EXHIBIT 10.27
TRANSLATION FROM THE HEBREW ORIGINAL
RENTAL CONTRACT
Prepared and signed in Tel-Aviv on 8th day of January, 1996
Between
Yehudit Pomerantz, ID# 5057196
Ofer Pomerantz, ID# 5338270
Irit Pomerantz, ID# 5724172
Jointly and severally
30 Kaplansky Street, Givatayim
(hereinafter: "the Landlord")
Parties of the first part
And Between
DSPC Israel Ltd.
11 Ben Gurion Street, Givat Shmuel
(hereinafter: "the Tenant")
Party of the second part
Whereas: The Landlord is the owner of the building as detailed below;
Whereas: The Landlord is interested in renting to the Tenant and the Tenant
is interested in renting from the Landlord the property as detailed below in
accordance with the contractual terms set forth below;
Therefore it was agreed to and declared between the parties as follows:
1. Preamble
The Preamble to this contract and its attachments represent an integral part of
the contract.
2. Definitions
2.1 "The Building" -- a three-story building, penthouse and basement that is
located at 18 Ben Gurion Street, Givat Shmuel, and which is known as plot number
952 of parcel number 6189.
2.2 "The Rental Property" -- an area of approximately 485 square meters
(gross) in the Building and which represents the entire first floor according to
the blueprint presented as Attachment A to the contract, including the
proportionate common areas of the Building's ground floor.
3. Rental Period
3.1 The Landlord rents to the Tenant and the Tenant rents from the Landlord
the rental property for a period of 36 months commencing on April 1, 1996 and
terminating on March 31, 1999, (hereinafter: "the Rental Period".)
3.2 The rental period will be extended for a period of 36 months commencing
on April 1, 1999, and will terminate on March 31, 2002 (hereinafter: "the
Extended Rental Period") unless the Landlord receives from the Tenant a written
notification of his intent not to exercise the renewal option six months prior
to the expiration of the rental period.
4. Intended Use
The intended use of the rental property is to be utilized by the Tenant, as
offices that serve the Tenant in his various activities only in the high-
technology industry (hereinafter: "intended use"), and the Tenant consents not
to use the rental property or part thereof for any other use whatsoever.
The above paragraph constitutes a material portion of the contract and any
breach will be considered a breach of the contract.
5. Declarations and Obligations of the Tenant
The Tenant declares as follows:
5.1 The Tenant declares that it is familiar with and is informed regarding
the building, and the rental property, and the areas that relate to it and has
found them suitable for its intended purpose and relinquishes any claim that
they are unfit for use to the Tenant.
5.2 The Tenant declares that it is familiar with and is informed regarding
the area and vicinity of the rental property, checked the blueprints and
investigated the plans that outline permissible use in the rental property
according to the building plan and according to the permits issued by the Givat
Shmuel Regional Council.
6. Rental Payment
6.1 The Tenant will pay to the Landlord monthly rental payments for the
entire duration of the rental contract amounts equal to $7,275, in New Israeli
Shekels.
The rental payment will be converted to NIS upon signing of this contract
according to the representative conversion rate of the US dollar as published by
the Bank of Israel, that is known at that time and, from that time, the payment
will be linked to the Consumer Price Index as stated below.
6.2 In the event that the Tenant will exercise the option, the rental
payments will be increased for the extended rental period (at the beginning of
the extended rental period) at a rate of 7%, above the rental payments due as
stipulated according to this contract at the end of the rental period (rental
payments in addition to all of the linkage differences up until the said date)
(hereinafter: "Extended Rental Period Payments".)
6.3 The rental payments for the extended rental period will be linked to the
Consumer Price Index in accordance with the stipulations of this contract.
6.4 At the date of signing this contract, rental payment will be paid for a
single month only.
On April 1, 1996, payment will be made for two month's rent.
Beginning on July 1, 1996, and for the remainder of the rental period and for
the extended rental period, should it be exercised, rental payments will be made
for each 3-month period in advance, on the 1st of each month in which a payment
is to be made.
6.5 Rental payments will be linked to the Consumer Price Index according to
the terms as follows:
6.5.1 "Consumer Price Index" - The index known as the Consumer Price Index as
published by the Central Agency for Statistics and Financial Investigation and
every index like it unless this index is replaced by a different authorized
governing body whether it be comprised of the same components or not.
