Lease

Exhibit 10.1


LEASE


BY AND BETWEEN


MENLO BUSINESS PARK, LLC, LESSOR


AND


ACCOM, INC., LESSEE


Menlo Business Park
1490 O'Brien Drive
Menlo Park, California


November 19, 1999


TABLE OF CONTENTS - -----------------


Paragraph Page - --------- ----


1. Lease.....................................................................1 2. Term......................................................................1 3. Monthly Base Rent.........................................................2 4. Additional Rent; Operating Expenses and Taxes.............................3 5. Payment of Rent...........................................................7 6. Security Deposit..........................................................8 7. Use.......................................................................8 8. Hazardous Materials.......................................................8 9. Taxes on Lessee's Property...............................................11 10. Insurance................................................................11 11. Indemnification..........................................................12 12. Tenant Improvement Work..................................................14 13. Maintenance and Repairs; Alterations; Surrender and Restoration..........14 14. Utilities and Services...................................................16 15. Liens....................................................................17 16. Assignment and Subletting................................................17 17. Waiver...................................................................20 18. Holding Over.............................................................20 19. Damage or Destruction....................................................21 20. Eminent Domain...........................................................23 21. Remedies.................................................................23 22. Lessee's Personal Property...............................................25 23. Notices..................................................................25 24. Estoppel Certificate.....................................................25 25. Signage..................................................................26 26. Real Estate Brokers......................................................26 27. Subordination; Attornment................................................26 28. No Termination Right.....................................................27 29. Lessor's Entry...........................................................27 30. Attorneys' Fees..........................................................27 31. Compliance with CC&R's...................................................27 32. Quiet Enjoyment..........................................................28 33. General Provisions.......................................................28


SCHEDULE OF EXHIBITS - --------------------


EXHIBIT "A" Legal Description
EXHIBIT "B" Menlo Business Park Master Plan
EXHIBIT "C" Floor Plan
EXHIBIT "D" Commencement Memorandum
EXHIBIT "E" Cost Estimate for Tenant Improvement Work
EXHIBIT "F" Lessee Estoppel Certificate


L E A S E
---------


Menlo Business Park
1490 O'Brien Drive
Menlo Park, California


THIS LEASE, referred to herein as "this Lease," is made and entered into as of November 19, 1999 by and between MENLO BUSINESS PARK, LLC, a California limited liability company, hereafter referred to as "Lessor," and ACCOM, INC., a Delaware corporation, hereafter referred to as "Lessee" or "Accom."


RECITALS:


A. Lessor is the owner of the real property located in Menlo Business Park, Menlo Park, California, commonly referred to as 1490 O'Brien Drive, Menlo Park, California, more particularly described on Exhibit "A" attached hereto and incorporated by reference herein, consisting of a parcel of land containing approximately 1.68 acres, together with all easements and appurtenances thereto (the "Land") and the existing building thereon, referred to as Building #10, 1490 O'Brien Drive, containing approximately 30,623 rentable square feet, and all other improvements located thereon (collectively, the "Improvements"). The Land and Improvements are referred to herein collectively as the "Premises." The Premises are shown on the Menlo Business Park Master Plan attached hereto as Exhibit "B." Building #10 is sometimes referred to herein as "the Building." The floor plan of Building #10 is attached hereto as Exhibit "C."


B. Lessor and Lessee wish to enter into this Lease of the Premises upon the terms and conditions set forth herein.


NOW, THEREFORE, the parties agree as follows:


1. Lease. Lessor hereby leases to Lessee, and Lessee leases from Lessor the Premises at the rental and upon all of the terms and conditions set forth herein.


2. Term.


(a) Accom is currently in possession of the Premises pursuant to an existing Lease between Lessor and Accom dated January 28, 1992 (the "Original Lease"), the term of which expires on February 26, 2000. The term of this Lease (the "term") and Lessee's obligation to pay rent pursuant to this Lease shall commence at 12:01 A.M. on February 27, 2000 (the "Commencement Date").


The term of this Lease shall expire, unless sooner terminated in accordance with the provisions hereof, on August 31, 2005. Upon the Commencement Date, Lessor and Lessee shall confirm in writing the expiration of the term of the Original Lease, the Commencement Date of this Lease, and the expiration date of the term of this Lease by executing and delivering the Commencement Memorandum in the form attached hereto as Exhibit "D."


3. Monthly Base Rent.


(a) Lessee shall pay to Lessor for each full calendar month during the first twelve (12) full calendar months of the term of this Lease, plus the partial month if any at the commencement of the lease term, Monthly Base Rent of Sixty-Four Thousand Three Hundred Eight and Thirty One Hundredths Dollars ($64,308.30) per 1


1month ($2.10/rentable square foot/month). Upon the execution and delivery of this Lease by Lessor and Lessee, Lessee shall pay to Lessor the sum of Sixty-Four Thousand Three Hundred Eight and Thirty One Hundredths Dollars ($64,308.30) representing the Monthly Base Rent for the first full month of the lease term. Monthly Base Rent for any partial calendar month at the commencement of the lease term shall 0be prorated on the basis of a thirty (30) day month.


