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 Quarter Ended June 30, 1996
Commission File Number 0-26690
ELANTEC SEMICONDUCTOR, INC.
(Registrant)
DELAWARE 77-0408929
- ----------------------------------- ---------------------------------------
(state or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
1996 Tarob Court
Milpitas, California 95035
Telephone: (408) 945-1323
-----------------------------------------
(Registrant's principal executive
offices and telephone number)
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
requirement for the past 90 days.
Yes X No
------- --------
As of July 28, 1996 8,728,249 shares of the Registrant's common stock, $0.01 par
value, were issued and outstanding.
<PAGE>
<TABLE>
INDEX
ELANTEC SEMICONDUCTOR, INC.
<CAPTION>
Page No.
---------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed consolidated statements of income -- Three and nine months ended
June 30, 1996 and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed consolidated balance sheets -- June 30, 1996 and September 30, 1995 . . 4
Condensed consolidated statements of cash flows -- Nine months ended June 30,
1996 and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to condensed consolidated financial statements . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
<TABLE>
ELANTEC SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------------- ----------------------------
1996 1995(1) 1996 1995(1)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenues $ 9,782 $ 7,471 $ 27,946 $ 18,992
Cost of revenues 4,627 3,567 13,246 9,048
------------ ----------- ------------ -----------
Gross profit 5,155 3,904 14,700 9,944
Operating expenses:
Research and development 1,582 1,272 4,741 3,561
Marketing, sales, general and administrative 2,248 1,740 6,324 4,442
------------ ----------- ------------ -----------
Total operating expenses 3,830 3,012 11,065 8,003
------------ ----------- ------------ -----------
Income from operations 1,325 892 3,635 1,941
Interest and other, net 111 15 332 40
------------ ----------- ------------ -----------
Income before taxes 1,436 907 3,967 1,981
Provision for taxes on income 113 70 310 165
------------ ----------- ------------ -----------
Net income $ 1,323 $ 837 $ 3,657 $ 1,816
============ =========== ============ ===========
Net income per share $ 0.14 $ 0.11 $ 0.39 $ 0.23
============ =========== ============ ===========
Shares used in computing per share amounts 9,448 7,854 9,337 7,856
============ =========== ============ ===========
<FN>
(1) The information in this column was derived from the Company's audited
consolidated financial statements at June 30, 1995.
See the accompanying notes to the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ELANTEC SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
June 30, Sept. 30
1996 1995 (2)
--------------- ---------------
(Unaudited)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 12,259 $ 6,009
Short-term investments 3,451 ---
Accounts receivable, net 5,070 4,125
Inventories 5,935 4,590
Prepaid expenses and other current assets 372 585
--------------- ---------------
Total current assets 27,087 15,309
Property and equipment, net 6,723 4,721
Other assets, net 618 880
--------------- ---------------
Total assets $ 34,428 $ 20,910
=============== ===============
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable and accrued liabilities $ 4,738 $ 4,118
Deferred revenues 3,626 3,416
Current portion of long-term debt and capital lease obligations 1,151 921
--------------- ---------------
Total current liabilities 9,515 8,455
Long-term debt and capital lease obligations 1,604 1,313
Stockholders' equity 23,309 11,142
--------------- ---------------
Total liabilities and stockholders' equity $ 34,428 $ 20,910
=============== ===============
<FN>
(1) The information in this column was derived from the Company's audited
consolidated financial statements at June 30, 1995.
(2) The information in this column was derived from the Company's audited
consolidated financial statements at September 30, 1995.
See the accompanying notes to the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ELANTEC SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
June 30,
----------------------------------
1996 1995(1)
---------------- ----------------
<S> <C> <C>
Operating activities:
Net income $ 3,657 $ 1,816
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,211 810
Changes in operating assets and liabilities:
Accounts receivable (945) (1,217)
Inventories (1,345) (380)
Prepaid expenses and other current assets 213 (123)
Accounts payable and accrued liabilities 620 891
Deferred revenues 210 25
---------------- ----------------
Net cash provided by operating activities 3,621 1,822
Investing activities:
Purchase of available-for-sale securities (3,451) ---
Purchase of property and equipment (1,994) (1,241)
Other assets 262 (69)
---------------- ----------------
Net cash used in investing activities (5,183) (1,310)
Financing activities:
Payments on capital lease and other debt (698) (355)
Issuance of common stock 8,510 20
---------------- ----------------
Net cash (used in)/provided by financing activities 7,812 (335)
Increase (decrease) in cash and cash equivalents 6,250 177
Cash and cash equivalents at beginning of period 6,009 5,717
---------------- ----------------
Cash and cash equivalents at end of period $ 12,259 $ 5,894
================ ================
Supplemental disclosures of cash flow information:
Lease and installment financing for capital equipment $ 1,219 $ 885
Interest paid $ 147 $ 87
Taxes paid $ 185 $ 65
<FN>
(1) The information in this column was derived from the Company's audited
consolidated financial statements at June 30, 1995.
</FN>
</TABLE>
<PAGE>
ELANTEC SEMICONDUCTOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE: 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and with Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete consolidated
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been included. These condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto for
the fiscal year ended September 30, 1995 included in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission on December 22,
1995.
Operating results for the three and nine month periods ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending September 30, 1996.
The Company's fiscal year end is the Sunday closest to September 30. The
Company's fiscal quarters end on the Sunday closest to the end of the calendar
quarter. For convenience, the Company has indicated that its fiscal quarters end
on December 31, March 31, June 30 and September 30.
NOTE: 2 - INVENTORIES
Inventories were comprised of the following:
- --------------------------------------------------------------------------
June 30, 1996 September 30,
1995(2)
- --------------------------------------------------------------------------
(in thousands)
Raw materials $ 896 $ 347
Work in process 4,246 3,710
Finished goods 793 533
- --------------------------------------------------------------------------
$ 5,935 $ 4,590
==========================================================================
NOTE 3 - NET INCOME PER SHARE
Net income per share is computed using the weighted average number of common and
common equivalent shares outstanding during the period using the treasury stock
method.
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, the matters discussed in
this Form 10-Q are forward-looking statements that involve risks and
uncertainties, including business conditions and growth in the markets Elantec
serves, fluctuations in gross margin due to the initiation of new manufacturing
processes, ability to control manufacturing yields, timely availability and
acceptance of new products, the impact of competitive products and pricing, the
Company's ability to meet customer delivery schedules, and the other risks
detailed below and from time to time in the Company's other reports filed with
the Securities and Exchange Commission. The actual results that the Company
achieves may differ materially from any forward-looking statements due to such
risks and uncertainties.
Results of Operation
Net revenues for the third quarter of 1996 increased by 30.9% from the third
quarter of 1995. For the first nine months of fiscal 1996 revenues exceeded the
corresponding period of 1995 by 47.1%. The increases were primarily attributable
to increased unit shipments of the Company's standard commercial products
partially offset by declines in average selling prices and a decline in
shipments of the Company's military products. Each of the Company's geographical
markets showed increases in net revenues for the third quarter and for the first
nine months of fiscal 1996 as compared to the same periods in the prior year.
The rate at which Elantec booked new orders slowed in the third quarter, causing
the book-to-bill ratio to dip slightly below one.
Lower bookings in the third quarter may impact the Company's ability to grow
revenues in the fourth quarter.
Gross margin was 52.7% in the third fiscal quarter of 1996 versus 52.3% in the
third quarter of 1995. For the first nine months of 1996, gross margin was 52.6%
versus 52.4% in the comparable period for 1995. Improvements in gross margin
attributable to the spreading of manufacturing overhead associated with the
Company's products over a larger production volume were partially offset by
reductions in average selling prices, increases in unfavorable manufacturing
yield variances. There can be no assurance that the Company will not encounter
similar difficulties in the future. Gross margins may continue to fluctuate from
quarter to quarter due to manufacturing yields, foundry performance, changes in
average selling prices, and other factors.
During fiscal 1992 and 1993, the Company entered into agreements with Aisin
Seiki Co., Ltd., a Japanese manufacturer of automotive parts that extend until
fiscal 1998, pursuant to which the Company recognized approximately $393,000 and
$1,099,000 of contract revenues in the third quarter and the first nine months
of fiscal 1996, respectively, and approximately $412,000 and $1,245,000 in the
third quarter and the first nine months of fiscal 1995, respectively. Gross
margin on these contract revenues in the third quarter and
<PAGE>
in the first nine months of both fiscal 1995 and fiscal 1996 was somewhat higher
than gross margin on product revenues during the same periods.
Research and development expenses were $1,582,000 and $4,741,000 for the third
quarter and the first nine months of fiscal 1996, respectively, versus
$1,272,000 and $3,561,000 for the corresponding periods of fiscal 1995. The
increases in spending reflected the Company's increased product and process
development efforts. The Company intends to manage research and development
spending to remain flat from the third to the fourth quarter. In fiscal 1997,
the Company expects to incur higher absolute research and development expenses,
although these expenses are expected to remain relatively constant or to decline
slightly as a percentage of net revenues. There can be no assurance, however,
that net revenues will grow at the same or faster rate as the anticipated
research and development expenses.
Marketing, sales, general and administrative expenses were $2,248,000 and
$6,324,000 for the third quarter and the first nine months of fiscal 1996,
respectively, versus $1,740,000 and $4,442,000 for the corresponding periods of
fiscal 1995. These increases in spending were attributable to higher commissions
on increased sales, higher employee compensation due to increased headcount,
higher sales related travel expenses and higher costs associated with the
requirements of being a public company. The Company intends to manage marketing,
sales, general and administrative expenses to be flat in the fourth quarter as
compared with the third quarter.
Interest and other, net was $111,000 and $332,000 for the third quarter and the
first nine months of fiscal 1996, respectively, versus $15,000 and $40,000 for
the corresponding periods of fiscal 1995. The increases in interest income
reflects investment of net proceeds from the Company's initial public offering
which was completed in October, 1995.
The provisions for taxes on income for both the third quarter and the first nine
months of fiscal 1996 were lower than the statutory rate, principally due to the
benefit of net operating loss carryforwards offset by alternative minimum taxes
and foreign withholding taxes.
Factors Affecting Future Results
The Company's quarterly and annual results of operations are subject to
fluctuations due to a variety of factors, including business conditions in the
markets Elantec serves, the volume and timing of orders received, ability of the
Company to meet customers' request dates, competitive pricing pressures,
fluctuations in manufacturing yields (the portion of good circuits on a silicon
wafer), the availability and cost of wafers from outside foundries and other
components and materials from the Company's suppliers, the timing of new product
announcements and introductions by the Company or its competitors, changes in
the mix of products sold, research and development costs, the timing and level
of process development costs, market acceptance of new or enhanced versions of
the Company's products, seasonal customer demand and the cyclical nature of
semiconductor industry. Many of these factors are outside the Company's control.
<PAGE>
The semiconductor industry has been cyclical and subject to significant periodic
economic downturns characterized by diminished product demand, accelerated
erosion of average selling prices and over capacity. Consistent with a general
downing of demand in the semiconductor industry, demand for the Company's
products slowed somewhat in the third quarter. The Company believes that this
slow down in bookings will result in net revenues for its fiscal fourth quarter
that are below what it achieved in its third quarter, 1996. Any material
increase in industry-wide production capacity, shift in industry capacity
towards products competitive with the Company's products, reduced demand in the
markets the Company serves, or other factors could result in a rapid decline in
product pricing and could materially and adversely affect the Company's business
and results of operations. In addition, the semiconductor industry is
characterized by rapid technological change, intense competition and significant
expenditures for product development and capital equipment. The Company may
experience substantial period-to-period fluctuations in future results of
operations due to general semiconductor industry conditions, overall economic
conditions or other factors.
Liquidity and Capital Resources
Working capital increased to $17,572,000 at June 30, 1996 from $6,854,000 at
September 30, 1995, primarily as a result of the $8,200,000 of net proceeds from
the Company's initial public offering in October 1995 and as a result of
positive contributions to cash from operations.
Net cash provided by operating activities was $3,621,000 for the nine months
ended June 30, 1996. This reflects higher net income offset in part by increased
accounts receivable and inventory related to higher revenues.
Capital expenditures were $1,995,000 during the nine months ended June 30, 1996.
Additionally, there were outstanding commitments for capital expenditures of
approximately $700,000 at June 30, 1996.
The sale of common stock in the Company's initial public offering and the
exercise of stock options and warrants generated net proceeds of approximately
$8,510,000 for the nine months ended June 30, 1996. The Company invests its cash
in interest bearing securities with maturities not exceeding 12 months.
Historically, the Company has generated cash through operations and financing
activities in an amount sufficient to fund its requirements. The Company
believes that cash on hand and cash generated from operations will be sufficient
to meet the Company's working capital and capital expenditure requirements at
least through the next twelve months. Any major change in the nature of the
Company's business, such as the acquisition of products, the design of products
not currently under development or the need for significant new capital
expenditures, could change the Company's capital requirements. To the extent the
Company requires additional cash, there can be no assurance that the Company
will be able to obtain such financing on terms favorable to the Company, or at
all.
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit 10.17 - Amendment to Standard Industrial/Commercial
Single-Tenant Lease, Dated June 23, 1993
Exhibit 10.18 - Standard Industrial/Commercial Single-Tenant
Lease, Dated February 20, 1996
Exhibit 10.19 - Amendment to Standard Industrial/Commercial
Single-Tenant Lease, Dated February 20, 1996
Exhibit 11.01 - Computation of Per Share Earnings
Exhibit 27.00 - Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during
the quarter ended June 30, 1996.
<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.
ELANTEC SEMICONDUCTOR, INC.
(Registrant)
DATE: BY: /s/ Terrence W. Plette
------------------- ----------------------------
Terrence W. Plette
Duly authorized officer of the registrant,
and Chief Financial Officer
Exhibit 10.17
First Amendment to Lease Agreement
This First Amendment to Standard Industrial/Commercial Single-Tenant
Lease-Net Lease (this "First Amendment") is entered into by and between ROBERT
RUGGLES, an individual ("Lessor"), and ELANTEC SEMICONDUCTOR, INC., a Delaware
corporation ("Lessee"), effective the date it is executed by the last party to
become a signatory under "Authorized Signatures" below. This First Amendment
amends the Standard Industrial/Commercial Single-Tenant Lease-Net Lease entered
into between Lessor and the predecessor-in-interest to Lessee as of June 23,
1993, and the addendum thereto ("Lease").
Recitals
A. Lessor and the predecessor-in-interest to Lessee entered into that
certain Lease for the premises commonly known as 1996 Tarob Court, Milpitas,
California ("Premises").
B. Lessor and Lessee desire to extend the term of the Lease on the
terms and conditions set forth below.
Agreement
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants contained in this Agreement and of good, lawful and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lessor and Lessee agree as follows:
1. Controlling Document. In the event of a conflict between the terms
or provisions of this First Amendment and the terms or provisions of the Lease,
the terms of this First Amendment shall prevail in all respects. All terms and
conditions of the Lease not specifically modified herein shall remain unchanged
and in full force and effect. All terms not specifically defined herein are as
defined in the Lease.
2. Term. Section 1.3 of the Lease is revised to provide that the term
of the Lease is eleven (11) years and six (6) months, commencing on January 1,
1994 and ending on June 30, 2005.
3. Base Rent. The Base Rent payable under the Lease, as defined in
Paragraph 1.5 of the Lease, is revised as follows:
Total Base Rent
Period Per Month
Jauuary 1, 1994 to June 30, 1996 S25,157.00
July 1, 1996 to June 30, 1997 $31,446.00
July 1, 1997 to June 30, 1999 $33,333.00
July 1, 1999 to June 30, 2001 $35,333.00
July 1, 2001 to June 30, 2003 S37,453.00
July 1, 2003 to June 30, 2005 $39,700.00
<PAGE>
4. Security Deposit. Section 1.7 of the Lease is revised to provide
that on July 1, 1996, Tenant shall increase the security deposit from $26,000.00
to $35,000.00
5. Real Estate Broker. Lessee is not represented by a real estate
broker in connection with this First Amendment.
