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EXHIBIT 10.5
EXHIBIT A
FORM OF AMENDED AND RESTATED
COMMERCIAL LEASE AGREEMENT
This Amended and Restated Commercial Lease Agreement ("Lease") is made
and entered as of __________, 2001 by and between ESS Technology Inc., a
California corporation ("Landlord") and Vialta Inc., a Delaware corporation
("Tenant"), to amend and restate that certain Commercial Lease Agreement between
Landlord and Tenant dated January 1, 2001.
Landlord is the owner of land and improvements in Fremont, California
legally described on Exhibit 1 attached hereto and incorporated by reference
herein (the "Project").
The Leased Premises are improved with a freestanding building consisting
of 77,249 square feet commonly known as 00000 Xxxxxxx Xxxx., Xxxxxxx, Xxxxxxxxxx
(the "Leased Premises"). The Leased Premises are a portion of the Project, as
depicted on Exhibit 2 attached hereto.
Landlord desires to lease the Leased Premises to Tenant, and Tenant
desires to lease the Leased Premises from Landlord for the term, at the rental
and upon the covenants, conditions and provisions herein set forth.
THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, it is agreed:
1. Premises and Common Areas. Landlord hereby leases to Tenant the Leased
Premises. In addition to the Leased Premises, Landlord grants to Tenant a
nonexclusive license to use the Common Areas during the term of this Lease. The
term "Common Areas" is defined as the area and facilities outside the Leased
Premises as depicted on Exhibit 2 attached hereto that is designated by the
Landlord for the general non-exclusive use of Landlord, Tenant and other lessees
of the Project and their respective employees, suppliers, shippers, customers
and invitees, including but not limited to parking areas, loading and unloading
areas, trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls. Landlord shall have the right to make
changes to the Common Areas provided that such changes do not unreasonably
interfere with Tenant's use and enjoyment of the Leased Premises.
2. Term.
(a) The initial term of this Lease shall commence on January 1,
2001 ("Commencement Date") and end on December 31, 2003 ("Initial Term").
(b) Tenant may renew the Lease for one extended term of up to
three (3) years ("Renewal Term"). Tenant shall exercise such renewal option, if
at all, by giving written notice to Landlord not less than ninety (90) days
prior to the expiration of the Initial Term. The renewal term shall be at the
rental set forth below and otherwise upon the same covenants, conditions and
provisions as provided in this Lease. The Initial Term and the Renewal Term
shall be referred to herein as the "Term."
Exhibit A-1
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3. Rental.
(a) Tenant shall pay to Landlord during the Initial Term rental of
$1,853,976.00 per year, payable in installments of $154,498.00 per month. Each
installment payment shall be due in advance on the first day of each calendar
month during the lease term to Landlord at ESS Technology Inc., 00000 Xxxxxxx
Xxxx., Xxxxxxx, XX 00000, Attn: Accounting Dept., or at such other place
designated by written notice from Landlord or Tenant. The rental payment amount
for any partial calendar months included in the lease term shall be prorated on
a daily basis.
(b) The rental for any renewal lease term, if created as permitted
under this Lease, shall be $1,853,976.00 per year, payable in installments of
$154,498.00 per month.
4. Use. Tenant may use the Leased Premises for general office purposes
and for any purpose not prohibited by (i) law and (ii) any covenants, conditions
and restrictions affecting the Leased Premises as of the date of this Lease.
Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the
purposes of storing, manufacturing or selling any explosives, flammables or any
other inherently dangerous substance regulated by law ("Hazardous Substance"),
except for such Hazardous Substances customarily used in an office, without the
prior written consent of Landlord.
5. Sublease and Assignment. Tenant shall have the right without
Landlord's consent to assign this Lease to a corporation with which Tenant may
merge or consolidate, to any subsidiary of Tenant, to any corporation that
controls, is controlled by or under common control with Tenant, or to a
purchaser of all or substantially all of Tenant's assets. Except as set forth
above, Tenant shall not sublease all or any part of the Leased Premises, or
assign this Lease in whole or in part without Landlord's consent, such consent
not to be unreasonably withheld, conditioned or delayed.
