<PAGE>
As filed with the Securities and Exchange Commission on January 31, 2000
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
INVENTA TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
---------------
<TABLE>
<CAPTION>
Delaware 7371 77-0217480
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
255 Shoreline Drive, Suite 200
Redwood Shores, CA 94065
(650) 413-1100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
David A. Lavanty
President and Chief Executive Officer
Inventa Technologies, Inc. 255 Shoreline Drive, Suite 200 Redwood Shores, CA
94065 (650) 413-1100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
<TABLE>
<CAPTION>
Michael J. O'Donnell Richard Capelouto
<S> <C>
Richard L. Picheny Daniel Clivner
Wilson Sonsini Goodrich & Rosati Simpson Thacher & Bartlett
Professional Corporation 3373 Hillview Avenue, Suite 250
650 Page Mill Road Palo Alto, CA 94304
Palo Alto, CA 94304 (650) 251-5000
(650) 493-9300
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Offering Amount of
Securities to be Registered Price Registration Fee
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock $0.001 par value............. $60,000,000 $15,840.00
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated , 2000
PROSPECTUS
Shares
[Inventa Logo]
Common Stock
- --------------------------------------------------------------------------------
This is our initial public offering of shares of common stock. We are offering
shares. No public market currently exists for our shares.
We have applied to list the shares on the Nasdaq National Market under the
symbol "INVA."
Investing in our shares involves risks. Risk Factors begin on page 5.
<TABLE>
<CAPTION>
Per Share Total
--------- --------
<S> <C> <C>
Public Offering Price........................................ $ $
Underwriting Discount........................................ $ $
Proceeds to Inventa.......................................... $ $
</TABLE>
We have granted the underwriters a 30-day option to purchase up to
additional shares of common stock on the same terms and conditions as set forth
above solely to cover over-allotments, if any.
At our request, the underwriters have reserved up to 12% of the common stock
offered in this prospectus for sale at the initial public offering price to our
directors, prior investors and other persons associated with Inventa.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.
Lehman Brothers, on behalf of the underwriters, expects to deliver the shares
on or about , 2000.
- --------------------------------------------------------------------------------
Lehman Brothers
First Union Securities, Inc.
Friedman Billings Ramsey
, 2000
<PAGE>
ARTWORK AND DIAGRAMS
[TO BE FILED BY AMENDMENT]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Consolidated Financial Data..................................... 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 20
Business................................................................. 27
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management................................................................. 37
Certain Relationships and Related Transactions............................. 45
Principal Stockholders..................................................... 46
Description of Capital Stock............................................... 48
Shares Eligible for Future Sale............................................ 52
Underwriting............................................................... 54
Legal Matters.............................................................. 57
Experts.................................................................... 57
Additional Information..................................................... 57
Index to Financial Statements.............................................. F-1
</TABLE>
ABOUT THIS PROSPECTUS
Investors should rely only on the information contained in this prospectus.
Inventa and the underwriters have not authorized anyone to provide any
different or additional information. This prospectus is not an offer to sell or
a solicitation of an offer to buy our common stock in any jurisdiction where it
is unlawful. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock. This preliminary prospectus is
subject to completion prior to this offering.
The Inventa name is a registered trademark of Inventa Technologies, Inc. In
addition, Inventa has filed for trademark registration of the Inventa logo,
"LightSpeed," "i2K," "eSales" and "eCare." This prospectus also includes
trademarks and tradenames of other parties.
Until , 2000, all dealers selling shares of our common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information and financial statements and notes appearing elsewhere in this
prospectus. Except as otherwise indicated, the information in this prospectus
assumes that the over-allotment option granted to the underwriters is not
exercised and that all shares of our outstanding preferred stock are converted
into our common stock.
Inventa Technologies, Inc.
Our Business
We are a leading Internet professional services firm providing business-to-
business, or B2B, e-Commerce solutions to Global 2000 companies and emerging
digital businesses. We architect, engineer, integrate and support complex B2B
digital exchanges and digital customer relationship management solutions.
Digital exchanges are electronic marketplaces that enable businesses to
dynamically collaborate with trading partners, conduct e-Commerce, manage
distribution relationships and enhance business partnerships. Digital customer
relationship management, or DCRM, is an Internet-based approach to coordinating
a company's customer relationships across communications channels, business
functions and trading partners.
We focus exclusively on engineering B2B e-Commerce solutions for our
clients. We believe our early vision, B2B experience and methodologies are
unique in the Internet professional services sector and enable us to rapidly
and efficiently architect and implement advanced Internet solutions for our
clients. In 1999, our clients included Automatic Data Processing, Inc., Cadence
Design Systems, Inc., ePolicy.com, Fujitsu PC Corporation, Pure Markets
Corporation, Siemens Corporation and Trade Pacific Investments Limited, or
tradepac.com.
Examples of the solutions we have engineered for our clients include:
. Citigroup, Inc.--a DCRM solution for the bank's private client group that
supports the provision of investment services and enables personalized
account management and associated financial transactions
. GoTo.com, Inc.--a DCRM solution that supports comprehensive customer case
management and customer self-service and allows frequently asked
questions to be accessed in real time
. Pure Markets--a financial services digital exchange focused on commercial
leasing that provides for online bid management, leasing transactions and
business process automation
. tradepac.com--a digital exchange for inventory liquidation used to
auction goods and match buyers worldwide with sellers from the Asia-
Pacific region
Our Solution
We deliver our services through multi-disciplinary teams of talented
professionals with extensive experience in business process analysis, project
management and software engineering. Our professionals create scalable,
reliable and integrated business solutions using our proprietary LightSpeed
delivery model and i2K architectural framework. Our solutions optimize the
engineering of B2B e-Commerce systems by utilizing an iterative design process
focused on integrating legacy applications with emerging digital technologies.
Our B2B e-Commerce systems are engineered to facilitate:
. integration of complex Internet and legacy technologies with multiple
business processes within a company and with its trading partners'
systems
. integration of multiple databases to allow the multi-directional flow of
information
1
<PAGE>
. improved performance and response time to support real-time access by
trading partners from a variety of technology platforms
. flexibility in accommodating the variety of contractual relationships,
processes and payment methods that exist between businesses
We have also productized our services into two offerings, eCare and eSales.
eCare is our Internet-based customer care offering developed to enable our
clients to provide high-quality customer interaction and improve customer
retention. eSales is our Internet-based sales offering developed to help
clients generate revenue through Internet-based channels and to streamline the
purchasing process. We believe our productized services allow us to leverage
our extensive experience in providing B2B solutions, reduce our project risk
and speed time-to-market for our clients.
Our Market Opportunity
Businesses are increasingly using B2B e-Commerce to enhance their
competitive positions by improving operating efficiencies, strengthening their
trading partner relationships and identifying and capitalizing on emerging
digital business opportunities. Developing and supporting B2B e-Commerce
systems requires substantial expertise in the design of new business processes
and systems that integrate with existing operations, selection of the
appropriate Internet technologies and management of the implementation process
to meet the time-to-market needs characteristic of today's competitive business
environment. Many businesses lack this expertise. As a result, an increasing
number of businesses, from start-ups to Global 2000 companies, engage third-
party Internet professional services firms to help them design and implement
B2B e-Commerce solutions. International Data Corporation, or IDC, estimates
that the market for Internet professional services will grow from $7.8 billion
in 1998 to $78.6 billion in 2003, representing a 59% compound annual growth
rate. We believe the B2B e-Commerce segment of the Internet professional
services market is underserved and is large and growing faster than the overall
market.
Our Strategy
Our strategy is to enhance our position and reputation as a leading provider
of B2B e-Commerce solutions to Global 2000 companies and emerging digital
businesses. The key elements of our growth strategy are to:
. maintain our exclusive B2B e-Commerce focus
. maintain our technology leadership by pursuing highly complex engagements
. continue to productize our services by introducing new offerings that
target other business processes
. hire, train and retain professionals and maintain a culture that fosters
innovation
. leverage our reputation for client satisfaction and innovation to attract
new engagements from both new and existing clients
2
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered by Inventa.. shares
Common stock outstanding after
this offering................... shares
Use of proceeds.................. General corporate purposes, including
reducing outstanding debt of approximately
$4.0 million; increasing our recruiting
capabilities; expanding our sales and
marketing capabilities; increasing our brand
awareness; investing in our internal systems
and processes; opening new offices; and
pursuing selected strategic investments or
acquisitions.
Proposed Nasdaq National Market
symbol.......................... "INVA"
</TABLE>
Common stock outstanding after this offering:
. is based on the number of shares outstanding as of , 2000
. assumes the conversion of all outstanding shares of series A, B, C and D
preferred stock into an aggregate of shares of common stock, which
will automatically occur at the closing of this offering
. includes shares of common stock to be issued to holders of Series D
preferred stock in a private placement to be made contemporaneously with
this offering at the initial offering price less the underwriting
discount
. excludes shares of common stock issuable upon the exercise of stock
options outstanding at , 2000, at a weighted average exercise price
of $ per share
. excludes shares of common stock reserved for future grant under our
stock option plans
. excludes shares of common stock issuable upon the exercise of
warrants outstanding at , 2000, at an exercise price of $ per
share
Additional Information
We were incorporated in California in 1988 as Inventa Corporation. We
reincorporated in Delaware in , 2000, as Inventa Technologies, Inc. Our
principal executive offices are located at 255 Shoreline Drive, Suite 200,
Redwood Shores, CA 94065 and our telephone number is (650) 413-1100. We
maintain a site on the World Wide Web at www.inventa.com. The reference to our
web address does not constitute incorporation by reference of the information
contained at that site. The information found on our site is not part of this
prospectus and should not be relied upon when making a decision to invest in
our common stock.
3
<PAGE>
Summary Consolidated Financial Data
The following table summarizes the consolidated statement of operations and
consolidated balance sheet data for our business. For a more detailed
explanation of this financial data, see "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements located elsewhere in this
prospectus.
The unaudited pro forma consolidated balance sheet data reflects the
following assumptions:
. issuance of 1,350,000 shares of our common stock with a fair value of
$12.2 million in connection with the acquisition of XTEND-Tech, Inc.,
which was consummated on January 26, 2000
. receipt of approximately $22.2 million from the issuance of 3,000,000
shares of series D mandatorily redeemable convertible preferred stock on
January 19, 2000, at $7.41 per share
. conversion of 1,000,000 shares of our series A convertible preferred
stock and 13,615,511 shares of series B, C, and D mandatorily redeemable
convertible preferred stock into 14,615,511 shares of our common stock
upon the completion of this offering
The unaudited pro forma, as adjusted, consolidated balance sheet data gives
effect to the sale of the shares offered by us at an assumed initial public
offering price of $ per share and the application of the net proceeds as
described in "Use of Proceeds," after deducting the estimated underwriting
discount and estimated offering expenses.
For an explanation of the number of shares used to compute net loss per
share, see Note 1 of notes to financial statements.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
------------------ --------------------
1997 1998 1998 1999
-------- -------- ----------- --------
(unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Consolidated Statement of Operations
Data:
Revenues............................ $ 5,196 $ 8,016 $ 6,001 $ 7,924
Loss from operations................ (2,795) (1,692) (1,308) (6,825)
Net loss............................ (2,964) (1,658) (1,298) (6,826)
Net loss per share:
Basic and diluted................. $ (0.65) $ (0.36) $ (0.28) $ (1.69)
======== ======== ======== ========
Weighted average shares........... 4,557 4,659 4,658 4,693
Pro forma net loss per share
(unaudited):
Basic and diluted................. -- -- -- $ (0.49)
========
Weighted average shares........... -- -- -- 13,886
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1999
-------------------------------
Pro Forma,
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents..................... $ 3,156 $ 25,473 $
Working capital............................... 1,610 23,938
Total assets.................................. 6,661 36,562
Capital lease obligations, net of current
portion...................................... 348 402
Mandatorily redeemable convertible preferred
stock........................................ 14,387 --
Total stockholders' equity (deficit).......... (11,244) 32,625
</TABLE>
4
<PAGE>
RISK FACTORS
Investing in shares of our common stock involves risk. You should carefully
consider the risks described below and other information in this prospectus
before making an investment decision. If any of the following risks actually
occur, our business, financial condition, results of operations and reputation
could be harmed. As a result, the trading price of our common stock may decline
and you may lose all or part of your investment.
Risks Related to Our Business
If we are unable to manage our growth or the quality of our services, our
ability to retain clients and key personnel, our reputation and our business
could be harmed
Our growth has placed significant demands on our management and other
resources. Our revenues for the year ended December 31, 1999 increased
approximately 74% from the revenues for the year ended December 31, 1998. Our
staff increased from 57 full-time employees at December 31, 1998, to 207 at
January 27, 2000. Our future success will depend on our ability to manage our
growth effectively, including:
. continuing to train, motivate, manage and retain our existing employees
and to attract and assimilate new employees
. maintaining project quality
. maintaining high rates of employee utilization
. accurately estimating time and resources required to complete engagements
. developing and improving our operational, financial, accounting and other
internal systems and controls
. improving our business development capabilities
. continuing the productization of our services
. maintaining and improving our knowledge management capabilities
If we are unable to manage our growth or the quality of our services, our
ability to retain clients and key personnel, our reputation and results of
operations could be harmed.
We expect to report operating losses in 1999, 2000 and 2001
We expect to report an operating loss for the year ended December 31, 1999,
and we anticipate incurring losses in 2000 and 2001 as well. As we strive to
grow our business, we expect to spend significant funds for general corporate
purposes, including working capital, marketing, recruiting and hiring
additional personnel, upgrading our infrastructure and expanding into new
geographic markets. Although our revenues have increased in recent periods, we
cannot assure you that we will sustain these growth rates. To the extent that
our revenues do not increase at a rate commensurate with these costs and
expenditures, our results of operations and our stock's performance could be
harmed. In particular, we expect that our plan for increases in expenses and
capital expenditures over the next year will result in higher operating losses.
If we achieve profitability in the future, it may or may not be sustainable.
The loss of our professionals, or our inability to recruit additional
professionals, would make it difficult for us to complete existing projects and
bid for new projects, which could cause our business to suffer
Our business is labor intensive, and our success depends on identifying,
hiring, training and retaining experienced, knowledgeable professionals. If a
significant number of our current professionals leave, we may be unable to
complete or retain existing engagements or bid for new projects. In addition,
former employees may compete with us in the future.
5
<PAGE>
Even if we retain our current employees, we must continually recruit and
train talented professionals in order for our business to grow. There is
currently a shortage of qualified professionals in the Internet professional
services field, and this shortage is likely to continue. Furthermore, there is
significant competition for employees with the skills required to perform the
services we offer. We cannot give any assurances that we will be able to
attract a sufficient number of qualified employees in the future, or that we
will be successful in motivating and retaining the employees we are able to
attract. If we cannot attract, motivate and retain qualified professionals, our
business, financial condition and results of operations will suffer.
We depend on our key management personnel, and the loss of any key executive or
manager may harm our ability to obtain and retain client engagements, maintain
a cohesive culture and compete effectively
We believe that our success will depend on the continued employment of our
key management personnel. This dependence is particularly important to our
business because we believe personal relationships are critical to obtaining
and maintaining client engagements and maintaining a cohesive culture. If one
or more members of our key management personnel were unable or unwilling to
continue in their present positions, such persons would be very difficult to
replace and our business could be seriously harmed. In addition, if any of
these key employees joins a competitor or forms a competing company, some of
our clients might choose to use the services of that competitor or new company
instead of our own. Furthermore, clients or other companies seeking to develop
in-house information technology services capabilities may hire away some of our
key employees. This would not only result in the loss of key employees but
could also result in the loss of a client relationship or a new business
opportunity. Any of the foregoing could seriously harm our business.
Our management team has limited experience working together
We have employed our president and chief executive officer only since
January 1999. Three of our officers have joined us within the past 12 months,
and we currently do not have a chief financial officer. Therefore, there has
been little or no opportunity to evaluate the effectiveness of our executive
management team. The failure of our executive management to function
effectively as a team in this industry may hurt our ability to manage our
business and growth, obtain and execute client engagements, maintain a cohesive
culture and compete effectively, which could seriously harm our business.
We depend heavily on our principal clients. The loss of a principal client or a
reduction in the work we perform for any particular client could harm our
financial condition and reputation
We derive a significant portion of our revenue from a limited number of
clients. In 1999, our five largest clients accounted for approximately 78.9% of
our revenues, with ADP and ePolicy.com each accounting for over 10% of our
revenues. The volume of work performed for our principal clients may not be
sustained from year to year, and there is a risk that once we complete an
engagement, these principal clients may not retain us for additional work in
the future. Any cancellation, deferral or reduction in work performed for one
of these principal clients or a number of smaller clients could harm our
financial condition, results of operations and reputation.
Our business may be harmed by cost overruns and penalties associated with
fixed-price, fixed-time contracts if we fail to accurately estimate the time
and resources necessary for the performance of our services
For the year ended December 31, 1999, approximately 89% of our revenues was
derived from fixed-price, fixed-time contracts. We expect that most of our
future revenues will continue to be derived from fixed-price, fixed-time
contracts. Our contracts may provide for financial penalties if we do not meet
specified deadlines. To mitigate losses from fixed-price, fixed-time contracts,
we must, among other things:
. accurately estimate the resources required to perform these contracts
. complete our clients' projects on a timely basis
6
<PAGE>
. effectively manage our clients' expectations
. complete projects within budget and to our clients' satisfaction
If we do not successfully manage these project risks, we could be exposed
to cost overruns and penalties. We have occasionally had to commit
unanticipated additional resources to complete projects, and we may have to
take similar actions in the future. If this occurs in connection with a large
project or a sufficient number of projects, we may suffer lower gross margins
and delays in recognizing revenues, and our financial condition, results of
operations and reputation could be harmed.
Our clients may delay or terminate projects before completion, which could
harm our revenues and earnings
In general, our clients may terminate project engagements without notice
and without penalty. This may make our results of operations difficult to
predict. If a client reduces the scope of, delays the start of or terminates a
project, this could result in lower revenues and underutilized employees and,
as a result, could harm our earnings.
Quarterly fluctuations in our revenues and earnings could affect the market
price of our common stock
Our revenues and earnings may vary from quarter to quarter as a result of a
number of factors, including:
. the number, size and scope of client engagements commenced or completed
during a quarter
. professional staff utilization rates
. unanticipated project terminations, delays or deferrals
. the accuracy of our estimates of resources required to complete ongoing
projects
. the contractual terms and degree of completion of projects in which we
are engaged
A large percentage of our expenses, particularly employee compensation and
rent, are fixed in advance of any particular quarter. In addition, we may
incur unanticipated expenses relating to increased utilization of
subcontractors. Any decline in revenues or earnings, unanticipated project
termination or delay, or greater than expected costs for any quarter could
harm our results of operations and result in a decline in the market price of
our common stock, even if not reflective of any long-term problems with our
business.
Expansion of our service offerings may not be successful and we may lose
opportunities to expand our business
In addition to growing our business within the disciplines in which we
currently focus, an element of our strategy is to expand our service
offerings, including the applications management and support offerings added
as a result of our recent acquisition of XTEND-Tech. Successful expansion of
our service offerings will require:
. attracting, training, assimilating and retaining talented personnel
. marketing and delivering expanded services
. establishing relationships with vendors and technology providers
We cannot assure you that this expansion of our service offerings will be
successful. Failure to develop additional solutions and service offerings on a
timely basis could cause us to lose opportunities for business with both
existing and potential clients.
7
<PAGE>
We face significant competition from bigger, more established competitors who
have greater financial and technical resources and from new entrants in markets
that are new and rapidly changing
The business areas in which we compete are intensely competitive and subject
to rapid technological change. We expect competition to continue and intensify.
Our competitors fall into six major categories:
. Internet professional services firms
. information technology consulting and systems integration firms
. services divisions of computer hardware and software vendors
. web design firms
. information technology strategy consulting firms
. in-house information technology departments of our current and potential
clients
Many of our competitors have longer operating histories and client
relationships, greater resources, larger client bases and greater brand or name
recognition than we have. Our competitors may be able to respond more quickly
to technological developments and changes in clients' needs.
Further, there are low barriers to entry into our industry segment. We do
not own any technologies that preclude or inhibit potential competitors from
entering our industry. Since the potential market opportunity is large, while
costs to develop and provide Internet professional services are relatively low,
we expect to continue to face additional competition from new entrants into our
industry.
If we do not keep pace with technological changes, industry standards and
client preferences, our competitive position will suffer
Our success will depend in part on our ability to develop information
technology solutions that keep pace with continuing changes in Internet
technology, evolving industry standards and changing client preferences. We
cannot give any assurances that we will be successful in addressing these
developments on a timely basis, or at all. Our failure to respond quickly and
cost-effectively to new developments could cause us to lose current and
potential business opportunities and harm our business and results of
operations.
In particular, we have derived a significant portion of our revenues from
projects based primarily on:
. open systems technologies
. multi-tier software architectures
. Internet-based architectures
These areas are continuing to develop and are subject to rapid change. Any
factors impeding the acceptance of information technology systems using
Internet-based architectures could harm our business, especially if we are
unable to develop skills and replacement technologies for these types of
information technology systems.
We may face intellectual property claims that may be costly to resolve or limit
our ability to use intellectual property in the future
We cannot give any assurances that our services do not infringe on the
intellectual property rights of others or that an infringement claim filed
against us will be successfully defended. A successful infringement claim
against us could harm us in the following ways:
. we may be liable for damages and litigation costs, including attorneys'
fees
. we may be enjoined from further use of the intellectual property in
dispute
8
<PAGE>
. we may have to license the intellectual property, incurring licensing
fees
. we may have to develop a non-infringing alternative, which could be
costly and delay projects
. we may have to indemnify clients with respect to losses incurred as a
result of our infringement of the intellectual property
Regardless of the outcome, an infringement claim could result in
substantial costs, diversion of resources and management attention, clients'
termination of project engagements and harm to our financial condition and
reputation.
We may not have the right to resell or reuse intellectual property developed
for specific clients
Our LightSpeed delivery model and i2K architectural model, as well as our
knowledge management system, known as Inside Inventa, depend on using
information and techniques learned and developed during prior engagements.
Moreover, a portion of our business involves the development of software
applications for specific client engagements. Our clients generally retain
ownership of client-specific software, although we retain rights to some of
the applications, processes and other intellectual property developed in
connection with client engagements. Some clients have prohibited us from
marketing the applications developed for them, or similar applications, for
specified periods or to specified types of potential clients. We cannot give
assurances that clients will not demand similar or other restrictions in the
future. We cannot give any assurances that disputes will not arise that affect
our ability to resell or reuse such applications, processes and other
intellectual property, damage our relationships with our clients, divert our
management's attention or harm our business, financial condition and results
of operations.
If we are unable to achieve anticipated benefits from the XTEND-Tech
acquisition or future acquisitions, joint ventures and strategic investments,
our business may suffer
On January 26, 2000, we completed the acquisition of XTEND-Tech. We may
seek to expand our solutions and service offerings and gain access to new
technologies and clients through future acquisitions, joint ventures and
strategic investments. Some of the risks that we may encounter in connection
with the XTEND-Tech acquisition and any future acquisitions, joint ventures
and strategic investments include:
. expenses, delays and difficulties of integrating the acquired company
into our existing organization and our culture
. loss of employees from the acquired company following the acquisition
. expenses and difficulties in identifying future acquisitions and
investment opportunities and the costs associated with acquisitions and
investments that are abandoned before completion
. diversion of management's attention during the target selection,
negotiation and integration processes
. impact on our financial condition due to the timing of the acquisition or
investment
. expense of amortizing an acquired company's intangible assets, which
could be significant in light of the high valuations of many companies in
the information technology industry
. any undisclosed or potential liabilities of the acquired company,
including employment, intellectual property, and warranty and product
liability related problems
Any of these factors could harm our business, financial condition,
reputation and results of operations.
If we are unable to maintain our reputation and expand our name recognition,
we may have difficulty in attracting new clients, partners and professionals
and our business may suffer
We believe that establishing and maintaining a good reputation and name
recognition are critical for attracting and expanding our client base and
professional staff. We also believe that the importance of
9
<PAGE>
reputation and name recognition will increase due to the growing number of
Internet professional services firms. If our reputation is damaged or if
potential clients are not familiar with us or the services we provide, we may
become less competitive or lose our market position. Promotion and enhancement
of our name will depend largely on our success in continuing to provide large,
complex, integrated Internet technology solutions. If clients do not perceive
our solutions to be effective or of high quality, our brand name and reputation
will suffer. In addition, if solutions we provide have defects, critical
business functions of our clients may fail, and we would likely suffer adverse
publicity as well as economic liability.
If we fail to secure written contracts, our ability to collect fees, protect
our intellectual property and protect ourselves from liability to others could
be impaired
We attempt to protect ourselves by entering into written contracts with our
clients covering the terms and contingencies of a project engagement. In some
cases we perform work for clients on the basis of a limited statement of work
or verbal agreements before a detailed written contract can be finalized. To
the extent that we fail to have detailed written contracts in place, our
ability to collect fees, recognize revenues, protect our intellectual property
and protect ourselves from liability to others may be impaired.
If we are not successful in opening and growing new offices, our financial
results may suffer
A key component of our strategy is to open offices in new geographic
locations. Once we select a new location, we typically devote substantial
financial and management resources to launch and grow that office. We cannot
assure you that we will select appropriate markets to enter, open new offices
efficiently or manage new offices profitably. Our failure to accurately assess
these issues could harm our business.
We may need additional capital in the future, which may not be available to us.
The raising of any additional capital may dilute your ownership in us
We may need to raise additional funds through public or private debt or
equity financings in order to:
. take advantage of opportunities, including rapid expansion of our
business or acquisitions of complementary businesses or technologies
. develop new services
. respond to competitive pressures
. fund operating losses
Any additional capital raised through borrowings or the sale of our equity
securities may dilute your ownership percentage in our company, or the debt or
securities issued may be entitled to priority of payment, including priority in
any bankruptcy or liquidation. Furthermore, we cannot assure you that any
additional financing we may need will be available on terms favorable to us, or
at all. In such case, our business results would suffer.
10
<PAGE>
Risks Related to Our Industry
Our business may suffer if growth in the use of the Internet declines
Because Internet technologies are central to many of our solutions, our
business depends upon continued growth in the use of the Internet by our
clients, prospective clients and their suppliers and other trading partners.
Capacity constraints caused by growth in Internet usage may, unless resolved,
impede further growth in Internet use. Factors that may affect Internet usage
or e-Commerce adoption include:
. actual or perceived lack of security of information
. lack of easy access and ease of use
. congestion of Internet traffic or other usage delays
. inconsistent quality of service
. increases in costs of accessing the Internet
. adverse government regulation
. uncertainty regarding intellectual property ownership
. reluctance of companies to adopt new business methods
. costs associated with the obsolescence of existing infrastructure
. lack of economic viability of the e-Commerce model
If the number of business users on the Internet does not increase and
commerce over the Internet does not become more accepted and widespread, demand
for our services may decrease and our business and results of operations could
suffer.
Market acceptance of our industry is uncertain
Widespread market acceptance of the outsourcing of the design, development
and maintenance of Internet-based applications to Internet professional
services firms is uncertain. Many of our potential clients may ultimately
decide to perform these services in-house. In-house personnel may have better
access to both key client decision-makers and the information required to
prepare proposals for such solutions. If independent providers of Internet
professional services prove to be unreliable, ineffective or too expensive, or
if software companies develop tools that are sufficiently user-friendly and
cost-effective, companies may instead choose to design, develop or maintain
their Internet-based applications internally. We will be harmed if the market
for our services does not continue to develop or develops more slowly than we
expect, or if the market does not accept our services.
Government regulation and legal uncertainties relating to the Internet could
decrease demand for our services, increase our operating costs or otherwise
harm our business
Increased regulation of the Internet or taxation of e-Commerce might slow
the growth in use of the Internet, which could decrease demand for our
services, increase our cost of doing business or otherwise harm our business.
Congress, federal regulatory agencies and the states have recently passed
legislation or taken other actions regulating certain aspects of the Internet,
including:
. online content . liability for third-party activities
. interaction with children . transmission of sexually explicit
materials
. copyright infringement . defamation
. user privacy . consumer protection
. taxation . jurisdiction
. access charges
11
<PAGE>
In addition, federal, state and local governmental organizations as well as
foreign governments are considering other legislative and regulatory proposals
that would regulate these and other aspects of the Internet. We do not know how
courts will interpret laws governing the Internet or the extent to which they
will apply existing laws to the Internet. Therefore, we are not certain how
existing or future laws governing the Internet or applied to the Internet will
affect our business.
Risks Related to our Common Stock
Our common stock has not been traded publicly. The initial public offering
price may not be indicative of the market price of our common stock after this
offering, and the market price of our common stock, like the market prices of
the stocks of other technology companies, may fluctuate widely and rapidly
There is currently no public market for our common stock, and we cannot
assure you that an active trading market will develop or be sustained after
this offering. The initial public offering price will be determined through
negotiation between us and representatives of the underwriters and may not be
indicative of the market price for our common stock after this offering.
The market price of our common stock could fluctuate significantly as a
result of:
. our susceptibility to quarterly variations in our operating results,
which may cause us to fail to meet analysts' or investors' expectations
. changes in financial estimates by the analysts following our stock
. earnings and other announcements by, and changes in investors'
evaluations of, Internet professional services firms
. economic and stock market conditions specific to Internet professional
services firms
. changes in business or regulatory conditions affecting information
technology services
. announcements or implementation by us or our competitors of technological
innovations or new products or services
. trading volume of our common stock
The securities of many companies have experienced significant price and
volume fluctuations in recent years, often unrelated to the companies'
operating performance. Specifically, market prices for securities of Internet-
related and technology companies have frequently reached elevated levels, often
following their initial public offerings. These levels, if attained in the
future, may not be sustainable and may not bear any relationship to these
companies' operating performances. If the market price of our common stock
reaches an elevated level following this offering, it may significantly and
rapidly decline. In the past, following periods of volatility in the market
price of a company's securities, stockholders have often instituted securities
class action litigation against the company. If we were to become involved in a
class action suit, it could divert the attention of senior management, and, if
adversely determined, our business and financial condition could suffer.
The sale or availability for sale of substantial amounts of our common stock
could cause a decline in the market price of our common stock
Sales of substantial amounts of our common stock in the public market after
the completion of this offering, or the perception that these sales could
occur, could cause a decline in the market price of our common stock and could
impair our future ability to raise capital through offerings of our common
stock. There will be shares of common stock outstanding immediately
after this offering, or shares if the underwriters exercise their
over-allotment option in full. The shares sold in this offering will be
freely tradable without restriction or further registration under the
Securities Act, unless held
12
<PAGE>
by our "affiliates" as that term is defined in Rule 144 under the Securities
Act. The 20,724,913 shares of common stock outstanding prior to this offering
are "restricted securities" as defined in Rule 144 and may not be sold in
absence of registration other than in accordance with Rule 144, Rule 144(k) or
Rule 701 under the Securities Act or another exemption from registration.
In connection with this offering, we, our executive officers and directors
and a number of our stockholders have agreed, except in limited circumstances,
not to sell any shares of common stock for 180 days after completion of this
offering without the consent of Lehman Brothers Inc. These shares, however, may
be released from these restrictions by Lehman Brothers Inc. at any time. We
cannot predict what effect, if any, market sales of shares held by principal
stockholders or any other stockholder or the availability of these shares for
future sale will have on the market price of our common stock.
A number of our stockholders are parties to an agreement with us that
provides these stockholders with the right to require us to register the sale
of shares owned by them. These rights cover approximately 15,965,511 shares,
representing % of our common stock outstanding after this offering and will
also cover any shares obtained by these stockholders from time to time.
Registration of these shares of our common stock would permit the sale of these
shares without regard to the restrictions of Rule 144 and Rule 144(k).
Concentration of ownership of our common stock may limit your ability to
influence corporate matters
Immediately following this offering, our executive officers and directors,
or entities controlled by them, will own approximately % of the outstanding
shares of our common stock.
If our significant stockholders choose to act or vote together on corporate
matters, they will have the power to control the approval of any action
requiring the approval of our stockholders, including any mergers,
acquisitions, sales of all of our assets or amendments to our certificate of
incorporation. In addition, without the consent of these stockholders, we could
be prevented from entering into transactions that could be beneficial to us.
Also, third parties could be discouraged from making a tender offer or bid to
acquire our company at a price per share that is above the then-prevailing
market price.
The net proceeds of this offering may be allocated in ways with which you and
other stockholders may not agree
Our management will have significant flexibility in applying the proceeds we
receive in this offering. Because the proceeds are not required to be allocated
to any specific purpose, investment or transaction, you cannot determine at
this time the value or propriety of our management's application of the
proceeds on our behalf and you and other stockholders may not agree with our
management's decisions.
Investors in this offering will experience immediate and substantial dilution
If you purchase common stock in this offering, you will pay more for your
shares than the amounts paid by existing stockholders for their shares. As a
result, you will experience immediate and substantial dilution of approximately
$ per share, representing the difference between our net tangible book
value per share as of December 31, 1999, after giving effect to this offering
and the initial public offering price of $ per share. In addition, you may
experience further dilution to the extent that shares of our common stock are
issued upon the exercise of stock options or under our employee stock purchase
plan. All of the shares issuable upon the exercise of currently outstanding
stock options will be issued at a purchase price less than the public offering
price per share in this offering.
13
<PAGE>
Antitakeover provisions of Delaware's General Corporation Law and our
certificate of incorporation could delay or deter a change in control
Amendments to our certificate of incorporation and our bylaws, as well as
various provisions of the Delaware General Corporation Law, may make it more
difficult to effect a change in control of our company. The existence of these
provisions may adversely affect the price of our common stock, discourage third
parties from making a bid for us or reduce any premiums paid to our
stockholders for their common stock. For example, our certificate of
incorporation authorizes our board of directors to issue up to 14,779,511
shares of blank check preferred stock and to attach special rights and
preferences to this preferred stock. The issuance of this preferred stock may
make it more difficult for a third party to acquire control of us. Our
certificate of incorporation also provides for the division of our board of
directors into three classes as nearly equal in size as possible with staggered
three-year terms. This classification of the board of directors could have the
effect of making it more difficult for a third party to acquire our company, or
of discouraging a third party from acquiring control of us.
Forward-looking statements contained in this prospectus may not be realized
This prospectus contains forward-looking statements that involve risk and
uncertainties. These forward-looking statements relate to, among other things,
our competition, strength of business model, strategy, plans and timing of the
introduction of new services, plans for entering into strategic relationships
and making acquisitions, and other expectations, intentions and plans contained
in this prospectus that are not historical facts.
When used in this prospectus, the words "expects," "anticipates," "intends,"
"plans," "may," "believes," "seeks," "estimates" and similar expressions
generally identify forward-looking statements. These statements reflect our
current expectations. They are subject to a number of risks and uncertainties,
including but not limited to, changes in technology and changes in the Internet
professional services market. In light of the many risks and uncertainties
surrounding the Internet professional services market, we cannot assure you
that the forward-looking statements contained in this prospectus will be
realized.
14
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds to us from the offering will be
approximately $ at an assumed initial public offering price of
$ per share (the mid-point of the range) and approximately
$ if the underwriters exercise the over-allotment option in full, in
each case, after deducting the estimated underwriting discount and estimated
offering expenses payable by us.
We intend to use the net proceeds of the offering primarily for general
corporate purposes, including:
. reducing outstanding debt of approximately $4.0 million, which is due
November 30, 2000, and bears interest at the prime rate plus 2.00%
(currently 10.50%)
. increasing our recruiting capabilities
. expanding our sales and marketing capabilities
. increasing our brand awareness
. investing in our internal systems and processes
. opening new offices
In addition, we may use the proceeds to make selected strategic investments
or acquisitions. We cannot specify with certainty all or particular allocations
of the use of proceeds from this offering.
DIVIDEND POLICY
We have never declared or paid any cash dividends and we do not anticipate
paying cash dividends in the foreseeable future. We currently intend to retain
future earnings, if any, to finance operations and the expansion of our
business. Any future determination to pay dividends will be at the sole
discretion of the board of directors and will depend upon our financial
condition, operating results, capital requirements and other factors our board
of directors deems relevant. In addition, our current line of credit facilities
restrict our ability to declare and pay any dividends without the prior consent
of our lenders.
15
<PAGE>
CAPITALIZATION
The following table sets forth our actual capitalization and our unaudited
pro forma and unaudited pro forma, as adjusted, capitalization as of September
30, 1999. You should read this information in conjunction with our consolidated
financial statements and related notes to those consolidated financial
statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of September 30, 1999
--------------------------------
Pro Forma,
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Capital lease obligations, current portion..... $ 156 $ 175 $
======== ======== ====
Capital lease obligations, net of current
portion....................................... 348 402
-------- -------- ----
Mandatorily redeemable convertible preferred
stock:
Series B, $0.001 par value; 2,560,000 shares
authorized; 2,560,000 shares issued and
outstanding, actual; no shares issued and
outstanding, pro forma and pro forma, as
adjusted.................................... 3,469 -- --
Series C, $0.001 par value; 8,059,511 shares
authorized; 8,055,511 shares issued and
outstanding, actual; no shares issued and
outstanding, pro forma and pro forma, as
adjusted.................................... 10,918 -- --
Series D, $0.001 par value; 3,000,000 shares
authorized; no shares issued and
outstanding, actual; no shares issued and
outstanding, pro forma and pro forma, as
adjusted.................................... -- -- --
-------- -------- ----
14,387 -- --
-------- -------- ----
Series A convertible preferred stock, $0.001
par value; 1,000,000 shares authorized;
800,000 shares issued and outstanding,
actual; no shares issued and outstanding,
pro forma and pro forma, as adjusted........ 1 --
Common stock, $0.001 par value; 25,000,000
shares authorized; 4,717,053 shares issued
and outstanding, actual; 19,132,564 shares
issued and outstanding, pro forma and pro
forma, as adjusted.......................... 5 20
Additional paid-in capital................... 2,299 55,922
Deferred stock-based compensation............ (2,213) (7,181)
Accumulated comprehensive loss............... (93) (93)
Accumulated deficit.......................... (11,243) (16,043)
-------- -------- ----
Total stockholders' equity (deficit)....... (11,244) 32,625
-------- -------- ----
Total capitalization..................... $ 3,647 $ 33,202 $
======== ======== ====
</TABLE>
The foregoing table excludes the following shares at September 30, 1999:
. 2,954,000 shares of common stock issuable upon exercise of outstanding
options with a weighted average exercise price of $0.24 per share
. 2,040,252 shares of common stock available for future grant as of
September 30, 1999 and
. 200,000 shares of common stock issuable upon the exercise and
conversion of warrants
For a description of the assumptions underlying the unaudited pro forma and
unaudited pro forma, as adjusted, data, see "Summary Consolidated Financial
Data."
16
<PAGE>
DILUTION
On a pro forma basis after giving effect to the conversion of all
outstanding shares of preferred stock into shares of common stock in connection
with this offering, our pro forma net tangible book value as of December 31,
1999, was $ or $ per share of common stock. Pro forma net tangible book
value per share represents the amount of our total tangible assets reduced by
the amount of our total liabilities and divided by the total number of shares
of common stock outstanding (reflecting the conversion of all outstanding
shares of preferred stock into shares of common stock upon the closing of this
offering). Without taking into account any other change in our pro forma net
tangible book value after December 31, 1999, other than to give effect to the
sale of shares of common stock offered by this prospectus at an
assumed initial public offering price of $ per share and receipt of the
estimated net proceeds therefrom, our pro forma net tangible book value as of
December 31, 1999, would have been approximately $ or $ per
share. This represents an immediate increase in such net tangible book value of
$ per share to existing stockholders and an immediate dilution of
$ per share to the new investors. If the initial public offering price
is higher or lower, the dilution to new investors will be, respectively,
greater or less. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $
-----
Pro forma net tangible book value per share as of December 31,
1999.......................................................... $
Increase per share attributable to new investors............... $
-----
Pro forma net tangible book value per share after this
offering...................................................... $
-----
Net tangible book value dilution per share to new investors.... $
=====
</TABLE>
The following table sets forth as of December 31, 1999, the difference
between the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by the existing
stockholders and by the new investors at an assumed initial public offering
price of $ per share for shares purchased in this offering, before
deducting the estimated underwriting discounts and estimated offering expenses:
<TABLE>
<CAPTION>
Shares
Purchased Total Consideration Average
-------------- --------------------- Price Per
Number Percent Amount Percent Share
------ ------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... % $ % $
New investors............... $
--- ----- --------- ----------
Total..................... 100.0% $ 100.0%
=== ===== ========= ==========
</TABLE>
This table assumes that the underwriters do not exercise their over-
allotment option. If the underwriters' over-allotment option is exercised in
full, the pro forma, as adjusted net tangible book value per share after giving
effect to this offering would be $ per share. After deducting underwriting
discounts and commissions and estimated transaction expenses, the increase in
the net tangible book value per share to existing stockholders would be $
and the dilution to new public investors would be $ per share.
This table also assumes that no options or warrants have been or are
exercised after December 31, 1999. As of December 31, 1999, there were
outstanding options to purchase an aggregate of shares of common stock
at a weighted average exercise price of $ per share (excluding warrants to
purchase shares of Series C Preferred Stock at $ per share). If all
such options and warrants had been exercised on December 31, 1999, our net
tangible book value on such date would have been $ or $ per
share, the increase in net tangible book value attributable to new investors
would have been $ per share and the dilution in net tangible book value to
new investors would have been $ per share.
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated statement of operations data for the
years ended December 31, 1997 and 1998, and the nine months ended September 30,
1999, and the consolidated balance sheet data at December 31, 1997 and 1998,
and at September 30, 1999, are derived from the audited consolidated financial
statements included elsewhere in this prospectus. The selected consolidated
statement of operations data for the year ended December 31, 1996, and the
consolidated balance sheet data at December 31, 1996, are derived from our
audited consolidated financial statements not included elsewhere in this
prospectus. The selected consolidated statement of operations data for the year
ended December 31, 1995, and the nine months ended September 30, 1998, and the
consolidated balance sheet data at December 31, 1995, are derived from our
unaudited consolidated financial statements that include, in our opinion, all
adjustments, consisting of only normal recurring adjustments, necessary for
fair representation of the financial condition at that date and results of
operations for such period. The historical results presented below are not
necessarily indicative of the results to be expected for any future period. The
selected consolidated financial data should be read in conjunction with our
consolidated financial statements and the notes to those consolidated financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" located elsewhere in this prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
------------------------------------ -------------------
1995 1996 1997 1998 1998 1999
----------- ------ ------- ------- ----------- -------
(unaudited) (unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues................ $2,416 $5,032 $ 5,196 $ 8,016 $ 6,001 $ 7,924
Operating expenses:
Project personnel...... 1,185 2,635 2,677 2,799 2,005 5,260
Sales and marketing.... 72 135 1,671 1,838 1,517 2,560
General and
administrative........ 951 2,123 3,456 4,520 3,613 5,727
Depreciation........... 149 131 187 251 174 366
Amortization of
deferred stock-based
compensation.......... -- -- -- 50 -- 836
Non-recurring expenses
on closing of foreign
operations............ -- -- -- 250 -- --
------ ------ ------- ------- ------- -------
Total operating
expenses............. 2,357 5,024 7,991 9,708 7,309 14,749
------ ------ ------- ------- ------- -------
Income (loss) from
operations............. 59 8 (2,795) (1,692) (1,308) (6,825)
Other income (expense),
net.................... (16) (51) (79) 36 10 14
------ ------ ------- ------- ------- -------
Income (loss) before
income taxes........... 43 (43) (2,874) (1,656) (1,298) (6,811)
Income tax benefit
(expense).............. (16) 14 (90) (2) -- (15)
------ ------ ------- ------- ------- -------
Net income (loss)....... $ 27 $ (29) $(2,964) $(1,658) $(1,298) $(6,826)
====== ====== ======= ======= ======= =======
Net income (loss) per
share:
Basic and diluted...... $ 0.01 $(0.01) $ (0.65) $ (0.36) $ (0.28) $ (1.69)
====== ====== ======= ======= ======= =======
Weighted average
shares................ 4,529 4,541 4,557 4,659 4,658 4,693
Pro forma net loss per
share (unaudited):
Basic and diluted...... -- -- -- -- -- $ (0.49)
=======
Weighted average
shares................ -- -- -- -- -- 13,886
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
As of December 31, As of
----------------------------------- September 30,
1995 1996 1997 1998 1999
----------- ------ ------- ------- -------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Cash and cash equivalents... $ 68 $ 48 $ 671 $ 4,783 $ 3,156
Working capital............. 387 317 429 3,802 1,610
Total assets................ 954 1,878 1,822 6,295 6,661
Long-term borrowings and
capital lease obligations,
net of current portion..... 37 70 192 373 348
Mandatorily redeemable
convertible preferred
stock...................... -- -- 3,200 8,270 14,387
Total stockholders' equity
(deficit).................. 627 600 (2,496) (4,125) (11,244)
</TABLE>
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with "Selected
Consolidated Financial Data," our consolidated financial statements and the
notes to those financial statements located elsewhere in this prospectus. In
addition to historical information, this discussion contains forward-looking
information that involves risks and uncertainties. Our actual results could
differ materially from those anticipated by such forward-looking information
due to competitive factors, risks associated with our expansion plans and other
factors discussed under "Risk Factors" and elsewhere in this prospectus.
Overview
Revenues. Our revenues are substantially derived from fixed-price, fixed-
time contracts. Revenues earned under fixed-price, fixed-time projects are
recognized on the percentage-of-completion method based on the ratio of actual
costs incurred to total estimated costs. We recognize revenues on our other
projects on a time and materials basis. Revenues exclude reimbursable expenses
charged to clients.
Approximately 95% of our revenues for the nine months ended September 30,
1999, was derived from fixed-price, fixed-time arrangements. We expect the
percentage of our revenues that is derived from fixed-price, fixed-time
projects may decrease in the future.
Due to our use of fixed-price contracts, our operating results may be harmed
by inaccurate estimates of costs and time required to complete projects.
Therefore, we closely monitor project progress through a series of processes
designed to help estimate cost and time to completion, including a detailed
review at the end of each project stage to determine project percentage of
completion. We typically receive an advance payment from our clients upon
contract signing, with additional payments upon our attainment of project
milestones. Deferred revenues consist primarily of payments received in advance
of services rendered. We recognize those payments as revenues upon performance
of services.
Cost Structure. Project personnel expenses consist primarily of payroll,
associated taxes, employee benefits, any third-party fees and net travel costs
incurred in the delivery of our services. Sales and marketing expenses consist
primarily of personnel costs and commissions as well as the costs associated
with the development and maintenance of our marketing materials and programs.
General and administrative expenses consist primarily of the costs associated
with operations management, finance, human resources, information systems,
facilities and other administrative support for project personnel.
We regularly review the fees we charge for our services, our employee
compensation and our overhead costs in an effort to remain competitive within
our industry. In addition, we monitor the progress of our projects with our
clients' senior management on a regular basis. Monitoring the costs and
progress associated with each project is aided by our intranet-based project
management systems. We manage the activities of our service delivery personnel
by closely monitoring project schedules and staffing requirements for new
projects. Most of our client projects can, and may in the future, be terminated
by the client without penalty. However, our contracts generally provide that we
will be compensated based on the percentage of work completed relative to the
fixed price of the engagement. Termination of a client project could require us
to maintain underutilized employees, resulting in a higher than expected number
of inactive professionals. We maintain a sufficient number of senior
professionals to oversee existing and anticipated client projects and
participate in our sales efforts to engage new client projects.
Variability of Operating Results. Our operating results have fluctuated from
quarter to quarter and may continue to fluctuate in the future. These
fluctuations may be significant. We may not always forecast accurately the
frequency and duration of our projects. We incur expenses, which are mainly
fixed expenses, based on our expectations concerning the costs of our future
projects. We may not be able to reduce our spending in a timely manner to
compensate for any shortfall in our projected revenues. In the event of such a
20
<PAGE>
shortfall, our expenses as a percentage of our revenues would increase. Our
quarterly operating results may not meet the expectations of analysts or
investors. This may cause a decline in the market price of our common stock.
Recent Net Losses. Our revenues were $7.9 million for the nine months ended
September 30, 1999, compared to $6.0 million for the nine months ended
September 30, 1998. We attribute our revenue growth to services delivered to
new clients, additional projects for existing clients and larger average
project sizes. Our net loss was $6.8 million for the nine months ended
September 30, 1999, compared to $1.3 million for the nine months ended
September 30, 1998. We primarily attribute our increased net losses to higher
project personnel expenses, sales and marketing expenses and general and
administrative expenses. The overall increase in expenses was primarily
attributable to costs incurred to expand or increase the number of project
personnel as well as significant investment in office facilities and related
infrastructure management and administrative personnel and sales and marketing.
Recent Events. In January 2000, we acquired the business of XTEND-Tech, a
30-employee information technology consulting organization serving Global 1000
companies. We issued 1,350,000 shares of our common stock in connection with
this acquisition with an estimated fair value of approximately $12.2 million.
This consideration consisted of a combination of the purchase price paid for
the outstanding common stock of XTEND-Tech and consideration to certain
employee shareholders of XTEND-Tech for continued employment with us. The
acquisition was accounted for using the purchase method of accounting. The
total amount of the consideration treated purchase price for this acquisition
was approximately $7.2 million and was allocated to the tangible and intangible
assets acquired and liabilities assumed based upon their respective fair values
at the acquisition date. The amortization of the intangible assets will occur
over the estimated periods to be benefited. In connection with this acquisition
we signed restricted stock agreements with certain employee shareholders of
XTEND-Tech as consideration for continued employment. The fair value of the
unvested shares, which relate to these restricted stock agreements, amounting
to $5.0 million, has been recorded as deferred stock-based compensation, which
will be amortized over the three-year vesting period of the restricted stock.
Results of Operations
The following table sets forth, as a percentage of revenue, our consolidated
statement of operations for the years ended December 31, 1997, and 1998, and
the nine months ended September 30, 1998, and 1999.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
---------------- -----------------------
1997 1998 1998 1999
------ ------ ------------ --------
(Unaudited)
<S> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues........................... 100% 100% 100% 100%
Operating expenses:
Project personnel................. 51 35 33 66
Sales and marketing............... 32 23 25 32
General and administrative........ 67 56 61 72
Depreciation...................... 3 3 3 5
Amortization of deferred stock-
based compensation............... -- 1 -- 11
Non-recurring expenses on closing
of foreign operations............ -- 3 -- --
------ ------ -------- --------
Total operating expenses......... 153 121 122 186
------ ------ -------- --------
Loss from operations............... (53) (21) (22) (86)
Other income (expense), net........ (2) -- -- --
------ ------ -------- --------
Loss before income taxes........... (55) (21) (22) (86)
Income tax expense................. (2) -- -- --
------ ------ -------- --------
Net loss........................... (57)% (21)% (22)% (86)%
====== ====== ======== ========
</TABLE>
21
<PAGE>
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September
30, 1998
Revenues. Revenues increased $1.9 million, or 32%, to $7.9 million for the
nine months ended September 30, 1999, from $6.0 million for the nine months
ended September 30, 1998. This growth is attributable to services delivered to
new clients, additional projects for existing clients and larger average
project sizes.
Project Personnel Expenses. Project personnel expenses increased $3.3
million, or 162%, to $5.3 million for the nine months ended September 30, 1999,
from $2.0 million for the nine months ended September 30, 1998. The increase
was primarily attributable to the hiring of additional project personnel
associated with the increased demand for our services. Headcount for project
personnel as of September 30, 1999, was 81 compared to 32 as of September 30,
1998. As a percentage of revenues, project personnel expenses were 66% for the
nine months ended September 30, 1999, and 33% for the nine months ended
September 30, 1998.
Sales and Marketing Expenses. Sales and marketing expenses increased $1.1
million, or 69%, to $2.6 million for the nine months ended September 30, 1999,
from $1.5 million for the nine months ended September 30, 1998. The increase
was due to our investment in our sales and marketing programs. As a percentage
of revenues, sales and marketing expenses were 32% for the nine months ended
September 30, 1999, and 25% for the nine months ended September 30, 1998.
General and Administrative Expenses. General and administrative expenses
increased $2.1 million, or 59%, to $5.7 million for the nine months ended
September 30, 1999, from $3.6 million for the nine months ended September 30,
1998. Office rent expenses increased to $582,000 for the nine months ended
September 30, 1999, from $143,000 for the nine months ended September 30, 1998.
General and administrative headcount increased to 33 as of September 30, 1999,
from 13 as of September 30, 1998. The increases in office rent expenses
accounted for 21% of the overall increase. In addition, personnel expenses
accounted for 40% of this increase. As a percentage of revenues, general and
administrative expenses were 72% for the nine months ended September 30, 1999,
and 60% for the nine months ended September 30, 1998.
Depreciation. Depreciation increased $192,000, or 110% to $366,000 for the
nine months ended September 30, 1999, from $174,000 for the nine months ended
September 30, 1998. The increase was attributable to capital expenditures for
new equipment and leasehold improvements.
Amortization of Deferred Stock-based Compensation. We recorded $836,000 in
amortization of deferred stock-based compensation expense for the nine months
ended September 30, 1999. This expense represented the amortization of the
difference between the deemed fair value of the underlying options at the time
of grant and their exercise price.
