*---------------------------------------------------------------*
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
SEPTEMBER 30, 1996
Commission File Number
0-17187
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LOGIC DEVICES INCORPORATED
(Exact name of registrant as specified in its charter)
*---------------------------------------------------------------*
CALIFORNIA 94-2893789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
628 EAST EVELYN AVENUE, SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)
(408) 737-3300
(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
Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest practicable date. On November 7, 1996,
6,121,750 shares of Common Stock, without par value, were outstanding.
*---------------------------------------------------------------*
1 of 16 PAGES
<PAGE>
LOGIC DEVICES INCORPORATED
INDEX
PAGE NUMBER
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1996 3
and December 31, 1995
Consolidated Statements of Income for the three 4
months ended September 30, 1996 and 1995
Consolidated Statements of Income for the nine 5
months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows for the 6
nine months ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 9
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part II. Other Information
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
Signatures 16
Exhibit 10 17
Exhibit 11
Exhibit 27
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LOGIC DEVICES INCORPORATED
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 1,317,800 $ 4,378,500
Accounts receivable, net of allowance 5,205,500 5,844,000
Inventories 11,921,100 8,296,000
Prepaid expenses 1,294,700 980,300
Deferred income taxes 704,700 704,700
Total current assets 20,443,800 20,203,500
Equipment and leasehold improvements, net 3,011,300 2,409,800
Other assets 629,100 752,700
$24,084,200 $23,366,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank Borrowings 1,000,000 -
Current portion of long-term obligations 175,200 175,200
Accounts payable 840,100 991,000
Accrued expenses 333,000 278,800
Income taxes payable - 819,000
Total current liabilities 2,348,300 2,264,000
Long-term obligations 83,300 166,200
Deferred income taxes 225,000 225,000
Total liabilities 2,656,600 2,655,200
Shareholders' equity:
Common stock 17,316,400 16,741,900
Shareholder receivables (307,500) -
Retained earnings 4,418,700 3,968,900
Total shareholders' equity 21,427,600 20,710,800
$24,084,200 $23,366,000
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Three months ended September 30, 1996 and 1995
(unaudited)
1996 1995
Net revenues $ 3,389,700 $ 4,517,400
Cost of sales 1,847,600 2,684,700
Gross margin 1,542,100 1,832,700
Operating expenses:
Research and development 436,300 382,500
Selling, general and administrative 949,400 761,700
Operating expenses 1,385,700 1,144,200
Income from operations 156,400 688,500
Other income (expense), net 4,700 (40,700)
Income before taxes 161,100 647,800
Income taxes 65,800 207,000
Net income $ 95,300 $ 440,800
Net income per common share $ 0.02 $ 0.08
Weighted average common share equivalents 6,221,750 5,667,306
outstanding
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Nine Months ended September 30, 1996 and 1995
(unaudited)
1996 1995
Net revenues $10,494,700 $12,475,400
Cost of sales 5,622,300 7,149,400
Gross margin 4,872,400 5,326,000
Operating expenses:
Research and development 1,231,100 1,098,000
Selling, general and administrative 2,970,500 2,344,500
Operating expenses 4,201,600 3,442,500
Income from operations 670,800 1,883,500
Other income (expense), net 73,300 (234,200)
Income before taxes 744,100 1,649,300
Income taxes 294,300 529,700
Net income $ 449,800 $ 1,119,600
Net income per common share $ 0.07 $ 0.21
Weighted average common share equivalents 6,221,750 5,324,185
outstanding
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1996 and 1995
(unaudited)
1996 1995
Cash flows from operating activities:
Net income $ 449,800 $1,119,600
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 766,600 931,000
Change in operating assets and liabilities:
Accounts receivable, net 638,500 (1,103,000)
Inventories (3,625,100) (175,600)
Prepaid expenses (314,400) (74,700)
Accounts payable (150,900) (758,400)
Accrued expenses 54,200 (74,900)
Income taxes payable (819,000) 151,600
Net cash (used in) provided by (3,000,300) 15,600
operating activities
Cash flows from investing activities:
Capital expenditures (1,139,500) (495,600)
Net increase in other assets (105,000) (351,700)
Net cash (used in) investing (1,244,500) (847,300)
activities
Cash flows from financing activities:
Bank borrowing, net 1,000,000 (2,846,400)
Proceeds from private placement - 9,940,900
Repayment of notes payable and long-term debt (82,900) (93,300)
Repayment of obligations to shareholders - (863,900)
Proceeds from exercise of warrants 258,900 258,500
Proceeds from exercise of employee stock options 8,100 190,500
Net cash provided by 1,184,100 6,586,300
financing activities
Net (decrease) increase in cash and (3,060,700) 5,754,600
cash equivalents
Cash and cash equivalents at beginning of
period $ 4,378,500 $ 222,300
Cash and cash equivalents at end of period $ 1,317,800 $5,976,900
<PAGE>
LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1996 and December 31, 1995
(unaudited)
(A) BASIS OF PRESENTATION
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and cash
flows for the periods indicated.
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-Q and therefore
do not include all information and footnotes necessary for a complete
presentation of the financial position, results of operations, and cash
flows, in conformity with generally accepted accounting principles. The
Company has filed audited financial statements which include all
information and footnotes necessary for such a presentation of the
financial position, results of operations, and cash flows for the years
ended December 31, 1995 and 1994, with the Securities and Exchange
Commission. It is suggested that the accompanying unaudited interim
financial statements be read in conjunction with the aforementioned
audited financial statements. The unaudited interim financial
statements contain all normal and recurring entries. The results of
operations for the interim period ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
(B) INVENTORIES
A summary of inventories follows:
September 30, December 31,
1996 1995
Raw materials $ 4,063,700 $ 938,000
Work-in-process 3,512,700 3,912,600
Finished goods 4,344,700 3,445,400
$ 11,921,100 $ 8,296,000
Based on forecasted 1997 sales levels, the Company has on hand
inventories aggregating approximately twelve months of sales.
<PAGE>
LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1996 and December 31, 1995
(unaudited)
(C) DEBT FINANCING
On June 28, 1996, the Company renewed its $8,000,000 revolving line
of credit with Sanwa Bank extending the maturity to May 31, 1997. The
line of credit bears interest at the bank's reference rate (8.25% at
September 30, 1996). The line of credit is secured by the assets of the
Company and requires the Company to maintain a minimum tangible net
worth of not less than $19,500,000, a maximum ratio of debt to tangible
net worth of not more than 0.5 to 1.00, a minimum current ratio of not
less than 2.00 to 1.00, a minimum quick ratio of not less than 1.50 to
1.0, and profitability of more than $1 dollar for each fiscal quarter.
As of September 30, 1996, the Company had $7,000,000 available under the
revolving line of credit.
(D) WARRANT EXERCISE
On February 15, 1995, the non-employee directors of the Company were
granted warrants to purchase an aggregate of 220,000 shares of Common
Stock. The grants were ratified by shareholders of the Company at the
Company's 1995 annual meeting of shareholders held June 13, 1995. The
warrants have an exercise price of $2.5625 per share, which was the last
reported transaction price of the Common Stock on February 15, 1995, and
expire on February 15, 2000. Two of the Warrants representing an
aggregate of 120,000 shares of Common Stock were exercised in July 1996
and the remaining Warrant has been transferred to a non-director. The
Company extended $307,500 in recourse loans for the exercise price of
the Warrants to the parties exercising the Warrants. These loans are
accounted for as shareholder receivables in shareholder's equity. The
shares of Common Stock received on the exercise also have been pledged
as security on such loans.
<PAGE>
(E) FACILITIES LEASE
The Company on October 18, 1996 signed a lease with respect to
premises located at 1320 Orleans Drive, Sunnyvale, California and
expects to take possession of the premises on December 1, 1996. The
lease has a six year term beginning upon the Company taking possession
of the premises. The premises consist of approximately 21,500 square
feet and will house the Company's main corporate offices and facilities
for the Company's research and development efforts, testing and assembly
of its semiconductor products. The lease is triple net and the monthly
base rent will be approximately $26,300 for each of the first 12 months
of the lease increasing thereafter in accordance with the Consumer Price
Index on the basis set forth in the lease. The Company believes that
the premises will be sufficient to meet its needs both currently and for
the term of the lease.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LOGIC DEVICES INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Net revenues decreased by 25%, from $4,517,400 for the three months
ended September 30, 1995 to $3,389,700 for the three months ended
September 30, 1996. This decrease was due to a substantial decrease in
revenues derived from the Company's SRAM ("Static Random Access Memory")
products which accounted for 49% of revenues in the September 30, 1995
period, but decreased to 17% of revenues in the September 30, 1996
period. Net revenues from the Company's DSP ("Digital Signal
Processing") products accounted for 49% of revenues in 1995, and
increased to 81% in 1996. The semiconductor memory market is in the
midst of a dramatic drop-off in demand which began in the fourth quarter
of 1995. SRAM memory suppliers have been caught in a period of weak
demand and have been reducing prices to move their SRAM inventories. As
a result of the adverse market conditions, the Company has experienced
order cancellations, delivery push-outs, and sharply falling prices
which affected SRAM product revenues during the 1996 period. The
Company's DSP product line, which sells into a much more stable market
environment than the SRAM products, grew 24% in revenues over the 1995
period.
Net revenues decreased by 16%, from $12,475,400 for the nine month
period ended September 30, 1995 to $10,494,700 for the nine months ended
September 30, 1996. This decrease was due to decreased net revenues
derived from the Company's SRAM products which accounted for 46% of
revenues for the 1995 period, but decreased to 12% of revenues for the
1996 period. Net revenues from DSP products accounted for 50% of
revenues in 1995, whereas DSP product sales comprised 84% of net
revenues in 1996. The sharp drop-off in demand in the memory market
which began in the fourth quarter of 1995 continued through the first
nine months of 1996. The Company has experienced order cancellations,
delivery push-outs, and sharply falling prices which affected SRAM
product revenues during the first nine months of 1996. The Company's
DSP product line, which is more stable, grew 42% in revenues over the
nine months half of 1995.
EXPENSES
Cost of sales decreased 31% from $2,684,700 or 59% of net revenues
for the three months ended September 30, 1995 to $1,847,600 or 55% of
net revenues for the same period in 1996. Gross profit decreased 16%,
<PAGE>
from $1,832,700 in the former period to $1,542,100 in the latter period.
The decrease in gross profit is the result of lower revenues for the
period. As a percentage of net revenues, gross profit increased from
41% for the three months ended September 30, 1995 to 45% for the three
months ended September 30, 1996. The increase in gross profit margin
for the period is the result of a larger percentage of the Company's
revenues coming from its DSP product line which generally yields higher
gross profit margin than the Company's SRAM product line.
Cost of sales decreased 21% from $7,149,400 or 57% of net revenues
for the nine months ended September 30, 1995 to $5,622,300 or 54% of net
revenues for the same period in 1996. Gross profit decreased 9% from
$5,326,000 in the former period to $4,872,400 in the latter period.
This decrease in gross profit is the result of lower revenues for the
period. As a percentage of net revenues, gross profit increased from
43% in the nine months ended September 30, 1995 to 46% in the nine
months ended September 30, 1996. This increase in gross profit margin
is the result of a higher revenue contribution from DSP products which
yields a higher gross margin than the Company's SRAM products.
Research and development ("R & D") expenses for the three months
ended September 30, 1995, were $382,500 and increased to $436,300 for
the same period in 1996. For the nine month period, research and
development expenses were $1,098,000 for 1995, increasing to $1,231,100
for 1996. As a percentage of net revenues, R & D expenses were 9% for
the three months ended September 30, 1995, compared to 13% for 1996.
For the nine months ended September 30, 1995, R & D expenses as a
percentage of net sales were 9% compared to 12% for 1996. In the 1996
periods the Company has dramatically increased its product development
efforts. The Company invested in additional personnel, product
development tools and new product tooling at its foundry sources to
increase the Company's product offerings and to diversify its foundry
sources. The Company intends to continue to make substantial
investments in product R & D.
Selling, general and administrative ("S,G & A") expenses were
$761,700 for the three months ended September 30, 1995 and increased to
$949,400 for the same period in 1996. For the nine months ended
September 30, 1995, S, G & A expenses were $2,344,500, increasing to
$2,970,500 for the same period in 1996. As a percentage of net sales,
selling, general and administrative expenses were 17% for the three
months ended September 30, 1995 compared to 28% in 1996. As a
percentage of net sales, selling, general and administrative expenses
were 19% for the first nine months of 1995 compared to 28% in 1996. The
Company increased its sales and marketing efforts substantially for the
1996 periods. Over the prior year, the Company has added a sales office
in Southern California to service the south and midwest sales regions
and a sales office in Great Britain to service the European market,
added an additional sales engineer to staff its east-coast regional
sales offices, and increased the marketing and technical sales staff at
the headquarters office. The Company has also increased its marketing
promotional effort with ad placements and applications articles in
<PAGE>
industry trade publications as well as additional promotional materials
and a newsletter for the Company's distributor and sales
representatives. The Company intends to continue to expand these
efforts in the future.
Net operating income decreased 77% to $156,400 for the three months
ended September 30, 1996 versus $688,500 for the same period in 1995.
For the nine month period ended September 30, 1996 net operating income
decreased 64% to $670,800 from $1,883,500 for the same period in 1995.
For the three month period in 1996, the Company earned $4,700 in
Other Income from interest on cash invested versus Other Income of
$40,700 in 1995. For the nine month period in 1996, the Company earned
$73,300 in Other Income from interest on cash invested versus Other
Income of $234,200 in 1995.
The Company's effective tax rate for the three and nine months
period for 1996 increased to 40% versus 32% for the 1995 period. This
increase is the result of utilization of the tax credits available to
the Company in the past.
Net income decreased 78% for the three months ended September 30,
1996 to $95,300 compared to $440,800 for the same period in 1995. For
the nine months ended September 30, 1996, net income decreased 60% to
$449,800 compared to $1,119,600 for the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
For the first nine months of 1996, the Company used $3,000,300 in
cash flow from operating activities (after-tax cash earnings less net
increases and decreases, respectively, in current assets and
liabilities). This use of cash was from increases in inventories of
$3,625,100 and payment of income taxes due of $819,000 offset by after-
tax cash earnings generated of $1,216,400 (net income plus depreciation
and amortization) and cash of $638,500 provided from accounts
receivables. The Company invested $1,244,500 in capital expenditures
and other assets for research and development tools and new product
tooling during the nine month period of 1996. The Company received
proceeds of $267,000 from the exercise of certain warrants and employee
stock options. The result was a net use of cash for the nine months of
1996 of $3,060,700.
In the first nine months of 1995, the Company generated $15,600 in
cash flow from operating activities (after-tax cash earnings less net
increases and decreases, respectively, in current assets and
liabilities). Capital equipment expenditures and increases to other
assets used $847,300 net in cash. The Company completed three private
<PAGE>
placements of securities during the period which provided $9,763,200 in
net cash. Repayment of bank notes, including a term loan in the
principal amount of $800,000 which had been used previously to repay
certain debt to shareholders, used $3,803,600 net in cash. Due to an
increase in the price of the Company's common stock throughout the first
nine months of 1995, the Company was provided with cash flow from the
exercise of certain warrants and employee stock options which provided
$420,500 in cash flow for the period.
WORKING CAPITAL
The Company's investment in inventories and accounts receivable has
been significant and will continue to be significant in the future.
Over prior periods, the Company, as a nature of its business, has
maintained these levels of inventories and accounts receivable.
The Company relies on third party suppliers for raw materials and as
a result maintains substantial inventory levels to protect against
disruption in supplies. The Company has historically maintained
inventory levels from approximately 225 days to 360 days, since 1990.
The low point in inventory levels came in 1992 and 1993 when the Company
had supply disruptions from one of its major suppliers.
The Company looks at its inventories in relationship to its sales
which have ranged from 155 days to 185 days within the periods between
1995 and 1990. This inventory to sales ratio is a more stable measure
of inventory levels, versus the traditional inventory turnover measure
because, at the times when the Company is experiencing supply
disruptions, and therefore lower inventory levels, the Company is also
experiencing increased costs of goods due to inefficiencies in its
operations stemming from sporadic deliveries which skews the numerator
and denominator in different directions for inventory turns
calculations.
The Company provides reserves for product material that is over one
year old with no back-log or sales activity, and reserves for future
obsolescence. The Company also takes physical inventory write-downs for
obsolescence.
Because of the Company's customer scheduled backlog demands, up to
80% of the quarterly revenues are shipped in the last month of the
quarter. This places a large portion of the quarterly shipments into
accounts receivable not yet due per the Company's net 30 day terms.
This factor, combined with the fact that the Company's distributor
customers (which currently make up 65% of the Company revenues)
generally pay 60 days and beyond, results in the accounts receivable
balance at the end of the quarterly period being at its highest point
for the period.
Although current levels of inventory and accounts receivable impact
the Company's liquidity, the Company believes that it is a necessary
cost of doing business given that the Company is a fabless manufacturer.
The Company is in the process of diversifying its supplier base to
reduce the risk of supply disruption. However, this will require a
<PAGE>
significant investment in product development related to product tooling
with new suppliers. The Company believes that as it expands its
customer base it will be able to even out the flow of its shipments
within its quarterly reporting periods.
DEBT
On June 28, 1996, the Company renewed its $8,000,000 revolving line
of credit with Sanwa Bank extending the maturity to May 31, 1997. The
line of credit bears interest at the bank's reference rate (8.25% at
September 30, 1996). The line of credit is secured by the assets of the
Company and requires the Company to maintain a minimum tangible net
worth of not less than $19,500,000, a maximum ratio of debt to tangible
net worth of not more than 0.5 to 1.00, a minimum current ratio of not
less than 2.00 to 1.00, a minimum quick ratio of not less than 1.50 to
1.0, and profitability of more than $1 dollar for each fiscal quarter.
As of September 30, 1996, the Company had $7,000,000 available under the
revolving line of credit.
<PAGE>
PART II - OTHER INFORMATION
LOGIC DEVICES INCORPORATED
Item 5. Other Information
See Note (E) to the Notes to Consolidated Financial Statements for a
description of a new facilities lease regarding
premises the Company expects to occupy on or about December 1, 1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) (1) Exhibit 10 - Facilities Lease
(2) Exhibit 11 - Computation of Earnings Per Common Share
(3) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
<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.