6. Addendum. Section 51 of the addendum included in the standard lease
signed on June 23, 1993 is hereby deleted.
7. Assignment and Subletting. Section 12 of the Lease is revised to
add Section 12.1(f) as follows:
"(f) Lessee is a publicly held corporation. The sale or transfer of
any amount of Lessee's stock shall not constitute an assignment
requiring Lessor's prior written consent."
Authorized Signatures
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Lease on the dates indicated.
"Lessor"
ROBERT RUGGLES, an individual
/s/ Robert Ruggles
--------------------------------
(Signature)
May 11, 1996
--------------------------------
(Date)
"Lessee"
ELANTEC SEMICONDUCTOR, INC.,
a Delaware corporation
/s/ David O'Brien
--------------------------------
(By)
President
--------------------------------
(Its)
May 9th, 1996
--------------------------------
(Date)
Exhibit 10.18
LEASE AGREEMENT
TABLE OF CONTENTS
Paragraph Page
1. Fundamental Lease Provisions....................................... 1
2. Premises........................................................... 1
3. Use................................................................ 1
4. Rent............................................................... 2
5. Term .............................................................. 3
6. Possession......................................................... 3
7. Rules and Regulations and Common Area.............................. 3
8. Parking ........................................................... 3
9. Expenses of Operation and Maintenance of the Complex............... 3
10. Acceptance and Surrender of Premises .............................. 3
11. Alterations and Additions ......................................... 4
12. Tenant Maintenance ................................................ 4
13. Utilities ......................................................... 4
14. Taxes ............................................................. 4
15. Liability Insurance ............................................... 5
16. Tenant's Property Insurance and Worker's Compensation ............. 5
17. Landlord's insurance; Waiver of Subrogation ....................... 5
18. Indemnification; Exemption of Landlord from Liability ............. 5
19. Compliance ........................................................ 5
20. Liens ............................................................. 5
21. Assignment and Subletting ......................................... 5
22. Subordination and Mortgages ....................................... 6
23. Entry by Landlord ................................................. 6
24. Bankruptcy; Tenant's Default ...................................... 6
25. Abandonment ....................................................... 7
26. Destruction ....................................................... 7
27. Eminent Domain .................................................... 7
28. Sale or Conveyance by Landlord .................................... 7
29. Attornment to Lender or Third Party ............................... 7
30. Holding Over ...................................................... 7
31. Certificate of Estoppel ........................................... 8
32. Construction Changes .............................................. 8
33. Rght of Landlord to Perform ....................................... 8
34. Attorney's Fees ................................................... 8
35. Waiver ............................................................ 8
36. Notices ........................................................... 8
37. Examination of Lease .............................................. 8
38. Default by Landlord ............................................... 8
39. Corporate Authority ............................................... 8
40. Limitation of Liability ........................................... 8
41. Brokers ........................................................... 8
42. Signs ............................................................. 8
43. Hazardous Materials ............................................... 9
44. Interest .......................................................... 9
45. Miscellaneous and General Provisions .............................. 9
Exhibits
A Legal Description
B Site Plan of Complex and Building
C Tenant Improvements Workletter
D Acknowledgment of Commencement
E Hazardous Materials
Riders
Addendum to Lease dated
-------------------------------------
3/22/96
-------------------------------------
-------------------------------------
NNN
<PAGE>
LEASE AGREEMENT
DATED: February 20 , 1996
LANDLORD: Geomax, A California General Partnership
TENANT: Elantec, Inc., a Delaware Corporation
1. FUNDAMENTAL LEASE PROVISIONS.
A. PREMISES: Approximately 23,886 square feet of leasable area in the Building
containing approximately 23,886 leasable square feet located on a parcel of
land in the County of Santa Clara, State of California, as more
particularly described in the legal description attached as Exhibit A
hereto, with a common address of
Trade Zone Boulevard, Milpitas, California 95035
The Location of Premises is indicated on the site plan attached as Exhibit
B hereto. (Paragraph 2)
B. LEASE TERM: eighty-four (84) full calendar months, plus any partial month
at the beginning of the Lease Term. (Paragraph 5)
C. COMMENCEMENT DATE: October 1, 1996, or twenty four (24) hours after
substantial completion of the Tenant Improvements, whichever is later.
(Paragraph 5)
D. INITIAL BASIC RENT: (Paragraph 4.A)
Lease Months Basic Rent Basic Rent
(inclusive) (per leasable sq.ft.) (total)
01-36: $.88 NNN $21,019.68
37-84: $.99 NNN $23,647.14
E. TENANT'S SHARE: one hundred percent (100%). (Paragraph 4.E)
F. PREPAID RENT: $21,019.68 for the first (lst) month(s) of the Lease Term.
(Paragraph 4.H)
H. SECURITY DEPOSIT: $ 23,647.14. (Paragraph 4.G)
I. PERMITTED USE: General office, sales, design, engineering, research and
development, storage, and other legal related uses. (Paragraph 3)
J. NUMBER OF PARKING SPACES: Up to eighty five (85). (Paragraph 8)
K. ADDRESSES FOR NOTICES AND PAYMENT OF RENT (Paragraphs 4.F and 36):
To Landlord: To Tenant:
Geomax Elantec, Inc.
2025 Gateway Place, #124 1996 Tarob Court
San Jose, CA 95110 Milpitas, CA 95035
Facsimile No.: Facsimile No.: (408) 945-9305
L. TENANT'S BROKER: Bishop Hawk, Inc.
(Paragraph 41)
M. GUARANTORS: None
N. OTHER PROVISIONS: The following Riders are added hereto and included as
part of this Lease:
Rider No. Paragraph No. Title
--------------- --------------------- ----------------------------
--------------- --------------------- ----------------------------
--------------- --------------------- ----------------------------
Each reference in this Lease to any of the provisions in this Paragraph 1 shall
be construed to incorporate all of the terms of each such provision. In the
event of any conflict between this Paragraph 1 and the balance of the Lease, the
balance of the Lease shall control.
2. PREMISES. Landlord hereby Leases to Tenant and Tenant hereby Leases from
Landlord for the term, at the Rent and upon the terms and conditions hereinafter
set forth, that certain space ("Premises") within that certain building
("Building") described in Paragraph 1.A. As used herein, the "Complex" shall
mean and include all of the land described in Exhibit A and shown on Exhibit B
attached hereto, and all of the buildings, improvements, fixtures and equipment
now or hereafter situated on said land.
Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth, and Tenant covenants as a material part of the
consideration for this Lease to perform and observe each and all of said terms,
covenants and conditions. This Lease is made upon the conditions of such
performance and observance.
Landlord agrees to construct any improvements to the Premises ("Tenant
Improvements") as may be described in Exhibit C attached hereto and incorporated
herein by reference, upon such terms and conditions as are set forth in such
Exhibit C. The Tenant Improvements shall be deemed substantially complete when
Landlord notifies Tenant in writing that the Tenant Improvements (if any) are
substantially completed in accordance with Exhibit C, subject only to "punch
list" items that do not materially diminish the usefulness of the Premises.
3. USE. Tenant shall use the Premises only in conformance with applicable
governmental laws, regulations, rules and ordinances, including without
limitation the Americans With Disabilities Act of 1990 (the "ADA"), and solely
for the purpose specified in Paragraph 1.1 and for no other purpose. Tenant
shall not do or permit to be done in or about the Premises or the Complex nor
bring or keep or permit to be brought or kept in or about the Premises or the
Complex anything which is prohibited by or will in any way increase the existing
rate of (or otherwise affect) fire or any insurance covering the Complex or any
part thereof, or any of its contents, or will cause a cancellation of any
insurance covering the Complex or any part thereof, or any of its contents.
Tenant shall not do or permit to be done anything in, on or about the Premises
or the Complex which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Complex or injure or annoy them, or use or
allow the Premises to be used for any improper, immoral unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises or the Complex. No sale by auction shall be
permitted on the Premises. Tenant shall not place any loads upon the floors,
walls, or ceiling, which endanger the structure, or place any harmful fluids or
other materials in the drainage system of the Building, or overload existing
electrical or other mechanical systems. No waste materials or refuse shall be
dumped upon or permitted to remain upon any part of the Premises or outside of
the Building in which the Premises are a part, except in trash containers placed
inside exterior enclosures designated by Landlord for that purpose or inside of
the Building proper where designated by Landlord. No materials, supplies,
equipment, finished products or semi-finished products, raw materials or
articles of any nature shall
<PAGE>
be stored upon or permitted to remain outside the premises or on any portion of
the Common Area of the Complex. No loudspeaker or other device, system or
apparatus which can be heard outside the Premises shall be used in or at the
Premises without the prior written consent of Landlord. Tenant shall not commit
or suffer to be committed any waste in or upon the Premises. Tenant shall
indemnify, defend and hold Landlord harmless against any loss, expense, damage,
attorneys fees, or liability arising out of failure of Tenant to comply with any
applicable law. Tenant shall comply with any covenants, conditions, or
restrictions ("CC&R's") affecting the Premises. The provisions of this Paragraph
are for the benefit of Landlord only and shall not be construed to be for the
benefit of any tenant or occupant of the Complex.
4. RENT
A. Basic Rent. Tenant agrees to pay to Landlord the sum set forth in
Paragraph 1.D hereof as "Basic Rent", in lawful money of the United States of
America, without deduction, offset, prior notice, or demand, on the first day of
every calendar month of the term hereof, and Landlord agrees to accept such sum
as Basic Rent for the premises.
B. Basic Rent Adjustment. On the first day of each calendar month
described in Paragraph 1.G hereof (hereinafter referred to as an "Adjustment
Date"), the Basic Rent provided for in Paragraph 4.A above shall be adjusted in
accordance with the following formula based on the Consumer Price Index ("CPI")
for all Urban consumers "All Items", San Francisco-Oakland-San Jose
(1982-84=100, standard reference base) published by the Bureau of Labor
Statistics, U.S. Department of Labor (the "Index" published nearest but prior to
the first day of the lease term or the last previous Adjustment Date as
applicable (the "Beginning Index") and the Index which is published nearest but
prior to the current Adjustment Date (the "Adjustment Index"). On each
Adjustment Date, the Basic Rent shall be increased by an amount equal to the
product obtained by multiplying the then current Basic Rate by a fraction, the
numerator of which is the Adjustment Index and the denominator of which is the
Beginning Index. On such adjustment, the parties shall execute an amendment to
the Lease stating the new (adjusted) Basic Rent. If the Index is changed so that
the Base Year of the Index differs from that used as of the month immediately
preceding the month in which the term commences, the Index shall be converted in
accordance with the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised
during the term, such other government index or other computation with which it
is replaced shall be used in order to obtain substantially the same result as
would be obtained if the Index had not been discontinued or revised. In no event
shall the Basic Rent following any Adjustment Date be less than the Basic Rent
in existence immediately prior to such Adjustment Date.
C. Partial Months. In the event that the term of this lease commences on
a date other than the first day of a calendar month, on the Commencement Date
Tenant shall pay to Landlord as rent for the period from such Commencement Date
to the first day of the first full calendar month that proportion of the monthly
rent hereunder which the number of days between such Commencement Date and the
first day of the next succeeding calendar month bears to thirty (30), and such
partial first month shall not be counted when computing the number of months in
the term of this lease. In the event that the term of this Lease for any reason
is terminated on a date other than the last day of a calendar month, on the
first day of the last calendar month of the term hereof Tenant shall pay to
Landlord as rent for the period from said first day of said last calendar month
to and including the last day of the term hereof that proportion of the monthly
rent hereunder which the number of days between said first day of said last
calendar month and the last day of the term hereof bears to thirty (30).
D. Late Charge. Notwithstanding any other provision of this Lease, if
Tenant is delinquent in the payment of rental as set forth in this Paragraph 4
when due, or any part thereof, Tenant agrees to pay Landlord, in addition to the
delinquent rental due, a Late charge for each rental payment which is not
received by Landlord within ten (10) days after due date for such payment. Said
Late charge shall equal ten (10%) percent of each rental payment so in default.
In the event that a late charge is payable hereunder, whether or not collected
for three (3) consecutive installments of rent, then rent shall automatically
become due and payable three (3) months in advance, rather than monthly
notwithstanding Paragraph 4 or any other provision of this Lease to the
contrary.
E. Additional Rent. Beginning with the Commencement Date of the term of
this Lease, Tenant shall pay to Landlord in addition to the Basic Rent and as
Additional Rent the following:
(1) Tenant's proportionate share ("Tenant's Share") as specified in
Paragraph 1.E, of all Real Property Taxes relating to the Complex, as set forth
in Paragraph 14, and
(2) Tenant's Share of all property insurance premiums relating to the
Complex, as set forth in Paragraph 15, and
(3) Tenant's Share of expenses for the operation, management,
maintenance and repair of the Building (including Common Areas of the Building)
and Areas of the Complex in which the Premises are Located, as set forth in
Paragraph 9, and
(4) All charges, costs and expenses, which Tenant is required to pay
hereunder, together with all interest and penalties, costs and expenses
including attorneys' fees and legal expenses, that may accrue thereto in the
event of Tenant's failure to pay such amounts, and all damages, reasonable costs
and expenses which Landlord may incur by reason of default of Tenant or failure
on Tenant's part to comply with the terms of this Lease. In the event of
nonpayment by Tenant of Additional Rent, Landlord shall have all the rights and
remedies with respect thereto as Landlord has for nonpayment of rent.
The Additional Rent due hereunder shall be paid to Landlord or Landlord's
agent (i) within ten (10) days for taxes and insurance and within ten (10) days
for all other Additional Rent items after presentation of an invoice from
Landlord or Landlord's agent setting forth such Additional Rent, and/or (ii) at
the option of Landlord, Tenant shall pay to Landlord monthly, in advance,
Tenant's Share of an amount estimated by Landlord to be Landlord's approximate
average monthly expenditure for such Additional Rent items, which estimated
amount shall be reconciled at the end of each calendar year as compared to
Landlords actual expenditure for said Additional Rent Items, with Tenant paying
to Landlord, upon demand, any amount of actual expenses expended by Landlord in
excess of said estimated amount, or Landlord refunding to Tenant (providing
Tenant is not in default in the performance of any of the terms, covenants and
conditions of this Lease) any amount of estimated payments made by Tenant in
excess of Landlord's actual expenditures for said Additional Rent items.
The respective obligations of Landlord and Tenant under this Paragraph
shall survive the expiration or other termination at the term of this Lease, and
if the term hereof shall expire or shall otherwise terminate on a day other than
the last day of a calendar year, the actual Additional Rent incurred for the
calendar year in which the term hereof expires or otherwise terminates shall be
determined and settled on the basis of the statement of actual Additional Rent
for such calendar year and shall be prorated in the proportion which the number
of days in such calendar year preceding such expiration or termination bears
to 365.
F. Place of Payment of Rent and Additional Rent. All Basic Rent hereunder
and all payments hereunder for Additional Rent shall be paid to Landlord at the
address of Landlord as specified in Paragraph 1.K or such other place as
Landlord may from time to time designate in writing.
G. Security Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum specified in Paragraph 1.H hereof as
a "Security Deposit". Said sum shall be held by Landlord as a Security Deposit
for the faithful performance by Tenant of all of the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the Lease
Term, and shall not in any event be used or applied by Tenant as "last month's
rent." If Tenant defaults with respect to any provision of this Lease,
including, but not limited to, the provisions relating to the payment of rent
and any of the monetary sums herewith, Landlord may (but shall not be required
to) use, apply or retain all or any part of the security deposit for the payment
of any other amount which Landlord may spend by reason of Tenant's default or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion of said Security Deposit is so used
or applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in the amount sufficient to restore the Security
Deposit to its original amount. Tenant's failure to do so shall be a material
breach of this Lease. Landlord shall not be required to keep this Security
Deposit separate from its general funds and Tenant shall not be entitled to
interest on such Security Deposit. If Tenant fully and faithfully performs every
provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant at Landlord's option, to the last
assignee of Tenant's interest hereunder) at the expiration of the Lease term and
after Tenant has vacated the Premises. In the event of termination of Landlord's
interest in this Lease, Landlord shall transfer said Security Deposit to
Landlord's successor in interest whereupon Landlord shall be released from
liability for the return of such Security Deposit or the accounting therefor.