Other Income (Expense), Net. Other income was $14,000 for the nine months
ended September 30, 1999, compared to $10,000 for the nine months ended
September 30, 1998. The increase was primarily due to an increase in net
interest income. The average aggregate balance outstanding on our line of
credit and term loan was $324,000 during the nine months ended September 30,
1999, as compared to $130,000 during the nine months ended September 30, 1998.
Interest expense under these facilities was $71,000 for the nine months ended
September 30, 1999, and $43,000 for the nine months ended September 30, 1998.
Income Tax Expense. We incurred no income tax expense for the nine months
ended September 30, 1998, and $15,000 for the nine months ended September 30,
1999. As of September 30, 1999, we had approximately $10.0 million of federal
net operating loss carryforwards and approximately $8.0 million of state net
operating loss carryforwards available to offset future taxable income. The
federal net operating loss carryforwards will expire between 2011 and 2019 and
the state net operating loss carryforwards will expire between 2004 and 2006,
if not utilized.
Under the Tax Reform Act of 1986, the amounts of and the benefit from net
operating losses that can be carried forward may be limited in certain
circumstances including, but not limited to, a cumulative stock ownership
change of more than 50% over a three-year period, as defined. Any unused annual
limitation may be carried forward to future years for the balance of the net
operating loss carryforward period.
22
<PAGE>
1998 Compared to 1997
Revenues. Revenues increased by $2.8 million, or 54%, to $8.0 million for
the year ended December 31, 1998, from $5.2 million for the year ended December
31, 1997. The increase was primarily attributable to an increase in the volume
of services delivered to new clients and additional work delivered to existing
clients.
Project Personnel Expenses. Project personnel expenses increased by
$122,000, or 5%, to $2.8 million for the year ended December 31, 1998, from
$2.7 million for the year ended December 31, 1997. The increase was
attributable to the hiring of additional project personnel. As a percentage of
revenues, project personnel expenses were 35% for the year ended December 31,
1998, and 51% for the year ended December 31, 1997.
Sales and Marketing Expenses. Sales and marketing expenses increased by
$167,000, or 10%, to $1.8 million for the year ended December 31, 1998, from
$1.7 million for the year ended December 31, 1997. The increase in these
expenses was primarily attributable to the hiring of business development and
marketing personnel, increased public relations activities and the
implementation and continuance of our marketing programs. Total marketing and
sales headcount was eight as of December 31, 1998, compared to five as of
December 31, 1997. As a percentage of revenues, sales and marketing expenses
were 23% for the year ended December 31, 1998, and 32% for the year ended
December 31, 1997.
General and Administrative Expenses. General and administrative expenses
increased $1.0 million, or 31%, to $4.5 million for the year ended December 31,
1998, from $3.5 million for the year ended December 31, 1997. The increase was
primarily attributable to expenses incurred to accommodate our current and
anticipated growth, including the expansion of our office facilities and the
increased cost of management and administrative personnel and other general
operating expenses in the areas of accounting, human resources and general
operations. Office rent expenses increased to $213,000 for the year ended
December 31, 1998, from $157,000 for the year ended December 31, 1997.
Headcount for management and administrative staff increased to 12 at December
31, 1998, from six at December 31, 1997. As a percentage of revenues, general
and administrative expenses were 56% for the year ended December 31, 1998, and
67% for the year ended December 31, 1997.
Depreciation. Depreciation increased by $64,000 to $251,000 for the year
ended December 31, 1998, from $187,000 for the year ended December 31, 1997.
The increase was related to increased investments in furniture and equipment.
Amortization of Deferred Stock-based Compensation. We recorded $50,000 in
amortization of deferred stock-based compensation expense for the year ended
December 31, 1998. This expense represented the amortization of the difference
between the deemed fair value of the underlying options at the date of grant
and their exercise price.
Non-Recurring Expenses on Closing of Foreign Operations. In November 1998,
we announced our intention to close our operations in Malaysia. In conjunction
with this announcement, we recorded a reserve of $250,000 for anticipated
liquidation costs of our Malaysian subsidiary.
Other Income (Expense), Net. Other income increased by $115,000 to $36,000
for the year ended December 31, 1998, from an expense of $79,000 for the year
ended December 31, 1997. The increase was primarily attributable to increased
interest income and a decrease in interest expense related to borrowings under
our revolving line of credit and capital lease obligations. Interest expense
was $56,000 for the year ended December 31, 1998, and $83,000 for the year
ended December 31, 1997.
Income Tax Expense. We incurred a $2,000 income tax expense for the year
ended December 31, 1998, as compared with $90,000 for the year ended December
31, 1997. As of December 31, 1998 we had approximately $3.0 million of federal
net operating loss carryforwards and $2.0 million of state net operating loss
carryforwards available to offset future taxable income.
23
<PAGE>
Quarterly Operating Results
The following table sets forth a summary of our unaudited quarterly
consolidated operating results for each of our seven most recently ended fiscal
quarters. We have derived this information from our unaudited interim
consolidated financial statements, which in our opinion, have been prepared on
a basis consistent with our consolidated financial statements contained
elsewhere in this prospectus and include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation in accordance
with generally accepted accounting principles when read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
prospectus. Our quarterly consolidated operating results are not necessarily
indicative of future results of operations.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30,
1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- --------
(in thousands, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues................ $1,681 $2,040 $2,280 $2,015 $ 1,818 $ 1,907 $ 4,199
Operating expenses:
Project personnel...... 611 655 739 794 1,168 1,561 2,531
Sales and marketing.... 425 575 518 320 798 706 1,056
General and
administrative........ 1,134 1,212 1,266 908 1,380 2,001 2,346
Depreciation........... 52 59 63 77 84 118 164
Amortization of
deferred stock-based
compensation.......... -- -- -- 50 179 225 432
Non-recurring expense
on closing of foreign
operations............ -- -- -- 250 -- -- --
------ ------ ------ ------ ------- ------- -------
Total operating
expenses............ 2,222 2,501 2,586 2,399 3,609 4,611 6,529
------ ------ ------ ------ ------- ------- -------
Loss from operations.... (541) (461) (306) (384) (1,791) (2,704) (2,330)
Other income (expense),
net.................... (15) 4 21 26 17 (7) 4
------ ------ ------ ------ ------- ------- -------
Loss before income
taxes.................. (556) (457) (285) (358) (1,774) (2,711) (2,326)
Income tax expense...... -- -- -- (2) (5) (5) (5)
------ ------ ------ ------ ------- ------- -------
Net loss................ $ (556) $ (457) $ (285) $ (360) $(1,779) $(2,716) $(2,331)
====== ====== ====== ====== ======= ======= =======
As a Percentage of
Revenue:
Revenues................ 100% 100% 100% 100% 100% 100% 100%
Operating expenses:
Project personnel...... 36 32 32 40 64 82 60
Sales and marketing.... 25 28 23 16 44 37 25
General and
administrative........ 68 59 56 45 76 105 56
Depreciation........... 3 3 3 4 5 6 4
Amortization of
deferred stock-based
compensation.......... -- -- -- 2 10 12 10
Non-recurring expense
on closing of foreign
operations............ -- -- -- 12 -- -- --
------ ------ ------ ------ ------- ------- -------
Total operating
expenses............ 132 122 114 119 199 242 155
------ ------ ------ ------ ------- ------- -------
Loss from operations.... (32) (22) (14) (19) (99) (142) (55)
Other income (expense),
net.................... (1) -- 1 1 1 -- --
------ ------ ------ ------ ------- ------- -------
Loss before income taxes
....................... (33) (22) (13) (18) (98) (142) (55)
Income tax expense...... -- -- -- -- -- -- --
------ ------ ------ ------ ------- ------- -------
Net loss................ (33)% (22)% (13)% (18)% (98)% (142)% (55)%
====== ====== ====== ====== ======= ======= =======
</TABLE>
24
<PAGE>
Liquidity and Capital Resources
Since 1997, we have financed our operations primarily from sales of
preferred stock and borrowings under a line of credit and a term loan from a
commercial bank. As of September 30, 1999, we have raised approximately $13.6
million, net of offering expenses, through the sale of our preferred stock. At
September 30, 1999, we had approximately $3.2 million in cash and cash
equivalents.
Net cash used in operating activities was $2.2 million for the year ended
December 31, 1997, $340,000 for the year ended December 31, 1998, $891,000 for
the nine months ended September 30, 1998, and $5.7 million for the nine months
ended September 30, 1999. Cash used in operating activities in each of these
periods was primarily the result of net losses, adjusted for non-cash items
primarily related to depreciation, increases in accounts receivable and fees
and unbilled revenues, partially offset by increases in accounts payable and
accrued expenses.
Net cash used in investing activities was $50,000 for the year ended
December 31, 1997, $460,000 for the year ended December 31, 1998, $270,000 for
the nine months ended September 30, 1998, and $837,000 for the nine months
ended September 30, 1999. Cash used in investing activities in each period
consisted primarily of purchases of furniture and equipment.
Net cash provided by financing activities was $2.9 million for the year
ended December 31, 1997, $4.9 million for the year ended December 31, 1998,
$4.7 million for the nine months ended September 30, 1998, and $4.9 million for
the nine months ended September 30, 1999. In 1997 and 1998, the cash provided
by our financing activities was primarily from the sale of our preferred stock.
For the nine months ended September 30, 1999, the cash provided from our
financing activities was primarily from the sale of our preferred stock and
borrowings under a term loan and equipment leases.
As of September 30, 1999, our principal commitments consisted of obligations
under equipment leases and borrowings that funded our purchases of furniture
and equipment. The equipment leasing arrangements consist primarily of us
paying rental fees to third-party leasing providers at interest rates between
11.0% and 13.0%. Although we have no material commitments for capital
expenditures, we anticipate an increase in our capital expenditures consistent
with anticipated growth in our operations, infrastructure and personnel.
As of September 30, 1999, we had a $1.0 million line of credit and a
$600,000 term loan with a commercial bank. The line of credit and the term loan
are secured by substantially all of our assets. Under the terms of the line of
credit, borrowings are subject to a limit of 80% of eligible accounts
receivable, as defined in the line of credit. The line of credit bears interest
at the prime rate plus 0.75% (9.00% at September 30, 1999). Under the line of
credit agreement, we are required to maintain certain financial ratios. As of
September 30, 1999, there were no amounts outstanding and $1.0 million
available under the line of credit. The term loan bears interest at the prime
rate plus 1.50% (9.75% at September 30, 1999) and had $375,000 outstanding as
of September 30, 1999. The term loan matures in June 2000.
Subsequent to September 30, 1999, we entered into a loan agreement that
provides for borrowings of up to $4.0 million under a term loan and $2.0
million under a revolving line of credit. Borrowings under the term loan bear
interest at the prime rate plus 2.00%, with accrued interest paid monthly and
is due at November 30, 2000. Borrowing under the line of credit is limited to
the lesser of 80% of the amount of the eligible accounts receivable or $2.0
million, and bears interest at the prime rate plus 2.00%. We borrowed the
entire $4.0 million available under the term loan on the date of the agreement.
Subsequent to September 30, 1999, we issued 3,000,000 shares of Series D
preferred stock in a private placement for gross proceeds of approximately
$22.2 million.
We believe that the net proceeds from this offering, combined with the
proceeds of the Series D private placement, the proceeds of the private
placement to be closed contemporaneously with this offering, current cash
balances and borrowing capacity under our credit facilities, will be sufficient
to fund our requirements for
25
<PAGE>
working capital and capital expenditures for at least the next 12 months.
Thereafter, we may sell additional equity or debt securities or seek additional
credit facilities. Sales of additional equity or convertible debt securities
would result in additional dilution to our stockholders. We may need to raise
additional funds sooner in order to support expansion, develop new or enhanced
services, respond to competitive pressures, acquire complementary businesses or
technologies or take advantage of unanticipated opportunities. Our future
liquidity and capital requirements will depend upon numerous factors, including
the success of our existing and new service offerings and competing
technological and market developments. Additional financing, if any, may not be
available on satisfactory terms.
Disclosure About Market Risk
Our exposure to market risk for changes in interest rates relates primarily
to the increase or decrease in the amount of interest income we can earn on our
available funds for investment and on the increase or decrease in the amount of
interest expense we must pay with respect to our various outstanding debt
instruments. The risk associated with fluctuating interest expense is limited,
however, to the exposure related to those debt instruments and credit
facilities that are tied to variable market rates. We do not plan to use
derivative financial instruments in our investment portfolio. We plan to ensure
the safety and preservation of our invested principal funds by limiting default
risks, market risk and reinvestment risk. We plan to mitigate default risk by
investing in high-credit quality securities.
All of our revenues are realized currently in U.S. dollars and are from
customers primarily in the United States. Therefore, we do not believe that we
currently have any significant direct foreign currency exchange rate risk.
26
<PAGE>
BUSINESS
Overview
We are a leading Internet professional services firm providing B2B e-
Commerce solutions to Global 2000 companies and emerging digital businesses. We
architect, engineer, integrate and support complex B2B digital exchanges and
digital customer relationship management, or DCRM, solutions. Digital exchanges
are electronic marketplaces that enable businesses to dynamically collaborate
with trading partners, conduct e-Commerce, manage distribution relationships
and enhance business partnerships. DCRM is an Internet-based approach to
coordinating a company's customer relationships across communications channels,
business functions and trading partners.
We believe our capabilities are uniquely suited to developing the extremely
complex, highly integrated systems required for effective B2B e-Commerce
solutions. Our professionals create scalable, reliable and integrated business
solutions using our proprietary LightSpeed delivery model and i2K architectural
framework. We provide these solutions through our 149 professionals, who have
an average of ten years experience in business process analysis, technology
architecture, project management and software engineering.
Industry Background
The Internet enables millions of businesses and consumers to share
information and conduct commerce electronically. Businesses initially used
their Internet sites primarily for advertising and promotional purposes. As
Internet usage increased, businesses realized the Internet could also be used
as an effective medium for directly targeting consumers, improving
communications with customers and generating business-to-consumer, or B2C, e-
Commerce transactions. Forrester Research, Inc. estimates that the total value
of goods exchanged in the United States B2C e-Commerce market will exceed $100
billion by 2003. Driven by the scale and scope of this rapidly emerging
business opportunity, businesses began to develop increasingly complex, higher
transaction volume consumer-oriented websites.
While B2C e-Commerce was evolving, companies also began to use Internet
technology to streamline their internal operations and electronically integrate
select internal processes with other businesses, including their suppliers,
distributors and key business customers. Today, businesses are using Internet
technologies to improve their competitive positions by increasing operating
efficiencies, strengthening their trading partner relationships, and
identifying and capitalizing on emerging digital business opportunities by
developing various Internet-based business models. Forrester estimates that the
total value of goods exchanged in the United States B2B e-Commerce market will
increase from $43.1 billion in 1998 to $1.3 trillion in 2003, representing a
99% five-year compound annual growth rate.
An important emerging Internet-based business model is the digital exchange.
Digital exchanges provide Internet-based trading hubs where multiple buyers and
sellers communicate and conduct commerce. The creation of these exchanges
enables innovative methods for dynamic trading between business partners,
including auctions, reverse auctions, aggregation, inventory liquidation and
on-line negotiation. These electronic marketplaces provide unprecedented global
opportunities for businesses to exchange information and execute transactions
with the efficiency, cost effectiveness and global reach provided by Internet
technologies, while supporting individual contractual relationships between
trading partners. Examples of these exchanges include autoExchange.com,
ePolicy.com, Pure Markets, tradepac.com and VerticalNet.
Businesses are rapidly developing digital exchanges and other B2B e-Commerce
systems in order to fully realize the B2B market opportunity. B2B e-Commerce
systems are engineered to facilitate:
. significant increases in the value and complexity of data and
transactions processed
. improved performance and response times to support real-time access by
trading partners from a variety of technology platforms
27
<PAGE>
. improved reliability, accuracy and security for transactions
. high degrees of integration between legacy applications, networks and
technology platforms within a company as well as across diverse
businesses
. the execution of a broad variety of processes and payment methods that
exist between trading partners
These B2B systems are highly complex and often involve a greater number of
steps per transaction and more processes than B2C systems, creating a longer,
more intricate commerce chain and resulting in a more complex delivery
infrastructure. B2B e-Commerce introduces powerful benefits to both buyers and
sellers. Some of the typical differences between B2C e-Commerce and B2B e-
Commerce are highlighted below:
<TABLE>
<CAPTION>
Characteristic B2C B2B
-------------- ---------------------------- --------------------------------
<S> <C> <C>
Users and
Participants .One-to-many .Many-to-many
.Individuals .Fragmented buyers, suppliers,
partners and distributors
- --------------------------------------------------------------------------------
Products and
Services .Standardized, mass market .Higher degrees of customization
.Convenient .Complex configuration
.Price points: $100s-$1000s .Price points: $1000s-millions
.Mission critical
.Highly time-sensitive
- --------------------------------------------------------------------------------
Delivery and
Fulfillment .Credit card payment .Credit/financing key issues
.Straightforward fulfillment .Intricate synchronization
.Multi-stage shipping
.Customs, tariffs, inspections
- --------------------------------------------------------------------------------
Infrastructure .Supplier-side systems only .Real-time, customized front-end
.Tight back-office integration
.Security, bandwidth for heavy
volumes
- --------------------------------------------------------------------------------
Outcome
Objective .Building brand .Linking the value chain
</TABLE>
Developing and supporting B2B e-Commerce systems requires substantial
expertise in designing new business processes that integrate with existing
operations, selecting and implementing the appropriate Internet technologies
and managing the implementation process to meet the time-to-market needs
characteristic of today's competitive business environment. There is a limited
supply of high-quality, experienced Internet services professionals and demand
for these professionals is increasing rapidly. This makes it increasingly
difficult for companies seeking to internally implement B2B e-Commerce
solutions to hire, develop and retain these professionals. As a result, an
increasing number of businesses, from start-ups to Global 2000 companies,
engage third-party professional services firms to help them design and
implement B2B e-Commerce solutions.
The demand for these and related Internet and e-Commerce services is
projected to grow dramatically. IDC estimates that this market will grow from
approximately $7.8 billion in 1998 to $78.6 billion in 2003, representing a 59%
compound annual growth rate. Within the Internet professional services market,
however, we believe the B2B e-Commerce segment is underserved and is large and
growing faster than the overall market.
We believe there are only a few Internet professional services firms with an
exclusive focus on B2B e-Commerce. Additionally, we believe that in order to be
successful in this market, professional services firms
28
<PAGE>
must possess an integrated model of B2B-oriented process analysis, substantial
software engineering expertise, strong technology architecture and integration
skills, and effective client and project management capabilities.
Our Solution
We are a leading Internet professional services firm providing B2B e-
Commerce solutions to Global 2000 companies and emerging digital businesses. We
architect, engineer, integrate and support complex B2B digital exchanges and
DCRM solutions.
The key elements of our solution are:
Early and Exclusive B2B e-Commerce Focus. We have delivered B2B software
applications for our clients since 1995. We provide our services through multi-
disciplinary teams of professionals with extensive experience in business
process analysis, project management and software engineering. We believe our
early vision and B2B experience is unique in the Internet professional services
sector, and enables us to rapidly and efficiently architect and implement
Internet solutions.
Proprietary LightSpeed Delivery Model. LightSpeed, our proprietary
collection of operating principles, methods and frameworks, is an Internet-
based model for governing the way we deliver solutions to our clients,
including how we define, price, staff and manage our projects. We believe the
successful application of LightSpeed in our engagements enables us to more
accurately forecast project schedules and costs. LightSpeed also allows us to
better manage project risk, and to identify, capture and reuse valuable
Internet frameworks, designs, processes and techniques that we develop while
creating B2B e-Commerce solutions for our clients.
Proprietary i2K Architectural Model. i2K is a collection of architectural
principles, methods and frameworks we have developed for B2B e-Commerce
systems. It provides a schematic for developing solutions that are scalable,
adaptable, integrated with our clients' legacy systems and extendable outside
their enterprises to their trading partners' systems. We believe each of our
clients' competitive advantage is directly related to how quickly and how well
they leverage and integrate information within their Internet-based and legacy
systems and those of their trading partners. Accessing and combining this
information in meaningful ways is essential to leveraging the potential of the
Internet. We believe the successful design and implementation of solutions
based on our i2K model results in secure, reliable systems and a highly
extendable architectural platform.
Productization of Services. Based on our extensive experience in B2B digital
exchanges and digital customer relationship management solutions, we have
developed modular solutions tailored for discrete business processes. Our
productized service offerings are comprised of three major elements: pre-
defined business functions, proven business practices and pre-defined
technology architecture. Our current offerings, eSales and eCare, address
Internet-based sales and Internet-based customer care. We believe productizing
any of our services reduces our project risk, increases our operating margins,
improves our sales force's productivity, speeds time-to-market for our clients
and differentiates us from our competition.
Integrated End-to-End Implementation Capabilities. We believe we provide the
complete range of capabilities required to deliver comprehensive B2B e-Commerce
solutions. Our core competencies include:
. business process analysis
. technology architecture
. custom Internet application development
. e-Commerce software implementation
. applications management, maintenance, support and enhancement
We believe our competencies enable us to engineer and deliver B2B digital
exchanges and DCRM solutions seamlessly, for a fixed price and within fixed
timeframes.
29
<PAGE>
Knowledge Management and Transfer. We collect, store and organize
information we acquire from interaction with our clients in order to enhance
our existing base of technology and business process expertise. Inside Inventa,
our corporate intranet, is a secure integrated knowledge management repository
that facilitates the dissemination of this intellectual capital across our
organization. We believe this expanding base of readily accessible knowledge
enables us to meet our clients' ever-increasing expectations for our
performance.
In addition, eTrack, our internal Internet-based project management system,
enables us to capture, monitor and manage information for:
. project scheduling
. project status review
. document and deliverable distribution to our professionals and our
clients
. detailed information on the resources required to achieve specific tasks
on a project
eTrack improves our ability to forecast the estimated time and resources
required to complete our solutions and, together with Inside Inventa, increases
the reusability of our intellectual capital, thereby reducing risks to us and
our clients.
Our Strategy
Our objective is to enhance our position and reputation as a leading
provider of B2B e-Commerce solutions to Global 2000 companies and emerging
digital businesses. The key elements of our growth strategy are to:
Maintain Our Exclusive B2B e-Commerce Focus. We intend to maintain our
exclusive focus on B2B e-Commerce solutions. We believe this segment of the
information technology professional services market is the most strategic to
our clients, is the fastest growing and is best aligned with our core
competencies. Currently, we target two major B2B e-Commerce practice areas:
. digital exchanges, where we engineer and support B2B marketplaces that
facilitate the timely exchange of information and goods between trading
partners
. digital customer relationship management, where we deliver solutions for
a broad range of B2B customer interaction processes, including sales,
marketing and customer support
We also intend to expand our service offerings by developing additional
practices to cover the full range of B2B e-Commerce processes and relationships
in which our clients and prospective clients are likely to engage, including
digital partner relationship management and digital supply chain management.
Maintain Our Technology Leadership. We believe that our clients choose to
work with us because of our reputation for technology leadership and for
successfully solving the most challenging B2B e-Commerce problems with leading-
edge Internet technologies. We believe working on the industry's most complex
assignments will make us more attractive to high-quality professionals, who
enlarge our technology skill set and knowledge base. We intend to maintain our
technology leadership by:
. pursuing complex engagements that allow us to refine and advance our B2B
e-Commerce capabilities
. researching emerging technologies for their relevance and applicability
to our clients' business strategies
. refining and enhancing our proprietary i2K architectural model to take
advantage of advances in Internet technology
. deepening our current partner relationships and establishing new
partnerships to maintain our status as an early adopter of emerging
technologies and skill sets
30
<PAGE>
. enhancing our knowledge management infrastructure to improve the breadth,
depth and quality of access to technology-related information by our
professionals
Continue to Productize Our Services. We intend to continue to productize our
services. We believe productization:
. permits faster and more predictable project implementations resulting in
higher operating margins
. facilitates marketing our services and solutions to prospective clients
. demonstrates our thought leadership and competencies
. improves training for our professional staff and increases sales force
productivity
. differentiates us from our competitors
We intend to expand our productized service offerings beyond eSales and
eCare by leveraging knowledge and experience from our engagements, continuing
to refine and enhance our LightSpeed delivery model, and identifying and
establishing the partner relationships relevant to effective productization.
Recruit and Retain Highly-Skilled Professionals. We intend to continue to
hire, train and retain individuals who are highly skilled in the engineering of
complex Internet solutions. To provide an environment conducive to recruitment
and retention, we have created a corporate culture that emphasizes balance
between one's professional and personal life, challenging work assignments,
broad equity ownership, promotion from within, opportunities for advanced
training and direct involvement in growing our business.
Further, we have designed our LightSpeed delivery model to be a key employee
recruiting and retention tool by:
. encouraging direct client contact at all levels of our project teams
. basing our teams at our facilities to reduce professionals' travel time
. conducting our engagements using small, highly-specialized project teams
We will continue to expand our in-house recruiting staff and to invest in
initiatives focused on direct and Internet-based recruitment, employee referral
programs and on-campus recruiting. In addition, we intend to expand the
geographic reach of our recruitment efforts, and to advertise and promote our
brand to generate awareness of our company among potential employees in
relevant markets.
Expand Existing and Establish New Client Relationships. We believe our track
record of successful engagements has resulted in strong relationships with our
clients. As a result, our clients often request that we expand the scope and
complexity of our engagements. This reinforces our growing reputation as an
innovative provider of B2B e-Commerce solutions. We intend to leverage our
reputation for client satisfaction and innovation to attract new engagements
with our existing clients and to capture new clients through referral-driven
sales.
In addition, we intend to engage new clients by continuing to:
. expand our direct sales force in our current geographic markets
. invest in promotional activities designed to improve brand awareness and
provide sales leads
. establish new strategic business and technology alliances
. expand geographically, both within the United States and internationally
31
<PAGE>
Our Services
We have developed a broad range of capabilities in designing and
implementing B2B e-Commerce solutions for our clients, from integrating demand-
side Internet applications with front- and back-office systems to supply-side
Internet applications for servicing trading partners. Our capabilities include:
. competitive assessment of our clients' Internet strategies and
capabilities
. business process analysis
. application portfolio definition and functionality prioritization
. requirements definition and concept prototyping
. technology architecture design and engineering
. custom Internet application development
. e-Commerce software implementation
. systems integration
. enterprise application integration (within and between businesses)
. applications management and enhancement
. service productization
We leverage these skill sets and our substantial expertise in two major B2B
e-Commerce practice areas, digital exchanges and digital customer relationship
management as described below:
Digital Exchanges. We engineer and support B2B marketplaces that are highly
scalable and extendable to accommodate the rapid growth that well-designed and
well-marketed B2B systems are likely to experience.
Digital Customer Relationship Management. We deliver solutions for a broad
range of B2B customer interaction processes, including sales, marketing,
customer support, distribution and fulfillment. These service offerings are
comprehensive, scalable, extendable and secure thereby helping our clients
ensure the quality and integrity of their relationships with their business
customers and other trading partners.
Although each of our solutions is uniquely engineered and customized to meet
the expectations of each of our clients, we architect them using standard
Internet technologies and commercial off-the-shelf software to accelerate
project delivery and ease system maintenance.
We deliver our solutions using the following service models:
LightSpeed Delivery Model. LightSpeed is our proprietary Internet-based
model for governing the way we deliver solutions to our clients.
32
<PAGE>
LightSpeed is composed of four distinct stages:
<TABLE>
<C> <S>
Innovate Our professionals work closely with our clients' senior
executives to conduct a strategic assessment of their
competitive positioning in the Internet marketplace and
create a business and technology roadmap for the development
of a B2B solution. We then arrive at a shared vision of our
clients' B2B initiative and explore potential software
applications, identify architectural issues, and highlight
potential obstacles to success. Finally, we deliver an
agreed-upon B2B e-Commerce roadmap for the development of a
solution.
- -------------------------------------------------------------------------------
Blueprint We work with our clients to define and prioritize the scope,
functionality and business processes for their projects.
Using intensive workshops, storyboarding and prototyping
techniques, we deliver functional requirements, an
application prototype, architecture and technology
recommendations and a detailed plan for the LightSpeed
Create and Launch stage.
- -------------------------------------------------------------------------------
Create and Launch We develop a detailed engineering design, and create a
comprehensive quality assurance plan. We then implement our
solution in a series of progressively more functional
releases. With this approach, we deliver a production-
quality release with meaningful, business-relevant
functionality usually within ten weeks. The entire Create
and Launch stage typically takes between 16 and 24 weeks,
and may include two or three releases.
- -------------------------------------------------------------------------------
Enhance We help our clients evaluate an individual project's success
before embarking on the next project or major phase. We
refine our most recent implementation and enhance the
application in response to changes in user requirements. We
also offer our clients opportunities to expand their
implementations with application enhancement and database
consulting services.
</TABLE>
i2K Architectural Model. i2K is our proprietary collection of architectural
principles, methods and frameworks for B2B e-Commerce solutions. It provides
our clients a schematic for developing solutions that are scalable, adaptable,
integrated with their legacy systems and extendable outside their enterprise to
their trading partners systems.
Productization Model. We have combined our LightSpeed delivery model, our
i2K architectural model, commercially available off-the-shelf software and the
collective knowledge of our professionals into productized service offerings
for specific business processes. We have targeted two critical business
processes with these Internet offerings, sales and customer care. With eSales
and eCare, we can quickly assess and analyze our clients' business and
recommend a portfolio of applications, develop an implementation strategy,
define system requirements, design the technology architecture, and then
prototype, engineer and enhance the solutions. Using eSales and eCare we can
rapidly deliver what we have determined to be the most common functionality for
B2B customer relationship management processes.
Upon implementation of eSales or eCare, our clients' and their trading
partners' sales or customer service representatives have access to a broad
variety of capabilities to facilitate interaction with, and satisfy the needs
of, their business customers. Some of the more common functionalities include:
. customer profiling
. sales or customer service workflow or process management
. sales or customer service case management
. custom database-driven views of customers, products, suppliers and orders
. e-mail messaging
33
<PAGE>
. sales and customer care management reporting
. integration with call center operations
eSales enables our clients to generate revenue through Internet-based sales
channels; satisfy and retain customers through online order and sales
management; and streamline the purchasing process for their business customers.
eCare enables our clients to integrate service channels to ensure
consistent, high-quality customer interaction; retain customers through
personalized and responsive service; reduce overhead and call center volume;
and capture customer data.
Clients
The following is a list of our clients that generated more than $100,000 in
revenues during 1999:
ADP
GoTo.com
Amkor Technology, Inc.
Siemens
Cadence Design Systems
Sun Microsystems, Inc.
Citigroup
Pure Markets
Crane Co.
SMART Modular Technologies, Inc.
ePolicy.com
tradepac.com
Fujitsu
In 1999, our five largest clients represented 78.9% of our revenues,
including ADP and ePolicy.com, each of which represented more than 10% of our
revenues.
In addition, we began engagements for the following additional clients in
the fourth quarter of 1999:
Charles Schwab & Co., Inc. Portera Systems
Grainger.com, a subsidiary of W.W. Grainger, Inc. Utility.com, Inc.
Moai Technologies, Inc.
Employees
As of January 27, 2000, we had 207 employees. Of these employees, 149 were
consulting and services delivery professionals, and 58 were personnel
performing marketing, sales, human resources, finance, accounting, legal,
internal information systems and administrative functions, including ten
executives and 20 sales and marketing personnel. None of our employees is
represented by a labor union, and we consider our employee relations to be
excellent.
34
<PAGE>
Competition
The market for Internet professional services is intensely competitive and
subject to rapid technological change. We believe the principal competitive
factors in our industry are reputation and client satisfaction; the experience
and skill levels of professionals; advanced technical architecture and project
management expertise; ability to predict project cost and manage resource
scheduling; and ability to recruit and retain professionals. Our competition
falls into the following categories:
. Internet professional services firms (such as Lante, Proxicom, Sapient,
Scient, US Interactive and Viant)
. information technology consulting and systems integration firms (such as
Andersen Consulting, Cambridge Technology Partners and EDS)
. services divisions of computer hardware and software vendors (such as IBM
and Oracle)
. web design firms (such as Modem Media . Poppe Tyson and Razorfish)
. information technology strategy consulting firms (such as @McKinsey,
Diamond Technology Partners and Mainspring)
. in-house information technology departments of our current and potential
clients
Future competitors may offer services that provide significant performance,
price, creative or other advantages over those offered by us. Therefore, we
expect to face additional competition from new entrants into our industry.
Alliances
We leverage our marketing and sales efforts through alliances with a number
of vendors of Internet technology. Our partners include Active Software, Art
Technology Group, BroadVision, Exodus Communications, Extricity Software,
Hewlett-Packard, Microsoft, Moai Technologies, Oracle, Selectica, Silknet
Software and Vitria. These partners may recommend our services to their
clients, provide us sales leads, deliver training for our professionals and
enable us to obtain advance access to their technologies.
Sales and Marketing
Our sales efforts are targeted at corporate clients who are investing
significant resources in their B2B e-Commerce strategies. Our sales force
generates leads through a combination of direct mail, targeted events with
industry thought leaders and cooperative marketing with our alliance partners.
We have sales offices in the metropolitan areas of San Francisco, New York,
Chicago and Washington, D.C.,
To augment our sales effort we also have a separate marketing department
focused on two key objectives:
. building brand recognition at a national level to drive business growth
and support our recruiting efforts
. developing and cultivating leads for our sales force
To achieve these objectives, we engage in market research, public relations
and advertising, participate in trade shows and conduct seminars. In addition,
we employ a communication strategy based on standards for our logo, corporate
identity, website and marketing materials.
Intellectual Property Rights
Our proprietary knowledge base and the other intellectual property rights
that we develop for our clients are an integral part of our business. Our
clients generally retain ownership of custom work product and we retain a
royalty-free license to use some or all of the applications, processes and
intellectual property developed in connection with customer projects. This
information is accessible on our knowledge base only to our employees via our
secure corporate intranet.
35
<PAGE>
Facilities
Our principal executive offices are located in approximately 21,000 square
feet of leased office space in Redwood Shores, California. The lease for this
office space is for a term of two years and expires on March 31, 2001. We also
have offices in the metropolitan areas of New York, New York, Washington, D.C.
and Chicago, Illinois; We lease all of our facilities and consider these
facilities to be adequate for our needs for the foreseeable future.
Legal Proceedings
We are not a party to any material legal proceedings.
36
<PAGE>
MANAGEMENT
Executive Officers, Directors and Key Employees
Our executive officers, directors and other key employees are as follows:
<TABLE>
<CAPTION>
Name Age Position(s)
------------------------------------ --- -----------------------------------
<C> <C> <S>
Ashok Santhanam..................... 46 Chairman of the Board of Directors
and Founder
David A. Lavanty.................... 39 President, Chief Executive Officer
and Director
Richard M. Cerwonka................. 48 Senior Vice President
Carol C. Halliday................... 53 Senior Vice President
Anthony H. Moretto.................. 51 Senior Vice President
Elizabeth Campbell.................. 39 Vice President of Human Resources
Michael Makishima................... 38 Vice President of Finance
Tobias Younis....................... 50 Vice President of Marketing
Robert J. Kudis..................... 34 Vice President and General Manager,
Central Region
Edward F. Leppert................... 39 Vice President and General Manager,
Northeast Region
Srikantan Moorthy................... 37 General Manager, Southeast Region
Michael Bealmear.................... 51 Director
Todd Dagres......................... 39 Director
Robert Ducommun..................... 48 Director
Frank Pinto......................... 46 Director
Jake Reynolds....................... 32 Director
</TABLE>
Ashok Santhanam is our founder and has served as the Chairman of our Board
of Directors since January 1999. From our inception to January 1999, Mr.
Santhanam was our President and Chief Executive Officer. Prior to founding
Inventa, Mr. Santhanam was the founder and President of Ventura Data Systems
Pvt. Ltd., an information technology services firm based in Bangalore, India.
Before establishing Ventura, Mr. Santhanam held various technical and
management positions at Gould Inc., a publicly held technology company,
including Director of Operations in the Recording Systems Division from 1983 to
1986. Mr. Santhanam holds a Bachelor of Technology degree from the Indian
Institute of Technology in Madras, India and an MBA from Harvard Business
School.
David A. Lavanty has served as our President and Chief Executive Officer
since January 1999. From June 1998 to December 1998, he served as Senior Vice
President, Worldwide Consulting for Siebel Systems, Inc., an enterprise
relationship management application software company. From March 1995 to April
1998, Mr. Lavanty held several positions at Sybase, Inc., a software company,
including Vice President and General Manager, Professional Services for the
Americas and Vice President, Southeast and Federal Professional Services. Prior
to Sybase, Mr. Lavanty held positions as Vice President of Consulting Services
at Oracle Corporation, a software company, and Senior Vice President at PRC
Realty Systems, a systems integration company. Mr. Lavanty received a BS from
the University of Akron and an MBA from Marymount University.
Richard M. Cerwonka has served as a Senior Vice President since January
2000. From May 1999 to January 2000, he was President and Chief Executive
Officer of XTEND-Tech. From November 1998 to May 1999, Mr. Cerwonka was Area
Vice President, Southeast for the Enterprise Solutions Division of Sybase. From
April 1998 to November 1998, he served as the Area Vice President, Southeast
Professional Services for Sybase. From July 1995 to April 1998, Mr. Cerwonka
was a Practice Director, Professional Services for Sybase. From January 1980 to
July 1995, he held a variety of positions at Sea-Land Service, Inc., a global
transportation company, including Director of Equipment Engineering, Director
of Information Technology and Director of Terminal Operations.
Carol C. Halliday has served as a Senior Vice President since January 2000.
From April 1999 to January 2000, she was our Vice President and General Manager
of the Western Region. From October 1991 to April
37
<PAGE>
1999, Ms. Halliday held a variety of positions at Sybase, including Area Vice
President, West Professional Services, Vice President, Strategic Solutions
Division and Practice Director, Rocky Mountain Professional Services. Prior to
Sybase, she served as Director of Distributed Application Development for
Fidelity Investments, a financial services company.
Anthony H. Moretto has served as a Senior Vice President since April 1999.
From April 1993 to April 1999, Mr. Moretto held a variety of positions at
Sybase, including Vice President and General Manager, Professional Services,
Area Vice President, Southeast Professional Services and Practice Manager,
Professional Services. Prior to Sybase, he served as a Senior Managing
Consultant for Oracle, Branch Manager for Cap Gemini America, a systems
integration company, and Director, Commercial Systems Integration for Martin
Marietta Data Systems, a systems integration company. Mr. Moretto holds a BBA
from the Wharton School at the University of Pennsylvania.
Elizabeth Campbell has served as Vice President of Human Resources since
September 1999. She was our Director of Human Resources from August 1998 to
September 1999. From December 1996 to July 1998, Ms. Campbell was President of
Search Worldwide, a technology human resources consulting company she founded.
From May 1993 to November 1996, Ms. Campbell was Director of Corporate Human
Resources for Informix Software, a relational database software company.
Michael Makishima has served as Vice President of Finance since December
1999. He was our Controller from July 1997 to December 1999. From March 1989 to
December 1996, Mr. Makishima held several positions at Liant Software
Corporation, a software company, including General Manager of Liant Software
Services, Director of Manufacturing, Director of Corporate Finance and Vice
President of Finance and Administration of Ryan McFarland Corporation, a
subsidiary of Liant.
Tobias Younis has served as Vice President of Marketing since November 1999.
From August 1997 to November 1999, Mr. Younis served as Vice President for META
Group, an information technology research company. From June 1994 to August
1997, Mr. Younis was a Director of Enterprise Systems Consulting for Sybase.
From January 1992 to June 1994, Mr. Younis was founder and President for
Marcomm Associates, a marketing consulting company. Prior to Marcomm, Mr.
Younis served as Vice President of Special Marketing Operations at Oracle
Corporation.
Robert J. Kudis has served as Vice President and General Manager of the
Central Region since May 1999. From January 1997 to May 1999, Mr. Kudis served
as Vice President of Consulting, U.S. Central Region, for the Baan Company, an
enterprise resource software company. From May 1987 to January 1997, Mr. Kudis
was a consultant for Ernst & Young, a public accounting firm. Mr. Kudis holds a
BBA in Information Systems from the University of Wisconsin.
Edward F. Leppert has served as Vice President and General Manager of the
Northeast Region since October 1999. He served as our Vice President and
Managing Director of the Eastern Region from January 1999 to September 1999,
and as our Managing Director of the Eastern Region from November 1997 to
January 1999. From March 1996 to November 1997, Mr. Leppert served as Director
of Operations and General Manager for Cambridge Technology Partners, a systems
integration company. From September 1991 to March 1996, Mr. Leppert served as
Associate Director, Information Management for Bristol-Myers Squibb Company, a
consumer products manufacturing company. Prior to Bristol-Myers Squibb, Mr.
Leppert served as a Senior Manager for Andersen Consulting, a consulting firm.
Mr. Leppert holds a BS degree in systems planning and management from the
Stevens Institute of Technology.
Srikantan Moorthy has served as General Manager of the Southeast Region
since November 1999. Mr. Moorthy served as our Director of Operations from May
1996 to November 1999, as a Practice Director from January 1996 to April 1996,
as a Consulting Practice Manager from August 1994 to January 1996, and as
Technical Staff Manager from August 1993 to August 1994. Mr. Moorthy joined us
as a Principal Software Engineer in January 1993. Mr. Moorthy has a Bachelor of
Engineering degree from Bangalore University, India.
38
<PAGE>
Michael Bealmear has served as a Director since September 1998. Mr. Bealmear
is President and Chief Executive Officer of Spear Technologies, Inc., a
privately held software company. Prior to Spear, he was Executive Vice
President at Cadence and Senior Vice President of Worldwide Services at Sybase.
Mr. Bealmear also is a director of several privately owned companies. Mr.
Bealmear has a BS in Electrical Engineering from the University of Texas and an
MS in Mathematics and Computer Science from Rice University.
Todd Dagres has served as a Director since February 1997. Mr. Dagres is a
General Partner with Battery Ventures, a venture capital firm. Mr. Dagres is a
director of Akamai Technologies, an Internet content distribution firm; Qtera
Technologies, a telecommunications equipment provider; Edgix, an internet
content delivery firm; Predictive Networks, a developer of Internet profiling
and content delivery systems; Convergent Networks, a data and voice equipment
company; Equipe Communications, a network equipment firm; River Delta Networks,
a networking solutions company; and InformationView Solutions, a provider of
network cost management solutions. Mr. Dagres is also an Adjunct Professor at
the Sloan School of Management of the Massachusetts Institute of Technology. He
has an MS in Economics from Trinity College and an MBA from Boston University.
Robert Ducommun has served as a Director since June 1994. Mr. Ducommun is a
director of Ducommun Incorporated, a publicly held company that provides
products and services to the aerospace industry, and a director of several
private companies. He has been a private investor in and advisor to emerging
companies since 1992. He was Executive Vice President and Chief Financial
Officer of Aviva Sports, a sports toy marketing company, and chief financial
officer of Microsource, Inc., a manufacturer of microwave components. Mr.
Ducommun has a BA degree from Stanford University and an MBA from Harvard
Business School.
Frank Pinto has served as a Director since May 1998. Mr. Pinto is a
Principal with Boston Millennia Partners, a venture capital firm. He manages
Boston Millennia Partners' investments in Knowledge Impact, a customer
relationship management training firm, InfoLibria, an Internet infrastructure
solutions firm, and is a director of Quality Packaging Systems, a
pharmaceutical services company. Mr. Pinto holds a BA degree in Economics and
Environmental Studies from Middlebury College and an MBA from the Amos Tuck
School at Dartmouth College.
Jake Reynolds has served as a Director since October 1998. He is a General
Partner of Technology Crossover Ventures, a venture capital firm. He also
serves as a director of several private companies. Mr. Reynolds received an AB
degree in Geography from Dartmouth College and an MBA from Columbia Business
School.
Board of Directors
Our board of directors is currently comprised of seven directors. Our
amended and restated bylaws authorize not less than five directors and not more
than seven directors.
Board Committees
Our board of directors has a compensation committee and an audit committee.
The Compensation Committee is comprised of Jake Reynolds, its chairman, Todd
Dagres and Frank Pinto. The Compensation Committee is responsible for the
administration of all salary and incentive compensation plans for our officers,
including bonuses and options granted under our option plans.
The Audit Committee is comprised of Robert Ducommun, its chairman, Michael
Bealmear and Frank Pinto. The Audit Committee is responsible for assuring the
integrity of our financial control, audit and reporting functions. It reviews
with our management and our independent accountants the effectiveness of our
financial controls, accounting and reporting practices and procedures. In
addition, the Audit Committee reviews the qualifications of our independent
accountants, make recommendations to the board of directors regarding the
selection of our auditors, reviews the scope, fees and results of activities
related to audit and non-audit services.
39
<PAGE>
Compensation Committee Interlocks and Insider Participation
Our board of directors did not have a compensation committee until May 1998.
From May 1998 to December 1999, the Compensation Committee was comprised of
Ashok Santhanam, Todd Dagres and Frank Pinto. In December 1999, Jake Reynolds
replaced Ashok Santhanam on this committee. During the fiscal year 1999, the
Compensation Committee met four times. Prior to May 1998, determinations
regarding the compensation of our officers were made by our board of directors.
Director Compensation
We do not pay fees to directors for serving on our board of directors.
Directors who are not employees are reimbursed for all reasonable expenses
incurred by them in attending board and committee meetings. Employee and non-
employee directors are also eligible to receive options under our 1993 Stock
Option Plan.
Executive Compensation
The following table summarizes the compensation paid to or earned by our
Chief Executive Officer and our four other mostly highly compensated executive
officers for the year ended December 31, 1999. We use the term "Named Executive
Officers" to refer to these people in this prospectus.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
----------------- ------------
Securities
Underlying
Name and Principal Position(s) Salary Bonus Options
- ----------------------------------------------- -------- -------- ------------
<S> <C> <C> <C>
Ashok Santhanam, Chairman of the Board and
Founder....................................... $175,000 $ 30,000 --
David A. Lavanty, President and Chief Executive
Officer....................................... 250,000 100,000 100,000
Anthony H. Moretto, Senior Vice President...... 147,051 62,500 240,000
Carol C. Halliday, Senior Vice President....... 126,923 30,093 175,000
Michael Makishima, Vice President of Finance... 124,583 36,300 55,000
</TABLE>
The following table sets forth information with respect to stock options
granted during the year ended December 31, 1999, to each of the Named Executive
Officers:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(2)
--------------------------------------------- ---------------------
Number of Percent of Weighted
Shares Total Options Average
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted(1) Fiscal Year per share Date 5% 10%
- ------------------------ ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ashok Santhanam......... -- -- -- -- -- --
David A. Lavanty........ 100,000 4.0%(3) $ 0.45 8/01/09 $1,505,565 $2,323,791
Anthony H. Moretto...... 240,000 10.0%(4) 0.20 8/01/09 3,695,847 5,686,684
Carol C. Halliday....... 175,000 7.0%(5) 0.20 8/01/09 2,694,544 4,146,084
Michael Makishima....... 55,000 2.0%(6) 0.73 11/23/09 803,607 1,240,644
</TABLE>
- --------
(1) All options were granted under our 1993 Plan. Options granted under the
Plan vest over a four-year period with 25% vesting at the first anniversary
date of the grant date and the remaining shares vesting in equal
40
<PAGE>
monthly installments over the next 36 months. The board retains sole
discretion to modify the terms, including the price, of outstanding options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date of offer to their expiration date based
upon an initial public offering price of $10.00 per share. These
assumptions are not intended to forecast future appreciation of our stock
price. The potential realizable value computation does not take into
account federal or state income tax consequences of option exercises or
sales of appreciated stock.
(3) Excludes options to purchase 865,000 shares of common stock at an exercise
price of $0.15 per share granted to Mr. Lavanty on December 31, 1998, and
effective on the date of this offering a grant of options to purchase an
additional 290,000 shares of common stock at an exercise price equal to the
then existing share price.
(4) Of the 240,000 options to purchase our common stock granted to Mr. Moretto,
200,000 options granted on June 30, 1999, have an exercise price of $0.15
per share and the other 40,000 options granted on August 1, 1999, have an
exercise price of $0.45 per share.
(5) Of the 175,000 options to purchase our common stock granted to Ms.
Halliday, 145,000 options granted on June 30, 1999, have an exercise price
of $0.15 per share and the other 30,000 options granted on August 1, 1999,
have an exercise price of $0.45 per share.
(6) Excludes options to purchase 30,000 shares of our common stock at an
exercise price of $0.15 granted to Mr. Makishima on August 20, 1997. Of the
total grant of 55,000 options to Mr. Makishima, 15,000 options granted on
January 31, 1999, have an exercise price of $0.15 per share, 15,000 options
granted on August 1, 1999, have an exercise price of $0.45 per share, and
25,000 options granted on November 23, 1999, have an exercise price of
$1.25 per share.
The following table sets forth certain information regarding exercised stock
options during the year ended December 31, 1999, and unexercised options held
as of December 31, 1999, by each of the Named Executive Officers:
Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired December 31, 1999 December 31, 1999(1)
On Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ashok Santhanam......... -- -- -- -- -- --
David A. Lavanty........ -- -- 216,250 748,750 $1,373,187 $4,724,562
Anthony H. Moretto...... -- -- 50,000 190,000 317,500 1,194,500
Carol C. Halliday....... -- -- -- 175,000 -- --
Michael Makishima....... -- -- 18,749 66,251 119,056 388,693
</TABLE>
- --------
(1) Calculated on the basis of the fair market value of the underlying
securities of $6.50 per share as of December 31, 1999, minus the per share
exercise price, multiplied by the number of shares underlying the option.
Employment Agreements
Ashok Santhanam. We entered into an employment agreement dated May 11, 1998,
with Ashok Santhanam, our founder and Chairman of the Board of Directors. The
term of the agreement shall continue unless we or Mr. Santhanam elect to
terminate the agreement. The employment agreement provides for an annual base
salary of $160,000, to be reviewed annually, and an annual maximum bonus of
$90,000, subject to annual review, payable at the discretion of our board of
directors. Effective January 1, 1999, our Board of Directors increased
Mr. Santhanam's annual base salary to $175,000. The employment agreement also
provides
41
<PAGE>
that, in the event of his termination without cause, we will pay Mr. Santhanam
his accrued compensation to the date of termination and continue his car lease
payments, maintain his health, welfare and retirement benefits, and provide
severance compensation equal to his base salary and bonus for 12 months after
his termination date. In addition, any options granted to Mr. Santhanam would
continue to vest during the 12 months following his termination date. The
agreement also provides that Mr. Santhanam will not engage in a competitive
business activity for one year following termination in the event of his
termination without cause, and for two years following termination if he
resigns or is terminated for cause. The agreement further provides that
Mr. Santhanam will not solicit our employees, nor our clients with respect to a
competitive business activity, for two years following his termination for any
reason.
David A. Lavanty. We entered into an employment agreement dated December 31,
1998, with Mr. Lavanty, our President and Chief Executive Officer. The initial
term of three years will automatically be renewed for successive one-year terms
unless we or Mr. Lavanty elect to terminate the agreement at least 30 days
before the end of a term. The employment agreement provides for an annual base
salary of $250,000 and an annual bonus payable at the discretion of our board
of directors. The employment agreement also provides that in the event of his
termination without cause, we will pay Mr. Lavanty severance compensation equal
to his base compensation, and maintain his health and retirement benefits, for
12 months after his termination date. In addition, any options granted to Mr.
Lavanty will continue to vest during the 12 months following his termination
date, and shall vest in full upon a change of control. The agreement also
provides that Mr. Lavanty will not engage in a competitive business activity
for one year following termination in the event of his termination for any
reason. The agreement further provides that Mr. Lavanty will not solicit our
employees nor our clients with respect to a competitive business activity for
one year following his termination for any reason. The agreement provided for
the grant of options to Mr. Lavanty to purchase up to 865,000 shares of common
stock subject to vesting over a four-year period, 25% of which vested on
signing and the balance of which will vest in 36 equal monthly installments
beginning on the first anniversary date of the signing of the Agreement.
Finally, the agreement provides for the grant to Mr. Lavanty of options to
purchase up to 290,000 shares of common stock upon effectiveness of this
prospectus at the initial public offering price.
Anthony H. Moretto. We entered into an employment agreement dated March 17,
1999, with Mr. Moretto, a Senior Vice President, which provides for an annual
base salary of $200,000 and a quarterly performance bonus. The employment
agreement also provides that we will pay Mr. Moretto an amount equal to his
base compensation for six months if we terminate Mr. Moretto without cause. In
addition, the employment agreement provides that upon termination without
cause, or within six months following a change of control, we will (i) continue
to pay Mr. Moretto his base compensation for 12 months, and (ii) permit
Mr. Morretto's unvested options to continue to vest for 12 months. The
agreement provided for the grant of options to Mr. Moretto to purchase 200,000
shares of common stock, subject to vesting over a four-year period, 25% of
which vested immediately upon the execution of the agreement and the balance of
which will vest in 36 equal installments beginning on the first anniversary of
his employment. Fifty-percent of Mr. Moretto's unvested options will vest upon
the occurrence of a change of control within his first two years of employment
with us. Finally, we paid a one-time signing bonus to Mr. Moretto of $25,000.