Logic Devices Incorporated
(Registrant)
Date: OCTOBER 13, 1996 By /S/ WILLIAM J. VOLZ
William J. Volz
President and Principal
Executive Officer
Date: OCTOBER 13, 1996 By /S/ TODD J. ASHFORD
Todd J. Ashford
Chief Financial Officer and
Principal Financial and
Accounting Officer
<PAGE>
Exhibit 10
Lease Agreement
By And Between
Aetna Life Insurance Company,
A Connecticut Corporation
As Landlord
And
Logic Devices, Inc.,
A California corporation
As Tenant
Dated October 18, 1996
<PAGE>
Table Of Contents
Page
Basic Lease Information iv
1. Demise 1
2. Premises 1
3. Term 2
4. Rent 3
5. Utility Expenses 8
6. Late Charge 8
7. Security Deposit 9
8. Possession 9
9. Use Of Premises 10
10. Acceptance Of Premises 12
11. Surrender 12
12. Alterations And Additions 13
13. Maintenance and Repairs Of Premises 14
14. Landlords Insurance 16
15. Tenants Insurance 16
16. Indemnification 17
17. Subrogation 18
18. Signs 18
19. Free From Liens 19
20. Entry By Landlord 19
21. Destruction And Damage 20
22. Condemnation 22
23. Assignment And Subletting 23
24. Tenants Default 25
25. Landlords Remedies 27
26. Landlords Right to Perform Tenants Obligations 30
27. Attorneys Fees 31
28. Taxes 31
29. Effect Of Conveyance 32
30. Tenant's Estoppel Certificate 32
31. Subordination 33
32. Environmental Covenants 33
33. Notices 37
34. Waiver 37
35. Holding Over 37
36. Successors And Assigns 38
37. Time 38
38. Brokers 38
39. Limitation Of Liability 38
40. Financial Statements 39
41. Rules And Regulations 39
42. Mortgagee Protection 39
43. Entire Agreement 40
44. Interest 40
45. Construction 40
46. Representations And Warranties Of Tenant 40
47. Security 41
48. Jury Trial Waiver 41
Exhibit
A Diagram of the Premises
B Tenant Improvements
B-1 Landlord's Work
B-2 Final Plans and Specifications for Tenant Improvements
C Commencement and Expiration Date Memorandum
D Rules and Regulations
E Sign Criteria
F Hazardous Materials Disclosure Certificate
G Tenant Improvements Loan Amortization Memorandum
<PAGE>
Lease Agreement
Basic Lease Information
Lease Date:
October 18, 1996
Landlord:
Aetna Life Insurance Company,
a Connecticut corporation
Landlord s Address:
c/o Allegis Realty Investors llc
1740 Technology Drive, Suite 600
San Jose, California 95110
All notices sent to Landlord under this Lease shall be sent to
the above address, with copies to:
Insignia Commercial Group, Inc.
160 West Santa Clara Street, Suite 1350
San Jose, California 95113
Tenant:
Logic Devices, Inc.,
a California corporation
Tenant's Contact Person:
Todd Ashford
Tenant's Address and Telephone Number:
1320 Orleans Avenue
Sunnyvale, California 94089
(408) 737-3300
Premises Square Footage:
Approximately Twenty-One Thousand Five Hundred Seventy-Six
(21,576) rentable square feet
Premises Address:
1320 Orleans Drive
Sunnyvale, California
Project:
1320-1322 Orleans Drive, Sunnyvale, California,
together with the land on which the Project is situated and all
Common Areas
Building (if not the same as the Project):
Same as the Project
Tenant's Proportionate Share of Project:
54%
Tenant's Proportionate Share of Building:
54%
Length of Term:
Seventy-two (72) months
Estimated Commencement Date:
December 1, 1996
Estimated Expiration Date:
November 30, 2002
Monthly Base Rent:
Months Sq. Ft. Monthly Base Rate Monthly Base Rent
1-12 21,576 x $1.25 = $ 26,970.00
13-72 Monthly Base Rent to be increased in accordance with
the Consumer Price Index (see Paragraph 4(a) of the
Lease)
Prepaid Base Rent:
Twenty-Six Thousand Nine Hundred Seventy Dollars ($26,970.00)
Prepaid Additional Rent:
Four Thousand Three Hundred Seventy-Two and 96/100 Dollars
($4,372.96)
Month to which Prepaid Base Rent and Additional Rent will be
Applied:
First (1st) month of the Term
Security Deposit:
Sixty-Four Thousand Dollars ($64,000.00)
Permitted Use:
General office and research and development, engineering, test
and assembly of semiconductor products
Unreserved Parking Spaces:
One hundred (100) nonexclusive and undesignated parking spaces
Broker(s):
Jeff Houston of CPS (Landlord's Broker)
Todd Beatty of CPS (Tenant's Broker)
Tenant Improvements Allowance:
Sixty-Four Thousand Seven Hundred Twenty-Eight Dollars
($64,728.00)
Tenant Improvements Loan:
Eighty-Six Thousand Three Hundred Four Dollars ($86,304.00)
Architect:
DES Architects & Engineers
<PAGE>
Lease Agreement
This Lease Agreement is made and entered into by and between
Landlord and Tenant on the Lease Date. The defined terms used in
this Lease which are defined in the Basic Lease Information
attached to this Lease Agreement ( Basic Lease Information )
shall have the meaning and definition given them in the Basic
Lease Information. The Basic Lease Information, the exhibits,
the addendum or addenda described in the Basic Lease Information,
and this Lease Agreement are and shall be construed as a single
instrument and are referred to herein as the Lease .
1. Demise
In consideration for the rents and all other charges and
payments payable by Tenant, and for the agreements, terms and
conditions to be performed by Tenant in this Lease, Landlord does
hereby lease to Tenant, and Tenant does hereby hire and take from
Landlord, the Premises described below (the Premises ), upon the
agreements, terms and conditions of this Lease for the Term
hereinafter stated.
2. Premises
The Premises demised by this Lease is located in that
certain building (the Building ) specified in the Basic Lease
Information, which Building is located in that certain real
estate development (the Project ) specified in the Basic Lease
Information. The Premises has the address and contains the
square footage specified in the Basic Lease Information. The
location and dimensions of the Premises are depicted on Exhibit
A, which is attached hereto and incorporated herein by this
reference. Tenant shall have the non-exclusive right (in common
with the other tenants, Landlord and any other person granted use
by Landlord) to use the Common Areas (as hereinafter defined),
excluding, however, the parking areas, together with a license to
use the number of non-exclusive and undesignated parking spaces
set forth in the Basic Lease Information in the Building or
Project s parking areas; provided, however, that Landlord shall
not be required to enforce Tenant s right to use such parking
spaces; and, provided further, that the number of parking spaces
allocated to Tenant hereunder shall be reduced on a proportionate
basis in the event any of the parking spaces in the Building or
Project s parking areas are taken or otherwise eliminated as a
result of any Condemnation (as hereinafter defined) or casualty
event affecting such parking areas. No easement for light or air
is incorporated in the Premises. For purposes of this Lease, the
term Common Areas shall mean all areas and facilities outside
the Premises and within the exterior boundary line of the Project
that are provided and designated by Landlord for the
non-exclusive use of Landlord, Tenant and other tenants of the
Project and their respective employees, guests and invitees.
The Premises demised by this Lease shall also include any
Tenant Improvements (as that term is defined in Exhibit B,
attached hereto and incorporated herein by this reference) to be
constructed by Landlord within the interior of the Premises.
Landlord shall construct any Tenant Improvements on the terms and
conditions set forth in Exhibit B. Landlord and Tenant agree to
and shall be bound by the terms and conditions of Exhibit B.
Landlord has the right, in its sole discretion, from time
to time, to: (a) make changes to the Common Areas, including,
without limitation, changes in the location, size, shape and
number of driveways, entrances, parking spaces, parking areas,
ingress, egress, direction of driveways, entrances, corridors and
walkways; (b) close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises
remains available; (c) add additional buildings and improvements
to the Common Areas or remove existing buildings or improvements
therefrom; (d) use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Project or
any portion thereof; and (e) do and perform any other acts or
make any other changes in, to or with respect to the Common Areas
and the Project as Landlord may, in its sole discretion, deem to
be appropriate.
3. Term
The term of this Lease (the "Term") shall be for the period
of months specified in the Basic Lease Information, commencing on
the earliest to occur of the following dates (the "Commencement
Date"):
(a) The date the Tenant Improvements are approved by the
appropriate governmental agency as being in accordance with its
building code and the building permit issued for such
improvements, as evidenced by the issuance of a final building
inspection approval; provided, however, that the date determined
pursuant to this Paragraph 3(a) shall not be earlier than
December 1, 1996; or
(b) The date Landlord s architect and general contractor
have both certified in writing to Tenant that the Tenant
Improvements have been substantially completed in accordance with
the plans and specifications therefor; provided, however, that
the date determined pursuant to this Paragraph 3(b) shall not be
earlier than December 1, 1996; or
(c) The date Tenant commences occupancy of the Premises;
provided, however, that Tenant shall not be deemed to have
commenced occupancy of the Premises for purposes of this
Paragraph 3(c) if Tenant enters upon the Premises for the sole
purpose of installing its telephone cabling and cubicles therein
and preparing the Premises for its business operations in
accordance with Paragraph 8(c) below.
In the event the actual Commencement Date, as determined
pursuant to the foregoing, is a date other than the Estimated
Commencement Date, then Landlord and Tenant shall promptly
execute a Commencement and Expiration Date Memorandum in the form
attached hereto as Exhibit C, wherein the parties shall specify
the Commencement Date, the date on which the Term expires (the
Expiration Date ) and the date on which Tenant is to commence
paying Rent.
4. Rent
(a) Base Rent. Tenant shall pay to Landlord, in advance on
the first day of each month, without further notice or demand and
without offset or deduction, the monthly installments of rent
specified in the Basic Lease Information (the Base Rent ).
The Base Rent under this Paragraph 4(a) shall be adjusted,
as stated below, on each anniversary of the Commencement Date of
this Lease to reflect percentage increases in the cost of living.
The Consumer Price Index (U.S. Department of Labor Consumer Price
Index (all items) for Urban Wage Earners and Clerical Workers,
San Francisco Bay Area (1982-1984=100), hereinafter referred to
as the Index ) published for the month immediately preceding
each such adjustment date ( Adjustment Index ) and the Index
published for the month immediately preceding the Commencement
Date of this Lease ( Base Index ) shall be compared and the
percentage difference between the Adjustment Index and the Base
Index shall be determined. The initial Base Rent specified in
the Basic Lease Information shall be increased by adding to said
initial Base Rent the percentage amount of said initial Base Rent
equal to the percentage difference between the Base Index and the
Adjustment Index; provided, however, in no event shall the
initial Base Rent hereunder be increased by less than four
percent (4%) or more than seven percent (7%) for any one year.
When the adjusted Base Rent is determined after each adjustment
date, Landlord shall give Tenant written notice indicating the
amount thereof and the method of computation. If the Consumer
Price Index is changed or discontinued, Landlord shall substitute
an official index published by the Bureau of Labor Statistics or
its successor or similar governmental agency as may then be in
existence and shall be most nearly equivalent thereto.
Upon execution of this Lease, Tenant shall pay to Landlord
the Prepaid Rent and first monthly installment of estimated
Additional Rent (as hereinafter defined) specified in the Basic
Lease Information to be applied toward Base Rent and Additional
Rent for the month of the Term specified in the Basic Lease
Information.
(b) Additional Rent. This Lease is intended to be a
triple-net Lease with respect to Landlord; and subject to
Paragraph 13(b) below, the Base Rent owing hereunder is (1) to be
paid by Tenant absolutely net of all costs and expenses relating
to Landlord s ownership and operation of the Project and the
Building, and (2) not to be reduced, offset or diminished,
directly or indirectly, by any cost, charge or expense payable
hereunder by Tenant or by others in connection with the Premises,
the Building and/or the Project or any part thereof. The
provisions of this Paragraph 4(b) for the payment of Tenant s
Proportionate Share(s) of Expenses (as hereinafter defined) are
intended to pass on to Tenant its share of all such costs and
expenses. In addition to the Base Rent, Tenant shall pay to
Landlord, in accordance with this Paragraph 4, Tenant s
Proportionate Share(s) of all costs and expenses paid or incurred
by Landlord in connection with the ownership, operation,
maintenance, management and repair of the Premises, the Building
and/or the Project or any part thereof (collectively, the
Expenses ), including, without limitation, all the following
items (the Additional Rent ):
(1) Taxes and Assessments. All real estate taxes and
assessments, which shall include any form of tax, assessment,
fee, license fee, business license fee, levy, penalty (if a
result of Tenant s delinquency), or tax (other than net income,
estate, succession, inheritance, transfer or franchise taxes),
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 (i) determined by the area of the Premises, the Building
and/or the Project or any part thereof, or the Rent and 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 Rent
and/or other sums due under this Lease; (ii) upon any legal or
equitable interest of Landlord in the Premises, the Building
and/or the Project or any part thereof; (iii) upon this
transaction or any document to which Tenant is a party creating
or transferring any interest in the Premises, the Building and/or
the Project; (iv) levied or assessed in lieu of, in substitution
for, or in addition to, existing or additional taxes against the
Premises, the Building and/or the Project, whether or not now
customary or within the contemplation of the parties; or (v)
surcharged against the parking area. Tenant and Landlord
acknowledge that Proposition 13 was adopted by the voters of the
State of California in the June, 1978 election and that
assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such purposes as fire protection,
street, sidewalk, road, utility construction and maintenance,
refuse removal and for other governmental services which may
formerly have been provided without charge to property owners or
occupants. It is the intention of the parties that all new and
increased assessments, taxes, fees, levies and charges due to any
cause whatsoever are to be included within the definition of real
property taxes for purposes of this Lease. Taxes and
assessments shall also include legal and consultants fees,
costs and disbursements incurred in connection with proceedings
to contest, determine or reduce taxes, Landlord specifically
reserving the right, but not the obligation, to contest by
appropriate legal proceedings the amount or validity of any
taxes.
(2) Insurance. All insurance premiums for the Building
and/or the Project or any part thereof, including premiums for
all risk fire and extended coverage insurance, commercial
general liability insurance, rent loss or abatement insurance,
earthquake insurance, flood or surface water coverage, and other
insurance as Landlord deems necessary in its sole discretion, and
any deductibles paid under policies of any such insurance.
(3) Utilities. The cost of all Utilities (as
hereinafter defined) serving the Premises, the Building and the
Project that are not separately metered to Tenant, any
assessments or charges for Utilities or similar purposes included
within any tax bill for the Building or the Project, including
without limitation, entitlement fees, allocation unit fees,
and/or any similar fees or charges and any penalties (if a result
of Tenant s delinquency) related thereto, and any amounts, taxes,
charges, surcharges, assessments or impositions levied, assessed
or imposed upon the Premises, the Building or the Project or any
part thereof, or upon Tenant s use and occupancy thereof, as a
result of any rationing of Utility services or restriction on
Utility use affecting the Premises, the Building and/or the
Project, as contemplated in Paragraph 5 below (collectively,
Utility Expenses ).
(4) Common Area Expenses. All costs to operate,
maintain, repair, replace, supervise, insure and administer the
Common Areas, including supplies, materials, labor and equipment
used in or related to the operation and maintenance of the Common
Areas, including parking areas (including, without limitation,
all costs of resurfacing and restriping parking areas), signs and
directories on the Building and/or the Project, landscaping
(including maintenance contracts and fees payable to landscaping
consultants), amenities, sprinkler systems, sidewalks, walkways,
driveways, curbs, lighting systems and security services, if any,
provided by Landlord for the Common Areas, and any charges,
assessments, costs or fees levied by any association or entity of
which the Project or any part thereof is a member or to which the
Project or any part thereof is subject.
(5) Parking Charges. Any parking charges or other
costs levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations, or interpretations
thereof, promulgated by any governmental authority or insurer in
connection with the use or occupancy of the Building or the
Project.
(6) Maintenance and Repair Costs. Except for costs
which are the responsibility of Landlord pursuant to Paragraph
13(b) below, all costs to maintain, repair, and replace the
Premises, the Building and/or the Project or any part thereof,
including without limitation, (i) all costs paid under
maintenance, management and service agreements such as contracts
for janitorial, security and refuse removal, (ii) all costs to
maintain, repair and replace the roof coverings of the Building
or the Project or any part thereof, (iii) all costs to maintain,
repair and replace the heating, ventilating, air conditioning,
plumbing, sewer, drainage, electrical, fire protection, life
safety and security systems and other mechanical, electrical and
communications systems and equipment serving the Premises, the
Building and/or the Project or any part thereof (collectively,
the Systems ).
(7) Life Safety Costs. All costs to install, maintain,
repair and replace all life safety systems, including, without
limitation, all fire alarm systems, serving the Premises, the
Building and/or the Project or any part thereof (including all
maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by
Landlord s insurance carriers, Laws (as hereinafter defined) or
otherwise.
(8) Management and Administration. All costs for
management and administration of the Premises, the Building
and/or the Project or any part thereof, including, without
limitation, a property management fee, accounting, auditing,
billing, postage, salaries and benefits for clerical and
supervisory employees, whether located on the Project or
off-site, payroll taxes and legal and accounting costs and fees
for licenses and permits related to the ownership and operation
of the Project.
Notwithstanding anything in this Section 4(b) to the
contrary, with respect to all sums payable by Tenant as
Additional Rent under this Section 4(b) for the repair or
replacement of any item or the construction of any new item in
connection with the physical operation of the Premises, the
Building or the Project (i.e., HVAC, roof membrane or coverings
and parking area) which is a capital item the repair or
replacement of which properly would be capitalized under
generally accepted accounting principles, Tenant shall be
required to pay only the prorata share of the cost of the item
falling due within the Term (including any Renewal Term) based
upon the amortization of the same over the useful life of such
item, as reasonably determined by Landlord.
(c) Payment of Additional Rent.
(1) Upon commencement of this Lease, Landlord shall submit
to Tenant an estimate of monthly Additional Rent for the period
between the Commencement Date and the following December 31 and
Tenant shall pay such estimated Additional Rent on a monthly
basis, in advance, on the first day of each month. Tenant shall
continue to make said monthly payments until notified by Landlord
of a change therein. By April 1 of each calendar year, Landlord
shall endeavor to provide to Tenant a statement showing the
actual Additional Rent due to Landlord for the prior calendar
year, to be prorated during the first year from the Commencement
Date. If the total of the monthly payments of Additional Rent
that Tenant has made for the prior calendar year is less than the
actual Additional Rent chargeable to Tenant for such prior
calendar year, then Tenant shall pay the difference in a lump sum
within ten (10) days after receipt of such statement from
Landlord. Any overpayment by Tenant of Additional Rent for the
prior calendar year shall be credited towards the Additional Rent
next due.
(2)Landlord s then-current annual operating and capital
budgets for the Building and the Project or the pertinent part
thereof shall be used for purposes of calculating Tenant s
monthly payment of estimated Additional Rent for the current
year, subject to adjustment as provided above. Landlord shall
make the final determination of Additional Rent for the year in
which this Lease terminates as soon as possible after termination
of such year. Even though the Term has expired and Tenant has
vacated the Premises, Tenant shall remain liable for payment of
any amount due to Landlord in excess of the estimated Additional
Rent previously paid by Tenant, and, conversely, Landlord shall
promptly return to Tenant any overpayment. Failure of Landlord
to submit statements as called for herein shall not be deemed a
waiver of Tenant s obligation to pay Additional Rent as herein
provided.
(3) With respect to Expenses which Landlord allocates
to the Building, Tenant s Proportionate Share shall be the
percentage set forth in the Basic Lease Information as Tenant s
Proportionate Share of the Building, as adjusted by Landlord from
time to time for a remeasurement of or changes in the physical
size of the Premises or the Building, whether such changes in
size are due to an addition to or a sale or conveyance of a
portion of the Building or otherwise. With respect to Expenses
which Landlord allocates to the Project as a whole or to only a
portion of the Project, Tenant s Proportionate Share shall be,
with respect to Expenses which Landlord allocates to the Project
as a whole, the percentage set forth in the Basic Lease
Information as Tenant s Proportionate Share of the Project and,
with respect to Expenses which Landlord allocates to only a
portion of the Project, a percentage calculated by Landlord from
time to time in its sole discretion and furnished to Tenant in
writing, in either case as adjusted by Landlord from time to time
for a remeasurement of or changes in the physical size of the
Premises or the Project, whether such changes in size are due to
an addition to or a sale or conveyance of a portion of the
Project or otherwise. Notwithstanding the foregoing, Landlord
may equitably adjust Tenant s Proportionate Share(s) for all or
part of any item of expense or cost reimbursable by Tenant that
relates to a repair, replacement, or service that benefits only
the Premises or only a portion of the Building and/or the Project
or that varies with the occupancy of the Building and/or the
Project. Without limiting the generality of the foregoing,
Tenant understands and agrees that Landlord shall have the right
to adjust Tenant s Proportionate Share(s) of any Utility Expenses
based upon Tenant s use of the Utilities or similar services as
reasonably estimated and determined by Landlord based upon
factors such as size of the Premises and intensity of use of such
Utilities by Tenant such that Tenant shall pay the portion of
such charges reasonably consistent with Tenant s use of such
Utilities and similar services. If Tenant disputes any such
estimate or determination of Utility Expenses, then Tenant shall
either pay the estimated amount or cause the Premises to be
separately metered at Tenant s sole expense.