6. Repairs by Tenant. During the Lease term, Tenant shall make, at
Tenant's expense, all necessary repairs to the interior of the Leased Premises
except those provided in Section 7 hereof. Tenant's repairs shall include such
items as routine repairs of interior floors, walls, ceilings, and other interior
parts of the Leased Premises damaged or worn through normal occupancy, subject
to the obligations of the parties otherwise set forth in this Lease.
7. Tenant Alterations and Improvements. Tenant, at Tenant's expense,
shall have the right following Landlord's consent to remodel, redecorate, and
make additions, improvements and replacements of and to all or any part of the
Leased Premises from time to time as Tenant may deem desirable, provided the
same are made in a workmanlike manner and utilizing good quality materials.
Tenant shall have the right to place and install personal property, trade
fixtures, equipment and other temporary installations in and upon the Leased
Premises, and fasten the same to the Leased Premises. All personal property,
equipment, machinery, trade fixtures and temporary installations, whether
acquired by Tenant at the commencement of the Term or placed or installed on the
Leased Premises by Tenant thereafter, shall remain Tenant's property free and
clear of any claim by Landlord. Tenant shall have the right to remove the same
at any time during the term of this Lease provided that all damage to the Leased
Premises caused by such removal shall be repaired by Tenant at Tenant's expense.
Exhibit A-2
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Notwithstanding the foregoing, Tenant shall be entitled to make non-structural
interior alterations to the Leased Premises which do not exceed Twenty Five
Thousand Dollars ($25,000) in cost in any calendar year without Landlord's prior
written consent.
8. Landlord's Maintenance and Repairs. Except for damage caused by the
active negligence or willful misconduct of Tenant, in which event Tenant shall
repair the damage, Landlord, at Landlord's sole expense, shall keep in good
condition and repair the exterior walls, roof (including roof membrane),
elevator shafts, footings, foundations, structural portions of load-bearing
walls, structural floors and subfloors, and structural columns and beams
("Building's Structure"). Landlord, at Landlord's expense, shall keep in good
condition and repair the Leased Premises' HVAC, life-safety, plumbing,
electrical and mechanical systems ("Building Systems") as well as the parking
lots, walkways, driveways, landscaping, fences, signs and utility installations
of the Common Areas upon the Leased Premises and all parts thereof. Landlord
shall commence and complete such repairs hereunder within thirty (30) days after
receipt of written notice from Tenant of the need for such repairs, except in
the case of an emergency, when such repairs shall be commenced and completed as
soon as possible. Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to furnish any services when such failure is caused by accident,
breakage, repairs, strikes, lockout, or other labor disturbances or by any other
cause beyond the reasonable control of Landlord.
9. Property Taxes. Landlord shall pay, prior to delinquency, all general
real estate taxes and installments of special assessments coming due during the
Lease term on the Leased Premises, and all personal property taxes with respect
to Landlord's personal property, if any, on the Leased Premises. Tenant shall be
responsible for paying all personal property taxes with respect to Tenant's
personal property at the Leased Premises.
10. Insurance.
(a) If the Leased Premises are damaged by fire or other casualty
resulting from the act or negligence or willful misconduct of Tenant or any of
Tenant's agents, employees or invitees, rent shall not be diminished or abated
while such damages are under repair, and Tenant shall be responsible for the
costs of repair not covered by insurance.
(b) Landlord shall maintain fire and extended coverage insurance
on the Project, in such amounts, as Landlord shall deem appropriate. Tenant
shall be responsible, at its expense, for fire and extended coverage insurance
on all of its personal property, including removable trade fixtures, located in
the Leased Premises.