Tobias Younis. We entered into an employment agreement dated October 29,
1999, with Mr. Younis, our Vice President of Marketing, which provides for an
annual base salary of $185,000 and a quarterly performance bonus. The
employment agreement also provides that if we terminate Mr. Younis without
cause, or within six months following a change of control, we will (i) continue
to pay Mr. Younis his base compensation for six months, and (ii) permit Mr.
Younis' unvested options to continue to vest for six months. The agreement
provided for the grant of options to Mr. Younis to acquire 200,000 shares of
common stock, subject to vesting over four years.
Carol C. Halliday. We entered into an employment agreement dated March 12,
1999, with Ms. Halliday, a Senior Vice President, which provides for an annual
base salary of $180,000 and a quarterly performance bonus. The employment
agreement also provides that if we terminate Ms. Halliday without cause, we
will continue to pay Ms. Halliday her base compensation for three months. The
agreement provided for the grant of options to Ms. Halliday to acquire 145,000
shares of common stock, subject to vesting over four years.
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<PAGE>
Robert J. Kudis. We entered into an employment agreement dated March 30,
1999, with Mr. Kudis, our Vice President and General Manager of Central Region
Operations, which provides for an annual base salary of $175,000 and a
quarterly performance bonus. The employment agreement also provides that if we
terminate Mr. Kudis without cause, we will continue to pay Mr. Kudis his base
compensation for three months. In addition, the agreement provides that if we
terminate Mr. Kudis without cause within six months following a change of
control, we will (i) continue to pay Mr. Kudis his base compensation for six
months, and (ii) permit Mr. Kudis' unvested options to continue to vest for six
months. The agreement provided for the grant of options to Mr. Kudis to acquire
90,000 shares of common stock, subject to vesting over four years. Fifty-
percent of Mr. Kudis' unvested options will vest upon the occurrence of a
change of control within his first two years of employment.
Other employment agreements. We entered into employment agreements with
Edward F. Leppert, Michael Makishima, Elizabeth Campbell and Srikantan Moorthy,
which provide for severance payments equal to six months' salary, and options
that will continue to vest for six months following termination upon (i) a
change of control and termination without cause or (ii) a change of control and
a relocation of the employee beyond a 30-mile radius from their office
locations.
Employee Benefit Plans
1993 Stock Option Plan. Our 1993 Stock Option Plan provides for the issuance
to employees, directors and consultants of incentive stock options and non-
qualified stock options to purchase up to a total of 5,355,000 shares of our
common stock. Our board of directors or a committee designated by our board of
directors may serve as administrator of the 1993 Plan. As of January 27, 2000,
options issued under the 1993 Plan to purchase a total of 4,136,790 shares of
common stock at a weighted average exercise price of $0.42 were outstanding, of
which options to purchase 827,250 shares at a weighted average exercise price
of $0.42 were fully vested. As of January 27, 2000, we had 958,808 shares of
common stock available for future grant under this plan.
The terms of options granted under the 1993 Plan are as determined by the
administrator, subject to the following:
. the option price per share for any incentive stock option or non-
qualified stock option may not be less than the fair value and 85% of the
fair value, respectively, of the common stock on the date of the grant
. if an incentive stock option or non-qualified stock option is granted to
a person who owns more than 10% of the total combined voting power of all
our classes of stock, the exercise price shall be not less than 110% of
the fair value of the common stock on the date of the grant
. the term of each stock option may not exceed ten years, and in the case
of a person who owns more than 10% of the total combined voting power of
all our classes of stock, the term of each stock option may not exceed
five years
. payment for the exercise of an option may be in cash, in shares of common
stock already owned by the option holder for more than six months and
which have a fair value equal to the exercise price of the option, by
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to us the amount required to
pay the exercise price, or by delivery of an irrevocable subscription
agreement that irrevocably obligates the option holder to pay the
aggregate exercise price not more than 12 months after the date of
delivery of the subscription agreement
The administrator has the power to determine the terms of the options
granted, including the exercise price. The board of directors may amend,
suspend or discontinue the 1993 Plan at any time, provided that such action may
not affect any rights with respect to options previously granted under the
1993 Plan.
Options granted under the 1993 Plan are not transferable other than by will
or by the laws of descent or distribution, and each option may be exercised,
during the lifetime of the optionee, only by the optionee.
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<PAGE>
Options granted under the 1993 Plan must generally be exercised within three
months of the optionee's separation of service from us, but in no event later
than the expiration of the term of the option.
The 1993 Plan provides that in the event of our merger with or into another
corporation, each option shall be assumed or an equivalent option shall be
substituted by the successor corporation. If the successor corporation does not
agree to assume the options or substitute an equivalent option, then our board
of directors shall notify the optionees that the option will be exercisable for
15 days from the date of the notice and that the option will terminate
thereafter. The 1993 Plan also provides that in the event of our proposed
dissolution or liquidation, our board of directors will notify optionees at
least 15 days prior to the proposed action and that the options will terminate
immediately prior to the completion of the proposed action.
Employee Stock Purchase Plan. [To be provided by Amendment.]
401(k) Plan. We have a 401(k) plan that provides a tax-qualified employee
savings plan for our eligible employees. An employee may elect to reduce his or
her current annual compensation on a pre-tax basis and to have the amount of
the reduction contributed to the 401(k) savings plan. Subject to the
restrictions imposed by the Internal Revenue Code on highly compensated
employees, an employee may generally defer up to 25% of his or her pre-tax
earnings or the statutorily prescribed limit, which was $10,000 in calendar
year 1999. Our 401(k) plan is intended to qualify under Section 401(k) of the
Internal Revenue Code so that contributions by our employees to our 401(k) plan
and income earned on plan contributions are not taxable to employees until
withdrawn from the 401(k) plan. The 401(k) savings plan permits, but does not
require, additional matching contributions by us on behalf of all participants
in the 401(k) savings plan.
Life Insurance Program. We maintain a $2 million key man life insurance
policy on Ashok Santhanam, our Chairman of the Board of Directors, payable to
us in the event of Mr. Santhanam's death. We also maintain a $1 million key man
life insurance policy on David A. Lavanty, our President and Chief Executive
Officer, payable to us in the event of Mr. Lavanty's death.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 8, 1994, we sold an aggregate of 400,000 shares of Series A
Preferred Stock at a price of $1.00 per share. We issued 400,000 shares of our
Series A Preferred Stock pursuant to a two-for-one stock split declared in
January 1997. All share numbers reflect the stock split. On February 14, 1997,
we sold an aggregate of 2,560,000 shares of Series B Preferred Stock at a price
of $1.25 per share. On May 11, 1998, and May 28, 1999, we sold an aggregate of
8,055,511 shares of Series C Preferred Stock at a price of $1.25 per share. On
January 19, 2000, we sold an aggregate of 3,000,000 shares of Series D
Preferred Stock at a price of $7.41 per share. Listed below are the directors,
executive officers, stockholders and their affiliates that beneficially own 5%
or more of our securities.
<TABLE>
<CAPTION>
Shares of Shares of Shares of Shares of
Shares of Series A Series B Series C Series D
Common Preferred Preferred Preferred Preferred
Investor Stock Stock Stock Stock Stock
- ----------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
5% Stockholder entity
affiliated with us
Ashok Santhanam(1)......... 4,500,000 -- -- -- --
Other 5% stockholders
Boston Millennia Partners
Limited Partnership(2).... -- -- -- 3,152,000 425,371
Technology Crossover
Ventures II, L.P.(3)...... -- -- -- 3,152,000 425,371
Battery Ventures(4)........ -- -- 2,286,363 1,576,000 62,672
</TABLE>
- --------
(1) Ashok Santhanam, the Chairman of our Board of Directors, and his wife
Revathi Santhanam are trustees of the Santhanam Family Trust, which holds
3,500,000 shares of common stock. Two irrevocable trusts each hold 500,000
shares of common stock for the benefit of their children. Mr. Santhanam and
Mrs. Santhanam each disclaim any beneficial interest in the shares held by
these irrevocable trusts.
(2) Frank Pinto, a director of our Company, is a principal of Boston Millennia
Partners Limited Partnership. Mr. Pinto disclaims beneficial ownership of
the securities held by this entity except for his proportional interest in
the entity.
(3) The Technology Crossover Ventures II, L.P. shares include shares purchased
by TCV II (Q), L.P., Technology Crossover Ventures II, C.V., TCV II
Strategic Partners, L.P., and TCV II, V.O.F. Mr. Reynolds, a director of
our Company, and a General Partner of Technology Crossover Ventures,
disclaims beneficial ownership of the securities held by this entity except
for his proportional interest in the entity.
(4) Mr. Dagres, a director of our Company, is a General Partner of Battery
Ventures. Mr. Dagres disclaims beneficial ownership of the securities held
by this entity except for his proportional interest in the entity.
Mr. Santhanam is a director and a 50% shareholder of Challenger Systems,
Inc., an entity to which we paid $590,000 in 1997 and $485,000 in 1998 for
software programming services.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock as of January 27, 2000, as adjusted to reflect
the sale of common stock in this offering, by:
. each person known to us to own beneficially more than 5% of our common
stock
. each of the Named Executive Officers
. each of our directors
. all of our executive officers and directors as a group
Except as otherwise noted, the address of each person listed in the table is
c/o Inventa Technologies, Inc., 255 Shoreline Drive, Suite 200, Redwood Shores,
California 94065. The table includes all shares of common stock issuable within
60 days of January 27, 2000, upon the exercise of options and warrants
beneficially owned by the indicated stockholders on that date based on options
and warrants outstanding as of January 27, 2000. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to shares. To
our knowledge, except under applicable community property laws or as otherwise
indicated, the persons named in the table have sole voting and sole investment
control with respect to all shares beneficially owned. The applicable
percentage of ownership for each stockholder is based on 20,724,913 shares of
common stock outstanding as of January 27, 2000, in each case together with
applicable options and warrants for that stockholder. Shares of common stock
issuable upon the exercise of options and warrants beneficially owned are
deemed outstanding for the purpose of computing the percentage of ownership of
the person holding those options and warrants, but are not deemed outstanding
for computing the percentage ownership of any other person.
<TABLE>
<CAPTION>
Shares Shares to be
Beneficially Owned Beneficially Owned
Prior to Offering After Offering
------------------ ---------------------
Beneficial Owner Number Percent Number Percent
- --------------------------------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C>
Boston Millennia Partners Limited
Partnership(1).................. 3,577,371 17.2%
Technology Crossover Ventures II,
L.P.(2)......................... 3,577,371 17.2
Battery Ventures III, L.P.(3).... 3,925,035 18.9
Ashok Santhanam(4)............... 4,500,000 21.7
David A. Lavanty(5).............. 270,311 1.2
Anthony H. Moretto(6)............ 50,000 *
Michael Makishima(7)............. 24,373 *
Robert Ducommun(8)............... 560,200 *
Michael Bealmear................. 40,000 *
Frank Pinto...................... 4,000 *
All executive officers and
directors as a group............ 16,524,661 78.4
</TABLE>
- --------
* Represents less than one percent of the total.
(1) Principal address is 30 Rowes Wharf, Suite 330, Boston, Massachusetts,
02110. Includes shares held by Boston Millennia Associates I Partnership
and various individuals. Mr. Pinto, a director of our company, is a
Principal with Boston Millennia Partners Limited Partnership. Mr. Pinto
disclaims beneficial ownership of the shares held by this entity except to
the extent of his proportional interest in the entity.
(2) Principal address is 575 High Street, Palo Alto, California, 94301.
Includes 1,711,320 shares held by Technology Crossover Ventures II, L.P.,
1,315,687 shares held by TCV II (Q), L.P., 261,284 shares held by
Technology Crossover Ventures II, C.V., 233,488 shares held by TCV II,
Strategic Partners, L.P., and 55,592 shares held by TCV II, V.O.F. Mr.
Reynolds, a director of our company, is a General Partner of Technology
Crossover Ventures. Mr. Reynolds disclaims beneficial ownership of the
shares held by this entity except to the extent of his proportional
interest in the entity.
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<PAGE>
(3) Principal address is 20 William Street, Wellesley, Massachusetts, 01282.
Mr. Dagres, a director of our company, is a General Partner of Battery
Ventures. Mr. Dagres disclaims beneficial ownership of the shares held by
this entity except to the extent of his proportional interest in the
entity.
(4) Mr. Santhanam, the Chairman of our Board of Directors, and his wife Revathi
Santhanam are trustees of the Santhanam Family Trust, which holds 3,500,000
shares. Two irrevocable trusts each hold 500,000 shares for the benefit of
Mr. Santhanam's two minor children. Mr. and Mrs. Santhanam disclaim
beneficial ownership of the shares held by these irrevocable trusts.
(5) Mr. Lavanty is our President and Chief Executive Officer. Excludes 694,689
shares issuable upon exercise of options, and a grant of options to
purchase an additional 290,000 shares effective on the date of this
offering.
(6) Excludes 190,000 shares issuable upon exercise of options.
(7) Excludes 60,727 shares issuable upon exercise of options.
(8) Principal address is 1155 Park Avenue, New York, New York, 10128. Mr.
Ducommun, a director of our company, is the Trustee of the Palmer G. and
Charles E. Ducommun Charitable Annuity Trust which holds 241,700 shares.
Mr. Ducommum, his sister, Electra D. de Peyster, and the Ducommun and Gross
family foundations are the principal beneficiaries of the trust. Ms de
Peyster is also a shareholder of ours.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
Our amended and restated certificate of incorporation authorizes the
issuance of up to 25,000,000 shares of common stock, par value $0.001 per
share, and 14,779,511 shares of preferred stock, par value $0.001 per share,
the rights and preferences of which may be established from time to time by our
board of directors. As of January 27, 2000, there were outstanding 6,109,402
shares of common stock, and 14,615,511 shares of preferred stock, which are
convertible into 14,615,511 shares of common stock upon the completion of this
offering, were issued and outstanding.
Common Stock
Each holder of our common stock is entitled to one vote for each share held
of record on all matters to be voted upon by the stockholders. There are no
cumulative voting rights. Subject to the preferences of preferred stock issued
after the sale of the common stock in this offering, holders of common stock
are entitled to receive ratably any dividends that may be declared from time to
time by the board of directors out of funds legally available for that purpose.
In the event of our liquidation, dissolution or winding up, holders of common
stock would be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights and there
are no redemption or sinking fund provisions applicable to the common stock.
All outstanding shares of common stock, the shares of common stock to be issued
upon conversion of the outstanding preferred stock, the shares of common stock
to be issued in the contemporaneous private placement and the shares of common
stock offered by us in this offering, when issued and paid for, will be fully
paid and nonassessable. The rights, preferences and privileges of the holders
of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock that we may designate in
the future.
Preferred Stock
Upon the closing of this offering, the board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of 14,779,511 million
shares of preferred stock, par value $0.001 per share, in one or more series,
with each of such series to have such rights and preferences, including voting
rights, dividend rights, conversion rights, redemption privileges and
liquidation preferences, as shall be determined by the board of directors. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of holders of any series of preferred stock that may be
issued in the future. Issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from attempting to acquire, a
majority of our outstanding voting stock. We currently have no plans to issue
any shares of preferred stock.
Warrants
As of January 27, 2000, we had outstanding warrants to purchase 160,000
shares of Series C Preferred Stock at an exercise price of $2.50 per share.
These warrants are exercisable for 160,000 shares of common stock upon the
completion of this offering. Each warrant has a net exercise provision under
which the holder may, in lieu of payment of the exercise price in cash,
surrender the warrant and receive a net amount of shares, based on the fair
value of our stock at the time of the exercise of the warrant, after deducting
the aggregate exercise price. The warrants for 160,000 shares of Series C
Preferred Stock will expire on November 30, 2004.
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<PAGE>
Limitation of Liability and Indemnification Matters
Our amended and restated certificate of incorporation limits the liability
of directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for:
. breach of their duty of loyalty to the corporation or its stockholders
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law
. unlawful payments of dividends or unlawful stock repurchases or
redemptions
. any transaction from which the director derived an improper personal
benefit
This limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.
Our bylaws provide that we will indemnify our directors, officers, employees
and other agents to the fullest extent permitted by Delaware law. We believe
that indemnification under our bylaws covers at least negligence and gross
negligence on the part of indemnified parties. Our bylaws also permit us to
secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions in such capacity,
regardless of whether the bylaws would permit such indemnification.
We have obtained directors and officers' insurance providing indemnification
for all of our directors and officers for certain liabilities. Prior to closing
of this offering, we will enter into agreements to indemnify our directors and
executive officers, in addition to the indemnification provided for in our
bylaws. These agreements, among other things, will indemnify our directors and
executive officers for certain expenses, including attorneys' fees, judgments,
fines and settlement amounts incurred by any such person in any action or
proceeding, out of such person's services as a director, officer, employee,
agent or fiduciary of ours, any subsidiary of ours or any other company or
enterprise to which the person provides services at our request. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
At present, there is no litigation or proceeding involving any of our
directors or officers in which indemnification is required or permitted, and we
are not aware of any threatened litigation or proceeding that may result in a
claim for indemnification.
Registration Rights
The holders of 14,615,511 shares of preferred stock, and 1,350,000 shares of
common stock issued in connection with the acquisition of XTEND-Tech, referred
to as "registrable securities," are entitled to certain rights with respect to
registration of their shares under the Securities Act. These rights are
provided under the terms of an investors' registration rights agreement between
the holders of registrable securities and us. Beginning as soon as practicable
after January 1, 2000, holders of at least 50% of the then outstanding
registrable securities may require on up to two occasions that we register for
public resale all or a lesser amount of their registrable securities. We need
not register these shares if the requested registration would occur after we
have effected two (2) registrations, or if the requested registration would
occur within 180 days following the effective date of any Form S-1 registration
statement we have filed. Also, we may defer the registration of the shares for
up to 90 days if, in the good faith judgement of the board of directors, it
would be seriously detrimental to our stockholders and us for the registration
statement to be filed.
In addition, holders of registrable securities may require on up to four
occasions, but only once in any 12-month period that we register their shares
for public resale on a Form S-3 registration statement; provided that
. we are eligible to use Form S-3 and the value of registrable securities
is at least $500,000
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<PAGE>
. the request for Form S-3 registration does not occur within 180 days
following the effective date of any registration statement registering
shares of common stock
. the request for Form S-3 registration does not occur within 180 days
following the effective date of a registration statement registering
registrable securities required by the holders of at least 50% of the
outstanding registrable securities
We shall not be required to maintain the effectiveness of any Form S-3 for
more than 180 days from the effective date of the Form S-3. In view of market
conditions, we may reduce the number of registrable securities to be registered
on Form S-3 to not less than 50% of the shares the holders of registrable
securities have requested to be registered. Furthermore, in the event we elect
to register any of our shares of common stock for the purposes of effecting any
public offering other than our initial public offering, the holders of
registrable securities are entitled to include their shares of common stock in
the registration, but in view of market conditions, we may reduce the number of
shares proposed to be registered. All expenses in connection with any
registration will be borne by us.
Antitakeover Provisions
Certain provisions of our amended and restated certificate of incorporation
and bylaws may have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control
of us. Such provisions could limit the price that certain investors might be
willing to pay in the future for shares of our common stock. Certain of these
provisions allow us to issue preferred stock without any vote or further action
by the stockholders, eliminate the right of stockholders to act by written
consent without a meeting and eliminate cumulative voting in the election of
directors. These provisions may make it more difficult for stockholders to take
certain corporate actions and could have the effect of delaying or preventing a
change in control of us.
We are subject to Section 203 of the Delaware General Corporation Law, which
regulates corporate acquisitions. In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a business combination with an
interested stockholder for a period of three years following the date the
person became an interested stockholder, unless:
. the board of directors approved the transaction in which such stockholder
became an interested stockholder prior to the date the interested
stockholder attained such status
. upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, he or she owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by persons who are directors and also
officers
. the business combination is approved by a majority of the board of
directors and by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the interested stockholder
A business combination generally includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. In general, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock.
Our amended and restated certificate of incorporation provides that, upon
the closing of this offering, the board of directors will be divided into three
classes of directors with each class serving a staggered three-year term. The
classification system of electing directors may tend to discourage a third
party from making a tender offer or otherwise attempting to obtain control of
us and may maintain the incumbency of the board of directors, as the
classification of the board of directors generally increases the difficulty of
replacing a majority of the directors. Our amended and restated certificate of
incorporation eliminates the right of stockholders to act by written consent
without a meeting and our bylaws eliminate the right of stockholders to call
special meetings of stockholders. The authorization of undesignated preferred
stock makes it possible for the board of
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<PAGE>
directors to issue preferred stock with voting or other rights or preferences
that could impede the success of any attempt to change control of us. These and
other provisions may have the effect of deferring hostile takeovers or delaying
changes in control of our management. The amendment of any of these provisions
would require approval by holders of at least 66 2/3% of the outstanding common
stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the common stock.
Future sales of substantial amounts of common stock in the public market
following this offering could cause the prevailing market price of our common
stock to fall and impede our ability to raise equity capital at a time and on
terms favorable to us.
Upon completion of this offering, we will have outstanding an aggregate of
shares of common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or outstanding
warrants after January 27, 2000. Of these outstanding shares, the
shares sold in this offering will be freely tradable without restriction or
further registration under the Securities Act of 1933, unless purchased by our
"affiliates" as that term is defined in Rule 144 under the Securities Act of
1933. The remaining shares of common stock outstanding upon
completion of the offering and held by existing stockholders will be
"restricted securities" as that term is defined in Rule 144 under the
Securities Act of 1933. Restricted shares may be sold in the public market only
if registered or if they qualify for an exemption from registration under Rules
144, 144(k) or 701 promulgated under the Securities Act of 1933, which rules
are summarized below, or another exemption. Sales of the restricted shares in
the public market, or the availability of such shares for sale, could adversely
affect the market price of the common stock. All officers, directors and
certain other holders of common stock have entered into contractual lock-up
agreements, providing that they will not offer, sell, contract to sell or grant
any option to purchase or otherwise dispose of shares of common stock owned by
them or that could be purchased by them through the exercise of options or
warrants for a period of 180 days after the date of this prospectus without the
prior written consent of Lehman Brothers Inc. As a result of these contractual
restrictions, notwithstanding possible earlier eligibility for sale under the
provisions of Rules 144, 144(k) and 701, additional shares will be eligible for
sale beginning 181 days after the effective date of the offering, subject in
some cases to certain volume limitations.
Eligibility of Restricted Shares for Sale in the Public Market
<TABLE>
<S> <C>
At the Effective Date.................................... None
90 Days After Effective Date............................. None
180 Days after Effective Date............................ 22,088,391 Shares
More Than 180 Days After Effective Date.................. 2,933,312 Shares
</TABLE>
In general, under Rule 144 as currently in effect, beginning 91 days after
the date of this prospectus, a person, or persons whose shares are aggregated,
who has beneficially owned restricted shares for at least one year, including
persons who may be deemed to be our affiliates, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of:
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after the offering
. the average weekly trading volume of the common stock as reported through
the Nasdaq National Market during the four calendar weeks preceding the
filing of a Form 144 with respect to such sale
Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us. Under Rule 144(k), a person who is not deemed to have been our affiliate at
any time during the 90 days preceding a sale, and who has beneficially owned
for at least two years the restricted shares proposed to be sold, including the
holding period of any prior owner except an affiliate, is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
Subject to certain limitations on the aggregate offering price of a
transaction and other conditions, Rule 701 permits resales of shares issued
prior to the date the issuer becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, pursuant to certain compensatory benefit
plans and contracts commencing 90 days after the issuer becomes subject to the
reporting requirements of the Securities
52
<PAGE>
and Exchange Act of 1933, in reliance upon Rule 144 but without compliance with
certain restrictions, including the holding period requirements. In addition,
the Securities and Exchange Commission has indicated that Rule 701 will apply
to typical stock options granted by an issuer before it becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, along with the
shares acquired upon exercise of such options, including exercises after the
date the issuer becomes so subject. Securities issued in reliance on Rule 701
are restricted securities and, subject to the contractual restrictions
described above, beginning 91 days after the date of this prospectus, may be
sold by persons other than affiliates subject only to the manner of sale
provisions of Rule 144 and by affiliates under Rule 144 without compliance with
its one-year minimum holding period requirements.
We, our executive officers and directors and certain of our stockholders
have agreed not to sell or otherwise dispose of any shares of common stock or
any securities convertible into or exercisable or exchangeable for common
stock, or enter into any swap or similar agreement that transfers, in whole or
in part, the economic risk of ownership of the common stock, for a period of
180 days after the date of this prospectus, without the prior written consent
of Lehman Brothers Inc., subject to limited exceptions.
We intend to file a registration statement under the Securities Act of 1933
covering the shares of common stock subject to outstanding options or reserved
for issuance under the 1993 Plan. This registration statement is expected to be
filed within 90 days of effectiveness of the registration statement covering
the shares of common stock in this offering and will automatically become
effective upon filing. Accordingly, shares registered under such registration
statement will, subject to Rule 144 volume limitations applicable to affiliates
and the expiration of a 180-day lock-up period, be available for sale in the
open market, except to the extent that such shares are subject to our vesting
restrictions or the contractual restrictions described above.
53
<PAGE>
UNDERWRITING
Pursuant to the terms of an underwriting agreement, which is filed as an
exhibit to the registration statement relating to this prospectus, the
underwriters of the offering named below, for whom Lehman Brothers Inc., First
Union Securities, Inc. and Friedman, Billings, Ramsey & Co., Inc. are acting as
representatives, have each agreed to purchase from us the respective number of
shares of common stock set forth opposite its name below:
<TABLE>
<CAPTION>
Underwriters Number of shares
------------ ----------------
<S> <C>
Lehman Brothers Inc.......................................
First Union Securities, Inc...............................
Friedman, Billings, Ramsey & Co., Inc. ...................
------
Total...................................................
======
</TABLE>
The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement, and that if any of the shares of
common stock are purchased by the underwriters under the underwriting
agreement, then all of the shares of common stock which the underwriters have
agreed to purchase under the underwriting agreement must be purchased. The
conditions contained in the underwriting agreement include the requirement that
the representations and warranties made by us to the underwriters are true,
that there is no material change in the financial markets and that we deliver
to the underwriters customary closing documents.
The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by us. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares described below.
<TABLE>
<CAPTION>
Paid by Us No Exercise Full Exercise
---------- ----------- -------------
<S> <C> <C>
Per share........................................ $ $
Total............................................ $ $
</TABLE>
The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the initial public
offering price set forth on the cover page of this prospectus, and to dealers,
who may include the underwriters, at the initial public offering price less a
selling concession not in excess of $ share. The underwriters may allow,
and the dealers may reallow, a concession not in excess of $ per share
to brokers and dealers. After the offering, the underwriters may change the
offering price and other selling terms.
54
<PAGE>
We have granted to the underwriters an option to purchase up to an aggregate
of additional shares of common stock, exercisable solely to cover over-
allotments, if any, at the initial public offering price less the underwriting
discounts and commissions shown on the cover page of this prospectus. The
underwriters may exercise this option at any time until 30 days after the date
of the underwriting agreement. If this option is exercised, each underwriter
will be committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriter's initial commitment as indicated in the
preceding table and we will be obligated, under the over-allotment option, to
sell the shares of common stock to the underwriters.
We, our executive officers and directors and certain of our other existing
stockholders have agreed not to directly or indirectly do any of the following,
whether any transaction described in clause (1) or (2) below is to be settled
by delivery of common stock or other securities, in cash or otherwise, in each
case without the prior written consent of Lehman Brothers Inc. on behalf of the
underwriters, for a period of 180 days after the date of this prospectus:
(1) offer, sell or otherwise dispose of, or enter into any transaction or
arrangement which is designed or could be expected to, result in the
disposition or purchase by any person at any time in the future of, any
shares of common stock or securities convertible into or exchangeable
for common stock or substantially similar securities, other than any of
the following:
. the common stock sold under this prospectus
. shares of common stock we issue under employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date of this prospectus or under currently
outstanding options, warrants or rights
(2) sell or grant options, rights or warrants with respect to any shares of
our common stock or securities convertible into or exchangeable for our
common stock or substantially similar securities, other than the grant
of options under option plans existing on the date hereof.
Prior to the offering, there has been no public market for the shares of our
common stock. The initial public offering price will be negotiated between the
representatives and us. In determining the initial public offering price of the
common stock, the representatives will consider, among other things and in
addition to prevailing market conditions, our historical performance and
capital structure, estimates of our business potential and earnings prospects,
an overall assessment of our management and the consideration of the above
factors in relation to market valuation of companies in related businesses.
We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "INVA."
We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act of 1933 and liabilities arising from
breaches of the representations and warranties contained in the underwriting
agreement, and to contribute to payments that the underwriters may be required
to make for these liabilities.
We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $ .
Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of common stock.
55
<PAGE>
The underwriters may create a short position in the common stock in
connection with the offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.
The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed five percent of the total number of
shares of common stock offered by them.
The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares
of common stock in the open market to reduce the underwriters' short position
or to stabilize the price of the common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of those purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it was to discourage resales of the security by purchasers in
an offering.
Neither we nor any of the underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the common stock. In addition, neither we nor
any of the underwriters make any representation that the representatives will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada where the
sale is made.
At our request, the underwriters have reserved up to 12% shares of the
common stock offered by this prospectus for sale to our directors and to our
business associates at the initial public offering price set forth on the cover
page of this prospectus. These persons must commit to purchase no later than
the close of business on the day following the date of this prospectus. The
number of shares available for sale to the general public will be reduced to
the extent these persons purchase the reserved shares.
Fidelity Capital Markets, a division of National Financial Services
Corporation will be facilitating electronic distribution of information through
the Internet, their Intranet and other proprietary electronic technology.
Fidelity Capital Markets will not be acting as an underwriter of this Offering.
fbr.com, a division of FBR Investments Services, Inc., which is an affiliate
of Friedman, Billings, Ramsey & Co., Inc., will be facilitating a portion of
the Internet distribution for this offering. Friedman, Billings, Ramsey & Co.,
Inc. has agreed to allocate a limited number of shares to fbr.com for sale to
its online brokerage account holders. An electronic prospectus is available on
the web site maintained by fbr.com. Other than the prospectus in electronic
format, the information on the fbr.com web site relating to this offering is
not a part of this prospectus and should not be relied upon by prospective
investors.
Certain of the representatives and their affiliates may in the future
provide investment banking, financial advisory and other services to us for
which these representatives may receive customary fees and commissions.
56
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Simpson Thacher & Bartlett, New York, New York.
EXPERTS
The financial statements as of December 31, 1997 and 1998, and September 30,
1999 and for the two years in the period ended December 31, 1998, and the nine
month period ended September 30, 1999, included in this prospectus have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants given on the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission. This prospectus, which forms a part of the registration
statement, does not contain all of the information included in the registration
statement. Certain information is omitted and you should refer to the
registration statement and our exhibits. With respect to references made in
this prospectus to any contract or other document of ours, such references are
not necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contract or document. You may
review a copy of the registration statement at the Securities and Exchange
Commission's public reference room at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Securities and
Exchange Commission's regional offices in Chicago, Illinois and New York, New
York. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Our
Securities and Exchange Commission filings and the registration statement can
also be reviewed by accessing the Securities and Exchange Commission's Internet
site at http://www.sec.gov.
57
<PAGE>
ARTWORK AND DIAGRAMS
[TO BE FILED BY AMENDMENT]
<PAGE>
INVENTA CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVENTA CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants........................................ F-2
Consolidated Balance Sheet............................................... F-3
Consolidated Statement of Operations and Comprehensive Losses............ F-4
Consolidated Statement of Stockholders' Equity (Deficit)................. F-5
Consolidated Statement of Cash Flows..................................... F-6
Notes to Consolidated Financial Statements............................... F-7
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Overview................................................................. F-20
Unaudited Pro Forma Combined Balance Sheet............................... F-21
Unaudited Pro Forma Combined Statement of Operations..................... F-22
Notes to Pro Forma Combined Financial Information........................ F-23
XTEND-TECH, INC. FINANCIAL STATEMENTS
Report of Independent Accountants........................................ F-24
Balance Sheet............................................................ F-25
Statement of Operations.................................................. F-26
Statement of Cash Flows.................................................. F-27
Notes to Financial Statements............................................ F-28
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Inventa Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and comprehensive losses, of
stockholders' equity (deficit) and of cash flows present fairly, in all
material respects, the financial position of Inventa Corporation and its
subsidiary (the "Company") at December 31, 1997 and 1998 and at September 30,
1999, and the results of its operations and its cash flows for the years ended
December 31, 1997 and 1998 and for the nine month period ended September 30,
1999 in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
San Jose, California
January 21, 2000
F-2
<PAGE>
INVENTA CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
December 31, Equity at
---------------- September 30, September 30,
1997 1998 1999 1999
------- ------- ------------- -------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents...... $ 671 $ 4,783 $ 3,156
Accounts receivable, net....... 622 637 634
Prepaid expenses and other
current assets................ 37 142 990
------- ------- --------
Total current assets.......... 1,330 5,562 4,780
Property and equipment, net...... 451 661 1,618
Other assets..................... 41 72 263
------- ------- --------
$ 1,822 $ 6,295 $ 6,661
======= ======= ========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------------
Current liabilities:
Borrowings..................... $ 300 $ -- $ 375
Accounts payable............... 164 523 990
Accrued expenses............... 326 1,125 1,649
Capital lease obligations...... 111 112 156
------- ------- --------
Total current liabilities..... 901 1,760 3,170
Borrowings, long-term............ -- 300 --
Capital lease obligations, long-
term............................ 192 73 348
Deferred tax liabilities, long-
term............................ 25 17 --
------- ------- --------
1,118 2,150 3,518
------- ------- --------
Mandatorily redeemable
convertible preferred stock:
Series B mandatorily redeemable
convertible preferred stock;
$0.001 par value; 2,560,000
shares authorized, issued and
outstanding................... 3,200 3,200 3,469 $ --
Series C mandatorily redeemable
convertible preferred stock;
$0.001 par value; 8,059,511
shares authorized; 0,
4,055,511, and 8,055,511
shares issued and outstanding,
respectively.................. -- 5,070 10,918 --
------- ------- -------- --------
3,200 8,270 14,387 --
Stockholders' equity (deficit):
Series A convertible preferred
stock; $0.001 par value;
1,000,000 shares authorized;
800,000 shares issued and
outstanding................... 1 1 1 $ --
Common stock; $0.001 par value;
25,000,000 shares authorized;
4,642,000, 4,682,000 and
4,717,053 shares issued and
outstanding, respectively;
16,132,564 (unaudited) shares
issued and outstanding,
pro forma..................... 5 5 5 16
Additional paid-in capital....... 368 1,357 2,299 16,676
Deferred stock-based
compensation.................... -- (978) (2,213) (2,213)
Accumulated comprehensive loss... (111) (93) (93) (93)
Accumulated deficit.............. (2,759) (4,417) (11,243) (11,243)
------- ------- -------- --------
Total stockholders' equity
(deficit).................... (2,496) (4,125) (11,244) $ 3,143
------- ------- -------- ========
$ 1,822 $ 6,295 $ 6,661
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
INVENTA CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSSES
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
-------------------- ----------------------
1997 1998 1998 1999
--------- --------- ----------- ----------
(unaudited)
<S> <C> <C> <C> <C>
Revenues........................ $ 5,196 $ 8,016 $ 6,001 $ 7,924
--------- --------- --------- ----------
Operating expenses:
Project personnel............. 2,677 2,799 2,005 5,260
Sales and marketing........... 1,671 1,838 1,517 2,560
General and administrative.... 3,456 4,520 3,613 5,727
Depreciation.................. 187 251 174 366
Amortization of deferred
stock-based compensation..... -- 50 -- 836
Non-recurring expenses on
closing of foreign
operations................... -- 250 -- --
--------- --------- --------- ----------
Total operating expenses.... 7,991 9,708 7,309 14,749
--------- --------- --------- ----------
Loss from operations............ (2,795) (1,692) (1,308) (6,825)
Interest and other income....... 4 92 53 85
Interest expense................ (83) (56) (43) (71)
--------- --------- --------- ----------
Loss before income taxes........ (2,874) (1,656) (1,298) (6,811)
Income tax expense.............. (90) (2) -- (15)
--------- --------- --------- ----------
Net loss........................ (2,964) (1,658) (1,298) (6,826)
--------- --------- --------- ----------
Accretion of mandatorily
redeemable convertible
preferred stock to redemption
value.......................... -- -- -- (1,117)
--------- --------- --------- ----------
Net loss attributable to common
stockholders................... $ (2,964) $ (1,658) $ (1,298) $ (7,943)
========= ========= ========= ==========
Other comprehensive losses:
Foreign currency translation
adjustment................... (112) 18 -- --
--------- --------- --------- ----------
Comprehensive loss.............. $ (3,076) $ (1,640) $ (1,298) $ (7,943)
========= ========= ========= ==========
Net loss per share:
Basic and diluted............. $ (0.65) $ (0.36) $ (0.28) $ (1.69)
========= ========= ========= ==========
Weighted average shares....... 4,556,893 4,658,735 4,658,274 4,692,638
========= ========= ========= ==========
Pro forma net loss per share
(unaudited):
Basic and diluted............. $ (0.49)
==========
Weighted average shares....... 13,885,927
==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
INVENTA CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands)
<TABLE>
<CAPTION>
Series A
Convertible Retained Total
Preferred Stock Common Stock Additional Deferred Accumulated Earnings/ Stockholders'
----------------- ------------- Paid-in Stock-Based Comprehensive (Accumulated Equity
Shares Amount Shares Amount Capital Compensation Losses Deficit) (Deficit)
------- ------- ------ ------ ---------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996................... 800 $ 1 4,543 $ 5 $ 388 $ -- $ 1 $ 205 $ 600
Stock issuance costs.... -- -- -- -- (25) -- -- -- (25)
Exercise of common stock
options................ -- -- 99 -- 5 -- -- -- 5
Foreign currency
translation
adjustment............. -- -- -- -- -- -- (112) -- (112)
Net loss................ -- -- -- -- -- -- -- (2,964) (2,964)
------- ------- ----- --- ------- ------- ----- -------- --------
Balance at December 31,
1997................... 800 1 4,642 5 368 -- (111) (2,759) (2,496)
Stock issuance costs.... -- -- -- -- (42) -- -- -- (42)
Exercise of common stock
options................ -- -- 40 -- 3 -- -- -- 3
Deferred stock-based
compensation........... -- -- -- -- 1,028 (1,028) -- -- --
Amortization of stock-
based compensation..... -- -- -- -- -- 50 -- -- 50
Foreign currency
translation
adjustment............. -- -- -- -- -- -- 18 -- 18
Net loss................ -- -- -- -- -- -- -- (1,658) (1,658)
------- ------- ----- --- ------- ------- ----- -------- --------
Balance at December 31,
1998................... 800 1 4,682 5 1,357 (978) (93) (4,417) (4,125)
Stock issuance costs.... -- -- -- -- (16) -- -- -- (16)
Exercise of common stock
options................ -- -- 35 -- 4 -- -- -- 4
Accretion of mandatorily
redeemable convertible
preferred stock........ -- -- -- -- (1,117) -- -- -- (1,117)
Deferred stock-based
compensation........... -- -- -- -- 2,071 (2,071) -- -- --
Amortization of stock-
based compensation..... -- -- -- -- -- 836 -- -- 836
Net loss................ -- -- -- -- -- -- -- (6,826) (6,826)
------- ------- ----- --- ------- ------- ----- -------- --------
Balance at September 30,
1999................... 800 $ 1 4,717 $ 5 $ 2,299 $(2,213) $ (93) $(11,243) $(11,244)
======= ======= ===== === ======= ======= ===== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
INVENTA CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
---------------- -------------------
1997 1998 1998 1999
------- ------- ----------- -------
(unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................. $(2,964) $(1,658) $(1,298) $(6,826)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Provision for doubtful accounts..... 258 (49) -- --
Depreciation........................ 192 252 174 366
Deferred income taxes............... 99 -- -- --
Amortization of deferred stock-based
compensation....................... -- 50 50 836
Changes in operating assets and
liabilities:
Accounts receivable............... 250 78 (164) 3
Prepaid expenses and other
assets........................... 51 (121) (854) (1,039)
Accounts payable.................. (151) 345 173 467
Accrued expenses.................. 14 797 1,032 525
Income taxes payable.............. 1 (26) (26) (1)
Deferred tax liabilities.......... 1 (8) 22 (17)
------- ------- ------- -------
Net cash used in operating
activities..................... (2,249) (340) (891) (5,686)
------- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment.... (50) (460) (270) (837)
------- ------- ------- -------
Net cash used in investing
activities..................... (50) (460) (270) (837)
------- ------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of mandatorily
redeemable convertible preferred
stock, net of issuance costs......... 3,175 5,027 5,027 4,984
Proceeds from issuance of common
stock................................ 5 3 2 4
Proceeds from borrowings.............. -- 300 91 75
Repayment of borrowings............... (165) (300) (300) --
Repayment of capital lease
obligations.......................... (93) (118) (97) (167)
------- ------- ------- -------
Net cash provided by financing
activities..................... 2,922 4,912 4,723 4,896
------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents............................ 623 4,112 3,562 (1,627)
Cash and cash equivalents, beginning of
year................................... 48 671 671 4,783
------- ------- ------- -------
Cash and cash equivalents, end of year.. $ 671 $ 4,783 $ 4,233 $ 3,156
======= ======= ======= =======
Supplemental cash flow information:
Cash paid for the period:
Interest............................ $ 77 $ 56 $ 44 $ 71
======= ======= ======= =======
Taxes............................... $ 49 $ -- $ -- $ 13
======= ======= ======= =======
Supplemental non-cash investing and
financing activity:
Property and equipment acquired under
capital lease........................ $ 285 $ -- $ -- $ 486
======= ======= ======= =======
</TABLE>
F-6
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company
Inventa Corporation (the "Company") was incorporated in California on
October 26, 1988. The Company provides Internet professional services including
business-to-business e-Commerce solutions to companies located primarily in the
United States. The Company architects, engineers, integrates and supports
complex business to business digital exchanges and digital customer
relationship management solutions. Digital exchanges are electronic
marketplaces that enable businesses to collaborate with trading partners,
conduct e-Commerce, manage distribution relationships and enhance business
partnerships. Digital customer relationship management is an Internet based
approach to coordinating a company's customer relationships across
communications channels, business functions and trading partners.
Basis of Presentation
The accompanying consolidated financial statements include the financial
statements of the Company and its wholly owned foreign subsidiary, ICG Systems
SDN. BHD, located in Malaysia through December 31, 1998. All intercompany
accounts between the Company and its wholly owned subsidiary have been
eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company derives its revenues from professional services which are
generally provided to clients on either a fixed-price or a time and materials
basis. Revenue from fixed-price engagements is recognized using the percentage
of completion method (based on the ratio of costs incurred to the total
estimated project costs). Revenue from time and materials engagements is
recognized as services are rendered. Payments received in advance of services
rendered are recorded as deferred revenue. The Company reports revenue net of
reimbursable expenses which are billed to and collected from clients.
Provisions for estimated losses on uncompleted contracts are made on a
contract by contract basis and are recognized in the period in which such
losses become probable and can be reasonably estimated. To date, such losses
have not been significant.
At December 31, 1997 and 1998, and September 30, 1999, the Company had
$33,000, $32,000 and $879,000 in unbilled accounts receivable relating to
revenue recognized but not billed due to timing of customer payment terms.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original
maturity of three months or less to be cash equivalents. Cash equivalents
consist primarily of deposits in money market funds.
F-7
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Concentration of Credit Risks
Financial instruments that potentially subject the Company to a
concentration credit risk consist primarily of cash and cash equivalents and
accounts receivable. The Company limits its exposure to credit loss by placing
its cash and cash equivalents with high quality financial institutions. The
Company's accounts receivable are derived from revenue earned from clients
located in the United States. The Company performs ongoing credit evaluations
of its clients and maintains an allowance for potential credit losses based
upon the expected collectability of accounts receivable.
The following table summarizes the revenues from clients in excess of 10% of
total revenues:
<TABLE>
<CAPTION>
Years Ended Nine Months
December 31, Ended
-------------- September 30,
1997 1998 1999
------ ------ -------------
<S> <C> <C> <C>
Company A....................................... 3% 52% 39%
Company B....................................... -- -- 20%
Company C....................................... 1% 16% 6%
Company D....................................... 17% 8% 6%
Company E....................................... 18% 5% --
Company F....................................... 15% -- --
</TABLE>
At December 31, 1997, Company E and F accounted for 15% and 17% of total
accounts receivable, respectively. At December 31, 1998, Company A and C
accounted for 38% and 27% of total accounts receivable, respectively. At
September 30, 1999, Company A and B accounted for 16% and 25% of total accounts
receivable, respectively.
Fair Value of Financial Instruments
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable are carried at cost, which approximates
their fair value because of the short-term maturity of these instruments. The
carrying value of the Company's capital leases approximate fair value because
the implicit rates for these leases approximates prevailing market rates.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets,
generally ranging from three to five years. Equipment acquired under capital
leases is amortized on a straight-line basis over the term of the lease or
estimated useful lives, whichever is shorter. Leasehold improvements are
amortized over the shorter of the term of the lease or the life of the asset.
Long-lived Assets
The Company evaluates the recoverability of its long-lived assets in
accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be disposed of" ("SFAS No. 121"). SFAS No. 121 requires recognition of
impairment of long-lived assets in the event the net book value of such assets
exceeds the future undiscounted cash flows attributable to such assets.
Advertising
Advertising is expensed as incurred. Advertising and public relations
expenses for the years ended December 31, 1998 and 1999 and for the nine months
ended September 30, 1998 and 1999 totaled $91,000, $230,000, $190,000 and
$207,000, respectively.
F-8
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock-based Compensation
The Company accounts for stock-based compensation in accordance with the
provisions of Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees," ("APB No. 25") and complies with the disclosure
provisions of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123"). Under APB No. 25, compensation
expense is recognized based on the difference, if any, on the date of grant
between the fair value of the Company's stock and the amount an employee must
pay to acquire the stock. The compensation expense is recognized over the
option vesting period.
The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS 123 and the Emerging Issues Task Force
in Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or In Conjunction with Selling, Goods or
Services."
Pro Forma Stockholders' Equity (Unaudited)
Effective upon the closing of this offering, the outstanding shares of
Series A Convertible Preferred Stock, Series B and Series C Mandatorily
Redeemable Convertible Preferred Stock will automatically convert into
approximately 800,000, 2,560,000 and 8,055,511 shares, respectively, of Common
Stock. The pro forma effects of these transactions are unaudited and have been
reflected in the accompanying pro forma Stockholders' Equity at September 30,
1999.
Net Loss Per Share
Net loss per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS "No. 128") and SEC
Staff Accounting Bulletin No. 98 ("SAB No. 98"). Under the provisions of SFAS
No. 128 and SAB No. 98, basic net loss per share is computed by dividing the
net loss available to common stockholders for the period by the weighted
average number of common shares outstanding during the period. Diluted net loss
per share is computed by dividing the net loss for the period by the weight
average number of common and potential common shares outstanding during the
period, if their effect is dilutive. Potential common shares are comprised of
incremental shares of Common Stock issuable upon the exercise of stock options
and warrants and upon the conversion of Convertible Preferred Stock ("Preferred
Stock").
The following table sets forth the computation of basic and diluted net loss
per share for the periods indicated, (in thousands, except share and per share
data):
<TABLE>
<CAPTION>
Years Ended Nine Months Ended
December 31, September 30,
-------------------- ---------------------
1997 1998 1998 1999
--------- --------- ---------- ---------
(unaudited)
<S> <C> <C> <C> <C>
Historical:
Numerator:
Net loss........................ $ (2,964) $ (1,658) $ (1,298) $ (6,826)
Accretion of series B and C
mandatorily redeemable
convertible preferred stock.... -- -- -- (1,117)
--------- --------- --------- ---------
Net loss attributable to common
stockholders................... $ (2,964) $ (1,658) $ (1,298) $ (7,943)
========= ========= ========= =========
Denominator:
Weighted average shares......... 4,556,893 4,658,735 4,658,274 4,692,638
========= ========= ========= =========
Net loss per share:
Basic and diluted............... $ (0.65) $ (0.36) $ (0.28) $ (1.69)
========= ========= ========= =========
</TABLE>
F-9
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table sets forth common stock equivalents that are not
included in the diluted net loss per share calculation above because to do so
would be antidilutive for the period indicated:
<TABLE>
<CAPTION>
Year Ended Year Ended Nine Months
December 31, December 31, September 30,
1997 1998 1999
------------ ------------ -------------
<S> <C> <C> <C>
Weighted average effect of common stock
equivalents:
Series A convertible preferred
stock............................... 800,000 800,000 800,000
Series B mandatorily redeemable
convertible preferred stock......... 2,133,333 2,560,000 2,560,000
Series C mandatorily redeemable
convertible preferred stock......... -- 2,703,674 5,833,289
Convertible preferred stock
warrants............................ 200,000 200,000 200,000
Employee stock options............... 496,779 416,068 2,040,252
--------- --------- ----------
3,630,112 6,679,742 11,433,541
========= ========= ==========
</TABLE>
Pro Forma Net Loss Per Share (Unaudited)
Pro forma net loss per share for the nine months ended September 30, 1999 is
computed using the weighted average number of common shares outstanding,
including the conversion of the Company's Series A, Series B and Series C
Convertible Preferred Stock into shares of the Company's Common Stock effective
upon the closing of the Company's initial public offering, as if such change in
conversion rate and conversion occurred on January 1, 1999 or at the date of
original issuance, if later. The resulting pro forma adjustment includes (i) an
increase in the weighted average shares used to compute the basic net loss per
share by 9,193,289 shares and (ii) a decrease in the net loss attributable to
common stockholders for the accretion of mandatorily redeemable convertible
preferred stock of $1,117,000. The calculation of diluted net loss per share
excludes potential shares of common stock as the effect of their inclusion
would be antidilutive. Pro forma potential common stock consists of common
stock subject to repurchase rights and incremental shares of common stock
issuable upon the exercise of stock options.
Foreign Currency Translation Policy
The functional currency of ICG Systems SDN. BHD. is the local currency.
Assets and liabilities are translated at exchange rates prevailing at the
balance sheet dates. Revenues, costs and expenses are translated into United
States dollars at average exchange rates for the period. Gains and losses
resulting from translation are accumulated as a component of stockholders'
equity.
Income Taxes
Income taxes are accounted for using an asset and liability approach.
Deferred income tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the currently enacted tax rates and laws. In
addition, deferred tax assets are recorded for the future benefit of utilizing
net operating loss and research and development credit carryforwards. A
valuation allowance is provided against deferred tax assets unless it is more
likely than not that they will be realized, either through the generation of
future taxable income or through carryback potential.
Comprehensive Income
The Company follows the provisions of Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No.
130 establishes standards for reporting comprehensive income and its components
in financial statements. Comprehensive income, as defined, includes all changes
in equity (net assets) during a period from non-owner sources.
F-10
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Segment Information
The Company follows the provisions of Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). The Company identifies its operating segments
based on business activities, management responsibility and geographical
location. During the periods presented the Company operated in a single
business segment.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivatives and Hedging Activities" ("SFAS No. 133"). This statement
establishes accounting and reporting standards of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value and will be effective as
of June 15, 2000. The adoption of SFAS No. 133 is not expected to have a
material effect on the Company's results of operations, financial condition or
cash flows.
NOTE 2--BALANCE SHEET COMPONENTS (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
------------- -------------
1997 1998 1999
----- ------ -------------
<S> <C> <C> <C>
Accounts receivable, net:
Accounts receivable.............................. $ 955 $ 945 $ 808
Less: Allowance for doubtful accounts............ (333) (308) (174)
----- ------ ------
$ 622 $ 637 $ 634
===== ====== ======
Property and equipment, net:
Furniture and fixtures........................... $ 144 $ 218 $ 495
Equipment........................................ 702 1,051 1,599
Leasehold improvements........................... 47 76 394
----- ------ ------
893 1,345 2,488
Less: Accumulated depreciation .................... (442) (684) (870)
----- ------ ------
$ 451 $ 661 $1,618
===== ====== ======
</TABLE>
Property and equipment includes $456,000 of equipment under capital leases
at December 31, 1997 and 1998 and $756,551 at September 30, 1999. Accumulated
depreciation of assets under capital leases totaled $179,000, $234,000 and
$266,874 at December 31, 1997, 1998 and September 30, 1999, respectively.
<TABLE>
<CAPTION>
December
31,
----------- September 30,
1997 1998 1999
---- ------ -------------
<S> <C> <C> <C>
Accrued expenses:
Payroll and related expenses..................... $180 $ 510 $1,069
General and administrative expenses.............. 119 614 563
Income taxes payable............................. 27 1 --
Deferred tax liabilities, current................ -- -- 17
---- ------ ------
$326 $1,125 $1,649
==== ====== ======
</TABLE>
F-11
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 3--RELATED PARTY TRANSACTIONS:
During 1997 and 1998, the Company obtained contract services from an entity
in which the Chairman, who was the Company's former President, has a
significant investment. The Company paid approximately $590,000 during 1997 and
$485,000 during 1998, which was estimated to approximate the fair market value,
for the services. This relationship was mutually terminated in October 1998.