(d) General Payment Terms. The Base Rent, Additional Rent
and all other sums payable by Tenant to Landlord hereunder,
including, without limitation, payments of principal and interest
on the Tenant Improvements Loan (as defined in Exhibit B hereto),
if any, any late charges assessed pursuant to Paragraph 6 below
and any interest assessed pursuant to Paragraph 45 below, are
referred to as the Rent . All Rent shall be paid without
deduction, offset or abatement in lawful money of the United
States of America. Checks are to be made payable to Moffett Park
Properties Company #317 and shall be mailed to: ALIC SA87 IODCG
AAF REI 3261 Moffett Park Properties, Lock Box 66268, El Monte,
California 91735-6268 or to such other person or place as
Landlord may, from time to time, designate to Tenant in writing.
The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated
amount of the Rent for a full calendar month based upon a thirty
(30) day month.
5. Utility Expenses
(a) Tenant shall pay the cost of all water, sewer use, sewer
discharge fees and permit costs and sewer connection fees, gas,
heat, electricity, refuse pick-up, janitorial service, telephone
and all materials and services or other utilities (collectively,
Utilities ) billed or metered separately to the Premises and/or
Tenant, together with all taxes, assessments, charges and
penalties added to or included within such cost. Tenant
acknowledges that the Premises, the Building and/or the Project
may become subject to the rationing of Utility services or
restrictions on Utility use as required by a public utility
company, governmental agency or other similar entity having
jurisdiction thereof. Tenant acknowledges and agrees that its
tenancy and occupancy hereunder shall be subject to such
rationing or restrictions as may be imposed upon Landlord,
Tenant, the Premises, the Building and/or the Project, and Tenant
shall in no event be excused or relieved from any covenant or
obligation to be kept or performed by Tenant by reason of any
such rationing or restrictions. Tenant agrees to comply with
energy conservation programs implemented by Landlord by reason of
rationing, restrictions or Laws.
(b) Landlord shall not be liable for any loss, injury or
damage to property caused by or resulting from any variation,
interruption, or failure of Utilities due to any cause
whatsoever, or from failure to make any repairs or perform any
maintenance. No temporary interruption or failure of such
services incident to the making of repairs, alterations,
improvements, or due to accident, strike, or conditions or other
events shall be deemed an eviction of Tenant or relieve Tenant
from any of its obligations hereunder. In no event shall
Landlord be liable to Tenant for any damage to the Premises or
for any loss, damage or injury to any property therein or thereon
occasioned by bursting, rupture, leakage or overflow of any
plumbing or other pipes (including, without limitation, water,
steam, and/or refrigerant lines), sprinklers, tanks, drains,
drinking fountains or washstands, or other similar cause in,
above, upon or about the Premises, the Building, or the Project.
6. Late Charge
Notwithstanding any other provision of this Lease, Tenant
hereby acknowledges that late payment to Landlord of Rent, or
other amounts due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. If any Rent or other sums due
from Tenant are not received by Landlord or by Landlord s
designated agent within five (5) days after their due date, then
Tenant shall pay to Landlord a late charge equal to five percent
(5%) of such overdue amount, plus any costs and attorneys fees
incurred by Landlord by reason of Tenant s failure to pay Rent
and/or other charges when due hereunder. Landlord and Tenant
hereby agree that such late charges represent a fair and
reasonable estimate of the cost that Landlord will incur by
reason of Tenant s late payment and shall not be construed as a
penalty. Landlord s acceptance of such late charges shall not
constitute a waiver of Tenant s default with respect to such
overdue amount or estop Landlord from exercising any of the other
rights and remedies granted under this Lease.
Initials: Landlord _______ Tenant _______
7. Security Deposit
Concurrently with Tenant s execution of the Lease, Tenant
shall deposit with Landlord the Security Deposit specified in the
Basic Lease Information as security for the full and faithful
performance of each and every term, covenant and condition of
this Lease. Landlord may use, apply or retain the whole or any
part of the Security Deposit as may be reasonably necessary (a)
to remedy Tenant s default in the payment of any Rent, (b) to
repair damage to the Premises caused by Tenant, (c) to clean the
Premises upon termination of this Lease, (d) to reimburse
Landlord for the payment of any amount which Landlord may
reasonably spend or be required to spend by reason of Tenant s
default, or (e) to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant s default.
Should Tenant faithfully and fully comply with all of the terms,
covenants and conditions of this Lease, within thirty (30) days
following the expiration of the Term, the Security Deposit or any
balance thereof shall be returned to Tenant or, at the option of
Landlord, to the last assignee of Tenant s interest in this
Lease. Landlord shall not be required to keep the Security
Deposit separate from its general funds and Tenant shall not be
entitled to any interest on such deposit. If Landlord so uses or
applies all or any portion of said deposit, within five (5) days
after written demand therefor Tenant shall deposit cash with
Landlord in an amount sufficient to restore the Security Deposit
to the full extent of the above amount, and Tenant s failure to
do so shall be a default under this Lease. In the event Landlord
transfers its interest in this Lease, Landlord shall transfer the
then remaining amount of the Security Deposit to Landlord s
successor in interest, and thereafter Landlord shall have no
further liability to Tenant with respect to such Security
Deposit.
8. Possession
(a) Tenant s Right of Possession. Subject to Paragraph
8(b), Tenant shall be entitled to possession of the Premises upon
commencement of the Term.
(b) Delay in Delivering Possession. If for any reason
whatsoever, Landlord cannot deliver possession of the Premises to
Tenant on or before the Estimated Commencement Date, this Lease
shall not be void or voidable, nor shall Landlord, or Landlord s
agents, advisors, employees, partners, shareholders, directors,
invitees or independent contractors (collectively, Landlord s
Agents ), be liable to Tenant for any loss or damage resulting
therefrom. Tenant shall not be liable for Rent until Landlord
delivers possession of the Premises to Tenant. The Expiration
Date shall be extended by the same number of days that Tenant s
possession of the Premises was delayed beyond the Estimated
Commencement Date.
(c) Early Occupancy. Notwithstanding anything to the
contrary contained in Paragraph 8(a), Tenant shall have the right
to enter upon the Premises at such times as shall be acceptable
to Landlord during period between November 15, 1996 and the
Commencement Date for the sole purpose of installing Tenant s
telephone cabling and cubicles and preparing the Premises for its
business operations, provided, however, that such entry shall be
subject to all of the terms and provisions of this Lease,
excepting only the obligation to pay Rent and, provided further,
that Tenant shall not conduct business in the Premises during
such period.
9. Use Of Premises
(a) Permitted Use. The use of the Premises by Tenant and
Tenant's agents, advisors, employees, partners, shareholders,
directors, invitees and independent contractors (collectively,
Tenant's Agents ) shall be solely for the Permitted Use specified
in the Basic Lease Information and for no other use. Tenant
shall not permit any objectionable or unpleasant odor, smoke,
dust, gas, noise or vibration to emanate from or near the
Premises. The Premises shall not be used to create any nuisance
or trespass, for any illegal purpose, for any purpose not
permitted by Laws, for any purpose that would invalidate the
insurance or increase the premiums for insurance on the Premises,
the Building or the Project or for any purpose or in any manner
that would interfere with other tenants use or occupancy of the
Project. Tenant agrees to pay to Landlord, as Additional Rent,
any increases in premiums on policies resulting from Tenant s
Permitted Use or any other use or action by Tenant or Tenant s
Agents which increases Landlord s premiums or requires additional
coverage by Landlord to insure the Premises. Tenant agrees not
to overload the floor(s) of the Building.
(b) Compliance with Governmental Regulations and Private
Restrictions. Tenant and Tenant s Agents shall, at Tenant s
expense, faithfully observe and comply with (1) all municipal,
state and federal laws, statutes, codes, rules, regulations,
ordinances, requirements, and orders (collectively, Laws ), now
in force or which may hereafter be in force pertaining to the
Premises or Tenant s use of the Premises, the Building or the
Project, including without limitation, any Laws requiring
installation of fire sprinkler systems, seismic reinforcement and
related alterations, and removal of asbestos, whether substantial
in cost or otherwise, provided, however, that except as provided
in Paragraph 9(c) below, Tenant shall not be required to make
structural changes to the Premises or the Building not related to
Tenant s specific use of the Premises unless the requirement for
such changes is imposed as a result of any improvements or
additions made or proposed to be made at Tenant s request; (2)
all recorded covenants, conditions and restrictions affecting the
Project ( Private Restrictions ) now in force or which may
hereafter be in force; and (3) any and all rules and regulations
set forth in Exhibit D and any other rules and regulations now or
hereafter promulgated by Landlord related to parking or the
operation of the Premises, the Building and/or the Project
(collectively, the Rules and Regulations ). The judgment of any
court of competent jurisdiction, or the admission of Tenant in
any action or proceeding against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such Laws or
Private Restrictions, shall be conclusive of that fact as between
Landlord and Tenant.
(c) Compliance with Americans with Disabilities Act.
Landlord and Tenant hereby agree and acknowledge that the
Premises, the Building and/or the Project may be subject to,
among other Laws, the requirements of the Americans with
Disabilities Act, a federal law codified at 42 U.S.C. 12101 et
seq., including, but not limited to Title III thereof, and all
regulations and guidelines related thereto, together with any and
all laws, rules, regulations, ordinances, codes and statutes now
or hereafter enacted by local or state agencies having
jurisdiction thereof, including all requirements of Title 24 of
the State of California, as the same may be in effect on the date
of this Lease and may be hereafter modified, amended or
supplemented (collectively, the ADA ). Any Tenant Improvements
to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of
compliance therewith shall be a part of and included in the costs
of the Tenant Improvements. Tenant shall be solely responsible
for conducting its own independent investigation of this matter
and for ensuring that the design of all Tenant Improvements
strictly complies with all requirements of the ADA. Subject to
reimbursement pursuant to Paragraph 4 above, if any barrier
removal work or other work is required to the Building, the
Common Areas or the Project under the ADA, then such work shall
be the responsibility of Landlord; provided, if such work is
required under the ADA as a result of Tenant s use of the
Premises or any work or Alteration (as hereinafter defined) made
to the Premises by or on behalf of Tenant, then such work shall
be performed by Landlord at the sole cost and expense of Tenant.
Except as otherwise expressly provided in this provision, Tenant
shall be responsible at its sole cost and expense for fully and
faithfully complying with all applicable requirements of the ADA,
including without limitation, not discriminating against any
disabled persons in the operation of Tenant s business in or
about the Premises, and offering or otherwise providing auxiliary
aids and services as, and when, required by the ADA. Within ten
(10) days after receipt, Tenant shall advise Landlord in writing,
and provide Landlord with copies of (as applicable), any notices
alleging violation of the ADA relating to any portion of the
Premises, the Building or the Project; any claims made or
threatened orally or in writing regarding noncompliance with the
ADA and relating to any portion of the Premises, the Building, or
the Project; or any governmental or regulatory actions or
investigations instituted or threatened regarding noncompliance
with the ADA and relating to any portion of the Premises, the
Building or the Project. Tenant shall and hereby agrees to
protect, defend (with counsel acceptable to Landlord) and hold
Landlord and Landlord s Agents harmless and indemnify Landlord
and Landlord s Agents from and against all liabilities, damages,
claims, losses, penalties, judgments, charges and expenses
(including attorneys fees, costs of court and expenses necessary
in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related
to, directly or indirectly, Tenant s or Tenant s Agents
violation or alleged violation of the ADA. Tenant agrees that
the obligations of Tenant herein shall survive the expiration or
earlier termination of this Lease
10. Acceptance Of Premises
By entry hereunder, Tenant accepts the Premises as suitable
for Tenant s intended use and as being in good and sanitary
operating order, condition and repair, AS IS, and without
representation or warranty by Landlord as to the condition, use
or occupancy which may be made thereof. Any exceptions to the
foregoing must be by written agreement executed by Landlord and
Tenant.
11. Surrender
Tenant agrees that on the last day of the Term, or on the
sooner termination of this Lease, Tenant shall surrender the
Premises to Landlord (a) in good condition and repair (damage by
acts of God, fire, and normal wear and tear excepted), but with
all interior walls painted or cleaned so they appear painted,
any carpets cleaned, all floors cleaned and waxed, all
non-working light bulbs and ballasts replaced and all roll-up
doors and plumbing fixtures in good condition and working order,
and (b) otherwise in accordance with Paragraph 32(h). Normal
wear and tear shall not include any damage or deterioration to
the floors of the Premises arising from the use of forklifts in,
on or about the Premises (including, without limitation, any
marks or stains on any portion of the floors), and any damage or
deterioration that would have been prevented by proper
maintenance by Tenant, or Tenant otherwise performing all of its
obligations under this Lease. On or before the expiration or
sooner termination of this Lease, (i) Tenant shall remove all of
Tenant s Property (as hereinafter defined) and Tenant s signage
from the Premises, the Building and the Project and repair any
damage caused by such removal, and (ii) Landlord may, by notice
to Tenant given not later than ninety (90) days prior to the
Expiration Date (except in the event of a termination of this
Lease prior to the scheduled Expiration Date, in which event no
advance notice shall be required), require Tenant at Tenant s
expense to remove any or all Alterations and to repair any damage
caused by such removal. Any of Tenant s Property not so removed
by Tenant as required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant s expense,
and Tenant waives all claims against Landlord for any damages
resulting from Landlord s retention and disposition of such
property; provided, however, that Tenant shall remain liable to
Landlord for all costs incurred in storing and disposing of such
abandoned property of Tenant. All Tenant Improvements and
Alterations except those Alterations Landlord requires Tenant to
remove shall remain in the Premises as the property of Landlord.
If the Premises are not surrendered at the end of the Term or
sooner termination of this Lease, and in accordance with the
provisions of this Paragraph 11 and Paragraph 32(h) below, Tenant
shall continue to be responsible for the payment of Rent (as the
same may be increased pursuant to Paragraph 35 below) until the
Premises are so surrendered in accordance with said Paragraphs,
and Tenant shall indemnify, defend and hold Landlord harmless
from and against any and all loss or liability resulting from
delay by Tenant in so surrendering the Premises including,
without limitation, any loss or liability resulting from any
claim against Landlord made by any succeeding tenant or
prospective tenant founded on or resulting from such delay and
losses to Landlord due to lost opportunities to lease any portion
of the Premises to any such succeeding tenant or prospective
tenant, together with, in each case, actual attorneys fees and
costs. Notwithstanding anything in this Paragraph 11 to the
contrary, Tenant shall not be required to remove from the
Premises at the expiration of the Term the initial Tenant
Improvements constructed and installed pursuant to Exhibit B
hereto.
12. Alterations And Additions
(a) Tenant shall not make, or permit to be made, any
alteration, addition or improvement (hereinafter referred to
individually as an Alteration and collectively as the
Alterations ) to the Premises or any part thereof without the
prior written consent of Landlord, which consent shall not be
unreasonably withheld; provided, however, that Landlord shall
have the right in its sole and absolute discretion to consent or
to withhold its consent to any Alteration which affects the
structural portions of the Premises, the Building or the Project
or the Systems serving the Premises, the Building and/or the
Project or any portion thereof.
(b) Any Alteration to the Premises shall be at Tenant s sole
cost and expense, in compliance with all applicable Laws and all
requirements requested by Landlord, including, without
limitation, the requirements of any insurer providing coverage
for the Premises or the Project or any part thereof, and in
accordance with plans and specifications approved in writing by
Landlord, and shall be constructed and installed by a contractor
approved in writing by Landlord. As a further condition to
giving consent, Landlord may require Tenant to provide Landlord,
at Tenant s sole cost and expense, a payment and performance
bond in form acceptable to Landlord, in a principal amount not
less than one and one-half times the estimated costs of such
Alterations, to ensure Landlord against any liability for
mechanic s and materialmen s liens and to ensure completion of
work. Before Alterations may begin, valid building permits or
other permits or licenses required must be furnished to Landlord,
and, once the Alterations begin, Tenant will diligently and
continuously pursue their completion. Landlord may monitor
construction of the Alterations and Tenant shall reimburse
Landlord for its costs (including, without limitation, the costs
of any construction manager retained by Landlord) in reviewing
plans and documents and in monitoring construction. Tenant shall
maintain during the course of construction, at its sole cost and
expense, builders risk insurance for the amount of the completed
value of the Alterations on an all-risk non-reporting form
covering all improvements under construction, including building
materials, and other insurance in amounts and against such risks
as Landlord shall reasonably require in connection with the
Alterations. In addition to and without limitation on the
generality of the foregoing, Tenant shall ensure that its
contractor(s) procure and maintain in full force and effect
during the course of construction a broad form commercial
general liability and property damage policy of insurance naming
Landlord, Tenant and Landlord s lenders as additional insureds.
The minimum limit of coverage of the aforesaid policy shall be in
the amount of not less than Three Million Dollars ($3,000,000.00)
for injury or death of one person in any one accident or
occurrence and in the amount of not less than Three Million
Dollars ($3,000,000.00) for injury or death of more than one
person in any one accident or occurrence, and shall contain a
severability of interest clause or a cross liability endorsement.
Such insurance shall further insure Landlord and Tenant against
liability for property damage of at least One Million Dollars
($1,000,000.00).
(c) All Alterations, including, but not limited to, heating,
lighting, electrical, air conditioning, fixed partitioning,
drapery, wall covering and paneling, built-in cabinet work and
carpeting installations made by Tenant, together with all
property that has become an integral part of the Premises or the
Building, shall at once be and become the property of Landlord,
and shall not be deemed trade fixtures or Tenant s Property. If
requested by Landlord, Tenant will pay, prior to the commencement
of construction, an amount determined by Landlord necessary to
cover the costs of demolishing such Alterations and/or the cost
of returning the Premises and the Building to its condition prior
to such Alterations.
(d) No private telephone systems and/or other related
computer or telecommunications equipment or lines may be
installed without Landlord s prior written consent. If Landlord
gives such consent, all equipment must be installed within the
Premises and, at the request of Landlord made at any time prior
to the expiration of the Term, removed upon the expiration or
sooner termination of this Lease and the Premises restored to the
same condition as before such installation.
(e) Notwithstanding anything herein to the contrary, before
installing any equipment or lights which generate an undue amount
of heat in the Premises, or if Tenant plans to use any
high-power usage equipment in the Premises, Tenant shall obtain
the written permission of Landlord. Landlord may refuse to grant
such permission unless Tenant agrees to pay the costs to Landlord
for installation of supplementary air conditioning capacity or
electrical systems necessitated by such equipment.
(f) Tenant agrees not to proceed to make any Alterations,
notwithstanding consent from Landlord to do so, until Tenant
notifies Landlord in writing of the date Tenant desires to
commence construction or installation of such Alterations and
Landlord has approved such date in writing, in order that
Landlord may post appropriate notices to avoid any liability to
contractors or material suppliers for payment for Tenant s
improvements. Tenant will at all times permit such notices to be
posted and to remain posted until the completion of work.