"The Base Index" - The index for the month of November 1995, published
on December 15, 1995.
"The New Index" - For each and every rental payment--the latest
published index published immediately prior to the date designated for a
specific payment or prior to actual payment, whichever is higher.
6.5.2 Calculation Method
If on the actual payment date of each rental payment, the new index is higher
than the base index, then the rental payment will increase proportionately to
the increase in the change between the base index and the new index. If, on the
actual rental payment date of each rental payment the new index will be
different than or lower than the base index, then the rental payment will remain
the same with no change.
6.6 Value Added Tax will be added to each and every rental payment and will
be paid in full according to the Value Added Tax rate in effect at the time of
payment. The Landlord will issue a tax invoice as required by law.
7. Decrement of the Rental Period
The Tenant does not have the right to alter the conclusion of this
contract prior to the end of the rental period as described in Paragraph 3.1,
above, and/or prior to the end of the extended rental period, should it be
exercised. Any lapse in the use of the rental property and/or abandonment of
the rental property prior to the date referenced below does not release the
Tenant from its obligations according to this contract including, and without
detracting from the generality of the above, the Tenant's obligation to pay
rental payments to the Landlord.
8. Taxes and Payments
8.1 Governmental property taxes and other obligatory payments that,
according to the law, are the responsibility of the property owner, as
distinguished from the occupant, will be paid by the Landlord.
8.2 All other taxes, levies, fees, and payments, without exception, that
relate to the rental period and the extended rental period, should it be
exercised, will be paid by the Tenant, including:
8.2.1 All taxes, fees, and levies imposed by the Regional Council that apply
to the rental property and its use therein and the business being conducted
therein by the Tenant.
8.2.2 Invoices for water, electricity, and telephone that relate to the
Tenant.
8.2.3 All payments that relate to maintenance of the rental property without
exception.
8.2.4 28% of the total general building maintenance including expenses related
to elevator maintenance, elevator insurance, maintenance of the electrical
system, garden, and sewage.
The payments will be made immediately upon the Landlord's first demand to which
a detailed invoice will be attached.
8.2.5 In addition to everything stated above, the Tenant will pay to the
Landlord a co-operative maintenance and upkeep payment in the amount of $1.00,
plus Value Added Tax, for each square meter of the rental property, which will
be converted to NIS and linked to the Consumer Price Index and paid together
with the regular rental payment.
9. Permits
9.1 The Tenant is obligated to obtain the required permits to operate a
commercial enterprise in accordance with the intended use of the rental property
from the appropriate
governing bodies. The Tenant agrees to perform its commercial activities in
accordance with the said permits, without deviation, as required by Law and any
governing body.
9.2 The Landlord is in no manner responsible for the receipt of the proper
commercial permits relating to the rental property, and the Tenant alone will
act to this end and is responsible for obtaining the said permits.
10. Alterations and Renovation
10.1 The Tenant agrees not to perform any alterations or corrections that
include additions or building of any sort, in any definition of the term, in the
rental property (hereinafter comprehensively termed: "renovation") without prior
written consent from the Landlord.
10.2 In the event that the Tenant desires to perform any renovation, it must
present a detailed plan of renovation. Upon the plan's approval by the Landlord
and renovation performed by the Tenant, the Landlord has the right, upon the
completion of this contract, to demand that the Tenant demolish the renovation
and, in this case, the Tenant must demolish the renovation and perform any
required corrective maintenance to return the rental property to its condition
prior to the renovation, all this to be completed within 14 days of the
Landlord's demand, or to leave the renovation in the ownership of the Landlord
and the Tenant agrees that the renovation will be the sole property of the
Landlord without any compensation for it.
11. Furnishings
The Tenant may furnish the rental property provided that the installation of the
furnishings do not damage the rental property.
12. Use of the Rental Property
12.1 The Tenant agrees to use the rental property in a careful and reasonable
manner, to preserve a state of cleanliness of the property and its surrounding
area, to prevent destruction and damage in the rental property including all of
the appliances that serve the Tenant whether they serve only the Tenant or
together with other Tenants, excluding only damage or depreciation that result
from normal or reasonable use.