NOTE 4--INCOME TAXES:
The provision for income taxes consists of the following, (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------- September 30,
1997 1998 1999
------- ------- -------------
<S> <C> <C> <C>
Current:
Federal.................................... $ (3) $ -- $ 13
State and local............................ 1 2 2
Other...................................... 29 -- --
------- ------- ------
27 2 15
------- ------- ------
Deferred:
Federal.................................... 53 -- --
State and local............................ 10 -- --
------- ------- ------
63 -- --
------- ------- ------
$ 90 $ 2 $ 15
======= ======= ======
Deferred tax assets and liabilities consist of the following, (in
thousands):
<CAPTION>
December 31,
---------------- September 30,
1997 1998 1999
------- ------- -------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........... $ 1,102 $ 1,274 $3,869
Accruals and other reserves................ 53 341 225
Fixed assets............................... -- 107 85
------- ------- ------
Total gross deferred tax assets.............. 1,155 1,722 4,179
Less: Valuation allowance.................... (1,155) (1,722) (4,179)
------- ------- ------
-- -- --
------- ------- ------
Deferred tax liabilities:
Fixed assets............................... (25) (17) --
------- ------- ------
$ (25) $ (17) $ --
======= ======= ======
</TABLE>
Management believes that based on a number of factors, it is more likely
than not that the deferred tax assets will not be utilized, such that a full
valuation allowance has been recorded.
As of September 30, 1999, the Company had approximately $10.0 million of
federal net operating loss carryforwards and approximately $8.0 million of
state net operating loss carryforwards available to offset future taxable
income. The federal net operating loss carryforwards will expire between 2011
and 2019 and the state net operating loss carryforwards will expire between
2004 and 2006, if not utilized.
F-12
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Under the Tax Reform Act of 1986, the amounts of and the benefit from net
operating losses that can be carried forward may be limited in certain
circumstances including, but not limited to, a cumulative stock ownership
change of more than 50% over a three-year period, as defined. Any unused annual
limitation may be carried forward to future years for the balance of the net
operating loss carryforward period.
NOTE 5--BORROWINGS:
Line of Credit
At September 30, 1999, the Company had no balance outstanding and due under
a line of credit with Silicon Valley Bank. The line of credit provides for
borrowings of up to $1,000,000 which are secured by the Company's assets. The
line of credit expires on June 22, 2000 and charges interest at a rate of 9.0%
per annum. Under the line of credit, the Company is required to maintain
certain financial ratios as stipulated in the agreement.
This line of credit was terminated in November 1999.
Equipment Lease Line
At September 30, 1999, the Company had $375,000 outstanding under an
equipment lease financing line with Silicon Valley Bank. The equipment lease
line provides for borrowings of up to $600,000 which are secured by the
Company's assets. The Company's ability to draw on the financing line expires
on June 22, 2000. The lease line bears interest at a rate of 9.75% per annum.
Under the line of credit, the Company is required to maintain certain financial
covenants. This equipment lease line was paid in full in November 1999.
NOTE 6--COMMITMENTS:
Lease Commitments
The Company leases office space, equipment and an automobile under
noncancelable operating and capital leases. Rent expense under the operating
leases was approximately $157,000 and $214,000 for the years ended December 31,
1997 and 1998, respectively, and $143,000 and $583,000 for the nine month
periods ended September 30, 1998 and 1999, respectively.
Future minimum lease payments under the capital and noncancelable operating
leases at September 30, 1999, are as follows:
<TABLE>
<CAPTION>
Capital Operating
Years Ended December 31, Leases Leases
------------------------ ------- ---------
(in thousands)
<S> <C> <C>
2000...................................................... $ 188 $ 963
2001...................................................... 150 496
2002...................................................... 104 185
2003...................................................... 96 116
2004...................................................... 27 --
------- -------
565 $ 1,760
-------
Less: Amounts representing interest....................... (61)
-------
Present value of minimum capital lease payments........... 504
Less: Current portion..................................... (156)
-------
Capital lease obligations, long-term...................... $ 348
=======
</TABLE>
F-13
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Employment Agreements
The Company has entered into employment agreements with certain officers of
the Company. Some employment agreements also provide for severance in the event
the individual is terminated without cause.
NOTE 7--CONVERTIBLE PREFERRED STOCK:
Convertible Preferred Stock at September 30, 1999, consists of the following
(in thousands):
<TABLE>
<CAPTION>
Shares
---------------------- Liquidation Redemption
Series Authorized Outstanding Amount Amount
------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
A.............................. 1,000 800 $ 400 $ --
B.............................. 2,560 2,560 3,200 6,400
C.............................. 8,060 8,056 10,069 20,140
------ ------ ------- -------
11,620 11,416 $13,669 $26,540
====== ====== ======= =======
</TABLE>
The holders of Convertible Preferred Stock have the following rights and
preferences:
Voting
Each share of Series A, Series B and Series C has voting rights equal to an
equivalent number of shares of Common Stock into which it is convertible and
votes together as one class with the Common Stock.
Dividends
Holders of Series A, Series B and Series C are entitled to receive
noncumulative dividends as declared by the Board of Directors at a rate of
$0.03, $0.075 and $0.10 per share, respectively, per annum prior to any
dividends being paid to holders of Common Stock. After payment of such
dividends, declared dividends shall be paid to the holders of Common Stock and
Convertible Preferred Stock in such amounts as they would be entitled to
receive if their shares had been converted into shares of Common Stock. No
dividends were declared by the Board from inception through September 30, 1999.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company,
including merger or sale of substantially all assets, the Series A, Series B
and Series C shareholders are entitled to receive with each series of
Convertible Preferred Stock, on a pro rata basis, a distribution of $0.50,
$1.25 and $1.25 per share, respectively, plus any unpaid but declared dividends
prior to and in preference to any distribution to the holders of Common Stock.
After the payment has been made to the holders of Series A, Series B and Series
C, the holders of Common Stock are entitled to receive $0.40 per share. The
remaining assets, if any, shall be distributed ratably among the holders of the
Common Stock, Series A, Series B and Series C shareholders.
Redemption
The holders of Series C have the right to require the Company to redeem the
then outstanding shares beginning on or after March 31, 2004 in three equal
annual installments which is the fair value of the Series C at the time of
redemption plus unpaid dividends. The holders of Series B have the right to
require the Company to redeem the then outstanding shares any time after March
2004 in three annual installments for a redemption price, which is the fair
value of the Series B at the time of redemption plus unpaid dividends. Fair
values shall be determined by the Board of Directors but if it is unacceptable
to the holders of the Series C or Series B,
F-14
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
then it shall be determined by an independent investment banking firm. The
Series A has no redemption privileges.
As the future redemption prices of the Series B and Series C shares are
variable in amount, the difference between the Series B and Series C carrying
values and their estimated future redemption value are being accreted ratably
as a charge to additional paid-in capital.
During the years ended December 31, 1997 and 1998, the carrying value of
both the Series B and Series C approximated their estimated future redemption
price and as such no accretion charges were recorded. During the nine months
ended September 30, 1999, the Company recorded accretion charges of $1.1
million.
Conversion
Each share of Series A, Series B and Series C is convertible at the option
of the holder into one share of Common Stock. The conversion ratio of Series B
into Common Stock is subject to certain adjustments to prevent dilution. Series
A, Series B and Series C automatically convert into Common Stock upon the
completion of an underwritten public offering with gross proceeds of at least
$5,000,000, $10,000,000 and $10,000,000 and a public offering price of not less
than $1.75, $4.00 and $4.00 per share, respectively.
Warrants
In connection with the issuance of Series A, each holder was granted a
warrant to purchase one share of preferred stock for every four shares of
Series A owned at an exercise price per share of $0.50. The warrants expire at
the earlier of December 31, 1999, the date of the Company's initial public
offering of securities, or the date of acquisition of the Company. The value of
the warrants at the time of their issuance was not material to the consolidated
financial statements.
Subsequent to September 30, 1999, warrants for an aggregate of 200,000
shares of Series A Convertible Preferred Stock were exercised. Gross proceeds
from the exercise were $100,000.
NOTE 8--COMMON STOCK:
The Company's Articles of Incorporation, as amended, authorize the Company
to issue 25,000,000 shares of Common Stock.
At September 30, 1999, the Company had reserved the following number of
shares of Common Stock for future issuance (in thousands):
<TABLE>
<S> <C>
Series A Convertible Preferred Stock.................................. 800
Series B Mandatorily Redeemable Convertible Preferred Stock........... 2,560
Series C Mandatorily Redeemable Convertible Preferred Stock........... 8,060
Warrants for Series A Convertible Preferred Stock..................... 200
Options under Stock Option Plan....................................... 5,138
------
16,758
======
</TABLE>
F-15
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 9--STOCK OPTION PLAN:
In 1993, the Board of Directors and shareholders adopted the 1993 Stock
Option Plan (the "1993 Plan") which provides for granting of incentive stock
options ("ISO's") and nonqualified stock options ("NSO's") for shares of Common
Stock to employees, directors and consultants of the Company. In accordance
with the 1993 Plan, the stated exercise price shall not be less than 100% and
85% of the estimated fair market value of the Common Stock as determined by the
Board of Directors on the date of grant for ISO's and NSO's, respectively.
Stock options granted to a person owning more than 10% of the combined voting
power of all classes of stock of the Company must be issued at 110% of the fair
market value of the stock on the date of grant. The 1993 Plan provides that the
options shall be exercisable over a period not to exceed ten years and shall
generally vest 25% one year after the date of grant and thereafter vest in
equal monthly installments over the remaining 36 months.
The following tables summarize stock option plan activity under the 1993
Plan (in thousands except per share amounts):
<TABLE>
<CAPTION>
Years Ended December 31, Nine Months
--------------------------------- Ended September
1997 1998 30, 1999
---------------- ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. 483 $0.05 425 $0.10 1,496 $0.14
Granted................. 330 0.15 1,259 0.15 1,682 0.32
Exercised............... (99) 0.05 (41) 0.07 (35) 0.13
Canceled................ (289) 0.09 (147) 0.09 (189) 0.22
---- ----- -----
Outstanding at end of
period................. 425 $0.10 1,496 $0.14 2,954 $0.24
==== ===== =====
Options exercisable at
end of period........... -- 348 483
==== ===== =====
Weighted average fair
value of options
granted during the
period................. $1.13 $1.13 $1.62
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Options Exercisable
Options Outstanding at at September 30,
September 30, 1999 1999
-------------------------------- --------------------
Weighted
Average Weighted Weighted
Number of Remaining Average Average
Exercise Options Contractual Exercise Number Exercise
Prices Outstanding Life Price Outstanding Price
-------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.050................ 73 5.8 years $0.05 66 $0.05
$0.150................ 2,049 9.3 years 0.15 417 0.15
$0.450................ 679 9.8 years 0.45 -- 0.45
$0.625................ 153 9.6 years 0.63 -- 0.63
----- ---
2,954 9.3 years $0.24 483 $0.14
===== ===
</TABLE>
Stock-based Compensation
In connection with certain stock option grants during the nine months ended
September 30, 1999 the Company recorded unearned stock-based compensation
totaling $2,071,000, which is being amortized in accordance with FASB
Interpretation No. 28 over the vesting periods of the related options, which is
generally four years. Stock-based compensation amortization recognized during
the nine months ended September 30,
F-16
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1999 totaled $836,000. If the stock-based compensation for the nine months
ended September 30, 1999 had been allocated across the relevant functional
expense categories within operating expenses, it would be allocated as follows
(in thousands):
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
1999
-------------
<S> <C>
Project personnel.............................................. $301
Sales and marketing............................................ 55
General and administrative..................................... 480
----
$836
====
</TABLE>
Fair Value Disclosures
The Company has adopted the disclosure only provision of SFAS No. 123. Had
compensation cost been determined for options issued under the 1993 Plan and
outside the 1993 Plan based on the fair value of the options at the grant date
for awards in 1997 and 1998 consistent with provisions of SFAS No. 123, the
Company's net loss would have been increased to the pro forma amounts indicated
below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Years Ended Nine Months
December 31, Ended
---------------- September 30,
1997 1998 1999
------- ------- -------------
<S> <C> <C> <C>
Net loss attributable to common stockholders:
As reported................................. $(2,964) $(1,658) $ (7,943)
======= ======= =======
Pro forma................................... $(3,045) $(1,865) $ (8,101)
======= ======= =======
Net loss per share--basic and diluted as
reported..................................... $ (0.65) $ (0.36) $ (1.69)
======= ======= =======
Net loss per share--basic and diluted pro
forma........................................ $ (0.67) $ (0.40) $ (1.73)
======= ======= =======
</TABLE>
The Company calculated the fair value of each option on the date of grant
using the Black-Scholes pricing model with the following assumptions used for
grants during the applicable period: annual dividend yield of 0%, risk-free
annual interest rates of 4.47% to 6.31% for options granted during the period
from January 1, 1997 through September 30, 1999 and a weighted average expected
option term of five years.
NOTE 10--EMPLOYEE BENEFIT PLAN
Effective January 1, 1996, and as amended on January 1, 1998, the Company
adopted the Inventa Corporation Retirement Savings Plan (the "Plan") which
qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code.
All full-time employees who are at least 21 years old are eligible to
participate in the Plan. Participants may contribute up to maximum allowed
under the law of their earnings to the Plan. A discretionary matching amount
may be made by the Company. The Company made matching contributions for the
years ended December 31, 1997 and 1998 and the nine months ended September 30,
1998 and 1999 of $21,000, $30,000, $20,000, and $64,000, respectively.
F-17
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 11--MALAYSIAN OPERATIONS:
In November 1998, the Company announced a formal plan to close its
operations in Malaysia and focus its effort in the United States. Accordingly,
in February 1999, the Company engaged the services of a third party to assist
in the orderly liquidation of the Malaysian subsidiary. In conjunction with
this announcement, the Company made a provision of $250,000 in the consolidated
financial statements for costs to be incurred in connection with the
liquidation of the Malaysian subsidiary. The balance of this provision at
September 30, 1999 was $134,073.
NOTE 12--SEGMENT AND GEOGRAPHIC INFORMATION:
The Company operates in a single industry segment (as defined by SFAS No.
131) providing consulting and systems integration services.
The following is a summary of service revenue by geographic area (in
thousands):
<TABLE>
<CAPTION>
Years Ended Nine Months
December 31, Ended
------------- September 30,
1997 1998 1999
------ ------ -------------
<S> <C> <C> <C>
Malaysia......................................... $ 748 $ 521 $ --
United States.................................... 4,448 7,495 7,924
------ ------ ------
$5,196 $8,016 $7,924
====== ====== ======
</TABLE>
NOTE 13--SUBSEQUENT EVENTS:
Borrowing Arrangement
On November 17, 1999, the Company entered into a loan agreement with a
financial institution. This agreement provided for borrowings of up to
$4,000,000 under term loan ("Term Loan") and $2,000,000 under revolving line of
credit. Borrowing under term loan bears interest at prime rate plus 2% with
accrued interest paid monthly and is due at November 30, 2000. Borrowing under
the line of credit is limited to the lesser of 80% of the amount of the
eligible accounts receivable or $2,000,000, and bears interest at prime rate
plus 2%. The Company borrowed the entire $4,000,000 available under the term
loan on the date of the agreement.
In connection with such debt financing, the Company issued warrants to
purchase 160,000 shares of Series C Mandatorily Redeemable Preferred Stock at
$2.50 per share, which expire in November 2004. The value of the warrants was
determined using the Black-Scholes valuation model. The expense will be
recognized as additional interest expense over the term of the borrowing
arrangement. The warrants became exercisable upon the closing of the loan
agreement.
Series D Mandatorily Redeemable Preferred Stock
On January 19, 2000, 3,000,000 shares of Series D Mandatorily Redeemable
Preferred Stock were issued for gross proceeds of approximately $22.2 million.
The issuance will result in a beneficial conversion feature of approximately
$4.8 million calculated in accordance with Emerging Issues Task Force No. 98-5,
which will result in an immediate charge to accumulated deficit.
F-18
<PAGE>
INVENTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock-based Compensation
In connection with certain stock option grants during the three months ended
December 31, 1999, the Company recorded deferred stock-based compensation
totaling $3.1 million, which is being amortized in accordance with FASB
Interpretation No. 28 over the vesting periods of the related options, which is
generally four years. Stock-based compensation amortization recognized during
the three months ended December 31, 1999 totaled $768,000.
Acquisition
Effective January 26, 2000, the Company acquired all the outstanding shares
of common stock of XTEND-Tech, Inc., a provider of information technology
consulting services. Total consideration paid in connection with this
acquisition was 1,350,000 shares of the Company's common stock with a value of
$12,150,000. This consideration consisted of a combination of the purchase
price paid for the outstanding common stock of XTEND-Tech and consideration to
certain employee stockholders of XTEND-Tech for continued employment with the
Company.
The acquisition will be accounted for using the purchase method of
accounting. The amount of the consideration treated as purchase price for this
acquisition was approximately $7,182,000. The purchase price was allocated to
the tangible and intangible assets acquired and liabilities assumed based upon
their respective fair values at the acquisition date. The purchase price
consisted of 798,052 shares of the Company's common stock. The estimated
allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Tangible assets.................................................. $ 473,000
Intangible assets
Workforce...................................................... 3,528,000
Covenants not to compete....................................... 882,000
Goodwill....................................................... 2,718,000
Liabilities...................................................... (419,000)
----------
$7,182,000
==========
</TABLE>
The amortization of the intangible assets will occur over the estimated
periods to be benefited. The workforce intangible asset will be amortized on a
straight-line basis over eighteen months from the acquisition date, however,
retention of the acquired employees will be evaluated in future periods to
assess whether accelerated amortization of this asset is warranted. The
covenants not to compete intangible asset will be amortized on a straight-line
basis over four years starting from the acquisition date. The goodwill is
expected to be amortized on a straight-line basis over three years from the
acquisition date.
Additionally, the Company signed restricted stock agreements with certain
employee stockholders of XTEND-Tech, Inc. as consideration for continued
employment. Under these agreements, the stockholders receive 849,150 shares of
the Company's common stock with a fair value of approximately $7,642,000 at the
effective date of the stock purchase agreement. Under the restricted stock
agreement, 297,202 shares vest immediately and therefore constitute part of the
purchase price of the tangible and intangible assets of XTEND-Tech, Inc. The
remaining 551,948 shares vest evenly over three years from the effective date
of the stock purchase agreement. The fair value of the unvested shares,
amounting to $4,968,000 has been recorded as deferred stock-based compensation
which will be amortized over the three year vesting period of the restricted
stock in accordance with FASB Interpretation No. 28.
F-19
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
OVERVIEW
In January 2000, Inventa Corporation ("Inventa") entered into a stock
acquisition agreement to acquire all outstanding shares of XTEND-Tech, Inc.
("XTEND-Tech"). Total consideration for the shares of XTEND-Tech was
$12,150,000 consisting of 1,350,000 shares of common stock. The unaudited pro
forma combined balance sheet is based on the individual balance sheets of
Inventa and XTEND-Tech appearing elsewhere in this prospectus and has been
prepared to reflect the acquisition of the common stock of XTEND-Tech by
Inventa as of September 30, 1999. The unaudited pro forma combined statements
of operations are based on individual historical results of operations of
Inventa and XTEND-Tech for the nine months ended September 30, 1999, after
giving effect to the acquisition of XTEND-Tech as if it had occurred on January
1, 1999.
The unaudited pro forma combined financial statements should be read in
conjunction with the historical financial statements and notes thereto of
Inventa and XTEND-Tech. The unaudited pro forma combined financial statements
are presented for illustrative purposes only and are not necessarily indicative
of results of operations that would have actually occurred had the acquisitions
of Inventa and XTEND-Tech been effected on the dates assumed.
F-20
<PAGE>
INVENTA CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Inventa XTEND-Tech Adjustments Pro Forma
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents....... $ 3,156 $ 17 $ -- $ 3,173
Accounts receivable, net........ 634 376 -- 1,010
Prepaid expenses and other
current assets................. 990 -- -- 990
-------- ----- ------- --------
Total current assets.......... 4,780 393 -- 5,173
Property and equipment, net...... 1,618 80 -- 1,698
Other assets..................... 263 -- -- 263
Intangible assets................ -- -- 4,410 (1) 4,410
Goodwill......................... -- -- 2,718 (1) 2,718
-------- ----- ------- --------
$ 6,661 $ 473 $ 7,128 $ 14,262
======== ===== ======= ========
LIABILITIES, MANDATORILY
REDEEMABLE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Borrowings...................... $ 375 $ -- $ -- $ 375
Accounts payable................ 990 29 -- 1,019
Advances from related party..... -- 190 -- 190
Accrued expenses................ 1,646 87 -- 1,733
Income taxes payable............ 3 40 -- 43
Capital lease obligations ...... 156 19 -- 175
-------- ----- ------- --------
Total current liabilities..... 3,170 365 -- 3,535
Capital lease obligations, long-
term............................ 348 54 -- 402
-------- ----- ------- --------
3,518 419 -- 3,937
-------- ----- ------- --------
Mandatorily redeemable
convertible preferred stock:
Series B mandatorily redeemable
convertible preferred stock;
$0.001 par value; 2,560,000
shares authorized, issued and
outstanding ................... 3,469 -- -- 3,469
Series C mandatorily redeemable
convertible preferred stock;
$0.001 par value; 8,059,511
shares authorized; 8,055,511
shares issued and
outstanding.................... 10,918 -- -- 10,918
-------- ----- ------- --------
14,387 -- -- 14,387
Stockholders' equity (deficit):
Series A convertible preferred
stock; $0.001 par value;
1,000,000 shares authorized;
800,000 shares issued and
outstanding.................... 1 -- -- 1
Common stock; $0.001 par value;
25,000,000 shares authorized;
4,717,053 shares issued and
outstanding .................. 5 -- 1 (2) 6
Additional paid-in capital....... 2,299 -- 12,149 (2) 14,448
Deferred stock-based
compensation.................... (2,213) -- (4,968)(3) (7,181)
Accumulated comprehensive loss... (93) -- -- (93)
Retained earnings (accumulated
deficit)........................ (11,243) 54 (54)(8) (11,243)
-------- ----- ------- --------
Total stockholders' equity
(deficit).................... (11,244) 54 7,128 (4,062)
-------- ----- ------- --------
$ 6,661 $ 473 $ 7,128 $ 14,262
======== ===== ======= ========
</TABLE>
See accompanying notes to Pro Forma Combined Financial Information.
F-21
<PAGE>
INVENTA CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Inventa XTEND-Tech Adjustments Pro Forma
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues..................... $ 7,924 $1,010 $ (112)(6) $ 8,822
--------- ------ ------- ---------
Operating expenses:
Project personnel.......... 5,260 671 (112)(6) 5,819
Sales and marketing........ 2,560 110 -- 2,670
General and
administrative............ 5,727 130 -- 5,857
Depreciation............... 366 4 -- 370
Amortization of
intangibles............... -- -- 2,609 (5) 2,609
Amortization of deferred
stock-based compensation.. 836 -- 860 (4) 1,696
--------- ------ ------- ---------
Total operating
expenses................ 14,749 915 3,357 19,021
--------- ------ ------- ---------
Income (loss) from
operations.................. (6,825) 95 (3,469) (10,199)
Interest and other income.... 85 -- -- 85
Interest expense............. (71) (2) -- (73)
--------- ------ ------- ---------
Income (loss) before income
taxes....................... (6,811) 93 (3,469) (10,187)
Income tax expense........... (15) (40) -- (55)
--------- ------ ------- ---------
Net income (loss)............ (6,826) 53 (3,469) (10,242)
--------- ------ ------- ---------
Accretion of mandatorily
redeemable convertible
preferred stock to
redemption value............ (1,117) -- -- (1,117)
--------- ------ ------- ---------
Net income (loss)
attributable to common
stockholders................ $ (7,943) $ 53 $(3,469) $ (11,359)
--------- ------ ------- ---------
Other comprehensive losses:
Foreign currency
translation adjustment.... -- -- -- --
--------- ------ ------- ---------
Comprehensive income (loss).. $ (7,943) $ 53 $(3,469) $ (11,359)
========= ====== ======= =========
Net loss per share:
Basic and diluted.......... $ (1.69) $ (2.07)(7)
========= =========
Weighted average shares.... 4,692,638 798,052 5,490,690 (7)
========= ======= =========
</TABLE>
See accompanying notes to Pro Forma Combined Financial Information.
F-22
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
(Continued)
(1) Reflects the preliminary allocation of the purchase price to the intangible
assets and goodwill acquired in the XTEND-Tech acquisition. The preliminary
allocation has resulted in intangible assets, including assembled workforce
and covenants not to compete, estimated at approximately $4,410,000 and
estimated goodwill of approximately $2,718,000, which is being amortized
over periods of one and one half to four years.
The total estimated purchase price for the XTEND-Tech acquisition has been
allocated on a preliminary basis to assets and liabilities based on
management's best estimates of their fair value with the excess costs over
the net assets acquired allocated to intangible assets and goodwill. This
allocation is subject to change pending a final analysis of the value of the
assets acquired and, liabilities assumed, upon closure of the acquisition.
The impact of such changes could be material.
(2) Reflects the issuance of 1,350,000 shares of Inventa Common Stock with a
fair value of $12,150,000 in connection with the XTEND-Tech acquisition.
(3) Reflects the unearned compensation recorded for restricted stock issued in
connection with the purchase of XTEND-Tech. Of the 1,350,000 shares issued,
798,052 with a fair value of $7,182,000 were immediately vested and as such
represent the purchase price. The remaining 551,948 shares which were
issued to XTEND-Tech employee stockholders are subject to the Company's
right to repurchase the shares upon the termination of employment with
Inventa. The fair value of these restricted shares in the amount of
$4,968,000 has been recorded as unearned deferred compensation and will be
amortized over the vesting period.
(4) Reflects the amortization of the unearned deferred stock-based compensation
referred to in Note 3 above.
(5) Reflects the amortization of the intangible assets and goodwill referred to
in Note 1 above.
(6) Represents elimination of intercompany transactions with XTEND-Tech.
(7) Pro forma net loss reflects the impact of the adjustments above. Basic and
diluted net loss per share (pro forma) is computed using the weighted-
average number of shares of common stock outstanding after the issuance of
Inventa common stock in connection with the XTEND-Tech acquisition,
excluding the 551,948 shares subject to repurchase.
(8) Reflects elimination of XTEND-Tech stockholders' equity.
F-23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
XTEND-Tech, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations and of cash flows present fairly, in all material respects, the
financial position of XTEND-Tech, Inc. (the "Company") at September 30, 1999,
and the results of its operations for the period from inception (January 29,
1999) to September 30, 1999, in conformity with accounting principles generally
accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
January 7, 2000
F-24
<PAGE>
XTEND-TECH, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
------
Current assets:
Cash and cash equivalents........................................... $ 16,807
Accounts receivable, net............................................ 375,996
--------
Total current assets............................................... 392,803
Property and equipment, net.......................................... 80,272
--------
$473,075
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable.................................................... $ 29,238
Advances from related party......................................... 190,396
Accrued taxes....................................................... 39,700
Accrued bonuses..................................................... 75,000
Other accrued liabilities........................................... 12,486
Capital lease obligations .......................................... 18,560
--------
Total current liabilities.......................................... 365,380
Capital lease obligations, long-term................................. 54,134
--------
419,514
--------
Stockholders' equity:
Common stock; no par value; 100,000 shares authorized, issued and
outstanding........................................................ --
Retained earnings................................................... 53,561
--------
Total stockholders' equity......................................... 53,561
--------
$473,075
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE>
XTEND-TECH, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (JANUARY 29, 1999) TO SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Revenues:
Revenues from third parties...................................... $ 520,836
Revenues from related parties.................................... 489,639
----------
1,010,475
----------
Operating expenses:
Compensation, including employees' benefits costs and related
taxes........................................................... 754,278
General and administrative ...................................... 157,284
Interest......................................................... 1,592
Depreciation .................................................... 4,060
----------
917,214
----------
Income from operations............................................. 93,261
Income tax expense ................................................ (39,700)
----------
Net income......................................................... $ 53,561
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-26
<PAGE>
XTEND-TECH, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (JANUARY 29, 1999) TO SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income........................................................ $ 53,561
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ................................................... 4,060
Changes in operating assets and liabilities:
Accounts receivable........................................... (375,996)
Accounts payable.............................................. 29,238
Advances from related party................................... 190,396
Accrued taxes................................................. 39,700
Other accrued liabilities..................................... 87,486
---------
Net cash provided by operating activities................... 28,445
---------
Cash flows from investing activities:
Purchase of property and equipment................................ (10,092)
---------
Net cash used in investing activities....................... (10,092)
---------
Cash flows from financing activities:
Repayment of capital lease obligations............................ (1,546)
---------
Net cash used in financing activities....................... (1,546)
---------
Net increase in cash and cash equivalents........................... 16,807
Cash and cash equivalents, beginning of period...................... --
---------
Cash and cash equivalents, end of period............................ $ 16,807
=========
Supplemental non-cash investing and financing activity:
Property and equipment acquired under capital lease .............. $ 74,240
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE>
XTEND-TECH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company
XTEND-Tech, Inc. (the "Company") was incorporated in the state of New Jersey
on January 29, 1999. The Company is an information technology consulting
organization providing clients with technology expertise in all phases of
systems engineering and most software development methodologies for the major
industries in the United States.
The Company operations have initially been focused on the New Jersey, New
York, Pennsylvania and Delaware areas, with two offices, one in West Orange and
the other in Moorestown (Southern New Jersey).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Changes in
such estimates could affect reported amounts in future periods.
Financial Instruments
The Company's financial instruments approximate their fair value.
Accounts Receivable
Bad debts are provided on the allowance method based on management's
evaluation of outstanding accounts receivable. No provision for bad debts was
considered necessary by management at September 30, 1999.
Property and Equipment
Property and equipment, essentially computer hardware, are stated at cost
less accumulated depreciation. Depreciation is calculated using the straight-
line method over the useful lives of the assets. Computer hardware is
depreciated over four years. Maintenance and repairs are charged to expense
when incurred, and the cost of additions and improvements is capitalized.
Revenue Recognition
Revenues are derived from sales of the Company's consulting services to end-
users. Revenue is recognized on a time and material basis when services are
provided.
Income Taxes
The accrual basis of accounting is used for income tax reporting purposes. A
provision of $39,700 was made for federal and state income taxes as of
September 30, 1999. The Company, with the consent of its shareholders, has
elected to be taxed as a "C" Corporation for federal and state income tax
purposes.
The Company utilizes the asset and liability method of accounting for income
taxes under which deferred tax assets and liabilities are recognized for the
tax consequences of temporary differences by applying enacted
F-28
<PAGE>
XTEND-TECH, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period when the change in tax rates is
enacted.
Concentration of Credit Risks
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of trade accounts receivable. Concentrations
of credit risk with respect to trade receivables are limited based on
management's evaluation of the relationship with the Company's clients. The
Company's three largest customers accounted for approximately 72% of revenues
for the period ended September 30, 1999. IDCS, Inc. accounted for 48%. At
September 30, 1999, these three customers accounted for approximately 52% of
accounts receivable. These balances were subsequently collected.
NOTE 2--RELATED PARTY TRANSACTIONS:
Since its incorporation in January 1999, the Company's activities have been
financed on a needs basis through a prepayment note, payable to Intermodal
Database Communication Systems, Inc. ("IDCS"), a related party that owns 14.25%
of the Company. Through this prepayment note, the Company agrees to pay IDCS
the remaining prepayment principal sum that may be due to IDCS at any time upon
IDCS's request. In the event the Company refuses to repay any amount due within
3 days notice of demand, these amounts would accrue interest at a prime rate
plus 5.00%. The total advances from IDCS during the period ended September 30,
1999 amounted to $675,000. As of September 30, 1999, the outstanding balance on
these advances amounted to $190,396.
The Company has also entered into a capital lease agreement (see Note 6)
with Selecto Flash, Inc., a related party which is represented on the Company's
Board of Directors.
NOTE 3--PROPERTY AND EQUIPMENT:
Property and equipment consist of the following as of September 30, 1999:
<TABLE>
<S> <C>
Computer equipment.................................................. $10,092
Computer equipment under capital lease.............................. 74,240
-------
84,332
Less: Accumulated depreciation...................................... (4,060)
-------
Total property and equipment, net................................... $80,272
=======
</TABLE>
NOTE 4--EMPLOYEE BENEFIT PLAN:
The Company participates in a self directed 401(k) Plan (the Plan), covering
all employees, which qualifies under Section 401(k) of the Internal Revenue
Code. The Plan allows eligible employees to make tax deferred contributions of
up to 15% of their compensation, subject to the legal maximum amount. The
Company does not match employees' contributions. Loans to participants are
permitted in an amount not to exceed the lesser of one-half of the
Participant's non-forfeitable interest under the Plan or $50,000.
The Company also provides its employees with health, long-term disability
and life insurance programs, for which the Company fully pays the premiums,
except for the life insurance covered only up to $50,000 by the Company.
Expenses incurred for health and life insurance amounted to $39,386 and $1,990
respectively.
F-29
<PAGE>
XTEND-TECH, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
NOTE 5--STOCKHOLDERS' EQUITY:
At September 30, 1999, the capital stock of the Company consists of 100,000
shares of common stock, with no par value, that are authorized, issued and
outstanding.
NOTE 6--COMMITMENTS:
The Company entered into two operating leases for computer equipment with
Selecto Flash, Inc. and Dell Financial Services and also for phone system with
Unistar leasing. The Company has leased, under a six-month operating lease,
office space in New Jersey since November 1999. The aggregate future minimum
lease payments, under the Company's leases are approximately as follows:
Year Ended December 31,
<TABLE>
<S> <C>
1999............................................................... $ 11,540
2000............................................................... 38,725
2001............................................................... 30,950
2002............................................................... 29,875
2003............................................................... 10,830
--------
Total future minimum lease payments................................ $121,920
========
</TABLE>
NOTE 7--SUBSEQUENT EVENTS:
Promissory Note
On December 30, 1999, the Company signed a collateralized promissory note of
$90,000 with Valley National Bank. The promissory note is to be paid in 36
equal installments of $2,500 and interest is calculated on the basis of actual
days elapsed over a 360-day year at prime plus 1.50%. The promissory note is
collateralized by all property, including all accounts receivable, goods,
inventory, merchandise, machinery, equipment, fixtures, instruments and general
intangibles, and all cash and non-cash proceeds therefrom. The proceeds from
the promissory note are to be used to finance the purchase of office equipment
for a new office location.
Stock Purchase Agreement
Effective January 26, 1999, the shareholders of the Company sold all
outstanding shares of the Company's common stock to Inventa Corporation in
exchange for shares of Inventa Corporation common stock.
F-30
<PAGE>
[ ] Shares
[Inventa Logo]
[SOMERA LOGO]
Common Stock
-----------------
PROSPECTUS
, 2000
-----------------
Lehman Brothers
First Union Securities, Inc.
Friedman Billings Ramsey
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses to be paid by the Registrant,
other than the underwriting discounts and commissions payable by the Registrant
in connection with the sale of the common stock being registered. All amounts
shown are estimates except for the registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
Amount to
be Paid
----------
<S> <C>
Registration fee............................................... $ 15,840
NASD filing fee................................................ 6,500
Nasdaq National Market......................................... 95,000
Blue sky qualification fees and expenses....................... 10,000
Printing and engraving expenses................................ 250,000
Legal fees and expenses........................................ 400,000
Accounting fees and expenses................................... 400,000
Director and officer liability insurance....................... 300,000
Transfer agent and registrar fees.............................. 25,000
Miscellaneous expenses......................................... 57,660
----------
Total ......................................................... $1,560,000
==========
</TABLE>
- --------
Item 14. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's certificate of
incorporation and bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant intends to enter into separate indemnification agreements with its
directors, officers and certain employees that would require the Registrant,
among other things, to indemnify them against certain liabilities that may
arise by reason of their status or service (other than liabilities arising from
willful misconduct of a culpable nature). The Registrant also intends to
maintain director and officer liability insurance, if available on reasonable
terms.
These indemnification provisions and the indemnification agreements to be
entered into between the Registrant and its officers and directors may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred)
arising under the Securities Act.
The Registrant intends to obtain in conjunction with the effectiveness of
the Registration Statement a policy of directors' and officers' liability
insurance that insures the Registrant's directors and officers against the cost
of defense, settlement or payment of a judgment under certain circumstances.
The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act, or otherwise.
II-1
<PAGE>
Item 15. Recent Sales of Unregistered Securities.
Except as otherwise noted, we have issued and sold the following securities
within the last three years and through January 27, 2000:
On February 14, 1997, we sold an aggregate of 2,560,000 shares of our Series
B Preferred Stock at a price of $1.25 per share to five investors and their
affiliates.
On May 11, 1998, and May 28, 1999, we sold an aggregate of 8,055,511 shares
of our Series C Preferred Stock at a price of $1.25 per share to seven
investors and their affiliates.
On January 19, 2000, we sold an aggregate of 3,000,000 shares of our Series
D Preferred Stock at a price of $7.41 per share to seven investors and their
affiliates.
On January 26, 2000, we issued 1,350,000 shares of common stock in
connection with our acquisition of XTEND-Tech.
We issued 200,000 shares of our Series A Preferred Stock, at an exercise
price per share of $0.50, pursuant to the exercise of warrants issued in
connection with our original issuance of our Series A Preferred Stock.
We issued a warrant to acquire 160,000 of Series C Preferred Stock, at an
exercise price of $2.50 per share, in connection with our borrowing of
$4,000,000 under a term loan.
We issued shares of our common stock and shares of our Series
A Preferred stock pursuant to a two-for-one stock split declared on
, 1997.
Since our inception, we have granted options to purchase 5,211,220 shares of
our common stock to employees, directors and consultants under our 1993 Plan at
exercise prices ranging from $0.05 to $6.50 per share. Of the 5,211,220 options
granted, 4,136,790 remain outstanding, 259,402 shares of common stock have been
purchased pursuant to exercises of stock options and options to acquire
815,028 shares have been cancelled and are available for grant under our 1993
Plan.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving any public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each transaction represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the securities issued in such transactions. All
recipients either received adequate information about us or had access, through
their employment or other relationships with us, to adequate information about
us.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Form of Amended and Restated Articles of Incorporation of Registrant
prior to completion of this offering.
3.2* Form of Certificate of Incorporation of Registrant to be effective
upon completion of this offering.
3.3* Amended and Restated Bylaws of Registrant prior to completion of this
offering.
3.4* Amended and Restated Bylaws of Registrant to be effective upon
completion of this offering.
4.1* Form of Registrant's Common Stock Certificate.
4.2* Amended and Restated Registration Rights Agreement, between the
Registrant and the parties named therein.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued.
10.1* Series A Preferred Stock Purchase Agreement.
10.2* Series B Preferred Stock Purchase Agreement.
10.3* Series C Preferred Stock Purchase Agreement.
10.4* Series D Preferred Stock Purchase Agreement.
10.5 Sublease Agreement, dated March 29, 1999, between Sega of America and
Inventa Corporation.
10.6 Lease Agreement, dated September 10, 1992, between ShoreBreeze
Associates and Sega Corporation, and amendments thereto.
10.7 Lease Agreement, dated September 8, 1998, between Albany Street Plaza
Real Estate Management Company and Inventa Corporation.
10.8 Sublease Agreement, dated September 9, 1999, between Marcam Solutions,
Inc. and Inventa Corporation.
10.9* Lease Agreement, dated , 1999, between Vantas Virginia, Inc. and
Inventa Corporation.
10.10 Employment Agreement between the Registrant and David A. Lavanty,
dated as of December 31, 1999.
10.11 Employment Letter Agreement between the Registrant and Anthony H.
Monetto, dated March 17, 1999.
10.12 Employment Letter Agreement between the Registrant and Tobias Youmis,
dated October 29, 1999.
10.13 Employment Letter Agreement between the Registrant and Robert J.
Kudis, dated March 30, 1999.
10.14 Employment Letter Agreement between the Registrant and Carol C.
Halliday, dated March 12, 1999.
10.15 Severance Agreement between the Registrant and Massimo Chiocca dated
January 13, 1998.
10.16 Severance Agreement between the Registrant and Ashok Santhanam dated
January 10, 1998.
10.17 Severance Agreement between the Registrant and Edward F. Lappert dated
January 13, 1998.
10.18 Severance Agreement between the Registrant and Michael Makishima dated
January 13, 1998.
10.19 Severance Agreement between the Registrant and Srikanthan Moorthy
dated January 10, 1998.
10. * 1993 Stock Option Plan.
10. * Form of Stock Option Agreement.
10. * Stock Purchase Plan.
10. * 401(K) Plan.
11.1* Statement of computation of earnings per share.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.1 Power of Attorney (see signature page).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
II-3
<PAGE>
(b) Financial Statement Schedules.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Redwood Shores, California, on the
31st day of January 2000.
INVENTA TECHNOLOGIES, INC.
By:
/s/ David A. Lavanty
----------------------------------
David A. Lavanty President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Ashok Santhanam and David A. Lavanty, and
each of them acting individually, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments or any abbreviated registration statement
and any amendments thereto filed pursuant to Rule 462(b) increasing the number
of securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ David A. Lavanty President and Chief Executive January 31, 2000
_____________________________________ Officer, and Director
David A. Lavanty (Principal Executive Officer)
/s/ Michael Makishima Vice President of Finance January 31, 2000
_____________________________________ (Principal Financial and
Michael Makishima Accounting Officer)
/s/ Ashok Santhanam Director January 31, 2000
_____________________________________
Ashok Santhanam
/s/ Michael Bealmear Director January 31, 2000
_____________________________________
Michael Bealmear
/s/ Todd Dagres Director January 31, 2000
_____________________________________
Todd Dagres
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Robert Ducommun Director January 31, 2000
_____________________________________
Robert Ducommun
/s/ Frank Pinto Director January 31, 2000
_____________________________________
Frank Pinto
/s/ Jake Reynolds Director January 31, 2000
_____________________________________
Jake Reynolds
</TABLE>
II-6
<PAGE>
EXHIBIT 10.5
[LOGO OF AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION]
STANDARD SUBLEASE
(Long-form to be used with pre-1996 AIR leases)
1. Parties. This Sublease, dated, for reference purposes only, March 29,
1999, is made by and between Sega of America, Inc., a California corporation
("Sublessor") and Inventa Corp., a California corporation ("Sublessee").
2. Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property, including all
improvements therein, and commonly known by the street address of 255 Shoreline
Drive, Suite 200, Redwood City located in the County of San Mateo, State of
California and generally described as (describe briefly the nature of the
property) approximately 21,029 rentable square feet on the second floor, more
commonly referred to as Suite 200 ("Premises").
3. Term.
3.1 Term. The term of this Sublease shall be for two (2) years commencing
on April 1, 1999 and ending on March 31, 2001 unless sooner terminated pursuant
to any provision hereof.
3.2 Delay in Commencement. Sublessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises by the commencement
date. If, despite said efforts, Sublessor is unable to deliver possession as
agreed, Sublessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Sublease. Sublessee shall not, however, be
obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty days
after the commencement date, Sublessee may, at its option, by notice in writing
within ten days after the end of such sixty day period, cancel this Sublease, in
which event the Parties shall be discharged from all obligations hereunder. If
such written notice is not received by Sublessor within said ten day period,
Sublessee's right to cancel shall terminate. Except as otherwise provided, if
possession is not tendered to Sublessee when required and Sublessee does not
terminate this Sublease, as aforesaid, any period of rent abatement that
Sublessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Sublessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by tile
acts or omissions of Sublessee. if possession is not delivered within 120 days
after the commencement date, this Sublease shall automatically terminate unless
the Parties agree, in writing, to the contrary.
4. Rent.
4.1 Base Rent. Sublessee shall pay to Sublessor as Base Rent for the
Premises equal monthly payments of $56,778.30 in advance, on the first (1/st/)
day of each month of the term hereof. Sublessee shall pay Sublessor upon the
execution hereof fifty six thousand seven hundred seventy-eight dollars and
thirty cents ($56,778.30) as Base Rent for the first month's rent. Base Rent for
any period during the term hereof which is for less than one month shall be a
pro rata portion of the monthly installment.
4.2 Rent Defined. All monetary obligations of Sublessee to Sublessor
under the terms of this Sublease (except for the Security Deposit) are deemed to
be rent ("Rent"). Rent shall be payable in lawful money of the United States to
Sublessor at the address stated herein or to such other persons or at such other
places as Sublessor may designate in writing.
5. Security Deposit. Sublessee shall deposit with Sublessor upon execution
hereof $ 170,334.90 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder, if Sublessee fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any Rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any portion
of said deposit, Sublessee shall within ten days after written demand therefore
forward to Sublessor an amount sufficient to restore said Deposit to the full
amount provided for herein and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said Deposit
separate from its general accounts. If Sublessee performs all of Sublessee's
obligations hereunder, said Deposit, or so much thereof as has not therefore
been applied by Sublessor, shall be returned, without payment of interest to
Sublessee (or at Sublessor's option, to the last assignee, if any, of
Sublessee's interest hereunder) at the expiration of the term hereof, and after
Sublessee has vacated the Premises. No trust relationship is created herein
between Sublessor and Sublessee with respect to said Security Deposit.
6. Use.
6.1 Agreed Use. The Premises shall be used and occupied only for general
office purposes as provided in the Master Lease and for no other purpose.
Insert 6.2
Page 1 of 4
<PAGE>
(a) If such capital improvements are required as a result of the specific
and unique use of the Premises by Sublessee as compared with uses by tenants in
general, Sublessee shall be fully responsible for the cost thereof provided,
however, that if the cost thereof exceeds six months' Base Rent, Sublessee may
instead terminate this Sublease unless Sublessor notifies Sublessee in writing,
within ten days after receipt of Sublessees's termination notice that Sublessor
has elected to pay the difference between the actual cost thereof and the amount
equal to six months' Base Rent. If the Parties elect termination, Sublessee
shall immediately cease the use of the Premises which require such capital
improvement and deliver to Sublessor written notice specifying a termination
date at least ninety days thereafter. Such termination date shall, however, in
no event be earlier then the last day that Sublessee could legally utilize the
Premises without commencing such capital improvement.
(b) Notwithstanding the above, the provisions concerning capital
improvements are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the capital improvements are instead triggered by
Sublessee as a result of an actual or proposed change in use, change in
intensity of use, or modification to the Premises then, and in that event,
Sublessee shall be fully responsible for the cost thereof, and Sublessee shall
not have any right to terminate this Sublease.
6.3 Acceptance of Premises and Lessee. Sublessee acknowledges that:
(a) it has been advised by Brokers to satisfy itself with respect to
the condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Sublessee's intended use,
(b) Sublessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and
(c) neither Sublessor, Sublessor's agents, nor any Broker has made
any oral or written representations or warranties with respect to said matters
other than as set forth in this Sublease.
In addition, Sublessor acknowledges that:
(a) Broker has made no representations, promises or warranties
concerning Sublessee's ability to honor the Sublease or suitability to occupy
the Premises, and
(b) it is Sublessor's sole responsibility to investigate the
financial capability and/or suitability of all proposed tenants.
7. Master Lease
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter the "Master Lease", a copy of which is attached hereto marked
Exhibit 1, wherein Shorebreeze Associates is the lessor hereinafter the
-----------------------
"Master Lessor"
7.2 This Sublease is and shall be at all times subject and
subordinate to the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease e.g. Lease Sections 1, 2 and 3) which
event the terms of this Sublease document shall control over the Master Lease
Therefore for the for the purposes of this Sublease," wherever in the Master
Lease the word "Lessor" is used it shall be deemed to mean the Sublessor herein
and wherever in the Master Lease the word "Lessee" is used it shall be deemed to
mean the Sublessee herein. Insert 7.3
7.4 During the term of this Sublease and for all periods subsequent
for obligations which have arisen during the termination of this Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of Sublessor and Master Lessor, each and every obligation of
Sublessor under the Master Lease except for the following paragraphs which are
excluded therefrom: Insert 7.4
----------
7.5 The obligations that Sublessee has assumed under paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations". The
obligations that sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred, to as the "Sublessor's Remaining Obligations".
7.6 Sublessee shall hold Sublessor free and harmless from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire
term of this Sublease, subject, however, to any earlier termination of the
Master Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless from
all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in
full force and effect and that no default exists on the part of any Party to the
Master Lease.
8. Assignment of Sublease and Default.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease, subject however to the provisions of
Paragraph 8.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a
Default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the Rent accruing
under this Sublease. However, if Sublessor shall Default in the performance of
its obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all Rent owing and to be owed under this
Sublease. Master Lessor shall not, by reason of this assignment of the Sublease
nor by reason of the collection of the Rent from the Sublessee, be deemed liable
to Sublessee for any failure of the Sublessor to perform and comply with
Sublessor's Remaining Obligations.
Page 2 of 4
<PAGE>
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee
upon receipt of any written notice from the Master Lessor stating that a Default
exists in the performance of Sublessor's obligations under the Master Lease, to
pay to Master Lessor the Rent due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Lessor, and that Sublessee shall pay such Rent
to Master Lessor without any obligation or right to inquire as to whether such
Default exists and notwithstanding any notice from or claim from Sublessor to
the contrary and Sublessor shall have no right or claim against Sublessee for
any such Rent so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease
without the consent of Master Lessor.
9. Consent of Master Lessor,
9.1 In the event that the Master Lease requires that Sublessor obtain
the consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within ten days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the
Master Lease have been guaranteed by third parties then neither this Sublease,
nor the Master Lessor's consent, shall be effective unless, Insert 9.2
9.3 In the event that Master Lessor does give such consent then
Insert 9.2
(a) Such consent shall not release Sublessor of its obligations
or alter the primary liability of Sublessor to pay the Rent and perform and
comply with all of the obligations of Sublessor to be performed under the Master
Lease.
(b) The acceptance of Rent by Master Lessor from Sublessee or
anyone else liable under the Master Lease shall not be deemed a waiver by Master
Lessor of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent
to any subsequent subletting or assignment.
(d) In the event of any Default of Sublessor under the Master
Lease, Master Lessor may proceed directly against Sublessor, any guarantors or
anyone else liable under the Master Lease or this Sublease without first
exhausting Master Lessor's remedies against any other person or entity liable
thereon to Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and
assignments of the Master Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor or anyone else liable under
the Master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.
(f) In the event that Sublessor shall Default in its obligations
under the Master Lease, then Master Lessor, at its option and without being
obligated to do so, may require Sublessee to attorn to Master Lessor in which
event Master Lessor shall undertake the obligations of Sublessor under this
Sublease from the time of the exercise of said option to termination of this
Sublease but Master Lessor shall not be liable for any prepaid Rent nor any
Security Deposit paid by Sublessee, nor shall Master Lessor be liable for any
other Defaults of the Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of
Sublessor at the end of this document shall constitute their consent to the
terms of this Sublease.
9.5 Master Lessor acknowledges that, to the best of Master Lessor's
knowledge, no Default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.
9.6 In the event that Sublessor Defaults under its obligations to be
performed under the Master Lease by Sublessor, Master Lessor agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any Default of Sublessor described in any notice of default within
ten days after service of such notice of default on Sublessee. If such Default
is cured by Sublessee then Sublessee shall have the right of reimbursement and
offset from and against Sublessor.
10. Brokers Fee,
10.1 Upon execution hereof by all parties, Sublessor shall pay to BT
---
Commercial Real Estate a licensed real estate broker, ("Broker"), a fee as
- ----------------------
set forth in a separate agreement between Sublessor and Broker.
11. Attorney's Fees. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action on trial and appeal shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the Court.
Insert 11
12. Additional Provisions. [If there ate no additional provisions, draw a
line from this point to the next printed word after the space left here. If
there are additional provisions place the same here.] See Addendum attached
---------------------
Page 3 of 4
<PAGE>
- --------------------------------------------------------------------------------
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
- ---------
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY REAL ESTATE BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS SUBLEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PROPERTY, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR SUBLESSEE'S INTENDED USE.
WARNING: IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
- -------
CERTAIN PROVISIONS OF THE SUBLEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.
- --------------------------------------------------------------------------------
Executed at: Sega of America, Inc.
------------------------------ -----------------------------
on: March 30, 1999 By: /s/ [ILLEGIBLE]^^
-------------------------------------- --------------------------
Address:__________________________________ By: _________________________
"Sublessor" (Corporate Seal)
Executed at: Santa Clara, CA Inventa Corp.
----------------------------- -----------------------------
on: 29 March 1999 By:
-------------------------------------- --------------------------
Address: 2620 AUGUSTINE DRIVE, SUITE 225 By: /s/ [ILLEGIBLE]^^
--------------------------------- --------------------------
"Sublessee" (Corporate Seal)
Executed at: Shorebreeze Associates
------------------------------ -----------------------------
on:_______________________________________ By:__________________________
Address:__________________________________ By:__________________________
"Master Lessor" (Corporate Seal)
NOTE: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
St., Suite 600, Los Angeles, CA 90017. (213) 687-8777.
Page 4 of 4
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Exhibit 10.6
THIS LEASE, dated September 10, 1992 , between ShoreBreeze Associates ("Lessor")
and SEGA Corporation ("Lessee").