13. Maintenance and Repairs Of Premises
(a) Maintenance by Tenant. Throughout the Term, Tenant
shall, at its sole expense, (1) keep and maintain in good order
and condition the Premises, and repair and replace every part
thereof, including glass, windows, interior doors, interior door
frames and interior door closers, interior lighting (including,
without limitation, light bulbs and ballasts), Tenant s signage,
interior demising walls and partitions, equipment, interior
painting and interior walls and floors (excepting only those
portions of the Building or the Project to be maintained by
Landlord, as provided in Paragraph 13(b) below), (2) furnish all
expendables, including light bulbs, paper goods and soaps, used
in the Premises, and (3) keep and maintain in good order and
condition, repair and replace all of Tenant s security systems in
or about or serving the Premises. Tenant shall not do nor shall
Tenant allow Tenant s Agents to do anything to cause any damage,
deterioration or unsightliness to the Premises, the Building or
the Project.
(b) Maintenance by Landlord. Subject to the provisions of
Paragraphs 13(a), 22 and 23, and further subject to Tenant s
obligation under Paragraph 4 to reimburse Landlord, in the form
of Additional Rent, for Tenant s Proportionate Share(s) of the
cost and expense of the following items, Landlord agrees to
repair and maintain the following items: the roof coverings
(provided that Tenant installs no additional air conditioning or
other equipment on the roof that damages the roof coverings, in
which event Tenant shall pay all costs resulting from the
presence of such additional equipment); window frames, window
casements, skylights, exterior doors, exterior door frames and
exterior door closers; the Systems serving the Premises and the
Building; the parking areas, pavement, landscaping, sprinkler
systems, sidewalks, driveways, curbs, and lighting systems in the
Common Areas; and the roll-up doors, ramps and dock equipment,
including, without limitation, dock bumpers, dock plates, dock
seals, dock levelers and dock lights located in or on the
Premises. Subject to the provisions of Paragraphs 13(a), 22 and
23, Landlord, at its own cost and expense, agrees to repair and
maintain the following items: the structural portions of the
roof (specifically excluding the roof coverings), the foundation,
the footings, the floor slab, the load bearing walls, and the
exterior walls (excluding any glass therein) of the Building.
Notwithstanding anything in this Paragraph 13 to the contrary,
Landlord shall have the right to either repair or to require
Tenant to repair any damage to any portion of the Premises, the
Building and/or the Project caused by or created due to any act,
omission, negligence or willful misconduct of Tenant or Tenant s
Agents and to restore the Premises, the Building and/or the
Project, as applicable, to the condition existing prior to the
occurrence of such damage; provided, however, that in the event
Landlord elects to perform such repair and restoration work,
Tenant shall reimburse Landlord upon demand for all costs and
expenses incurred by Landlord in connection therewith. Landlord
s obligation hereunder to repair and maintain is subject to the
condition precedent that Landlord shall have received written
notice of the need for such repairs and maintenance and a
reasonable time to perform such repair and maintenance. Tenant
shall promptly report in writing to Landlord any defective
condition known to it which Landlord is required to repair, and
failure to so report such defects shall make Tenant responsible
to Landlord for any liability incurred by Landlord by reason of
such condition.
(c) Tenant s Waiver of Rights. Tenant hereby expressly
waives all rights to make repairs at the expense of Landlord or
to terminate this Lease, as provided for in California Civil Code
Sections 1941 and 1942, and 1932(1), respectively, and any
similar or successor statute or law in effect or any amendment
thereof during the Term.
14. Landlord s Insurance
Landlord shall purchase and keep in force fire, extended
coverage and all risk insurance covering the Building and the
Project. Tenant shall, at its sole cost and expense, comply with
any and all reasonable requirements pertaining to the Premises,
the Building and the Project of any insurer necessary for the
maintenance of reasonable fire and commercial general liability
insurance, covering the Building and the Project. Landlord, at
Tenant s cost, may maintain Loss of Rents insurance, insuring
that the Rent will be paid in a timely manner to Landlord for a
period of at least twelve (12) months if the Premises, the
Building or the Project or any portion thereof are destroyed or
rendered unusable or inaccessible by any cause insured against
under this Lease.
15. Tenant s Insurance
(a) Commercial General Liability Insurance. Tenant shall,
at Tenant s expense, secure and keep in force a broad form
commercial general liability insurance and property damage policy
covering the Premises, insuring Tenant, and naming Landlord and
its lenders as additional insureds, against any liability arising
out of the ownership, use, occupancy or maintenance of the
Premises. The minimum limit of coverage of such policy shall be
in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of one person in any one
accident or occurrence and in the amount of not less than Three
Million Dollars ($3,000,000.00) for injury or death of more than
one person in any one accident or occurrence, shall include an
extended liability endorsement providing contractual liability
coverage (which shall include coverage for Tenant s
indemnification obligations in this Lease), and shall contain a
severability of interest clause or a cross liability endorsement.
Such insurance shall further insure Landlord and Tenant against
liability for property damage of at least Three Million Dollars
($3,000,000.00). Landlord may from time to time require
reasonable increases in any such limits if Landlord believes that
additional coverage is necessary or desirable. The limit of any
insurance shall not limit the liability of Tenant hereunder. No
policy maintained by Tenant under this Paragraph 15(a) shall
contain a deductible greater than two thousand five hundred
dollars ($2,500.00). No policy shall be cancelable or subject to
reduction of coverage without thirty (30) days prior written
notice to Landlord, and loss payable clauses shall be subject to
Landlord s approval. Such policies of insurance shall be issued
as primary policies and not contributing with or in excess of
coverage that Landlord may carry, by an insurance company
authorized to do business in the State of California for the
issuance of such type of insurance coverage and rated A:XIII or
better in Best s Key Rating Guide.
(b) Personal Property Insurance. Tenant shall maintain in
full force and effect on all of its personal property, furniture,
furnishings, trade or business fixtures and equipment
(collectively, Tenant s Property ) on the Premises, a policy or
policies of fire and extended coverage insurance with standard
coverage endorsement to the extent of the full replacement cost
thereof. No such policy shall contain a deductible greater than
two thousand five hundred dollars ($2,500.00). During the term
of this Lease the proceeds from any such policy or policies of
insurance shall be used for the repair or replacement of the
fixtures and equipment so insured. Landlord shall have no
interest in the insurance upon Tenant s equipment and fixtures
and will sign all documents reasonably necessary in connection
with the settlement of any claim or loss by Tenant. Landlord
will not carry insurance on Tenant s possessions.
(c) Worker's Compensation Insurance; Employer s Liability
Insurance. Tenant shall, at Tenant s expense, maintain in full
force and effect worker s compensation insurance with not less
than the minimum limits required by law, and employer s liability
insurance with a minimum limit of coverage of One Million Dollars
($1,000,000).
(d) Evidence of Coverage. Tenant shall deliver to Landlord
certificates of insurance and true and complete copies of any and
all endorsements required herein for all insurance required to be
maintained by Tenant hereunder at the time of execution of this
Lease by Tenant. Tenant shall, at least thirty (30) days prior
to expiration of each policy, furnish Landlord with certificates
of renewal or binders thereof. Each certificate shall
expressly provide that such policies shall not be cancellable or
otherwise subject to modification except after thirty (30) days
prior written notice to Landlord and the other parties named as
additional insureds as required in this Lease (except for
cancellation for nonpayment of premium, in which event
cancellation shall not take effect until at least ten (10) days
notice has been given to Landlord).
16. Indemnification
(a) Of Landlord. Tenant shall indemnify and hold harmless
Landlord and Landlord s Agents against and from any and all
claims, liabilities, judgments, costs, demands, causes of action
and expenses (including, without limitation, reasonable attorneys
fees) arising from (1) the use of the Premises, the Building or
the Project by Tenant or Tenant s Agents, or from any activity
done, permitted or suffered by Tenant or Tenant s Agents in or
about the Premises, the Building or the Project, and (2) any act,
neglect, fault, willful misconduct or omission of Tenant or
Tenant s Agents, or from any breach or default in the terms of
this Lease by Tenant or Tenant s Agents, and (3) any action or
proceeding brought on account of any matter in items (1) or (2).
If any action or proceeding is brought against Landlord by reason
of any such claim, upon notice from Landlord, Tenant shall defend
the same at Tenant s expense by counsel reasonably satisfactory
to Landlord. As a material part of the consideration to
Landlord, Tenant hereby releases Landlord and Landlord s Agents
from responsibility for, waives its entire claim of recovery for
and assumes all risk of (i) damage to property or injury to
persons in or about the Premises, the Building or the Project
from any cause whatsoever (except that which is caused by the
sole active gross negligence or willful misconduct of Landlord or
Landlord s Agents or by the failure of Landlord to observe any of
the terms and conditions of this Lease, if such failure has
persisted for an unreasonable period of time after written notice
of such failure), or (ii) loss resulting from business
interruption or loss of income at the Premises. The obligations
of Tenant under this Paragraph 16 shall survive any termination
of this Lease.
(b) No Impairment of Insurance. The foregoing indemnity
shall not relieve any insurance carrier of its obligations under
any policies required to be carried by either party pursuant to
this Lease, to the extent that such policies cover the peril or
occurrence that results in the claim that is subject to the
foregoing indemnity.
17. Subrogation
Landlord and Tenant hereby mutually waive any claim against
the other and its Agents for any loss or damage to any of their
property located on or about the Premises, the Building or the
Project that is caused by or results from perils covered by
property insurance carried by the respective parties, to the
extent of the proceeds of such insurance actually received with
respect to such loss or damage, whether or not due to the
negligence of the other party or its Agents. Because the
foregoing waivers will preclude the assignment of any claim by
way of subrogation to an insurance company or any other person,
each party now agrees to immediately give to its insurer written
notice of the terms of these mutual waivers and shall have their
insurance policies endorsed to prevent the invalidation of the
insurance coverage because of these waivers. Nothing in this
Paragraph 17 shall relieve a party of liability to the other for
failure to carry insurance required by this Lease.
18. Signs
(a) Tenant shall not place or permit to be placed in, upon,
or about the Premises, the Building or the Project any exterior
lights, decorations, balloons, flags, pennants, banners,
advertisements or notices, or erect or install any signs, windows
or door lettering, placards, decorations, or advertising media of
any type which can be viewed from the exterior the Premises
without obtaining Landlord s prior written consent or without
complying with Landlord s signage criteria specified on Exhibit E
hereto, as the same may be modified by Landlord from time to time
(the Signage Criteria ), and with all applicable Laws, and will
not conduct, or permit to be conducted, any sale by auction on
the Premises or otherwise on the Project. Tenant shall remove
any sign, advertisement or notice placed on the Premises, the
Building or the Project by Tenant upon the expiration of the Term
or sooner termination of this Lease, and Tenant shall repair any
damage or injury to the Premises, the Building or the Project
caused thereby, all at Tenant s expense. If any signs are not
removed, or necessary repairs not made, Landlord shall have the
right to remove the signs and repair any damage or injury to the
Premises, the Building or the Project at Tenant s sole cost and
expense.
(b) Notwithstanding anything to the contrary contained in
Paragraph 18(a) above, Landlord shall construct a monument sign
adjacent to the Building promptly after the Commencement Date,
and Tenant shall have the right to install identification signage
on such monument sign at Tenant s sole cost and expense,
provided that (i) Landlord shall have the right to approve the
size, design and style of such identification signage, and (ii)
such identification signage shall comply with the Signage
Criteria and all applicable laws.
19. Free From Liens
Tenant shall keep the Premises, the Building and the Project
free from any liens arising out of any work performed, material
furnished or obligations incurred by or for Tenant. In the
event that Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the lien to be released of
record by payment or posting of a proper bond, Landlord shall
have in addition to all other remedies provided herein and by law
the right but not the obligation to cause same to be released by
such means as it shall deem proper, including payment of the
claim giving rise to such lien. All such sums paid by Landlord
and all expenses incurred by it in connection therewith
(including, without limitation, attorneys fees) shall be payable
to Landlord by Tenant upon demand. Landlord shall have the right
at all times to post and keep posted on the Premises any notices
permitted or required by law or that Landlord shall deem proper
for the protection of Landlord, the Premises, the Building and
the Project, from mechanics' and materialmen's liens. Tenant
shall give to Landlord at least five (5) business days' prior
written notice of commencement of any repair or construction on
the Premises.
20. Entry By Landlord
Tenant shall permit Landlord and Landlord s Agents to enter
into and upon the Premises at all reasonable times, upon
reasonable notice (except in the case of an emergency, for which
no notice shall be required), and subject to Tenant s reasonable
security arrangements, for the purpose of inspecting the same or
showing the Premises to prospective purchasers, lenders or
tenants or to alter, improve, maintain and repair the Premises or
the Building as required or permitted of Landlord under the terms
hereof, or for any other business purpose, without any rebate of
Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned
(except for actual damages resulting from the sole active gross
negligence or willful misconduct of Landlord); and Tenant shall
permit Landlord to post notices of non-responsibility and
ordinary for sale or for lease signs. No such entry shall be
construed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises.
Landlord may temporarily close entrances, doors, corridors,
elevators or other facilities without liability to Tenant by
reason of such closure in the case of an emergency and when
Landlord otherwise deems such closure necessary.
21. Destruction And Damage
(a) If the Premises are damaged by fire or other perils
covered by extended coverage insurance, Landlord shall, at
Landlord s option:
(1) In the event of total destruction (which shall mean
destruction or damage in excess of twenty-five percent (25%) of
the full insurable value thereof) of the Premises, elect either
to commence promptly to repair and restore the Premises and
prosecute the same diligently to completion, in which event this
Lease shall remain in full force and effect; or not to repair or
restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within
sixty (60) days after the date (the Casualty Discovery Date )
Landlord obtains actual knowledge of such destruction. If
Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total
destruction.
(2) In the event of a partial destruction (which shall
mean destruction or damage to an extent not exceeding twenty-five
percent (25%) of the full insurable value thereof) of the
Premises for which Landlord will receive insurance proceeds
sufficient to cover the cost to repair and restore such partial
destruction and, if the damage thereto is such that the Premises
may be substantially repaired or restored to its condition
existing immediately prior to such damage or destruction within
one hundred eighty (180) days from the Casualty Discovery Date,
Landlord shall commence and proceed diligently with the work of
repair and restoration, in which event the Lease shall continue
in full force and effect. If such repair and restoration
requires longer than one hundred eighty (180) days or if the
insurance proceeds therefor (plus any amounts Tenant may elect or
is obligated to contribute) are not sufficient to cover the cost
of such repair and restoration, Landlord may elect either to so
repair and restore, in which event the Lease shall continue in
full force and effect, or not to repair or restore, in which
event the Lease shall terminate. In either case, Landlord shall
give written notice to Tenant of its intention within sixty (60)
days after the Casualty Discovery Date. If Landlord elects not
to restore the Premises, this Lease shall be deemed to have
terminated as of the date of such partial destruction.
(3) Notwithstanding anything to the contrary contained
in this Paragraph, in the event of damage to the Premises
occurring during the last twelve (12) months of the Term,
Landlord may elect to terminate this Lease by written notice of
such election given to Tenant within thirty (30) days after the
Casualty Discovery Date.
(b) If the Premises are damaged by any peril not covered by
extended coverage insurance, and the cost to repair such damage
exceeds any amount Tenant may agree to contribute, Landlord may
elect either to commence promptly to repair and restore the
Premises and prosecute the same diligently to completion, in
which event this Lease shall remain in full force and effect; or
not to repair or restore the Premises, in which event this Lease
shall terminate. Landlord shall give Tenant written notice of
its intention within sixty (60) days after the Casualty Discovery
Date. If Landlord elects not to restore the Premises, this Lease
shall be deemed to have terminated as of the date on which Tenant
surrenders possession of the Premises to Landlord, except that if
the damage to the Premises materially impairs Tenant s ability to
continue its business operations in the Premises, then this Lease
shall be deemed to have terminated as of the date such damage
occurred.
(c) Notwithstanding anything to the contrary in this
Paragraph 22, Landlord shall have the option to terminate this
Lease, exercisable by notice to Tenant within sixty (60) days
after the Casualty Discovery Date, in each of the following
instances:
(1) If more than twenty-five percent (25%) of the full
insurable value of the Building or the Project is damaged or
destroyed, regardless of whether or not the Premises are
destroyed.
(2) If the Building or the Project or any portion
thereof is damaged or destroyed and the repair and restoration of
such damage requires longer than one hundred eighty (180) days
from the Casualty Discovery Date.
(3) If the Building or the Project or any portion
thereof is damaged or destroyed and the insurance proceeds
therefor are not sufficient to cover the costs of repair and
restoration.
(4) If the Building or the Project or any portion
thereof is damaged or destroyed during the last twelve (12)
months of the Term.
(d) In the event of repair and restoration as herein
provided, the monthly installments of Base Rent shall be abated
proportionately in the ratio which Tenant s use of the Premises
is impaired during the period of such repair or restoration, but
only to the extent of rental abatement insurance proceeds
received by Landlord; provided, however, that Tenant shall not be
entitled to such abatement to the extent that such damage or
destruction resulted from the acts or inaction of Tenant or
Tenant s Agents. Except as expressly provided in the immediately
preceding sentence with respect to abatement of Base Rent, Tenant
shall have no claim against Landlord for, and hereby releases
Landlord and Landlord s Agents from responsibility for and waives
its entire claim of recovery for any cost, loss or expense
suffered or incurred by Tenant as a result of any damage to or
destruction of the Premises, the Building or the Project or the
repair or restoration thereof, including, without limitation, any
cost, loss or expense resulting from any loss of use of the whole
or any part of the Premises, the Building or the Project and/or
any inconvenience or annoyance occasioned by such damage, repair
or restoration.
(e) If Landlord is obligated to or elects to repair or
restore as herein provided, Landlord shall repair or restore only
the initial tenant improvements, if any, constructed by Landlord
in the Premises pursuant to the terms of this Lease,
substantially to their condition existing immediately prior to
the occurrence of the damage or destruction; and Tenant shall
promptly repair and restore, at Tenant s expense, Tenant s
Alterations which were not constructed by Landlord.
(f) Tenant hereby waives the provisions of California Civil
Code Section 1932(2) and Section 1933(4) which permit termination
of a lease upon destruction of the leased premises, and the
provisions of any similar law now or hereinafter in effect, and
the provisions of this Paragraph 22 shall govern exclusively in
case of such destruction.