H. Prepaid Rent. Concurrently with Tenant's execution of this Lease,
Tenant shall pay to Landlord the sum specified in Paragraph 1.F as prepaid rent
for the months designated therein.
Landlord's Initials: Q/M
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5. TERM. The term of this Lease shall be for a period of time specified in
Paragraph 1.B (unless sooner terminated as hereinafter provided) and, subject to
Paragraph 6, shall commence on the commencement date ("Commencement Date")
specified in Paragraph 1.C. Within 10 days following the Commencement Date of
the Lease Term, Tenant will execute and deliver to Landlord a certificate
substantially in the form of Exhibit D indicating any exceptions thereto which
may exist at that time. Tenant's failure to execute and deliver such
certificates within such time limit shall constitute an unqualified acceptance
of the Premises and acknowledgment that the statements contained in Exhibit D
are true and correct without exception.
6. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver
possession of said Premises to Tenant on the date set forth in Paragraph 1.C or
any other date, this Lease shall not be void or voidable; no obligation of
Tenant shall be affected thereby; nor shall Landlord or Landlord's agents be
liable to Tenant for any loss or damage resulting therefrom; but in that event
the commencement and termination dates of the Lease, and all other dates
affected thereby shall be revised to conform to the date of Landlord's delivery
to Tenant of possession of the Premises, and the Lease Term shall be extended
for a period equal to the delay in delivery of possession, plus the number of
days necessary to end the Lease Term on the last day of a month. The above is,
however, subject to the provision that the period of delay of delivery of the
Premises shall not exceed 180 days from the date specified in Paragraph 1.C
(except those delays caused by Acts of God, strikes, war, utilities,
governmental bodies; weather, unavailable materials, and delays beyond
Landlord's control shall be excluded in calculating such period) in which
instance Tenant, at its option, may, by written notice to Landlord within ten
(10) days after the end of the 180-day period, terminate this Lease and the
parties shall have no further liability thereafter accruing under this Lease.
7. RULES AND REGULATIONS AND COMMON AREA. Subject to the terms and conditions of
this Lease and such rules and regulations as Landlord may from time to time
prescribe, Tenant and Tenant's employees, invitees and customers shall, in
Common with other occupants of the Complex in which the Premises are located,
and their respective employees, invitees and customers, and others entitled to
the use thereof, have the non-exclusive right to use the access roads, parking
areas, and facilities provided and designated by Landlord for the general use
and convenience of the occupants of the Complex in which the Premises are
located, which areas and facilities are referred to herein as "Common Area".
This right shall terminate upon the termination of this Lease. Landlord reserves
the right from time to time to make changes in the shape, size, location, amount
and extent of Common Area. Landlord further reserves the right to promulgate
such reasonable rules and regulations relating to the use of the Common Area,
and any part or parts thereof, as Landlord may deem appropriate for the best
interests of the occupants of the Complex. The rules and regulations shall be
binding upon Tenant upon delivery of a copy of them to Tenant, and Tenant shall
abide by them and use its best efforts to cause its agents, employees,
contractors and invitees to cooperate in their observance. Such rules and
regulations may be amended by Landlord from time to time, with or without
advance notice, and all amendments shall be effective upon delivery of a copy to
Tenant. Landlord shall not be responsible to Tenant for the non-performance by
any other tenant or occupant of the Complex of any of said rules and
regulations.
Landlord shall operate, manage and maintain the Common Area. The manner in
which the Common Area shall be maintained and the expenditures for such
maintenance shall be at the discretion of Landlord.
8. PARKING. Tenant shall have the non-exclusive right, in common with other
tenants or occupants of the Complex, to use the number of parking spaces in the
common parking areas of the Complex as is specified in Paragraph 1.J. Neither
Tenant nor Tenant's employees, agents, representatives and/or invitees shall use
parking spaces in excess of said number of spaces allocated to Tenant hereunder.
Tenant acknowledges that certain other tenants of the Complex may have exclusive
parking rights to certain parking spaces in the parking areas of the Complex,
and that Tenant shall have no right to use such exclusive spaces upon receiving
notice of the location of such exclusive spaces from Landlord. Landlord shall
have the right (but not the obligation), at Landlord's sole discretion, from
time to time to regulate reasonable rules and regulations as described in
Paragraph 7 regarding the operation of the parking areas, including without
limitation the specific designation of the location of Tenant's parking spaces
within the common parking areas of the Complex. Landlord shall also have the
right to implement a system of parking charges, vouchers, fines or other parking
control fees to be paid by Tenant and/or the users of the Common Areas, if so
required by any governmental agency having jurisdiction over the Complex.
Tenant shall not at any time, park, or permit to be parked, any trucks or
vehicles adjacent to the loading areas so as to interfere in any way with the
use of such areas, nor shall Tenant at any time park, or permit the parking of
Tenant's trucks or other vehicles or the trucks and vehicles of Tenant's
suppliers or others, in any portion of the common area not designated by
Landlord for such use by Tenant. Tenant shall not park nor permit to be parked,
any inoperative vehicles or equipment on any portion of the common parking area
or other common areas of the Complex, or use the same for storage. Tenant agrees
to assume responsibility for compliance by its employees with the parking
provisions contained herein.
If Tenant or its employees park in other than such designated parking
areas, then Landlord may charge Tenant, as an additional charge, and Tenant
agrees to pay, ten ($10.00) dollars per day for each day or partial day each
such vehicle is parked in any area other than that designated. Tenant hereby
authorizes Landlord at Tenant's sole expense to tow away from the Complex any
vehicle belonging to Tenant or Tenant's employees parked in violation of these
provisions, or to attach violation stickers or notices to such vehicles.
Landlord shall have no obligation to Tenant to police the parking areas or
enforce any private or public parking restrictions, which enforcement shall be
at Landlord's sole and absolute descretion.
9. EXPENSES OF OPERATION AND MAINTENANCE OF THE COMPLEX. As Additional Rent and
in accordance with Paragraph 4.E of this Lease, and except for those expenses
required to be paid exclusively by Tenant as set forth in Paragraphs 12 and 13
or elsewhere in this Lease, Tenant shall pay to Landlord Tenant's Share of all
expenses of operation, management, maintenance and repair of the Building,
Complex and Common Areas including, but not limited to, all sums expended in
connection with the Common Areas and Building exteriors for all general
maintenance and repairs; license, permit, and inspection fees; security; utility
charges associated with exterior landscaping and lighting (including water and
sewer charges); janitorial services; trash removal; fire protection systems;
general liability insurance protecting against claims related to the condition,
use or occupancy of the Common Areas (in such amounts and providing such
coverage as determined in Landlord's sole discretion); exterior window cleaning;
maintenance of landscaped areas, irrigation systems, lakes, parking lots,
sidewalks, driveways, and stairways, including resurfacing, restriping, cleaning
and sweeping; maintenance, repair and replacement of all Building systems and
fixtures, including without limitation electrical, mechanical, lighting,
plumbing, and telecommunication systems including without limitation
intra-Building telephone, telecommunication and network cabling which
telecommunication systems are located outside of the Premises, except as
otherwise provided in Paragraph 12 below; repair and replacement of roofs and
structural elements of the buildings (excluding new capital improvements);
salaries and employee benefits of on-site personnel and payroll taxes applicable
thereto; fees for accounting, bookkeeping, expense collection, and other
management services rendered by Landlord and/or by a third party manager engaged
by Landlord (which may be a party affiliated with Landlord), except that the
total amount charged for such management services and included in Tenant's share
of expenses shall not exceed the rate of three percent (3%) of the then current
Basic Rent payable by Tenant for each respective month; taxes on personal
property, equipment and machinery utilized in the operation of the Common Area;
supplies, materials, equipment and tools; maintenance and/or insurance contracts
covering all or any of the repairs or maintenance described in this Paragraph 9;
reasonable reserves for roof repairs, parking for resurfacing and other similar
items of major repair and maintenance; and the cost of complying with rules,
regulations and orders of governmental authorities, including without limitation
maintenance, alterations and repairs required in connection therewith.
"Additional Rent" as used herein shall not include Landlord's debt
repayments; interest on charges; expenses directly or indirectly incurred by
Landlord for the benefit of any other tenant; cost for the installation of
partitioning or any other tenant improvements; cost of attracting tenants;
depreciation; interest, or executive salaries.
10. ACCEPTANCE AND SURRENDER OF PREMISES. By entry hereunder, Tenant accepts
the Premises as being in good and sanitary order, condition and repair and
accepts the Building and improvements included in the Premises in their present
condition and without representation or warranty by Landlord as to the condition
of such Building, the use or occupancy which may be made thereof, or the precise
square footage of the Building or the Premises. Any exceptions to the foregoing
must be by written agreement executed by Landlord and Tenant. Tenant agrees on
the last day of the Lease Term, or on the sooner termination of this Lease to
surrender the Premises promptly and peaceably to Landlord in good condition and
repair (damage by Acts of God, fire, and normal wear and tear excepted), with
all interior walls painted, or cleaned so that they appear freshly painted, and
repaired and replaced, if damaged; all floors cleaned and waxed; all carpets
cleaned and shampooed; the air conditioning and heating equipment serviced by a
reputable and licensed service firm and in good operating condition (provided
the maintenance of such equipment has been Tenant's responsibility during the
term of this Lease) together with all alterations, additions, and improvements
which may have been made in, to, or on the Premises (except movable trade
fixtures installed at the expense of Tenant); provided, however, that Tenant
shall ascertain from Landlord within thirty (30) days before the end of the term
of this Lease whether Landlord desires to have the Premises or any part or parts
thereof restored to their condition and configuration as when the Premises were
delivered to Tenant and if Landlord shall so desire, then Tenant shall restore
said Premises or such part or parts thereof before the end of this Lease at
Tenant's sole cost and expense. Tenant, on or before the end of the term or
sooner termination of this Lease, shall remove all of Tenant's personal property
and trade fixtures from the Premises, and all property not so removed on or
before the end of the term or sooner termination of this Lease shall be deemed
abandoned by Tenant and title to same shall thereupon pass to Landlord without
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compensation to Tenant. Landlord may, upon termination of this Lease, remove all
moveable furniture and equipment so abandoned by Tenant, at Tenant's sole cost,
and repair any damage caused by such removal at Tenant's sole cost. If the
Premises are not surrendered at the end of the term or sooner termination of
this Lease, Tenant shall indemnify Landlord against loss or liability resulting
from the delay by Tenant in so surrendering the Premises including, without
limitation, any claims made by a succeeding tenant founded on such delay.
Nothing contained herein shall be construed as an extension of the term hereof
or as a consent of Landlord to any holding over by Tenant. The voluntary or
other surrender of this Lease or the Premises by Tenant or a mutual cancellation
of this Lease shall not work as a merger and, at the option of Landlord, shall
either terminate all or any existing subleases or subtenancies or operate as an
assignment to Landlord of all or any such subleases or subtenancies.
11. ALTERATIONS AND ADDITIONS. Tenant shall not make, or suffer to be made, any
alteration or addition to the Premises, or any part thereof, without the written
consent of Landlord first had and obtained by Tenant. All work with respect to
any alteration or addition shall be done in a good and workmanlike manner, shall
be under the supervision of a competent architect or competent licensed
structural engineer, and shall be made in accordance with all applicable laws,
ordinances, codes and regulations related thereto and the plans and
specifications with respect thereto shall be approved in writing by Landlord
before commencement of work. Landlord's approval of Tenant's plans and
specification shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency or compliance with
governmental Laws, rules or regulations.
Tenant agrees that it will not proceed to make such alteration or
additions, without having obtained consent from Landlord to do so, and until
five (5) days after the receipt of such consent, 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. Tenant
shall, if required by Landlord, secure at Tenant's own cost and expense, a
completion and lien indemnity bond, satisfactory to Landlord, for such work.
Tenant further covenants and agrees that any mechanic's lien filed against the
Premises or against the Complex for work claimed to have been done for, or
materials claimed to have been furnished to Tenant, will be discharged by
Tenant, by bond or otherwise, within ten (10) days after the imposition thereof,
at the cost and expense of Tenant. Any exceptions to the foregoing must be made
in writing and executed by both Landlord and Tenant. Upon completion of the
work, Tenant shall file a Notice of Completion as permitted by law in the Office
of the County Recorder where the Premises is located.
Any addition to, or alteration of, the Premises, except moveable furniture
and trade fixtures, shall at once become apart of the Premises and belong to
Landlord. Tenant shall retain title to all moveable furniture and trade fixtures
placed in the Premises. All heating, lighting, electrical, air conditioning,
floor to ceiling partitioning, drapery, carpeting, and floor installations made
by Tenant, together with all property that has become an integral part of the
Premises, shall not be deemed trade fixtures.
12. TENANT MAINTENANCE. Tenant shall, at its sole cost and expense, keep and
maintain the Premises (including appurtenances) and every part thereof in a high
standard of maintenance and repair, and in good and sanitary condition. Tenant's
maintenance and repair responsibilities herein referred to include, but are not
limited to, all windows, window frames, plate glass, glazing, and truck doors;
plumbing systems (such as water and drain lines, sinks, toilets, faucets,
drains, showers and water fountains); electrical systems (such as panels,
conduits, outlets, lighting fixtures, lamps, bulbs, tubes, and ballasts);
heating and air conditioning systems (such as compressors, fans, air handlers,
ducts, mixing boxes, thermostats, time clocks, boilers, heaters, supply and
return grills); telecommunication systems within the premises (including without
limitation all distribution throughout the Premises from Tenant's
telephone/computer closets), and telecommunication systems located outside of
the Premises (including without limitation intra-Building telephone,
telecommunication and network cabling) installed to exclusively serve all or any
portion of the Premises; all interior improvements within the Premises including
but not limited to wall coverings, window coverings, carpet, floor coverings,
partitioning, ceilings, doors (both interior and exterior), including closing
mechanisms, latches, locks, and skylights, if any; automatic fire extinguishing
systems; and all other interior improvements of any nature whatsoever. Tenant
agrees to provide carpet shields under all rolling chairs or to otherwise be
responsible for wear and tear of the carpet caused by such rolling chairs if
such wear and tear exceeds that caused by normal foot traffic in surrounding
areas. Areas of excessive wear in the Premises shall be replaced at Tenant's
sole expense upon lease termination. Tenant shall contract with a service
company for the quarterly maintenance of the heating and air conditioning
equipment, with a copy of the service contract to be furnished to Landlord
within ten (10) days after opening for business, and a copy of any subsequent
contracts to be furnished from time to time; provided, however, that Landlord
reserves the right to contract with a service company for the quarterly
maintenance of the heating and air conditioning equipment in the Premises, in
which event Tenant shall reimburse the cost thereof to Landlord upon demand
therefor. If Tenant needs to access Building system, including without
limitation the Building telecommunications system, Tenant shall have the right
to do so only upon the prior written consent of Landlord and by utilization of a
contractor consented to by Landlord, provided that despite any such consent by
Landlord, Tenant shall remain fully responsible for the acts, omissions and
negligence of any such contractor. Tenant hereby waives all rights, statutory or
otherwise, to make repairs for or at the expense of Landlord.