12.2 The Tenant is required to immediately repair any damage and/or
destruction to the rental property or its appliances as stated in Paragraph
12.1, above, (excluding only damage or depreciation that results from normal and
reasonable use) and to immediately replace, with an equal replacement, any
accessory installed in the rental property that was lost or destroyed.
12.3 In the event that the Tenant did not perform the repairs required of it
as stated, or if it did not replace any part which it is so required to replace
as stated, the Landlord may, but is not obligated to, perform the repairs at the
expense of the Tenant, and, in any case, the Tenant is obligated to repay the
Landlord, in full, for any damage, destruction, or loss
as stated excluding only damage or destruction that results from normal or
reasonable use.
12.4 The Landlord is not compelled to perform any repairs during the term of
the rental period or the extended rental period, should it be exercised, except
for repairs as a result of faulty building. Repair of plumbing, sewage, and
electricity that is internal to the walls and water damage or water penetration
from the external walls, that result from reasonable use by the Tenant of the
said appliances, only, will be repaired by the Landlord within 30 days of the
Tenant's demand. After this period, the Tenant may perform the repairs at the
Landlord's expense.
13. Responsibility for Damage
13.1 The Tenant assumes responsibility towards the Landlord and to any third-
party whatsoever for any damage, of any type, that may result to any person or
property, including, and without detracting from the generality of the above,
visitors to the rental property, the Tenant's employees, and to any other person
that finds himself within the boundaries of the rental property, that results
from the condition of the rental property and/or the installed equipment therein
and/or, the Tenant's actions and/or, from the provision of services within the
rental property, and/or, within its immediate surroundings and/or the property
of and/or the jurisdiction of the Tenant.
13.2 Without detracting from the instructions stated in Paragraph 13.1,
above, the Tenant agrees to take all steps necessary to cancel any demand and/or
claim against the Landlord for any damage as described in Paragraph 13.1, above,
and to indemnify the Landlord for any monies that the Landlord may be required
to pay as a result of said demand and/or, claim, as mentioned above, within 15
days from the initial demand for payment from the Landlord provided that the
Landlord notified the Tenant of any demand and/or claim, as above mentioned,
within 15 days that he became aware of the demand and/or claim, as above
mentioned, and permitted the Tenant to defend itself accordingly.
14. Insurance
14.1 Without diminishing the Tenant's obligations and responsibility
according to this contract, the Tenant agrees to maintain, at it own expense,
for the entire duration of the rental period and the extended rental period,
should it be exercised, the following forms of insurance:
14.1.1 Comprehensive insurance covering the rental property (including loss of
rental income) that will be underwritten through participation in the Landlord's
comprehensive insurance policy and taken out by the Landlord, for the proportion
of the rental property in the building.
14.1.2 Third party insurance (including itself and its employees) for any
bodily injury or property damage resulting from any source through the rental
property.
14.1.3 The Tenant's property insurance will include cancellation of the
subrogation clause towards the Landlord.
14.2 The following clarifications apply the following types of insurance:
14.2.1 The insurance company will be any reasonable insurance company that the
Landlord will agree to.
14.2.2 The Tenant will present to the Landlord copies of the insurance policies
above mentioned.
14.2.3 The third party insurance policy will include a paragraph stating that
the terms of the policy may not be downgraded and that the policy may not be
cancelled, except with the written approval of the Landlord.
15. Signs and Advertisements
The Tenant agrees not to hang, install, or graphically depict symbols or
advertising messages, of any type, on any part of the building that the Tenant
occupies without prior approval of the Landlord, and similarly, not to use any
portion of the building except for the rental property except for use as access
to the rental property without detracting from the statements above, in the
event that any type of the Tenant's property is found outside of the rental
property, the Landlord has the right to remove them from any place that they may
be found, at the Tenant's expense, and the Landlord has no responsibility
regarding the property whatsoever.
16. Visitation
The rights of the Landlord or his appointee:
16.1 To enter the rental property at any reasonable time in order to verify
that the terms and conditions of the contract are being upheld upon prior
notification of the Tenant and accompanied with a representative of the Tenant.
16.2 To enter the rental property, at any reasonable time and with prior
arrangement, to perform in the rental property, building maintenance required
for the building or any part thereof.
16.3 During the last three months of the rental period and/or the extended
rental period, should it be exercised, to enter the rental property during
generally accepted working hours together with visitors, whose number shall not
be greater than 4, with 24 hour advance notice to the Tenant.
