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EXHIBIT 2.5
REAL ESTATE MATTERS AGREEMENT
BETWEEN
ESS TECHNOLOGY, INC.
AND
VIALTA, INC.
______________, 2001
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REAL ESTATE MATTERS AGREEMENT
This Real Estate Matters Agreement (this "Agreement") is entered into on
_______, 2001 between ESS Technology, Inc., a California corporation ("ESS
TECHNOLOGY"), and Vialta, Inc., a Delaware corporation ("VIALTA"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Distribution Agreement (as defined below).
RECITALS
WHEREAS, ESS Technology will distribute to the holders of its common
stock on the Distribution Date, _______ shares of Vialta Class A Common Stock
owned by ESS Technology in accordance with the Master Distribution Agreement
dated as of _______, 2001 between ESS Technology and Vialta (the "DISTRIBUTION
AGREEMENT").
WHEREAS, the parties desire to set forth certain agreements regarding
real estate matters in connection with the Distribution.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. General Definitions. The following terms, as used herein, shall have
the following meanings. Unless indicated otherwise, all other capitalized terms
which are used but are not otherwise defined herein shall have the meanings
ascribed to them in the Distribution Agreement.
1.1 "ADDITIONAL PROPERTIES" means any real property purchased,
leased or licensed by ESS Technology or its Subsidiaries after the date of the
Distribution Agreement and before the Distribution Date which is a subject of
this Agreement.
1.2 "LANDLORD" means all persons or entities with a right, title
or interest in a Leased Property superior to the interest held by Vialta or its
respective Subsidiaries, including, without limitation, ground lessors, master
lessors, lessors, sublessors, and licensors.
1.3 "LEASE" means the oral or written agreement whereby Vialta or
its respective Subsidiaries obtained all the right, title and interest to
exclusive use and occupancy of a Leased Property.
1.4 "LEASE CONSENTS" means all consents, waivers, amendments, and
novations required by a Landlord or other third parties pursuant to a Relevant
Lease as a result of the transactions contemplated by the Distribution
Agreement.
1.5 "LEASED PROPERTIES" means the real property leased by Vialta
or its Subsidiaries which is a subject of this Agreement pursuant to Section 2.
1.6 "RELEVANT LEASES" means those Leases with respect to which the
consummation of the Distribution either (A) violates a provision of a Lease, or
(B) without the
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consent of the Landlord, triggers a Lease default or an event which, with the
passage of time or the giving of notice or both, would be a Lease default.
1.7 "VIALTA HK" means Xxxxxx.xxx Hong Kong Company Limited, a
Subsidiary of Vialta organized under the laws of Hong Kong.
2. Retained Real Property. Subject to the terms and conditions of this
Agreement, ESS Technology and Vialta agree that, upon the Distribution, Vialta
and its Subsidiaries shall hold or retain interests the following real property:
2.1 Fremont, California. ESS Technology and Vialta are parties to
a Commercial Lease Agreement dated January 1, 2001, whereby Vialta leases from
ESS Technology an approximately 77,249 square foot building commonly known as
00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx ("FREMONT PROPERTY"). On the
Distribution Date, ESS Technology and Vialta shall enter into an amended and
restated lease of the Fremont Property in form and content of Exhibit A attached
hereto.
2.2 Honolulu, Hawaii. Vialta and the Ohana Foundation for
Technical Development, a Hawaii nonprofit corporation ("OHANA"), are parties to
an oral subsublease of a portion of that certain premises located at 0000 Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx ("HONOLULU PROPERTY"). On and after the
Distribution Date, ESS Technology and Vialta shall use commercially reasonable
efforts to (A) obtain Lease Consents from the Landlords to the subsubletting of
the Honolulu Property by Vialta, and (B) enter a written subsublease between
Vialta and Ohana.
2.3 Toronto, Canada. Vialta and 235 Investments Limited are
parties to that certain Lease dated January 20, 2000, as amended, regarding that
certain premises located at 000 Xxxxxxxx, Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxx
("TORONTO PROPERTY"). On or after the Distribution Date, ESS Technology and
Vialta shall use commercially reasonable efforts to obtain the Lease Consent of
the Landlord.