13. UTILITIES. Tenant shall pay promptly, as the same become due, all charges
for water, gas, electricity, telephone, telex and other electronic
communications service, sewer service, waste pick-up and any other utilities,
materials or services furnished directly to or used by Tenant on or about the
Premises during the term of this Lease, including, without limitation, any
temporary or permanent utility surcharge or other exactions whether or not
hereinafter imposed. If any such services and utilities are not separately
metered to the Premises, Tenant shall pay Landlord for the cost of installing
separate meters if requested by Landlord. Tenant shall pay an equitable portion
of all charges which are jointly metered, with the determination of Tenant's
equitable portion to be made by Landlord. Tenant shall pay for any and all
telecommunication or other utility system modifications or additions which it
may require and which Landlord expressly agrees to provide pursuant to the terms
of this Lease or any subsequent written agreement, provided, however, that
nothing in this Lease shall require Landlord to provide, modify or install any
utility system or utility system component for Tenant's use except to the extent
that the same is required by an express written agreement between Landlord and
Tenant. Landlord shall not be liable for and Tenant shall not be entitled to any
damages or any abatement or reduction of rent by reason of any interruption or
failure of utility services to the Premises.
14. TAXES.
A. As Additional Rent and in accordance with Paragraph 4.E of this Lease,
Tenant shall pay to Landlord Tenant's Share of all Real Property Taxes. The term
"Real Property Taxes," as used herein, shall mean (i) all taxes, assessments,
levies and other charges of any kind or nature whatsoever, general and special,
foreseen and unforeseen (including all installments of principal and interest
required to pay any general or special assessments for public improvements and
any increases resulting from reassessments caused by any change in ownership of
the Complex) now or hereafter imposed by any governmental or quasi-governmental
authority or special district having the direct or indirect power to tax or levy
assessments, which are levied or assessed against, or with respect to the value,
occupancy or use of, all or any portion of the Complex (as now constructed or as
may at any time hereafter be constructed, altered, or otherwise changed) or
Landlord's interest therein; any improvements located within the Complex
(regardless of ownership); the fixtures, equipment and other property of
Landlord, real or personal, that are an integral part of and located in the
Complex; or parking areas, public utilities, or energy within the Complex; (ii)
all charges, levies or fees imposed by reason of environmental regulation or
other governmental control of the Complex; and (iii) all costs and fees
(including attorneys' fees) incurred by Landlord in contesting any Real Property
tax and in negotiating with public authorities as to any Real Property Tax. If
at any time during the term of this Lease the taxation or assessment of the
Complex prevailing as of the commencement date of this Lease shall be altered so
that in lieu of or in addition to any Real Property Tax described above there
shall be levied, assessed or imposed (whether by reason of a change in the
method of taxation or assessment, creation of a new tax or charge, or any other
cause) an alternate or additional tax or charge (i) on the value, use or
occupancy of the Complex or Landlord's interest therein or (ii) on or measured
by the gross receipts, income or rentals from the Complex, on Landlord's
business of leasing the Complex, or computed in any manner with respect to the
operation of the Complex, then any such tax or charge, however designated, shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this lease. If any Real Property Tax is based upon property or rents unrelated
to the Complex, then only that part of such real Property Tax that is fairly
allocable to the Complex shall be included within the meaning of the term "Real
Property Taxes." Notwithstanding the foregoing, the term "Real Property Taxes"
shall not include estate, inheritance, gift or franchise taxes of Landlord or
the federal or state net income tax imposed on Landlord's income from all
sources.
B. Taxes on Tenant's Property.
(1) Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in or about the Premises. If any such taxes on Tenant's personal
property or trade fixtures are levied against Landlord or Landlord's property or
if the assessed value of the Premises is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of Tenant and if
Landlord, after written notice to Tenant, pays the taxes based on such increased
assessment, which Landlord shall have the right to do regardless of the validity
thereof (but only under proper protest if requested by Tenant), Tenant shall
upon demand, as
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the case may be, repay to Landlord the taxes so levied against Landlord, or the
proportion of such taxes resulting from such increase in the assessment;
provided that in any such event Tenant shall have the right, in the name of
Landlord and with Landlord's full cooperation (but without cost to Landlord), to
bring suit in any court of competent jurisdiction to recover the amount of any
such taxes so paid under protest, and any amount so recovered shall belong to
Tenant.
(2) If the Tenant improvements in the Premises, whether installed,
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which standard office
improvements in other space in the Complex are assessed, then the real property
taxes and assessments levied against Landlord or the Complex by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Paragraph 14.8 (1)
above. If the records of the County Assessor are available and sufficiently
detailed to serve as a basis for determining whether said Tenant improvements
are assessed at a higher valuation than standard office improvements in other
space in the Complex, such records shall be binding on both the Landlord and the
Tenant. if the records of the County Assessor are not available or sufficiently
detailed to serve as a basis for making said determination, the actual cost of
construction shall be used.
15. LIABILITY INSURANCE. Tenant, at Tenant's expense, agrees to obtain and keep
in force during the term of this lease a policy of comprehensive public
liability insurance with limits in the amount of not less than $1,000,000
combined single limit coverage per occurrence for injuries to or death of
persons occurring in, on or about the Premises or the Complex, and property
damage insurance with limits of not less than $500,000. The policy or policies
affecting such insurance, certificates of which insurance shall be furnished to
Landlord prior to occupancy, shall name Landlord and the beneficiary or
mortgagee of any deed of trust or mortgage affecting the Premises as additional
insureds, and shall insure any liability of Landlord, contingent or otherwise,
with respect to any act or emission of Tenant, its agents, employees or invitees
or otherwise by any conduct or transactions of any of said persons in or about
or concerning the Premises, including any, failure of Tenant to observe or
perform any of its obligations hereunder; shall be issued by an insurance
company admitted to transact business in the State of California having a rating
of A or better in "Best's insurance Guide's"; and shall provide that the
insurance effected thereby shall not be canceled, except upon thirty (30) days'
prior written notice to Landlord. Said liability insurance shall be primary and
not contributing to any insurance available to Landlord, and Landlord's
insurance shall be in excess thereto. If, during the term of this lease, in the
considered opinion of Landlord's lender, insurance advisor, or counsel, the
amount of insurance described in this Paragraph 15 is not adequate, Tenant
agrees to increase said coverage to such reasonable amount as Landlord's lender,
insurance advisor, or counsel shall deem adequate.
16. TENANT'S PROPERTY INSURANCE AND WORKER'S COMPENSATION. Tenant shall
maintain a policy or policies of fire and property damage insurance in "all
risk" form with a sprinkler leakage endorsement insuring the personal property,
inventory, trade fixtures, and leasehold improvements within the Premises for
the full replacement value thereof. The proceeds from any of such policies shall
be used for the repair or replacement of such items so insured. Tenant shall
also maintain a policy or policies of worker's compensation insurance and any
other employee benefit insurance sufficient to comply with all laws.
17. LANDLORD'S INSURANCE; WAIVER OF SUBROGATION. Landlord shall purchase and
keep in force, a policy or policies of casulty insurance covering loss or damage
to the Premises, Building and related Common Area improvements in the amount of
the full replacement value thereof, providing protection against those perils
covered by "all risk" insurance, and including such other casualty endorsements
as Landlord may elect. Land shall also maintain at Landlord's election, or if
required by Landlord's lender from time to time, earthquake and/or flood damage
insurance, worker's compensation insurance, sprinkler leakage insurance and
rental income insurance in the amount of one hundred (100%) percent of twelve
(12) months Basic Rent, plus sums paid as Additional Rent. Tenant shall pay to
Landlord Tenant's Share of the cost of Landlord's insurance, as described
herein, as Additional Rent in accordance with Paragraph 4.E hereof. If such
insurance cost is increased due to Tenant's use of the Premises or the Complex,
Tenant agrees to pay to Landlord the full cost of such increase. Tenant shall
have no interest in or any right to the proceeds of any insurance procured by
Landlord as described in this Paragraph 17.
Landlord and Tenant do each hereby waive their respective rights of
recovery against each other to the extent of insurance coverage of the releasing
party, from any liability for loss or damage caused by fire or any of the perils
included in the releasing party's insurance policies, irrespective of the cause
of such fire or casualty; provided, however, that if the insurance policy of
either releasing party prohibits such waiver, then this waiver shall not take
effect until consent to such waiver is obtained. If such waiver is so
prohibited, the insured party affected shall promptly notify the other thereof.
18. INDEMNIFICATION; EXEMPTION OF LANDLORD FROM LIABILITY.
A. Subject to Section 2782 of the California Civil Code, Tenant shall
defend, indemnify, and hold Landlord and its agents, contractors and employees
harmless (except for gross negligence or willful misconduct of Landlord and then
only to the extent that insurance actually carried or required to be carried
pursuant to the lease does not cover any such loss) from and against any and all
obligations, losses, costs, expenses, liability, claims, demands, fines,
penalties, attorneys' fees, investigation costs, court costs or expert witness
fees incurred in connection with or on account of or arising from any injury or
death or property damage resulting from (i) the use, condition or occupancy of
the Premises or (ii) any act or omission or negligence of Tenant or Tenant's
agents, contractors, employees, or invitees or (iii) any occurrence in, upon or
at the Premises from any cause whatsoever or (iv) any breach, violation or
non-performance by Tenant of any of its obligations hereunder.
B. Neither Landlord nor its agents or contractors or employees shall be
liable to Tenant, and Tenant waives all claims against Landlord, and its agents,
contractors and employees for injury or death to any person (including without
limitation Tenant and Tenant's employees) or for damage (including consequential
damages) or loss to Tenant's business or for damage or loss to any property
(including without limitation Tenant's personal property) by and from all
causes, including without limitation (i) any latent or patent defect in the
Premises, Building or Complex, or (ii) fire, steam, electricity, gas, dampness,
water or rain which may leak or flow from or into any part of the Premises, or
(iii) interruption, breakage, leakage, obstruction or defects of pipes,
sprinklers, wires, appliances, or Building Systems, including without limitation
plumbing, heating, air conditioning, telecommunications or lighting systems or
fixtures, whether the damage or injury results from conditions arising in, upon,
or about the Premises, Building or Complex or from other sources of (iv) any act
or omission or neglect of any other tenant of the Building or Complex. Tenant
shall immediately notify Landlord in writing of any known defect in the
Premises. The provisions of this Paragraph 18.B shall not apply to any damage or
injury caused bv Landlord's willful misconduct or gross negligence.
19. COMPLIANCE. Tenant, at its sole cost and expense, shall promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now or hereafter in effect; with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted; and with
any direction or occupancy certificate issued pursuant to law by any public
officer; provided, however, that no such failure shall be deemed a breach of
these provisions if Tenant, immediately upon notification, commences to remedy
or rectify said failure. The judgment of any court of competent jurisdiction or
the admission of Tenant in any action against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such law, statute, ordinance
or governmental rule, regulation, requirement, direction or provision, shall be
conclusive of that fact as between Landlord and Tenant. This Paragraph shall not
be interpreted as requiring Tenant to make structural changes or structural
improvements, except to the extent such changes or improvements are required as
a result of Tenant's use of the Premises. Tenant shall, at its sole cost and
expense, comply with any and all requirements pertaining to said Premises, of
any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance covering the Premises.
20. LIENS. Tenants shall keep the Premises and the Complex free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant. In the event that Tenant shall not, within ten (10) days following the
imposition of such lien, cause the same to be released of record, Landlord shall
have, in addition to all other remedies provided herein and by law, the right,
but not the obligation, to cause the same to be released by such means as it
shall deem proper, including payment of the claim giving rise to such lien. All
sums paid by Landlord for such purpose, and all expenses incurred by it in
connection therewith, shall be payable to Landlord by Tenant on demand with
interest thereon as specified in Paragraph 44 below.
21. ASSIGNMENT AND SUBLETTING.
A. Landlord's Consent Required. Tenant shall not assign, transfer, or
hypothecate the leasehold estate under this lease, or any interest herein, and
shall not sublet the Premises, or any part thereof, or any right or privilege
appurtenant thereto, or suffer any other person or entity to occupy or use the
Premises, or any portion thereof, without, in each case, the prior written
consent of Landlord, which consent will not be unreasonably withheld. Any
attempt to do so without such consent being first had and obtained shall be
wholly void and shall constitute a default by Tenant under this lease.
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B. Reasonable Consent. If Tenant complies with the following conditions,
Landlord shall not unreasonably withhold its consent to the assignment of the
Lease or the subletting of the Premises or any portion thereof: Tenant shall
submit in writing to Landlord (a) the name and legal composition of the proposed
assignee or subtenant; (b) the nature of the proposed assignee's or subtenant's
business to be carried on in the Premises; (c) the terms and provisions of the
proposed assignment or sublease; (d) such reasonable financial information as
Landlord may request concerning the proposed assignee or subtenant including,
without limitation, financial history, credit rating and business experience.
Tenant acknowledges that Landlord has entered into this lease in reliance on the
particular skills, knowledge and experience of Tenant and/or the principal
officer of Tenant with respect to the conduct of business in the Premises.
Tenant recognizes that Landlord's willingness to put its investment in the
Premises at risk under the terms of this Lease is based upon Landlord's
judgmental considerations regarding Tenant's abilities as set forth above.
Without limiting Landlord's right to refuse to give such consent on any other
reasonable grounds, Landlord reserves the right to refuse to give such consent
if in Landlord's reasonable business judgment (i) the quality of operation is or
may be in any way adversely affected during the Lease term; (ii) the financial
worth of the proposed new tenant is less than that of Tenant executing this
Lease; (iii) the proposed assignee's or subtenant's use of the Premises involves
the storage, use or disposal of any Hazardous Materials; (iv) the proposed
assignee or subtenant has been required by any governmental authority to clean
up Hazardous Materials; (v) the proposed assignee or subtenant is subject to
investigation or enforcement by any governmental authority in connection with
the use, disposal or storage of a Hazardous Material, or (vi) investigation
discloses other information reasonably unsatisfactory to Landlord.
C. No Release of Tenant. No consent by Landlord to any assignment or
subletting by Tenant shall relieve Tenant of any obligation to be performed by
Tenant under this Lease, whether occurring before or after such consent,
assignment of the Lease or subletting of the Premisis. Tenant hereby irrevocably
assigns to Landlord all rent and other sums from any assignment, transfer or
subletting at the Premises, and agrees that Landlord, as assignee and as
attorney-in-fact for Tenant, or a receiver for Tenant appointed upon Landlord's
application, may collect such Rent and other sums and apply the same as provided
in Paragraph 24 upon Tenant's default under this Lease; provided, however, that
until the occurrence of any act of default by Tenant under this Lease, its
assignee, transferee or subtenant, Tenant shall have the right to collect such
sums, provided that fifty percent (50%) of all excess sums in excess of the rent
payable by Tenant to Landlord hereunder which any assignee, transferee or
subtenant covenants to pay shall belong solely and exclusively to Landlord.
Landlord may at its election require as a condition to approval of a proposed
assignment, transfer or sublease that the rent due pursuant to the sublease be
paid directly to Landlord. In the event Tenant is allowed to assign, transfer or
sublet the whole or any part of the Premises, with the prior written consent of
Landlord, no assignee, transferee or subtenant shall assign or transfer this
Lease, either in whole or in part, or sublet the whole or any part of the
Premises, without also having obtained the prior written consent of Landlord. A
consent of Landlord to one assignment, transfer, hypothecation, subletting,
occupation or use by any other person shall not release Tenant from any of
Tenant's obligations hereunder or be deemed to be a consent to any subsequent
similar or dissimilar assignment, transfer, hypothecation, subletting,
occupation or use by any other person. Any such assignment, transfer,
hypothecation, subletting, occupation or use without such consent shall be void
and shall constitute a breach of this Lease by Tenant and shall, at the option
of Landlord exercised by written notice to Tenant, terminate this Lease. The
leasehold estate under this Lease shall not, nor shall any interest therein, be
assignable for any purpose by operation of law without the written consent of
Landlord.
