED BY LANDLORD'S
ARCHITECT.
OUTLINE SPECIFICATION IN SPECIFIC AREAS (SEE PLAN FOR LOCATION):
1. EXISTING OFFICES #1 THROUGH #9, EXISTING CONFERENCE ROOM,
COMPUTER ROOM, COPIER/FAX ROOM:
-FLOOR: $15.00 PER YARD GLUE DOWN CARPET ALLOWANCE.
-CEILING: REPLACE EXISTING CEILING TILES WITH NEW CEILING
TILES.
2. MATERIALS OFFICE, PURCHASING OFFICE, FINANCE CONFERENCE ROOM:
-FLOOR: $15.00 PER YARD GLUE DOWN CARPET ALLOWANCE.
-CELIING: REPLACE EXISTING CEILING TILES WITH NEW
CEILING TILES.
-WALLS: NEW GYP. BD. FINISH TO MATCH, PAINTED.
3. BULLPEN AREAS #1 THROUGH #4:
-FLOOR: $15.00 PER YARD GLUE DOWN CARPET ALLOWANCE.
-CEILING: REPLACE EXISTING CEILING TILES WITH NEW
CEILING TILES.
-WORKSTATIONS: DATA/TELEPHONE/POWER (120V, 15 AMP)
DROP TO TENANTS SUPPLIED AND INSTALLED
WORK STATIONS. TYPICAL OF (31).
4. ENTRY, EXECUTIVE OFFICE SUITE:
-FLOOR: NEW GLUE DOWN CARPET-$25.00 PER YARD ALLOWANCE.
-CEILING: NEW SUSPENDED CEILING WITH "SECOND LOOK"
CEILING TILES AND PARABOLIC LAY-IN FLUORESCENT LIGHT
FIXTURES.
-WALLS: WALL COVERING ON 50% MAXIMUM OF WALL AREA. $2.00
PER SQ. FT. ALLOWANCE. GYP. BD. FINISHED TO
MATCH ON REMAINDER OF WALLS.
101 Drake St., Suite 200
Monterey, CA 93940
(408) 646-1095
<PAGE>
EXHIBIT B(2)
OUTLINE SPECIFICATION, 1188 BORDAUX, PAGE 2 OF 3, 10/20/94
5. ELECTRICAL ROOMS #1 AND #2, FINANCE STORAGE, LUNCH ROOM, CORRIDORS:
-FLOOR, WALLS: AS-IS, PATCH AND PAINT
-CEILING: REPLACE EXISTING CEILING TILES WITH NEW
CEILING TILES.
6. STOCK ROOM, RECEIVING, SHIPPING:
-FLOOR: CLEAN AND SEAL EXISTING CONCRETE
-WALLS: CLEAN, PATCH AND PAINT.
-CEILING: INSTALL NEW "RO-FOIL" INSULATION BOARD OVER
CEILING FRAMING AND PAINT ENTIRE CEILING.
7. MANUFACTURING AREA, R.M.A. AREA, MAINTENANCE, AND WORK STATION AREAS:
-FLOOR: NEW 12" X 12" VINYL SQUARE TILES.
-WALLS: CLEAN, PATCH AND PAINT
-CEILING: INSTALL NEW "RO-FOIL" INSULATION BOARD OVER
CEILING FRAMING AND PAINT ENTIRE CEILING.
-WORKSTATIONS: POWER (120V, 15 AMP) AND COMPRESSED AIR
DROPS AT EACH WORK STATION, TYPICAL OF (80) IN
MANUFACTURING AREA, DATA, TELEPHONE AND POWER TO (3)
WORK STATIONS ADJACENT TO MANUF. OFFICE #9.
8. TOOL ROOM:
-FLOOR: 12" X 12" V.C.T.
-WALLS: CLEAN, PATCH AND PAINT
-CEILING: CLEAN, PATCH AND PAINT
9. R AND D ROOM:
-FLOOR: 12" X 12" V.C.T.
-WALLS: CLEAN, PATCH AND PAINT
-CEILING: REPLACE EXISTING CEILING TILES WITH NEW
CEILING TILES.
10. TOILET ROOMS:
-REMODEL AS SHOWN ON PLANS, REPAIR FINISHES AS REQUIRED.
<PAGE>
ADDITIONAL PROVISIONS FOR WORK LETTER AGREEMENT, OUTLINE SPECIFICATIONS
FOR THAT LEASE DATED OCTOBER 24, 1994 ON 1188 BORDEAUX DRIVE, SUNNYVALE
BETWEEN SYMTRON CORPORATION AS TENANT AND REDTREE PROPERTIES, L.P. AS
LANDLORD.