22. Condemnation
(a) If twenty-five percent (25%) or more of either the
Premises, the Building or the Project or the parking areas for
the Building or the Project is taken for any public or
quasi-public purpose by any lawful governmental power or
authority, by exercise of the right of appropriation, inverse
condemnation, condemnation or eminent domain, or sold to prevent
such taking (each such event being referred to as a Condemnation
), Landlord may, at its option, terminate this Lease as of the
date title vests in the condemning party. If twenty-five percent
(25%) or more of the Premises is taken and if the Premises
remaining after such Condemnation and any repairs by Landlord
would be untenantable for the conduct of Tenant s business
operations, Tenant shall have the right to terminate this Lease
as of the date title vests in the condemning party. If either
party elects to terminate this Lease as provided herein, such
election shall be made by written notice to the other party given
within thirty (30) days after the nature and extent of such
Condemnation have been finally determined. If neither Landlord
nor Tenant elects to terminate this Lease to the extent permitted
above, Landlord shall promptly proceed to restore the Premises,
to the extent of any Condemnation award received by Landlord, to
substantially the same condition as existed prior to such
Condemnation, allowing for the reasonable effects of such
Condemnation, and a proportionate abatement shall be made to the
Base Rent corresponding to the time during which, and to the
portion of the floor area of the Premises (adjusted for any
increase thereto resulting from any reconstruction) of which,
Tenant is deprived on account of such Condemnation and
restoration, as reasonably determined by Landlord. Except as
expressly provided in the immediately preceding sentence with
respect to abatement of Base Rent, Tenant shall have no claim
against Landlord for, and hereby releases Landlord and Landlord s
Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by
Tenant as a result of any Condemnation or the repair or
restoration of the Premises, the Building or the Project or the
parking areas for the Building or the Project following such
Condemnation, including, without limitation, any cost, loss or
expense resulting from any loss of use of the whole or any part
of the Premises, the Building, the Project or the parking areas
and/or any inconvenience or annoyance occasioned by such
Condemnation, repair or restoration. The provisions of
California Code of Civil Procedure Section 1265.130, which allows
either party to petition the Superior Court to terminate the
Lease in the event of a partial taking of the Premises, the
Building or the Project or the parking areas for the Building or
the Project, and any other applicable law now or hereafter
enacted, are hereby waived by Tenant.
(b) Landlord shall be entitled to any and all compensation,
damages, income, rent, awards, or any interest therein whatsoever
which may be paid or made in connection with any Condemnation,
and Tenant shall have no claim against Landlord for the value of
any unexpired term of this Lease or otherwise; provided, however,
that Tenant shall be entitled to receive any award separately
allocated by the condemning authority to Tenant for Tenant s
relocation expenses or the value of Tenant s Property
(specifically excluding fixtures, Alterations and other
components of the Premises which under this Lease or by law are
or at the expiration of the Term will become the property of
Landlord), provided that such award does not reduce any award
otherwise allocable or payable to Landlord.
23. Assignment And Subletting
(a) Tenant shall not voluntarily or by operation of law, (1)
mortgage, pledge, hypothecate or encumber this Lease or any
interest herein, (2) assign or transfer this Lease or any
interest herein, sublease the Premises or any part thereof, or
any right or privilege appurtenant thereto, or allow any other
person (the employees and invitees of Tenant excepted) to occupy
or use the Premises, or any portion thereof, without first
obtaining the written consent of Landlord, which consent shall
not be withheld unreasonably provided that (i) Tenant is not then
in Default under this Lease nor is any event then occurring which
with the giving of notice or the passage of time, or both, would
constitute a Default hereunder, and (ii) Tenant has not
previously assigned or transferred this Lease or any interest
herein or subleased the Premises or any part thereof. When
Tenant requests Landlord s consent to such assignment or
subletting, it shall notify Landlord in writing of the name and
address of the proposed assignee or subtenant and the nature and
character of the business of the proposed assignee or subtenant
and shall provide current and prior financial statements for the
proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles. Tenant shall also
provide Landlord with a copy of the proposed sublease or
assignment agreement, including all material terms and conditions
thereof. Landlord shall have the option, to be exercised within
thirty (30) days of receipt of the foregoing, to (1) terminate
this Lease as of the commencement date stated in the proposed
sublease or assignment, (2) sublease or take an assignment, as
the case may be, from Tenant of the interest, or any portion
thereof, in this Lease and/or the Premises that Tenant proposes
to assign or sublease, on the same terms and conditions as stated
in the proposed sublet or assignment agreement, (3) consent to
the proposed assignment or sublease, or (4) refuse its consent to
the proposed assignment or sublease, providing that such consent
shall not be unreasonably withheld so long as Tenant is not then
in Default under this Lease nor is any event then occurring which
with the giving of notice or the passage of time, or both, would
constitute a Default hereunder. In the event Landlord elects to
terminate this Lease` or sublease or take an assignment from
Tenant of the interest, or portion thereof, in the Lease and/or
the Premises that Tenant proposes to assign or sublease as
provided in the foregoing clauses (1) and (2), respectively, then
Landlord shall have the additional right to negotiate directly
with Tenant s proposed assignee or subtenant and to enter into a
direct lease or occupancy agreement with such party on such terms
as shall be acceptable to Landlord in its sole and absolute
discretion, and Tenant hereby waives any claims against Landlord
related thereto, including, without limitation, any claims for
any compensation or profit related to such lease or occupancy
agreement.
(b) Without otherwise limiting the criteria upon which
Landlord may withhold its consent, Landlord shall be entitled to
consider all reasonable criteria including, but not limited to,
the following: (1) whether or not the proposed subtenant or
assignee is engaged in a business which, and the use of the
Premises will be in an manner which, is in keeping with the then
character and nature of all other tenancies in the Project, (2)
whether the use to be made of the Premises by the proposed
subtenant or assignee will conflict with any so-called exclusive
use then in favor of any other tenant of the Building or the
Project, and whether such use would be prohibited by any other
portion of this Lease, including, but not limited to, any rules
and regulations then in effect, or under applicable Laws, and
whether such use imposes a greater load upon the Premises and the
Building and Project services then imposed by Tenant, (3) the
business reputation of the proposed individuals who will be
managing and operating the business operations of the assignee or
subtenant, and the long-term financial and competitive business
prospects of the proposed assignee or subtenant, and (4) the
creditworthiness and financial stability of the proposed assignee
or subtenant in light of the responsibilities involved. In any
event, Landlord may withhold its consent to any assignment or
sublease, if (i) the actual use proposed to be conducted in the
Premises or portion thereof conflicts with the provisions of
Paragraph 8(a) or (b) above or with any other lease which
restricts the use to which any space in the Building or the
Project may be put, or (ii) the proposed assignment or sublease
requires alterations, improvements or additions to the Premises
or portions thereof.
(c) If Landlord approves an assignment or subletting as
herein provided, Tenant shall pay to Landlord, as Additional
Rent, the difference, if any, between (1) the Base Rent plus
Additional Rent allocable to that part of the Premises affected
by such assignment or sublease pursuant to the provisions of this
Lease, and (2) the rent and any additional rent payable by the
assignee or sublessee to Tenant, less reasonable and customary
market-based leasing commissions, if any, incurred by Tenant in
connection with such assignment or sublease. The assignment or
sublease agreement, as the case may be, after approval by
Landlord, shall not be amended without Landlord s prior written
consent, and shall contain a provision directing the assignee or
subtenant to pay the rent and other sums due thereunder directly
to Landlord upon receiving written notice from Landlord that
Tenant is in default under this Lease with respect to the payment
of Rent. In the event that, notwithstanding the giving of such
notice, Tenant collects any rent or other sums from the assignee
or subtenant, then Tenant shall hold such sums in trust for the
benefit of Landlord and shall immediately forward the same to
Landlord. Landlord s collection of such rent and other sums
shall not constitute an acceptance by Landlord of attornment by
such assignee or subtenant. A consent to one assignment,
subletting, occupation or use shall not be deemed to be a consent
to any other or subsequent assignment, subletting, occupation or
use, and consent to any assignment or subletting shall in no way
relieve Tenant of any liability under this Lease. Any assignment
or subletting without Landlord s consent shall be void, and
shall, at the option of Landlord, constitute a Default under this
Lease.
(d) Notwithstanding any assignment or subletting, Tenant and
any guarantor or surety of Tenant s obligations under this Lease
shall at all times remain fully responsible and liable for the
payment of the Rent and for compliance with all of Tenant s other
obligations under this Lease (regardless of whether Landlord s
approval has been obtained for any such assignment or
subletting).
(e) Tenant shall pay Landlord s reasonable fees (including,
without limitation, the fees of Landlord s counsel), incurred in
connection with Landlord s review and processing of documents
regarding any proposed assignment or sublease.
(f) Notwithstanding anything in this Lease to the contrary,
in the event Landlord consents to an assignment or subletting by
Tenant in accordance with the terms of this Paragraph 24, Tenant
s assignee or subtenant shall have no right to further assign
this Lease or any interest therein or thereunder or to further
sublease all or any portion of the Premises. In furtherance of
the foregoing, Tenant acknowledges and agrees on behalf of itself
and any assignee or subtenant claiming under it (and any such
assignee or subtenant by accepting such assignment or sublease
shall be deemed to acknowledge and agree) that no sub-subleases
or further assignments of this Lease shall be permitted at any
time.
(g) Tenant acknowledges and agrees that the restrictions,
conditions and limitations imposed by this Paragraph 24 on Tenant
s ability to assign or transfer this Lease or any interest
herein, to sublet the Premises or any part thereof, to transfer
or assign any right or privilege appurtenant to the Premises, or
to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code
Section 1951.4, as amended from time to time, and for all other
purposes, reasonable at the time that the Lease was entered
into, and shall be deemed to be reasonable at the time that
Tenant seeks to assign or transfer this Lease or any interest
herein, to sublet the Premises or any part thereof, to transfer
or assign any right or privilege appurtenant to the Premises, or
to allow any other person to occupy or use the Premises or any
portion thereof.
24. Tenant s Default
The occurrence of any one of the following events shall
constitute an event of default on the part of Tenant ( Default ):
(a) The vacation or abandonment of the Premises by Tenant
for a period of ten (10) consecutive days or any vacation or
abandonment of the Premises by Tenant which would cause any
insurance policy to be invalidated or otherwise lapse, or the
failure of Tenant to continuously operate Tenant s business in
the Premises, in each of the foregoing cases irrespective of
whether or not Tenant is then in monetary default under this
Lease. Tenant agrees to notice and service of notice as provided
for in this Lease and waives any right to any other or further
notice or service of notice which Tenant may have under any
statute or law now or hereafter in effect;
(b) Failure to pay any installment of Rent or any other
monies due and payable hereunder, said failure continuing for a
period of five (5) days after the same is due;
(c) A general assignment by Tenant or any guarantor or
surety of Tenant s obligations hereunder (collectively,
Guarantor ) for the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by
Tenant or any Guarantor, the filing by Tenant or any Guarantor of
a voluntary petition for an arrangement, the filing by or against
Tenant or any Guarantor of a petition, voluntary or involuntary,
for reorganization, or the filing of an involuntary petition by
the creditors of Tenant or any Guarantor, said involuntary
petition remaining undischarged for a period of sixty (60) days;
(e) Receivership, attachment, or other judicial seizure of
substantially all of Tenant s assets on the Premises, such
attachment or other seizure remaining undismissed or undischarged
for a period of sixty (60) days after the levy thereof;
(f) Death or disability of Tenant or any Guarantor, if
Tenant or such Guarantor is a natural person, or the failure by
Tenant or any Guarantor to maintain its legal existence, if
Tenant or such Guarantor is a corporation, partnership, limited
liability company, trust or other legal entity;
(g) Failure of Tenant to execute and deliver to Landlord any
estoppel certificate, subordination agreement, or lease amendment
within the time periods and in the manner required by Paragraphs
30 or 31 or 42;
(h) An assignment or sublease, or attempted assignment or
sublease, of this Lease or the Premises by Tenant contrary to the
provision of Paragraph 24, unless such assignment or sublease is
expressly conditioned upon Tenant having received Landlord s
consent thereto;
(i) Failure of Tenant to restore the Security Deposit to the
amount and within the time period provided in Paragraph 7 above;
(j) Failure in the performance of any of Tenant s covenants,
agreements or obligations hereunder (except those failures
specified as events of Default in subparagraphs (b), (l) or (m)
above or any other subparagraphs of this Paragraph 25, which
shall be governed by such other Paragraphs), which failure
continues for ten (10) days after written notice thereof from
Landlord to Tenant, provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot
be cured within such ten (10) day period despite reasonable
diligence, Tenant shall not be in default under this subparagraph
so long as Tenant thereafter diligently and continuously
prosecutes the cure to completion and actually completes such
cure within thirty (30) days after the giving of the aforesaid
written notice;
(k) Chronic delinquency by Tenant in the payment of Rent, or
any other periodic payments required to be paid by Tenant under
this Lease. Chronic delinquency shall mean failure by Tenant
to pay Rent, or any other payments required to be paid by Tenant
under this Lease within five (5) days after written notice
thereof for any three (3) months (consecutive or nonconsecutive)
during any period of twelve (12) months. In the event of a
Chronic Delinquency, in addition to Landlord s other remedies for
Default provided in this Lease, at Landlord s option, Landlord
shall have the right to require that Rent be paid by Tenant
quarterly, in advance;
(l) Chronic overuse by Tenant or Tenant s Agents of the
number of undesignated parking spaces set forth in the Basic
Lease Information. Chronic Overuse shall mean use by Tenant
or Tenant s Agents of a number of parking spaces greater than the
number of parking spaces set forth in the Basic Lease Information
more than three (3) times during the Term after written notice by
Landlord;
(m) Any insurance required to be maintained by Tenant
pursuant to this Lease shall be canceled or terminated or shall
expire or be reduced or materially changed, except as permitted
in this Lease; and
(n) Any failure by Tenant to discharge any lien or
encumbrance placed on the Project or any part thereof in
violation of this Lease within ten (10) days after the date such
lien or encumbrance is filed or recorded against the Project or
any part thereof.
Tenant agrees that any notice given by Landlord pursuant to
Paragraph 25(j), (k) or (l) above shall satisfy the requirements
for notice under 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.
25. Landlord s Remedies
(a) Termination. In the event of any Default by Tenant,
then in addition to any other remedies available to Landlord at
law or in equity and under this Lease, Landlord shall have the
immediate option to terminate this Lease and all rights of Tenant
hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so
terminate this Lease then Landlord may recover from Tenant:
(1)the worth at the time of award of any unpaid Rent
and any other sums due and payable which have been earned at the
time of such termination; plus
(2) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable which
would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves could have
been reasonably avoided; plus
(3) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable for the
balance of the term of this Lease after the time of award exceeds
the amount of such rental loss that Tenant proves could be
reasonably avoided; plus
(4) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant s failure to
perform its obligations under this Lease or which in the ordinary
course would be likely to result therefrom, including, without
limitation, (A) any costs or expenses incurred by Landlord (1) in
retaking possession of the Premises; (2) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering,
remodeling or rehabilitating the Premises or any affected
portions of the Building or the Project, including such actions
undertaken in connection with the reletting or attempted
reletting of the Premises to a new tenant or tenants; (3) for
leasing commissions, advertising costs and other expenses of
reletting the Premises; or (4) in carrying the Premises,
including taxes, insurance premiums, utilities and security
precautions; (B) any unearned brokerage commissions paid in
connection with this Lease; (C) reimbursement of any previously
waived or abated Base Rent or Additional Rent or any free rent or
reduced rental rate granted hereunder; and (D) any concession
made or paid by Landlord to the benefit of Tenant in
consideration of this Lease including, but not limited to, any
moving allowances, contributions, payments or loans by Landlord
for tenant improvements or build-out allowances (including
without limitation, any unamortized portion of the Tenant
Improvement Allowance (such Tenant Improvement Allowance to be
amortized over the Term in the manner reasonably determined by
Landlord), if any, and any outstanding balance (principal and
accrued interest) of the Tenant Improvement Loan, if any), or
assumptions by Landlord of any of Tenant s previous lease
obligations; plus
(5) such reasonable attorneys fees incurred by
Landlord as a result of a Default, and costs in the event suit is
filed by Landlord to enforce such remedy; and plus
(6) at Landlord s election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from
time to time by applicable law.
As used in subparagraphs (1) and (2) above, the worth at the
time of award is computed by allowing interest at an annual rate
equal to twelve percent (12%) per annum or the maximum rate
permitted by law, whichever is less. As used in subparagraph (3)
above, the worth at the time of award 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%). Tenant waives redemption or relief from forfeiture
under California Code of Civil Procedure Sections 1174 and 1179,
or under any other pertinent present or future Law, in the event
Tenant is evicted or Landlord takes possession of the Premises by
reason of any Default of Tenant hereunder.
(b) Continuation of Lease. In the event of any Default by
Tenant, then in addition to any other remedies available to
Landlord at law or in equity and under this Lease, Landlord shall
have the remedy described in California Civil Code Section 1951.4
(Landlord may continue this Lease in effect after Tenant s
Default and abandonment and recover Rent as it becomes due,
provided Tenant has the right to sublet or assign, subject only
to reasonable limitations). In addition, Landlord shall not be
liable in any way whatsoever for its failure or refusal to relet
the Premises. For purposes of this Paragraph 26(b), the
following acts by Landlord will not constitute the termination of
Tenant s right to possession of the Premises:
(1) Acts of maintenance or preservation or efforts to
relet the Premises, including, but not limited to, alterations,
remodeling, redecorating, repairs, replacements and/or painting
as Landlord shall consider advisable for the purpose of reletting
the Premises or any part thereof; or
(2) The appointment of a receiver upon the initiative
of Landlord to protect Landlord s interest under this Lease or in
the Premises.
(c) Re-entry. In the event of any Default by Tenant,
Landlord shall also have the right, with or without terminating
this Lease, in compliance with applicable law, to re-enter the
Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant.
(d) Reletting. In the event of the abandonment of the
Premises by Tenant or in the event that Landlord shall elect to
re-enter as provided in Paragraph 26(c) or shall take possession
of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to
terminate this Lease as provided in Paragraph 26(a), Landlord may
from time to time, without terminating this Lease, relet the
Premises or any part thereof for such term or terms and at such
rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises in Landlord s
sole discretion. In the event that Landlord shall elect to so
relet, then rentals received by Landlord from such reletting
shall be applied in the following order: (1) to reasonable
attorneys fees incurred by Landlord as a result of a Default and
costs in the event suit is filed by Landlord to enforce such
remedies; (2) to the payment of any indebtedness other than Rent
due hereunder from Tenant to Landlord; (3) to the payment of any
costs of such reletting; (4) to the payment of the costs of any
alterations and repairs to the Premises; (5) to the payment of
Rent due and unpaid hereunder; and (6) the residue, if any, shall
be held by Landlord and applied in payment of future Rent and
other sums payable by Tenant hereunder as the same may become due
and payable hereunder. Should that portion of such rentals
received from such reletting during any month, which is applied
to the payment of Rent hereunder, be less than the Rent payable
during the month by Tenant hereunder, then Tenant shall pay such
deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such
reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.
(e) Termination. No re-entry or taking of possession of the
Premises by Landlord pursuant to this Paragraph 26 shall be
construed as an election to terminate this Lease unless a written
notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination
by Landlord because of any Default by Tenant, Landlord may at any
time after such reletting elect to terminate this Lease for any
such Default.
(f) Cumulative Remedies. The remedies herein provided are
not exclusive and Landlord shall have any and all other remedies
provided herein or by law or in equity.
(g) No Surrender. No act or conduct of Landlord, whether
consisting of the acceptance of the keys to the Premises, or
otherwise, shall be deemed to be or constitute an acceptance of
the surrender of the Premises by Tenant prior to the expiration
of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord.
The surrender of this Lease by Tenant, voluntarily or otherwise,
shall not work a merger unless Landlord elects in writing that
such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at
its option, elect in writing to treat such surrender as a merger
terminating Tenant s estate under this Lease, and thereupon
Landlord may terminate any or all such subleases by notifying the
sublessee of its election so to do within five (5) days after
such surrender.