D. Form of Consent; Costs. Tenant agrees to reimburse Landlord for
Landlord's expenses (including attorney's fees and costs) incurred in
conjunction with the processing and documentation of any such requested
transfer, assignment, subletting, licensing or concession agreement, change of
ownership, mortgage, or hypothecation of this Lease or Tenant's interest in and
to the Premises (collectively, "Transfer"). Each Transfer to which there has
been consent shall be by an instrument in writing in form satisfactory to
Landlord, and shall be executed by the transferor and the transferee in each
instance; and each transferee shall agree in writing, for the benefit of
Landlord, to assume, to be bound by, and to perform the terms, covenants and
conditions of this Lease to be done, kept and performed by Tenant, including the
payment of all amounts due or to become due under this Lease directly to
Landlord. An executed copy of such written instrument shall be delivered to
Landlord. Failure to first obtain in writing Landlord's consent or failure to
comply with the provisions of this Paragraph 21 shall operate to prevent any
such Transfer from becoming effective.
E. Acknowledgment of Reasonableness. Tenant agrees that the provisions of
this Paragragh 21 are not unreasonable standards or conditions for any purpose,
including for purposes of the California Civil Code Section 1951.4(b).
22. SUBORDINATION AND MORTGAGES. In the event Landlord's title or leasehold
interest is now or hereafter encumbered by a lien of any mortgage or deed of
trust, upon the interest of Landlord in the land and buildings in wnich the
demised Premises are located, to secure a Loan from a lender (hereinafter
referred to as "Lender") to Landlord, Tenant shall, at the request of Landlord
or Lender, execute in writing an agreement subordinating its rights under this
Lease to the lien of such mortgage or deed of trust, or, if so requested,
agreeing that the lien of Lender's mortgage or deed of trust shall be or remain
subject and subordinate to the rights of Tenant under this Lease.
Notwithstanding any such subordination, Tenant's possession under this Lease
shall not be disturbed if Tenant is not in default and so long as Tenant shall
pay all rent and observe and perform all of the provisions set forth in this
Lease.
23. ENTRY BY LANDLORD. Landlord reserves, and shall at all reasonable times
after 24 hours prior notice (except in emergencies) have, the right to enter the
Premises to inspect them; to perform any services to be provided by Landlord
hereunder; to submit the Premises to prospective purchasers, lenders, or
tenants; to post notices of nonresponsibility; and to alter, improve or repair
the Premises and any portion of the Complex, all without abatement of rent; and
may erect scaffolding and other necessary structures in or through the Premises
where reasonably required by the character of the work to be performed;
provided, however that the business of Tenant shall be interfered with to the
least extent that is reasonably practical. For each of the foregoing purposes,
Landlord shall at all times have and retain a key with which to unlock all of
the doors in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord by any of said means, or otherwise,
shall not under any circumstances be construed or deemed to be a forcible or
unlawful entry into or a detainer of the Premises or an eviction, actual or
constructive, of Tenant from the Premises or any portion thereof. Landlord shall
also have the right at any time to change the arrangement or location of
entrances or passageways, doors and doorways, and corridors, elevators, stairs,
toilets or other public parts of the Complex and to change the name, number or
designation by which the Complex is commonly known, and none of the foregoing
shall be deemed an actual or constructive eviction of Tenant, or shall entitle
Tenant to any damages or reduction of rent hereunder.
24. BANKRUPTCY; TENANT'S DEFAULT.
A. Bankruptcy. The commencement of a bankruptcy action or liquidation
action or reorganization action or insolvency action or an assignment of or by
Tenant for the benefit of creditors, or any similar action undertaken by Tenant,
or the insolvency of Tenant, shall, at Landlord's option, constitute a breach of
this Lease by Tenant. If the trustee or receiver appointed to serve during a
bankruptcy, liquidation, reorganization, insolvency or similar action elects to
reject Tenant's unexpired Lease, the trustee or receiver shall notify Landlord
in writing of its election within sixty (60) days after an order for relief in a
liquidation action or within thirty (30) days after the commencement of any
other action. Within thirty (30) days after court approval of the assumption of
this Lease, the trustee or receiver shall cure (or provide adequate assurance to
the reasonable satisfaction of Landlord that the trustee or receiver shall cure)
any and all previous defaults under the unexpired Lease and shall compensate
Landlord for all actual pecuniary loss and shall provide adequate assurance of
future performance under said lease to the reasonable satisfaction of Landlord.
Nothing contained in this Paragraph shall affect the existing right of
Landlord to refuse to accept an assignment upon commencement of or in connection
with a bankruptcy, liquidation, reorganization or insolvency action or an
assignment of Tenant for the benefit of creditors or other similar act. Nothing
contained in this Lease shall be construed as giving or granting or creating an
equity in the demised Premises to Tenant. In no event shall the leasehold estate
under this Lease, or any interest therein, be assigned by voluntary or
involuntary bankruptcy proceeding without the prior written consent of Landlord.
In no event shall this Lease or any right or privileges hereunder be an asset of
Tenant under any bankruptcy, insolvency or reorganization proceedings.
B. Tenant's Default. The failure to perform or honor any covenant,
condition or representation made under this Lease shall constitute a default
hereunder by Tenant upon expiration of the appropriate grace period hereinafter
provided. Tenant shall have a period of three (3) days from the date of written
notice from Landlord, in the manner prescribed in Section 1162 of the California
Code of Civil Procedure, within which to cure any default in the payment of
Basic or Additional Rent or adjustment thereto. Tenant shall have a period of
thirty (30) days from the date of written notice from Landlord within which to
cure any other default under this Lease; provided, however, that if the nature
of Tenant's failure is such that more than thirty (30) days is reasonably
required to cure the same, Tenant shall not be in default so long as Tenant
commences performance within such thirty (30) day period and thereafter
prosecutes the same to completion. Upon an uncured default of this Lease by
Tenant, Landlord shall have the following rights and remedies in addition to any
other rights or remedies available to Landlord at law or in equity:
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(1) The rights and remedies provided for by California Civil Code
Section 1951.2, including but not limited to, recovery of the worth at the time
of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss for the same period
that Tenant proves could be reasonably avoided, as computed pursuant to
subsection (b) of said Section 1951.2. Any proof by Tenant under subparagraphs
(2) and (3) of Section 1951.2 of the amount of rental loss that could be
reasonably avoided shall be made in the following manner: Landlord and Tenant
shall each select a licensed real estate broker in the business of renting
property of the same type and use as the Premises and in the same geographic
vicinity. Such two real estate brokers shall select a third licensed real estate
broker, and the three licensed real estate brokers so selected shall determine
the amount of the rental loss that could be reasonably avoided from the balance
of the term of this Lease after the time of award. The decision of the majority
of said licensed real estate brokers shall be final and binding upon the parties
hereto.
(2) The rights and remedies provided by California Civil Code Section
1954, which allows Landlord to continue the Lease in effect after Tenant's
breach and abandonment and to enforce all of its rights and remedies under this
Lease, including the right to recover rent as it becomes due, for so long as
Landlord does not terminate Tenant's right to possession; acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver
upon Landlord's initiative to protect its interest under this Lease shall not
constitute a termination of Tenant's right to possession.
(3) The right to terminate this Lease by giving notice to Tenant in
accordance with applicable law.
(4) To the extent permitted by law, the right and power to enter the
Premises and remove therefrom all persons and property, to store such property
in a public warehouse or elsewhere at the cost of and for the account of Tenant,
and to sell such property and apply such proceeds therefrom pursuant to
applicable California law. Landlord may, from time to time, sublet the Premises
or any part thereof for such term or terms (which may extend beyond the term of
this Lease) and at such rent and such other terms as Landlord in its sole
discretion may deem advisable, with the right to make alterations and repairs to
the Premises. Upon each subletting, (i) Tenant shall be immediately liable to
pay Landlord, in addition to indebtedness other than rent due hereunder, the
cost of such subletting, including but not limited to, reasonable attorney's
fees and costs, and any real estate commissions actually paid, and the cost of
such alterations and repairs incurred by Landlord and the amount, if any, by
which the rent hereunder for the period of such subletting (to the extent such
period does not exceed the term hereof) exceeds the amount to be paid as rent
for the Premises for such period or (ii) at the option of Landlord, rents
received from such subletting shall be applied first to payment of indebtedness
other than rent due hereunder from Tenant to Landlord; second, to the Payment of
any costs of such subletting and of such alterations and repairs; third to
payment of rent due and unpaid hereunder; and the residue, if any, shall be held
by Landlord and applied in payment of future rent as the same becomes due
hereunder. If Tenant has been credited with any rent to be received by such
subletting under option (i) and such rent shall not be promptly paid to Landlord
by the subtenant(s), or if such rentals received from such subletting under
option (ii) during any month be less than that to be paid during that month by
Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No taking possession of the
Premises by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention be given to Tenant.
Notwithstanding any such subletting without termination, Landlord may at any
time hereafter elect to terminate this Lease for such previous breach.
(5) The right to have a receiver appointed for Tenant upon application
by Landlord, to take possession of the Premises and to apply any rental
collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to subparagraph 4 above.
25. ABANDONMENT. Tenant shall not vacate or abandon the Premises at any time
during the term of this Lease (except that Tenant may vacate so long as it pays
rent, provides an on-site security guard during normal business hours from
Monday through Friday, and otherwise performs its obligations hereunder), and if
Tenant shall abandon, vacate or surrender said Premises, or be dispossessed by
the process of law, or otherwise, any personal property belonging to Tenant and
left on the Premises shall be deemed to be abandoned, at the option of Landlord,
except such property as may be mortgaged to Landlord.
26. DESTRUCTION. In the event the Premises are destroyed in whole or in part
from any cause, except damage and destruction caused from vandalism or accident
for which Tenant is responsible for under Paragraph 12, Landlord may, at its
option:
(a) Rebuild or restore the Premises to their condition prior to the
damage or destruction, or
(b) Terminate this Lease (providing that the Premises is damaged to
the extent of 33 1/3% of the replacement cost or to any extent if the damage is
not covered by insurance).
Landlord shall give Tenant notice in writing within thirty (30) days from
the destruction of the Premises of its election to either rebuild and restore
them, or to terminate this Lease. In the event Landlord agrees to rebuild or
restore the Premises, Landlord shall do so promptly at its expense. Tenant shall
be entitled to a reduction in rent while such repair is being made in the
proportion that the area of the Premises rendered untenantable by such damage
bears to the total area of the Premises. If Landlord initially estimates that
the rebuilding or restoration will exceed 180 days or if Landlord does not
complete the rebuilding or restoration within one hundred eighty (180) days
following the date of destruction (such period of time to be extended for delays
caused by the fault or neglect of Tenant or because of Acts of God, acts of
public agencies, labor disputes, strikes, fires, freight embargoes, rainy or
stormy weather, inability to obtain materials, supplies or fuels, acts of
contractors or subcontractors, or delay of the contractors or subcontractors due
to such causes or other contingencies beyond the control of Landlord), then
Tenant shall have the right to terminate this Lease by giving thirty (30) days
prior written notice to Landlord. Notwithstanding anything herein to the
contrary, Landlord's obligation to rebuild or restore shall be limited to the
Building and interior improvements constructed by Landlord as they existed as of
the commencement date of the Lease and shall not include restoration of Tenant's
trade fixtures, equipment, (including telecommunication equipment, whether or
not located within the Premises), merchandise, or any improvements, alterations,
or additions made by Tenant to the Premises, which Tenant shall forthwith
replace or fully repair at Tenant's sole cost and expense provided this Lease is
not cancelled according to the provisions above.
Unless this Lease is terminated pursuant to the foregoing provisions, this
Lease shall remain in full force and effect. Tenant hereby expressly waives any
statutory rights of termination which may arise by reason of any partial or
total destruction of Premises.
In the event that the Building in which the Premises are situated is
damaged or destroyed to the extent of not less than 33 1/3% of the replacement
costs thereof, Landlord may elect to terminate this Lease, whether the Premises
be injured or not. In the event the destruction of the Premises is caused by
Tenant, Tenant shall pay the deductible portion of Landlord's insurance
proceeds.
27. EMINENT DOMAIN. If all or any part of the Premises shall be taken by any
public or quasi-public authority under the power of eminent domain or conveyance
in lieu thereof, this Lease shall terminate as to any portion of the Premises so
taken or conveyed on the date when title vests in the condemnor, and Landlord
shall be entitled to any and all payment, income, rent, award, or any interest
therein whatsoever which may be paid or made in connection with such taking or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value or any unexpired term of this Lease. Notwithstanding the foregoing
Paragraph, any compensation specifically awarded Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.
If (i) any action or proceeding is commenced for such taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of condemnation of its intention to condemn
the Premises or any portion thereof, or (ii) any of the foregoing events occur
with respect to the taking of any other space in the Complex, or if any such
spaces are taken or conveyed in lieu of such taking and Landlord shall decide to
discontinue the use and operation of the Complex, or decide to demolish, alter
or rebuild the Complex, then, in any of such events Landlord shall have the
right to terminate this Lease by giving Tenant written notice thereof within
sixty (60) days of the date or receipt of said written advice, or commencement
of said action or proceeding, taking or conveyance, which termination shall take
place as of the first to occur of the last day of the calendar month next
following the month in which such notice is given or the date on which title to
the Premises shall vest in the condemnor.
In the event of a partial taking or conveyance of the Premises, if the
portion of the Premises taken or conveyed is so substantial that the Tenant can
no longer reasonably conduct its business, Tenant shall have the privilege of
terminating this Lease within sixty (60) days from the date of such taking or
conveyance, upon written notice to Landlord of its intention to do so, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next following the month in which such notice is given, upon payment by
Tenant of the rent from the date of such taking or conveyance to the date of
termination.
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If a portion of the Premises be taken by condemnation or conveyance in lieu
thereof and neither Landlord nor Tenant shall terminate this Lease as provided
herein, this lease shall continue in full force and effect as to the part of the
Premises not so taken or conveyed, and the rent herein shall be apportioned as
of the date of such taking or conveyance so that thereafter the rent to be paid
by Tenant shall be in the ratio that the area of the portion of the Premises not
so taken or conveyed bears to the total area of the Premises prior to such
taking.
28. SALE OR CONVEYANCE BY LANDLORD. In the event of a sale or conveyance of the
Complex or any interest therein, by any owner of the reversion then constituting
Landlord, the transferor shall theraby be released from any further liability
upon any of the terms, covenants or conditions (express or implied) herein
contained in favor of Tenant, and in such event, insofar as such transfer is
concerned, Tenant agrees to look solely to the responsibility of the successor
in interest of such transferor in and to the Complex and this Lease. This Lease
shall not be affected by any such sale or conveyance, and Tenant agrees to
attorn to the successor in interest of such transferor.
29. ATTORNMENT TO LENDER OR THIRD PARTY. In the event the interest of Landlord
in the land and buildings in which the leased Premises are located (whether such
interest of Landlord is a fee title interest or a leasehold) is encumbered by
deed of trust, and such interest is acquired by the lender or any third party
through judicial foreclosure or by exercise of a power of sale at private
trustee's foreclosure sale, Tenant hereby agrees to attorn to the purchaser at
any such foreclosure sale and to recognize such purchaser as the Landlord under
this Lease. In the event the lien of the deed of trust securing the loan from a
Lender to Landlord is prior and paramount to the Lease, this Lease shall
nonetheless continue in full force and effect for the remainder of the unexpired
term hereof, at the same rental herein reserved and upon all the other terms,
conditions and covenants herein contained.
30. HOLDING OVER. Any holding over by Tenant after expiration or other
termination of the term of this Lease with the written consent of Landlord
delivered to Tenant shall not constitute a renewal of the Lease or give Tenant
any rights to the Premises except as expressly provided in this Lease. Any
holding over after the expiration or other termination of the term of this
Lease, with the consent of Landlord, shall be construed to be a tenancy from
month to month, on the same terms and conditions herein specified insofar as
applicable except that the monthly Basic Rent shall be increased to an amount
equal to one hundred fifteen (115%) percent of the monthly Basic Rent required
during the test month of the Lease term.