(b) The Monthly Base Rent shall be adjusted as of the first day of the calendar month immediately following the first anniversary of the Commencement Date and annually on the first day of the calendar month immediately following each anniversary of the Commencement Date thereafter during the entire lease term (the "Rental Adjustment Date") to reflect any increases in the cost of living. The adjustment shall be calculated upon the basis of the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index, all items, for all Urban Consumers - San Francisco-Oakland-San Jose (1982-84=100), hereafter referred to as the "Index." The Index for said subgroup published most recently as of the end of the calendar month immediately preceding the month in which the Commencement Date occurs shall be considered the "base Index."


(c) The Monthly Base Rent shall be adjusted as of each Rental Adjustment Date to an amount equal to the product obtained by multiplying the initial Monthly Base Rent referred to in Paragraph 3(a) by a fraction, the numerator of which is the Index most recently published as of the end of the calendar month immediately preceding each Rental Adjustment Date and the denominator of which is the base Index; provided that in no event shall the Monthly Base Rent be increased on any Rental Adjustment Date to an amount less than three percent (3%) per annum or more than eight percent (8%) per annum, calculated for each individual year from the previous Rental Adjustment Date, of the Monthly Base Rent payable before such Rental Adjustment Date.


(d) When the new Monthly Base Rent is determined for each Rental Adjustment Date, Lessor shall give Lessee written notice to that effect indicating how the new Monthly Base Rent figure was computed in accordance with subparagraph (c). If the Index does not exist on any Rental Adjustment Date in the same format as referred to in subparagraph (b), Lessor shall substitute in lieu thereof an index reasonably comparable to the Index referred to above which is acceptable to Lessee and which is then published by the Bureau of Labor Statistics, or successor or similar governmental agency, or if no governmental agency then publishes an index, Lessor shall substitute therefor any index commonly accepted which is published by a reputable private organization.


4. Additional Rent; Operating Expenses and Taxes.


(a) In addition to the Monthly Base Rent payable by Lessee pursuant to Paragraph 4, Lessee shall pay to Lessor, as "Additional Rent," the Operating Expenses of the Premises in accordance with Paragraph 4(b) hereof and real property taxes and assessments levied or assessed against the Premises in accordance with Paragraph 5(c) hereof. Monthly Base Rent and Additional Rent are referred to herein collectively as "rent."


(b) "Operating Expenses," as used herein, shall include all direct costs of management, operation, maintenance, repair and replacement of the Premises as determined by standard accounting practices (unless excluded by this Lease), including, but not limited to:


Personal property taxes related to the Premises; any parking taxes or parking levies imposed on the Premises in the future by any governmental agency; a pro rata portion of the management fee charged for the management and operation of Menlo Business Park, in an amount equal to four percent (4%) of the total gross income received by Lessor from the operation of Menlo Business Park (including Monthly Base Rent and Additional Rent received from tenants); water and sewer charges; waste disposal; insurance premiums for insurance coverages maintained by Lessor pursuant to Paragraph 11(b) hereof; license, permit, and inspection fees; charges for electricity, heating, air conditioning, gas, and any other utilities (including, without limitation, any temporary or permanent utility surcharge or other exaction); security; painting and repairing, interior and exterior; maintenance and replacement of floor and window coverings; repair, maintenance, and replacement of air-conditioning, heating, mechanical and electrical systems, elevators, plumbing and sewage systems; landscaping and gardening of Outside Areas; glazing; repair, maintenance, cleaning, sweeping, striping, and resurfacing of the parking area; supplies, materials, equipment and tools in the maintenance of the Premises; costs for accounting services incurred in the calculation of Operating Expenses and Taxes as defined herein; and the cost of any other capital expenditures for any improvements or changes to the Buildings which are


required by laws, ordinances, or other governmental regulations adopted after the Commencement Date, or for any items or capital expenditures voluntarily made by Lessor which are intended to and have the effect of reducing Operating Expenses; provided, however, that except for capital improvements required because of Lessee's specific use of the Premises, if Lessor is required to or voluntarily makes such capital improvements, Lessor shall amortize the cost of said improvements over the useful life of said improvements (together with interest on the unamortized balance at the rate equal to the effective rate of interest on Lessor's bank line of credit at the time of completion of said improvements, but in no event in excess of twelve percent (12%) per annum) as an Operating Expense in accordance with standard accounting practices, except that with respect to capital improvements made to save Operating Expenses such amortization shall not be at a rate greater than the anticipated savings in Operating Expenses. Operating Expenses shall also include any other expense or charge, whether or not described herein not specifically excluded by other provisions of this Lease, which in accordance with generally accepted accounting and management practices would be considered an expense of managing, operating, maintaining, and repairing the Premises.