26. Landlord s Right to Perform Tenant s Obligations
(a) Without limiting the rights and remedies of Landlord
contained in Paragraph 26 above, if Tenant shall be in Default in
the performance of any of the terms, provisions, covenants or
conditions to be performed or complied with by Tenant pursuant to
this Lease, then Landlord may at Landlord s option, without any
obligation to do so, and without notice to Tenant perform any
such term, provision, covenant, or condition, or make any such
payment and Landlord by reason of so doing shall not be liable or
responsible for any loss or damage thereby sustained by Tenant or
anyone holding under or through Tenant or any of Tenant s Agents.
(b) Without limiting the rights of Landlord under Paragraph
26(a) above, Landlord shall have the right at Landlord s option,
without any obligation to do so, to perform any of Tenant s
covenants or obligations under this Lease without notice to
Tenant in the case of an emergency, as determined by Landlord in
its sole and absolute judgment, or if Landlord otherwise
determines in its sole discretion that such performance is
necessary or desirable for the proper management and operation of
the Building or the Project or for the preservation of the rights
and interests or safety of other tenants of the Building or the
Project.
(c) If Landlord performs any of Tenant s obligations hereunder
in accordance with this Paragraph 26, the full amount of the cost
and expense incurred or the payment so made or the amount of the
loss so sustained shall immediately be owing by Tenant to
Landlord, and Tenant shall promptly pay to Landlord upon demand,
as Additional Rent, the full amount thereof with interest thereon
from the date of payment by Landlord at the lower of (1) ten
percent (10%) per annum, or (2) the highest rate permitted by
applicable law.
27. Attorney s Fees
(a) If either party hereto fails to perform any of its
obligations under this Lease or if any dispute arises between the
parties hereto concerning the meaning or interpretation of any
provision of this Lease, then the defaulting party or the party
not prevailing in such dispute, as the case may be, shall pay
any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its
rights hereunder, including, without limitation, court costs and
reasonable attorneys fees and disbursements. Any such attorneys
fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Lease shall be recoverable
separately from and in addition to any other amount included in
such judgment, and such attorneys fees obligation is intended
to be severable from the other provisions of this Lease and to
survive and not be merged into any such judgment.
(b) Without limiting the generality of Paragraph 27(a)
above, if Landlord utilizes the services of an attorney for the
purpose of collecting any Rent due and unpaid by Tenant or in
connection with any other breach of this Lease by Tenant, Tenant
agrees to pay Landlord actual attorneys fees as determined by
Landlord for such services, regardless of the fact that no legal
action may be commenced or filed by Landlord.
28. Taxes
Tenant shall be liable for and shall pay, prior to
delinquency, all taxes levied against Tenant s Property. If any
Alteration installed by Tenant pursuant to Paragraph 11 or any of
Tenant s Property is assessed and taxed with the Project or
Building, Tenant shall pay such taxes to Landlord within ten (10)
days after delivery to Tenant of a statement therefor.
29. Effect Of Conveyance
The term Landlord as used in this Lease means, from time
to time, the then current owner of the Building or the Project
containing the Premises, so that, in the event of any sale of the
Building or the Project, Landlord shall be and hereby is entirely
freed and relieved of all covenants and obligations of Landlord
hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale,
that the purchaser of the Building or the Project has assumed and
agreed to carry out any and all covenants and obligations of
Landlord hereunder.
30. Tenant s Estoppel Certificate
From time to time, upon written request of Landlord, Tenant
shall execute, acknowledge and deliver to Landlord or its
designee, a written certificate stating (a) the date this Lease
was executed, the Commencement Date of the Term and the date the
Term expires; (b) the date Tenant entered into occupancy of the
Premises; (c) the amount of Rent and the date to which such Rent
has been paid; (d) that this Lease is in full force and effect
and has not been assigned, modified, supplemented or amended in
any way (or, if assigned, modified, supplemented or amended,
specifying the date and terms of any agreement so affecting this
Lease); (e) that this Lease represents the entire agreement
between the parties with respect to Tenant s right to use and
occupy the Premises (or specifying such other agreements, if
any); (f) that all obligations under this Lease to be performed
by Landlord as of the date of such certificate have been
satisfied (or specifying those as to which Tenant claims that
Landlord has yet to perform); (g) that all required contributions
by Landlord to Tenant on account of Tenant s improvements have
been received (or stating exceptions thereto); (h) that on such
date there exist no defenses or offsets that Tenant has against
the enforcement of this Lease by Landlord (or stating exceptions
thereto); (i) that no Rent or other sum payable by Tenant
hereunder has been paid more than one (1) month in advance (or
stating exceptions thereto); (j) that security has been deposited
with Landlord, stating the original amount thereof and any
increases thereto; and (k) any other matters evidencing the
status of this Lease that may be required either by a lender
making a loan to Landlord to be secured by a deed of trust
covering the Building or the Project or by a purchaser of the
Building or the Project. Any such certificate delivered pursuant
to this Paragraph 30 may be relied upon by a prospective
purchaser of Landlord s interest or a mortgagee of Landlord s
interest or assignee of any mortgage upon Landlord s interest in
the Premises. If Tenant shall fail to provide such certificate
within ten (10) days of receipt by Tenant of a written request by
Landlord as herein provided, such failure shall, at Landlord s
election, constitute a Default under this Lease, and Tenant shall
be deemed to have given such certificate as above provided
without modification and shall be deemed to have admitted the
accuracy of any information supplied by Landlord to a prospective
purchaser or mortgagee.
31. Subordination
Landlord shall have the right to cause this Lease to be and
remain subject and subordinate to any and all mortgages, deeds of
trust and ground leases, if any ( Encumbrances ) that 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 ground lease or upon the
foreclosure of any such mortgage or deed of trust, so long as
Tenant is not in default, the holder thereof ( Holder ) shall
agree to recognize Tenant s rights under this Lease as long as
Tenant shall pay the Rent 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, acknowledge and deliver any and all reasonable
documents required by Landlord or the Holder to effectuate such
subordination. If Tenant fails to do so, such failure shall
constitute a Default by Tenant under this Lease.
Notwithstanding anything to the contrary set forth in this
Paragraph 31, Tenant hereby attorns and agrees to attorn to any
person or 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.
32. Environmental Covenants
(a) Prior to executing this Lease, Tenant has completed,
executed and delivered to Landlord a Hazardous Materials
Disclosure Certificate ( Initial Disclosure Certificate ), a
fully completed copy of which is attached hereto as Exhibit F and
incorporated herein by this reference. Tenant covenants,
represents and warrants to Landlord that the information on the
Initial Disclosure Certificate is true and correct and accurately
describes the Hazardous Materials which will be manufactured,
treated, used or stored on or about the Premises by Tenant or
Tenant s Agents. Tenant shall, on each anniversary of the
Commencement Date and at such other times as Tenant desires to
manufacture, treat, use or store on or about the Premises new or
additional Hazardous Materials which were not listed on the
Initial Disclosure Certificate, complete, execute and deliver to
Landlord an updated Disclosure Certificate (each, an Updated
Disclosure Certificate ) describing Tenant s then current and
proposed future uses of Hazardous Materials on or about the
Premises, which Updated Disclosure Certificates shall be in the
same format as that which is set forth in Exhibit F or in such
updated format as Landlord may require from time to time. Tenant
shall deliver an Updated Disclosure Certificate to Landlord not
less than thirty (30) days prior to the date Tenant intends to
commence the manufacture, treatment, use or storage of new or
additional Hazardous Materials on or about the Premises, and
Landlord shall have the right to approve or disapprove such new
or additional Hazardous Materials in its sole and absolute
discretion. Tenant shall make no use of Hazardous Materials on
or about the Premises except as described in the Initial
Disclosure Certificate or as otherwise approved by Landlord in
writing in accordance with this Paragraph 32(a).
(b) As used in this Lease, the term Hazardous Materials
shall mean and include any substance that is or contains (1) any
hazardous substance as now or hereafter defined in <section> 101(14) of
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ( CERCLA ) (42 U.S.C. <section> 9601 et
seq.) or any regulations promulgated under CERCLA; (2) any
hazardous waste as now or hereafter defined in the Resource
Conservation and Recovery Act, as amended ( RCRA ) (42 U.S.C. <section>
6901 et seq.) or any regulations promulgated under RCRA; (3) any
substance now or hereafter regulated by the Toxic Substances
Control Act, as amended ( TSCA ) (15 U.S.C. <section> 2601 et seq.) or
any regulations promulgated under TSCA; (4) petroleum, petroleum
by-products, gasoline, diesel fuel, or other petroleum
hydrocarbons; (5) asbestos and asbestos-containing material, in
any form, whether friable or non-friable; (6) polychlorinated
biphenyls; (7) lead and lead-containing materials; or (8) any
additional substance, material or waste (A) the presence of which
on or about the Premises (i) requires reporting, investigation or
remediation under any Environmental Laws (as hereinafter
defined), (ii) causes or threatens to cause a nuisance on the
Premises or any adjacent area or property or poses or threatens
to pose a hazard to the health or safety of persons on the
Premises or any adjacent area or property, or (iii) which, if it
emanated or migrated from the Premises, could constitute a
trespass, or (B) which is now or is hereafter classified or
considered to be hazardous or toxic under any Environmental Laws.
(c) As used in this Lease, the term Environmental Laws
shall mean and include (1) CERCLA, RCRA and TSCA; and (2) any
other federal, state or local laws, ordinances, statutes, codes,
rules, regulations, orders or decrees now or hereinafter in
effect relating to (A) pollution, (B) the protection or
regulation of human health, natural resources or the
environment, (C) the treatment, storage or disposal of Hazardous
Materials, or (D) the emission, discharge, release or threatened
release of Hazardous Materials into the environment.
(d) Tenant agrees that during its use and occupancy of the
Premises it will (1) not (A) permit Hazardous Materials to be
present on or about the Premises except in a manner and quantity
necessary for the ordinary performance of Tenant s business or
(B) release, discharge or dispose of any Hazardous Materials on,
in, at, under, or emanating from, the Premises, the Building or
the Project; (2) comply with all Environmental Laws relating to
the Premises and the use of Hazardous Materials on or about the
Premises and not engage in or permit others to engage in any
activity at the Premises in violation of any Environmental Laws;
and (3) immediately notify Landlord of (A) any inquiry, test,
investigation or enforcement proceeding by any governmental
agency or authority against Tenant, Landlord or the Premises,
Building or Project relating to any Hazardous Materials or under
any Environmental Laws or (B) the occurrence of any event or
existence of any condition that would cause a breach of any of
the covenants set forth in this Paragraph 32.
(e) If Tenant s use of Hazardous Materials on or about the
Premises results in a release, discharge or disposal of Hazardous
Materials on, in, at, under, or emanating from, the Premises, the
Building or the Project, Tenant agrees to investigate, clean up,
remove or remediate such Hazardous Materials in full compliance
with (1) the requirements of (A) all Environmental Laws and (B)
any governmental agency or authority responsible for the
enforcement of any Environmental Laws; and (2) any additional
requirements of Landlord that are reasonably necessary to protect
the value of the Premises, the Building or the Project.
(f) Upon reasonable notice to Tenant, Landlord may inspect
the Premises and surrounding areas for the purpose of determining
whether there exists on or about the Premises any Hazardous
Material or other condition or activity that is in violation of
the requirements of this Lease or of any Environmental Laws.
Such inspections may include, but are not limited to, entering
the Premises or adjacent property with drill rigs or other
machinery for the purpose of obtaining laboratory samples.
Landlord shall not be limited in the number of such inspections
during the Term of this Lease. In the event (1) such inspections
reveal the presence of any such Hazardous Material or other
condition or activity in violation of the requirements of this
Lease or of any Environmental Laws, or (2) Tenant or its Agents
contribute or knowingly consent to the presence of any Hazardous
Materials in, on, under, through or about the Premises, the
Building or the Project or exacerbate the condition of or the
conditions caused by any Hazardous Materials in, on, under,
through or about the Premises, the Building or the Project,
Tenant shall reimburse Landlord for the cost of such inspections
within ten (10) days of receipt of a written statement therefor.
Tenant will supply to Landlord such historical and operational
information regarding the Premises and surrounding areas as may
be reasonably requested to facilitate any such inspection and
will make available for meetings appropriate personnel having
knowledge of such matters. Tenant agrees to give Landlord at
least sixty (60) days prior notice of its intention to vacate
the Premises so that Landlord will have an opportunity to perform
such an inspection prior to such vacation. The right granted to
Landlord herein to perform inspections shall not create a duty on
Landlord s part to inspect the Premises, or liability on the part
of Landlord for Tenant s use, storage, treatment or disposal of
Hazardous Materials, it being understood that Tenant shall be
solely responsible for all liability in connection therewith.
(g) Landlord shall have the right, but not the obligation,
prior or subsequent to a Default, without in any way limiting
Landlord s other rights and remedies under this Lease, to enter
upon the Premises, or to take such other actions as it deems
necessary or advisable, to investigate, clean up, remove or
remediate any Hazardous Materials or contamination by Hazardous
Materials present on, in, at, under, or emanating from, the
Premises, the Building or the Project in violation of Tenant s
obligations under this Lease or under any Environmental Laws.
Notwithstanding any other provision of this Lease, Landlord shall
also have the right, at its election, in its own name or as
Tenant s agent, to negotiate, defend, approve and appeal, at
Tenant s expense, any action taken or order issued by any
governmental agency or authority with regard to any such
Hazardous Materials or contamination by Hazardous Materials. All
costs and expenses paid or incurred by Landlord in the exercise
of the rights set forth in this Paragraph 32 shall be payable by
Tenant upon demand.
(h) Tenant shall surrender the Premises to Landlord upon the
expiration or earlier termination of this Lease free of debris,
waste or Hazardous Materials placed on, about or near the
Premises by Tenant or Tenant s Agents, and in a condition which
complies with all Environmental Laws and any additional
requirements of Landlord that are reasonably necessary to protect
the value of the Premises, the Building or the Project,
including, without limitation, the obtaining of any closure
permits or other governmental permits or approvals related to
Tenant s use of Hazardous Materials in or about the Premises.
Tenant s obligations and liabilities pursuant to the provisions
of this Paragraph 32 shall survive the expiration or earlier
termination of this Lease. If it is determined by Landlord that
the condition of all or any portion of the Premises, the
Building, and/or the Project is not in compliance with the
provisions of this Lease with respect to Hazardous Materials,
including, without limitation, all Environmental Laws, at the
expiration or earlier termination of this Lease, then at Landlord
s sole option, Landlord may require Tenant to hold over
possession of the Premises until Tenant can surrender the
Premises to Landlord in the condition in which the Premises
existed as of the Commencement Date and prior to the appearance
of such Hazardous Materials except for normal wear and tear,
including, without limitation, the conduct or performance of any
closures as required by any Environmental Laws. The burden of
proof hereunder shall be upon Tenant. For purposes hereof, the
term normal wear and tear shall not include any deterioration
in the condition or diminution of the value of any portion of the
Premises, the Building, and/or the Project in any manner
whatsoever related to directly, or indirectly, Hazardous
Materials. Any such holdover by Tenant will be with Landlord s
consent, will not be terminable by Tenant in any event or
circumstance and will otherwise be subject to the provisions of
Paragraph 35 of this Lease.
(i) Tenant agrees to indemnify and hold harmless Landlord
from and against any and all claims, losses (including, without
limitation, loss in value of the Premises, the Building or the
Project, liabilities and expenses (including attorney s fees))
sustained by Landlord attributable to (1) any Hazardous
Materials placed on or about the Premises, the Building or the
Project by Tenant or Tenant s Agents, or (2) Tenant s breach of
any provision of this Paragraph 32.
(j) The provisions of this Paragraph 32 shall survive the
expiration or earlier termination of this Lease.
33. Notices
All notices and demands which are required or may be
permitted to be given to either party by the other hereunder
shall be in writing and shall be sent by United States mail,
postage prepaid, certified, or by personal delivery or overnight
courier, addressed to the addressee at Tenant s Address or
Landlord s Address as specified in the Basic Lease Information,
or to such other place as either party may from time to time
designate in a notice to the other party given as provided
herein. Copies of all notices and demands given to Landlord
shall additionally be sent to Landlord s property manager at the
address specified in the Basic Lease Information or at such other
address as Landlord may specify in writing from time to time.
Notice shall be deemed given upon actual receipt (or attempted
delivery if delivery is refused ), if personally delivered, or
one (1) business day following deposit with a reputable overnight
courier that provides a receipt, or on the third (3rd) day
following deposit in the United States mail in the manner
described above.
34. Waiver
The waiver of any breach of any term, covenant or condition
of this Lease shall not be deemed to be a waiver of such term,
covenant or condition or of any subsequent breach of the same or
any other term, covenant or condition herein contained. The
subsequent acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant, other than the
failure of Tenant to pay the particular rental so accepted,
regardless of Landlord s knowledge of such preceding breach at
the time of acceptance of such Rent. No delay or omission in the
exercise of any right or remedy of Landlord in regard to any
Default by Tenant shall impair such a right or remedy or be
construed as a waiver. Any waiver by Landlord of any Default
must be in writing and shall not be a waiver of any other Default
concerning the same or any other provisions of this Lease.
35. Holding Over
Any holding over after the expiration of the Term, without
the express written consent of Landlord, shall constitute a
Default and, without limiting Landlord s remedies provided in
this Lease, such holding over shall be construed to be a tenancy
at sufferance, at a rental rate of one hundred fifty percent
(150%) of the Base Rent last due in this Lease, plus Additional
Rent, and shall otherwise be on the terms and conditions herein
specified, so far as applicable; provided, however, in no event
shall any renewal or expansion option or other similar right or
option contained in this Lease be deemed applicable to any such
tenancy at sufferance. If the Premises are not surrendered at
the end of the Term or sooner termination of this Lease, and in
accordance with the provisions of Paragraphs 11 and 32(h), Tenant
shall indemnify, defend and hold Landlord harmless from and
against any and all loss or liability resulting from delay by
Tenant in so surrendering the Premises including, without
limitation, any loss or liability resulting from any claim
against Landlord made by any succeeding tenant or prospective
tenant founded on or resulting from such delay and losses to
Landlord due to lost opportunities to lease any portion of the
Premises to any such succeeding tenant or prospective tenant,
together with, in each case, actual attorneys fees and costs.
36. Successors And Assigns
The terms, covenants and conditions of this Lease shall,
subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of all
of the parties hereto. If Tenant shall consist of more than one
entity or person, the obligations of Tenant under this Lease
shall be joint and several.
37. Time
Time is of the essence of this Lease and each and every
term, condition and provision herein.
38. Brokers
Landlord and Tenant each represents and warrants to the
other that neither it nor its officers or agents nor anyone
acting on its behalf has dealt with any real estate broker except
the Broker(s) specified in the Basic Lease Information in the
negotiating or making of this Lease, and each party agrees to
indemnify and hold harmless the other from any claim or claims,
and costs and expenses, including attorneys fees, incurred by
the indemnified party in conjunction with any such claim or
claims of any other broker or brokers to a commission in
connection with this Lease as a result of the actions of the
indemnifying party.
39. Limitation Of Liability
Tenant agrees that, in the event of any default or breach by
Landlord with respect to any of the terms of the Lease to be
observed and performed by Landlord (a) Tenant shall look solely
to the then-current landlord s interest in the Building for the
satisfaction of Tenant s remedies for the collection of a
judgment (or other judicial process) requiring the payment of
money by Landlord; (b) no other property or assets of Landlord,
its partners, shareholders, officers, directors or any successor
in interest shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant s remedies;
(c) no personal liability shall at any time be asserted or
enforceable against Landlord s partners or successors in interest
(except to the extent permitted in (a) above), or against
Landlord s shareholders, officers or directors, or their
respective partners, shareholders, officers, directors or
successors in interest; and (d) no judgment will be taken against
any partner, shareholder, officer or director of Landlord. The
provisions of this section shall apply only to the Landlord and
the parties herein described, and shall not be for the benefit of
any insurer nor any other third party.