(c) Tenant and Landlord shall, each at its own expense, maintain a
policy or policies of comprehensive general liability insurance with respect to
the respective activities of each in the Leased Premises with the premiums
thereon fully paid on or before due date, issued by and binding upon some
insurance company approved by Landlord, such insurance to afford minimum
protection of not less than $1,000,000 combined single limit coverage of bodily
injury, property damage or combination thereof. Landlord shall be listed as an
additional insured on Tenant's policy or policies of comprehensive general
liability insurance, and Tenant shall
Exhibit A-3
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provide Landlord with current Certificates of Insurance evidencing Tenant's
compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's
insurers to notify Landlord that a policy is due to expire at least (10) days
prior to such expiration. Landlord shall not be required to maintain insurance
against thefts within the Project.
(d) Notwithstanding anything to the contrary in this Lease or any
Ancillary Agreement (as that term is defined in that certain Master Distribution
Agreement between Landlord and Tenant dated _________), Tenant hereby waives any
right of recovery against Landlord and its respective agents, employees,
contractors and invitees, and Landlord hereby waives any right of recovery
against Tenant and its agents, employees, contractors and invitees, for any loss
or damage that is covered by any insurance policy maintained or required to be
maintained with respect to this Lease or the Project. Each party shall, in
addition to naming the other parties as additional insureds/loss payees on all
applicable policies, inform all its insurers of policies described in this Lease
about this waiver of subrogation, and shall secure from such insurers amendments
to the policies recognizing and providing for such waiver.
11. Indemnity.
(a) Tenant's Indemnification. Tenant hereby agrees to indemnify,
defend and hold harmless Landlord from and against any and all claims, losses,
liabilities and expenses, including reasonable attorneys' fees (whether incurred
in litigation, on appeal, discretionary review, or otherwise), suffered or
incurred by Landlord by reason of (a) the occupancy of the Leased Premises by
Tenant, the conduct of Tenant's business thereon, or any act, omission or
neglect of Tenant, its agents, contractors, employees, subtenants or invitees in
relation thereto, on or after the Commencement Date, (b) the release of any
Hazardous Substance in or about the Leased Premises or the violation of any
environmental, health and safety laws by Tenant or its agents, contractors,
employees or invitees, or (c) any breach by Tenant of any of Tenant's
obligations under the Lease.
(b) Landlord's Indemnification. Landlord hereby agrees to
indemnify, defend and hold harmless Tenant from and against any and all claims,
losses, liabilities and expenses, including reasonable attorneys' fees (whether
incurred in litigation, on appeal, discretionary review, or otherwise) suffered
or incurred by Tenant by reason of (a) the occupancy of the Project by Landlord,
the conduct of Landlord's business thereon, or any act, omission or neglect of
Landlord, its agents, contractors, employees, tenants or invitees in relation
thereto, before or after the Commencement Date, (b) any environmental
contamination or pollution of the Leased Premises that occurred or existed
before the Commencement Date, including cleanup and removal from the Leased
Premises of any such prior Hazardous Substance or contamination unless such
preexisting condition is caused by the affirmative act of Tenant, its employees,
agents, contractors successors or assigns, or (c) any breach by Landlord of any
of Landlord's obligations under the Lease.
12. Utilities. Tenant shall pay all charges for water, sewer, gas,
electricity, telephone and other services and utilities used by Tenant on the
Leased Premises during the term of this Lease unless otherwise expressly agreed
in writing by Landlord. In the event that any utility or service provided to the
Leased Premises is not separately metered, Landlord shall pay the amount due and
separately invoice Tenant for Tenant's pro rata share of the charges. Tenant
Exhibit A-4
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shall pay such amounts within fifteen (15) days of invoice. In the event that
Landlord uses the Leased Premises' HVAC system to service the Leased Premises
and Landlord's adjacent building ("Landlord's Facility"), Tenant shall pay the
amount due and separately invoice Landlord for Landlord's pro rata share of the
charges. Landlord shall pay such amounts within fifteen (15) days of invoice.