1. PREMISES: Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, for the term and subject to the agreements, conditions and provisions
hereinafter set forth, to each and all of which Lessor and Lessee hereby
mutually agree, the following described premises (the "Premises") Suites 103
and 200 totalling 28,106 rentable square feet located feet located at
255 Shoreline Drive, Redwood City, CA. As used in this Lease the term
"Building" means the land and other real property described in Exhibit A
attached hereto, the building constructed or being constructed thereon, and
all other improvements on or appurtenances located thereon.
2. TERMS, COMPLETION OF IMPROVEMENTS: The term of this Lease shall commence on
December 1, 1992, and, unless sooner terminated as hereinafter provided,
shall end on March 15, 1996. If Lessor, for any reason what-soever, cannot
deliver possession of the Premises to Lessee at the commencement of said
term, in accordance with the terms hereof, this Lease shall not be void or
voidable, nor shall Lessor be liable to Lessee for any loss or damage
resulting therefrom, but in that event, rental shall be waived for the period
between the commencement for said term and the time when Lessor can deliver
possession. No delay in delivery of possession shall operate to extend the
term hereof. Prior to the commencement of the term hereof, Lessor shall
construct or install in the Premises the improvements to be constructed or
installed by Lessor pursuant to the provisions of Exhibit B. The Premises
shall be deemed completed and possession delivered when Lessor has
substantially completed these improvements subject only to the completion of
items on Lessor's architect's punch list, and Lessee shall accept the same
upon notice from Lessor that such improvements have been so completed. Lessor
shall use its best efforts to advise Lessee of the anticipated date of
completion at least thirty (30) days prior to such date, but the failure to
give such notice shall not constitute a default hereunder by Lessor.
Notwithstanding the foregoing, in the event that Lessor shall for any reason
be unable to deliver the Premises to Lessee in accordance with this paragraph
2 on or before N/A *, this Lease shall terminate without liability to
either party.
* See Addendum to Lease
3. RENTAL: (a)Lessee shall pay to Lessor throughout the term of this Lease as
rental for the Premises One Million Eight Hundred Eighty Seven Thousand Three
Hundred Ten and 00/100s Dollars ($ 1,887,310.00) (the "Base Rent")
(subject to adjustment as provided in paragraphs 3(b), 3(c) and 4 below)
which rental shall be payable monthly in installments of Forty Seven
Thousand Seven Hundred Eighty and 00/100' s Dollars ($ 47,780.00) each
on or before the first day of the first full calendar month of the term
hereof and on or before the first day of each and every successive calendar
month thereafter during the term hereof, in the event the term of this Lease
commences on a day other than the first day of a calendar month, then the
monthly rental for the first and last fractional months of the term hereof
shall be appropriately prorated. Rental shall be paid to Lessor, without
deduction or offset, in lawful money of the United States of America at 800
S. Claremont St., Suite 201, San Mateo, CA 94402, or to such other person or
at such oilier place as Lessor may from time to time designate in writing.
4. LESSEE'S SHARE OF INCREASED COSTS: (a) The rental payable during each
calendar year or part thereof during the term of this Lease subsequent to the
calendar year 1992 (the calendar year 1992 being hereinafter referred to as
the "Base Year") shall be increased by Lessee's Percentage Share of the total
dollar increase, if any, in Operating Expenses paid or incurred by Lessor in
such year over Operating Expenses paid or incurred by Lessor in the Base
Year. In no event shall the rental payable under this paragraph 4(a) be less
than the Base Rent, as the same may from time to time be adjusted, referred
to in paragraph 3 above. As used herein, "Lessee's Percentage Share" shall be
computed by dividing the number of square feet of ??? rentable in the
Premises (in Paragraph 10 by the total number of square feet of net rentable
in the Building. As used herein, "Operating Expenses" shall mean (i) all
costs of management, operation and maintenance of the Building, including,
without limitation, wages, salaries, and payroll burden of employees,
janitorial, maintenance, guard, and other services, Building office rent or
rental value, power, water, waste disposal and other utilities, materials and
supplies, maintenance and repairs, insurance, and depreciation on personal
property, and (ii) the cost or portion thereof properly allocable to the
Building (amortized over such reasonable period as Lessor shall determine
together with interest at the rate of 2% over prime per annum on the
unamortized balance) of any capital improvements made to the Building by
Lessor after the Base Year that reduce other Operating Expenses or made to
the Building by Lessor after the date of this Lease that are required under
any governmental law or regulation that was not applicable to the Building at
the time it was constructed; provided, however, that Operating Expenses shall
not include taxes covered under paragraph 4(b) below, depreciation on the
Building (other than depreciation on exterior window draperies provided by
Lessor and carpeting in public corridors and common areas), costs of tenants'
improvements, real estate brokers' commissions, interest and capital items
other than those referred to in clause (ii) above.
INITIAL ________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
Page 1
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(b) The rental payable during each tax year (July 1 through June 30) in the
term hereof subsequent to the tax year ending June 30, 1992 or, if the
assessed valuation of the Building for such tax year does not reflect a
valuation as a substantially completed building, then subsequent to the first
tax year for which the assessed valuation of the Building reflect a valuation
as a substantially completed building (the "Base Tax Year") shall be increased
by Lessee's Percentage Share of the total dollar increase, if any, in real
property taxes and assessments (and any tax levied wholly or partly in lieu
thereof) levied against the Building for such tax year, over such taxes for
the Base Tax Year, provided that in no event shall the rental payable
hereunder be less than the Base Rent, as the same may from time to time be
adjusted, referred to in paragraph 3 above.
(c) During December of each calendar year or as soon thereafter as
practicable, Lessor shall give Lessee written notice of its estimate of
amounts payable under paragraphs 4(a) and 4(b) above for the ensuing calendar
year. On or before the first day of each month during the ensuing calendar
year, Lessee shall pay to Lessor one-twelfth (1/12) of such estimated amounts;
provided that, if such notice is not given in December, Lessee shall continue
to pay on the basis of the prior year's estimate until the month after such
notice is given. If at any time or times it appears to Lessor that the amounts
payable under either paragraph 4(a) or 4(b) above for the current calendar
year will vary from its estimate by more than 10% Lessor shall by written
notice to Lessee, revise its estimate for such year, and subsequent payments
by Lessee for such year shall be based upon such revised estimate.
(d) Within ninety (90) days after the close of each calendar year or as soon
after such 90-day period as practicable, Lessor shall deliver to Lessee a
statement of amounts payable under paragraphs 4(a) and 4(b) above for such
calendar year certified by certified accountants designated by Lessor and such
certified statement shall be conclusively binding upon Lessor and Lessee. If
such statement shows an amount owing by Lessee that is less than the estimated
payments for such calendar year previously made by Lessee, it shall be
accompanied by a refund of the excess by Lessor to Lessee. If such statement
shows an amount owing by Lessee that is more than the estimated payments for
such calendar year previously made by Lessee, Lessee shall pay the deficiency
to Lessor within thirty (30) days after delivery of the statement.
(e) If, for any reason other than the default of Lessee, this Lease shall
terminate on a day other than the last day of a calendar year, the amount of
increase (if any) in rental payable by Lessee applicable to the calendar year
in which such termination shall occur shall be prorated on the basis which the
number of days from the commencement of such calendar year to and including
such termination date bears to three hundred and sixty-five (365).
5. USE: The Premises shall be used for general office purposes and delivery and
technical work in coin operating machines. Lessee shall not do or permit to
be done in or about the machines Premises, nor bring or keep or permit to be
brought or kept therein, anything which is prohibited by or will in any way
conflict with any law, statute, ordinance or governmental rule or regulation
now in force or which may hereafter be enacted or promulgated, or which is
prohibited by the standard form of fire insurance policy, or will in any way
increase the existing rate of or affect any fire or other insurance upon the
Building or any of its contents, or cause a cancellation of any insurance
policy covering the Building or any part thereof or any of its contents.
Lessee shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other tenants
of the Building, or injure or annoy them, or use or allow the Premises to be
used for any improper, immoral, unlawful or objectionable purpose, nor shall
Lessee cause, maintain or permit any nuisance in, on or about the Premises or
commit or suffer to be committed any waste in, on or about the Premises.
6. SERVICES: (a) Lessor shall maintain the public and common areas of the
Building, including lobbies, stairs, elevators, corridors and restrooms, the
windows in the Building, the mechanical, plumbing and electrical equipment
serving the Building, and the structure itself in reasonably good order and
condition except for damage occasioned by the act of Lessee, which damage
shall be repaired by Lessor at Lessee's expense.
(b) Lessor shall furnish the Premises with (i) electricity (or lighting and
the operation of office machines, (ii) heat and air conditioning from 8:00
a.m. to 6:00 p.m. Monday through Friday, excluding holidays, reasonably
required for the comfortable occupation of the Premises, (iii) elevator
service, (iv) lighting replacement (for building standard lights,) (v)
restroom supplies, and (vi) window washing with reasonable frequency, all
during the times and in the manner that such services are customarily
furnished in comparable office buildings in the area. Lessor shall be
responsible for furnishing daily janitorial service on the Premises. Lessor
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the rental herein reserved be abated by
reason of (x) the installation, use or interruption of use of any equipment
in connection with the furnishing of any of the foregoing services, (y)
failure to furnish or delay in furnishing any such services when such failure
or delay is caused by accident or any condition beyond the reasonable control
of Lessor or by the making of necessary repairs or improvements to the
Premises or to the Building, or (z) the limitation, curtailment, rationing or
restriction on use of water or electricity, gas or any other form of energy
serving the Premises or the Building. Lessor shall use reasonable efforts
diligently to remedy any interruption in the furnishing of such services.
(c) Whenever heat generating machines or equipment or lighting other than
building standard lights are used on the Premises by Lessee which affect the
temperature otherwise maintained by the air conditioning system, Lessor shall
have the right to install supplementary air conditioning units in the
Premises, and the costs thereof, including the cost of installation and the
cost of operation and maintenance thereof, shall be paid by Lessee to Lessor
upon billing by Lessor. If Lessee installs lighting requiring power in excess
of that required for normal desk-top office equipment or normal copying
equipment, Lessee shall pay Lessor upon billing for the cost of such excess
power as additional rent, together with the cost of installing any additional
risers or other facilities that may be necessary to furnish such excess power
to the Premises.
(d) Notwithstanding any other provision hereof, in the event that any law,
ordinance or other governmental regulation now or hereafter in effect shall
impose a limit on the allocation to the Building of any utility or other
service, whether or not the same is to be supplied to the Premises by
landlord under this paragraph 7, then Lessee shall not use or cause to be
consumed on the Premises, nor shall Lessor be required to provide to provide
to the Premises hereunder, such utility or other service in an amount or in a
manner which would result in the violation by Lessor or Lessee of such law,
ordinance or regulation.
7. TAXES PAYABLE BY LESSEE: In addition to the monthly rental and other charges
to be paid by Lessee hereunder, Lessee shall reimburse Lessor upon demand for
any and all taxes payable by Lessor (other than net income taxes) whether or
not now customary (or within the contemplation of the parties hereto: (a)
upon, measured by or reasonably attributable to the cost or value of Lessee's
equipment, furniture, fixtures and other personal property located in the
Premises or by the cost or value of any leasehold improvements made in or to
the Premises by or for Lessee, other than building standard tenant
improvements made by Lessor, regardless of whether title to such improvements
shall be in Lessee or Lessor; (b) upon or measured by the monthly rental
payable hereunder, including without limitation, any gross income tax or
excise tax levied by the City of Redwood City , the County of San Mateo, the
State of California, the Federal Government or any other governmental body
with respect to the receipt of such rental (c) upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair,
use or occupancy by Lessee of the Premises or any portion thereof; (d) upon
this transaction or any document to which Lessee is a party creating or
transferring an interest or an estate in the Premises. In the event that it
shall not be lawful for Lessee so to reimburse Lessor the monthly rental
payable to Lessor under this Lease shall be revised to net Lessor the same
net rental after imposition of any such tax upon Lessor as would have been
payable to Lessor prior to the imposition of any such tax.
8. ALTERATIONS: Lessee will not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof, or
attach any fixtures or equipment thereto, without first obtaining Lessor's
written consent, which consent shall not be unreasonably withheld. Any
alterations, additions or improvements to the Premises consented to by Lessor
shall be made by Lessor for Lessee's account, and Lessee shall reimburse
Lessor for the cost thereof (including a reasonable charge for Lessor's
overhead) within ten (10) days after receipt of a statement. All alterations,
additions, fixtures and improvements, whether temporary or permanent in
character, made in or upon the Premises either by Lessee or Lessor, shall
immediately become Lessor's property and, at the end of the term hereof,
shall remain on the Premises without compensation to Lessee.
9. LIENS: Lessee shall keep the Premises and the Building free from any liens
arising out of any work performed, materials furnished or obligations
incurred by Lessee. Lessor shall have the right to post and keep posted on
the Premises any notices that may be provided by law or which Lessor may deem
to be proper for the protection of Lessor, the Premises and the Building from
such liens.
INITIAL _________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
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10. REPAIRS: By entry hereunder Lessee accepts the Premises as being in the
condition in which Lessor is xxx to deliver the Premises. Lessee shall, at
all times during the term hereof and at Lessee's sole cost and expense, keep
the Premises and every part thereof in good condition and repair, ordinary
wear and tear, damage thereto by fire, earthquake, act of God or the
elements excepted, Lessee hereby waiving all rights to make repairs at the
expense of Lessor or in lieu thereof to vacate the Premises as provided by
California Civil Code Section 1942 or any other law, statue or ordinance now
or hereafter in effect. Lessee shall at the end of the term hereof surrender
to Lessor the Premises and all alterations, additions and improvements
thereto in the same condition as when received, ordinary wear and tear and
damage by fire, earthquake, act of God or elements excepted. Lessor has no
obligation and has made no promise to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof, except as specifically
herein set forth. No representations respecting the condition of the
Premises or the Building have been made by Lessor to Lessee, except as
specifically herein set forth.
11. DESTRUCTION OR DAMAGE: If the Premises or the Building are damaged by fire,
earthquake, act of God or the elements, Lessor shall forthwith repair the
same, subject to the provisions of this section hereinafter set forth, and
provided such repairs can, in Lessor's opinion, be made within sixty (60)
days, and this Lease shall remain in full force and effect except that, if
there shall be damage to the Premises and such damage is not the result of
the negligence of willful misconduct of Lessee or Lessee's employees or
invitees, an abatement of rental shall be allowed Lessee for such part of
the Premises as shall be rendered unusable by Lessee in the conduct of its
business during the time such part is so unusable. If such repairs cannot,
in Lessor's opinion, be made within sixty (60) days, Lessor may, at its
option, upon written notice to Lessee within thirty (30) days after the date
of such fire or other casualty, repair or restore such damage, this Lease
continuing in full force and effect, but the rent to be partially abated as
hereinabove provided. If Lessor does not so elect to make such repairs which
cannot be made within sixty (60) days, then Lessor may and (provided the
damage affects the Premises or common areas necessary to Lessee's occupancy)
Lessee may, by written notice to the other given not less than thirty-one
(31) nor more than sixty (60) days after the date of such fire or other
casualty, terminate this Lease as of the date of such fire or other
casualty. Lessor shall not be required to repair any injury or damage by
fire, earthquake, act of God or the elements, or to make any repairs or
replacements, of any improvements installed in the Premises by or for
Lessee, other than building standard tenant improvements made by Lessor, and
Lessee shall, at Lessee's sole cost and expenses, repair and restore its
portion of such improvements. A total destruction of the Building shall
automatically terminate this Lease. Lessee waives California Civil Code
Sections 1932(2) and 1933(4) providing for termination of hiring upon
destruction of the thing hired.
12. INSURANCE AND WAIVER OF SUBROGATION: Lessee shall obtain and, at all times
during the term hereof, keep in force, at its own cost, fire and casualty
insurance in the amount of One Hundred 100) percent of the actual
replacement cost of improvements to the Premises constructed by or for
Lessee and general liability insurance with limits of not less than
One Million Dollars Dollars ($1,000,000.00 ) for injury or death of any
number of persons in one occurrence, and not less than Five Hundred
Thousand Dollars ($ 500,000.00) for damage to property. The insurance
prescribed by this paragraph shall be issued by companies rated at least AAA
by Best's Insurance Reports (Properly Liability) or otherwise acceptable to
Lessor, shall name Lessor as a co-insured, and shall provide that such
policies cannot be cancelled without thirty (30) days prior notice In
Lessor. Lessor and Lessee shall each obtain from their respective insurers
under all policies of fire, theft, public liability, workmen's compensation
and other insurance maintained by either of them at any time during the term
hereof insuring or covering the Building or any portion thereof or
operations therein, and such policies shall contain, a waiver of all rights
of subrogation which the insurer of one party might have against the other
party, and Lessor and Lessee shall each indemnify the other against any loss
or expense, including reasonable attorney's fees, resulting from the failure
to obtain such waiver.
13. INSURANCE AND INDEMNIFICATION: Lessee hereby waives all claims against
Lessor for damage to any property or injury to or death of any person in,
upon or about the Premises of the Building arising at any time and from any
cause other than solely by reason of the gross negligence or willful act of
Lessor, its employees or contractors, and Lessee shall hold Lessor harmless
from any damage to any properly or injury to or death of any person arising
from the use of the Premises or the Building by Lessee, except such as is
caused solely by gross negligence or willful act of Lessor, its contractors
or employees. The foregoing indemnity obligation of Lessee shall include
reasonable attorneys' fees, investigation costs and all other reasonable
costs and expenses incurred by Lessor from the first notice that any claim
or demand is to be made or may be made. The provisions of this paragraph 14
shall survive the termination of this Lease with respect to any damage,
injury or death occurring prior to such termination.
14. COMPLIANCE WITH LEGAL REQUIREMENTS: Lessee shall at its sole cost and
expense promptly comply with all laws, statutes, ordinances and governmental
rules, regulations or requirements of any board of fire underwriters or
other similar body now or hereafter constituted, with any direction or
occupancy certificate issued pursuant to any law by any public officer or
officers, as well as the provisions of all recorded documents affecting the
Premises, insofar as any thereof relate to or affect the condition, use or
occupancy of the Premises, excluding requirements of structural changes not
related to or affected by improvements made by or for Lessee or Lessee's
acts.
15. ASSIGNMENT AND SUBLETTING; EARLY TERMINATION: In the event Lessee should
desire to assign this Lease or sublet the Leased Premises or any part
thereof, Lessee shall give Lessor written notice of such desire at least
ninety (90) days in advance of the date on which Lessee desires to make such
assignment or sublease. Lessor shall then have a period of thirty (30) days
following receipt of such notice within which to notify Lessee in writing
that Lessor elects either (i) to terminate this Lease as to the space so
affected as of the date so specified by Lessee in which event Lessee will be
relieved of all further obligations hereunder as to such space, or (ii) to
permit Lessee to assign or sublet such space, subject, however, in prior
written approval of the proposed assignee or sublessee by Lessor, such
consent not to be unreasonably withheld. If Lessor should fail to notify
Lessee in writing of such election within said 30-day period, Lessor shall
be deemed to have elected option (ii) above, but written approval by Lessor
of the proposed assignee or sublessee shall be required. Any rent or other
consideration realized by Lessee under any such sublease and assignment in
excess of the rental payable hereunder, after amortization of the reasonable
cost of work in excess of Building Standard for which Tenant has paid and
reasonable subletting and assignment costs, shall be paid in its entirety to
Lessor. Lessee's obligation to pay over Lessor's portion of the
consideration shall constitute an obligation for rental hereunder. No
assignment or subletting by Lessee shall relieve Lessee of any obligation
under this Lease. Any assignment or subletting which conflicts with the
provisions hereof shall be void.
16. RULES: Lessee shall faithfully observe and comply with the rules and
regulations as follows and, after notice thereof, all reasonable
modifications thereof and additions thereto from time to time promulgated in
writing by Lessor. Lessor shall not be responsible to Lessee for the
nonperformance by any other tenant or occupant of the Building of any off
said rules and regulations.
17. ENTRY BY LESSOR: Lessor may enter the Premises with 24 hr. prior notice at
reasonable hours to (a) inspect the same, (b) exhibit the same to
prospective purchaser, lenders or tenants, (c) determine whether Lessee is
complying with all its obligations hereunder, (d) supply janitor service and
any other service to be provided by Lessor to Lessee hereunder, (e) post
notices of nonresponsibility, and (f) make repairs required of Lessor under
the terms hereof or repairs to any adjoining space or utility services or
make repairs, alterations or improvements to any other portion of the
Building; provided, however, that all such work shall be done as promptly as
reasonably possible. Lessee hereby waives any claim for damages for any
injury or inconvenience to or interference with Lessee's business, any loss
of occupancy or quiet enjoyment of the Premises or any other loss occasioned
by such entry. Lessor shall at all times have and retain a key with which to
unlock all of the doors in, on or about the Premises (excluding Lessee's
vaults, safes and similar areas designated in writing by Lessee and Lessor
in advance); and Lessor shall have the right to use any and all means which
Lessor may deem proper to open said doors in an emergency in order to obtain
entry to the Premises, and any entry to the Premises obtained by Lessor by
any of said means, or otherwise, shall not under any circumstances be
constructed or deemed to be a forcible or unlawful entry into or a detainer
of the Premises or an eviction, actual or constructive, of Lessee from the
Premises, or any portion thereof.
18. EVENTS OF DEFAULT: The occurrence of any one or more of the following events
("Events of Default") shall constitute a breach of this Lease by Lessee: (a)
if Lessee shall fail to pay any rental when and as the same becomes due and
payable; or (b) if Lessee shall fail to pay any other sum when and as the
same becomes due and payable and such failure shall continue for more than
ten (10) days; or (c) if Lessee shall fail to perform or observe any other
term hereof or the rules and regulations described in paragraph 17 to be
performed or observed by Lessee, such failure shall continue for more than
thirty (30) days after notice thereof from Lessor, and Lessee shall not
within such period commence with due diligence and dispatch the curing of
such default, or, having so commenced, shall thereafter fail or neglect to
prosecute or complete with due diligence and dispatch the curing of such
default; or (d) if Lessee shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due or shall file a petition in bankruptcy, or shall be adjudicated
as bankrupt or insolvent, or shall file a petition in any proceeding seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under
INITIAL _________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
Page 3
<PAGE>
any present or future statute, law or regulation, or shall file an answer
admitting or fail timely to contest the material allegations of a petition
filed against it in any such proceeding, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator of
Lessee or any material part of its properties; or (e) if within ninety (90)
days after the commencement of any proceeding against Lessee seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such proceeding shall not have been dismissed, or if. within
ninety (90) days after the appointment without the consent or acquiescence
of Lessee, of any trustee, receiver or liquidator of Lessee or of any
material part of its properties, such appointment shall not have been
vacated; or (f) if this Lease or any estate of Lessee hereunder shall be
levied upon under any attachment or execution and such attachment or
execution is not vacated within ten (10) days.
19. TERMINATION UPON DEFAULT: If an Event of Default shall occur, Lessor at any
time thereafter may give a written termination notice to Lessee, and on the
date specified in such notice (which shall be not less than three days after
the giving of such notice) Lessee's right to possession shall terminate and
this Lease shall terminate, unless on or before such date all arrears or
rental and all other sums payable by Lessee under this Lease (together with
the late charges and interest provided for in paragraph 33 hereof) and all
costs and expenses incurred by or on behalf of Lessor hereunder shall have
been paid by Lessee and all other breaches of this Lease by Lessee at the
time existing shall have been fully remedied to the satisfaction of Lessor.
Upon such termination, Lessor may recover from Lessee: (a) the worth at the
time of award of the unpaid rental which has been earned as of the time of
termination; (b) the worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Lessee proves could
have been reasonably avoided; (c) the worth at the time of award of the
amount by which the unpaid rental for the balance of the term of this Lease
after the time of award exceeds the amount of such rental loss that Lessee
proves could be reasonably avoided; and (d) any other amount necessary to
compensate Lessor for all the detriment proximately caused by Lessee's
failure to perform its obligations under this Lease or which in the ordinary
course of events would be likely to result therefrom. The "worth at the time
of award" of the amounts referred to in clauses (a) and (b) above shall be
computed by allowing interest at the rate of ten percent (10%) per annum.
The worth at the time of award of the amount referred to in clause (c) above
shall be computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%). For the purpose of determining unpaid rental under clauses (a), (b)
and (c) above, the monthly real reserved in this Lease shall be deemed to be
the sum of the rental due under paragraph 3 above the amounts last payable
by Lessee pursuant to paragraph 4 above and any other monetary obligations
of Lessee hereunder.
20. CONTINUATION AFTER DEFAULT: Even though Lessee has breached this Lease and
abandoned the Premises, this Lease shall continue in effect for so long as
Lessor does not terminate Lessee's right to possession, and Lessor may
enforce all its rights and remedies under this Lease, including the right to
recover the rental as it becomes due under this Lease. Acts of maintenance
or preservation of efforts to relet the Premises or the appointment of a
receiver upon the initiative of Lessor to protect Lessor interest under this
Lease shall not constitute a termination of Lessee's right to possession.
21. OTHER RELIEF: The remedies provided for in this Lease are in addition to any
other remedies available to Lessor at law or in equity by statute or
otherwise.
22. LESSOR'S RIGHT TO CURE DEFAULTS: All agreements and provisions to be
performed by Lessee under any of the terms of this Lease shall be at its
sole cost and expense and without any abatement of rental except as
expressly provided herein. If Lessee shall fail to pay any sum of money,
other than rental, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder and such failure
shall continue for ten (10) days, with regard to any monetary default, and
for thirty (30) days, with respect to any other default hereunder, after
notice thereof by Lessor, Lessor may, but shall not be obligated so to do,
and without waiving or releasing Lessee from any obligations of Lessee, make
any such payment or perform any such other act on Lessee's part to be made
or performed as in this Lease provided. All sums so paid by Lessor and all
necessary incidental costs shall be deemed additional rent hereunder and
shall be payable to Lessor on demand, and Lessor shall have (in addition to
any other right or remedy of Lessor) the same rights and remedies in event
of the nonpayment thereof by Lessee as in the case of default by Lessee in
the payment of rental.
23. ATTORNEYS' FEES: In the event of any action or proceeding brought by either
party against the other under this Lease, the prevailing party shall be
entitled to recover for the fees of its attorneys in such action or
proceeding such amount as the court may adjudge reasonable.
24. EMINENT DOMAIN: If all or any part of the Premises shall be taken as a
result of the exercise of the power of eminent domain, this Lease shall
terminate as to the part so taken as of the date of taking, and, in the case
of a partial taking, either Lessor or Lessee shall have the right to
terminate this Lease as to the balance of the Premises by written notice to
the other within thirty (30) days after such date; provided, however, that a
condition to the exercise by Lessee of such right to terminate shall be that
the portion of the Premises taken shall be of such extent and nature as
substantially to handicap, impede or impair Lessee's use of the balance of
the Premises. In the event of any taking, Lessor shall be entitled to any
and all compensation, damages, income, rent, awards, or any interest therein
whatsoever which may be paid or made in connection therewith, and Lessee
shall have no claim against Lessor for the value of any unexpired term of
this Lease otherwise. In the event of a partial taking of the Premises which
does not result in a termination of this Lease, the monthly rental
thereafter to be paid shall be equitably reduced.
25. SUBORDINATION: This Lease shall be subject and subordinated at all times to
(a) all ground or underlying leases which may hereafter be executed
affecting the Building, and (b) the lien of all mortgages and deeds of trust
in any amount or amounts whatsoever now or hereafter placed on or against
the Building or on or against Lessor's interest or estate therein or on or
against all such ground or underlying leases, all at the option of the
holder(s) thereof and without the necessity of having future instruments
executed on the part of Lessee to effectuate such subordination.
Notwithstanding the foregoing, (x) in the event of termination for any
reason whatsoever of any such ground or underlying lease, this Lease shall
not be barred, terminated, cut off or foreclosed nor shall the rights and
possession of Lessee hereunder be disturbed if Lessee shall not then be in
default in the payment of rental or other sums or be otherwise in default
under the terms of this Lease, and Lessee shall attorn to the Lessor of any
such ground or underlying lease, or, if requested, enter into a new lease
for the balance of the original or extended term hereof then remaining upon
the same terms and provisions as are in this Lease contained; (y) in the
event of a foreclosure of any such mortgage or deed of trust or of any other
action or proceeding for the enforcement thereof, or of any sale thereunder,
this Lease will not be barred, terminated, cut off or foreclosed nor will
the rights and possession of Lessee thereunder be disturbed if Lessee shall
not then be in default in the payment of rental or other sums or be
otherwise in default under the terms of this Lease, and Lessee shall attorn
to the purchaser at such foreclosure, sale or other action or proceeding;
and (z) Lessee agrees to execute and deliver upon demand such further
instruments evidencing such subordination of this Lease to such ground or
underlying leases, and to the lien of any such mortgages or deeds of trust
as may reasonably be required by Lessor.
26. NO MERGER: The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, shall not work a merger, and shall, at the
option of Lessor terminate all or any existing subleases or subtenancies, or
may, at the option of Lessor, operate as an assignment to it of any or all
such subleases or subtenancies
27. SALE: In the event the original Lessor hereunder, or any successor owner of
the Building, shall sell or convey the Building, all liabilities and
obligations on the part of the original Lessor, or such successor owner,
under this Lease accruing, thereafter shall terminate, and thereupon all
such liabilities and obligations accruing after the dale of sale or
conveyance shall be binding upon the new owner. Lessee agrees to attorn to
such new owner.
28. ESTOPPEL CERTIFICATE: At any time and from time to time but on not less than
ten (10) days prior written request by Lessor, Lessee shall execute,
acknowledge and deliver to Lessor, promptly upon request, an estoppel
certificate in the form of Exhibit C hereto. Any such certificate may be
relied upon by any prospective purchaser, mortgagee or beneficiary under any
deed of trust of the Building or any part thereof.
29. NO LIGHT, AIR OR VIEW EASEMENT: Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to the
Building shall in no way affect this Lease or impose any liability on
Lessor.
30. HOLDING OVER: If, without objection by Lessor, Lessee holds possession of
the Premises after expiration of the term of this Lease, Lessee shall become
a tenant from month to month upon the terms herein specified but at a
monthly rental equivalent to the then prevailing monthly rental paid by
Lessee at the expiration of the term of this Lease pursuant to all the
provisions of paragraphs 3 and 4 above payable in advance on or before the
first day of each month. Each party shall give the other written notice at
least one month prior to the dale of termination of such monthly tenancy of
its intention to terminate such tenancy. Notwithstanding the foregoing, if
Lessee holds possession of the Premises after expiration or sooner
termination of the term of this Lease notwithstanding Lessor's objection,
Lessee shall pay monthly rental at twice the amounts otherwise then payable
under the terms hereof.
INITIAL _________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
Page 4
<PAGE>
32. SECURITY DEPOSIT: Lessee has deposited with Lessor the sum of Forty Seven
Thousand Seven Hundred Eighty Dollars ($47,780.00)(the "Deposit"). The
Deposit shall be held by Lessor as security for the faithful performance by
Lessee of all of the provisions of this Lease to be performed or observed by
Lessee. In the event Lessee fails to perform or observe any of the
provisions of this Lease to be performed or observed by it, then, at the
option of Lessor, Lessor may (but shall not be obligated to) apply the
Deposit or so much thereof as may be necessary to remedy any default in the
payment of rent or to repair damages to the Premises caused by Lessee, and
Lessee shall forthwith upon demand restore the Deposit to the sum so
specified. Any remaining portion of the Deposit shall be returned to Lessee
upon expiration of this lease.
33. LATE CHARGE AND INTEREST: (a) Lessee hereby acknowledges that late payment
by Lessee to Lessor of rent and other sums due hereunder will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may be
imposed on Lessor by the terms of any mortgage or trust deed covering the
Building. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor when due, Lessee shall pay to Lessor
a late charge lump sum equal to 8% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate
of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's default with respect to such overdue amount, nor prevent
Lessor from exercising-any of the other rights and remedies granted
hereunder.
(b) Any amount due to Lessor, if not paid when due, shall bear interest from
the date due until paid at the rate of 10% per annum or, if a higher rate is
legally permissible, at the highest rate legally permitted, provided that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee to the extent such
interest would cause the total interest to be in excess of that legally
permitted. Payment of interest shall not excuse or cure any default
hereunder by Lessee.
34. WAIVER: The waiver by Lessor of any agreement, condition or provision herein
contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other agreement, condition or provisions herein contained, nor
shall any custom or practice which may evolve between the parties in the
administration of the terms hereof be construed to waive or to lessen the
right of Lessor to insist upon the performance by Lessee in strict
accordance with said terms. The subsequent acceptance of rental hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessee
of any agreement, condition or provision of this Lease, other than the
failure of Lessee to pay the particular rental so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of
such rental.
35. NOTICES: All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing and shall be deemed
to have been fully given when deposited in the United States mail, certified
or registered, postage prepaid, and addressed as follows: to Lessee at 255
Shoreline Drive, Redwood City, CA or to such other place as Lessee may from
time to time designate in a notice to Lessor; to Lessor at 800 S. Claremont
Street, Suite 201, San Mateo, CA 94402, or to such other place as Lessor may
from time to time designate in a notice to Lessee; or, in the case of
Lessee, delivered to Lessee at the Premises. Lessee hereby appoints as its
agent to receive the service of all dispossessory or distraint proceedings
and notices thereunder the person in charge of or occupying the Premises at
the time, and, if no person shall be in charge of or occupying the same,
then such service may be made by attaching the same on the main entrance of
the Premises.
36. BROKERAGE COMMISSION: Lessor and Lessee warrant that they have no contract
or dealings regarding this Lease through any licensed real estate broker
other than Cornish & Carey and Blickman Turkus/Cushman + Wakefield co-
brokers procuring side whose commission shall be paid by Lessor, or any
other person who can claim a right to commission or finder's fee as a
procuring cause of this Lease. In the event that any other broker or finder
perfects a claim for commission or finder's fee in connection with this
Lease, the party through whom the broker or finder makes its claim shall
indemnify, hold harmless and defend the other party from said claim and all
costs and expenses, including reasonable attorneys' fees, incurred by the
other party in defending against the same.
37. COMPLETE AGREEMENT: There are no oral agreements between Lessor and Lessee
affecting this Lease, and this Lease supercedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and
understandings, if any, between Lessor and Lessee or displayed by Lessor to
Lessee with respect to the subject matter of this Lease or the Building.
There are no representations between Lessor and Lessee other than those
contained in this Lease.
38. CORPORATE AUTHORITY: If Lessee signs as a corporation, each of the persons
executing this Lease on behalf of Lessee does hereby covenant and warrant
that Lessee is a duly authorized and existing corporation, that Lessee has
and is qualified to do business in California, that the corporation has full
right and authority to enter into this Lease, and that each of the persons
signing on behalf of the corporation were authorized to do so.
39. MISCELLANEOUS: The words "Lessor" and "Lessee" as used herein shall include
the plural as well as the singular. If there be more than one Lessee, the
obligations hereunder imposed upon Lessee shall be joint and several. Time
is of the essence of this Lease and each and all of its provisions.
Submission of this instrument for examination or signature by Lessee does
not constitute a reservation of or option for lease, and it is not effective
as a lease or otherwise until execution and delivery by both Lessor and
Lessee. The exhibit(s) and addendum, if any, attached to this Lease are by
this reference made a part hereof. The agreements, conditions and provisions
herein contained shall, subject to the provisions as to assignment, apply to
and bind the heirs, executors, administrators, successors and assigns of the
parties hereto. If any provisions of this Lease shall be determined to be
illegal or unenforceable, such determination shall not affect any other
provision of this Lease and all such other provisions shall remain in full
force and effect. This Lease shall be governed by and construed pursuant to
the laws of the State of California.
40. LESSEE SIGNS: Lessee shall erect no signs on the exterior of the Building or
in any of the common areas without the prior written consent of Lessor.
41. EXHIBITS:
Exhibit Schedule - Addendum to Lease
Exhibit B - Initial Improvement of Premises (Work Letter)
Exhibit C - Form of Estoppel Certificate
Exhibit D - Spaceplan dated 8/18/92
42. OTHER PROVISIONS:
43. RULES AND REGULATIONS: 1. The sidewalks, halls, passages, exits, entrances,
elevators, escalators, if any, and stairways of the Building shall not be
obstructed by any of the Lessees or used by them for any purpose other than
for ingress to and egress from their respective premises. The halls,
passages, exits, entrances, elevators, escalators and stairways are not for
the general public, and Lessor shall in all cases retain the right to
control and prevent access thereto of all persons whose presence in the
judgment of Lessor would be prejudicial to the safety, character, reputation
and interests of the Building and its Lessees, provided that nothing
herein contained shall be construed to prevent such access to persons with
whom any Lessee normally deals in the ordinary course of its business,
unless such persons are engaged in illegal activities. No Lessee and no
employee or invitee of any Lessee shall go upon the roof of the building.
2. Except as authorized by a Lease, no sign, placard, picture, name,
advertisement of notice visible from the exterior of any Lessee's premises
shall be inscribed, painted, affixed or otherwise displayed by any Lessee on
any part of the Building without the prior written consent of Lessor.
Lessor will adopt and make available to Lessee general guidelines relating
to signs inside the Building on the office floors. Lessee agrees to conform
to such guidelines, but may request approval of Lessor for modifications,
which approval will not be unreasonably withheld. All approved signs or
lettering on doors shall be printed, painted, affixed or inscribed at the
expense of the Lessee by a person approved by Lessor, which approval will
not be unreasonably withheld. Material visible from outside the Building
will not be permitted.
INITIAL _________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
Page 5
<PAGE>
3. The premises shall not be used for the storage of merchandise held for sale
to the general public or for lodging. No smoking shall be done or permitted by
any Lessee on the premises, except that use by the Lessee of Underwriter's
Laboratory approved equipment for brewing coffee, tea, hot chocolate and
similar beverages shall be permitted, provided that such use is in accordance
with all applicable federal, state and city laws, code, ordinances, rules and
regulations. Lessor shall allow Lessee's use of a microwave and vending
machines.
4. No Lessee shall employ any person or persons other than the janitor of
Lessor for the purpose of cleaning the premises, unless otherwise agreed to by
Lessor in writing. Except with the written consent of Lessor, no person or
persons other than those approved by Lessor shall be permitted to enter the
Building for the purpose of cleaning the same. No Lessee shall cause any
unnecessary labor by reason of such Lessee's carelessness or indifference in
the preservation of good order and cleanliness. Janitor service will not be
furnished on nights when rooms are occupied after 9:00 P.M. unless, by
agreement in writing, service is extended to a later hour for specifically
designated rooms.
5. Lessor will furnish each Lessee free of charge with two keys to each door
lock in the premises. Lessor shall require payment of a $10 ($5.00 of which is
refundable upon return of keys) deposit for each additional key provided to
Lessee. No Lessee shall have any keys made. No Lessee shall alter and lock or
install a new or additional lock or any bolt on any door of its premises
without the prior written consent of Lessor. Lessee shall in each case furnish
Lessor with a key for any such lock. Each Lessee, upon the termination of its
tenancy, shall deliver to Lessor all keys to doors in the Building which shall
have been furnished to Lessee.
* Lessee's initial key order shall be at no charge up to a maximum of 100
keys.
6. Heavy objects shall, if considered necessary by Lessor, stand on wood
strips of such thickness as is necessary to properly distribute the weight.
Lessor will not be responsible for loss of or damage to any such properly from
any cause, and all damage done to the Building by moving or maintaining such
property shall be repaired at the expense of Lessee. The persons employed to
move such property in or out of the Building must be acceptable to Lessor
7. No Lessee shall use or keep in the premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material other than limited
quantities thereof reasonably necessary for the operation or maintenance of
office equipment, or without Lessor's prior written approval, use any method
of healing or air conditioning other than that supplied by Lessor. No Lessee
shall use or keep or permit to be used or kept any foul or noxious gas or
substance in the premises, or permit or suffer the premises to be occupied or
used in a manner offensive or objectionable to Lessor or other occupants of
the Building by reason of noise, odors or vibrations; or interfere in any way
with other Lessees or those having business therein.
8. The directory of the Building will be provided for the display of the name
and location of Lessees and a reasonable number of the principal officers and
employees of Lessees, and Lessor reserves the right to exclude any other names
therefrom. Any additional name which Lessee shall desire to place upon said
bulletin board must first be approved by Lessor, and, if so approved, charge
will be made therefor.
9. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any window of the Building without the prior written
consent of Lessor. In any event, with the prior written consent of Lessor,
such items shall be installed on the office side of Lessor's standard window
covering and shall in no way be visible from the exterior of the Building.
10. No Lessee shall obtain for use in the premises, ice, drinking water, food,
beverage, towel or other similar services, except at such reasonable hours and
under such reasonable regulations as may be fixed by Lessor. Lessor shall
allow Lessee's use of a microwave and vending machines.
11. Each Lessee shall see that the doors of its premises are closed and locked
and that all water faucets, water apparatus and utilities are shut off before
Lessee or Lessee's employees leave the premises, so as to prevent waste or
damage, and for any default or carelessness in this regard Lessee shall make
good all injuries sustained by other tenants or occupants of the Building or
Lessor. On multiple-tenance floors, all Lessees shall keep the doors to the
Building corridors closed at all times except for ingress and egress.
12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed,
no foreign substance of any kind whatsoever shall be thrown therein and the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by the Lessee who, or whose employees or invitees,
shall have caused it.
13. Except with the prior written consent of Lessor, no Lessee shall sell, or
permit the sale at retail, of newspapers, magazines, periodicals, theatre
tickets or any other goods or merchandise to the general public in or on the
premises, nor shall any Lessee carry on, or permit or allow any employee or
other person to carry on, the business of stenography, typewriting or any
similar business in or from the premises for the service or accommodation of
occupants of any other portion of the Building, nor shall the premises of any
Lessee be used for manufacturing of any kind, or any business or activity
other than that specifically provided for in such Lessee's lease.
14. No Lessee shall install any radio or television antenna, loudspeaker, or
other device on the roof or exterior walls of the Building.
15. There shall not be used in any space, or in the public halls of the
Building, either by any Lessee or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Lessor may approve. No other vehicles of any kind shall be
brought by any Lessee into the Building or kept in or about its premises.
16. Each Lessee shall store all its trash and garbage within its premises. No
material shall be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage in the City of Redwood
City without being in violation of any law or ordinance governing such
disposal. All garbage and refuse disposal shall be made only through entryways
and elevators provided for such purpose and at such times as Lessor shall
designate.
17. Canvassing, peddling, soliciting, and distribution of handbills or any
other written materials in the Building are prohibited, and each Lessee shall
cooperate to prevent the same.
18 The requirements of the Lessees will be attended to only upon application
by telephone or in person at the office of the Building. Employees of Lessor
shall not perform any work or do anything outside of their regular duties
unless under special instructions from Lessor.
19. Lessor may waive any one or more of these Rules and Regulations for the
benefit of any particular Lessee or Lessees, but no such waiver by Lessor
shall be construed as a waiver of such Rules and Regulations in favor of any
other Lessee or Lessees, nor prevent Lessor from thereafter enforcing any such
Rules and Regulations against any or all of the Lessees of the Building.
20. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.
21. Lessor reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for the safely,
care and cleanliness of the Building and for the preservation of good order
therein.
22. Proper protection of carpeting is required such as plastic carpet
protectors under wheeled chairs.
IN WITNESS WHEREOF, the parties have executed this Lease dated the day and year
first above written.
LESSEE: SEGA CORPORATION LESSOR: SHOREBREEZE ASSOCIATES
By /s/ [ILLEGIBLE]^^ By /s/ [ILLEGIBLE]^^
--------------------- -------------------------
[ILLEGIBLE]^^ General Partner^^
--------------------- -------------------------
INITIAL _________________
RAISER PROPERTY MANAGEMENT COMPANY
OFFICE LEASE
Page 6
<PAGE>
SHOREBREEZE II
--------------
WORK LETTER
INITIAL IMPROVEMENT OF PREMISES
"EXHIBIT B"
1. THE IMPROVEMENTS
----------------
Lessor, through its General Contractor, shall furnish and install within the
Premises those items of general construction (the "improvements") shown on those
plans attached hereto as Exhibit "D" to the Lease. As its contribution to the
Improvements referred to above, Lessor shall bear the cost of the following
Tenant Improvement items pursuant to Exhibit "D".
A. PARTITIONS
----------
Standard partition will be ceiling height with five-eights inch gypsum
board an each side of two-and-one-half-inch metal stud. All appropriate
gypsum board surfaces to be finished with building standard eggshell
latex paint.
B. DOORS, FRAMES AND HARDWARE
--------------------------
Entry Door will be solid core stone washed white oak, double set in a
hollow metal frame. Hardware will be heavy-duty lever-action latchset
with a polished chrome finish. Interior doors will be paint grade solid
core full height.
C. FLOOR COVERINGS
---------------
Carpet in all tenant office areas, selected from the building standard
finish selections. Building standard rubber base on perimeter of all
wall surfaces.
D. CEILINGS
--------
Ceiling will be a suspended 2'x2' acoustical ceiling with fissured
mineral fiber panels throughout the tenant office area. Reception area
and main conference room will be coffered sheetrock with recessed
lighting.
-1-
<PAGE>
E. LIGHT FIXTURES
--------------
2'x4' recessed, parabolume "SP 35" fluorescent light fixtures.
F. SWITCHES
--------
Switches, electrical outlets and telephone outlets, fire sprinkler heads
and exit signs provided as required.
G. HEATING, VENTILATION AND AIR CONDITIONING
-----------------------------------------
HVAC system will be a variable air-volume system with multiple
thermostatically-controlled zones to meet requirements.
H. SIGNAGE
-------
Landlord will provide a suite number with the firm name, using the
building standard character and sign plate.
I. WINDOW COVERINGS
----------------
Levelor blinds on all exterior windows. Color to be selected be selected
by landlord.
J. GLAZING
-------
1/4" plate extending from floor to ceiling. Frame painted to match wall
color.
Tenant shall provide, install and pay for telephone and computer cable and
all furniture and fixtures.
-2-
<PAGE>
EXHIBIT C
Tenant Estoppel
---------------
To:
Re: Lease dated:_______________________ Amended:________________________
Landlord:__________________________ Tenant:_________________________
Premises:_________ square feet of net rentable area in the building
located at___________________________, Suite________, City of_________,
State of____________________.
As the lessee or tenant under the Lease defined below, the undersigned hereby
certifies to
, which has made or is about to make a loan to the above-defined
Landlord secured in part by a mortgage or deed of trust covering the above-
defined Premises and an assignment of the Landlord's interest in the Lease, the
truth and accuracy of the following statements pertaining to the Lease:
1. A true, correct and complete copy of the lease described above and all
amendments, guaranties, security agreements, subleases, assignments and
other related documents are attached as Exhibit "A" (together referred to
-----------
as the "Lease"). The Lease as defined herein is in full force and effect
and there are no other agreements or understandings between Landlord and
Tenant and/or guarantor which relate to the Premises.
2. The Lease is for an original term of ___ years which commenced on _______
and will expire/has expired on ____________. The undersigned Tenant has
no rights to renew or extend the term of the Lease or any expansion rights
under the Lease, except those (if any) set forth in the Lease. The
undersigned Tenant has exercised its option to extend the original term
through ___________________.
3. The undersigned Tenant entered into occupancy of the Premises on
_____________, 19__, is presently in possession of and occupies the
Premises for purposes permitted under the Lease, and has been paying rent
since ___________. The Premises consist of__________square feet of net
rentable area.
4. Landlord has satisfactorily complied with all of the requirements and
conditions precedent to the commencement of the term of the lease as
specified in the Lease. The undersigned represents that the improvements
and space required to be furnished according to the Lease have been duly
completed and accepted by the undersigned and that the Premises are in good
condition, satisfactory to the undersigned and not in need of repair as of
the date of this Certificate.
5. The fixed annual rent under the Lease is $_______and no moneys have been
paid in advance of the due date set forth in the Lease described above,
------------
except___________________________. The undersigned has on deposit with
Landlord the sum of____________________Dollars ($________) [in cash,] as
security deposit or for other purposes stated in this Lease.
6. All monthly rental and other rentals under the Lease including the payment
of any taxes, utilities, common area maintenance payments or other charges
that are currently due have been paid, except_____________________; all
such rentals are being paid on a current basis without any claims for
offsets or deductions.
7. No monetary or other concessions or considerations (including, but not
limited to, rental concessions, by the Landlord, tenant improvements in
excess of building standard, or Landlord's assumption of prior lease
obligations of the Current Tenant) have been granted to Tenant except:
_____________________________.
<PAGE>
8. There are ??? uncured defaults by Landlord under this Lease, and the
undersigned ??? of no events or conditions which if uncured shall with the
passage of time or notice or both, constitute a default by Landlord under
the Lease. There are no existing defenses or offsets which the undersigned
has against the enforcement of the Lease by Landlord.
9. The undersigned has no option or preferential right to purchase the
Premises or the building of which the Premises are a part, nor any right,
title or interest with respect to the Premises other than as tenant under
the Lease.
10. The undersigned acknowledges, in the event acquires the Premises
through foreclosure or thorough a transfer of title in lieu of foreclosure,
that: (i) assumes no liability for any of the undersigned's security
deposits or sums escrowed with Landlord for taxes unless or until
actually receives such security deposits or sums; (ii) shall not be
liable for any act or omission of any prior landlord (including Landlord),
nor shall be obligated to cure any defaults of any prior landlord
(including Landlord) under the Lease which occurred prior to the time that
succeeded to the interest of Landlord; (iii) shall not be subject to
any offsets or defenses which the undersigned may be entitled to assert
against any prior landlord (including Landlord); (iv) shall not be bound
by any payment of rent or additional rent by the undersigned to any prior
landlord (including Landlord) for more than two (2) months in advance; (v)
shall not be bound by any amendment or modification of the Lease made
without the prior written consent of ; (vi) the undersigned shall be
subject to any rights of with respect to insurance and condemnation
proceeds; and, (vii) the undersigned shall attorn to as its lessor
under the Lease immediately and automatically upon acquisition of the
Premises.
11. The undersigned acknowledges: (a) that there have been no modifications or
amendments to the Lease other than herein specifically stated;
(b) that it has not notice of a prior assignment, hypothecation or
pledge of rents or of Landlord's interest in the Lease; (c) that no
prepayment or reduction of rent and no modification, termination or
acceptance of surrender of the Lease will be valid as to without the
prior written consent of ; and, (d) that notice of the proposed
assignment of Landlord's interest in the Lease may be given to the
undersigned by Certified or Registered Mail, Return Receipt Requested, at
the Premises, or a otherwise directed below.
12. The undersigned is not the subject of any bankruptcy, insolvency, debtor's
relief, reorganization, receivership, or similar proceedings.
13. Under the Lease, the undersigned is entitled to the use of_____________
parking spaces; such spaces are (check one) assigned [ ] or unassigned
[x].
14. The undersigned has not dumped, spilled, stored, released or in any other
manner deposited any oil, fuels, gases, pesticides, DOT, lead, paints or
solvents, cyanide, acids, ammonium compounds or other chemicals, trash,
garbage or other solid wastes or hazardous substances on or about the
Premises. The undersigned has received no notice of and has no knowledge of
any violation or claimed violation of any law, rule or regulation relating
to such materials or wastes.
Dated:____________________, 19____
TENANT:___________________________
By:________________________
Title:_____________________
Address to which notices are to be sent to Tenant if other than to the Premises.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
<PAGE>
Addendum to Lease
-----------------
Sega Corporation
----------------
1. Occupancy Date/Schedule:
-----------------------
It is agreed that the final floorplan must be approved by lessor and Lessee
no later than September 21, 1992 in order to complete the improvements and
provide occupancy by December 1,1992.
Any delay in completion that is caused by either Lessee's inability to
provide approved floorplans by such date, or changes to the plan after
final approval, shall not delay the commencement of the Lease and rental
obligations.
2. Tenant Improvements:
-------------------
Lessor shall build out the premises, at their cost, according to a mutually
agreed upon floorplan using building standard materials and finishes. Any
changes made to the floorplan after final spaceplan has been agreed upon
shall be at Lessor's expense as long as any such changes do not increase
the total cost of the improvements beyond $651,553.00. Any changes that
result in total costs exceeding this amount shall be paid by Lessee.
3. Moving Allowance:
----------------
Upon Lessee's occupancy of the premises, Lessor shall provide an allowance
of $1.00 per rentable square feet, totalling $28,106.00, to cover moving
costs.
5. Communication Conduit:
---------------------
Lessor, at Lessor's sole cost and expense, shall provide and maintain
conduit, as is needed by Lessee, between the separate buildings and
different floors within the same building. Such conduit shall accommodate
the telephone, computer and other communication cabling. Lessor's
responsibility for such conduit shall include all space occupied by Lessee
whether it be direct or sublease space.
6. Parking:
-------
Lessee shall be provided with 93 non-assigned parking spaces at no charge.
<PAGE>
7. After Hours Usage:
-----------------
The HVAC building hours are 8.00 A. M. to 6:00 P.M. Monday through Friday.
Additional hours are accessed through a telephone voice system and billed
on a monthly basis at $20.00 per hour.