40. Financial Statements
Within ten (10) days after Landlord s request, Tenant shall
deliver to Landlord the then current financial statements of
Tenant (including interim periods following the end of the last
fiscal year for which annual statements are available), prepared
or compiled by 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 consistently applied.
41. Rules And Regulations
Tenant agrees to comply with such reasonable rules and
regulations as Landlord may adopt from time to time for the
orderly and proper operation of the Building and the Project.
Such rules may include but shall not be limited to the following:
(a) restriction of employee parking to a limited, designated area
or areas; and (b) regulation of the removal, storage and disposal
of Tenant s refuse and other rubbish at the sole cost and expense
of Tenant. The then current rules and regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant.
Landlord shall not be responsible to Tenant for the failure of
any other person to observe and abide by any of said rules and
regulations. Landlord s current rules and regulations are
attached to this Lease as Exhibit D.
42. Mortgagee Protection
(a) Modifications for Lender. If, in connection with
obtaining financing for the Project or any portion thereof,
Landlord s lender shall request reasonable modifications to this
Lease as a condition to such financing, Tenant shall not
unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially
adversely affect Tenant s rights or increase Tenant s obligations
under this Lease.
(b) Rights to Cure. Tenant agrees to give to any trust deed
or mortgage holder ( Holder ), by registered mail, at the same
time as it is given to Landlord, a copy of any notice of default
given to Landlord, provided that prior to such notice Tenant has
been notified, in writing, (by way of notice of assignment of
rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure
such default within the time provided for in this Lease, then the
Holder shall have an additional twenty (20) days after expiration
of such period, or after receipt of such notice from Tenant (if
such notice to the Holder is required by this Paragraph 42(b)),
whichever shall last occur within which to cure such default or
if such default cannot be cured within that time, then such
additional time as may be necessary if within such twenty (20)
days, any Holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not
limited to commencement of foreclosure proceedings, if necessary
to effect such cure), in which event this Lease shall not be
terminated.
43. Entire Agreement
This Lease, including the Exhibits and any Addenda attached
hereto, which are hereby incorporated herein by this reference,
contains the entire agreement of the parties hereto, and no
representations, inducements, promises or agreements, oral or
otherwise, between the parties, not embodied herein or therein,
shall be of any force and effect.
44. Interest
Any installment of Rent and any other sum due from Tenant
under this Lease which is not received by Landlord within ten
(10) days from when the same is due shall bear interest from the
date such payment was originally due under this Lease until paid
at an annual rate equal to the maximum rate of interest permitted
by law. Payment of such interest shall not excuse or cure any
Default by Tenant. In addition, Tenant shall pay all costs and
attorneys fees incurred by Landlord in collection of such
amounts.
45. Construction
This Lease shall be construed and interpreted in accordance
with the laws of the State of California. The parties
acknowledge and agree that no rule of construction to the effect
that any ambiguities are to be resolved against the drafting
party shall be employed in the interpretation of this Lease,
including the Exhibits and any Addenda attached hereto. All
captions in this Lease are for reference only and shall not be
used in the interpretation of this Lease. Whenever required by
the context of this Lease, the singular shall include the plural,
the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or
unenforceable, such determination shall not affect any other
provision of this Lease and all such other provisions shall
remain in full force and effect.
46. Representations And Warranties Of Tenant
Tenant hereby makes the following representations and
warranties, each of which is material and being relied upon by
Landlord, is true in all respects as of the date of this Lease,
and shall survive the expiration or termination of the Lease.
(a) If Tenant is an entity, Tenant is duly organized,
validly existing and in good standing under the laws of the state
of its organization and the persons executing this Lease on
behalf of Tenant have the full right and authority to execute
this Lease on behalf of Tenant and to bind Tenant without the
consent or approval of any other person or entity. Tenant has
full power, capacity, authority and legal right to execute and
deliver this Lease and to perform all of its obligations
hereunder. This Lease is a legal, valid and binding obligation
of Tenant, enforceable in accordance with its terms.
(b) Tenant has not (1) made a general assignment for the
benefit of creditors, (2) filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition by
any creditors, (3) suffered the appointment of a receiver to take
possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or
substantially all of its assets, (5) admitted in writing its
inability to pay its debts as they come due, or (6) made an offer
of settlement, extension or composition to its creditors
generally.
47. Security
(a) Tenant acknowledges and agrees that, while Landlord may
engage security personnel to patrol the Building or the Project,
Landlord is not providing any security services with respect to
the Premises, the Building or the Project and that Landlord shall
not be liable to Tenant for, and Tenant waives any claim against
Landlord with respect to, any loss by theft or any other damage
suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of
security with respect to the Premises, the Building or the
Project.
(b) Tenant hereby agrees to the exercise by Landlord and
Landlord s Agents, within their sole discretion, of such security
measures as, but not limited to, the evacuation of the Premises,
the Building or the Project for cause, suspected cause or for
drill purposes, the denial of any access to the Premises, the
Building or the Project and other similarly related actions that
it deems necessary to prevent any threat of property damage or
bodily injury. The exercise of such security measures by
Landlord and Landlord s Agents, and the resulting interruption of
service and cessation of Tenant s business, if any, shall not be
deemed an eviction or disturbance of Tenant s use and possession
of the Premises, or any part thereof, or render Landlord or
Landlord s Agents liable to Tenant for any resulting damages or
relieve Tenant from Tenant s obligations under this Lease.
48. Jury Trial Waiver
Tenant hereby waives any right to trial by jury with respect
to any action or proceeding (i) brought by Landlord, Tenant or
any other party, relating to (A) this Lease and/or any
understandings or prior dealings between the parties hereto, or
(B) the Premises, the Building or the Project or any part
thereof, or (ii) to which Landlord is a party. Tenant hereby
agrees that this Lease constitutes a written consent to waiver of
trial by jury pursuant to the provisions of California Code of
Civil Procedure Section 631, and Tenant does hereby constitute
and appoint Landlord its true and lawful attorney-in-fact, which
appointment is coupled with an interest, and Tenant does hereby
authorize and empower Landlord, in the name, place and stead of
Tenant, to file this Lease with the clerk or judge of any court
of competent jurisdiction as a statutory written consent to
waiver of trial by jury.
Landlord and Tenant have executed and delivered this Lease
as of the Lease Date specified in the Basic Lease Information.
Landlord:
Aetna Life Insurance Company,
a Connecticut corporation
By: Allegis Realty Investors llc
Its Investment Advisor
By: /s/Cynthia Stevenin
Vice President
Tenant:
Logic Devices, Inc.,
a California corporation
By: /s/ Todd J. Ashford
Print Name: Todd J. Ashford
Its: CFO
By:
Print Name:
Its:
<PAGE>
Exhibit A
Diagram Of The Premises
<PAGE>
Exhibit B
Tenant Improvements
This exhibit, entitled Tenant Improvements , is and shall
constitute Exhibit B to the Lease Agreement, dated as of the
Lease Date, by and between Landlord and Tenant for the Premises.
The terms and conditions of this Exhibit B are hereby
incorporated into and are made a part of the Lease. Capitalized
terms used, but not otherwise defined, in this Exhibit B have the
meanings ascribed to such terms in the Lease.
1. Landlord s Work
Prior to the Commencement Date, Landlord shall complete the
work in the Premises described on Exhibit B-1 hereto ( Landlord s
Work ). Landlord s Work shall be performed at Landlord s sole
cost and expense and shall not reduce the Tenant Improvement
Allowance or the Tenant Improvement Loan (as such terms are
hereinafter defined).
2. Tenant Improvements
Subject to the conditions set forth below, in addition to
Landlord s Work to be performed pursuant to Paragraph 1 above,
Landlord agrees to construct certain Tenant Improvements in the
Premises pursuant to the terms of this Exhibit B.
3. Definition
Tenant Improvements as used in the Lease and this Exhibit
B shall include only those improvements within the interior
portions of the Premises which are depicted on the Final Plans
and Specifications (hereafter defined in Paragraph 4) or
described hereinbelow. Tenant Improvements shall specifically
not include any Alterations installed or constructed by Tenant,
and any of Tenant s Property.
The Tenant Improvements may include:
(a) Partitioning, doors, floor coverings, finishes,
ceilings, wall coverings and painting, millwork and similar
items.
(b) Electrical wiring, lighting fixtures, outlets and
switches, and other electrical work.
(c) Duct work, terminal boxes, diffusers and accessories
required for the completion of the heating, ventilation and air
conditioning systems serving the Premises, including the cost of
meter and key control for after-hour air conditioning.
(d) Any additional Tenant requirements including, but not
limited to odor control, special heating, ventilation and air
conditioning, noise or vibration control or other special
systems.
(e) All fire and life safety control systems such as fire
walls, sprinklers, halon, fire alarms, including piping, wiring
and accessories installed within the Building and serving the
Premises.
(f) All plumbing, fixtures, pipes, and accessories to be
installed within the Building and serving the Premises.
4. Plans And Specifications
Landlord shall retain the architect specified in the Basic
Lease Information ( Architect ) for the preparation of
preliminary and final working architectural and engineering plans
and specifications for the Tenant Improvements ( Final Plans and
Specifications ). Landlord reserves the right to substitute for
the Architect another architect of its selection. Tenant shall
cooperate diligently with the Architect and shall furnish within
ten (10) days after request therefor, all information required by
the Architect for completion of the Final Plans and
Specifications, and shall provide (in writing, if requested by
Landlord), not later than three (3) business days after request
therefor, any approval or disapproval of preliminary or Final
Plans and Specifications which Tenant is permitted to give under
this Exhibit B. The Final Plans and Specifications shall be
subject to Landlord s approval, which approval shall not be
unreasonably withheld. Landlord shall not be deemed to have
acted unreasonably if it withholds its approval of any plans,
specifications, drawings or other details or of any Change
Request (hereafter defined in Paragraph 10 below) because, in
Landlord s reasonable opinion, the work as described in any such
item, or any Change Request, as the case may be: (a) is likely
to adversely affect Building systems, the structure of the
Building or the safety of the Building and/or its occupants; (b)
might impair Landlord s ability to furnish services to Tenant or
other tenants in the Building or the Project; (c) would increase
the cost of operating the Building or the Project; (d) would
violate any Laws; (e) contains or uses Hazardous Materials; (f)
would adversely affect the appearance of the Building or the
Project or the marketability of the Premises to subsequent
tenants; (g) might adversely affect another tenant s premises or
such other tenant s use and enjoyment of such premises; (h) is
prohibited by any ground lease affecting the Building and/or the
Project, any Private Restrictions or any mortgage, trust deed or
other instrument encumbering the Building and/or the Project;
(i) is likely to be substantially delayed because of
unavailability or shortage of labor or materials necessary to
perform such work or the difficulties or unusual nature of such
work; (j) is not, at a minimum in accordance with Landlord s
building standards, or (k) would increase the Tenant Improvements
Cost (defined in Paragraph 8 below) by more than ten percent
(10%) from the cost originally estimated and anticipated by the
parties. The foregoing reasons, however, shall not be the only
reasons for which Landlord may withhold its approval, whether or
not such other reasons are similar or dissimilar to the
foregoing. Neither the approval by Landlord of the Final Plans
and Specifications or any other plans, specifications, drawings
or other items associated with the Tenant Improvements nor
Landlord s performance, supervision or monitoring of the Tenant
Improvements shall constitute any warranty or covenant by
Landlord to Tenant of the adequacy of the design for Tenant s
intended use of the Premises. Tenant agrees to, and does hereby,
assume full and complete responsibility to ensure that the Tenant
Improvements and the Final Plans and Specifications are adequate
to fully meet the needs and requirements of Tenant s intended
operations of its business within the Premises and Tenant s use
of the Premises. Landlord and Tenant shall indicate their
approval of the Final Plans and Specifications by initialing them
and attaching them to the Lease as Exhibit B-2. Upon completion
of the Final Plans and Specifications and approval thereof by
Landlord and Tenant, Landlord will obtain subcontractor trade
bids and furnish a cost breakdown to Tenant. In the event the
estimated Tenant Improvements Cost, based on such bids and the
reasonably anticipated costs of other items constituting the
Tenant Improvements Cost, exceeds the sum of the Tenant
Improvements Allowance (hereafter defined in Paragraph 6) and the
Tenant Improvements Loan (hereafter defined in Paragraph 7), plus
any amounts which Tenant desires to pay as an Excess Tenant
Improvements Cost (hereafter defined in Paragraph 9.A.) ( Tenant
s T.I. Budget ), at Tenant s request, the Final Plans and
Specifications may be revised once, at Tenant s cost and expense.
Any such revisions shall be subject to Landlord s approval, and
the amended Final Plans and Specifications, as approved by
Landlord and Tenant, shall thereafter be deemed to be the Final
Plans and Specifications for the Tenant Improvements. The
amended Final Plans and Specifications shall be approved by
Tenant (in writing, if requested by Landlord) not later than
three (3) days after Landlord s request therefor. Landlord shall
thereafter submit such amended Final Plans and Specifications to
its contractor and subcontractor for re-bidding, and shall
furnish a cost breakdown to Tenant. If the estimated Tenant
Improvements Cost, as determined by the bids based on the amended
Final Plans and Specifications and the reasonably anticipated
costs of other items constituting the Tenant Improvements Cost,
result in an Excess Tenant Improvements Cost, then Tenant shall
pay such Excess Tenant Improvements Cost as and when required by
Paragraph 9.A. Tenant s failure to approve or disapprove any
matters which Tenant shall be entitled to approve or disapprove
pursuant to this Paragraph 4 shall be conclusively deemed to be
approval of same by Tenant.
5. Landlord To Construct Improvements
When the Final Plans and Specifications (as amended, if
required by Paragraph 4 above) have been approved by Landlord and
Tenant, Landlord shall submit such Final Plans and Specifications
to all governmental authorities having rights of approval over
the Tenant Improvement work and shall apply for all governmental
approvals and building permits. Subject to satisfaction of all
conditions precedent and subsequent to its obligations under this
Exhibit B, and further subject to the provisions of Paragraph
9.A., Landlord shall thereafter commence and proceed to complete
construction of the Tenant Improvements.
6. Tenant Improvements Allowance
Landlord shall provide an allowance for the planning and
construction of the Tenant Improvements in the amount specified
in the Basic Lease Information ( Tenant Improvements Allowance ).
Subject to Paragraph 7 below, the Tenant Improvements Allowance
shall be the maximum contribution by Landlord for the Tenant
Improvements Cost. Should the actual cost of planning and
constructing those Tenant Improvements depicted on the Final
Plans and Specifications be less than the Tenant Improvements
Allowance, the Tenant Improvements Allowance shall be reduced to
an amount equal to said actual cost.
7. Tenant Improvements Loan
In addition to the Tenant Improvements Allowance, Landlord
agrees to loan to Tenant up to the amount specified in the Basic
Lease Information for Tenant Improvements (the Tenant
Improvements Loan ). The Tenant Improvements Loan shall be
repayable by Tenant to Landlord in substantially equal
self-amortizing installments over the initial Term of the Lease,
together with interest on the balance outstanding from time to
time at the rate of twelve percent (12%) per annum. Promptly
following the completion of the Tenant Improvements and the
calculation of the actual Tenant Improvements Loan, Landlord and
Tenant shall execute a Tenant Improvements Loan Amortization
Memorandum in the form attached to the Lease as Exhibit G.
Notwithstanding anything herein to the contrary, in the event the
Lease shall terminate for any reason prior to the scheduled
expiration thereof, the Tenant Improvements Loan and all accrued
and unpaid interest thereon shall immediately become due and
payable in full.
8. Tenant Improvements Cost
The Tenant Improvements Cost ( Tenant Improvements Cost )
shall include all costs and expenses associated with the design,
preparation, approval and construction of the Tenant
Improvements, including, but not limited, to the following:
(a) All costs of preliminary and final architectural and
engineering plans and specifications for the Tenant Improvements,
and engineering costs associated with completion of the State of
California energy utilization calculations under Title 24
legislation;
(b) All costs of obtaining building permits and other
necessary authorizations and approvals from local governmental
authorities;
(c) All costs of interior design and finish schedule plans
and specifications including as-built drawings;
(d) All direct and indirect costs of procuring, constructing
and installing the Tenant Improvements in the Premises,
including, but not limited to, the construction fee for overhead
and profit and the cost of all on-site supervisory and
administrative staff, office, equipment and temporary services
rendered by Landlord, Landlord s consultants and property manager
and Landlord s contractor in connection with construction of the
Tenant Improvements and all labor (including overtime) and
materials constituting the Tenant Improvements;
(e) All fees payable to the Architect, general contractor,
subcontractors and Landlord s engineering firm if they are
required by Tenant and/or any governmental authorities to
redesign any portion of the Tenant Improvements following Tenant
s approval of the Final Plans and Specifications;
(f) All construction and project management fees payable by
Landlord to Landlord s property management company or any other
individual or entity; and
(g) Utility connection fees.
In no event shall the Tenant Improvements Cost include any
costs of procuring, constructing or installing in the Premises
any of Tenant s Property.
9. Excess Tenant Improvements Cost
If the Tenant Improvements Cost is more than the sum of the
Tenant Improvements Allowance and, if applicable, the Tenant
Improvements Loan, then the difference between the Tenant
Improvements Cost and the sum of the Tenant Improvements
Allowance and, if applicable, the Tenant Improvements Loan (
Excess Tenant Improvements Cost ) shall be paid by Tenant to
Landlord in cash, within ten (10) days of delivery of statements
from Landlord to Tenant therefor. If construction of the Tenant
Improvements will result in an Excess Tenant Improvements Cost,
Landlord shall not be obligated to commence or continue
construction of the Tenant Improvements if payment of the Excess
Tenant Improvements Costs by Tenant is not received within ten
(10) days after delivery by Landlord to Tenant of a statement
therefor; provided, however, that Landlord may, at its option,
commence or continue construction of the Tenant Improvements, in
which event Tenant shall pay the Excess Tenant Improvements Cost
within ten (10) days after delivery by Landlord to Tenant of the
statement therefor. If Landlord so elects to commence
construction of the Tenant Improvements or has already commenced
construction of the Tenant Improvements when there occurs an
Excess Tenant Improvements Cost, then Landlord shall be entitled
to suspend or terminate construction of the Tenant Improvements
if payment by Tenant to Landlord of the Excess Tenant Improvement
Costs has not been received within ten (10) days after delivery
by Landlord to Tenant of a statement therefor.
10. Change Request
When the Final Plans and Specifications have been approved
by Landlord, there shall be no changes without Landlord s prior
written consent, except for (a) necessary on-site installation
variations or minor changes necessary to comply with building
codes and other governmental regulations; (b) one revision, if
requested by Tenant, to adjust the estimated Tenant Improvements
Cost to Tenant s T.I. Budget therefor, as permitted by Paragraph
4 above; and (c) changes approved in writing by both parties.
Any costs related to such governmentally required or requested
and approved changes shall be added to the Tenant Improvements
Cost and, to the extent such cost results in Excess Tenant
Improvements Cost, shall be paid for by Tenant as and with any
Excess Tenant Improvements Cost as set forth in Paragraph 9. The
billing for such additional costs to Tenant shall be accompanied
by evidence of the amounts billed as is customarily used in the
business. Costs related to changes shall include, without
limitation, any architectural or design fees, construction
management fees and Landlord s general contractor s price for
effecting the change.