2.4 Hong Kong, China. Vialta HK and Upcenter Investments Limited
are parties to that certain Lease dated August 2, 2000 regarding that certain
premises located at Xxxxx 0000-00, Xxxxx Xxxxx, 238 Xxxxxx Road, Kowloon, Hong
Kong, China ("HONG KONG PROPERTY"). On or after the Distribution Date, ESS
Technology and Vialta, and their Subsidiaries shall use commercially reasonable
efforts to obtain the Lease Consent of the Landlord.
3. Obtaining the Lease Consents. Vialta confirms that, with respect to
the Hong Kong Property, the Toronto Property and the Honolulu Property, an
application has been made or will be made by Vialta or its Subsidiary by the
Distribution Date to the relevant Landlord for the Lease Consents.
3.1 Declarations. Neither Vialta nor ESS Technology shall be
required to commence judicial proceedings for a declaration that a Lease Consent
has been unreasonably withheld or delayed.
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3.2 Lease Consents. Vialta will take or cause its applicable
Subsidiary to take such commercially reasonable steps to obtain the Lease
Consents as to each Relevant Lease, to wit:
3.2.1 if properly required by the Landlord, entering into
an agreement with the relevant Landlord to observe and perform the tenant's
obligations contained in the Relevant Lease throughout the remainder of the term
of the Relevant Lease, subject to any statutory limitations of such liability;
3.2.2 if properly required by the Landlord, providing such
additional guaranty, surety, deposit or other security in an amount equal to
that stated in the Relevant Lease or in an amount consistent with those provided
for comparable leases for comparable properties in the vicinity of the Leased
Property, and otherwise take all commercially reasonable steps to meet the
lawful, commercially reasonable, and fair market requirements of the Landlord,
so as to ensure that the Lease Consents are obtained;
3.2.3 Vialta shall not be required to obtain a release of
any obligation entered into by ESS Technology or its Subsidiary with any
Landlord or other third party with respect to any Leased Property.
3.3 Release of ESS Technology. Vialta agrees to use commercially
reasonable efforts obtain the Landlord's consent to the release of any
guarantee, surety or other security ESS Technology or its Subsidiaries provided
Landlord and, if required, offer the guarantee, surety or other security
described in Section 3.2.2 to the Landlord in order to obtain such release. If,
with respect to any Leased Property, ESS Technology and Vialta are unable to
obtain a release by the Landlord of any guarantee, surety or other security
which ESS Technology or its Subsidiary has previously provided to the Landlord,
Vialta shall indemnify, defend, protect and hold harmless ESS Technology and its
Subsidiary from and after the Distribution Date against all losses, costs,
claims, damages, or liabilities incurred by ESS Technology or its Subsidiary as
a result of Vialta's occupancy of the Leased Property with respect to such
guarantee, surety or other security.
4. Continued Occupation by Vialta. Vialta or its applicable Subsidiary
shall occupy the Leased Properties on and after the Distribution Date and will
be responsible for all costs, expenses and liabilities as a consequence of such
occupation. Notwithstanding the foregoing, if Vialta reasonably believes that an
enforcement or forfeiture action by the relevant Landlord is imminent because of
the failure to obtain a Lease Consent, Vialta may immediately vacate the Leased
Property. ESS Technology shall be solely responsible for any losses, claims,
costs, demands and liabilities incurred Vialta or its Subsidiaries with respect
to any default or breach by Vialta or its Subsidiaries of the Relevant Lease for
occupying the Leased Property without obtaining a Lease Consent.
5. Communications from Landlords. ESS Technology, Vialta and their
respective Subsidiaries shall promptly supply to each other any notices,
demands, invoices and other communications received from any Landlord while
Vialta or its applicable Subsidiary occupies any Leased Property without the
relevant Lease Consent.