8. Option:
------
Lessor grants Lessee an option to renew for three (3) years at "Market
Rate". This option must be exercised in writing to Lessor no later than one
hundred eighty (180) days prior to the expiration of the Lease. "Market
Rate" which shall be, on any Adjustment date, the effective rental rate,
determined on a full service basis per rentable square foot, at which
comparable space in the Redwood Shores area is being leased, at the time of
the Adjustment Date, to comparable tenants renting for a Comparable Term
(as hereinafter defined) the approximate amount of rentable square feet
then occupied by Tenant. If Landlord and Tenant are unable to agree upon
Market Rate on or before a date which is ninety (90) days prior to the
Adjustment Date, the Market Rate shall be determined by arbitration. If it
is submitted to arbitration, each of the parties shall select one
arbitrator, and the two so selected shall select a third. Each party shall
bear the entire cost of the arbitrator selected by such party and one-half
(1/2) the cost of the third arbitrator. A majority of the arbitrators shall
determine the Market Rate and that decision shall be conclusive and binding
upon the parties. Each arbitrator shall be an active professional real
estate appraiser and preferably a member of the American Institute of Real
Estate Appraisers. If either party fails to select an arbitrator within
fourteen (14) days after notice in writing to the other appointment of an
arbitrator, the single arbitrator selected shall be the sole arbitrator and
his decision shall be conclusive and binding on Landlord and Tenant.
9. Quiet Enjoyment:
---------------
A satisfactory letter agreement to be provided by Lessor regarding quiet
enjoyment of Lessee's sublease space and a first right of refusal.
<PAGE>
[FLOOR PLAN APPEARS HERE]
SHOREBREEZE II
--------------
SEGA EXPANSION SP;
SUITE 510
3170 Square Feet
EXHIBIT A
---------
<PAGE>
Amendment No. One to Lease
--------------------------
This Amendment, dated March 3, 1993, is by and between ShoreBreeze Associates
("Lessor") and Sega Corporation ("Lessee"). Lessor and Lessee entered into a
lease agreement dated September 10, 1992 (the "Lease") for the premises known as
Suites 103 and 200 at 255 Shoreline Drive, Redwood City, California and wish to
amend such Lease as follows:
Premises: Effective March 1, 1993, the premises shall be increased by
- --------
3,170 square feet, commonly known as Suite 510 (Exhibit A"
attached), for a new total of 31,276 square feet.
Base Rent: Effective April 1, 1993, the base rent shall increase by
- ----------
$5,706.00 per month for a new total of $53,486.00 per month.
Lessee's Name: Lessee's name shall hereby be changed to Sega of America,
- --------------
Inc.
All other terms and conditions of the Lease shall remain unchanged.
Agreed & Accepted:
- ------------------
Lessor Lessee
- ------ ------
ShoreBreeze Associates Sega of America, Inc.
/s/ [ILLEGIBLE]^^ /s/ [ILLEGIBLE]^^
- --------------------------- ------------------------
By: By:
3.10.93 3/4/93
- --------------- ----------------
Date Date
<PAGE>
Amendment No. Two to Lease
--------------------------
Sega of America, Inc.
---------------------
This Amendment, dated September 7, 1995, is by and between ShoreBreeze
Associates ("Lessor") and Sega of America, Inc. ("Lessee"). Lessor and Lessee
entered into a lease agreement dated September 10,1992 (the "Lease") for the
premises known as Suites 103 and 200 at 255 Shoreline Drive, Redwood City,
-----------------------------------------
California. Such Lease was amended per the terms of Amendment No. One to Lease
dated March 3,1993 which added Suite 510. Lessor and Lessee agree to further
amend the Lease as follows:
Premises: Effective March 16, 1996, the Premises shall consist of:
- ---------
Suite 100 - 4,556 Square Feet
Suite 200 - 21,029 Square Feet
------------------
Total: 25,585 Square Feet
----- ------------------
Termination Date: March 31, 2001
- ----------------
Base Rent: March 16, 1996 - March 31, 1999 .... $58,078.00 per month
- ---------
April 1, 1999 - March 31, 2001 .... $59,358.00 per month
Free Rent: Lessee shall pay no rent on the above premises only during
- ---------
the period December 1, 1995 through March 31, 1996.
Option to Extend: Lessee shall have a one-time option to extend the terms of
- ----------------
this Lease for an additional five (5) years at Fair Market
Value. Fair Market Value shall be, on the adjustment date,
the effective rental rate, determined on a full service basis
per rentable square foot, at which comparable space in the
Redwood Shores area is being leased to comparable tenants
renting for a Comparable Term. This option applies only to
the entire premises leased. Lessee must give Lessor at least
twelve (12) months prior written notice of their intention to
exercise such option. At the time such option is exercised,
the Lease shall be in full force and effect and no default on
the part of Lessee shall have occurred and be continuing.
<PAGE>
Amendment No. Two to Lease
- --------------------------
Page Two
- --------
All other terms and conditions of the Lease shall remain in effect and
unchanged.
Agreed & Accepted:
- ------------------
Lessor: ShoreBreeze Associates Lessee: Sega of America, Inc.
- ------ --------
/s/ [ILLEGIBLE]^^ /s/ [ILLEGIBLE]^^
- ---------------------- ------------------------------
Date: 9/11/95 Date: 9/7/95
----------------- -------------------------
Shorebreeze Associates,
a California Limited Partnership
By: Redwood Shores MIP Inc.,
A California corporation,
General Partner
By: /s/ Carl C. Gregory, III
--------------------------
Carl C. Gregory, III
President
<PAGE>
Amendment No. Three to Lease
----------------------------
Sega of America, Inc.
---------------------
This Amendment, dated November 21, 1995, is by and between ShoreBreeze
Associates ("Lessor") and Sega of America, Inc. ("Lessee"). Lessor and Lessee
entered into a lease agreement dated September 10,1992 (the "Lease") for the
premises known as Suites 103 and 200 at 255 Shoreline Drive, Redwood City,
California. Such Lease was amended per the terms of Amendment No. One to Lease
dated March 3, 1993 which added Suite 510. The Lease was further amended per the
terms of amendment No. Two to Lease. Lessor and Lessee agree to further amend
the Lease as follows:
Premises: Effective March 16,1996, the Premises shall consist of:
- ---------
Suite l00 - 4,556 Square Feet
Suite 200 - 21,029 Square Feet
Suite 510 - 370 Square Feet
------------------
Total: 28,755 Square Feet
----- ------------------
Termination Date: Suite 510: October 31,1999
- -----------------
Suites 100 a 200: March 31, 2001
Base Rent: Suites 100 & 200:
- ---------- ----------------
March 16, 1996 - March 31,1999 .... $58,078.00 per month
April 1, 1999 - March 31, 2001 .... $59,358.00 per month
Suite 510: $7,133.00 per month
---------
Free Rent: Lessee shall pay no rent on 28,106 square feet (the total
- ----------
premises on the first and second floors) during the period
December 1,1995 through March 31,1996.
Option to Extend: Lessee shall have a one-time option to extend the terms of
- -----------------
this Lease for an additional five (5) years at Fair Market
Value. Fair Market Value shall be, on the adjustment date,
the effective rental rate, determined on a full service
basis per rentable square foot, at which comparable space in
the Redwood Shores area is being leased to comparable tenant
renting for a Comparable Term. Lessee must give Lessor at
least twelve (12) months prior written notice as follows:
<PAGE>
Amendment. No. Three to Lease
- -----------------------------
Page Two
- --------
Option to Extend (Cont.): - Written Notice by November 30, 1998 for Suite 510
- -------------------------
- Written Notice by March 31, 2000 for Suites 100/200*
* It is understood that this option is only for Suite
100 and 200 combined and cannot be exercised
separately.
In addition, in order for Lessee to exercise such
Option, the Lease shall be in full force and effect
and no default on the part of Lessee shall have
occurred and be continuing.
All other terms and conditions of the Lease shall remain in effect and
unchanged.
Agreed & Accepted:
- ------------------
Lessor: ShoreBreeze Associates Lessee: Sega of America, Inc.
- ------ -------
/s/ [ILLEGIBLE]^^ /s/ [ILLEGIBLE]^^
- ---------------------------- ---------------------------------
Date: 12/12/95 Date: 12/7/95
----------------------- ----------------------------
<PAGE>
EXHIBIT 10.7
ALBANY STREET PLAZA
OFFICE LEASE
ALBANY STREET PLAZA REAL ESTATE MANAGEMENT COMPANY
LANDLORD
AND
INVENTA CORPORATION
TENANT
DATED: SEPTEMBER 8, 1998
REVISED: OCTOBER 21, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
Article 1.00 Basic Lease Information 6
Article 2.00 Demised Premises 8
2.01 Agreement And Description 8
2.02 Warranty Of Title/Quiet Enjoyment 8
2.03 Estoppel 8
2.04 Initial Condition Of Premises 8
2.05 Use Of The Premises 8
Article 3.00 Term, Commencement, Occupancy 8
3.01 Term 8
3.02 Occupancy 8
3.03 No Notice For Termination 8
3.04 Holdover 9
Article 4.00 Rent 9
4.01 General 9
4.02 Unspecified Costs 9
4.03 Due Date 9
4.04 Rental Years 9
4.05 Covenant To Pay Rent; Place Of Payment 9
4.06 No Waiver Upon Receipt 9
4.07 Late Charge 9
Article 5.00 Tax 9
5.01 Abatement 9
5.02 Payment 9
Article 6.00 Acceptance Of Premises 9
Article 7.00 Subordination 10
7.01 To Mortgages And Leases in General 10
7.02 To The Master Lease 10
Article 8.00 Tenant's Improvements, Fixtures And Mechanic's Liens 10
8.01 Improvements 10
8.02 Landlord's Right To Enter 10
8.03 Mechanic's Liens 10
8.04 Fixtures 10
Article 9.00 Prompt Occupancy And Use 10
9.01 Continuous Occupancy 10
9.02 Operations In Good Faith 10
9.03 Hours And Days Of Operation 10
Article 10.00 Operation By Tenant 10
10.01 Tenant's Maintenance Obligations 10
10.02 Prohibitions 11
10.03 Paraphernalia And Pornography Prohibited 11
Article 11.00 Structural Repairs 11
Article 12.00 Interior Repairs 11
12.01 Tenant's Repairs 11
12.02 Tenant's Indemnification 12
Article 13.00 Damage To Premises 12
Article 14.00 Alterations 12
14.01 Tenant's Improvements 12
14.02 Exterior And Structural Improvements 12
14.03 Signs And Advertising 12
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
14.04 Painting/Decorations 12
14.05 Approval By Landlord 12
Article 15.00 Roof And Walls 12
Article 16.00 Common Facilities 12
16.01 General 12
16.02 Operation And Maintenance 13
16.03 Landlord's Right To Alter 13
Article 17.00 Expense Of Common Facilities 13
17.01 Landlord's Operating Costs 13
17.02 Tenant's Share 13
17.03 Payment And Adjustment Of Tenant's Share 13
Article 18.00 Payment Of Utility Charges, Etc. 13
18.01 Electricity 13
18.02 Payment Of Charges 13
18.03 Interruption In Service 14
18.04 Alteration Of Service 14
Article 19.00 Insurance 14
19.01 Insurance Required 14
19.02 Compliance With Landlord's Policies 14
19.03 Waiver Of Subrogation 14
Article 20.00 Indemnity 14
Article 21.00 Fire Or Other Casualty 15
21.01 Repair, Rent Abatement 15
21.02 Termination By Landlord 15
21.03 Demolition 15
Article 22.00 Condemnation 15
Article 23.00 Inspections By Landlord 15
Article 24.00 No Assignment, Etc. 15
24.01 General 15
24.02 Any Assignment Void 15
24.03 Limitation On Remedies 16
Article 25.00 Default 16
25.01 Events Of Default 16
25.02 Landlord's Remedies 18
25.03 Certain Damages 16
25.04 Continuing Liability After Termination 17
25.05 Cumulative Remedies 17
Article 26.00 Default By Landlord 17
Article 27.00 Successors And Assigns 17
Article 28.00 Governing Law 17
Article 29.00 Captions 17
Article 30.00 Brokers 18
Article 31.00 Written Modification 18
Article 32.00 Severability 18
Article 33.00 Notices 18
Article 34.00 Option To Renew 18
34.01 Term, Notice 18
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
34.02 Rent 18
Article 35.00 Joint And Several Liability 18
Article 36.00 Not A Joint Venture 18
Article 37.00 No Option 19
Article 38.00 Third Party Beneficiary 19
Article 39.00 Compliance With All Laws 19
Article 40.00 Limitation On Recourse 19
Article 41.00 Force Majeure 19
Article 42.00 No Recordation 19
Article 43.00 Effect Of Sale 19
Article 44.00 Tenant's Ecra Warranty 19
Article 45.00 Use Of Asbestos 19
Article 46.00 Corporate Tenancy 20
Article 47.00 Parking 20
</TABLE>
4
<PAGE>
TABLE OF EXHIBITS
-----------------
The following exhibits are attached to this Lease and are made part of this
Lease Agreement:
Page
EXHIBIT A The Premises 21
EXHIBIT B Rent Schedule 22
EXHIBIT C Approved Sign Design 23
EXHIBIT D Work Letter/Tenant's Plans 24
EXHIBIT E Master Lease 25
EXHIBIT F Cleaning Schedule 30
EXHIBIT G Rules and Regulations 31
5
<PAGE>
FIRST ADDENDUM TO LEASE
-----------------------
THIS FIRST ADDENDUM-TO LEASE (this "Addendum") is made by and between ALBANY
STREET PLAZA REAL ESTATE MANAGEMENT COMPANY ("Landlord"), and INVENTA
CORPORATION ("Tenant"), to be a part of that certain Lease Agreement (and
Addendum thereto) of even date herewith between Landlord and Tenant (the
"Lease") concerning a 5200 square feet of office space located at that building
commonly known by the street address of 120 Albany Street, New Brunswick, New
Jersey, together with up to 30 parking spaces allocated thereto. Landlord and
Tenant agree that, notwithstanding anything to the contrary in the Lease, the
Lease is hereby modified and supplemented as set forth below.
1. Commencement Date: The Lease shall commence on November 15, 1998.
-----------------
2. Taxes: "Taxes" shall not include and Tenant shall not be required to pay
-----
any portion of any tax or assessment expense or any increase therein (i)
levied on Landlord's rental income, unless such tax or assessment expense is
imposed in lieu of real property taxes; (ii) in excess of the amount which
would be payable if such tax or assessment expense were paid in installments
over the longest possible term; (iii) imposed on land and improvements other
than the Premises; or (iv) attributable to Landlord's net inheritance, gift,
transfer, estate or state taxes.
3. Operating Costs: "Operating Costs" shall not include and Tenant shall in no
---------------
event have any obligation to perform or to pay for the following
(collectively, "Costs"); (i) Costs occasioned by the act, omission or
violation of any law by Landlord, any other occupant of the Building, or
their respective agents, employees or contractors; (ii) Costs occasioned by
fire, acts of God, or other casualties or by the exercise of the power of
eminent domain; (iii) Costs to correct any construction defect in the
Premises or the Building or to comply with any CC&Rs or law applicable to
the Premises or the Building on the Lease Commencement Date; (iv) Cost of
any renovation, improvement, painting or redecorating of any portion of the
Building not made available for Tenant's use; (v) Costs incurred in
connection with negotiations or disputes with any other occupant of the
Building and Costs arising from the violation by Landlord or any occupant of
the Building (other than Tenant) of the terms and conditions of any lease or
other agreement; (vi) insurance Costs for coverage not customarily paid by
tenants of similar buildings in the vicinity of the Premises and premiums
and deductibles for coverages in excess of standard "all-risk" premiums and
deductibles, increases in insurance Costs caused by the activities of
another occupant of the Building, insurance deductibles, and co-insurance
payments; and (vii) Costs to respond to any claim of Hazardous Material
contamination or damage, except to the extent caused by the release or
emission of the Hazardous Material in question by Tenant.
4. Expansion Option: Tenant shall have an option on 3,600 square feet of space
----------------
commencing October 1, 1999, if it becomes available, at all the terms of
this lease, including rent, and a tenant improvement allowance of $5.00/rsf.
Tenant shall provide Landlord notice that Tenant desires to rent such space
by March 1, 1999.
5. Tenant's Right of First Refusal: Tenant shall have the right of first
-------------------------------
refusal on any space becoming available in the existing or proposed adjacent
building. Landlord shall notify Tenant of any possible vacancy and Tenant
shall notify Landlord within 30 days of its intention to exercise its right
of first refusal. Any exercise of such right shall be at all the terms of
this lease, including rent, and a tenant improvement allowance of $5.00/rsf.
And any tenancy created thereby, and shall run coterminous with this lease.
6. Tenant's Right of Termination: Tenant shall have the right to terminate the
-----------------------------
Lease after twenty four (24) months with three months prior written notice,
if Landlord is unable to provide written assurance by such time that it can
provide an additional space of 6500 square feet within twenty four (24)
months of the commencement of this Lease.
7. Compliance with Laws: Tenant shall comply with or cause the Premises to
--------------------
comply with any laws, rules or regulations unless the compliance with any of
the foregoing is necessitated solely due to Tenant's particular use of the
Premises.
8. Soundness of Tenant Improvement and Other Improvements: Notwithstanding
------------------------------------------------------
anything to the contrary in the lease, effective upon delivery of the
Premises to Tenant, Landlord does hereby warrant that (a) the construction
of the Improvements was performed in accordance with all rules, regulations,
codes, statutes, ordinance, and laws of all governmental and quasi-
governmental authorities, in accordance with the Final Plans, and in a good
and workman-like manner, (b) all material and equipment installed therein
conformed to the Final Plans and was new and otherwise of good quality, (c)
the electrical, plumbing, and mechanical systems servicing the Premises are
in working order and in good condition, and (d) the roof is in good
condition and water tight. All repairs to such systems within six (6) months
of the Commencement Date shall be performed at Landlord's sole expense.
9. Repairs and Maintenance: Landlord shall perform and construct, and Tenant
-----------------------
shall have no responsibility to perform or construct, any repair,
maintenance or improvements (i) necessitated by the sole acts or omissions
of Landlord, or its respective agents, employees or contractors, or (ii) for
which Landlord has a right of reimbursement from others. Landlord shall
contract for the maintenance of the landscape and HVAC systems, which costs,
to the extent they do not exceed the costs of comparable services provided
in the general locale of the Premises, shall be allocated to Tenants as
Operating Costs under the Lease.
10. Indemnity and Insurance: The Tenant agrees to and shall save, hold and keep
-----------------------
harmless and indemnify the Landlord from and for any and all payments,
expenses, costs, attorney fees and from and for any and all claims and
liability for losses or damage to
------------------
/s/ [ILLEGIBLE]^^
------------------
Initial Here
<PAGE>
property or injuries to persons occasioned wholly or in part by or resulting
from any acts or omissions by the tenant or the Tenant's agents, employees,
guests, licensees, invitees, subtenants, assignees or successors, or for any
cause or reason whatsoever arising out of or by reason of the occupancy by
the Tenant and the conduct of the Tenant's business, except to the extent
caused by the negligence or willful misconduct of Landlord, or Landlord's
agents, employees guests, licensees, invitees or other Tenants.
11. Surrender: Tenant's obligations with respect to the surrender of the
---------
Premises shall be fulfilled if Tenant surrenders possession of the Premises
in the condition existing at the Lease Commencement Date, ordinary wear and
tear, acts of God, casualties, condemnation, Hazardous Materials (other than
those released or emitted by Tenant or its agents, employees or contractors
in or about the Premises), and alterations or other interior improvements
which Landlord states in writing may be surrendered at the termination of
the Lease, excepted.
12. Reasonable Expenditures: Any expenditure by a party permitted or required
-----------------------
under the Lease, for which such party is entitled to demand and does demand
reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be reasonably incurred, and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business
hours.
13. Effect of Addendum: All terms with initial capital letters used herein as
------------------
defined terms shall have the meanings ascribed to them in the Lease unless
specifically defined herein. In the event of any inconsistency between this
addendum and the Lease, the terms of this addendum shall prevail. As used
herein, the term "Lease" shall mean the Lease, this Addendum and all riders,
exhibits, rules, regulations, referred in the Lease or this addendum.
ATTEST: ALBANY STREET PLAZA REAL ESTATE MANAGEMENT COMPANY
/s/ [ILLEGIBLE]^^ 11/4/98 /s/: Omar Boraie 11-4-98
- ----------------------------- --------------------------------------------------
Witness Date Omar Boraie Date
Managing Partner
ATTEST: Inventa Corporation
/s/ [ILLEGIBLE]^^ 11/3/9? /s/ Ashok Santhanam 11/3/9?
---------------------------- -------------------------------------------------
Witness Date Ashok Santhanam Date
CEO
------------------
/s/ [ILLEGIBLE]^^
------------------
Initial Here
<PAGE>
LEASE AGREEMENT
This Lease Agreement dated, September 8, 1998 is made by and between Albany
Street Plaza Real Estate Management Company having an address c/o Boraie Realty,
120 Albany Street, Suite 305, New Brunswick, New Jersey 08901 (Landlord) and
Inventa Corporation having an address at 2620 Augustine Drive, Suite # 205,
Santa Clara, CA 95054 (Tenant).
WITNESSETH:
Landlord and Tenant, intending to be legally bound, hereby covenant and agree as
follows:
ARTICLE 1.00 BASIC LEASE INFORMATION
In addition to the terms used in the Article which are defined elsewhere in this
Lease, the following defined terms may be used in this Lease:
a) Tenant's Trade Name: Inventa Corporation
b) Tenant's Address: 2620 Augustine Drive, Suite # 205
Santa Clara, CA 95054
c) Landlord: Albany Street Plaza Real Estate Management
Company
d) Landlord's Address: c/o Boraie Development Corp.
120 Albany Street, Suite 305
New Brunswick, New Jersey 08901
e) Albany Street Plaza Address: 120 Albany Street
New Brunswick, New Jersey 08901
f) Commencement Date: November 1, 1998
g) Termination Date: October 31, 2003
h) Security Deposit: $22,533.34 (2 month rent)
i) Annual Basic Rent: $135,000.00 Years 1-5
$11,266.67 monthly
j) Monthly Basic Rent: Per Month Commencing on the Commencement
Date Subject to Adjustments for the First
and Last Months Rent Pursuant to Sections
4.02 and 4.03.
k) Leaseable Area of the Premises: Approximately 5200 Square Feet
l) Leaseable Area of Albany Street 120,000 Square Feet
Plaza:
m) Permitted Use: Office Space and Related Purposes
Incidental to Tenant's
n) Minimum Business Hours: Monday - Friday, 7:00 AM - 7:00 PM
Saturday, 7:00 AM - 3:00 PM
o) Broker: Boraie Realty
257 Livingston Avenue
New Brunswick, New Jersey 08901
p) Additional Rent: Any and all amounts (Including Without
Limitation Tenant's Share of Landlord's
Operating Costs) which this Lease Requires
Tenant to pay in addition to Annual Basic
Rent.
q) Premises: The Premises shown on Exhibit A to this
and known as partial 7th floor
r) Albany Street Plaza: The Shopping Center and Office Development
Consisting of the Land and all
Improvements built on the land, including
Without Limitation, the Parking Lot,
Walkways, Driveways, Fences and
Landscaping, located at 120 Albany
------------------
/s/ [ILLEGIBLE]^^
------------------
Initial Here
6
<PAGE>
Street, New Brunswick, New Jersey 08901.
s) Building: The office and retail building which is
part of Albany Street Plaza.
t) Rent: The Annual Basic Rent and Additional Rent.
------------------
/s/ [ILLEGIBLE]^^
------------------
Initial Here
7
<PAGE>
ARTICLE 2.00 DEMISED PREMISES
Section 2.01 Agreement and Description
Landlord, for and in consideration of the terms, covenants and conditions herein
contained, does hereby demise, lease and let to Tenant, and Tenant does hereby
hire and take from Landlord for the term hereof subject to the terms, covenants
and conditions herein contained, approximately 5200 square feet on the 7th floor
known as Suite 700 of the building commonly known and designated as Albany
Street Plaza, 120 Albany Street, New Brunswick, New Jersey 08901 as more
specifically described on the sketch attached as Exhibit A (the "Premises").
Section 2.02 Warranty of Title/Quiet Enjoyment
Landlord hereby warrants that it and no other person or corporation has the
right to lease the Premises hereby demised. Tenant shall have peaceful and quiet
use and possession of the Premises without hindrance on the part of Landlord.
However, Tenant acknowledges that neither Landlord nor its agents have made any
representations or warranties as to the suitability or fitness of the Premises
for the conduct of Tenant's business or for any other purpose.
Section 2.03 Estoppel
Tenant agrees that at any time, and from time to time, at reasonable intervals,
within twenty (20) days after written request by Landlord, Tenant will execute,
acknowledge and deliver to Landlord and/or to such assignee or secured party as
may be designated by Landlord, a certificate stating
(a) that the Lease is unmodified and in full force and effect (or if there
have been modifications, that the Lease is in full force and effect as
modified, and identifying the modification agreements, or if the Lease
is not in full force and effect the certificate shall so state);
(b) the date to which rental has been paid under the Lease;
(c) whether or not there is any existing default by Tenant in the payment
of any rent or other sum of money under the Lease, and whether or not
there is any other existing default by either party under the Lease
with respect to which a notice of default has been served, and if
there is any such default, specifying the nature and extent thereof;
(d) whether or not there are any setoffs, defenses or counterclaims
against enforcement of the obligations to be performed by Tenant under
the Lease; and
(e) such other matters relating to this Lease as may be reasonably
requested by Landlord or any of its aforesaid designees.
Section 2.04 Initial Condition of Premises
Landlord agrees that prior to commencement of the Lease it will provide concrete
structural frame, concrete floor slab, demising walls as set forth on Exhibit A,
power to electrical rooms (and to the Premises), roughing for water and sanitary
sewer to the demising walls and standard automatic wet sprinkler system and
improvements in accordance with the plans and specifications set forth on
Exhibit D (Work Letter/Tenant's Plans) attached hereto.
Section 2.05 Use of the Premises
Tenant shall use the Premises to operate only for office space and related
purposes incidental to Tenants business, and in accordance with applicable law
(the "Permitted Use").
ARTICLE 3.00 TERM; COMMENCEMENT; OCCUPANCY
Section 3.01 Term
This Lease shall be for a term of five (5) years (the "Term"), commencing on the
"Commencement Date" (as hereinafter defined) and expiring at the close of
business October 31, 2003 (5) years after said Commencement Date (the
"Termination Date"), subject to any option rights which may be contained in
Article 34.00 hereof.
Section 3.02 Occupancy
Notwithstanding any other provision of this Lease to the contrary, in no event
shall Tenant occupy or use the Premises for any purpose prior to the Landlord's
receipt of a Certificate of Occupancy ("CO") for the Building.
Section 3.03 No Notice for Termination
This Lease shall terminate on the Termination Date set forth in Section 3.01, or
any extension or renewal thereof, without the necessity of any notice from
either Landlord or Tenant to terminate the same. Tenant hereby waives any
statutorily required notice to vacate the Premises and agrees that Landlord
shall be entitled to the benefit of all provisions of law respecting the summary
recovery of possession of Premises from a Tenant holding over to the same extent
as if statutory notice had been given. For the period of three (3) months prior
to the Termination Date, or any renewal or extension, Landlord shall have the
right to display on the exterior of the Premises a "For Rent" sign; and during
such period Landlord may show the Premises to prospective tenants during normal
business hours with reasonable notice.
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Section 3.04 Holdover
If Tenant shall be in possession of the Premises after the Termination Date set
forth in section 3.01, in the absence of any agreement extending the term
hereof, the tenancy under this Lease shall become one from month to month, which
either party may terminate on thirty (30) days prior written notice. During such
occupancy subsequent to the Termination Date, Tenant shall pay such rent as the
Landlord, in his sole discretion, shall deem appropriate.
ARTICLE 4.00 RENT
Section 4.01 General
Tenant covenants and agrees to pay the Landlord, as rental during the Term for
the Premises, an annual basic rent as set forth on Exhibit B ("Annual Basic
Rent") payable in equal monthly installments as set forth on Exhibit B ("Monthly
Basic Rent"). Landlord and Tenant agree that the Annual Basic Rent shall change
by no more that one (1%) percent due to any inaccuracy in the calculation of
leasable square feet occupied by the Premises as stated in subsection 1.00 (k).
Tenant covenants and agrees to pay, when due, any an all Additional Rent as
hereinafter set forth in this Lease.
Section 4.02 Unspecified Costs
Any cost of any nature not specified in this Lease attributable to the
operation, maintenance, alteration or improvement of the Premises shall, at the
option of the Landlord, if not paid when due, be deemed Additional Rent and
collectible as such with the next installment of Monthly Basic Rent. Nothing
herein contained shall be deemed to suspend or delay the payment of any sum at
the time the same becomes due and payable hereunder, or limit any other remedy
of the Landlord.
Section 4.03 Due Date
Monthly Basic Rent shall be payable in advance on the first business day of each
full calendar month during the Term, the first such payment, to be paid on the
Commencement Date, shall include any prorated Annual Basic Rent for the period
from the Commencement Date to the first day of the first full calendar month in
the Term.
Section 4.04 Rental Years
The first "Rental Year" shall begin on the Commencement Date and shall end at
the close of the twelfth full calendar month following the Commencement date;
thereafter a Rental Year shall consist of successive periods of twelve calendar
months. Any portion of the Term remaining at the end of the last full Rental
Year shall constitute the final Rental Year and rentals and all other charges
shall be apportioned therefore and promptly paid as provided herein on the basis
of the number of days in such final Rental Year divided by 365 days.
Section 4.05 Covenant to Pay Rent; Place of Payment
Tenant covenants to pay all Rent when due, without any setoff, deduction or
demand whatsoever. Any monies paid or expenses incurred by Landlord to correct
violations of any of the Tenant's obligations hereunder shall be payable to
Landlord as Additional Rental. Any Additional Rent provided for in this Lease
shall be due with the next installment of Annual Basic Rent due after receipt of
notice of such Additional Rent from Landlord. Rent and statements required of
Tenant shall be paid or delivered to Landlord at such place as Landlord may from
time to time designate in writing to Tenant.
Section 4.06 No Waiver. Upon Receipt
Receipt and acceptance by Landlord of any rentals, additional rentals and
charges with knowledge of the breach of any covenant or condition of this lease
by Tenant shall not be deemed a waiver of such breach.
Section 4.07 Late Charge
Notwithstanding anything to the contrary herein contained, in order to cover the
extra expense involved in handling delinquent payments, Tenant shall pay a late
charge of five percent (5%) of the overdue payment when any payment of Rent
hereunder is paid more than five (5) days after the due date thereof. It is
understood and agreed that this charge is for additional expense incurred by
Landlord and shall not be considered interest.
ARTICLE 5.00 TAX
Section 5.01 Abatement
Landlord anticipates having a property tax abatement for 15 years, whereby
Landlord will make certain payments in lieu of real estate taxes. The Tenant is
responsible for Tenant's share of said in lieu of tax payments. If at any future
time Landlord becomes obligated to pay taxes, Tenant shall be obligated to pay
as Tenant's share of such tax. If at any future time said property tax or in
lieu of property tax payment shall increase, Tenant shall pay Tenant's share of
the increase.
Section 5.02 Payment
Each month as Additional Rent, Tenant shall pay to Landlord one-twelfth (1/12)
of Tenant's Share of the appropriate property tax payment as specified in
Section 5.01 of this Lease.
ARTICLE 6.00 ACCEPTANCE OF PREMISES
By opening for business, Tenant Shall be deemed to have accepted the Premises,
acknowledged that the same are in the condition called for hereunder and agreed
that the obligations of the Landlord imposed hereunder have been fully
performed.
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ARTICLE 7.00 SUBORDINATION
Section 7.01 To Mortgages and Leases in General
This Lease shall not be a lien against the Premises in respect to any mortgages,
or ground or master leases, that are, now or may hereafter be placed upon the
Premises. All such mortgages, or ground or master leases shall have preference
and precedence, and be superior and prior in lien, to this Lease, irrespective
of the date of recording. This provision shall be self-operative and no further
instrument of subordination shall be required. Nevertheless, Tenant agrees to
execute without cost any instruments which Landlord may deem necessary or
desirable to confirm the subordination of this Lease. A refusal by the Tenant to
execute such instruments shall constitute a default under this Lease.
Section 7.02 To the Master Lease
This lease is subordinate to the Master Lease Agreement ("Master Lease") for the
Albany Street Plaza, between Albany Street Plaza Urban Renewal Association as
master lessor and Albany Street Plaza Real Estate Management Company as master
lessee. The terms and conditions of the Master Lease are incorporated herein and
are binding upon the parties hereto as if set forth fully herein. Where the
provisions of the Master Lease and this Lease are conflicting, the Master Lease
shall be controlling.
ARTICLE 8.00 TENANT'S IMPROVEMENTS, FIXTURES AND MECHANIC'S LIENS
Section 8.01 Improvements
On or before the Commencement date, Landlord shall substantially complete all
work to the Premises for Tenant in accordance with the description set forth in
Exhibit D (Work Letter/Tenant's Plans). All improvements to the Premises other
than those specified in Exhibit D shall be the obligation of the Tenant.
Section 8.02 Landlord's Right to Enter
Notwithstanding the Commencement Date, Landlord shall have the right to enter
the Premises as reasonably necessary to complete construction of the building.
Section 8.03 Mechanic's Liens
In the event any mechanic's lien shall at any time, whether before, during or
after the Term, be filed against any part of Albany Street Plaza by reason of
work, labor, services or materials performed or furnished to Tenant or to anyone
holding the Premises through or under Tenant, Tenant shall forthwith cause the
same to be discharged of record or bonded to the satisfaction of Landlord. If
Tenant shall fail to cause such lien to be so discharged or bonded within twenty
(20) days after being notified in writing of the filing thereof, then, in
addition to any other right or remedy of Landlord, Landlord may discharge the
same by paying the amount claimed to be due, and the amount so paid by Landlord
and all costs and expenses (including reasonable attorney's fees incurred by
Landlord in procuring the discharge of such lien) shall be due and payable by
Tenant to Landlord as Additional Rent upon demand.
Section 8.04 Fixtures
All trade fixtures and apparatus (as distinguished from leasehold improvements)
owned by the Tenant and installed in the Premises shall remain the property of
Tenant and shall be removable at any time, including the expiration of the Term.
At the termination of this Lease, all erections, alterations, additions and
improvements, whether temporary or permanent in character, which may be made
upon the Premises by any person, except furniture, movable trade fixtures or
movable machinery or equipment of the Tenant, shall become the property of the
Landlord and shall remain upon and be surrendered with the Premises as a part
thereof without compensation to the Tenant or to anyone else.
ARTICLE 9.00 PROMPT OCCUPANCY AND USE
Section 9.01 Continuous Occupancy
Tenant shall not abandon the Premises.
Section 9.02 Operations in Good Faith
Tenant shall cause said business to be conducted and operated in good faith.
Section 9.03 Hours and Days of Operation
The Building will remain open for business during the hours from Monday to
Friday, 7:00 AM to 7:00 PM and Saturday, 7:00 AM to 3:00 PM.
ARTICLE 10.00 OPERATION BY TENANT
Section 10.01 Tenant's Maintenance Obligations
In regard to use and occupancy of the Premises, and subject to Landlord's
janitorial service and cleaning Schedule set forth on Exhibit F, at its expense
Tenant shall:
(a) Replace promptly any cracked or broken glass of the Premises with glass
of like kind and quality if breakage is due to the negligence of
Tenant, its agents or employees;
(b) Maintain the Premises in a clean, orderly and sanitary condition;
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(c) Keep any garbage, trash, rubbish or refuse in containers within the
interior of the Premises until removed by Landlord's janitorial
service;
(d) Keep all mechanical apparatus free of vibration and noise which may be
transmitted beyond the Premises;
(e) Comply with all laws and ordinances, rules and regulations of
governmental authorities and all recommendations of the Fire
Underwriters Rating Bureau now or hereafter in effect in regard to
Tenant's business;
(f) Conduct its business in all respects in a dignified manner in
accordance with high standards of office operation consistent with the
quality of operation of the Albany Street Plaza as reasonably
determined by Landlord; and
(g) Comply with all rules and regulations as Landlord shall implement from
time to time.
(h) Comply with all rules and regulations as set forth by the City of New
Brunswick for the recycling of paper, bottles, cans, newspaper, etc.
Section 10.02 Prohibitions
In regard to use and occupancy of the Premises and common facilities, Tenant
shall not:
(a) Place or maintain any merchandise, trash, refuse or other articles in
any vestibule or entry of the Premises, on the sidewalks or corridors
adjacent thereto or elsewhere on the exterior of the Premises so as to
partially obstruct any driveway, sidewalk, parking area, mall or any
other common facility;
(b) Use or permit the use of any objectionable advertising medium such as,
without limitation, loudspeakers, phonographs, public address systems,
sound amplifiers, reception of radio or television broadcasts within or
outside of the Albany Street Plaza which is in any manner audible or
visible outside of the Premises;
(c) Permit accumulations of garbage, trash, rubbish or other refuse within
or without the Premises;
(d) Cause or permit objectionable odors to emanate or be dispelled from
the Premises:
(e) Solicit business in the parking area or other common facilities;
(f) Distribute handbills or other advertising matter to, in or upon any
automobiles parked in the parking areas or in any other common
facility;
(g) Permit the parking of delivery vehicles so as to interfere with the use
of any driveway, sidewalk, parking area, lobby or other common facility
in the Albany Street Plaza;
(h) Receive or ship articles of any kind except through service facilities
provided by the Landlord between 8:00 AM. 7:00 PM. in the area
designated on Exhibit A;
(i) Use the Albany Street Plaza, sidewalk or any other common area facility
adjacent to the Premises for the sale or display of any merchandise or
for any other business, occupation or undertaking;
(j) Conduct or permit to be conducted any auction, fire, going out of
business, bankruptcy, or other similar type sale in or connected with
the Premises;
(k) Use or permit the use of any portion of the Premises for any unlawful
purpose; or
(l) Place a load upon any floor which exceeds the floor load for which the
floor was designed to carry or allowed by law.
Section 10.03 Paraphernalia and Pornography Prohibited
Tenant acknowledges that it is Landlord's intent that the Albany Street Plaza be
operated in a manner which is consistent with the highest standards of decency
and morals prevailing in the community which it serves. Toward that end, Tenant
agrees that it shall not sell, distribute, display or offer for sale (i) any
roach clip, water pipe, bong, toke, coke spoon, cigarette papers, hypodermic
syringe or other paraphernalia commonly used in the use or ingestion of illicit
drugs, or (ii) any pornographic material found to be illegal by a court of law
in the State of New Jersey, the Third Circuit Court of Appeals or the United
States Supreme Court.
ARTICLE 11.00 STRUCTURAL REPAIRS
Landlord shall make all structural repairs to the Premises and will keep in good
order or repair the roof and the exterior of the Premises, except any doors, or
door frames, storefronts, windows, and glass; provided Tenant shall give
Landlord reasonable written notice of the necessity for such repairs, and
provided that the damage thereto shall not have been caused by negligence of
Tenant, its concessionaires, officers, employees, licensees, contractors or
agents, in which event Tenant shall be responsible therefore.
ARTICLE 12.00 INTERIOR REPAIRS
Section 12.01 Tenant's Repairs
Excluding utilities not exclusively serving the Premises and the sprinkler,
Tenant shall keep all non-structural elements and the interior of the Premises,
together with all electrical, plumbing and other mechanical installations
therein, in good order and repair and make all replacements thereto at its
expense, if repair and/or replacement is necessary due to the negligence of
Tenant, its agents or employees. Tenant shall surrender the Premises at the
expiration of the Term or at such other time as it may vacate the Premises in as
good condition as when received, except for ordinary wear and tear. Tenant shall
not overload the electrical wiring or other services or utilities serving the
Premises or within the Premises, and shall install at its expense, subject to
the provisions of Article 14 herein, any additional electrical wiring or service
which may be required in connection with Tenant's Permitted Use.
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Section 12.02 Tenant's Indemnification
Any damage sustained by any party caused by mechanical, electrical, plumbing or
any other equipment or installations, whose maintenance and repair is the
responsibility of the Tenant shall be paid by Tenant, and Tenant shall indemnify
and hold Landlord harmless from and against any and all claims, actions, damages
and liability in connection therewith, including, but not limited to attorney's
and other professional fees, and any other cost which Landlord might reasonably
incur.
ARTICLE 13.00 DAMAGE TO PREMISES
Tenant shall repair at its expense any damage to the Premises, or the building
in which the Premises are located, caused by bringing into the Premises any
property for Tenant's use, or by the installation or removal of such property,
unless caused by Landlord, its agents, employees or contractors; and in default
of such repairs by Tenant, at the expiration of fifteen (15) days after
delivery, except in case of emergency, of written notice to Tenant, Landlord may
make the same and Tenant agrees to pay to Landlord promptly upon Landlord's
demand, as Additional Rent, the cost thereof with interest at the rate of the
lesser of twelve percent (12%) per annum or the legal rate of interest in the
State of New Jersey as established from time to time.
ARTICLE 14.00 ALTERATIONS BY TENANT
Section 14.01 Tenant's Improvements
Tenant agrees that it shall not improve or alter the Premises in any way without
prior written approval of Landlord, which approval shall not be unreasonably
withheld as to non-structural or cosmetic alterations. Any improvements made by
Tenant which have been approved by Landlord shall be at the sole cost and
expense of Tenant. Tenant agrees that any improvements or alterations approved
by Landlord shall be constructed in a good and workmanlike manner. During the
Term of the Lease, Tenant shall maintain such improvements and alterations in
good condition. Tenant agrees that any additions, alterations and improvements
made by it to the Premises (leasehold improvements) shall upon termination of
the Lease automatically and without payment become the property of Landlord and
shall remain upon the Premises in the absence of written agreement to the
contrary. Tenant further shall not cut or drill into or secure any fixture,
apparatus, or equipment of any kind to any part of the Premises except telephone
equipment, artwork, computer equipment and related apparatus without Landlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed.
Section 14.02 Exterior and Structural Improvements
Tenant shall not alter the exterior of the Premises (including but not limited
to the facade and/or signs) and will not make any structural alterations to the
Premises or any part thereof without Landlord's prior written approval of such
alterations, which approval shall not be reasonably withheld or delayed.
Section 14.03 Signs and Advertising
Tenant shall not place or suffer to be placed or maintained on the exterior of
the Premises any sign, advertising matter or any other thing of any kind, and
shall not place or maintain any decoration, lettering or advertising matter on
the glass of any window or door of the Premises without Landlord's prior written
approval which approval shall not be unreasonably withheld or delayed. Tenant
shall maintain any such sign, decoration, lettering, advertising matter or other
thing as may be approved by Landlord in good condition and repair at all times.
Tenant's exterior sign as shown on Exhibit C is hereby approved by Landlord.
Section 14.04 Painting/Decorations
Tenant will not paint or decorate any part of the exterior of the Premises
without Landlord's prior written approval.
Section 14.05 Approval by Landlord
No alterations, renovations, improvements, other installation to be made in or
on the Premises (including, but not limited to, electrical, plumbing, and
mechanical installation and storefront or facade construction) shall be
commenced until plans and specifications therefor have been submitted to
Landlord and Landlord has approved same in writing. The plans and specifications
required hereunder and the improvements to be made pursuant thereto shall be
certified and performed by a person duly qualified to do the work described in
said plans and specifications in the jurisdiction wherein the Premises are
situated, and same shall comply with all applicable codes, rules, regulations
and ordinances.
ARTICLE 15.00 ROOF AND WALLS
Landlord shall have the exclusive right to use all or any part of the roof of
the Premises for any purpose; to erect additional stores or other structures
over all or any part of the Premises; to erect in connection with the
construction thereof temporary scaffolds and other aids to construction of the
exterior of the Premises.
ARTICLE 16.00 COMMON FACILITIES
Section 16.01 General
The common facilities which may be furnished by Landlord in or near the Albany
Street Plaza for the general common use of tenants, their officers, agents,
employees and invitees, including without limitation, loading docks and areas,
delivery passages, package pickup stations, pedestrian sidewalks, malls,
lobbies, courts and ramps, landscaped and planted areas, retaining walls,
stairways, bus stops, lighting facilities, heating, ventilation and air-
conditioning equipment and system, comfort stations and other areas and
improvements,
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shall at all times be subject to the exclusive control and management of
Landlord. Landlord shall have the right to establish, modify and enforce
reasonable rules and regulations with respect to the common facilities.
Section 16.02 Operation and Maintenance
Landlord shall operate and maintain the common facilities which may be provided
pursuant to this Article.
Section 16.03 Landlord's Right to Alter
Landlord reserves the right in its sole discretion to change, rearrange, alter,
modify, diminish or add to any or all of the common facilities so long as
adequate facilities in common are made available to the Tenant herein.
ARTICLE 17.00 EXPENSE OF COMMON FACILITIES
Section 17.01 Landlord's Operating Costs
The "Landlord's Operating Costs" shall be the cost and expense of operating and
maintaining the common facilities which may be provided pursuant to Article 16
in a manner deemed by Landlord to be reasonable and appropriate and for the best
interests of the Albany Street Plaza, including, without limitation: all costs
and expense of operating, repairing, lighting, cleaning, painting, striping,
policing and security (including cost of uniforms, equipment and all employment
taxes); insurance, including liability insurance for personal injury, death and
property damage, insurance against fire, extended coverage, theft or other
casualties, worker's compensation insurance covering personnel, fidelity bonds
for personnel, insurance against liability for defamation and claims of false
arrest occurring in or about the area in which the common facilities are from
time to time located; plate glass insurance for glass exclusively serving the
area in which the common facilities are form time to time located; removal of
snow, ice, and debris; costs and expense of inspection and depreciation of
machinery and equipment used in the operation and maintenance of the common
facilities and personal property taxes and other charges incurred in connection
with such equipment; costs and expense of repair and/or replacement of curbs,
walkways, landscaping, drainage, pipes, ducts, conduits and similar items, and
lighting facilities; costs and expense of planting, replanting and replacing
flowers, shrubbery and planters; costs of elevator service contracts; cost and
expense for the rental of music program services and loud speakers systems,
including furnishing electricity therefore; cost attributed by Landlord for
providing energy to heat, ventilate and air-condition areas in which the common
facilities are, from time to time located; maintenance costs related to
furnishing heat, air conditioning and ventilation; utility costs including but
not limited to electric, gas, water and sewer services; services, if any,
furnished by the Landlord for non-exclusive use of all tenants, including parcel
pick-up and delivery services and shuttle bus service; garbage collection; and
customary building management fees for operating and maintaining the common
facilities.
Section 17.02 Tenant's Share
In each Rental Year Tenant will pay Landlord, as Additional Rent, Tenant's share
of Landlord's Operating Costs. Tenant's share is 5%.
Section 17.03 Payment and Adjustment of Tenant's Share
Tenant's share shall be paid by Tenant in monthly installments in such amounts
as are from time to time estimated and billed by Landlord during each twelve
(12) month period commencing and ending on dates designated by Landlord, each
installment being due on the first day of each month next following the sending
of the bill by Landlord. Within one hundred twenty (120) days after the end of
each Rental Year Landlord shall deliver to Tenant a statement of Landlord's
Operating Costs for such Rental Year and the monthly installments paid or
payable shall be adjusted between Landlord and Tenant, each party hereby
agreeing to pay to the other within thirty (30) days of receipt of such
statement, such amount (without interest) as may be necessary to effect
adjustment to the agreed Tenant's Share for the preceding Rental Year. Tenant's
share of Landlord's Operating Costs as provided in Landlord's yearly statement
to Tenant shall only be increased in any given year by the greater of (a) ten
percent )10%) of the preceding year's share of Operating Costs, or (b) the
percentage increase, if any, in the consumer Price Index-all items, New York-
Northern New Jersey ("Index Figure") for the last month of the preceding rental
year over the Index figure for the first month of the preceding rental year
together with all additional Rent specified in this Lease. If the Index figure
is not issued for either the first or last month of the preceding Rental year,
then the Index Figure for the closest month preceding such month shall be used.
If the Index Figure shall cease to be calculated and/or published a comparable
Index will be selected by Landlord. Upon reasonable notice, Landlord shall make
available for Tenant's inspection, during normal business hours, Landlord's
records relating to Landlord's Operating Costs for such preceding period.
Failure of Landlord to provide the statement called for hereunder within the
time prescribed shall not relieve Tenant from its obligations hereunder.
ARTICLE 18.00 PAYMENT OF UTILITY CHARGES, ETC.
Section 18.01 Electricity
Tenant will pay to Albany Street Plaza its pro-rata share of electricity usage
for that floor.
Section 18.02 Payment of Charges
Landlord shall pay and discharge all charges for all public and private utility
services furnished to or for the benefit of the Building during the Term, except
Tenant shall pay and discharge all charges for electric utility services
furnished to or for the benefit of the Premises.
Section 18.03 Interruption in Service
Unless caused by the gross negligence of Landlord, its agents or employees,
Landlord shall under no circumstances be liable to Tenant in damages or
otherwise for any interruption in service of water, electricity, heating, air
conditioning or other utilities and
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services caused by the making of any necessary repairs or improvements or by any
cause beyond Landlord's reasonable control, and the same shall not constitute a
termination of this Lease or eviction from the Premises (constructive or
otherwise). However, in the event that such services are not provided for more
than five consecutive business days, then in that event the Monthly Rental will
be reduced proportionately from the date the interruption in services began
until the services are restored.
Section 18.04 Alteration of Service
Landlord reserves and shall at all times have the right in its sole discretion
to alter the utilities serving the Albany Street Plaza without unnecessarily
disrupting service to Tenant, and Tenant agrees to execute and deliver to
Landlord without delay such documentation as may be required to effect such
alteration. Operating Costs shall not include the cost of such alterations.
Operating costs shall not include the cost of such alterations.
ARTICLE 19.00 INSURANCE
Section 19.01 Insurance Required
Tenant will keep in force at its expense as long as this Lease remains in effect
and during such other time as Tenant occupies the Premises or any part thereof,
public liability insurance, including contractual liability, with respect to the
Premises with carriers Landlord has approved in writing with minimum limits of
One Million ($1,000,000.00) Dollars on account of bodily injuries to or death of
one person, and Five Million ($5,000,000.00) dollars on account of bodily
injuries to or death of more than one person as the result of any one accident
or disaster; property damage insurance with minimum limits of One Million
Dollars ($1,000,000.00) and all risks perils insurance at replacement cost value
on Tenant's personal property, including inventory, trade fixtures, wall and
floor coverings, furniture and other property removable by Tenant and leasehold
improvements either existing within the Premises on the Commencement Date or
installed by Tenant during the Term of this lease; provided, however, that
Tenant's insuring of said leasehold improvements used by it shall in no way
confer on Tenant any property rights to same except as otherwise provided in
this Lease. Tenant may self-insure for glass breakage. All policies shall name
Landlord or its designee as additional named insured, and shall contain a
provision stating that such policy or policies shall not be canceled or modified
except after thirty (30) days prior written notice to Landlord. At least thirty
(30) days prior to expiration of any insurance policies required hereunder,
Tenant shall deliver to Landlord a premium bill marked paid for the full year
subsequent to the year covered by the expiring policy. If the nature of Tenant's
operation is such as to place any or all of its employees under the coverage of
local worker's compensation or similar statutes, Tenant shall also keep in
force, at its expense, so long as this Lease remains in effect and during such
other times as Tenant occupies the Premises or any part thereof, worker's
compensation or similar insurance affording statutory coverage and containing
statutory limits. If Tenant shall not comply with its covenants made in this
Article 19.00, Landlord may immediately cause insurance as aforesaid to be
issued, and in such event Tenant agrees to pay, as Additional Rent, the premium
for such insurance upon Landlord's demand. It is understood and agreed to by
Landlord that if Tenant is self-insured it shall not be required to provide
Landlord with policies of Insurance. However, Tenant shall provide Landlord with
evidence of Tenant's self-insurance.
Section 19.02 Compliance with Landlord's Policies
Tenant shall not do or suffer to be done, or keep or suffer to be kept, anything
in, upon or about the Premises which will contravene Landlord's policies
insuring against loss or damage by fire or other hazards (including, without
limitation, public liability) or which shall prevent Landlord from procuring
such policies in companies acceptable to Landlord. If anything done, omitted to
be done or suffered by Tenant to be kept in, upon or about the Premises shall
cause the rate of fire or other insurance on the Premises or on other property
of Landlord or of others within the Albany Street Plaza to be increased beyond
the minimum rate from time to time applicable to the Premises for the Permitted
Use or to any other property for the use or uses made thereof, Tenant shall pay,
as Additional Rent, the amount of any such increase upon Landlord's demand.
Section 19.03 Waiver of Subrogation
Neither the Tenant nor the Landlord, nor their respective agents or employees,
shall be liable to the other (or to anyone claiming through or under them by way
of subrogation or otherwise) for loss or damage of type normally covered by
comprehensive liability, workers compensation, fire and "ALL-RISK" insurance
covering buildings, contents or personal injury or disability. Landlord and
Tenant shall each cause their insurance policies to contain clauses or
endorsements that the aforesaid releases shall not adversely affect or impair a
party's rights to recover under said insurance policies. In addition, it is
understood and agreed that if any such liability shall exceed the amount of the
effective and collectible insurance in question, the Tenant shall be liable for
such excess.