31. CERTIFICATE OF ESTOPPEL. Tenant shall within ten (10) days after written
notice from Landlord at any time, execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
date to which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults, if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises. Tenant's failure to deliver such statement
within such time shall be conclusive upon Tenant that this Lease is in full
force and effect, without modification except as may be represented by Landlord,
that there are no uncured defaults in Landlord's performance, and that not more
than one month's rent has been paid in advance.
32. CONSTRUCTION CHANGES. It is understood that the description of the Premises
and the location of ductwork, plumbing and other facilities therein are subject
to such minor changes as Landlord or Landlord's architect determines to be
desirable in the course of construction of the Premises, and no such changes, or
any changes in plans for any other portions of the Complex shall affect this
Lease or entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant. Landlord does not guarantee the accuracy of any
drawings supplied to Tenant and verification of the accuracy of such drawings
rests with Tenant.
33. RIGHT OF LANDLORD TO PERFOM. All terms, covenants and conditions of this
Lease to be performed or observed by Tenant shall be performed or observed by
Tenant at Tenant's sole cost and expense and without any reduction of rent. If
Tenant shall fail to pay any sum of money, or other rent, required to be paid by
it hereunder or shall fail to perform any other term or covenant hereunder on
its part to be performed, and such failure shall continue for five (5) days
after written notice thereof by Landlord, Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may, but shall not be obligated
to, make any such payment or perform any such other term or covenant on Tenant's
part to be performed. All sums so paid by Landlord and all necessary costs of
such performance by Landlord together with interest thereon at the rate of
interest specified in Paragraph 44 below, shall be paid (and Tenant covenants to
make such payments) to Landlord, and Landlord shall have (in addition to any
other right or remedy of Landlord) the same rights and remedies in the event of
nonpayment by tenant as in the case of failure by Tenant in the payment or rent
hereunder.
34. ATTORNEY'S FEES. In the event that either Landlord or Tenant should bring
suit for the possession of the Premises, for the recovery of any sum due under
this Lease, or because of the breach of any provision of this Lease, or for any
other relief against the other party hereunder, then all costs and expenses,
including reasonable attorneys' fees, incurred by the prevailing party therein
shall be paid by the other party, which obligation on the part of the other
party shall be deemed to have accrued on the date of the commencement of such
action and shall be enforceable whether or not the action is prosecuted to
judgment. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including a
reasonable attorney's fee.
35. WAIVER. The waiver by either party of the other party's failure to perform
or observe any term, covenant or condition herein contained to be performed or
observed by such waiving party shall not be deemed to be a waiver of such term,
covenant or condition of any subsequent failure of the party failing to perform
or observe the same or any other such term, covenant or condition therein
contained, and no custom or practice which may develop between the parties
hereto during the term hereof shall be deemed a waiver of, or in any way affect,
the right of either party to insist upon performance and observance by the other
party in strict accordance with the terms hereof.
36. NOTICES. All notices, demands, requests, advises or designations
(collectively "Notices") which may be or are required to be given by either
party to the other hereunder shall be in writing. All notices shall be
sufficiently given, made or delivered if (i) to Tenant, personally served on
Tenant by leaving the same at the Premises, or (ii) to Landlord, if personally
served on a general partner of Landlord executing this Lease. Notice shall also
be sufficiently given, made or delivered if sent by (a) postage prepaid United
States mail or overnight courier, addressed as specified in Paragraph 1.K, or
(b) facsimile transmission to the numbers specified in Paragaph 1.K, with
confirming copy sent by United States mail. Each Notice referred to in this
Paragraph shall be deemed received on the date of the personal service or
facsimile transmission, the next business day after sending via overnight
courier, or on the third (3rd) day after mailing thereof by United States Mail,
as the case may be.
37. EXAMINATION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and this instrument is not effective as a lease or otherwise until its execution
and delivery by both Landlord and Tenant.
38. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event earlier than thirty (30) days after written notice by Tenant to Landlord
and to the holder of any first mortgage or deed of trust covering the Premises
whose name and address shall have heretofore been furnished to Tenant in
writing, specifying wherein landlord has failed to perform such obligations;
provided, however, that if the nature of Landlord's obligations is such that
more than thirty (30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
39. CORPORATE AUTHORITY. If Tenant is a corporation (or a partnership) each
individual executing this Lease on behalf of said corporation (or partnership)
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said corporation (or partnership) in accordance with the
by-laws of said corporation (or partnership in accordance with the partnership
agreement) and that this Lease is binding upon said corporation (or partnership)
in accordance with its terms. If Tenant is a corporation, Tenant shall, within
thirty (30) days after execution of this Lease, deliver to Landlord a certified
copy of the resolution of the Board of Directors of said corporation authorizing
or ratifying the execution of this Lease.
40. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that, in the
event of any actual or alleged failure, breach or default hereunder by Landlord:
(i) the sole and exclusive remedy shall be against Landlord and
Landlord's assets;
(ii) no partner of Landlord shall be sued or named as a party in any
suit or action (except as may necessary to secure jurisdiction of
the partnership);
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(iii) no service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of
the partnership);
(iv) no partner of Landlord shall be required to answer or otherwise
plead to any service of process;
(v) no judgment will be taken against any partner of Landlord;
(vi) any judgment taken against any partner of Landlord may be vacated
and set aside at any time without hearing;
(vii) no writ of execution will ever be levied against the assets of
any partner of Landlord;
(viii) these covenants and agreements are enforceable both by Landlord
and also by any partner of Landlord.
Tenant agrees that each of the foregoing covenants and agreements shall be
applicable to any covenant or agreement either expressly contained in this Lease
or imposed by statute or at common law.
41. BROKERS. Tenant warrants that it had dealings with only the real estate
broker(s) or agent(s) specified in Paragraph 1.L in connection with the
negotiation of this Lease and that it knows of no other real estate broker or
agent who is entitled to a commission in connection with this Lease. Tenant
agrees to indemnify Landlord for any and all costs, expenses and damages
(including attorney's fees and costs) arising out of any allegations or claim by
any third party for a commission or fee in connection with the negotiation of
this Lease.
42. SIGNS. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside of
the Premises or any exterior windows of the Premises without the written consent
of Landlord first had and obtained and Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice to
and at the expense of Tenant. If Tenant is allowed to print or affix or in any
way place a sign in, on or about the Premises, upon expiraion or other sooner
termination of this Lease, Tenant at Tenant's sole cost and expense shall both
remove such sign and repair all damage in such a manner as to restore all
aspects of the appearance of the Premises to the condition prior to the
placement of said sign.
All approved signs or lettering on outside doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person approved of by
Landlord.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door partition or wall which may, in Landlord's judgment,
appear unsightly from outside the Premises.
43. HAZARDOUS MATERIALS.
A. Definitions. As used herein, the term "Hazardous Material" shall mean
any substance or material which has been determined by any state, federal, or
local government authority to be capable of posing a risk of injury to health,
safety or property including all of those materials and substances designated as
hazardous or toxic by the Environmental Protection Agency, the California Water
Quality Control Board, the Department of Labor, the California Department of
Industrial Relations, the Department of Transportation, the Department of
Agriculture, the Department of Human Services, the Food and Drug Agency or any
other governmental agency which regulates hazardous or toxic substances in the
environment. Without limiting the generality of the foregoing, the term
"Hazardous Materials" shall include all of those materials and substances
defined as "Toxic Materials" in Sections 66680 through 66685 of Title 22 of the
Callfornia Administrative Code, Division 4, Chapter 30, as the same shall be
amended from time to time.
B. Use Restriction. Subject to the terms and conditions set forth herein,
Landlord acknowledges that so long as the original party named herein as Tenant
remains the Tenant under this Lease, Tenant shall be permitted to use and store
in the Premises only the substances listed on Exhibit E attached hereto
(however, the inclusion of Exhibit E shall in no way be deemed to create any
obligation on Landlord's part to review the list of Hazardous Materials for
conformity to laws). Except as specifically allowed in this Lease, Tenant shall
not cause or permit any Hazardous Material to be used, stored, or disposed of in
or about the Premises, or any other land or improvements in the vicinity of the
Premises. The appearance of any Hazardous Material that is not permitted by this
Lease in or about the Premises shall be deemed an event of default. Without
limiting the generality of the foregoing, Tenant, at its sole cost, shall comply
with all laws relating to the storage, use and disposal of Hazardous Materials.
If the presence of Hazardous Materials on the Premises caused or permitted by
Tenant results in contamination of the Premises or any soil in or about the
Premises, Tenant, at its expense, shall promptly take all actions necessary to
return the same to the condition existing prior to the appearance of such
Hazardous Materials.
Tenant shall defend, hold harmless and indemnify Landlord and its agents
and employees with respect to all claims, damages and liabilities arising out of
or in connection with any storage, use or disposal of Hazardous Materials in or
about the Premises. Tenant shall not suffer any lien to be recorded against the
Premises as a consequence of a Hazardous Material, including any so-called
state, federal or local "super fund" lien related to the "clean up" of a
Hazardous Material in or about the Premises.
C. Compliance. Tenant shall immediately notify Landlord of any inquiry,
test, investigation, or enforcement proceeding by or against Tenant or the
Premises concerning a Hazardous Material. Tenant acknowledges that Landlord, as
the owner of the Premises, at its election, shall have the sole right, at
Tenant's expense, to negotiate, defend, approve and appeal any action taken or
order issued with regard to a Hazardous Material by an applicable governmental
authority. Landlord shall have the right to appoint a consultant, at Tenant's
expense, to conduct an investigation to determine whether Hazardous Materials
are being used, stored and disposed of in an appropriate manner. Tenant, at its
expense, shall comply with all recommendations of the consultant.
D. Certification Upon Termination of Lease. Upon the expiration or
earlier termination of the Lease, Tenant, at its sole cost, shall remove all
Hazardous Materials from the Premises and shall provide a certificate to
Landlord at Landlord's request certifying that there is no contamination of soil
in or about the Premises and that there is no other contamination of Hazardous
Materials in the Premises. If Tenant fails to so surrender the Premises, Tenant
shall indemnify and hold Landlord harmless from all damages resulting from
Tenant's failure to surrender the Premises as required by this Paragraph,
including without limitation any claims or damages in connection with the
condition of the Premises such as damages occasioned by the inability to relet
the Premises or a reduction in the fair market and/or rental value of the
Premises by reason of the existence of any Hazardous Materials in or around the
Premises.
E. Clean-Up Activities. If any action is required to be taken by a
governmental authority to clean-up Hazardous Materials from the Premises and
such action is not completed prior to the expiration or earlier termination of
the Lease, Tenant shall be deemed to have impermissibly held over until such
time as such required action is completed, and in addition to the requirements
of Paragraph 30, Landlord shall be entitled to all damages directly or
indirectly incurred in connection with such holding over, including without
limitation, damages occasioned by the inability to re-let the Premises or a
reduction of the fair market and/or rental value of the Premises.
44. INTEREST. Any sum accruing to Landlord under the provisions of this Lease
which shall not be paid by Tenant within thirty (30) days after such sum becomes
due, shall bear interest from the expiration of such 30 day period, until paid,
at the rate at twelve percent (12%) per annum.
45. MISCELLANEOUS AND GENERAL PROVISIONS.
A. Use of Building Name. Tenant shall not, without the written consent of
Landlord, use the name of the Building for any purpose other than as the address
of the business conducted by Tenant in the Premises.
B. Governing Law; Partial Invalidity. This Lease shall in all respects be
governed by and construed in accordance with the laws of the State of
California. If any provision of this Lease shall be invalid, unenforceable or
ineffective for any reason whatsoever, all other provisions hereof shall be and
remain in full force and effect.
C. Definitions; Binding Effect. The term "Premises" includes the space
leased hereby and any improvements now or hereafter installed therein or
attached thereto. The term "Landlord" or any pronoun used in place thereof
includes the plural as well as the singular and the successors and assigns of
Landlord. The term "Tenant" or any pronoun used in place thereof includes the
plural as well as the singular and individuals, firms, associations,
partnerships and corporations, and
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their and each of their respective heirs, executors, administrators, successors
and permitted assigns, according to the context hereof, and the provisions of
this Lease shall inure to the benefit of and bind such heirs, executors,
administrators, successors and permitted assigns.
The term "person" includes the plural as well as the singular and
individuals, firms, associations, partnerships and corporations. Words used in
any gender include other genders. If there be more than one Tenant, the
obligations of Tenant hereunder are joint and several. The paragraph headings of
this Lease are for convenience of reference only and shall have no effect upon
the construction or interpretation of any provision hereof.
D. Time of the Essence. Time is of the essence of this Lease and of each
and all of its provisions.
E. Quitclaim of Leasehold Interest. At the expiration or earlier
termination of this Lease, Tenant shall execute, acknowledge and deliver to
Landlord, within ten (10) days after written demand from Landlord to Tenant, any
quitclaim deed or other document required by any reputable title company
licensed to operate in the State of California, to remove the cloud or
encumbrance created by this Lease from the real property of which Tenant's
Premises are a part.
F. Entire Agreement. This instrument along with any exhibits, riders and
attachments hereto constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this agreement and the exhibits and attachments
may be altered, amended or revoked only by an instrument in writing signed by
both Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents or
representatives relative to the Leasing of the Premises are merged in or revoked
by this agreement.
G. Recording of Lease. Neither Landlord nor Tenant shall record this
Lease or a short form memorandum hereof without the consent of the other.
H. Amendments Required by Lender. Tenant further agrees to execute any
amendments required by a lender to enable Landlord to obtain financing, so long
as Tenant's rights hereunder are not substantially affected.
I. Air Rights Retained by Landlord. Tenant covenants and agrees that no
diminution or shutting off of light, air or view by any structure which may be
hereafter erected (whether or not by Landlord) shall in any way affect this
Lease, entitle Tenant to any reduction of rent hereunder or result in any
liability of Landlord to Tenant.
J. Early Occupancy. If Tenant occupies the Premises prior to the
Commencement Date, such occupancy shall be subject to all of the provisions of
this Lease, and Tenant shall pay Base Rent, Additional Rent and all other
charges specified in this Lease for the early occupancy period. Early occupancy
of the Premises by Tenant shall not advance the termination date of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Lease as of the day and year first above written.
Because of city requirments, minor changes in plans and specifications are
acceptable.
LANDLORD: Geomax TENANT: Elantec, Inc.
By George L. Quinn, Jr. By David O'Brien
-------------------------------- ---------------------------------
Print Name Print Name
/s/ George L. Quinn, Jr. /s/ David O'Brien
-------------------------------- ---------------------------------
Signature Signature
Partner Chief Executive Officer
-------------------------------- ---------------------------------
Title of Signatory Title of Signatory
By Max Gahrahmat By
-------------------------------- ---------------------------------
Print Name Print Name
/s/ Max Gahrahmat
-------------------------------- ---------------------------------
Signature Signature
Partner
-------------------------------- ---------------------------------
Title of Signatory Title of Signatory
NNNLEASE.MFD
7.20.94
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EXHIBIT A
LEGAL DESCRIPTION OF COMPLEX
The real property referred to in this Lease as the "Complex" shall mean and
include all that certain real property situated in the County of Santa Clara,
State of California, more particularly described as follows:
The real property located at Santa Clara County, APN: 086-36-045, and further
described as approximately 23,886 square feet on 1.54 acres of land.
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EXHIBIT B
SITE PLAN OF COMPLEX AND BUILDING
[Drawing on file at Company]
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EXHIBIT C
TENANT IMPROVEMENTS WORKLETTER
[To Be Added]
Landlord, at Landlord's sole cost and expense, shall provide a Tenant
Improvement Allowance ("Allowance") of $20.00 per square foot ($477,720.00) to
contractor for Tenant's interior improvements. Said allowance shall be inclusive
of costs associated with plans, architectural drawings, engineering, materials,
etc.