(c) Real property taxes and assessments upon the Premises, during each lease year or partial lease year during the term of this Lease are referred to herein as "Taxes."


As used herein, "Taxes" shall mean:


(1) all real estate taxes, assessments and any other taxes levied or assessed against the Premises including the underlying land, the Buildings, all improvements located thereon, including any increase in Taxes resulting from a reassessment following any transfer of ownership of the Premises or any interest therein; and


(2) all other taxes which may be levied in lieu of real estate taxes, assessments, and other fees, charges, and levies, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature by any authority having the direct or indirect power to tax, including without limitation any governmental authority or any improvement or other district or division thereof, for public improvements, services, benefits, or environmental matters which are assessed, levied, confirmed, imposed, or become a lien (i) upon the Premises, and/or any legal or equitable interest of Lessor in any part thereof; or (ii) upon this transaction or any document to which Lessee is a party creating or transferring any interest in the Premises; and (iii) any tax or excise, however described, imposed in addition to, or in substitution partially or totally of, any tax previously included within the definition of "Taxes" or any tax the nature of which was previously included in the definition "Taxes."


Not included within the definition of "Taxes" are any net income, profits, transfer, franchise, estate or inheritance taxes imposed by any governmental authority; late payment penalties or interest, provided that Lessee is not in default in the payment of Monthly Base Rent or Additional Rent.


With respect to any assessments which may be levied against or upon the Premises, or the underlying land, which under the laws then in force may be evidenced by improvement or other bonds, or may be paid in annual installments, only the amount of such annual installment (with appropriate proration of any partial year) and statutory interest shall be included within the computation of the annual Taxes levied against the Premises, the Buildings and improvements thereon, and the underlying land.


(d) The following costs ("Costs") shall be excluded from the definition of Operating Expenses:


(1) Costs occasioned by the act, omission or violation of law by Lessor, or its respective agents, employees or contractors;


(2) Costs for which Lessor receives reimbursement from others, including reimbursement from insurance;


(3) Interest, charges and fees incurred on debt or payments on any deed of trust on the Property;


(4) Advertising or promotional costs or other costs incurred by Lessor in procuring tenants for the Premises or other portions of Menlo Business Park;


(5) Costs incurred in repairing, maintaining or replacing any structural elements of the Buildings for which Lessor is responsible pursuant to Paragraph 13(a) hereof;


(6) Any wages, bonuses or other compensation of employees above the grade of building manager and any executive salary of any officer or employee of Lessor, including fringe benefits other than insurance plans and tax-qualified benefit plans, or any fee, profit or compensation retained by Lessor or its affiliates for management and administration of the Premises in excess of the maximum sum specified in Paragraph 4(b) of this Lease;


(7) General office overhead and general and administrative expenses of Lessor, except as specifically provided in Paragraph 4(b); and


(8) Leasing expenses and broker commissions payable by Lessor.


Lessor shall at all times use its best efforts to operate the Buildings in an economically reasonable manner at costs not disproportionately higher than those experienced by other comparable buildings in the market area in which the Premises are located (Menlo Park).


(e) At the Commencement Date, and as close as reasonably possible to the end of each calendar year thereafter, Lessor shall notify Lessee of the Operating Expenses estimated by Lessor for the calendar year 2000, and for each following calendar year. Concurrent with such notice, Lessor shall provide a description of such Operating Expenses and Taxes. Commencing on the Commencement Date, and on the first day of every month thereafter, Lessee shall pay to Lessor, as Additional Rent, one-twelfth (1/12th) of the estimated Operating Expenses and Taxes. If at any time during any such calendar year, it appears to Lessor that the Operating Expenses or Taxes for such year will vary from Lessor's estimate, Lessor may, by written notice to Lessee, revise Lessor's estimate for such year and the Additional Rent and Taxes payments by Lessee for such year shall thereafter be based upon such revised estimate. Lessor shall furnish to Lessee with such revised estimate written verification showing that the actual Operating Expenses or Taxes are greater than Lessor's estimate. The increase in the monthly installments of Additional Rent and Taxes resulting from Lessor's revised estimate shall not be retroactive, but the Additional Rent and Taxes for each calendar year shall be subject to adjustment between Lessor and Lessee after the close of the calendar year, as provided below.