11) Landlord ahsll have Landlord's architect evaluate the existing HVAC
system for capacity using the Tenant's proposed equipment and people
loads. Landlord shall cause the system to meet the architect's
recommendations. Work shall be performed during Phase II of
construction.
12) Landlord shall provide Tenant with carpeting, tile and wall-covering
samples prior to ordering them for this interior improvement. Tenant
shall then have forty-eight (48) hours in which to accept or reject said
samples. Tenant's failure to notify Landlord of acceptance of said
samples within such forty-eight (48) hour period shall be deemed as
Tenant's acceptance of such samples. In the event Tenant rejects any of
said samples, Tenant shall provide Landlord with acceptable samples
(along with information regarding the supplier, etc.), within the same
budget limitations, from a supplier acceptable to Landlord within
seventy-two (72) hours from said rejection. Tenant's failure to provide
acceptable samples within such seventy-two (72) hour period shall be
deemed as Tenant's acceptance of samples originally selected by
Landlord. In addition, Tenant shall be responsible for any and all
construction delays caused by the rejection of and the re-selection of
the carpeting, tile and wall covering.
-------------
please initial
--------------
please initial
<PAGE>
EXHIBIT B(3)
OUTLINE SPECIFICATION, 1188 BORDEAUX, PAGE 3 OF 3, 10/20/94
POWER DISTRIBUTION: SEE PLAN FOR NOTE LOCATION
/1/ 3 EA. DEDICATED 120V/20A
/2/ 1 EA. DEDICATED 120V/20A
/3/ 2 EA. DEDICATED 120V/20A
/4/ 1 EA. 120V/30A
/5/ 1 EA. 240V/20A
/6/ 1 EA. 240V/30A
/7/ 2 EA. 480V/60A 3 PHASE
/8/ 1 EA. 480V/30A 3 PHASE
/9/ 1 EA. 220V/30A 3 PHASE
/10/ 1 EA. 220V/30A 3 PHASE
/11/ 5 EA. 120V/30A 4 WIRE POWER TRACK, LANDLORD TO
SUPPLY AND INSTALL TRACK, TENANT TO CONNECT TO TRACK AS
NEEDED
/12/ 4 EA. 120V/20a DROPS
/13/ 3 EA. 120V/20 AMP DROPS AND WALL OUTLETS
/14/ 120V/20AMP WALL OUTLETS 12'-0" O.C. MAX, 3 PER CIRCUIT
COMPRESSED AIR DISTRIBUTION
/1/ 2" MAIN PERIMETER AIR DISTRIBUTION (COPPER)
/2/ 1 1/2" BRANCH LINES (COPPER)
/3/ 1 1/2" TEE EVERY 12' ALONG BRANCH LINES
/4/ 1 1/2" OR 2" DISCONNECT ON EACH SIDE OF EVERY BRANCH LINE
(BALL VALVES)
/5/ 2" TEE ALONG LINE AT 12" ON CENTER
/6/ 1" LINE TO STOCK ROOM WITH DISCONNECT AT TEE FROM 2"
PERIMETER LINE (COPPER)
<PAGE>
EXHIBIT B(4)
ILLUSTRATION OF FLOOR PLAN
<PAGE>
EXHIBIT B(5)
ILLUSTRATION BASED ON NOTED SCALED DIMENSIONS
<PAGE>
EXHIBIT C
LEASE GUARANTY
This Lease Guaranty is made this 24th day of October, 1994, by
Diceon Electronics, Inc. ("Guarantor"), for the benefit of Redtree
Properties, L.P., a Delaware limited partnership ("Landlord").
RECITALS
A. Symtron Corporation ("Tenant") has offered to lease from
-------------------
Landlord certain real property known as 1188 Bordeaux Drive in
-------------------
the City of Sunnyvale, County of Santa Clara, State of
--------- -----------
California, pursuant to the terms of a written lease dated as of
Oct. 24, 1994, (the "Lease").
- - - ------- --
B. Guarantor has received a copy of the Lease, together with all
exhibits and attachments thereto, has read the terms, and is
familiar with all of its terms and conditions.
C. As a condition to its agreement to execute the Lease,
Landlord has required that Guarantor execute this Lease
Guaranty, guaranteeing performance of all of the covenants on
Tenant's part to be performed pursuant to the Lease.
NOW THEREFORE, in order to induce Landlord to enter into the
Lease, Guarantor agrees as follows:
1. Scope of Guaranty. Guarantor unconditionally guarantees and
promises to Landlord, that Tenant shall perform when due all
obligations to be performed by Tenant pursuant to the terms of
the Lease, including, without limitation, the payment of
Rentals. All of said obligations of Tenant are hereinafter
referred to as the "Lease Obligations." If Tenant defaults under
the Lease, Landlord may proceed immediately against Guarantor or
Tenant or both, or Landlord can enforce against Guarantor or
Tenant or both any rights that it has under the Lease or
pursuant to applicable laws.