ARTICLE 20.00 INDEMNITY
The Tenant agrees to and shall save, hold and keep harmless and indemnify the
Landlord from and for any and all payments, expenses, costs, attorney fees and
from and for any and all claims and liability for losses or damage to property
or injuries to persons occasioned wholly or in part by or resulting from any
acts or omissions by the tenant or the Tenant's agents, employees, guests,
licensees, invitees, subtenants, assignees or successors, or for any cause or
reason whatsoever arising out of or by reason of the occupancy by the Tenant and
the conduct of the Tenant's business.
ARTICLE 21.00 FIRE OR OTHER CASUALTY
Section 21.01 Repair; Rent Abatement
If the Premises shall be damaged by fire, the elements, accident or other
casualty ("Casualty"), but the Premises are not thereby rendered untenantable in
whole or in part, Landlord shall at its expense cause such damage to be
repaired, without abatement of
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rent. If, as the result of casualty, the Premises are rendered untenantable in
part, Landlord shall at its expense cause such damage to be repaired, and the
Annual Basic Rent and other charges shall be abated proportionately as to the
portion of the Premises rendered untenantable from the date of such Casualty
until the Premises are rendered tenantable. If, as the result of Casualty, the
Premises are rendered wholly untenantable Landlord may, subject to Section 21.02
at its expense cause such damage to be repaired and the Annual Basic Rent and
other charges shall be abated from the date of such Casualty until the Premises,
or any portion thereof, have been rendered tenantable. In no event shall
Landlord be liable for interruption to Tenant's business or for damage to or
replacement or repair of Tenant's personal property, including inventory, trade
fixtures, floor coverings, furniture, supplies, records and other property
removable by Tenant under the provisions of this Lease.
Section 21.02 Termination By Landlord
If the Premises are a) rendered wholly untenantable, or b) damaged as a result
of any cause which is not covered by Landlord's insurance, or c) damaged in
whole or in part during the last two years of the Term (or of a renewal term, if
any) or if Building is damaged to the extent of fifty (50%) percent or more of
the rentable floor area thereof, then in any such event, Landlord may terminate
this Lease by giving to Tenant notice within ninety (90) days after the
occurrence of such event. Annual Basic Rental and other charges shall be
adjusted as of the date of such cancellation.
Section 21.03 Demolition
If the Building is so substantially damaged that it is reasonably necessary, in
Landlord's judgment, to demolish such Building for the purpose of reconstruction
or otherwise, Landlord may demolish the same in which event the rent shall be
abated as if the Premises were rendered untenantable by a Casualty. In no event,
however, shall Landlord be required to reconstruct any building demolished
pursuant to this Section. Upon notice by Landlord to Tenant of his intention not
to reconstruct, this Lease shall terminate.
ARTICLE 22.00 CONDEMNATION
If the whole or any part of the Premises shall be taken under the power of
eminent domain, this Lease shall terminate as to the part so taken on the date
Tenant is required to yield possession thereof to the condemning authority.
Landlord shall make such repairs and alterations as may be practicable in order
to restore the part not taken to useful condition and the Annual Basic Rental
shall be reduced proportionately as to the portion of the Premises so taken. If
the portion of the Premises so taken renders the Premises unusable for the
purpose set forth in Section 2.05, either party may terminate this Lease as of
the date when Tenant is required to yield possession. Tenant shall not be
entitled to any portion of the award for the fee or leasehold of any element
hereof, and the entire award shall belong to Landlord. However, Tenant may apply
for reimbursement from the condemning authority for moving expenses and the
value of goodwill and trade fixtures, if permitted. In addition, Tenant shall be
able to claim any award which is granted to Tenant based solely on the
undepreciated value of its leasehold improvements. Notwithstanding any provision
in this Article to the contrary, in no event shall Tenant be able to claim any
award that will adversely affect Landlord.
ARTICLE 23.00 INSPECTIONS BY LANDLORD
Tenant will, upon reasonable notice from Landlord permit Landlord, its agents,
employees and contractors to enter all parts of the Premises during Tenant's
business hours except in case of emergency when Landlord can enter any time, to
inspect the same and to enforce or carry our any provisions of this Lease.
ARTICLE 24.00 NO ASSIGNMENT, ETC.
Section 24.01 General
Tenant, for itself, its heirs, distributees, executors, administrators, legal
representatives, successors and assigns, covenants that it will not assign,
mortgage or encumber this Lease, nor sublease, or permit the Premises or any
part of the Premises to be used or occupied by others, without the prior written
consent of Landlord in each instance, which consent shall not be unreasonably
withheld or delayed for more than ten (10) days. The transfer of control, or of
a majority of the issued and outstanding capital stock, of any corporate tenant
or subtenant of this Lease or a majority interest in any partnership or other
entity Tenant or subtenant, however accomplished, and whether in a single
transaction or in a series of transactions, shall constitute an assignment of
this Lease or of such sublease requiring Landlord's prior written consent in
each instance which consent shall not be unreasonably withheld or delayed for
more than ten (10) days. The transfer of outstanding capital stock of any
corporate tenant, for purposes of this Article 24.00, will not include any sale
of such stock by persons other than those deemed "insiders" within the meaning
of the Securities Exchange Act of 1934 as amended, and which sale is effected
through "over-the-counter-market" or through any recognized stock exchange.
Section 24.02 Any Assignment Void
Any assignment or sublease in violation of Section 24.01 is void, and shall
constitute a default. If this Lease is assigned, or if the Premises or any part
of the Premises are subleased or occupied by anyone other than Tenant, Landlord
may, after default by Tenant, collect rent from the assignee, subtenant or
occupant, and apply the net amount collected to Rent. No assignment, sublease,
occupancy or collection shall be deemed a) a Waiver of the provisions of this
Article 24.00, or b) the acceptance of the assignee, subtenant or occupant as
Tenant; or c) release tenant from the further performance by Tenant of covenants
on the part of Tenant contained in this Lease. The consent by Landlord to an
assignment or sublease shall not be construed to relieve Tenant from obtaining
Landlord's prior written consent in writing to any further assignment or
sublease. No permitted subtenant shall assign or encumber its sublease or
further sublease all or any portion of its subleased space, or otherwise permit
the subleased space or any
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part of its subleased space to be used or occupied by others, without Landlord's
prior written consent in each instance, which consent shall not be unreasonably
withheld or delayed.
Section 24.03 Limitation on Remedies
Tenant shall not be entitled to make, nor shall Tenant make, any claim, and
Tenant by this Section waives any claim, for money damages (nor shall Tenant
claim any money damages by way of set-off, counterclaim or defense) based upon
any claim or assertion by Tenant that Landlord has unreasonably withheld or
unreasonably delayed its consent or approval to a proposed assignment or
subletting as provided for in this Article 24.00. Tenant's sole remedy shall be
an action or proceeding to enforce any such provision, or for specific
performance, injunction, or declaratory judgment.
ARTICLE 25.00 DEFAULT
Section 25.01 Events of Default
The following events are referred to collectively as "Events of Default", or
individually as an "Event of Default":
(a) Tenant fails to pay rent, after three (3) business days written notice;
(b) Tenant vacates or abandons the Premises without the payment of rent;
(c) This Lease or the Premises or any part of the Premises are taken upon
execution or by other process of law directed against Tenant, or are
taken upon or subject to any attachment at the instance of any creditor
or claimant against Tenant, and the attachment is not discharged or
disposed of within fifteen (15) days after its levy;
(d) Tenant files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United
State or under any insolvency act of any state, or admits the material
allegations of any such petition by answer or otherwise, or is
dissolved or makes an assignment for the benefit of creditors;
(e) Involuntary proceedings under any such bankruptcy law or insolvency act
or for the dissolution of Tenant are instituted against Tenant, or a
receiver or trustee is appointed for all or substantially all of the
property of Tenant, and such proceeding is not dismissed or such
receivership or trusteeship vacated within sixty (60) days after such
institution or appointment;
(f) Tenant fails to take possession of the Premises on the Commencement
date of the Term, or
(g) Tenant breaches any of the other agreements, terms, covenants or
conditions which this Lease requires Tenant to perform, and such breach
continues for a period of thirty (30) days after notice from Landlord
to Tenant.
Section 25.02 Landlord's Remedies
If any one or more Events of Default set forth in Section 25.01 occurs, then
Landlord has the right, at its election:
(a) to give Tenant written notice of Landlord's intention to terminate this
Lease on the earliest date permitted by law or on any later date
specified in such notice, in which case Tenant's right to possession of
the Premises will cease and this Lease will be terminated, except as to
Tenant's liability, as if the expiration of the term fixed in such
notices were the end of the Term; or
(b) without further demand or notice, to reenter and take possession of the
Premises or any part of the Premises, repossess the same, expel Tenant
and those claiming through or under Tenant, and remove the effects of
both or either, using such force for such purposes as may be necessary,
without being liable for prosecution, without being deemed guilty of
any manner of trespass, and without prejudice to any remedies for
arrears of Monthly Basic Rent or other amounts payable under this Lease
or as a result of any preceding breach of covenants or conditions; or
(c) in addition to all other remedies specified in this Lease, Landlord
can, without further demand or notice, cure any Event of Default and
charge Tenant for the cost of effecting such cure, including, without
limitation, attorneys' fees and interest on the amount so advanced at a
rate equal to the Citibank Prime Rate as that rate may change from time
to time plus five (5%) percent provided that Landlord will have no
obligation to cure any such Event of Default of Tenant.
Should Landlord elect to reenter as provided in subsection (b), or should
Landlord take possession pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may, from time to time, without terminating this
Lease, relet the Premises or any part of the Premises in Landlord's or Tenant's
name, but for the account of Tenant, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the Term) and on such conditions and upon such other terms (which may
include concessions of free rent and alteration and repair of the Premises) as
Landlord, in its sole discretion, may determine, and Landlord may collect and
receive the rent. Landlord will in no way be responsible or liable for any
failure to relet the Premises or any part of the Premises, or for any failure to
collect any rent due upon such reletting. No such reentry or taking possession
of the Premises by Landlord will be construed as an election on Landlord's part
to terminate this Lease unless a written notice of such intention is given to
Tenant. No notice from Landlord under this section or under a forcible or
unlawful entry and detainer statute or similar law will constitute an election
by Landlord to terminate this Lease unless such notice specifically so states.
Landlord reserves the right following any such reentry or reletting to exercise
its right to terminate this Lease by giving Tenant such written notice, in which
event this Lease will terminate as specified in such notice.
Section 25.03 Certain Damages
If Landlord does not elect to terminate this Lease as permitted in subsection
(a) of section 25.02, but on the contrary elects to take possession as provided
in subsection (b) of Section 25.02, Tenant will pay to Landlord; (a) Monthly
Basic Rent and other sums as
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provided in this Lease, which would be payable under this Lease if such
repossession had not occurred, less (b) the net proceeds, if any, of any
reletting of the Premises after deducting all Landlord's expenses in connection
with such reletting, including, without limitation, all repossession costs,
brokerage commissions, attorney' fees, expenses of employees, alteration and
repair costs and expenses of preparation for such reletting. If, in connection
with any reletting, the new lease term extends beyond the existing Term, or the
premises covered by such new lease include other premises not part of the
Premises, a fair apportionment of the rent received from such reletting and the
expenses incurred in connection with such reletting as provided in this Section
Will be made in determining the net proceeds from such reletting, and any rent
concessions will be equally apportioned over the term of the new lease. Tenant
will pay such rent and other sums to Landlord monthly on the day on which the
Monthly Basic Rent would have been payable under this Lease if possession had
not been retaken, and Landlord will be entitled to receive such rent and other
sums from Tenant on each such day.
Section 25.04 Continuing Liability After Termination
If this Lease is terminated on account of the occurrence of an Event of Default,
Tenant will remain liable to Landlord for damages in an amount equal to Monthly
Basic Rent and other amounts which would have been owing by Tenant for the
balance of the Term, had this Lease not been terminated, less the net proceeds,
if any, of any reletting of the Premises by Landlord subsequent to such
termination, after deducting all Landlord's expenses in connection with such
reletting, including, but without limitation, the expenses enumerated in section
25.03. Landlord will be entitled to collect such damages from Tenant monthly on
the day on which Monthly Basic Rent and other amounts would have been payable
under this Lease if this Lease had not been terminated, and Landlord will be
entitled to receive such Monthly Basic Rent and other amounts from Tenant on
each such day. Alternatively, at the option of Landlord, in the event this Lease
is so terminated, Landlord will be entitled to recover against Tenant, as
damages for loss of the bargain and not as a penalty, an aggregate rent which,
at the time of such termination of this Lease, represents the excess of the
aggregate of Monthly Base Rent and all other Rent payable by Tenant that would
have accrued for the balance of the of the Term over the aggregate rental value
of the Premises (such rental value to be computed on the basis of a tenant
paying not only a rent to Landlord for the use and occupation of the Premises,
but also such other charges as are required to be paid by Tenant under the terms
of this Lease) for the balance of such Term, both discounted to present value at
the lesser of eight (8%) percent or the discount rate of the New York Federal
Reserve Bank on the date of the Event of Default.
Section 25.05 Cumulative Remedies
Any suit or suits for the recovery of the amounts and damages set forth in
Sections 25.03 and 25.04 may be brought by Landlord, from time to time, at
Landlord's election, and nothing in this Lease will be deemed to require
Landlord to await the date upon which this Lease or the Term would have expired
had there occurred no Event of Default. Each right and remedy provided for in
this Lease is cumulative and is in addition to every other right or remedy
provided for in this Lease or now or after the Commencement date existing at law
or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Landlord of any one or more of the rights or remedies provided for
in this Lease or now or after the Commencement Date existing at law or in equity
or by statute or otherwise will not preclude the simultaneous or later exercise
by Landlord of any or all other rights or remedies provided for in this Lease or
now or after the Commencement Date existing at law or in equity or by statute or
otherwise. All costs incurred by Landlord in collecting any amounts and damages
owing by Tenant pursuant to the provisions of this Lease or to enforce any
provision of this Lease, including reasonable attorneys' fees whether or not one
or more actions are commenced by Landlord, will also be recoverable by Landlord
from Tenant.
ARTICLE 26.00 DEFAULT BY LANDLORD
If Landlord fails to fulfill any of the agreements or provisions of this Lease
and such failure is not corrected within ten (10) days or within a reasonable
period, if not accomplished within ten (10) days after having received written
notice from Tenant, then, in that event, in addition to all rights, powers or
remedies available to Tenant by law, Tenant may upon prior written notice to
Landlord: (i) correct Landlord's defaults and deduct the cost from monies due to
Landlord; (11) withhold payments of rent and other amounts (if any) due to
Landlord, until such default has been corrected; or (iii) terminate this Lease
and all obligations hereunder if the specified default is not corrected within
twenty (20) days after having received notice from Tenant.
ARTICLE 27.00 SUCCESSORS AND ASSIGNS
This Lease and the covenants and conditions therein contained shall inure to the
benefit of and be binding upon Landlord, its successors and assigns, and shall
be binding upon Tenant, its successors and assigns, and shall inure to the
benefit of Tenant and only such assigns of Tenant to whom the assignment by
Tenant has been consented to by Landlord in writing.
ARTICLE 28.00 GOVERNING LAW
This Lease shall be governed by the laws of the State of New Jersey.
ARTICLE 29.00 CAPTIONS
Captions and headings are for convenience and reference only.
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ARTICLE 30.00 BROKERS
Landlord and Tenant respectively represent and warrant to each other that
neither of them has consulted or negotiated with any broker or finder with
regard to the Premises except the Broker named in Article 1.00 (p) and Keller,
Dodds & Woodworth, Inc. having an address of 163 Nassau Street, Princeton, NJ
08542. Each party shall indemnify the other against and hold the other harmless
from any claims for fees or commissions from anyone with whom either of them has
consulted or negotiated with regard to the Premises except the Broker. Landlord
agrees to pay commission to broker as per separate agreement made between
Landlord and Keller, Dodds & Woodworth, Inc.
ARTICLE 31.00 WRITTEN MODIFICATION
This writing is intended by the parties as a final expression of their agreement
and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein. No representations, understandings, or agreements have been
made or relied upon in the making of this Lease other than those specifically
set forth herein. This Lease may only be modified by a writing signed by all of
the parties hereto or their duly authorized agents.
ARTICLE 32.00 SEVERABILITY
If any term or provision, or any portion thereof, of this Lease, or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstance other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
other term and provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
ARTICLE 33.00 NOTICES
Any notices required or authorized to be sent pursuant to the provisions hereof
shall be sent to the parties as follows:
a) to Landlord at: Albany Street Plaza Real Estate Management Company
c/o Boraie Development
120 Albany Street, Suite # 305
New Brunswick, New Jersey 08901
b) to Tenant at: Inventa Corporation
2620 Augustine Drive, Suite # 205
Santa Clara, CA 95054
Att: Michael Makishima
408-987-0220
or such other addresses as shall be designated by the parties hereto upon
written notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when sent by prepaid
registered or certified mail, return receipt requested.
ARTICLE 34.00 OPTION TO RENEW
Section 34.01 Term; Notice
Tenant is hereby granted an option to extend this term of this Lease for one
successive period of five (5) years commencing upon expiration of the term (the
"Option Period"), provided Tenant is not in default under the Lease and gives to
Landlord at least six months written notice prior to the expiration of the Term
of Tenant's exercise of such option.
Section 34.02 Rent
All the terms and conditions of this Lease shall be in effect during the Option
Period except that the Annual Basic Rent for the Option Period shall be fair
market value as mutually agreed upon by Landlord and Tenant.
ARTICLE 35.00 JOINT AND SEVERAL LIABILITY
If two or more individuals, corporations, partnerships or other business
associations (or any combination of two or more thereof) shall sign this lease
as Tenant, the liability of each such individual, corporation, partnership or
other business association to pay rent and perform all other obligations
hereunder shall be deemed to be joint and several. In like manner, if the Tenant
named in this lease shall be a partnership or other business association, the
members of which are, by virtue or statue or general law, subject to personal
liability, the liability of each such member shall be joint and several.
ARTICLE 36.00 NOT A JOINT VENTURE
Any intention to create a joint venture or partnership relationship between the
parties hereto is hereby expressly disclaimed.
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ARTICLE 37.00 NO OPTION
The submission of this lease for examination does not constitute a reservation
of or option for the Premises, and this Lease becomes effective only upon
execution and delivery thereof by Landlord and Tenant.
ARTICLE 38.00 THIRD PARTY BENEFICIARY
Nothing contained in this lease shall be construed so as to confer upon any
other party the rights of a third party beneficiary as to any provision
contained herein.
ARTICLE 39.00 COMPLIANCE WITH ALL LAWS
The Tenant shall promptly comply with all laws, ordinances, rules, regulations,
requirements and directives of the Federal, State and Municipal Governments or
Public Authorities and of all their departments, bureaus and subdivisions,
applicable to and affecting the Premises, their use and occupancy, for the
correction, prevention and abatement of nuisances, violations or other
grievances in, upon or connected with the Premises, during the Term; and shall
promptly comply with all orders, regulations, requirements and directives of the
Board of Fire Underwriters or similar authority and of any insurance companies
which have issued or are about to issue policies of insurance covering the
Premises and its contents for the prevention of fire or other casualty, damage
or injury, at the Tenant's own cost and expense.
ARTICLE 40.00 LIMITATION ON RECOURSE
Tenant specifically agrees to look solely to Landlord's interest in Albany
Street Plaza for the recovery of any judgments from Landlord, it being agreed
that Landlord (and its shareholders, venturers, and partners, and their
shareholders, venturers and partners and all of their officers, directors and
employees) shall not be personally liable for any such judgments.
ARTICLE 41.00 FORCE MAJEURE
Landlord shall have no liability to Tenant, nor will Tenant have any right to
Terminate this actual or constructive eviction, because of Landlord's failure to
perform any of its obligations in the Lease if the failure is due to reasons
beyond Landlord's reasonable control, including, without limitation, strikes or
other labor difficulties; inability to obtain necessary Governmental permits and
approvals (including building permits or Certificates of Occupancy);
unavailability or scarcity of materials; war; riot; civil insurrection;
accidents; acts of God; and governmental preemption in connection with a
national emergency. If Landlord fails to perform its obligations because of any
reasons beyond Landlord's reasonable control (including those enumerated above),
the period for Tenant's performance shall be extended day for day for the
duration of the cause of Landlord's failure.
ARTICLE 42.00 NO RECORDATION
Neither this Lease nor any short form or memorandum hereof shall be recorded by
the Tenant or Landlord. Such recordation shall be a default under this Lease,
and the Tenant or Landlord hereby irrevocably appoints the Tenant or Landlord
its attorney in fact for the limited purpose of causing the removal from the
record of any such recordation.
ARTICLE 43.00 EFFECT OF SALE
A sale, conveyance or assignment of Albany Street Plaza shall operate to release
Landlord from liability from and after the effective date of such sale,
conveyance or assignment upon all of the covenants, terms and conditions of this
Lease, express or implied, except those which arose prior to such effective
date, and, after the effective date of such sale, conveyance or assignment,
Tenant shall look solely to Landlord's successor in interest in and to this
Lease. This Lease shall not be affected by any such sale, conveyance or
assignment, and Tenant will attorn to Landlord's successor in interest in this
Lease.
ARTICLE 44.00 TENANT'S ECRA WARRANTY
Tenant represents and warrants that it is not an "Industrial Establishment" as
defined in the Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et
seq. ("ECRA"). Tenant shall not do or suffer anything that will cause it to
become an Industrial Establishment under ECRA during the term of this Lease.
Landlord may from time to time require Tenant at Tenant's sole expense to
provide proof satisfactory to Landlord that Tenant is not an Industrial
Establishment. In the event that Tenant now is or hereafter becomes an
Industrial Establishment then, in addition to all of the Landlord's other rights
and remedies herein, at its sole expense Tenant shall comply with all
requirements of ECRA, howsoever arising, related directly or indirectly to the
Tenant and/or its operations and/or the Premises. This Article shall survive the
expiration or sooner termination of the Lease.
ARTICLE 45.00 USE OF ASBESTOS
Landlord will inform Tenant if asbestos has been used for fireproofing or other
purposes in the construction of the building. If asbestos has been used,
Landlord will give Tenant evidence that proper testing and/or monitoring of the
air within the building has or is being done to insure that a health hazard does
not now or will not as long as Tenant occupies the Premises, exist.
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ARTICLE 46.00 CORPORATE TENANCY
If Tenant is a Corporation, the undersigned officers of Tenant hereby warrant
and certify to Landlord that tenant is a corporation in good standing and duly
organized under the laws of the State of New Jersey, or if chartered in a State
other than the State of New Jersey, is a Corporation in good standing and duly
organized under the laws of such State and is authorized to do business in the
State of New Jersey. The undersigned representatives of Tenant hereby further
warrant and certify-to Landlord that they are officers of the Corporation and as
such are authorized and empowered to bind the Corporation to the terms of this
Lease by their signatures thereto.
ARTICLE 47.00 PARKING
Landlord will provide up to thirty (30) parking spaces for Tenant's employees at
a cost to Tenant of seventy five ($75.00) dollars per month for the term of this
Lease and at the market rate for the remaining years of the Term of this Lease.
If additional parking is needed, and not available at the Albany Street Plaza
Parking Deck, Landlord will help secure additional spaces at the Ferren Mall
Parking Deck at the current market rate at no cost to Landlord.
ATTEST ALBANY STREET PLAZA REAL ESTATE MANAGEMENT
COMPANY
/s/ [ILLEGIBLE]^^ 11/4/98 /s/ Omar Boraie 4-11-98
- -------------------------------- ------------------------------------------
Witness Date Omar Boraie Date
Managing Partner
ATTEST Inventa Corporation
/s/ [ILLEGIBLE]^^ 11/3/98 /s/ Ashok Santhanam 11/3/98
- -------------------------------- ------------------------------------------
Witness Date Ashok Santhanam Date
CEO
EXHIBIT A
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FLOOR PLAN - LEASED PREMISES
----------------------------
(ATTACHED)
EXHIBIT B
21
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LEGEND
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_________________ DEMOLITION
_______________ NEW CONSTRUCTION
[PLAN APPEARS HERE]
<PAGE>
Basic Rental Schedule - Article 4.00
------------------------------------
<TABLE>
<CAPTION>
Rental Year and Date Amount Per Annum Amount Per Month
-------------------- ---------------- ----------------
<S> <C> <C>
Years 1 - 5
November 1, 1998 - October 31, 2003 $135,200.00 $11,266.67
1ST Option
Years 6 - 10
November 1, 2003 - October 31, 2008 $156,000.00 $13,000.00
</TABLE>
EXHIBIT C
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APPROVED SIGN DESIGN, SIZE, ETC.
--------------------------------
(INTENTIONALLY OMITTED)
EXHIBIT D
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WORK LETTER/TENANT'S PLANS
--------------------------
1. Landlord shall provide a tenant improvement allowance of $5.00 per rentable
square foot.
2. Any unused tenant improvement allowance shall accrue and be used at another
time by tenant as long as the allowance is used on the tenant's space.
3. Tenant will provide Landlord with construction, electrical, plumbing, etc.
blueprints and CAD disc, signed and sealed by an Architect, at Tenants cost
and expense.
EXHIBIT E
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MASTER LEASE
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This Master Lease Agreement (hereinafter referred to as the "Lease") dated
December 1, 1987, is made by and between ALBANY STREET PLAZA URBAN RENEWAL
ASSOCIATION, a New Jersey Partnership having an address c/o Boraie Realty, 120
Albany Street, Suite 305, New Brunswick, New Jersey 08901 ("Landlord") and
ALBANY STREET PLAZA REAL ESTATE MANAGEMENT COMPANY, a New Jersey Partnership
having an address c/o Boraie Realty, 120 Albany Street, Suite 305, New
Brunswick, New Jersey ("Tenant").
WITNESSETH
In consideration of Ten ($10.00) Dollars, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
the mutual covenants contained herein, Landlord and Tenant agree with each other
as follows:
ARTICLE I DEMISED PREMISES AND TERM OF LEASE
Section 1.01 Demised Premises
Landlord hereby leases and lets to Tenant, and Tenant hereby takes and hires
from Landlord, upon and subject to the terms, covenants, conditions and
provisions hereof, all that certain plot, piece or parcel of land known and
designated on the Official Tax Map of the City of New Brunswick as Block 16,
Lots 3, 15, 15.01 and 15.02 and more commonly known as 120 Albany Street, New
Brunswick, New Jersey 08901 (the "Land") together with all buildings and other
improvements erected or about to be erected thereon with such items of personal
property, fixtures and equipment as are used in connection with the operation of
such buildings and improvements, excepting such items of personal property as
are owned by Tenants of Tenant (the "Sub-Tenants") under executed leases
(hereinafter collectively referred to as the "Improvements"). The Land and
Improvements comprise, collectively, a first class retail shopping and
commercial center.
Section 1.02 Term Commencement
The Term of this Lease shall commence (the "Commencement Date") upon the full
and complete execution of this Lease.
Section 1.03 Term Expiration
This Lease shall be effective for so long as Landlord and the Demised Premises
remain subject to the provisions of the Urban Renewal Corporation and
Association Law of 1961, N.J.S.A. 40:55C-40 et seq. (the "Law"), as the Law be
amended, supplemented or revised, from time to time. In no event, however, shall
this Lease extend beyond April 30, 2005 unless extended by the mutual written
agreement of Landlord and Tenant.
ARTICLE II RENT
Section 2.01 Payment of Rent
All rent ( the "Rent") payable to Landlord under this Lease shall be paid to
Landlord at the address specified in Article XV hereof, or as Landlord may
otherwise designate, in lawful money of the United States.
Section 2.02 Rent
Tenant shall pay annually to Landlord as Rent the sum of $1,140,000.00, payable
in equal monthly installments of $95,000.00 payable in advance on the first day
of each full calendar month during the Term. The first such monthly payment
shall be paid on the Commencement Date and shall include prorated Rent for the
period from the Commencement Date to the first day of the first full calendar
month of any year during the Term. The annual Rent to be paid by Tenant to
Landlord may be revised, readjusted or recalculated at the election of Landlord
at least thirty (30) days prior to the expiration of any rental year during the
Term.
Section 2.03 Landlord and Tenant agree that all Rent payable hereunder shall be
net to Landlord and all costs, expenses and obligations of every kind and nature
relating to the Demised Premises shall be paid by Tenant, and Landlord shall be
indemnified and saved harmless from and against such costs, expenses and
obligations.
ARTICLE III TAXES, ASSESSMENTS, ANNUAL SERVICE CHARGE
Section 3.01 Impositions
The term "Impositions" shall mean all real estate taxes, duties or assessments
(special or otherwise), water and sewer rents whether ordinary or extraordinary,
general or special, foreseen or unforeseen, of any kind and nature whatsoever,
which at any time during the Term of this Lease shall be assessed, levied,
confirmed, imposed upon or grow out of, or become due and payable in respect of,
or become a lien on or attributable in any manner to the Demised Premises, or
the rents receivable therefrom, or any part thereof or any use thereon or any
facility located therein or used in connection therewith or any charge or other
payment required to be paid to any governmental authority, whether or not any of
the foregoing shall be a so called "Real Estate Tax". In this regard, Tenant
acknowledges that Landlord shall be entitled to an "in lieu" payment of real
estate taxes (hereinafter referred to as the "Annual Service Charge") for the
Improvements located on the Demised Premises, and which Annual Service Charge is
afforded to Landlord pursuant to the Law. Tenant agrees that it will take all
steps necessary to maintain and preserve the Annual Service Charge during the
Term of this Lease. From and after the Commencement Date, Tenant shall pay (or
Tenant shall cause its Sub-
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Tenants to pay pursuant to executed leases) all Impositions and/or the Annual
Service Charge attributable to the Demised Premises in a timely manner, and
Landlord shall be indemnified and saved harmless from and against the payment of
such Impositions.
Section 3.02 Other Governmental Charges
Tenant shall also pay (or Tenant shall cause its Sub-Tenants to pay) before any
fine, penalty, interest or cost may be added thereto or become due or be imposed
by operation of law for the non-payment thereof, all excises, levies, licenses
and permit fees and other governmental charges, general and special, ordinary
and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever
which at any time prior to or during the Term of this Lease may be assessed,
levied, confirmed, imposed upon the Demised Premises or any part thereof or any
appurtenance thereto as a result of or in connection with the use to which the
Demised Premises are put by Tenant (notwithstanding that such use may have been
consented to by Landlord).
ARTICLE IV SURRENDER
Section 4.01 Surrender of Demised Premises
Tenant shall on the last day of the Term, or upon an earlier termination of this
Lease, quit and surrender the Demised Premises to the possession of Landlord
without delay, broom clean and in good order, condition and repair (reasonable
wear and tear excepted), free and clear of all lettings, and occupancies or
subleases, and free and clear of all liens and encumbrances other than those, if
any, created by Landlord.
Section 4.02 Landlord Not Liable
Landlord shall not be responsible for any loss or damage occurring to any
property owned by Tenant or any Sub-Tenant.
Section 4.03 Survival
The provisions of this Article IV shall survive any termination of this Lease.
ARTICLE V INSURANCE
Section 5.01 Hazard Insurance
Tenant shall carry and/or Tenant shall cause its Sub-Tenants to carry pursuant
to executed leases, Insurance for the Demised Premises (or any portion thereof
in the case of a Sub-Tenant) against loss or damage by fire and against loss or
damage by other risks now or hereafter embraced by "extended coverage", and
against such other risks as Landlord from to time may reasonably designate, with
a replacement cost (depreciation) endorsement, in amounts sufficient to prevent
Landlord or Tenant from becoming a co-insurer under the terms of the applicable
policies, but in any event in an amount not less than the "full replacement
cost" without any deduction for physical depreciation of the Improvements. Such
"Full Replacement Cost" shall be determined at Tenant's cost and expense from
time to time at the request of Landlord, by an appraiser, engineer, architect or
contractor designated by Landlord.
Section 5.02 Liability and Other Insurance
Tenant shall cause its Sub-Tenants to secure and maintain such liability
(Personal Injury and Property) Insurance and such other Insurance and in such
amounts as Landlord, in its sole and absolute discretion, shall deem appropriate
to protect Landlord and Tenant.
ARTICLE VI REPAIRS
Section 6.01 Landlord: No Repair Obligations
Landlord shall not be required to furnish any services or facilities or to make
any repairs or alterations in or to the Demised Premises. Tenant assumes the
full and sole responsibility for the condition, operation, repair, replacement,
maintenance and management of the Demised Premises.
ARTICLE VII COMPLIANCE WITH LAWS, ORDINANCES, ETC.
Section 7.00 Obligations of Law and Boards
Throughout the Term, Tenant, at its sole cost and expense, shall promptly comply
with all present and future laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments, courts,
departments, commissions, boards and officers, and all orders, rules and
regulations of the National Board of Fire Underwriters or any other body
exercising similar functions, foreseen or unforeseen, structural or
nonstructural, interior or exterior, ordinary as well as extraordinary, which
may be applicable to the demised Premises and the sidewalks and curbs adjoining
the Demised Premises or to the use or manner of use of the Demised Premises or
the Sub-Tenants thereof, whether or not such law, ordinance, order, rule,
regulation or requirement shall interfere with the use and enjoyment of the
Demised Premises.
ARTICLE VIII NO WASTE
Section 8.00 No Waste
Tenant will not do or suffer any waste or damage, disfigurement or injury to the
Demised Premises or any part thereof.
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ARTICLE IX CONDEMNATION
Section 9.01 Entire Demised Premises Taken
If the whole of the Demised Premises shall be acquired or condemned by eminent
domain for any public or quasi-public use or purpose, then the Term shall cease
and terminate as of the date on which possession of the Demised Premises is
actually surrendered to the condemning authority, and on such date all Rent
shall be paid up to that date and thereupon this Lease shall terminate and be
null and void as if such date were the date originally set forth herein for the
expiration of the Term and neither Landlord nor Tenant shall have any further
obligations to each other pursuant to this Lease. Tenant shall in no event have
any claim against Landlord or the condemning authority for the value of any
unexpired Term.
Section 9.02 Portion of the Demised Premises Taken
If any part of the Demised Premises shall be acquired or condemned by eminent
domain for any public or quasi-public use or purpose, and in the event that such
partial taking or condemnation shall, in Tenant's reasonable business judgment,
render the Demised Premises unsuitable for the authorized business of the
Tenant, then in any such event the Term shall, at Tenant's option, exercised by
written notice to Landlord with thirty (30) days after any such taking, cease
and terminate as of the date on which possession of the portion of the Demised
Premises in question is actually surrendered to the condemning authority and on
such date all Rent shall be paid up to that date and thereupon this Lease shall
terminate and be null and void as if such date were the date originally set
forth herein for the expiration of the Term and neither Landlord or Tenant shall
have any further obligations to each other pursuant to this Lease. Tenant shall
in no event, have any claim against Landlord or the condemning authority for the
value of the unexpired Term. In the event of a partial taking or condemnation
which is not extensive enough to render the Demised Premises unsuitable for the
business of Tenant, then Landlord shall make the net condemnation proceeds
allocable to the Demised Premises available to Tenant for the restoration of the
Demised Premises, and Tenant shall promptly restore the Demised Premises to a
condition comparable to their condition at the time immediately prior to the
condemnation or taking, less, however, the portion lost in the taking, and this
Lease shall continue in full force and effect pursuant to the terms and
conditions hereof;, provided, however, that Rent shall abate in proportion to
the area of the Demised Premises taken. If the condemnation award made available
to Tenant by Landlord is insufficient to pay the entire cost of the restoration
work, Tenant shall supply the amount of any deficiency. For purposes of
determining the amount of the funds available for restoration of the Demised
Premises from the condemnation award, said amount will be deemed to be that part
of the award which remains after payment of Landlord's reasonable expenses
incurred in recovering same and which represents a portion of the total sum so
available (excluding any award or other compensation for land) which is
equitably allocable to the Demised Premises.
ARTICLE X ASSIGNMENT AND SUBLETTING
Section 10.00 Assignment, Subletting, Etc.
Tenant shall not assign or otherwise encumber this Lease without Landlord's
prior written consent. Tenant may freely sublet the Demised Premises or any
portion thereof as Tenant, in its sole and absolute discretion, shall deem
appropriate.
ARTICLE XI DEFAULT
Section 11.00 Events of Default
If any one or more of the following events (herein sometimes called "Events of
Default") shall happen:
a) if default shall be made in the due and punctual payment of any Rent or
any part thereof when the same shall become due and payable, and such
default shall continue for a period of ten (10) days after written notice
thereof;, or
b) if default shall be made by Tenant in the performance of or compliance
with any of the covenants, agreements, terms, or conditions contained in
this Lease other than those referred to in the foregoing subdivision (a),
and such default shall continue for a period of ten (10) days after written
notice thereof from Landlord to Tenant, provided, that if Tenant proceeds
with due diligence during such ten (10) day period to cure such default and
is unable by reason of the nature of the work involved, to cure the same
within the said ten (10) days, its time to do so shall be extended for an
additional period not to exceed the time necessary to cure the same,
provided, however, that Tenant diligently prosecutes same to completion,
such extension of time shall not subject Landlord or Tenant to any
liability, civil or criminal, and the interest of Landlord in this Lease
shall not be jeopardized thereby; or
c) if at any time during the Term there shall be filed by Tenant in any
court pursuant to any statute, either of the United States or of the State
of New Jersey, a petition in bankruptcy or insolvency, or for
reorganization, or for the appointment of a receiver or trustee of all or a
portion of Tenant's property or if Tenant makes an assignment for the
benefit of creditors or petitions for or enters into an arrangement; or
d) if at any time during the Term there shall be filed against Tenant in
any court pursuant to any statue either of the United States or of the
State of New Jersey, a petition in bankruptcy or insolvency, or for
reorganization, or for appointment of a receiver or trustee of all or a
portion of Tenant's property, and if within sixty (60) days after the
commencement of any such proceeding against Tenant, the same shall not have
been dismissed;
then and in any such event, Landlord at any time thereafter may give written
notice to Tenant specifying such Event of Default or Events of Default and
stating that this Lease and the Term shall expire and terminate on the date
specified in such notice, which shall be at least ten (10) days after the giving
of such notice, and upon the date specified in such notice, this Lease and the
term and all rights of Tenant under this Lease shall expire and terminate. The
termination of this Lease by virtue of an Event of Default or Events of Default
by Tenant shall not, however, impair any lease entered into by Tenant, as
Landlord, with any Sub-Tenant for the rental of all or portion of the Demised
Premises.
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ARTICLE XII UTILITIES
Section 12.00 Utilities
Tenant agrees to make its own arrangements, at Tenant's cost and expense, for
any gas, electricity and any other utility required in connection with the use
and operation of the Demised Premises. Tenant shall pay (or cause its Sub-
Tenants to pay pursuant to executed leases) before delinquency, directly to the
appropriate company or governmental agency, all charges for all utilities
consumed on the Demised Premises.
ARTICLE XIII SUBORDINATION
Section 13.01 Subordination of this Lease
At landlord's election, this Lease shall be subordinate or superior to the lien
of any present or future mortgage irrespective of the time of recording of such
mortgage. If, from time to time, Landlord shall elect that this Lease be
subordinate to the lien of any mortgage, Landlord may exercise such election by
giving notice thereof to Tenant. However, from time to time thereafter, Landlord
may elect that this Lease be paramount to the lien of such mortgage, and may
exercise such election by giving notice thereof to tenant. The exercise of any
of the elections provided in this Section shall not exhaust Landlord's right to
elect differently thereafter, from time to time. At the election of Landlord,
this clause shall be self-operative and no further instrument shall be required.
Upon Landlord's request, from time to time, Tenant shall (a) confirm in writing
and in recordable form that this Lease is so subordinate or so paramount (as
Landlord may elect) to the lien of any mortgage and/or (b) execute an instrument
making this Lease so subordinate or so paramount (as Landlord may elect) to the
lien of any Mortgage, in such form as may be required by an applicable
mortgagee.
Section 13.02 Subordination of Leases with Sub-Tenants
Any lease entered into by Tenant, as Landlord, and any Sub-Tenant for the rental
of all or a portion of the Demised Premises shall be subordinate to this Lease.
Tenant and any Sub-Tenant shall, upon Landlord's request from time to time (a)
confirm in writing that such lease is subordinate to this Lease or to the lien
of any mortgage made by Landlord and/or (b) execute an instrument making such
lease subordinate to this Lease or to the lien of any mortgage made by Landlord.
ARTICLE XIV ATTORNMENT
Section 14.00 Attornment
If the demised Premises is encumbered by a mortgage and such mortgage is
foreclosed, or if the Demised Premises is sold pursuant to such foreclosure or
by reason of a default under said mortgage, then, notwithstanding such
foreclosure, such sale, or such default (i) Tenant shall not disaffirm this
Lease or any of its obligations hereunder, and (ii) at the request of the
applicable mortgagee or purchaser at such foreclosure or sale, Tenant shall
attorn to such mortgagee or purchaser and execute a new lease for the Demised
Premises setting forth all of the provisions of this Lease except that the term
of such new Lease shall be for the balance of the Term.
ARTICLE XV NOTICES
Section 15.00 Notices
Any notices required or authorized to be pursuant to the provisions hereof shall
be sent to the parties as follows:
a) To Landlord: ALBANY STREET PLAZA URBAN RENEWAL ASSOCIATION
c/o Boraie Development Corp.
120 Albany Street, Suite 305
New Brunswick, NJ 08901
b) To Tenant: ALBANY STREET PLAZA REAL ESTATE MANAGEMENT
COMPANY
c/o Boraie Development Corp.
120 Albany Street, Suite 305
New Brunswick, NJ 08901
or such other addresses as shall be designated by the parties hereto upon
Written notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when sent by prepaid
registered or certified mail, return receipt requested.
ARTICLE XVI MISCELLANEOUS
Section 16.01 Captions
The captions of this Lease are for convenience and reference only and in no way
define, limit or describe the scope or intent of this Lease nor in any way
affect this Lease.
Section 16.02 Controlling Law
This Lease shall be construed and enforced in accordance with the laws of the
State of New Jersey.
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Section 16.03 Integration; Modifications
Upon the execution and delivery hereof, this instrument shall constitute the
entire lease between the Landlord and Tenant for the Demised Premises. This
Lease cannot be changed orally but only by an agreement in writing and signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
ARTICLE XVII Covenants to Bind and Benefit Respective Parties
Section 17.00 Binding Effect
The covenants and agreements herein contained shall bind and inure to the
benefit of Landlord and Tenant and their respective legal representatives,
successors and assigns, except as otherwise provided herein.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed as
of the day and year first above written.
WlTNESS:
LANDLORD: ALBANY STREET PLAZA
URBAN RENEWAL ASSOCIATION
A New Jersey Partnership
/s/: [ILLEGIBLE]^^ /s/: [ILLEGIBLE]^^
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Partner
WITNESS:
TENANT: ALBANY STREET PLAZA
REAL ESTATE MANAGEMENT COMPANY
A New Jersey Partnership
/s/: [ILLEGIBLE]^^ /s/: [ILLEGIBLE]^^
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Partner
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EXHIBIT F
BUILDING STANDARD CLEANING SCHEDULE
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FOR
ALBANY STREET PLAZA
Daily:
1. Empty wastepaper baskets and ashtrays.
2. Vacuum clean or carpet sweep all carpets and rugs, dry mop all resilient and
hard floors.
3. Dust and wipe clean all office furniture and window sills, washing window
sills when necessary (desk surfaces are to be uncluttered and free of
materials).
4. Wipe clean all water fountains and coolers; empty waste water.
5. Dust and damp dust, as necessary, interiors of all wastepaper baskets.
6. Remove wastepaper and normal office refuse.
7. Sweep and dust all private stairways.
8. Clean all men's and ladies' toilets, sanitize all fixtures.
9. Mop all ceramic tile, marble and terrazzo flooring.
Periodically:
1. Wash all exterior windows twice a year.
2. Clean interior glass twice per year.
3. Dust while in place all pictures, frames, charts, graphs and similar wall
hangings not reached in night cleaning schedule quarterly.
4. Dust all vertical surfaces and walls, partitions, doors, doorbucks and other
surfaces not reached in night cleaning schedule quarterly.
5. Dust all venetian blinds quarterly.
6. Dust ceiling surfaces, other than acoustical ceiling material, quarterly.
7. Vacuum all radiation and under window air conditioning equipment and
reassemble every three years.
8. Clean all building standard lighting fixtures.
After cleaning all lights shall be turned off, doors locked and offices left in
orderly fashion.
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EXHIBIT G
RULES AND REGULATIONS
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1. The sidewalks and public portions of the building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls,
shall not be obstructed or encumbered by Tenant or used for any purpose
other than ingress and engress to and from the premises in accordance with
Tenant's permitted uses.
2. No curtains, blinds, shades, louvered openings or screens shall be attached
to or hung in, or used in connection with, any window or door of the
Premises without the prior written consent of Landlord, such approval not
to be unreasonably withheld.
3. Excepting such store identification signs as are approved in writing by
landlord as to both design and location, no sign, advertisement, notice or
other lettering shall be exhibited, inscribed, painted or affixed by Tenant
on any part of the outside of the premises or building or on corridor
walls.
4. The sashes, sash doors, skylights, windows, heating, ventilating and air-
conditioning vents and doors that reflect or admit light and air into the
halls, passageways or other public places in the building shall not be
covered or obstructed by Tenant, nor shall any bottles, parcels or other
articles be placed on the window sills.
5. The water and wash closets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by tenant,
if caused by it or its agents, employees, contractors, licensees, or
invitees.
6. No bicycles, vehicles or animals (except seeing eye dogs) of any kind shall
be brought into or kept in or about the Premises. No cooking shall be done
or permitted by tenant on the Premises except in conformity with law and
then only in the lunchroom, as set forth in Tenant's plans, which is to be
primarily used by Tenant's employees for heating beverages and food. Tenant
shall not cause or permit any unusual or objectionable odors to be produced
upon or permeate from the Premises.
7. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of the building or
neighboring buildings or premises or those having business with them,
whether by the use of any musical instrument, radio, talking machine,
unmusical noise, whistling, singing, or in any other way, with the
exception of the Tenant's public address system.
8. Neither Tenant, nor any Tenant servants, employees, agents, visitors or
licensees, shall at any time bring or keep upon the Premises inflammable,
combustible or explosive fluid, or chemical substance, other than
reasonable amount of cleaning fluid, or solvents required in the normal
operation of Tenant's business offices. No offensive gases or liquids will
be permitted.
9. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by Tenant, nor shall any changes be made in existing locks
or the mechanism thereof, without the prior written approval of Landlord
and unless and until a duplicate key is delivered to Landlord. Tenant
shall, upon termination of its tenancy, restore to Landlord all keys of
stores, offices and toilet rooms, either furnished to, or otherwise
procured by, Tenant.
10. All moves in or out of the Premises, or the carrying in or out of any
safes, freight, furniture or bulky matter of any description must take
place during the hours which Landlord or its agent may reasonably determine
from time to time, pursuant to article 10.02. Only the building freight
elevator shall be used for such purposes. Tenant will insure that movers
take reasonable measures required by Landlord to protect the building (e.g.
windows, carpets, walls, doors, and elevator cabs) from damage.
11. Landlord reserves the right to exclude from the building at all times other
than business hours all persons who do not present a pass to the building
signed by Tenant. Issuance of such passes by landlord for Tenant shall be
on a reasonable basis.
12. The Premises shall not be used for lodging or sleeping or for any immoral
or illegal purpose.
13. The requirements of Tenant will be attended to only upon application at the
office of the building. Building employees shall not perform any work or do
anything outside of their regular duties, unless under special instructions
from the office of Landlord.
14. There shall not be used in any space, or in the public halls of any
building, either by Tenant or by its jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires end side guards. No hand trucks, mail carts or mail bags shall be
used in passenger elevators, provided adequate access or use of the freight
elevator is reasonably available to Tenant, or Tenant's agents.
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15. Landlord reserves the right to modify or delete any of the foregoing Rules
& Regulations and to make such other and reasonable Rules and Regulations
as in its judgment may from time to time be needed for the safety, care and
cleanliness of the Premises, and for the preservation of good order
therein.
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EXHIBIT 10.8
SUBLEASE AGREEMENT
1. PARTIES
This Sublease Agreement (the "Sublease") entered into this 9th day of September
____, 1999 is made between Marcam Solutions, Inc., as assignee of Marcam
Corporation ("Sublessor"), and Inventa Corporation, ("Sublessee").
2. THE LEASE
Sublessor is party to that certain written lease, dated March 20, 1997 by and
between CStone-Oakbrook, Inc. and Marcam Solutions, Inc, as assignee of Marcam
Corporation (the "Lease").
3. THE SUBLEASE
Sublessor subleases the entire Sublease Premises, as further defined below, to
Sublessee and Sublessee subleases the entire Sublease Premises from Sublessor,
in accordance with the terms and conditions set forth herein. The terms used in
this Sublease shall have the same meaning ascribed to them in the Lease, except
as and to the extent otherwise expressly provided in the Sublease. It is
mutually acknowledged that the term "Premises" when used in the Lease shall mean
Suites 101 and 120 and contain approximately 5,373 rentable square feet,.
4. SUBLEASE PREMISES
Sublessor hereby subleases to Sublessee, on the terms and conditions set forth
in this Sublease, the "Sublease Premises", otherwise defined as Suites 101 and
120 in the building commonly known as One Lincoln Centre, Oakbrook Terrace,
Illinois, consisting of approximately 5,373 rentable square feet.
5. WARRANTY AND COVENANT BY SUBLESSOR
Except with respect to the Assignment of Lease from MAPICS, Inc. (formerly known
as Marcam Corporation) to Marcam Solutions, Inc. dated as of July 31, 1997,
Sublessor warrants and represents to Sublessee that the Lease has not been
amended or modified except as expressly set forth herein. Sublessor represents
and warrants that (i) it has received and has sent no written notice of default
in connection with the Lease, (ii) it has no knowledge of any default by the
Lessor, as landlord, under the lease, and (iii) it has no knowledge of any
default by Sublessor, as tenant, under the Lease. Sublessor hereby covenants and
agrees to pay Base Rent and Additional Rent as such terms are defined in the
Lease when due under the Lease and to comply with and perform all the
provisions, covenants, conditions and agreements on its part to be done and
performed as tenant under the Lease, except for those provisions, covenants,
conditions and agreements assumed by Sublessee with respect to the Sublease
Premises demised under this Sublease and capable of performance by Sublessee.
6. TERM
The Term of this Sublease shall commence on September 15, 1999 (the
"Commencement Date") and end on April 30, 2002. If Sublessor permits Sublessee
to take Possession prior to the commencement of
<PAGE>
the Term, such early Possession shall not advance the Termination Date and shall
be subject to the provisions of this Sublease, including, without limitation,
payment of rent. Sublessor shall not be obligated to make any alterations,
improvements or repairs to the Premises on account of the Sublease. Sublessee
agrees to lease the Sublease Premises in their present condition on an "AS IS"
basis, and it acknowledges and stipulates that the Sublease Premises, in their
present condition are suitable and satisfactory for Sublessee's occupancy and
the conduct of Sublessee's business. Notwithstanding anything contained herein
to the contrary, Sublessee shall have the right to occupy the Sublease Premises
at anytime after the date of this Sublease. Tenant's early occupancy of the
Sublease Premises shall be subject to all of the terms and conditions of this
Sublease, except that Sublessee shall have no obligation to pay Rent pursuant to
Paragraph 7 until the Commencement Date.
7. RENT
Sublessee shall pay to Sublessor as rent, without deduction, setoff, notice or
demand, at 95 Wells Avenue, Newton, MA 02459 ATTN: Accounts Receivable or at
such other place as Sublessor shall designate from time to time by notice to
Sublessee, in the following amounts:
From, September 15, 1999 thru April 30, 2002 in 31 monthly installments of
$9,852.33 each, and a partial installment of $4926.17.
If the Term begins or ends on a day other than the first or last day of a month,
the rent for the partial months shall be prorated on a per diem basis. The Rent
shall include all Base Rent and Additional Rent (as such terms are defined in
the Lease) and all other amounts due and owing from Sublessee hereunder for the
Term, except separately metered electricity which will be paid by Sublessee
directly to the utility company (as defined in Paragraph 5 hereof).
7.1 ADDITIONAL RENT
Effective January 1, 2000, Sublessee shall be responsible for any Additional
Rent, as defined in Paragraph 5 of the Lease in excess of the amount due under
Paragraph 7 of this Sublease Agreement.
8. SECURITY DEPOSIT
Sublessee shall deposit with Sublessor's parent corporation upon execution of
this Sublease the sum of Nineteen Thousand Seven Hundred Four and 66/100 Dollars
($19,704.66.) as security for Sublessee's faithful performance of Sublessee's
obligations hereunder ("Security Deposit"). If Sublessee fails to pay rent or
other charges when due under this Sublease, or fails to perform any of its
obligations hereunder after and required notification to Sublessee and the
expiration of all notice and grace periods, Sublessor may use or apply all or
any portion of the Security Deposit for the payment of any rent or other amount
then due hereunder and unpaid, for the payment of any other sum for which
Sublessor may become obligated by reason of Sublessee's default or breach, or
for any loss or damage sustained by Sublessor as a result of Sublessee's default
or breach. If Sublessor so uses any portion of the Security Deposit, Sublessee
shall, within ten (10) days after written demand from Sublessor, restore the
Security Deposit to the full amount originally deposited, and Sublessee's
failure to do so shall constitute a default under this Sublease. Sublessor shall
not be required to keep the Security Deposit separate from its general accounts.