Tenant shall not use any equipment or devices that, in Landlord's reasonable
opinion, overload the wiring or interfere with electrical services to other
tenants. Landlord shall pay all charges for water, sewer, gas, electricity and
other services used in the Common Areas.
13. Signs. Tenant shall have the right to place on the Leased Premises,
at locations selected by Tenant, any signs which are permitted by applicable
zoning ordinances and private restrictions. Landlord shall assist and cooperate
with Tenant in obtaining any necessary permission from governmental authorities
or adjoining owners to place or construct the foregoing signs. Tenant shall
repair all damage to the Leased Premises resulting from the removal of signs
installed by Tenant.
14. Entry. Landlord shall have the right to enter upon the Leased
Premises upon reasonable notice at reasonable hours to inspect the same,
provided Landlord shall not thereby unreasonably interfere with Tenant's
business on the Leased Premises.
15. Parking. During the term of this Lease, Tenant shall have the
non-exclusive use of the automobile parking areas, driveways, and footways in
the Common Areas, subject to reasonable rules and regulations for the use
thereof as prescribed from time to time by Landlord.
16. Project Rules. Tenant will comply with the reasonable rules of the
Project and Leased Premises adopted and altered by Landlord from time to time
and will cause all of its agents, employees, invitees and visitors to do so; all
changes to such rules will be sent by Landlord to Tenant in writing. The initial
rules for the Project and Leased Premises are attached hereto as Exhibit 3 and
incorporated herein for all purposes.
17. Damage and Destruction. Subject to Section 10(a) above, if the Leased
Premises or any part thereof or any appurtenance thereto suffers Material Damage
by fire, casualty or structural defects so that the same cannot be used for
Tenant's purposes, then Tenant shall have the right within ninety (90) days
following damage to elect by notice to Landlord to terminate this Lease as of
the date of such damage. In the event of minor damage to any part of the Leased
Premises, and if such damage does not render the Leased Premises unusable for
Tenant's purposes, Landlord shall promptly repair such damage at the cost of the
Landlord. In making the repairs called for in this paragraph, Landlord shall not
be liable for any delays resulting from strikes, governmental restrictions,
inability to obtain necessary materials or labor or other matters which are
beyond the reasonable control of Landlord. Tenant shall be relieved from paying
rent and other charges during any portion of the Lease term that the Leased
Premises are inoperable or unfit for occupancy, or use, in whole or in part, for
Tenant's purposes in the proportion that the area of the Leased Premises not
occupied by Tenant bears to the total area of the Leased Premises. Rentals and
other charges paid in advance for any such periods shall be credited on the next
ensuing payments, if any, but if no further payments are to be made, any such
advance payments shall be refunded to Tenant. The provisions of this paragraph
extend not only to the matters aforesaid, but also to any occurrence which is
beyond Tenant's reasonable control and
Exhibit A-5
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which renders the Leased Premises, or any appurtenance thereto, inoperable or
unfit for occupancy or use, in whole or in part, for Tenant's purposes. For
purposes of this paragraph, "Material Damage" means that all or part of the
Leased Premises is damaged or destroyed to the extent that Landlord cannot
reasonably repair the damage within one hundred eighty (180) days after the date
the damage or destruction occurred. Within thirty (30) days after any damage to
the Leased Premises, Landlord shall provide Tenant with a written certificate
from Landlord's contractor specifying whether such damage constitutes Material
Damage.