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6. Failure to Obtain Consent. If, with respect to any Leased Property, at
any time a Lease Consent is formally and unconditionally refused in writing, ESS
Technology and Vialta shall commence good faith negotiations and use
commercially reasonable efforts to resolve the impasse with the Landlord. Such
reasonable efforts shall include:
6.1 If requested by the Landlord, ESS Technology shall provide a
guaranty, surety or other security (including, without limitation, a letter of
credit) for the obligations of the tenant under the Relevant Lease.
6.2 If requested by the Landlord, ESS Technology or its Subsidiary
shall accept an assignment of the Relevant Lease from Vialta or its Subsidiary
and concurrently sublease the Relevant Lease back to Vialta or its Subsidiary,
upon terms and conditions reasonably acceptable to the parties; provided,
however, that Vialta's duties and obligations under such sublease shall be (i)
no greater than ESS Technology's under the Relevant Lease and (ii) consistent
with the fair market terms provided for comparable subleases for comparable
properties in the vicinity of the Leased Property.
6.3 If the Landlord will not agree to the alternatives in Sections
6.1 or 6.2, (i) Vialta shall have the right to enter into a new and separate
lease for other space in the geographic area of the Leased Property ("NEW
PREMISES"), (ii) Vialta and ESS Technology shall negotiate with the Landlord for
a termination of the Relevant Lease, and (iii) ESS Technology shall be
responsible for, and shall indemnify, defend and hold harmless Vialta and its
Subsidiaries from, all costs, expenses, damages and liabilities as a consequence
of (a) the negotiation of and early termination of the Relevant Lease, (b) any
failure of Vialta or its Subsidiaries to promptly vacate the Leased Property,
(c) any enforcement or forfeiture action threatened or prosecuted by Landlord
with respect to an alleged or actual breach of the Relevant Lease on the basis
of Vialta's failure to obtain a Lease Consent or any other matter arising out of
Vialta's rights and duties under the Distribution Agreements and the Ancillary
Agreements, and (d) any moving and relocation costs incurred by Vialta or its
Subsidiaries to the New Premises.
7. Casualty; Lease Termination. The parties hereto shall grant and accept
assignments, leases or licenses as described in this Agreement, regardless of
any casualty damage or other change in the condition of the Leased Properties.
8. Tenant's Fixtures and Fittings. The provisions of the Distribution
Agreement and the other Ancillary Agreements shall apply to any trade fixtures
and personal property located at each Property.
9. Costs. ESS Technology shall pay all reasonable costs and expenses
(including, without limitation, Landlord's consent fees and attorneys' fees and
any costs and expenses relating to re-negotiation of Relevant Leases) incurred
in connection with (i) obtaining the Lease Consents, (ii) licensing and/or
otherwise transferring Additional Properties to Vialta or its Subsidiaries.
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10. Miscellaneous.
10.1 Incorporation of Distribution Agreement. The miscellaneous
provisions provided in Article V of the Distribution Agreement are incorporated
herein by reference as though set forth in full, excepting only Section 5.15 of
the Distribution Agreement.
10.2 Other Agreements. This Agreement is not intended to address,
and should not be interpreted to address, the matters expressly covered by the
Distribution Agreement and/or the other Ancillary Agreements. In the event of a
conflict between this Agreement and the Distribution Agreement and/or any other
Ancillary Agreement executed in connection herewith, the provisions of this
Agreement shall prevail.
10.3 Disputes. Any and all controversies, disputes or claims
arising out of, relating to, in connection with or resulting from this Agreement
(or any amendment thereto or any transaction contemplated hereby or thereby),
including as to its existence, interpretation, performance, non-performance,
validity, breach or termination, including any claim based on contract, tort,
statute or constitution and any claim raising questions of law, whether arising
before or after termination of this Agreement, shall be deemed a Dispute as
defined in Section 4.6 of the Distribution Agreement and shall be resolved
exclusively by, in accordance with, and subject to the procedures and
limitations set forth in, Section 4.6 of the Distribution Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Real Estate
Matters Agreement to be executed on its behalf by its officers thereunto duly
authorized on the day and year first above written.
ESS TECHNOLOGY, INC., VIALTA, INC.,
a California corporation a Delaware corporation
By: By:
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Name: Name:
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Title: Title:
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