The Tenant agrees not to deny the Landlord access to the rental property, as
stated, to perform the said maintenance.
17. Non Transference of Rights
17.1 The Tenant agrees not to transfer the rental of the rental property, or
any part thereof, to another, not to give, not to transfer, and not to rent the
property, or any part
thereof to another, not to allow use by another, in the rental property, or any
part thereof, not to include another in the rental property's possession, and/or
use, and/or enjoyment of the rental property, or any part thereof, and/or in the
commercial enterprise being conducted in the rental property and not to assign
any rights in the rental property, or any part thereof, whatsoever, to another.
All these whether compensation received or without compensation.
17.2 The restrictions stated in Paragraph 17.1, above, do not apply to use of
the rental property by the Tenant's parent company, DSP Communications Inc.,
(owners of controlling interest in the Tenant) and/or a different company
controlled by the Tenant, and/or the Tenant's parent company on providing that
the Tenant is solely responsible for fulfilling its obligations according to
this rental contract.
17.3 The transfer of shares and/or the issue of shares by the Tenant are
deemed as assignment of rights for the purposes of this contract, except for
transfers that do not alter controlling interest of the Tenant.
17.4 Notwithstanding the above paragraphs, the Tenant may sub-let portions of
the rental property (that shall not constitute more than 50% of the rental
property), and shall not be more than 2 sub-tenants at any given time, and this
only under the provision that prior written approval is granted by the Landlord.
The Landlord shall not withhold the granting of said approvals, unless
substantiated by reasonable cause.
17.5 In any event, the Tenant shall be responsible for the performance of the
terms and conditions set forth in this contract for the areas that are sub-let.
18. Vacation
18.1 The Tenant agrees that no later than March 31, 1999, or on the date that
the rental contract expires, or upon expiration of the extended rental period,
should it be exercised, or on the date that this contract reaches its end
(hereinafter: "Vacation Date"), the Tenant will vacate the rental property and
return it to the Landlord. The Tenant agrees that on the vacation date and upon
returning the rental property to the Landlord, the rental property will be free
and clear of any person or Tenant's belongings, orderly, and in good condition,
except for normal and reasonable use, in the same condition that the property
was received, according to Paragraph 12, above.
18.2 In the event that the Tenant did not fulfill its obligations as detailed
in Paragraph 18.1, above, then, and without detracting from the Landlord's
rights to exercise its rights in any manner it sees fit, the Tenant will be
obligated to pay to the Landlord up to and until such time that the Tenant did
not fulfill its obligations above mentioned, a usage fee to be paid in NIS equal
to $500 US for each day as fixed compensation and agreed to in advance. It is
explicitly declared and agreed to between the parties that the amount of the
compensation is set in advance after proper and cautious consideration of the
damage
imposed on the Landlord in the event that the Tenant does not vacate the rental
property on the appropriate date as stated and that any claim by the Tenant that
the amount is a penalty will not be given consideration, and the Tenant will be
prevented from making such a claim.
19. Securities
19.1 In order to insure that the Tenant will fulfill all of its obligations
according to this contract (including vacation of the rental property) and to
reduce the burden of collecting the sums due to the Landlord from the Tenant
according to this contract, including the amounts described in Paragraph 8, the
Tenant will furnish to the Landlord upon signing of this contract:
19.1.1 A bank guarantee in the amount of NIS 100,000, linked to the Consumer
Price Index as detailed in Paragraph 6, above, for the entire duration of the
rental period including the extended rental period, should it be exercised,
valid for 30 days after expiration of the rental period and/or the extended
rental period, should it be exercised.
19.1.2 Three (3) promissory notes in the amount of NIS 50,000 each, linked to
the Consumer Price Index as detailed in this contract, signed by the Tenant as
the issuer of the promissory notes, that will be deposited with Yoav Schnitzer,
Attorney, in escrow (hereinafter: "Trust administrator") and will be transferred
to the Landlord by the trust administrator upon demand of the Landlord, only
after the trust administrator notifies the Tenant of his intent 15 days in
advance, wherein the reason for transfer of the promissory notes to the Landlord
is stated.