18. Default. If Tenant shall fail to pay rent when due to Landlord as
herein provided, and if said failure shall continue for fifteen (15) days after
written notice thereof shall have been given to Tenant by Landlord, or if Tenant
fails to perform any of the other covenants or conditions to be kept, observed
and performed by Tenant, and such failure shall continue for thirty (30) days
after notice thereof in writing to Tenant by Landlord without correction thereof
then having been commenced and thereafter diligently prosecuted, Tenant shall be
in default of this Lease and Landlord may declare the term of this Lease ended
and terminated by giving Tenant written notice of such intention, and if
possession of the Leased Premises is not surrendered, Landlord may reenter said
premises. Landlord shall have, in addition to the remedy above provided, any
other right or remedy available to Landlord on account of any Tenant default,
either in law or equity. Landlord shall use reasonable efforts to mitigate its
damages.
19. Quiet Possession. Landlord covenants and warrants that upon
performance by Tenant of its obligations hereunder, Landlord will keep and
maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted
possession of the Leased Premises during the term of this Lease.
20. Condemnation. If any legally, constituted authority condemns the
Leased Premises or such part thereof which shall make the Leased Premises
unsuitable for leasing, this Lease shall cease when the public authority takes
possession, and Landlord and Tenant shall account for rental as of that date.
Such termination shall be without prejudice to the rights of either party to
recover compensation from the condemning authority for any loss or damage caused
by the condemnation. Neither party shall have any rights in or to any award made
to the other by the condemning authority.
21. Subordination. Upon written request of Landlord, or the holder of any
mortgage, deed of trust or other lien ("Lien Holder") encumbering the Leased
Premises, Tenant shall subordinate its rights hereunder to the lien of any
mortgage or deed of trust or other lien presently existing or hereafter arising
upon the Leased Premises and to any renewals, refinancing and extensions
thereof; provided that the Lien Holder agrees to recognize the Tenant's rights
under this Lease and not to disturb the possession, use and other rights of
Tenant under this Lease. Landlord agrees to use commercially reasonable efforts
to obtain a Subordination, Non-Disturbance and Attornment Agreement from the
current Lien Holder(s), if any, and deliver same to Tenant within thirty (30)
days from the date of this Lease. In addition, Landlord agrees to obtain a SNDA
from any future Lien Holder within thirty (30) days after Landlord obtains
financing from such Lien Holder; provided that if such SNDA is not so delivered,
Tenant shall not be required to subordinate its rights under this Lease to such
future Xxxx Xxxxxx'x lien. In the event of acquisition of title to the Leased
Premises by said Lien Holder or any person through foreclosure proceedings or
otherwise, the Lien Holder or other person acquiring title to the
Exhibit A-6
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Premises agrees to accept Tenant under the Lease and to perform the Landlord's
obligations hereunder, provided that no default has occurred and is continuing;
and Tenant agrees to attorn to and recognize such Lien Holder or any other
person acquiring title to the Premises. Landlord and Tenant agree that they will
from time to time upon request execute and deliver a statement in recordable
form certifying that this Lease is unmodified and in full force and effect (or
if there have been modifications, that the same is in full force and effect as
so modified), stating the dates to which rent and other charges payable under
this Lease have been paid, stating that no party is not in default hereunder
(or, if there is an alleged default, stating the nature of such alleged
default).
22. Notice. Any notice required or permitted under this Lease shall be
deemed sufficiently given or served if sent prepaid, by United States certified
mail, return receipt requested, addressed as follows:
If to Landlord to: ESS Technology Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
If to Tenant to: Vialta Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Landlord and Tenant shall each have the right from time to time to change the
place notice is to be given under this paragraph by written notice thereof to
the other party.
23. Brokers. Landlord and Tenant represent that neither party was shown
the Leased Premises by any real estate broker or agent and that neither party
has otherwise engaged in any activity which could form the basis for a claim for
real estate commission, brokerage fee, finder's fee or other similar charge, in
connection with this Lease.
24. Waiver. No waiver of any default of Landlord or Tenant hereunder
shall be implied from any omission to take any action on account of such default
if such default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and that only for
the time and to the extent therein stated. One or more waivers by Landlord or
Tenant shall not be construed as a waiver of a subsequent breach of the same
covenant, term or condition.