2. Nature of Guaranty. The obligations of Guarantor are
Independent of the obligations of Tenant. If Guarantor is more
than one person, the obligations of Guarantor are joint and
several. A separate action may be brought or prosecuted against
any one Guarantor whether or not an action is brought or
prosecuted against any other Guarantor or Tenant or all of them,
or whether or not any other Guarantor or Tenant or all of them
is joined in the action. Guarantor agrees that this Lease
Guaranty shall be construed as an absolute, unconditional,
continuing and unlimited obligation of Guarantor without regard
to and unaffected by the regularity, validity or unforceability
of any liability or obligation hereby guaranteed and without
regard to any subsequent course of conduct by Landlord, Tenant
or Guarantor or any combination of them. Without limiting the
generality of the foregoing, the obligations of Guarantor
hereunder shall in no way be released, diminished or otherwise
affected by reason of any voluntary or involuntary proceedings
by or against Tenant in bankruptcy or for an arrangement or
reorganization or for any other relief under any provision of
the Bankruptcy Act or any other insolvency or debtor's relief
law from time to time in effect, or by any disaffirmance or
abandonment by a trustee of Tenant.
3. Independent Execution. Each signatory who has executed this
Lease Guaranty hereby represents that it has done so
independently of the execution hereof by any other signatory,
and that in executing this Lease Guaranty, each signatory is not
relying upon the execution hereof by any other signatory. Each
signatory shall be bound by this Lease Guaranty regardless of
whether any other signatory executes this Lease Guaranty.
<PAGE>
4. Multiple Guaranties. The granting of a written release of
liability hereunder of less than all of the signatories hereto shall be
effective with respect to the liability hereunder of these specifically so
released, but shall in no way affect the liability hereunder of any of
the signatories not so released. Any prior or subsequent guaranty by
Guarantor or by any other guarantor of Tenant's obligations to Landlord
shall not be deemed to be in lieu of or to supersede or terminate this Lease
Guaranty but shall be construed as an additional or supplementary
guaranty unless otherwise expressly provided therein.
5. Modification of Lease. The provisions of the Lease may be
changed by agreement between Landlord and Tenant at any time, or by
course of conduct, with or without the consent of and/or notice to
Guarantor. Guarantor's liability under this Lease guaranty shall not be
in any way altered by such change, and this Lease Guaranty shall
guarantee the performance in full of the Lease Obligations as so
changed. The election by Landlord to secure the consent of Guarantor
before making one or more changes in the Lease shall not be deemed a
waiver of the provisions of this Paragraph 5 with regard to any past or
future change in the Lease. Landlord may settle or compromise with
Tenant all or any part of Tenant's liability or obligations under the
Lease, exchange, release or surrender any security which it may hold,
and/or waive compliance with any of the terms or provisions contined in
the Lease, all without in any way allocating the obligations of
Guarantor under this Lease Guaranty.
6. Assignment. An assignment of rights or a delegation of
duties under the Lease by either Landlord or Tenant (as permitted by the
Lease), with or without notice to or the consent of Guarantor, shall not
affect this Lease Guaranty or in any way exonerate or release Guarantor
from its obligations under this Lease Guaranty. Landlord may, without
notice to Guarantor, fully and freely assign its interest in this Lease
Guaranty in whole or in part to any person or entity, and no such
assignment shall affect this Lease Guaranty or in any way exonerate or
release Guarantor from its obligations under this Lease Guaranty. If
Landlord disposes of or assigns its interest in the Lease, "Landlord" as
used in this Lease Guaranty shall retain Landlord's successor or assign.
Guarantor may not assign its rights or delegate its duties under this
Lease Guaranty.
7. Waivers by Guarantor. Guarantor waives any right it may have
now or hereafter: (i) to require Landlord to proceed against Tenant or
to pursue any other remedy in Landlord's power; (ii) to require Landlord
to proceed against or exhaust any security deposit it now or hereafter
acquires for the performance of the Lease Obligations; (iii) to assert
any defense it may acquire by reason of any waiver, act, omission,
extension, modification, forbearance or delay by Landlord and/or reason
of Landlord's election of any remedy against it or Tenant or both; and
(iv) to require Landlord to make any presentation, demand for
performance, notice of nonperformance, protest, notice of acceptance of
this Lease Guaranty, or notice of the existence or creation of all or
any part of the Lease Obligations. Guarantor waives any defense it may
have by reason of any disability of Tenant and waives any other defense
it may have based on the termination of Tenant's liability under the
Lease from any cause.