In the event Tenant does not use the entire $20.00 per square foot Allowance,
the rental rates in Section 1.D., above, will be reduced by $.013 per one dollar
per square foot not used.
In the event the improvements tenant desires exceeds said Twenty dollars
($20.00) Allowance the cost above the allowance will be borne by Tenant.
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EXHIBIT D
ACKNOWLEDGMENT OF COMMENCEMENT
Landlord: Geomax
Tenant: Elantec, Inc.
Complex: Tarob - 2
Premises: Trade Zone Boulevard
For the Lease dated February 20, 1996, the undersigned hereby certifies:
I. That the undersigned Tenant occupies the above-described Premises
consisting of approximately ________________________ square feet.
II. That the initial Lease term commenced on _____________________, 19____
and will terminate on _____________________, 19____ .
III. That Tenant's obligation to pay monthly Basic Rent in the amount
of $________ commenced or will commence on _________________, 19____ .
IV. That a security deposit of $_______________ has been paid by Tenant to
Landlord.
V. That all construction to be performed by Landlord, is complete and
has been accepted by Tenant.
Dated as of this _____ day of _____________________, 19____ .
LANDLORD: Geomax TENANT: Elantec, Inc.
By George L. Quinn, Jr. By David O'Brien
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Print Name Print Name
/s/ George L. Quinn, Jr. /s/ David O'Brien
-------------------------------- ---------------------------------
Signature Signature
Partner Chief Executive Officer
-------------------------------- ---------------------------------
Title of Signatory Title of Signatory
By Max Gahrahmat By
-------------------------------- ---------------------------------
Print Name Print Name
/s/ Max Gahrahmat
-------------------------------- ---------------------------------
Signature Signature
Partner
-------------------------------- ---------------------------------
Title of Signatory Title of Signatory
DO NOT EXECUTE UNTIL THE EXACT COMMENCEMENT DATE HAS
BEEN ESTABLISHED PURSUANT TO PARAGRAPH 5.B OF THE LEASE.
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EXHIBIT E
HAZARDOUS MATERIALS
Subject to the terms and conditions set forth in Paragraph 43 of the Lease,
so long as the original party named therein as Tenant remains the Tenant under
the Lease, Tenant shall be permitted to use and store in the Premises only the
substances listed below:
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Exhibit 10.19
ADDENDUM
TO LEASE AGREEMENT
This Addendum to Lease Agreement ("Addendum") shall amend and
supplement the Lease Agreement dated ______________, 1996, by and between
Geomax, a California general partnership ("Landlord"), and Elantec
Semiconductor, Inc., a Delaware corporation, ("Tenant"). In the event of a
conflict between the terms and conditions of the Lease and this Addendum, the
terms and conditions of this Addendum shall prevail and be controlling.
1. Fundamental Lease Provisions (Section 1)
A. Parking Spaces. Tenant shall have the exclusive use of all the
parking spaces on the site, which shall be no less than 85 parking spaces.
B. Tenant's Address for Notice. After the Commencement Date, all
notices to Tenant shall be sent to the Tenant at the address indicated in
Section 1.K of the Lease, and to the Tenant at the Premises.
2. Premises (Section 2)
Landlord shall construct the Premises in accordance with the plans and
specifications attached hereto as Exhibit F and incorporated herein by reference
(the "Plans"). Landlord shall construct the Tenant Improvements in accordance
with the plans and specifications attached hereto as Exhibit G, as modified as
provided in Section 32 of this Addendum.
The Tenant Improvements shall be deemed substantially completed when
the Landlord's Architect has certified that (i) the Building, the Premises, the
Tenant Improvements and the related improvements, including the parking areas,
driveways, utility facilities, sidewalks, curbs, walks and plantings
(collectively, the "Related Improvements") have been constructed in a good and
workmanlike manner and fully finished in accordance with Exhibit F and Exhibit G
(as modified in accordance with Section 32 of this Addendum), the requirements
of all applicable laws, regulations, govenmenatal permits, and the provisions of
this Lease, excepting only minor "punch-list" items which do not adversely
affect the use of or access to the Premises; (ii) a Certificate of Occupancy has
been issued for the Premises by the appropriate governmental agency; and (iii)
the parking lot has been paved and striped.
3. Use (Section 3)
Tenant may store materials, supplies, equipment, finished products,
semi-finished products and raw materials within the Premises. Tenant shall
comply with any CC & R's affecting the Premises which are existing as of the
date of this Lease and which are attached to this Lease as an Exhibit.
4. Rent (Section 4)
The Additional Rent payable by Tenant pursuant to Section 4.E of the
Lease shall be payable as follows: for taxes, insurance and all other Additional
Rent, Landlord shall estimate the amount required for any Lease year, and Tenant
shall pay to Landlord monthly, in advance, the amount estimated by Landlord to
be Landlord's approximate average monthly expenditure for such Additional Rent
items,
<PAGE>
which estimated amount shall be reconciled at the end of each calendar year as
compared to Landlord's actual expenditure for said Additional Rent items, with
Tenant paying to Landlord, upon demand, any amount of actual expenses expended
by Landlord in excess of said estimate amount, or Landlord refunding to Tenant
(providing Tenant is not in default in the performance of any of the terms,
covenants and conditions of this Lease) any amount of estimated payments made by
Tenant in excess of Landlord's actual expenditures for said Additional Rent
items.
5. Possession (Section 6)
In the event the Premises have not been delivered to Tenant with the
Tenant Improvements substantially completed within one hundred twenty days after
October 1, 1996, Tenant shall have the right to terminate this Lease, at its
option, by written notice to Landlord, given within ten (10) days after the end
of the 120 day period, and the parties shall have no further liability accruing
under this Lease.
6. Landlord's Operation of the Common Areas (Sections 7 and 23)
Landlord shall operate, manage and maintain the Common Areas in a good,
clean and orderly condition throughout the term of this Lease.
Landlord shall not make any changes, alterations, reconfigurations,
reductions or modifications to any Common Area, corridor, doorway, or other
public parts of the Complex or other improvement which would interfere with
Tenant's use and enjoyment of the Premises, Tenant's access to or view from the
Premises, the visibility of Tenant's business, or any other material rights
Tenant has under the Lease.
7. Parking (Section 8)
Tenant shall have the exclusive right to use the number of parking
spaces in the Common Area parking areas of the Complex as is specified in
Paragraph 1.J of the Lease as modified herein. Section 8 of the Lease is hereby
deleted in its entirety. All parking for Tenant and Tenant's employees,
contractors, customers and invitees shall be free of charge, and any validation
system shall provide for full credit and/or reimbursement for said users. Tenant
shall police the parking lot for abandoned vehicles and shall not allow
employees to park in the parking lot on a long-term basis unless required by the
employee's work schedule.
8. Operating Expenses (Section 9)
Expenses of operation, management, maintenance and repair of the
Building, Complex and Common Areas which are passed through Landlord to Tenant
("Operating Expenses") shall also exclude the following items: brokers' and
finders' fees or other commissions; costs or expenses which according to
generally accepted accounting principles are required to be capitalized;
reserves for any repairs or improvements; advertising or promotional expenses;
wages, salaries, employee benefits and payroll taxes for Landlord's personnel;
costs incurred by Landlord in connection with the clean-up or removal of any
hazardous materials or toxic waste; or costs or expenses incurred due to
<PAGE>
violation by Landlord of any term or condition of the Lease. If it becomes
necessary to resurface the parking area during the term of the Lease, the cost
of resurfacing the parking area shall be amortized over its useful life on a
straight-line basis and the portion of the cost which is attributable to the
remaining Lease term shall be charged to the Tenant as an Operating Expense
annually on such amortized basis.
Tenant shall have the right, at such time and place as Landlord may
reasonably designate, to inspect and audit Landlord's books and records related
to the operation and maintenance of the Complex, for the purpose of verifying
Landlord's adjusted year-end statement of Operating Expenses payable by Tenant.
Tenant may employ an independent public accounting firm to conduct the audit.
The costs of the audit shall be paid by Tenant unless the audit shows that
Landlord's adjusted statement over-charged Tenant for Operating Expenses by more
than five percent (5%), in which case Landlord shall pay all Tenant's costs of
the audit.
9. Acceptance of the Premises (Section 10)
When Landlord is ready to tender possession of the Premises to Tenant,
the parties shall walk through the Premises together and shall set forth any
punch-list items in a writing signed by Landlord and Tenant. Notwithstanding
anything to the contrary contained in the Lease, Tenant's acceptance of the
Premises shall be subject to (a) Landlord's correction of all such punch-list
items within (30) days after delivery of Possession of the Premises to Tenant
(or, where such items cannot reasonably be corrected withln said thirty (30) day
period, Landlord's commencement of such correction within said period and the
diligent completion of such correction as soon as is reasonably practicable);
(b) latent defects; and (c) Landlord's warranties as to defects pursuant to
Section 10.
10. Warranty Against Defects
Landlord hereby warrants, represents and covenants that on the
Commencement Date, the Premises and the building systems shall be free from
faults or defects and that the Premises and the common areas shall comply with
all applicable laws, statutes, ordinances, governmental rules, regulations and
requirements, including without limitation all applicable fire and building
codes and all covenants, conditions, restrictions and easements affecting the
Premises. If, within one (1) year after the Commencement Date, any portion of
the Premises is found to be faulty or defective or not in conformance with the
provisions of the Lease, Landlord shall cause the same to be corrected at its
own expense promptly after receipt of a written notice from Tenant to do so.
11. Alterations and Additions (Section 11)
A. De Minimus Alterations. Landlord shall not unreasonably withhold or
delay approval of any alterations, additions, or improvements in or to the
Premises made by Tenant ("Alterations"). In any event, for any individual
nonstructural Alterations costing Ten Thousand Dollars ($10,000) or less, Tenant
shall not be required to obtain Landlord's prior approval, to use Landlord's
contractor, or to furnish performance bonds or completion guaranties. Tenant may
not make nonstructural Alterations in excess of Twenty-Five Thousand Dollars in
the aggregate in any Lease year without obtaining Landlord's prior approval.
<PAGE>
B. Removal of Alterations. Tenant shall have no obligation at the
expiration of the Lease Term to remove (i) any portion of Tenant's Work or any
Alteration approved by Landlord pursuant to the terms of the Lease, or (ii) any
de minimus alteration as described in Section 11.A above.
12. Repairs and Maintenance (Section 12)
A. Landlord's Duties. In addition to any other requirements of Landlord
as described in the Lease, Landlord shall, at its sole cost and expense, during
the Lease Term, keep in good order, condition and repair all structural
components of the Premises, including, without limitation, the foundations,
exterior walls, downspouts, gutters, roof, structure and the unexposed electric,
lighting, water, plumbing, sewer and other utility systems or any portion of
such systems lying beneath, within the walls or outside the Premises. In
addition, Landlord will replace the roof membrane if it becomes necessary. The
costs of such repair and maintenance shall not be a common area maintenance
expense which is passed through Landlord to Tenant
B. Tenant's Right to Fix and Bill. If Landlord fails to perform
Landlord's maintenance obligations, Tenant shall after thirty (30) days prior
written notice to Landlord (except in the case of emergency, in which case no
notice shall be required), have the right (but not the obligation) to perform
such obligation on Landlord's behalf and the cost thereof shall be due and
payable to Tenant within fifteen (15) days after notice thereof.
C. Tenant's Duties. Subject to the provisions of the Lease regarding
Landlord's warranties, Landlord's duty to repair, damage and destruction, and
condemnation, Tenant shall, during the Lease Term, be responsible for
maintaining the Premises in good condition and repair; provided, however, that
Tenant shall not be responsible for repairing or restoring the Premises or any
part thereof in connection with any damage arising from the willful misconduct
or negligence of Landlord, its agents, representatives or employees. Tenant
shall be responsible for the repair of the roof membrane, but Landlord shall be
responsible for replacement of the roof membrane if such becomes necessary.
13. Taxes (Section 14)
Tenant shall have the right, at Tenant's cost, to seek a reduction in
the assessment of the property on which the Premises is located for real
property tax purposes.
14. Insurance (Section 15)
A. Tenant's Insurance. Tenant's insurance shall be issued by an
insurance or reinsurence company having a rating of B+ or better (instead of A
or better) in Best's Insurance Guide.
<PAGE>
B. Landlord's Insurance. Tenant shall not be required to reimburse
Landlord for the cost of premiums for Landlord's flood or earthquake property
damage insurance unless such insurance is required to be carried by Lender or
Government Agency by law.
15. Indemnification (Section 18)
Landlord agrees that Tenant shall not be deemed to have waived, and
Tenant expressly does not waive or have any obligation to indemnify Landlord
from and against, any claim, right, injury, damage or action arising out of any
willful misconduct or negligence of Landlord or its agents, representatives,
invitees, independent contractors or employees, nor shall Landlord be relieved
from any liability Landlord may have to any other person or entity in connection
with any such misconduct or negligence. Landlord shall indemnify, defend and
hold Tenant harmless from all claims, costs, attorneys fees, expenses and
liabilities arising from any willful misconduct or negligence of Landlord or its
agents, representatives, invitees, independent contractors or employees; from
Tenant's reliance on any warranty or representation made by Landlord herein
which is not true or accurate; or from Landlord's failure to observe any of the
terms and conditions of the Lease.
16. Compliance (Section 19)
The word "particular" is hereby added between the words "Tenant's" and
the word "use" in the tenth line of Section 19 of the Lease.
17. Assignment and Subletting (Section 21)
A. Landlord's prior consent shall not be required for any assignment,
sublease or other transfer of Tenant's interest in the Premises or the Lease to
any corporation with which Tenant may merge or consolidate or become affiliated
as a parent, subsidiary, holding company or otherwise, or to an entity in which
Tenant has a controlling interest. A subsequent public offering and sale of
stock in Tenant's business, or a transfer of any amount of Tenant's stock, shall
not constitute a change in ownership of Tenant or an assignment of the Lease.
B. If any assignee, transferee or subtenant pays any sums to Tenant in
excess of the rent payable by Tenant to Landlord hereunder, fifty percent (50%)
of any excess sum, after deducting leasing costs, such as brokerage commissions,
shall be payable to Landlord.
C. Tenant's obligation to reimburse Landlord for Landlord's expenses
incurred in conjunction with the processing and documentation of any requested
transfer, assignment, subletting, licensing or concession agreement, shall not
exceed $500.
18. Subordination and Nondisturbance (Section 22)
Any provisions of the Lease with respect to subordination shall not be
effective with respect to the interest of any successor-in-interest to Landlord
unless and until such successor shall have delivered to Tenant a written
non-disturbance agreement for the benefit of Tenant, to the effect that the
Lease shall not be terminated in the event of any default under any ground lease
or underlying
<PAGE>
lease or any foreclosure or sale pursuant to the terms of any mortgage or deed
of trust, so long as Tenant is not in default (after the expiration of all
applicable cure periods) under the terms of the Lease, and Tenant agrees to
attorn to and become the Tenant of Landlord's successor-in-interest. Land1ord
agrees to use its best efforts to deliver to Tenant, within sixty (60) days
after the date hereof, a non-disturbance agreement in form and substance
reasonably satisfactory to Tenant, executed by any lender which currently holds
a deed of trust which encumbers any property of which the Premises are a part.
19. Tenant's Default (Section 24)
Tenant shall have a period of three (3) days after receipt of written
notice from Landlord (which notice may be, but is not required to be, a Three
Day Notice to Pay Rent or Quit in the manner prescribed in Section 1162 of the
California Code of Civil Procedure) to cure any default in the payment of Basic
Rent or Additional Rent or adjustment thereto.
20. Destruction (Section 26)
A. In the event the Premises are destroyed in whole or in part from a
cause actually insured against or required to be insured against pursuant to the
Lease, Landlord shall restore the Premises as soon as is reasonably possible, at
Landlord's expense, to the condition existing immediately prior to the damage or
destruction. In such event, the Lease shall remain in effect and rentals shall
be abated as described below.