25. Memorandum of Lease. The parties hereto contemplate that this Lease
should not and shall not be filed for record, but in lieu thereof, at the
request of either party, Landlord and Tenant shall execute a Memorandum of Lease
to be recorded for the purpose of giving record notice of the appropriate
provisions of this Lease.
26. Headings. The headings used in this Lease are for convenience of the
parties only and shall not be considered in interpreting the meaning of any
provision of this Lease.
27. Successors. The provisions of this Lease shall extend to and be
binding upon Landlord and Tenant and their respective legal representatives,
successors and assigns.
Exhibit A-7
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28. Consent. Landlord shall not unreasonably withhold, condition or delay
its consent with respect to any matter for which Landlord's consent is required
or desirable under this Lease.
29. Attorneys' Fees. If either party brings any action or legal
proceeding with respect to this Lease, the prevailing party shall be entitled to
recover reasonable attorneys' and experts' fees and court costs.
30. Performance. If there is a default with respect to any of Landlord's
covenants, warranties or representations under this Lease, and if the default
continues more than fifteen (15) days after notice in writing from Tenant to
Landlord specifying the default, Tenant may, at its option and without affecting
any other remedy hereunder, cure such default and deduct the cost thereof from
the next accruing installment or installments of rent payable hereunder until
Tenant shall have been fully reimbursed for such expenditures, together with
interest thereon at a rate equal to the lesser of twelve percent (12%) per annum
or the then highest lawful rate. If this Lease terminates prior to Tenant's
receiving full reimbursement, Landlord shall pay the unreimbursed balance plus
accrued interest to Tenant on demand.
31. Compliance with Law. Tenant shall comply with all laws, orders,
ordinances and other public requirements now or hereafter pertaining to Tenant's
use of the Leased Premises and Common Areas. Landlord shall comply with all
laws, orders, ordinances and other public requirements now or hereafter
affecting the Project. This Lease shall in all respects be governed by and
construed in accordance with the laws of the State of California.
32. Final Agreement. This Lease terminates and supersedes all prior
understandings or agreements on the subject matter hereof. This Lease may be
modified only by a further writing that is duly executed by both parties.
33. Cafeteria License. Beginning on the Commencement Date and continuing
throughout the Term, Landlord agrees to allow Tenant's employees to dine in the
cafeteria located at the Landlord's Facility ("Cafeteria License"). The
Cafeteria License shall be for the specific purpose of dining at the cafeteria
during the hours of access determined by Landlord for its employees and at no
other times. During the term of the Cafeteria License, Tenant employees may
purchase meals in the cafeteria at the same price as such meals are offered to
Landlord's employees. Tenant shall use, and shall cause each of its employees,
agents, contractors, invitees and visitors to use, the cafeteria in compliance
with the reasonable and nondiscriminatory rules and regulations established by
Landlord, provided Landlord has given Tenant written notice of such rules and
regulations.
34. Hotel Use. Landlord is the owner of a hotel (the "ESS Hotel")
adjacent to the Leased Premises. Subject to room availability, Landlord shall
permit Tenant the continuing right throughout the term to rent rooms at the ESS
Hotel for Tenant's employees, agents and business invitees at such rates that
Landlord shall reasonably determine from time to time; provided, however, that
such rates shall be no more than the lowest rate charged to guests of the hotel
who are not employees of Landlord during the calendar year.
Exhibit A-8
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IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
LANDLORD: TENANT:
ESS TECHNOLOGY INC., VIALTA INC.,
a California corporation a Delaware corporation
By: By:
------------------------------ ---------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
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Exhibit A-9
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EXHIBIT 1
LEGAL DESCRIPTION
Exhibit 1-1
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EXHIBIT 2
DEPICTION OF LEASED PREMISES AND COMMON AREAS
Exhibit 2-1
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EXHIBIT 3
PROJECT RULES
Exhibit 3-1