8. Limitations on Subrogation. Notwithstanding any payments
made by Guarantor under this Lease Guaranty. Guarantor shall have no
right, and waives any right it may have, to subrogation and/or to
enforcement of any remedy it may have against Tenant, until after all
the Lease Obligations shall have been performed in full.
<PAGE>
9. Non-Waiver of Terms. No waiver of any breach or default of
any term or condition of this Lease Guaranty or the Lease shall
constitute or be construed as a waiver by Landlord of any subsequent
breach or default of that term or condition or of any breach or default
of any other such term or condition.
10. Notices. Guarantor agrees that any notice or demand upon it
shall be deemed to be sufficiently given or served if it is in writing
and is personally served or mailed by first class certified mail,
postage prepaid, addressed to Guarantor at the following address:
Diceon Electronics, Inc.
----------------------------------------------------
18522 Von Karman Avenue
----------------------------------------------------
Irvine, CA 92715
----------------------------------------------------
Any notice or demand so mailed shall be deemed received on the third
business day following the date of deposit in the mail or when actually
received, whichever first occurs.
11. General Provisions. This Lease Guaranty shall be enforced
and construed in accordance with the laws of the State of California.
Guarantor agrees to pay reasonable attorneys' fees and all other costs
and expenses which may be incurred by Landlord in (i) any collection or
attempted collection of the Lease Obligations, (ii) in any negotiations
relating to the enforcement of the Lease Obligations, or (iii) in the
enforcement of this Lease Guaranty. All remedies of Landlord hereunder
shall be cumulative and no delay or omission by Landlord in the exercise
of rights or remedies under the Lease or under this Lease Guaranty shall
impair or otherwise affect the right of Landlord to later pursue any
remedy available to it in connection with the enforcement of the Lease
or this Lease Guaranty. Successive demands may be made upon, and
successive actions for the enforcement of such demands may be brought
against, Guarantor upon the successive breach of or default under any
Lease Obligation. The enforcement of this Lease Guaranty against
Guarantor with respect to any particular breach of or default under any
Lease Obligation shall not operate to exhaust this Lease Guaranty or to
waive Landlord's right to proceed under this Lease Guaranty with respect
to any other or future default or breach. If any provision hereof and/or
any of Guarantor's obligations hereunder shall be, or are adjudged to
be, unenforceable, the remainder of this Lease Guaranty and/or all of
Guarantor's other obligations hereunder shall subsist and remain in full
force and effect and not be affected thereby. Guarantor acknowledges
that its undertakings hereunder are given in consideration of
Landlord's acceptance of the Lease and execution thereof and that
Landlord will not consummate the Lease without the execution and
delivery of this Lease Guaranty by Guarantor. The use of the singular
and plural shall each include the other when the context so requires.
The use of the masculine, feminine or neuter gender shall each include
the other when the context so requires.
12. Successors. If Guarantor is a natural person or persons,
this Lease Guaranty shall not be discharged or in any way affected by
the death of Guarantor (or any one of them if Guarantor consists of more
than one natural person). Subject to the prohibition against Guarantor's
assignment or delegation of its rights and duties under this Lease
Guaranty pursuant to Paragraph 6 above, this Lease Guaranty shall be
binding upon and shall inure to the benefit of Landlord and Guarantor
and their respective heirs, successors, assigns, executors, and
administrators.
13. Modification. This Lease Guaranty may not be changed,
waived, discharged or terminated orally or by course of conduct, but
rather only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
<PAGE>
14. Counterparts. This Lease Guaranty my be executed in one or
more counterparts each of which shall be an original, but all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Guaranty
to be effective as of the date first set forth above.
GUARANTOR: Diceon Electronics, Inc.
By: /s/ Milan Mandaric
-------------------------------------------
-------------------------------------------
Its: President & CEO
-------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 1300
<SECURITIES> 0
<RECEIVABLES> 10468
<ALLOWANCES> 450
<INVENTORY> 6042
<CURRENT-ASSETS> 17919
<PP&E> 65610
<DEPRECIATION> 48770
<TOTAL-ASSETS> 35712
<CURRENT-LIABILITIES> 12977
<BONDS> 16400
<COMMON> 8335
0
0
<OTHER-SE> (2000)
<TOTAL-LIABILITY-AND-EQUITY> 35712
<SALES> 22753
<TOTAL-REVENUES> 22753
<CGS> 19883
<TOTAL-COSTS> 19883
<OTHER-EXPENSES> 2189
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 431
<INCOME-PRETAX> 250
<INCOME-TAX> 0
<INCOME-CONTINUING> 250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