B. If the Premises are damaged or destroyed in whole or in part,
Landlord shall within thirty (30) days notify Tenant of Landlord's reasonable
estimate of the number of days Landlord estimates will be required to complete
the restoration. If the Landlord's estimate is one hundred eighty (180) days or
more, Tenant may terminate the Lease by giving Landlord notice within thirty
(30) days of receiving Landlord's notice.
C. If the Premises are damaged or destroyed in whole or in part from
any cause during the last six (6) months of the Lease Term, Landlord or Tenant
may terminate the Lease by giving written notice of such election to do so
within thirty (30) days after the event of such damage or destruction, with
termination to be effective as of the date of such notice.
21. Eminent Domaln (Section 27)
A. Right to Terminate. If twenty-five percent (25%) or more of the
Premises, the common areas, or the Complex, or so much thereof as to render the
Premises unsuitable for Tenant's use, shall be taken or appropriated under the
power of eminent domain or conveyed in lieu thereof, Landlord and Tenant shall
each have the right to terminate the Lease. If either Tenant or Landlord intends
to terminate the Lease, such party shall notify the other within sixty (60) days
after such taking and the
<PAGE>
Lease shall be terminated on the date set forth in such notice, which date shall
be within thirty (30) days of the date of such notice.
B. Awards. If the Lease is terminated by either Landlord or Tenant
pursuant to Section 21.A above, Landlord shall receive (and Tenant shall assign
to Landlord upon demand from Landlord) any and all income, rent, award or
interest thereon which may be paid or owed in connection with the exercise of
such power of eminent domain or conveyance in lieu thereof and Tenant shall have
no claim against Landlord except that Tenant shall have the right to retain its
right to recover its share of any award or consideration for (a) moving
expenses; (b) loss or damage to improvements or alterations made by Tenant; and
(c) loss or damage to Tenant's fixtures, furnishings, equipment and other
personal property.
C. Continuance of Lease. If neither Landlord nor Tenant terminates the
Lease as provided In Section 21.A above, Landlord shall restore the Premises,
the common areas, and/or the Complex, as the case may be, at Landlord's cost and
expense and the Lease shall remain in full force and effect except that Tenant
shall be entitled to an appropriate reduction in Basic Rent and other charges
from the period of such taking until restoration shall have been completed. Such
proportionate reduction shall be based upon the extent to which the taking and
the restoration being made by Landlord shall interfere with the business carried
on by Tenant in the Premises. Landlord will not be required to repair or restore
any injury or damage to the property of Tenant or make any repairs or
restoration to any alterations installed in the Premises by Tenant.
22. Sale or Conveyance by Landlord (Section 28)
Notwithstanding any provision to the contrary contained in the Lease,
the release of Landlord from any liability accruing after the date Landlord
transfers title to the Premises and the agreement by Tenant to look solely to
Landlord's successor-in-interest shall be conditioned upon (a) delivery to
Landlord's successor of any and all funds in the hands of Landlord at the time
of the transfer in which Tenant has an interest, or in lieu thereof, delivery of
such funds to Tenant; and (b) the assumption, in writing, of all of Landlord's
obligations under the Lease by Landlord's successor in interest.
23. Estoppel Certificates (Section 31)
The obligation to deliver an Estoppel Certificate shall be an
obligation of both Landlord and Tenant.
24. Construction Changes (Section 32)
Section 32 of the Lease is revised to read in full as follows:
"The location of ductwork, plumbing and other facilities in the
Premises as shown in Exhibit F are subject to such minor, non-material
changes as Landlord or Landlord's architect may determine to be
desirable in the course of construction of the Premises, and no such
changes, or any other minor non-material changes in the Plans, shall
affect this Lease or entitle Tenant to any reduction of rent hereunder
or result in any liability of Landlord to Tenant; provided, however,
that Landlord
<PAGE>
may not make any such changes which may affect the Tenant Improvements
contained in Exhbit G, Tenant's use of the Premises, or the access to
or view of the Premises, without the Tenant's prior written consent."
25. Notices (Section 36)
All Notices sent by postage prepaid United States mail must be sent by
certified mail, return receipt requested.
26. Brokers (Section 41)
Landlord shall pay all leasing commissions or finders fees owing to
Tenant's broker indicated in Section 1 of the Lease and any other brokers used
by Landlord in connection with this transaction, and shall indemnify and hold
Tenant harmless against any claim or liability in connection with any such
commission or fee.
27. Signs (Section 42)
Tenant shall have the right to place a sign bearing Tenant's name on
the exterior of the Building to the extent permitted by the appropriate local
governmental body. In addition, Landlord shall construct at Landlord's cost, a
free-standing monument sign at the entrance to the parking drive to the Premises
for Tenant's exclusive use, provided such monument signage is permitted by the
local governmental body.
28. Hazardous Materials (Section 43)
A. Landlord represents that, to the best of Landlord's knowledge, as of
the Commencement Date, the Premises (and the area underneath the Premises) are
free of hazardous materials. Landlord agrees that Tenant shall have no liability
or responsibility whatsoever for any hazardous materials or toxic wastes on or
about the Premises or the Complex which were not created by Tenant. Landlord
shall indemnify, defend and hold Tenant harmless against all claims, losses or
liabilities arising out of or in connection with the presence, use, storage,
disposal, retrieval or clean-up of any hazardous material or toxic waste in or
about the Premises, the common areas, or any other part of the Complex, unless
caused or created by Tenant.
B. Landlord shall have the right to appoint a consultant to conduct an
investigation to determine whether Hazardous Materials are being used, stored
and disposed of in an appropriate manner. The consultant shall be at Landlord's
cost, and Tenant shall comply with appropriate laws regarding the use, storage
or disposal of Hazardous Materials, rather than the recommendations of such
consultant.
C. Tenant shall not be required to remove any Hazardous Materials from
the Premises unless such Hazardous Materials were placed on the Premises by
Tenant. In addition Tenant's requirement to provide a certificate to Landlord
certifying as to the contamination of the soil in or about the Premises or other
contamination of Hazardous Materials on the Premises, shall be to
<PAGE>
Tenant's knowledge only, and shall relate only to Hazardous Materials placed on
the Premises by Tenant.
29. Memorandum of Lease (Section 45.G)
Tenant may record a short form memorandum of the Lease, subject to the
prior written consent of Landlord as to form and content, which consent shall
not be unreasonably withheld. At termination of this Lease, Tenant shall record
a form of memorandum of termination of Lease.
30. Rules and Regulations
Any Rules and Regulations of the Complex shall not be enforced against
Tenant in a discriminatory manner and shall not be altered without prior notice
to all tenants of the Complex.
31. Options to Extend
A. Extended Term. In consideration of Tenant entering into the Lease,
and provided that Tenant is not then in default beyond the appropriate grace
period and has not been in default beyond the appropriate grace period more than
two (2) times during the Lease term, Landlord hereby grants to Tenant the option
to extend the term of the Lease for two (2) additional terms of three (3) years
each ("Extended Terms"). Tenant shall give written notice to Landlord of
Tenant's intent to exercise an option to extend at least one hundred twenty
(120) days prior to the expiration of the prior term. Each Extended Term shall
be upon the same covenants, agreements, terms, provisions and conditions as are
contained in the Lease, except that the rent payable shall be as provided in
Section 31.B below. If Tenant has exercised an option to extend, the phrase
"Lease Term" as used in the Lease shall mean the original term of the Lease and
such Extended Term.
B. Rent for Extended Terms. The Basic Rent for each Extended Term shall
be at 100% of the then prevailing market rental value. The prevailing market
rental value shall be determined as follows:
i. Landlord shall deliver to Tenant written notice of Landlord's
determination of prevailing market rental value within ten (10) days after
Landlord receives notice from Tenant that Tenant has exercised its option to
extend.
ii. If Tenant disputes Landlord's determination of the prevailing
market rental value as contained in Landlord's notice, Tenant shall notify
Landlord in writing within ten (10) days of its receipt of Landlord's
determination, which notice shall set forth Tenant's determination of the
prevailing market rental value. Should Tenant timely notify Landlord as
aforesaid, Landlord and Tenant sha11 attempt to resolve their differences within
ten (10) days following Landlord's receipt of Tenant's notice.
iii. If Landlord and Tenant cannot agree on prevailing market rental
value during such ten (10) day period, Tenant shall have the right to withdraw
its option to extend by giving Landlord notice of withdrawal within five (5)
days after the expiration of the ten (10) day period. If
<PAGE>
Tenant does not withdraw its exercise, Landlord and Tenant shall each appoint an
M.A.I appraiser experienced with the office space market in Santa Clara County
and give notice of such appointment to the other within ten (10) days after the
foregoing ten (10) day period. If either Landlord or Tenant shall fail timely to
appoint an appraiser, then the single appraiser appointed by one party shall
proceed to make the determination of prevailing market rental value. Such
appraisers shall, within fifteen (15) days after the appointment of the last of
them to be appointed, complete their written determinations of prevailing market
rental value and furnish the same to Landlord and Tenant. Each party shall pay
the fees and costs of the appraiser appointed by it. If the valuations vary by
ten percent (10%) or less of the higher value, the prevailing market rental
value shall be the average of the two valuations.
iv. If the valuations vary by more than ten percent (10%) of the
higher value, the two appraisers shall, within ten (10) days after submission of
the last appraisal report, appoint a third disinterested appraiser who shall be
an M.A.I. If the two appraisers shall be unable to agree in a timely manner on
the selection of the third appraiser, then either appraiser, on behalf of both,
may request appointment of such third disinterested M.A.I. appraiser by the
presiding judge of the superior court of the county in which the Premises are
located. Such third appraiser shall, within fifteen (15) days after appointment,
make a determination of prevailing market rental value and submit an appraisal
report to Landlord and Tenant. The prevailing market rental value of the
Premises shall be as determinned by the third appraiser, unless it is (A) less
than the valuation set forth in the lower prior appraisal, in which case the
lower prior appraisal shall be controlling, or (B) greater than the valuation
set forth in the higher prior appraisal, in which case the valuation set forth
in the higher prior appraisal shall be controlling. All fees and costs incurred
in connection wlth the determination of prevailing market rental value by the
third appraiser shall be paid one-half by Landlord and one-half by Tenant.
v. For purposes of this Section 31, the prevailing market rental
value of the Premises shall mean the rental rate that an unrelated party
negotiating at arm's length would pay for leasing the Premises for the period of
the extension term, taking into account all then current market factors,
including without limitation the quality, design, and location of the Building
and the Premises within the Building, the terms and conditions of the Lease
(including the permitted use provided in the Lease) and the value of the
existing tenant improvements to such party (but excluding the value of any
improvements installed at Tenant's expense) and also excluding any premium based
on the size of the Premises.
vi. Upon determination of the prevailing market rental value of the
Premises for an extension term, the parties shall execute a certificate
specifying the Basic Rent for such extension period.
<PAGE>
32. Tenant Improvements
Landlord hereby approves of the tenant improvements to the Premises as
shown in the rough plans and specifications attached hereto as Exhibit G, and
incorporated herein by reference ("Tenant Improvements").
After the execution of this Lease by Landlord and Tenant, the parties
shall work together to finalize the plans and specifications for the Tenant
Improvements, which shall be natural derivations of Exhibit G. Ten (10) days
after the final plans and specifications have been prepared, Landlord shall
obtain bids from at least two (2) contractors based on such final plans and
specifications, which bids shall be subject to Tenant's review and approval. In
the event the bids are in excess of $477,720, Tenant shall have the right to
reduce the scope of the Tenant Improvements to reduce the cost. Tenant shall be
provided with a Tenant Improvement Allowance in the amount of $477,720 for the
cost of the Tenant Improvements, as described more fully on Exhibit C. The
Tenant Improvements (as may have been so reduced by Tenant's reduction in scope)
shall be constructed by Landlord in accordance with the final approved plans and
specifications. Tenant shall not be responsible for any excess cost for the
Tenant Improvements above the final bid (as may have been reduced by Tenant's
reduction in scope), unless such excess cost results from a change in the
Improvements requested by Tenant and contained in a change order executed by
Tenant prior to performance of such additional cost item.
33. Pedestrian Easement
Tenant currently occupies 1996 Tarob Court, Milpitas, California
("Tarob Facility"). Landlord hereby agrees to execute a Grant of Easement in the
form attached hereto as Exhibit H, wherein Landlord provides Tenant with a
pedestrian and wheelchair easement along the route shown on Exhibit H between
the Premises and the Tarob Facility, for so long as Tenant occupies all or a
portion of each of the Tarob Facility and of the Premises. Tenant shall have the
right to record the Grant of Easement with the Santa Clara County Recorder.
After termination of the Lease and any extensions thereof, Tenant shall record a
termination of the easement with the Santa Clara County Recorder. In addition,
Landlord agrees, at Landlord's cost, to construct a cement walkway for
<PAGE>
Tenant's use along a portion of the route as shown on Exhibit H, and to create
an opening in the existing fence as shown to allow pedestrian and wheelchair
access. The walkway and fence opening shall be completed no later than thirty
(30) days after the Commencement Date of this Lease.
Signatures
- ---------
LANDLORD
GEOMAX
A California General Partnership
By: /s/ George L. Quinn, Jr.
-------------------------------
Title: Partner
----------------------------
Date: 4/5/96
----------------------------
And: /s/ Max Gahrahmat
------------------------------
Title: Partner
----------------------------
Date: 4/5/96
----------------------------
TENANT
Elantec Semiconductor, Inc.
a Delaware corporation
By: ???????????????????????
-------------------------------
Title: ___________________________
Date: ____________________________
<PAGE>
Exhibit F
---------
Plans and Specifications prepared by Devcon Construction dated as follows
Sheet Nos:
A0 1/18/96
A1 1/18/96
A2 1/18/96
A3 1/18/96
A4 1/18/96
A5 1/18/96
A6 1/18/96
L1 1/17/96
[Drawings on file at company]
<PAGE>
Exhibit G
---------
Site Plan of Tenant Improvements
--------------------------------
[Draw on file at company]
<PAGE>
Exhibit H
---------
Site Plan Showing Location of Easement
--------------------------------------
[Drawing on file at company]
<TABLE>
Exhibit 11.01
ELANTEC SEMICONDUCTOR, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------------- --------------------------
1996 1995(1) 1996 1995(1)
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Primary:
Net income $ 1,323 $ 837 $ 3,657 $ 1,816
============ ============= ============ =============
Common and common equivalent shares outstanding:
Common stock 8,648 1,915 8,429 1,828
Convertible redeemable preferred stock --- 4,937 --- 4,937
Common stock options 800 978 908 1,067
------------ ------------- ------------ -------------
9,448 7,830 9,337 7,832
Common and common equivalent shares related to stock
and option issuances in accordance with SAB Nos. 55,
64 and 83 0 24 0 24
------------ ------------- ------------ -------------
Common and common equivalent shares used in
computing per share amounts 9,448 7,854 9,337 7,856
============ ============= ============ =============
Net income per share $ 0.14 $ 0.11 $ 0.39 $ 0.23
============ ============= ============ =============
<FN>
(1) The information in this column was derived from the Company's audited
consolidated financial statements at June 30, 1995.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000949872
<NAME> ELANTEC SEMICONDUCTOR, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,259
<SECURITIES> 3,451
<RECEIVABLES> 5,100
<ALLOWANCES> (30)
<INVENTORY> 5,935
<CURRENT-ASSETS> 27,087
<PP&E> 14,917
<DEPRECIATION> (8,194)
<TOTAL-ASSETS> 34,428
<CURRENT-LIABILITIES> 9,515
<BONDS> 0
<COMMON> 23,309
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 34,428
<SALES> 9,391
<TOTAL-REVENUES> 9,782
<CGS> 4,627
<TOTAL-COSTS> 8,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> 1,436
<INCOME-TAX> 113
<INCOME-CONTINUING> 1,323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,323
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