19.2 In any event that monies are due to the Landlord by the Tenant according
to this contract, including rental payments, the Landlord is permitted to use
the bank guarantee and/or the promissory notes in an amount equal to the debt
outstanding due to the Landlord by the Tenant, should there be any, and to this
end, the Landlord has the right to utilize the bank guarantee and to use any
alternative means to collect the promissory notes provided that the Landlord
provide a written letter of intent to the Tenant 7 days in advance.
19.3 It is declared and agreed to between the parties that utilization of the
bank guarantee and/or the collection of the promissory notes by the Landlord do
not diminish the rights of the Landlord in collection from the Tenant of any
damages it sustained as a result of the Tenant's breach of any of its
obligations as set forth in this contract and/or, to restrict the Landlord in
exercising its said rights and/or, to limit its compensation and/or, damages
that are due to the Landlord as a result of the Tenant's breach of any of its
obligations as set forth in this contract.
19.4 In any event that the Landlord utilizes the securities, and/or any of
them and/or the securities have expired, and/or any of them, the Tenant agrees
to present to the Landlord new securities of comparable value and composition to
the bank guarantee or
promissory notes that were used or expired within 7 days of the date of
notification by the Landlord that the securities were realized or expired.
20. Major Terms and Conditions - Breaches, and Agreed Upon Compensation
20.1 The parties declare that all of the terms and conditions detailed in
Paragraphs 3, 4, 5, 6, 7, 8, 9, 10, 12, 13, 14, 17, 18, 19, and 20 and their
sub-paragraphs in this contract constitute major terms and conditions and their
breach will be considered a fundamental breach of this contract.
Any breach and/or non-fulfillment of any condition or obligation as described in
the above referenced paragraphs by the Tenant will entitle the Landlord to
notify the Tenant that the rental, according to this contract, has been breached
and is terminated and the Tenant must vacate the rental property, according to
Paragraph 18, above, within 15 days of said notification, and this does not
limit the rights of the Landlord to receive all of the rental payments and the
other amounts it was entitled to had the contract been in force, and this does
not diminish its right to seek other support or remedies, including compensation
for any damage that the Landlord incurs as a result of the breach or non-
fulfillment as described above.
20.2 Without detracting from the rights of the Landlord afforded him through
this contract, the Landlord maintains the right to claim interest from the
Tenant in any case of delay in the payment of the rental payment or other
payments the Tenant is obligated to the Landlord according to this contract, the
rate of interest will be the maximum interest rate charged by Bank Leumi Ltd.
for accounts over their limit.
21. Independence from the Tenants' Protection Law
The Tenant declares that it has not and will not provide key-money for the
rental property and/or in consideration of the rental property and that on the
date of the inception of the Tenant's Protection Law (Various Articles) - 1968,
the rental property was not occupied by any occupant with rights relative to the
rental property and that the Tenants' Protection Law (Comprehensive Version) -
1972 will not apply to it, and/or its dependents, and/or as it relates to the
Law.
22. Transfer of the Rights of the Landlord
The Landlord may transfer his rights in the rental property to others according
to this contract without any consent on behalf of the Tenant provided that the
rights of the Tenant are in no way affected.
23. Stamps
The stamp expense will be born equally between the parties.
24. Other Instructions
24.1 Any compromise by any of the parties to this contract will not be deemed
as renouncement of its rights or agreement on his part to any compromise and/or
modification of the terms of this contract unless the renouncement or agreement
is performed explicitly, in writing.
24.2 Any modification and/or addition to this contract shall not take effect
unless performed in writing and signed by the relevant parties.
24.3 All payments incumbent upon the Tenant according to this contract,
including the rental payment, will have Value Added Tax added, as prescribed by
the rate according to the Law, that will be paid by the Tenant together with the
said payment.
25. Correspondence
The addresses of the parties are:
Landlord: 30 Kaplansky Street, Givatayim
Tenant: __________________________
All correspondence that will be sent to any of the parties to the address that
appears next to its name will be considered as though delivered to its
destination 72 hours after sent via registered mail and/or 24 hours after
delivered by means of courier.
Agreed to between the parties as signed
/s/ Joseph M. Perl, Ph.D /s/Yehudit Pomerantz /s/ Ofer Pomerantz
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DSPC Israel Ltd. Yehudit Pomerantz Ofer Pomerantz
/s/ Irit Pomerantz
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Irit Pomerantz