Not later than ninety (90) days after the expiration of each calendar year of the term, Lessor shall furnish Lessee a statement certified by a responsible employee or agent of Lessor (the "Operating Statement") with respect to such year, prepared by an employee or agent of Lessor, showing Operating Expenses and Taxes broken down by component expenses, Base Taxes and Base Operating Expenses of the Premises broken down by component expenses, and the total payments made by Lessee on the basis of any previous estimate of such Operating Expenses and Taxes, all in sufficient detail for verification by Lessee. Unless Lessee raises any objections to the Operating Statement within ninety (90) days after receipt of the same, such statement shall conclusively be deemed correct and Lessee shall have no right thereafter to dispute such statement or any item therein or the computation of Operating Expenses and/or Taxes. Lessee or its accountants shall have the right to inspect and audit Lessor's books and records with respect to this Lease once each Lease Year to verify actual Operating Expenses and/or Taxes. Lessor's books and records shall be kept in accord with generally accepted accounting principles. If Lessee's audit of the Operating Expenses and/or Taxes for any year reveals a net overcharge of more than five percent (5%), Lessor promptly shall reimburse Lessee for the cost of the audit; otherwise, Lessee shall bear the cost of Lessee's audit. If Lessee objects to Lessor's Operating Statement, Lessee shall continue to pay on a monthly basis the Operating Expenses


and/or Taxes based upon the prior year's Operating Statement until the dispute is resolved.


If the Operating Expenses and Taxes for the year as finally determined exceeds the total payments made by Lessee based on Lessor's estimates, Lessee shall pay to Lessor the deficiency, within thirty (30) days after the receipt of Lessor's Operating Statement. If the total payments made by Lessee based on Lessor's estimate of the Operating Expenses and/or Taxes exceed the Operating Expenses and/or Taxes, Lessee's extra payment, plus the cost of the audit if charged to Lessor, shall be credited against payments of Additional Rent next due hereunder.


Notwithstanding the termination of this Lease, within thirty (30) days after Lessee's receipt of Lessor's Operating Statement or the completion of Lessee's audit regarding the Operating Expenses and/or Taxes for the calendar year in which this Lease terminates, Lessee shall pay to Lessor or shall receive from Lessor, as the case may be, an amount equal to the difference between the Operating Expenses and/or Taxes for such year, as finally determined, and the amount previously paid by Lessee on account thereof (prorated to the expiration date or the termination date of this Lease).


5. Payment of Rent.


(a) All rent shall be due and payable in lawful money of the United States of America at the address of Lessor set forth in Paragraph 23, "Notices," without deduction or offset and without prior demand or notice, unless otherwise specified herein. Monthly Base Rent and Additional Rent shall be payable monthly, in advance, on the first day of each calendar month. Lessee's obligation to pay rent for any partial month at the commencement of the lease term shall be as provided in Paragraph 3(a) hereof and rent for any partial month at the expiration or termination of the lease term shall be prorated on the basis of a thirty (30) day month.


(b) If any installment of Monthly Base Rent, Additional Rent or any other sum due from Lessee is not received by Lessor within five (5) days after the same is due, Lessee shall pay to Lessor an additional sum equal to five percent (5%) of the amount overdue as a late charge. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Lessor will incur by reason of the late payment by Lessee. Acceptance of any late charge shall not constitute a waiver of Lessee's default with respect to the overdue amount. Any amount not paid within ten (10) days after Lessee's receipt of written notice that such amount is due shall bear interest from the date due until paid at the lesser rate of (1) the prime rate of interest plus five percent (5%) or (2) the maximum rate allowed by law, in addition to the late payment charge.


Initials: Lessor_________ Lessee_________


6. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the sum of Sixty-Four Thousand Three Hundred Eight and Thirty One Hundredths Dollars ($64,308.30) (the "Security Deposit") as security for Lessee's faithful performance of Lessee's obligations under this Lease. If Lessee fails to pay Monthly Base Rent or Additional Rent or charges due hereunder, or otherwise defaults under this Lease (as defined in Paragraph 21), Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage (including attorneys' fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit moneys with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep all or any part of the Security Deposit separate from its general accounts. Lessor shall, at the expiration or earlier termination of the term hereof and after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's interest herein), that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or other increment for its use, or to be prepayment for any moneys to be paid by Lessee under this Lease.


7. Use. Lessee shall use and occupy the Premises only for general offices, research and development, and electronic assembly/testing, and for no other use or purpose without Lessor's prior written consent. Use of the Premises for the manufacture of integrated circuits or the manufacture of other electronic components is expressly prohibited. Any use of the Premises by Lessee or by any sublessee or assignee approved by Lessor pursuant to Paragraph 16 shall comply with the provisions of this Paragraph 7.


8. Hazardous Materials.


(a) The term "Hazardous Materials" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall include, but not be limited to hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Materials without the express prior written consent of Lessor and timely compliance (at Lessee's expense) with all Environmental Laws. "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank,


(ii) the generation, possession, storage, use, transportation, or disposal of Hazardous Materials that require a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of Hazardous Materials with respect to which any Environmental Law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of Lessee's agreed use of the Premises, so long as such use is in compliance with all Environmental Laws, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of ...