11. Termination
If the Lease is terminated prior to completion of the Tenant
Improvements for any reason due to the Default of Tenant under
the Lease, in addition to any other damages available to
Landlord, Tenant shall pay to Landlord, within five (5) days of
receipt of a statement therefor, all costs incurred by Landlord
through the date of termination in connection with the Tenant
Improvements. Landlord shall have the right to terminate the
Lease, upon written notice to Tenant, if Landlord is unable to
obtain a building permit for the Tenant Improvements within one
hundred twenty (120) days from the date the Lease is mutually
executed.
12. Interest
Any payments required to be made by Tenant hereunder which
are not paid when due shall bear interest at the maximum rate
permitted by law from the due date therefor until paid.
13. Disclaimer
Landlord shall have no liability to Tenant in the event
construction of the Tenant Improvements is delayed or prevented
due to any cause beyond Landlord s reasonable control. If Tenant
is entitled or permitted to enter the Premises prior to
completion of the Tenant Improvements, Landlord shall not be
liable to Tenant or Tenant s Agents for any loss or damage to
property, or injury to person, arising from or related to
construction of the Tenant Improvements. Tenant shall take all
reasonable precautions to protect against such loss, damage or
injury during construction of the Tenant Improvements, and shall
not interfere with the conduct of the Tenant Improvement work.
Tenant shall cooperate with all reasonable directives of Landlord
and Landlord s contractor in order to minimize any disruption or
delay in completion of the Tenant Improvements work.
14. Lease Provisions; Conflict
The terms and provisions of the Lease, insofar as they are
applicable, in whole or in part, to this Exhibit B, are hereby
incorporated herein by reference. In the event of any conflict
between the terms of the Lease and this Exhibit B, the terms of
this Exhibit B shall prevail. Any amounts payable by Tenant to
Landlord hereunder shall be deemed to be Additional Rent under
the Lease and, upon any default in the payment of same, Landlord
shall have all rights and remedies available to it as provided
for in the Lease.
<PAGE>
Exhibit B-1
Landlord s Work
Landlord shall perform the work in the Premises shown on the
plans prepared by DES Architects & Engineers under Project No.
8192.02, dated August 22, 1996.
<PAGE>
Exhibit B-2
Final Plans And Specifications
Reference is hereby made to that certain Lease Agreement
dated October 18, 1996 by and between Aetna Life Insurance
Company, a Connecticut corporation, as landlord ( Landlord ), and
Logic Devices, Inc., a California corporation, as tenant ( Tenant
), ( Lease Agreement ).
The Final Plans and Specifications (as defined in Exhibit B
to the Lease Agreement) consists of the following described
drawings, specifications and other documents:
Title of Drawing, Specification or Other Document
Date
The Final Plans and Specifications have been initialed by
both Landlord and Tenant and are on file with Landlord.
Initials: Landlord _______ Tenant _______
<PAGE>
Exhibit C
Commencement and expiration Date Memorandum
Landlord:
Aetna Life Insurance Company
Tenant:
Logic Devices, Inc.
Lease Date:
October 18, 1996
Premises:
Located at 1320 Orleans Drive, Sunnyvale, California
Tenant hereby accepts the Premises as being in the condition
required under the Lease, with all Tenant Improvements completed
(except for minor punchlist items which Landlord agrees to
complete).
The Commencement Date of the Lease is hereby established as
, 1996 and the Expiration Date is
________________, _____.
Tenant:
Logic Devices, Inc.,
a California corporation
By:
Print Name:
Its:
Approved and Agreed:
Landlord:
Aetna Life Insurance Company,
a Connecticut corporation
By: Allegis Realty Investors llc
Its Investment Advisor
By:
Cynthia Stevenin
Vice President
<PAGE>
Exhibit D
Rules and Regulations
This exhibit, entitled Rules and Regulations, is and shall
constitute Exhibit D to the Lease Agreement, dated as of the
Lease Date, by and between landlord and Tenant for the Premises.
The terms and conditions of this Exhibit D are hereby
incorporated into and are made a part of the Lease. Capitalized
terms used, but not otherwise defined, in this Exhibit D have the
meanings ascribed to such terms in the Lease.
1. Tenant shall not use any method of heating or air
conditioning other than that supplied by Landlord without the
consent of Landlord.
2. All window coverings installed by Tenant and visible from
the outside of the building require the prior written approval of
Landlord.
3. Tenant shall not use, keep or permit to be used or kept
any foul or noxious gas or substance or any flammable or
combustible materials on or around the Premises, except to the
extent that Tenant is permitted to use the same under the terms
of Paragraph 32 of the Lease.
4. Tenant shall not alter any lock or install any new locks
or bolts on any door at the Premises without the prior consent of
Landlord.
5. Tenant shall not make any duplicate keys without the
prior consent of Landlord.
6. Tenant shall park motor vehicles in parking areas
designated by Landlord except for loading and unloading. During
those periods of loading and unloading, Tenant shall not
unreasonably interfere with traffic flow around the Building or
the Project and loading and unloading areas of other tenants.
Tenant shall not park motor vehicles in designated parking areas
after the conclusion of normal daily business activity.
7. Tenant shall not disturb, solicit or canvas any tenant or
other occupant of the Building or Project and shall cooperate to
prevent same.
8. Except in the case of emergencies, no person shall go on
the roof without Landlord s permission.
9. Business machines and mechanical equipment belonging to
tenant which cause noise or vibration that may be transmitted to
the structure of the Building, to such a degree as to be
objectionable to Landlord or other tenants, shall be placed and
maintained by Tenant, at Tenant s expense, on vibration
eliminators or in noise-dampening housing or other devices
sufficient to eliminate noise or vibration.
10.All goods, including material used to store goods,
delivered to the Premises of Tenant shall be immediately moved
into the Premises and shall not be left in parking or receiving
areas overnight.
11. Tractor trailers which must be unhooked or parked with
dolly wheels beyond the concrete loading areas must use steel
plates or wood blocks under the dolly wheels to prevent damage to
the asphalt paving surfaces. No parking or storing of such
trailers will be permitted in the auto parking areas of the
Project or on streets adjacent thereto.
12. Forklifts which operate on asphalt paving areas shall
not have solid rubber tires and shall only use tires that do not
damage the asphalt.
13. Tenant is responsible for the storage and removal of all
trash and refuse. All such trash and refuse shall be contained
in suitable receptacles stored behind screened enclosures at
locations approved by Landlord.
14. Tenant shall not store or permit the storage or
placement of goods or merchandise in or around the common areas
surrounding the Premises. No displays or sales or merchandise
shall be allowed in the parking lots or other common areas.
15. Tenant shall not permit any animals, including but not
limited to, any household pets, to be brought or kept in or about
the Premises, the Building, the Project or any of the common
areas.
Initials:
Tenant:
Landlord:
<PAGE>
Exhibit E
Sign Criteria
<PAGE>
Exhibit F
Hazardous Materials Disclosure Certificate
Your cooperation in this matter is appreciated. Initially,
the information provided by you in this Hazardous Materials
Disclosure Certificate is necessary for the Landlord to evaluate
your proposed uses of the premises (the Premises ) and to
determine whether to enter into a lease agreement with you as
tenant. If a lease agreement is signed by you and the Landlord
(the Lease Agreement ), on an annual basis in accordance with
the provisions of Paragraph 32 of the Lease Agreement, you are to
provide an update to the information initially provided by you in
this certificate. Any questions regarding this certificate
should be directed to, and when completed, the certificate should
be delivered to:
Landlord: c/o Allegis Realty Investors llc
1740 Technology Drive, Suite 600
San Jose, California 95110
Attention: Cynthia Stevenin
Phone: (408) 437-5451
Name of (Prospective) Tenant: Logic Devices, Inc.
Mailing Address:
Contact Person, Title and Telephone Number(s):
Contact Person for Hazardous Waste Materials Management and
Manifests and Telephone Number(s):
Address of (Prospective) Premises: 1320 Orleans Drive, Sunnyvale,
California
Length of (Prospective) initial Term: Seventy-two (72) months
1. GENERAL INFORMATION:
Describe the proposed operations to take place in, on, or
about the Premises, including, without limitation, principal
products processed, manufactured or assembled, and services and
activities to be provided or otherwise conducted. Existing
tenants should describe any proposed changes to on-going
operations.
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials (as hereinafter
defined) be used, generated, treated, stored or disposed of in,
on or about the Premises? Existing tenants should describe any
Hazardous Materials which continue to be used, generated,
treated, stored or disposed of in, on or about the Premises.
Wastes Yes _ No _
Chemical Products Yes _ No _
Other Yes _ No _
If Yes is marked, please explain:
2.2 If Yes is marked in Section 2.1, attach a list of
any Hazardous Materials to be used, generated, treated, stored or
disposed of in, on or about the Premises, including the
applicable hazard class and an estimate of the quantities of such
Hazardous Materials to be present on or about the Premises at any
given time; estimated annual throughput; the proposed location(s)
and method of storage (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not
regulated by any Environmental Laws, as hereinafter defined); and
the proposed location(s) and method(s) of treatment or disposal
for each Hazardous Material, including, the estimated frequency,
and the proposed contractors or subcontractors. Existing tenants
should attach a list setting forth the information requested
above and such list should include actual data from on-going
operations and the identification of any variations in such
information from the prior year s certificate.
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage or treatment
of gasoline, diesel, petroleum, or other Hazardous Materials in
tanks or sumps proposed in, on or about the Premises? Existing
tenants should describe any such actual or proposed activities.
Yes _ No _
If yes, please explain:
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous
Waste Generator I.D. Number? Existing tenants should describe
any additional identification numbers issued since the previous
certificate.
Yes _ No _
4.2 Has your company filed a biennial or quarterly
reports as a hazardous waste generator? Existing tenants should
describe any new reports filed.
Yes _ No _
If yes, attach a copy of the most recent report filed.
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other
wastes to:
_____ storm drain?
_____ sewer?
_____ surface water?
_____ no wastewater or other wastes discharged.
Existing tenants should indicate any actual
discharges. If so, describe the nature of any proposed or actual
discharge(s).
5.2 Will any such wastewater or waste be treated
before discharge?
Yes _ No _
If yes, describe the type of treatment proposed to be
conducted. Existing tenants should describe the actual treatment
conducted.
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or
stacks to be used in your company s operations in, on or about
the Premises that will discharge into the air; and will such air
emissions be monitored? Existing tenants should indicate whether
or not there are any such air filtration systems or stacks in use
in, on or about the Premises which discharge into the air and
whether such air emissions are being monitored.
Yes _ No _
If yes, please describe:
6.2 Do you propose to operate any of the following
types of equipment, or any other equipment requiring an air
emissions permit? Existing tenants should specify any such
equipment being operated in, on or about the Premises.
_____ Spray booth(s)
_____ Incinerator(s)
_____ Dip tank(s)
_____ Other (Please describe)
_____ Drying oven(s)
_____ No Equipment Requiring Air Permits
If yes, please describe:
6.3 Please describe (and submit copies of with this
Hazardous Materials Disclosure Certificate) any reports you have
filed in the past [thirty-six] months with any governmental or
quasi-governmental agencies or authorities related to air
discharges or clean air requirements and any such reports which
have been issued during such period by any such agencies or
authorities with respect to you or your business operations.
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required
to prepare a Hazardous Materials management plan ( Management
Plan ) or Hazardous Materials Business Plan and Inventory (
Business Plan ) pursuant to Fire Department or other governmental
or regulatory agencies requirements? Existing tenants should
indicate whether or not a Management Plan is required and has
been prepared.
Yes _ No _
If yes, attach a copy of the Management Plan or
Business Plan. Existing tenants should attach a copy of any
required updates to the Management Plan or Business Plan.
7.2 Are any of the Hazardous Materials, and in
particular chemicals, proposed to be used in your operations in,
on or about the Premises listed or regulated under Proposition
65? Existing tenants should indicate whether or not there are
any new Hazardous Materials being so used which are listed or
regulated under Proposition 65.
Yes _ No _
If yes, please explain:
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or
Environmental Laws, has your company ever been subject to any
agency enforcement actions, administrative orders, or consent
decrees or has your company received requests for information,
notice or demand letters, or any other inquiries regarding its
operations? Existing tenants should indicate whether or not any
such actions, orders or decrees have been, or are in the process
of being, undertaken or if any such requests have been received.
Yes _ No _
If yes, describe the actions, orders or decrees and any
continuing compliance obligations imposed as a result of these
actions, orders or decrees and also describe any requests,
notices or demands, and attach a copy of all such documents.
Existing tenants should describe and attach a copy of any new
actions, orders, decrees, requests, notices or demands not
already delivered to Landlord pursuant to the provisions of
Paragraph 32 of the Lease Agreement.
8.2 Have there ever been, or are there now pending,
any lawsuits against your company regarding any environmental or
health and safety concerns?
Yes _ No _
If yes, describe any such lawsuits and attach copies of the
complaint(s), cross-complaint(s), pleadings and other documents
related thereto as requested by Landlord. Existing tenants
should describe and attach a copy of any new complaint(s),
cross-complaint(s), pleadings and other related documents not
already delivered to Landlord pursuant to the provisions of
Paragraph 32 of the Lease Agreement.
8.3 Have there been any problems or complaints from
adjacent tenants, owners or other neighbors at your company s
current facility with regard to environmental or health and
safety concerns? Existing tenants should indicate whether or not
there have been any such problems or complaints from adjacent
tenants, owners or other neighbors at, about or near the Premises
and the current status of any such problems or complaints.
Yes _ No _
If yes, please describe. Existing tenants should
describe any such problems or complaints not already disclosed to
Landlord under the provisions of the signed Lease Agreement and
the current status of any such problems or complaints.
9. PERMITS AND LICENSES
9.1 Attach copies of all permits and licenses issued
to your company with respect to its proposed operations in, on or
about the Premises, including, without limitation, any Hazardous
Materials permits, wastewater discharge permits, air emissions
permits, and use permits or approvals. Existing tenants should
attach copies of any new permits and licenses as well as any
renewals of permits or licenses previously issued.
As used herein, Hazardous Materials shall mean and include
any substance that is or contains (a) any hazardous substance
as now or hereafter defined in <section> 101(14) of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended ( CERCLA ) (42 U.S.C. <section> 9601 et seq.) or any
regulations promulgated under CERCLA; (b) any hazardous waste
as now or hereafter defined in the Resource Conservation and
Recovery Act, as amended ( RCRA ) (42 U.S.C. <section> 6901 et seq.) or
any regulations promulgated under RCRA; (c) any substance now or
hereafter regulated by the Toxic Substances Control Act, as
amended ( TSCA ) (15 U.S.C. <section> 2601 et seq.) or any regulations
promulgated under TSCA; (d) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (e)
asbestos and asbestos-containing material, in any form, whether
friable or non-friable; (f) polychlorinated biphenyls; (g) lead
and lead-containing materials; or (h) any additional substance,
material or waste (A) the presence of which on or about the
Premises (i) requires reporting, investigation or remediation
under any Environmental Laws (as hereinafter defined), (ii)
causes or threatens to cause a nuisance on the Premises or any
adjacent property or poses or threatens to pose a hazard to the
health or safety of persons on the Premises or any adjacent
property, or (iii) which, if it emanated or migrated from the
Premises, could constitute a trespass, or (B) which is now or is
hereafter classified or considered to be hazardous or toxic under
any Environmental Laws; and Environmental Laws shall mean and
include (a) CERCLA, RCRA and TSCA; and (b) any other federal,
state or local laws, ordinances, statutes, codes, rules,
regulations, orders or decrees now or hereinafter in effect
relating to (i) pollution, (ii) the protection or regulation of
human health, natural resources or the environment, (iii) the
treatment, storage or disposal of Hazardous Materials, or (iv)
the emission, discharge, release or threatened release of
Hazardous Materials into the environment.
The undersigned hereby acknowledges and agrees that this
Hazardous Materials Disclosure Certificate is being delivered to
Landlord in connection with the evaluation of a Lease Agreement
and, if such Lease Agreement is executed, will be attached
thereto as an exhibit. The undersigned further acknowledges and
agrees that if such Lease Agreement is executed, this Hazardous
Materials Disclosure Certificate will be updated from time to
time in accordance with Paragraph 32 of the Lease Agreement. The
undersigned further acknowledges and agrees that the Landlord and
its partners, lenders and representatives may, and will, rely
upon the statements, representations, warranties, and
certifications made herein and the truthfulness thereof in
entering into the Lease Agreement and the continuance thereof
throughout the term, and any renewals thereof, of the Lease
Agreement. I [print name] ____________________, acting with full
authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the
information contained in this certificate is true and correct.
(PROSPECTIVE) TENANT:
Logic Devices, Inc.,
a California corporation
By:
Title:
Date:
INITIALS:
TENANT:
LANDLORD:
<PAGE>
Exhibit G
Tenant Improvements Loan Amortization Memorandum
Landlord:
Aetna Life Insurance Company
Tenant:
Logic Devices, Inc.
Lease Date:
October 18, 1996
Premises:
Located at 1320 Orleans Drive, Sunnyvale, California
Tenant hereby acknowledges that Landlord has provided a
Tenant Improvements Loan to Tenant in the amount of
_____________________ ($___________) pursuant to Paragraph 6 of
Exhibit B to the Lease. Subject to the terms of the Lease and
said Exhibit B, the Tenant Improvements Loan shall be repayable
by Tenant, together with interest on the principal balance
outstanding from time to time at the rate of twelve percent (12%)
per annum, in monthly installments of ___________________
($_________) each. Said installments shall be payable on the
first day of each month during the initial Term of the Lease
concurrently with the payment of Base Rent.
Tenant:
Logic Devices, Inc.,
a California corporation
By:
Print Name:
Its:
Approved and Agreed:
Landlord:
Aetna Life Insurance Company,
a Connecticut corporation
By: Allegis Realty Investors llc
Its Investment Advisor
By:
Cynthia Stevenin
Vice President
<PAGE>
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Three months ended September 30, 1996 and 1995
1996 1995
Weighted average shares of common stock 6,121,750 5,349,183
outstanding
Dilutive effect of common stock options
and stock warrants 100,000 318,123
Weighted average common and 6,221,750 5,667,306
common share equivalents
Net income $ 95,300 $ 440,800
Net income per common $ .02 $ .08
share equivalent
<PAGE>
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Nine months ended September 30, 1996 and 1995
1996 1995
Weighted average shares of common stock 6,121,750 5,005,011
outstanding
Dilutive effect of common stock options
and stock warrants 100,000 319,174
Weighted average common and 6,221,750 5,324,185
common share equivalents
Net income $ 449,800 $1,119,600
Net income per common $ .07 $ .21
share equivalent
<PAGE>
EXHIBIT 27 LOGIC DEVICES INCORPORATED
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 1,317,800
<SECURITIES> 0
<RECEIVABLES> 5,205,500
<ALLOWANCES> 0
<INVENTORY> 11,921,100
<CURRENT-ASSETS> 20,443,800
<PP&E> 11,214,000
<DEPRECIATION> 8,202,700
<TOTAL-ASSETS> 24,084,200
<CURRENT-LIABILITIES> 2,348,300
<BONDS> 0
<COMMON> 17,316,400
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,084,200
<SALES> 10,494,700
<TOTAL-REVENUES> 10,494,700
<CGS> 4,872,400
<TOTAL-COSTS> 9,750,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 744,100
<INCOME-TAX> 294,300
<INCOME-CONTINUING> 449,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 449,800
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