If Sublessee faithfully performs all of Sublessee's obligations hereunder for a
period of eighteen (18) months, Sublessor shall return one half of the Security
Deposit to Sublessee. Within ten (10) days after the Term has expired, or
Sublessee has vacated the Sublease Premises, whichever shall last occur, and
provided Sublessee is not then in default of any of its obligations hereunder,
the Security Deposit, or so much thereof as had not theretofore been applied by
Sublessor shall be returned to Sublessee.
9. USE OF SUBLEASE PREMISES
<PAGE>
The Sublease Premises shall be used and occupied only for general office
purposes and other uses permitted under the Lease and for no other use or
purpose.
10. OTHER PROVISIONS OF SUBLEASE
All applicable terms and conditions of the Lease are incorporated into and made
a part of this Sublease as if Sublessor were the Landlord thereunder, Sublessee
the Tenant thereunder and the Sublease Premises the Premises, as set forth
below. Sublessee assumes and agrees to perform the Tenant's obligations under
the Lease during the Term to the extent that such obligations are applicable to
the Premises, except that the obligation to pay rent to Landlord under the Lease
shall be considered performed by Sublessee to the extent and in the amount rent
is paid to Sublessor in accordance with Paragraph 7 of this Sublease. Sublessee
shall not commit or suffer any act or omission that will violate any of the
provisions of the Lease.
11. ATTORNEYS' FEES
If Sublessor or Sublessee shall commence an action against the other arising out
of or in connection with this Sublease, the prevailing party shall be entitled
to recover its costs of suit and reasonable attorney's fees.
12. NOTICES
All notices and demands which may or are to be required or permitted to be given
by either party on the other hereunder shall be in writing. All notices and
demands by either party to the other shall be sent by United States mail,
postage prepaid, or other guaranteed overnight carrier to the address
hereinbelow, or to such other place as each party may from time to time
designate in a notice to the other party.
To Sublessor: Marcam Solutions, Inc.
c/o Wonderware Corporation
100 Technology Drive
Irvine, CA 92618
ATTN: Facilities Manager
To Sublessee: Inventa Corporation
255 Shoreline Drive
2/nd/ Floor
Redwood Shores, CA 94065
ATTN: Controller
with a copy to: Contracts Manager
13. ALTERATIONS
Sublessee shall not make any alterations in or to the Premises without the prior
written consent of Sublessor, which consent shall not be unreasonably withheld
or delayed. Any such changes shall be made in compliance with the Lease
(including, without limitation, the requirement to obtain the Lessor's consent
for certain types of alterations and the obligation to restore the Premises upon
the expiration of this Sublease).
14. NO ASSIGNMENT OR SUBLETTING
<PAGE>
Sublessee may not assign this Sublease, nor further sublet the Premises, nor
permit the same to be occupied by others, without the prior written consent of
Sublessor in each instance, which consent shall not be Unreasonably withheld or
delayed.
15. DEFAULT
The provisions of Article 19 of the Lease are hereby incorporated by reference
into this sublease to govern the rights, obligations and remedies of Sublessor
and Sublessee in the event of a default by Sublessee of its obligations pursuant
to this Sublease.
16. ADDITIONAL SERVICES
If Sublessee shall request freight elevator facilities, after hours heat, cooled
air, or mechanical ventilation or any other service for which a charge is
imposed pursuant to the Lease or otherwise, Sublessee shall either (i) if the
Lessor bills the Sublessee directly for such services, pay the full amount of
such charge to the Lessor within five (5) days after demand, or (ii) if the
Lessor bills the Sublessor for such services, pay the full amount of such charge
to Sublessor within five (5) days after demand as additional services rent
("Additional Services Rent").
17. INTEREST
If Sublessee shall fail to pay any installment of Rent or Additional Services
Rent within 10 days of when payment is due, Sublease shall pay interest thereon
at an annual rate of 10% (or the maximum rate permitted by law, whichever is
less), from the date on which such payment is due to the date of payment
thereof,
18. ENTIRE AGREEMENT
This Sublease, including the Lease which is incorporated herein as part of this
Sublease, embodies the entire understanding of the parties and there are no
further agreements or understandings, written or oral, in effect between the
parties relating to the subject matter hereof.
19. MISCELLANEOUS
(a) As between the Sublessor and Sublessee, in the event of a conflict between
the terms, covenants and conditions of this Sublease with the terms,
covenants and conditions of the Lease, the terms, covenants and conditions
of this Sublease shall govern. Notwithstanding the foregoing, however,
nothing contained in this Sublease shall be deemed, in any way, to modify
the terms, covenants and conditions of the Lease.
(b) Sublessor covenants and agrees with Sublessee that upon Sublessee paying the
Rent and Additional Services Rent and observing and performing all the
terms, covenants and conditions, on Sublessee's part to be observed and
performed, Sublessee may peaceably and quietly enjoy the Premises, subject
to the terms and conditions of the Lease and this Sublease.
(c) Sublessor covenants that it will not voluntarily amend or modify the terms
and conditions of the Lease, without the prior consent of Sublessee, unless
such amendment or modification (i) would not have a material adverse impact
of Sublessee's rights pursuant to this Sublease, or (ii) is required by
<PAGE>
the terms of the Lease, in which event Sublessor shall provide Sublessee
with advanced written notice of any such amendment or modification.
20. MODIFICATIONS
This Sublease may only be modified and/or amended by means of a written
document, signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Sublease Agreement as of the
9th day of September, 1999
SUBLESSOR: Marcam Solutions, Inc.
By: /s/ Al Fink
-------------------------------
Name: Al Fink
-----------------------------
Title: Vice President
----------------------------
SUBLESSEE: Inventa Corporation
By: /s/ David A. Lavanty
-------------------------------
Name: David A. Lavanty
-----------------------------
Title: President & CEO
----------------------------
<PAGE>
EXHIBIT A
---------
Upon commencement of this Sublease and occupation and payment of Security
Deposit and first month Rent, all furniture remaining in the Premises as
itemized in Exhibit B attached and the phone system listed below shall become
the property of Subtenant.
Description Quantity
Norstar 8x24 KSU 1
Norstar DR5 Software 1
Norstar 2-Port Copper Expansion Card 1
Norstar Copper Trunk Module 1
LS/DS Trunk Cartridge 1
Norstar Copper Station Module 1
M7324 Telephone (Black) 1
M7310 Telephone (Black) 7
M7208 Telephone (Black) 13
Key Lamp Module (Black) 1
Station Auxiliary Power Supply 1
<PAGE>
EXHIBIT B
---------
Furniture Remaining in the Premises
<TABLE>
<CAPTION>
Exec Exec Storage
Office Office
Room Total 1 2 3 4 5 6 7 8 9 10 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5-drawer desk 12 1 1 1 1 1 1 1 1 1 1
4-drawer metal file cabinet (beige) 12 2 1 1 1 1 1
4-shelve wood bookcase 5 1 1 1 1 1
Printer stand 1 1
High-back exec chair 2 1 1
Guest chair 11 2 2 3
Wall board 12 2 1 1 1 1 1 1 1 1
3-shelve wood bookcase 7 1 1 1 2 1
5' round table 3 1 1
Meeting chair (rolling) 54 5 2 3 3 3 3 3 4 2 1
2-drawer wood file cabinet 2 1 1
Credensa 2 1 1
2-drawer metal file cabinet (beige) 2 1 1
2.6x8 cafeteria table 6 1 1 2
2-drawer metal file 5 1 1
cabinet (black)
2-shelve metal bookcase (beige) 2 1
3x4 wood table 1
2-door storage cabinet (beige/6') 1
2-door storage cabinet (4'/black) 1
Metal storage shelves (4) 1
8' conference table (grey) 14
Large conference room table 1
L-shaped reception desk 5'6"x 6.6" 1
End Table 1
Desk Phone 17 1 1 1 1 1 1 1 1 1 1
<CAPTION>
Storage Kitchenette (Locked) Lab Conference Reception
Room
Room 11 12 13 14 15 16 17 18 19 20 21
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5-drawer desk 1 1 1
4-drawer metal file cabinet (beige) 1 4 1
4-shelve wood bookcase 1
Printer stand
High-back exec chair
Guest chair 4
Wall board 1 1 1
3-shelve wood bookcase 1
5' round table 1
Meeting chair (rolling) 1 2 3 2 2 3 7 6
2-drawer wood file cabinet
Credensa
2-drawer metal file cabinet (beige)
2.6x8 cafeteria table 1 1
2-drawer metal file cabinet (black) 1 2
2-shelve metal bookcase (beige) 1
3x4 wood table 1
2-door storage cabinet (beige/6') 1
2-door storage cabinet (4'/black) 1
Metal storage shelves (4) 1
8' conference table (grey) 1 1 12
Large conference room table 1
L-shaped reception desk 5'6"x 6.6" 1
End Table 1
Desk Phone 1 1 1 1 1 1 1 1
</TABLE>
<PAGE>
ASSIGNMENT OF LEASE
-------------------
MAPICS, Inc., formerly known as Marcam Corporation, a Massachusetts
corporation with its principal address at 5775-D Glenridge Drive, Atlanta,
Georgia 30328 ("Assignor"), and Marcam Solutions, Inc., a Delaware corporation
with its principal address at 95 Wells Avenue, Newton, Massachusetts 02159
("Assignee"), make this Assignment as of July 31, 1997 (the "Effective Date").
PRELIMINARY STATEMENT
---------------------
Assignor is the tenant of Suites 101 and 120, consisting of approximately
5,373 square feet, in the building known as One Lincoln Centre in Oakbrook
Terrace, Illinois (the "Demised Premises"), under an Office Lease dated March
20, 1997 (the "Lease"), between CStone-Oakbrook, Inc. ("Landlord") and Assignor.
Assignor wishes to assign its rights, interests and obligations under the Lease
to Assignee, and Assignee wishes to accept such assignment and assume such
obligations, on the terms and conditions of this Assignment.
AGREEMENT
---------
In consideration of the mutual covenants in this Assignment and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Assignor and Assignee hereby agree as follows:
1. Assignment and Assumption. Assignor hereby assigns and transfers all
-------------------------
of its rights, interests and obligations under the Lease and all of its rights,
title and interest in the Demised Premises to Assignee as of the Effective Date.
Assignee hereby accepts such assignment and assumes all of the obligations of
Assignor under the Lease arising or accruing on or after the Effective Date.
Assignor shall indemnify, defend and hold harmless Assignee from and against all
claims, liabilities, losses, damages, costs and expenses arising out of a breach
or default by Assignor in its obligations as the lessee under the Lease which
arise or accrue before the Effective Date. Assignee shall indemnify, defend and
hold harmless Assignor from and against all claims, liabilities, losses,
damages, costs and expenses arising out of a breach or default by Assignee in
its obligations as the lessee under the Lease which arise or accrue on or after
the Effective Date.
2. Adjustments. If any payments of rent, additional rent or other
-----------
charges due under the Lease relate to a period which includes time both before
and after the Effective Date, any such payment shall be prorated according to
the fractions of the total number of days in such period occurring,
respectively, before and after the Effective Date. Assignor shall pay the
prorated portion of any such payment relating to the fractional period before
the Effective Date, and Assignee shall pay the prorated portion of any such
payment relating to the fractional period on and after the Effective Date.
<PAGE>
-2-
Assignor and Assignee execute this Assignment under seal.
MAPICS, INC. MARCAM SOLUTIONS, INC.
By: /s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
-------------------------- -------------------------------
Name: Name:
Title: President/Vice President Title: President/Vice President
By: /s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
-------------------------- -------------------------------
Name: Name:
Title: Treasurer/Assistant Treasurer Title: Treasurer/Assistant Treasurer
<PAGE>
ONE LINCOLN CENTRE
OAKBROOK TERRACE, ILLINOIS 60181
OFFICE LEASE
between
CSTONE-OAKBROOK, INC.
Landlord
and
MARCAM CORPORATION
Tenant
Dated as of March 20, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. CERTAIN PROVISIONS AND DEFINITIONS.................................. 1
----------------------------------
2. GRANT AND ACCEPTANCE OF LEASE....................................... 3
-----------------------------
3. RENT................................................................ 3
----
4. BASE RENT........................................................... 3
---------
5. ADDITIONAL RENT..................................................... 3
---------------
6. USE OF PREMISES..................................................... 7
---------------
7. DELIVERY OF POSSESSION.............................................. 7
----------------------
8. SERVICES............................................................ 8
--------
9. CONDITION AND CARE OF PREMISES...................................... 11
------------------------------
10. SURRENDER OF PREMISES............................................... 12
---------------------
11. HOLDING OVER........................................................ 13
------------
12. RULES AND REGULATIONS............................................... 14
---------------------
13. RIGHTS RESERVED TO LANDLORD......................................... 14
---------------------------
14. ALTERATIONS......................................................... 17
-----------
15. ASSIGNMENT AND SUBLETTING........................................... 17
-------------------------
16. WAIVER OF CERTAIN CLAIMS, INDEMNITY BY TENANT....................... 20
---------------------------------------------
17. DAMAGE OR DESTRUCTION BY CASUALTY................................... 22
---------------------------------
18. EMINENT DOMAIN...................................................... 24
--------------
19. DEFAULT; LANDLORD'S RIGHTS AND REMEDIES............................. 24
---------------------------------------
20. RIGHTS OF MORTGAGEES AND GROUND LESSORS............................. 30
---------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
21. DEFAULT UNDER OTHER LEASES.......................................... 32
--------------------------
22. INSURANCE AND SUBROGATION........................................... 32
-------------------------
23. NONWAIVER........................................................... 34
---------
24. ESTOPPEL CERTIFICATE................................................ 34
--------------------
25. TENANT CORPORATION OR PARTNERSHIP................................... 34
---------------------------------
26. REAL ESTATE BROKERS................................................. 35
-------------------
27. NOTICES............................................................. 35
-------
28. MISCELLANEOUS....................................................... 37
-------------
29. EARLY OCCUPANCY..................................................... 41
---------------
30. SECURITY DEPOSIT.................................................... 41
----------------
31. SUBSTITUTION OF OTHER PREMISES...................................... 43
------------------------------
32. LANDLORD............................................................ 44
--------
33. TITLE AND COVENANT AGAINST LIENS.................................... 44
--------------------------------
34. COVENANT OF QUIET ENJOYMENT......................................... 45
---------------------------
35. EXCULPATORY PROVISIONS.............................................. 45
----------------------
</TABLE>
ii
<PAGE>
EXHIBITS
- --------
A Floor Plan(s) of Premises
B Legal Description of the Land
C Other Definitions
D Rules and Regulations
E Janitorial Services
F Form of Confirmation Agreement
W Workletter
iii
<PAGE>
OFFICE LEASE
------------
DATED AS OF: March __, 1997
BETWEEN: CStone-Oakbrook, Inc. ("Landlord")
(Address) One Lincoln Centre
Oakbrook Terrace, Illinois 60181
AND: Marcam Corporation ("Tenant")
(Address) 801 Warrenville Road
Suite 250
Lisle, Illinois 60532
LOCATION: Suites 101 and 120, One Lincoln Centre, Oakbrook Terrace,
Illinois 60181
Landlord and Tenant hereby covenant and agree as follows:
1. CERTAIN PROVISIONS AND DEFINITIONS. The following provisions and
---------------------------------
definitions are an integral part of this lease:
(a) "Base Rent"
ANNUAL BASE TOTAL ANNUAL MONTHLY
PERIOD* RENT PER RSF RENT INSTALLMENT
--------- -------------- ------------ -----------
4/15/97 - 4/30/98 $19.50 $104,773.50 $8,731.13
5/1/98 - 4/30/99 $20.09 $107,916.71 $8,993.06
5/1/99 - 4/30/00 $20.69 $111,154.21 $9,262.85
5/1/00 - 4/30/01 $21.31 $114,488.83 $9,540.74
5/1/01 - 4/30/02 $21.95 $117,923.50 $9,826.96
*Note: these periods are based on a Commencement Date of 4/15/97; if the
Commencement Date occurs on a different date, these periods shall be adjusted
accordingly.
(b) "Broker(s)" (see Section 26): Leasecorp, Inc.
(c) "Building": Those certain improvements from time to time located on
the Land and known as One Lincoln Centre and any area servicing those
improvements for which Landlord may from time to time have
obligations, such as adjoining access areas, public sidewalks and
other common areas and special service areas.
<PAGE>
(d) "Commencement Date":
The earlier of (i) April 1, 1997 (subject to extension as set forth
in the Workletter), or (ii) the day Tenant first occupies the
Premises.
No later than thirty (30) days after at the request of either party,
Landlord and Tenant shall execute and deliver to each other a
Confirmation Agreement confirming the Commencement Date and
Expiration Date in the form attached hereto as Exhibit F.
(e) "Expiration Date": The last full day of the Term.
(f) "Initial Term": Beginning on the Commencement Date, the period of
five (5) years, plus in the event the Commencement Date shall occur
on a day other than the first day of a calendar month, any period of
less than one (1) month between the Commencement Date and the first
day of the next succeeding calendar month.
(g) "Land": The land described on Exhibit B attached hereto.
(h) "Premises": The area indicated on Exhibit A on the first floor of the
Building, deemed to consist of 5,373 square feet of Rentable Area.
(i) "Project": The Land, the Building and all equipment and personal
property of Landlord or its beneficiaries used in connection with the
Land, or the Building from time to time.
(j) "Rentable Area": As defined in Exhibit C.
(k) "Security Deposit": (see Section 30): $125.000.00 (as decreased
pursuant to the terms of Section 30 hereof).
(l) "Tenant Alterations": Any alteration, improvements or additions
(including decorations) to the Premises performed or to be performed
by or on behalf of Tenant (other than the work done pursuant to the
Workletter).
(m) "Tenant Proportionate Share": 1.926%, which is the Rentable Area of
the Premises divided by 95% of the Rentable Area of the Building.
(n) "Term": The Initial Term and any extension or renewal of the Initial
Term.
(o) "Use": (see Section 6): General office use for a computer software
company.
2
<PAGE>
(p) "Workletter": The Workletter, attached as Exhibit W.
See Exhibit C and the Workletter for other definitions.
2. GRANT AND ACCEPTANCE OF LEASE. Landlord hereby leases the Premises to
-----------------------------
Tenant and Tenant hereby accepts and leases the Premises from Landlord to have
and to hold during the Term subject to the terms and conditions of this lease.
3. RENT. Base Rent, Additional Rent. Additional Rent Estimate and all
----
other amounts becoming due from Tenant to Landlord hereunder (collectively
"Rent") shall be paid in lawful money of the United States to Landlord at the
following address: c/o Hines. One Lincoln Centre, Oakbrook Terrace, Illinois
60181 or such other address as Landlord shall designate in writing to Tenant
from time to time, without any demand and without any reduction, abatement,
counterclaim, deduction or set-off whatsoever, except as expressly provided
herein, at the times and in the manner hereinafter provided. The payment of Rent
hereunder is independent of each and every other covenant and agreement
contained in this lease.
4. BASE RENT.
---------
(a) Amount. Tenant shall pay Base Rent to Landlord in equal monthly
------
installments (herein called "Monthly Base Rent"), in advance on the Commencement
Date and on or before the first day of each and every, calendar month during the
Term. If the Term shall begin on any day other than the first day of a calendar
month or end on any day other than the last day of a calendar month, then the
Monthly Base Rent for any partial calendar month within the Term shall be
prorated on a per diem basis assuming a thirty (30) day month.
5. ADDITIONAL RENT. In addition to paying the Base Rent. Tenant shall
---------------
also pay as additional rent the amounts (collectively "Additional Rent")
determined to be Tax Adjustment and Expense Adjustment in accordance with this
Section 5:
(a) Computation of Additional Rent. Tenant shall pay as Additional
------------------------------
Rent for each Calculation Year the following amounts:
(i) Tenant's Proportionate Share of Taxes for such Calculation
Year (the "Tax Adjustment"); plus
(ii) Tenant Proportionate Share of Expenses for such
Calculation Year (the "Expense Adjustment").
(b) Payments of Additional Rent; Additional Rent Estimate;
------------------------------------------------------
Projections. Tenant shall pay Additional Rent to Landlord in the manner
-----------
hereinafter provided. The aggregate of payments required to be made by
Tenant on account of Additional Rent for
3
<PAGE>
any Calculation Year until actual Additional Rent are determined is herein
called "Additional Rent Estimate".
(i) Landlord may, at any time and from time to time prior to
the first Calculation Date and during the Term, deliver to Tenant a
written notice or notices ("Projection Notice") setting forth:
(A) Landlord's reasonable estimates, forecasts or
projections (collectively, the "Projections") of any or all of
Taxes and Expenses for such Calculation Year, and
(B) Tenant's Additional Rent Estimate (setting forth the
Expense Adjustment component and Tax Adjustment component
separately) based upon the Projections, being the Tenant
Proportionate Share of the Projections.
(ii) On or before the first (lst) day of the next calendar
month following Landlord's service of a Projection Notice, and on or
before the first day of each month thereafter. Tenant shall pay to
Landlord one-twelfth (1/12) of the Additional Rent Estimate shown in
the Projection Notice. Within fifteen (15) days following Landlord's
service of a Projection Notice, to bring Tenant's payments of
Additional Rent Estimate current, Tenant shall also pay Landlord the
amount set forth in the Projection Notice, which shall equal the
Additional Rent Estimate shown in the Projection Notice less (A) any
previous payments on account of Additional Rent Estimate made for
such Calculation Year, and (B) total monthly installments on account
of Additional Rent Estimate not yet due and payable for the remainder
of such Calculation Year. Until such time as Landlord furnishes a
Projection Notice for a Calculation Year, Tenant shall pay to
Landlord a monthly installment of Additional Rent Estimate on the
first day of each month equal to the greater of the latest monthly
installment of Additional Rent Estimate or one-twelfth (1/12) of
Tenant's latest determined Additional Rent.
(c) Readjustments.
--------------
(i) Following the end of each Calculation Year and after
Landlord shall have determined the amount of Expenses to be used in
calculating the Expense Adjustment for such Calculation Year,
Landlord shall notify Tenant in writing (any such notice of Expenses
and Expense Adjustment herein called "Landlord's Expense Statement")
of such Expenses and Tenant's Expense Adjustment for such Calculation
Year. If the Expense Adjustment owed for such Calculation Year
exceeds the Expense Adjustment component of the Additional Rent
Estimate paid by Tenant during such Calculation Year, then Tenant
shall, within thirty (30) days after the date of Landlord's Expense
Statement, pay to Landlord an amount equal
4
<PAGE>
to the excess of the Expense Adjustment over the Expense Adjustment
component of the Additional Rent Estimate paid by Tenant during such
Calculation Year. If the Expense Adjustment component of the
Additional Rent Estimate paid by Tenant during such Calculation Year
exceeds the Expense Adjustment owed for such Calculation Year, then
Landlord shall credit such excess to Rent payable after the date of
Landlord's Expense Statement, or may, at its option, credit such
excess to any Rent theretofore due and owing, until such excess has
been exhausted. If this lease shall expire or be terminated prior to
full application of such excess. Landlord shall pay to Tenant the
balance thereof not theretofore applied against Rent and not
reasonably required for payment of Rent for the Calculation Year in
which the lease expires, subject to Tenant's obligations under
Section 5(e) hereof, provided Tenant shall have vacated the Premises
and otherwise surrendered the Premises to Landlord in accordance with
this lease and Tenant is not then in default under this lease.
(ii) Following the end of each Calculation Year and after
Landlord shall have determined the actual amount of Taxes to be used
in calculating the Tax Adjustment for such Calculation Year. Landlord
shall notify Tenant in writing (any such notice of Taxes and Tax
Adjustment herein called "Landlord's Tax Statement") of such Taxes
for such Calculation Year. If the Tax Adjustment owed for such
Calculation Year exceeds the Tax Adjustment component of the
Additional Rent Estimate paid by Tenant during such Calculation Year.
then Tenant shall, within thirty (30) days after the date of
Landlord's Tax Statement, pay to Landlord an amount equal to the
excess of the Tax Adjustment over the Tax Adjustment component of the
Additional Rent Estimate paid by Tenant during such Calculation Year.
If the Tax Adjustment component of the Additional Rent Estimate paid
by Tenant during such Calculation Year exceeds the Tax Adjustment
owed for such Calculation Year, then Landlord shall credit such
excess to Rent payable after the date of Landlord's Tax Statement, or
may, at its option, credit such excess to any Rent theretofore due
and owing, until such excess has been exhausted. If this lease shall
expire or be terminated prior to full application of such excess,
Landlord shall pay to Tenant the balance thereof not theretofore
applied against Rent and not reasonably required for payment of Rent
for the Calculation Year in which the lease expires, subject to
Tenant's obligations under Section 5(e) hereof, provided Tenant shall
have vacated the Premises and otherwise surrendered the Premises to
Landlord in accordance with this lease and Tenant is not then in
default under this lease.
(iii) Notwithstanding anything contained in this Section 5 to
the contrary, Landlord may, but shall have no obligation to, include
in the Additional Rent Estimate shown in any Projection Notice
delivered to Tenant with respect to the last Calculation Year falling
entirely within the Term, Landlord's good faith estimate or
projection of Additional Rent for any partial future Calculation Year
5
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in which the Expiration Date occurs, and Tenant shall pay such
Additional Rent Estimate for such future partial Calculation Year at
the same time and in the same manner provided in this Section 5 for
payment of Additional Rent Estimate for such last Calculation Year
falling entirely within the Term.
(d) Books and Records. Landlord shall maintain books and records
-----------------
showing Taxes and Expenses in accordance with sound accounting and
management practices. Tenant and its representative shall have the right to
examine such books and records showing Taxes and Expenses upon reasonable
prior notice and during normal business hours at any time within thirty
(30) days following Tenant's receipt of Landlord's Statement provided for
in Section 5(c); provided however that in the event Landlord has caused
Landlord's Statement to be audited by an independent public accounting firm
with a national reputation, then Tenant shall not have the right to cause
an audit of Landlord's books and records regarding Taxes and Expenses.
Unless Tenant shall take written exception to any item of Taxes or
Expenses, specifying in detail the reasons for such exception as to a
particular item within forty-five (45) days after Tenant's receipt of
Landlord's Statement, or in the event Landlord causes Landlord's Statement
to be certified as provided above, Landlord's Statement shall be considered
as final and accepted by Tenant. Notwithstanding any exception made by
Tenant, Tenant shall pay Landlord the full amount of its Additional Rent
Estimate and its Additional Rent, subject to readjustment at such time as
any such exception may be resolved in favor of Tenant.
(e) Proration and Survival. With respect to any Calculation Year
----------------------
which does not fall entirely within the Term, Tenant shall be obligated to
pay as Additional Rent for such Calculation Year only a pro rata share of
Additional Rent as hereinabove determined, based upon the number of days of
the Term falling within the Calculation Year. Following expiration or
termination of this lease, Tenant shall pay any Additional Rent due to
Landlord within thirty (30) days after the date of Landlord's Statement
sent to Tenant. Without limiting other obligations of Tenant which survive
the expiration or termination of this lease, the obligations of Tenant to
pay Additional Rent provided for in this Section 5 shall survive the
expiration or earlier termination of this lease. No interest or penalties
shall accrue on any amounts which Landlord is obligated to credit or pay to
Tenant by reason of this Section 5.
(f) No Decrease in Base Rent. In no event shall any Additional Rent
------------------------
result in a decrease of the Base Rent payable hereunder.
(g) No Representation or Warrant. Tenant acknowledges that neither
----------------------------
Landlord, nor any of Landlord's beneficiaries, nor the managing agent of
the Project, nor the leasing agent of the Project, nor any of their
respective agents or employees has made or does hereby make any
representation or warranty whatsoever to Tenant as to the amount of Taxes,
Expenses, Tax Adjustment or Expense Adjustment or any component thereof
which may become payable during the Term.
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6. USE OF PREMISES.
---------------
(a) Use. Tenant shall use and occupy the Premises as set forth in Section
---
1(o) hereof and uses reasonably incidental thereto only and for no other use or
purpose. Tenant shall comply with all rules and regulations made and adopted by
Landlord from time to time for the Building relating to Tenant's use of the
Premises and the Building.
(b) Compliance with Requirements. Tenant shall comply with all applicable
----------------------------
Laws (hereinafter defined) now or hereafter in force, with all applicable
insurance underwriters regulations and other requirements and with all notices
from any Mortgagee or Ground Lessor, respecting all matters of occupancy,
condition or maintenance of the Premises, whether any of the foregoing shall be
directed to Tenant or Landlord or any beneficiary of Landlord, and whether
imposed on the owner or occupant of the Premises. "Laws" means all statutes,
laws, ordinances, codes, rules and regulations, orders and directions of public
officials or other acts having the force or effect of law, of all federal,
state, county, municipal and other agencies, authorities or bodies having
jurisdiction over the Premises. Tenant shall not make or permit any use of the
Premises or the Building, or do or permit to be done anything in or upon the
Premises or the Building, or bring or keep anything in the Premises or the
Building, which directly or indirectly is forbidden by any of the foregoing or
which may be dangerous to persons or property, or which may invalidate or
increase the rate of insurance on the Building, its appurtenances, contents or
operations, or which may cause a default by Landlord or any of its beneficiaries
under any Mortgage or Ground Lease. Tenant shall procure and maintain all
licenses and permits legally necessary for the operation of Tenant's business
and allow Landlord to inspect them upon reasonable prior request.
7. DELIVERY OF POSSESSION.
----------------------
If Landlord shall be unable to give possession of the Premises on the
Commencement Date for any reason Landlord shall not be subject to any liability
for failure to give possession and except as may be otherwise expressly provided
in the Workletter, the Commencement Date shall not be delayed or postponed.
Except as otherwise expressly provided in the Workletter, such failure to give
possession on the Commencement Date shall not affect the validity of this lease
or otherwise affect the obligations of Tenant hereunder, nor shall the same be
construed to extend the Term. The Premises shall not be deemed incomplete or
unavailable for Tenant's possession, and the Commencement Date shall not be
delayed, if any work for which Tenant is responsible under this lease (including
without limitation the Workletter) is not complete. The Premises shall also not
be deemed incomplete or unavailable for Tenant's possession, and the
Commencement Date shall not be delayed, if there is a Tenant Delay (as defined
in the Workletter) or if, as to any work for which Landlord is responsible under
this lease (including without limitation the Workletter), only minor or
insubstantial details of construction, decoration or mechanical adjustments
remain to be completed, or if there is a delay in any such work for which
Landlord is responsible due to special work, changes, alterations or additions
required or made by Tenant in the Premises, or which is caused in whole or in
part by Tenant through the delay of Tenant in
7
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hiring or completing contracts with architects, engineers, contractors, material
suppliers or others, submitting plans, supplying information, approving plans,
specifications or estimates, giving authorizations or otherwise, or which is
caused in whole or in part by delay or default on the part of Tenant or any
other reason set forth in the Workletter. In the event of any dispute as to
whether any work for which Landlord is responsible under this lease (including
without limitation the Workletter)has been completed, the decision of Tenant's
architect shall be final and binding on the parties.
8. SERVICES.
--------
(a) General Description of Services. Landlord shall furnish the
-------------------------------
following services (the cost of which may be included in Expenses):
(i) Air conditioning and heat when necessary to provide a
temperature condition required, in Landlord's reasonable judgment, for
comfortable occupancy of the Premises under normal business operations,
Monday through Friday from 8:00 A.M to 6:00 P.M. and Saturdays from 8:00
A.M to 1:00 P.M, Holidays excepted. Levels of heating and air conditioning
are subject to adjustments pursuant to mandatory and voluntary compliance
by Landlord with Laws and guidelines relating to energy use.
(ii) Domestic water in common with other tenants for drinking,
lavatory and toilet purposes drawn through fixtures installed by Landlord
within the core of the Building, and warm water in common with other
tenants for lavatory purposes from the same regular Building supply and
fixtures.
(iii) Janitor and cleaning service in and about the Premises and
common areas of the Building, substantially as set forth in Exhibit E
attached hereto, which may be modified by Landlord from time to time.
Tenant shall not provide or use any other janitor or cleaning service.
(iv) Passenger elevator service in common with Landlord and other
persons, Monday through Friday from 8:00 A.M. to 6:00 P.M. (Saturdays from
8:00 A.M. to 1:00 P.M.), Sundays and Holidays excepted, and freight
elevator service in common with Landlord and other persons, Monday through
Friday from 8:00 A.M. to 4:30 P.M., Saturdays, Sundays and Holidays
excepted, and limited passenger elevator service daily at all times when
the aforesaid passenger elevator service is not furnished.
(b) Electricity. Electricity shall not be furnished by Landlord, but
-----------
shall be furnished by Commonwealth Edison Company or another electric utility
company serving the area selected by Landlord. Landlord shall permit Tenant to
receive such service direct from such utility company at Tenant's cost, and
shall permit Landlord's wire and conduits, to the extent available, suitable and
safely capable, to be used for such purposes. Tenant shall make all necessary
arrangements with the utility company for metering and paying for electric
current furnished by
8
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it to Tenant, and Tenant shall pay for all charges for electric current consumed
on the Premises during Tenant's occupancy thereof. Tenant shall make no
alterations or additions to the electric equipment or systems in the Premises or
the Building without the prior written consent of Landlord in each instance.
Tenant also agrees to purchase from Landlord or the managing agent of the
Project, as Landlord shall direct, all lamps, bulbs, ballasts and starters used
in the Premises during the Term. Tenant covenants and agrees that at all times
its use of electric current shall never exceed the capacity of the feeders to
the Building or the risers or wiring installed thereon.
(c) Telephone. Telephone service shall not be furnished by Landlord.
---------
Landlord shall permit Tenant to receive such service direct from any telephone
company serving the area at Tenant's cost, and shall permit Landlord's telephone
building riser cable, to the extent available, to be used for such purposes.
Landlord shall require Tenant to contract directly for such access with a
company which is managing use of the telephone cable riser in the Building.
Tenant shall make all necessary arrangements with the telephone company for
paying for the telephone service furnished by it to Tenant and Tenant shall pay
for all charges for telephone service and riser cable access. Neither Tenant or
Tenant's telephone company nor their respective agents, employees, licensees,
invitees or contractors shall make any alterations, additions or repairs to
Landlord's telephone building riser cable, telephone wires, telephone junction
boxes or telephone wire conduits. Tenant shall be liable for any damage done to
Landlord's telephone building, riser cable telephone wires, telephone junction
boxes or telephone wire conduits as a result of Tenant or Tenant's telephone
company's or their respective agents, employees, licensees, invitees or
contractors alteration, addition, maintenance or repair of Tenant's telephone
system and Landlord may, at its option, repair such damage and Tenant shall upon
demand by Landlord reimburse Landlord for all costs of such repair and damages.
Landlord agrees to use reasonable efforts in ascertaining any such damage and
agrees to provide Tenant with Written notice of any such damage within a
reasonable period of time after Landlord shall learn of the same.
(d) Extra or Additional Services. If Landlord shall provide services
----------------------------
which are extra or in addition to those services described in Section 8(a),
Tenant shall pay for any such extra or additional services so provided by
Landlord at Landlord's established rates therefor from time to time or if there
are no established rates, then at the rate of 115% of the cost of providing
such service, or as otherwise agreed by Landlord and Tenant. All charges for any
such extra or additional services so provided by Landlord shall be deemed to be
additional rent hereunder and shall be due and payable within thirty (30) days
after Tenant receives Landlord's bill therefor, or in installments as may be
designated by Landlord to Tenant in writing. If Tenant fails to pay when due
Landlord's proper charges for any such extra or additional services. Landlord
shall have the right in addition to all other rights and remedies available to
Landlord upon at least ten (10) days' prior written notice to Tenant, to
discontinue furnishing any such extra or additional services for which Tenant
has failed to pay. If Landlord discontinues any such extra or additional
services as provided in this Section 8(d), no such discontinuance shall be
deemed an eviction or disturbance of Tenant's use of the Premises or render
Landlord liable for damages or relieve Tenant from performance of Tenant's
obligations under this lease.
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(e) Holidays. For purposes of this Section 8, "Holidays" means New Year's
--------
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day
and any other day recognized as a holiday by the service unions representing
workers providing services to the Building or customarily designated as a
holiday by landlords operating first-class office buildings in DuPage County,
Illinois.
(f) Interruption of Services. Tenant agrees that neither Landlord nor any
------------------------
of Landlord's beneficiaries, nor the managing agent of the Project nor any of
their respective agents, partners or employees shall be liable for damage or
injury to person, property or business or for loss or interruption of business,
or for any other matter, in the event there is any failure delay or interruption
in furnishing any service. No such failure, delay, interruption or diminution
shall be deemed to constitute an eviction or disturbance of Tenant's use or
possession of the Premises, in whole or in part, actual or constructive, entitle
Tenant to any claim for set-off, abatement or reduction of Rent, render Landlord
liable for damages, or relieve Tenant from the performance of or affect any of
Tenant's obligations under this lease. However, Landlord shall use commercially
reasonable efforts to minimize any such failure, delay, interruption or
diminution.
(g) Tenant's Cooperation. Tenant agrees to cooperate fully with Landlord,
--------------------
at all times, in abiding by all regulations and requirements which Landlord may
prescribe (and written copies of which Landlord shall deliver to Tenant) for the
proper functioning and protection of all utilities and services reasonably
necessary for the operation of the Premises or the Project. Landlord and its
contractors shall have free access to any and all mechanical installations in
the Premises, and Tenant agrees that there shall be no construction of
partitions or other obstructions which might interfere with the moving of the
servicing equipment of Landlord to or from the enclosures containing said
installations. Tenant further agrees that neither Tenant nor its employees,
agents, licensees, invitees or contractors shall at any time tamper with, adjust
or otherwise in any manner affect Landlord's mechanical installations in the
Premises or the Project.
(h) Supplemental Heating or Cooling. Whenever, in Landlord's reasonable
-------------------------------
judgment, Tenant's use or occupation of the Premises, including lighting,
personnel, heat generating machines or equipment, or airborne emissions of smoke
or other particulates, individually or cumulatively, causes the design loads for
the system providing heat and air-cooling to be exceeded, or otherwise affects
adversely the temperature, humidity or air quality otherwise main-mined by the
heating, ventilating and air handling or conditioning system in the Premises or
the Building, Landlord may, but shall not be obligated to, temper such excess
loads by installing supplementary heating or air handling or conditioning units
in the Premises or elsewhere where necessary. In such event, the cost or such
units and the expense of installation, including, without limitation, the cost
of preparing working drawings and specifications, plus fifteen percent (15%) of
such cost as an overhead and supervision fee, shall be paid by Tenant as
additional rent within thirty (30) days after Landlord's demand therefor.
Alternatively, Landlord may require Tenant to install such supplementary heating
or air handling or conditioning units at Tenant's sole expense. Landlord may
operate and maintain any such supplementary units, but shall have no continuing
obligation to do so or liability in connection therewith. The expense resulting
from
10
<PAGE>
the operation and maintenance of any such supplementary heating or air handling
or conditioning units, including utility charges, repair costs, labor costs and
rent for space occupied by any supplementary heating or air handling or
conditioning units installed in rentable area outside the Premises, shall be
paid by Tenant to Landlord as additional rent at rates fixed by Landlord.
Alternatively, Landlord may require Tenant to operate and maintain any such
supplementary units, also at Tenant's sole expense.
9. CONDITION AND CARE OF PREMISES.
------------------------------
(a) Condition of Premises. Tenant accepts the Premises in "AS IS"
---------------------
condition. Tenant acknowledges that no promise by or on behalf of Landlord, any
of Landlord's beneficiaries, the managing agent of the Project, the leasing
agent of the Project or any of their respective agents, partners or employees to
alter, remodel, improve, repair, decorate or clean the Premises has been made to
or relied upon by Tenant, and that no representation respecting the condition of
the Premises or the Project by or on behalf of Landlord, any of Landlord's
beneficiaries, the managing agent of the Project, the leasing agent of the
Project or any of their respective agents, partners or employees has been made
to or relied upon by Tenant, except to the extent expressly set forth in this
lease (including without limitation the Workletter). Tenant shall notify
Landlord of any damage to the Premises, regardless of the cause of such damage.
(b) Tenant's Repairs. Subject to the provisions regarding fire and other
----------------
casualty losses set forth in Section 17 hereof, Tenant shall (i) keep the
Premises in good order, repair and condition at all times during the Term, and
(ii) promptly and adequately repair all damage to the Premises, including to the
portion of the Building air conditioning, heating, electrical and plumbing
systems which run through the Premises and which serve the Premises, caused by
Tenant or its contractors, agents or employees. All work with respect to any
such maintenance, repair or replacement shall be performed within any reasonable
period of time specified by Landlord by written notice to Tenant and shall be
subject to the provisions of Section 14 hereof. Alternatively, Landlord may, in
its sole discretion, elect to effect such repairs whether or not Tenant would
otherwise be prepared to do so, and, in such case, Tenant shall pay Landlord the
cost thereof plus a coordination and management fee equal to fifteen percent (15
%) of such cost, upon Landlord's written demand. Upon reasonable notice and so
long, as Landlord uses good faith efforts to maintain reasonable access to the
Premises and to minimize unreasonable interference with the conduct of Tenant's
business, Landlord may, but shall not be required to, enter the Premises at all
reasonable times to make repairs, alterations, improvements and additions to the
Premises or to the Building or to any equipment located in the Building as
Landlord shall desire or deem necessary or as Landlord may be required to make
by governmental authority or court order or decree.
(c) Landlord's Repairs. Subject to the provisions regarding fire and
------------------
other casualty losses set forth in Section 17 hereof, Landlord shall (i) keep
the public areas in the Building, exclusive of the Premises and other tenant
spaces occupied by or under the control of tenants, in good order, repair and
condition at all times during the Term, and (ii) keep in good order,
11
<PAGE>
condition and repair all outside windows of the Premises and the electrical,
plumbing, heating, ventilating and air conditioning systems in the Premises
(other than as set forth in Section 9(b) above).
(d) No Rights to Light, Air or View. This lease does not grant any rights
-------------------------------
to light, air or view over or about the real property of Landlord or any other
real property. Landlord specifically excepts and reserves to itself all rights
to and the use of any roofs, the exterior portions of the Premises, the land,
improvements and air and other rights below the improved floor level of the
Premises, the improvements and air and other rights above the improved ceiling
of Premises, the improvements and air and other rights located outside the
demising walls of the Premises and such areas within the Premises as are
required for installation of utility lines and other installations required to
serve the Building or any occupants of the Building, and Landlord specifically
reserves to itself the right to use, maintain and repair same, and no rights
with respect thereto are conferred upon Tenant, unless otherwise specifically
provided herein.
(e) Hazardous Substances. Tenant shall comply, at its sole expense, with
--------------------
all Laws relating to the protection of public health, safety and welfare and
with all environmental Laws in the use, occupancy and operation of the Premises
Tenant agrees that no Hazardous Substances (as hereinafter defined) shall be
used, located, stored or processed on the Premises or be brought into the
Building by Tenant, and no Hazardous Substances will be released or discharged
from the Premises (including, but not limited to, ground water contamination).
The term "Hazardous Substances" shall mean and include all hazardous and toxic
substances, waste or materials, any pollutant or contaminant, including, without
limitation, PCB's, asbestos and raw materials that include hazardous
constituents or any other similar substances or materials that are now or
hereafter included under or regulated by any environmental Laws or that would
pose a health, safety or environmental hazard.
10. SURRENDER OF PREMISES.
---------------------
(a) Surrender. Upon the termination of this lease by lapse of time or
---------
otherwise or upon the earlier termination of Tenant's right of possession.
Tenant shall surrender possession of the Premises to Landlord and deliver all
keys, computer cards or codes and other entry devices to the Premises to
Landlord and make known to Landlord the combinations of all locks of vaults then
remaining in the Premises, and shall, subject to the following subparagraphs,
return the Premises and all equipment and fixtures of Landlord therein to
Landlord in as good condition as when Tenant originally took possession, except
for ordinary wear and tear, except for loss or damage by fire or other insured
casualty or condemnation (which Tenant is not required to restore pursuant to
Section 17 of this lease), tailing which Landlord may restore the Premises and
such equipment and fixtures to such condition, and Tenant shall pay the cost
thereof to Landlord on demand.
(b) Ownership of Improvements. All installations, additions, partitions,
-------------------------
hardware, fixtures and improvements, temporary or permanent (including Tenant
Alterations), except
12
<PAGE>
movable furniture and equipment and other personal property belonging to Tenant
and Tenant's trade fixtures, in or upon the Premises, whether placed there by
Tenant or Landlord, shall, upon the termination of this lease by lapse of time
or otherwise or upon the earlier termination of Tenant's right of possession,
become Landlord's property and shall remain upon the Premises, all without
compensation, allowance or credit to Tenant; provided, however, that if at the
time Landlord consents to Tenant's installation of any installations, additions,
partitions, hardware, fixtures and improvements or at any time prior to
termination of this lease. Landlord requires removal of the same upon
termination, then Tenant, at Tenant's sole cost and expense, upon termination of
this lease by lapse of time or otherwise or upon the earlier termination of
Tenant's right of possession, shall promptly remove such designated items placed
in or upon the Premises by or on behalf of Tenant and, repair any damage to the
Premises or the Project caused by such removal, failing which Landlord may
remove the same and repair the Premises or the Project, as the case may be, and
Tenant shall pay the cost thereof to Landlord on written demand.
(c) Removal of Personal Property. Upon the termination of this lease by
----------------------------
lapse of time or otherwise or upon the earlier termination of Tenant's right of
possession. Tenant shall remove from the Premises Tenant's furniture, machinery,
safes and other items of movable personal property of every kind and description
and Tenant's trade fixtures, and Tenant shall restore any damage to the Premises
or the Project caused thereby, such removal and restoration to be performed
prior to the expiration of the Term or no later than ten (10) days following the
earlier termination of this lease or Tenant's right of possession (and upon
prior written notice to Landlord, in the event such removal occurs and is
permitted after termination of this lease or Tenant's right of possession),
failing which Landlord may do so and thereupon the provisions of Section 19(d)
shall apply; provided, however, if this lease or Tenant's possession terminates
prior to the originally stated Expiration Date, Tenant may not, without
landlord's prior written consent, remove any of its furniture, trade fixtures or
other personal property for which Landlord paid or gave Tenant an allowance, in
whole or in part, in which case, at Landlord's election, such property shall be
deemed to have been conveyed to Landlord as by bill of sale without further
payment or credit by Landlord to Tenant.
(d) Survival. Without limitation of any other obligations of Tenant which
--------
shall survive the expiration or termination of this lease, all obligations of
Tenant under this Section 10 shall survive the expiration or earlier termination
of this lease.
11. HOLDING OVER. If Tenant retains possession of the Premises or any part
------------
thereof after the termination of the lease by lapse of time or otherwise or
after the earlier termination of Tenant's right of possession. Tenant shall pay
to Landlord as Rent during such holdover period an amount equal to double the
Rent (based on the Base Rent plus the most current Additional Rent Estimate owed
by Tenant during the most recent year for the entire Premises) or double the
prevailing market rent (as determined by Landlord), if greater, on a per diem
basis. In addition to and without limiting any other rights and remedies which
Landlord may have on account of such holding over by Tenant, Tenant shall pay to
Landlord all direct and consequential damages suffered by Landlord on account of
such holding over by Tenant if it is wilful, including
13
<PAGE>
any damages and claims by tenants entitled to future possession. No occupancy by
Tenant after the expiration or other termination of this Lease shall be
construed to extend the Term. Any holding over with the consent of the Landlord
in writing shall thereafter constitute a lease from month to month on the same
terms and conditions as the lease, including payment of the Rent, or at such
other rate of Rent as to which Landlord notifies Tenant prior to or after such
holding over. The provisions of this Section 11 shall not be deemed to limit or
constitute a waiver of any rights or remedies of Landlord as provided herein or
at law or equity.
12. RULES AND REGULATIONS. Tenant agrees to observe and not to interfere
---------------------
with the rights reserved to Landlord contained in Section 13 hereof and
elsewhere in this lease and agrees, for itself, its employees, agents invitees,
licensees and contractors, to accept and comply with the rules and regulations
set forth in Exhibit D attached to this lease, and elsewhere in this lease, and
such other reasonable rules and regulations as shall be adopted by Landlord
pursuant to Section 13(o) or any other Section of this lease. The rules and
regulations in Exhibit D and all other rules and regulations made in accordance
with this lease are intended and shall be construed to supplement and not limit
or restrict in any way any of Landlord's rights or Tenant's obligations
contained in Section 13 or any other Section of this lease. Nothing contained in
this lease shall be construed to impose upon Landlord any duty or obligation to
enforce any of said rules and regulations or the terms, covenants or conditions
of any other lease against any other tenant or any other person. Landlord shall
provide to Tenant in writing, copies of all rules and/or regulations with which
Tenant must comply and any changes to such rules and/or regulations.
13. RIGHTS RESERVED TO LANDLORD. Subject to Landlord's obligation to
---------------------------
operate and maintain the Building as a first class office building (as set forth
in Section 8(a)), Landlord reserves and shall have the following rights, each of
which shall, unless expressly provided otherwise, be exercisable without notice
and without liability of Landlord, any of Landlord's beneficiaries, the managing
agent of the Project, or any of their respective agents. partners or employees
to Tenant for damage or injury to property, person or business or for loss or
interruption of business, or for any other matter, and without effecting an
eviction or disturbance of Tenant's use or possession, in whole or in part,
actual or constructive, or giving rise or entitling Tenant to any claim for set-
off, abatement or reduction of Rent or relieving Tenant from the performance of
or affecting any of Tenant's obligations under this lease:
(a) To change the name or, upon not less than sixty (60) days'
notice, the street address of the Building.
(b) To install and maintain or remove signs on the exterior and
interior of the Building and the Project.
(c) To prescribe the location and style of the suite number and
identification sign or lettering for the Premises.
14
<PAGE>
(d) To retain at all times, and to use in appropriate instances, pass
keys and other entry devices for all doors into and within the Premises.
(e) To grant to anyone the right to conduct any business or render
any service in any part of the Project; provided the same shall not
materially adversely affect Tenant's rights under this Lease.
(f) To enter the Premises for supplying janitor service or other
services to be provided to Tenant hereunder, or for or in the exercise of
Landlord's rights hereunder, and upon reasonable prior notice (except where
this lease otherwise permits entry without notice or in the event of an
emergency, in which case immediate entry shall be permitted) for other
reasonable purposes.
(g) To require all persons entering or leaving the Project or any
part thereof during such hours as Landlord may from time to time reasonably
determine to identity themselves to security personnel by registration or
otherwise and to establish their right to enter or leave in accordance with
Landlord's security controls. Landlord shall not be liable in damages or
otherwise for any error with respect to admission to or eviction or
exclusion from the Project or any part thereof of any person.
Notwithstanding anything contained herein to the contrary, in case of fire,
casualty, invasion, insurrection, mob, riot, act of terrorism, civil
disorder, public excitement or other commotion, or threat thereof, Landlord
reserves the right to limit or prevent access to the Project or any part
thereof during the continuance of the same, halt elevator service, activate
elevator emergency controls, or otherwise take such action or preventive
measures reasonably deemed necessary, by Landlord for the safety or
security of the tenants or other occupants of the Project or the protection
of the Project and the property in or about the Project. Tenant agrees to
cooperate in any reasonable safety or security program developed by
Landlord from time to time.
(h) To control, restrict and prevent access to any areas of the
Project, provided that reasonable access to the Premises shall be
maintained.
(i) To rearrange, relocate, enlarge, reduce or change corridors,
exits, elevators, stairs, lavatories, doors, entrances in or to the
Building and to decorate and to make repairs, alterations, additions and
improvements, structural or otherwise, in or to the Land or the Project or
any part thereof, including the Premises. and any adjacent building, land,
street or alley, including for the purpose of connection with or entrance
into or use of the Land or the Project in conjunction with any adjoining or
adjacent building or buildings or pedestrian ways, now existing or
hereafter constructed, provided that Landlord uses good faith efforts to
maintain reasonable access to the Premises and to minimize unreasonable
interference with the conduct of Tenant's business. In that regard,
Landlord may erect scaffolding and other structures reasonably required by
the character of the work to be performed, and during such operations to
enter upon the Premises upon reasonable prior
15
<PAGE>
notice and take into and upon or through any part of the Project, including
the Premises, all materials that may be required to do such work or make
such decorations, repairs, alterations, improvements or additions, and in
connection with any of the foregoing, to close public entryways, other
public spaces, stairways or corridors and interrupt or temporarily suspend
any services or facilities agreed to be furnished by Landlord. Landlord may
at its option do any such work and make any such decorations, repairs,
alterations, improvements and additions in and about the Project and the
Premises during ordinary business hours and, if Tenant desires to have the
same done during other than ordinary business hours. Tenant shall pay all
overtime and additional expenses resulting therefrom.
(j) To establish controls for the purpose of regulating all property
and packages to be taken into or removed from the Building and Premises.
(k) To regulate delivery of supplies and services in order to ensure
the cleanliness and security of the Project and to avoid congestion of the
loading docks, receiving areas and freight elevators.
(l) To approve the weight, size and location of safes, vaults, books,
files and other heavy equipment and articles in and about the Premises and
the Building so as not to exceed the design live load per square foot
designated by the structural engineers for the Building, and to require all
such items and furniture and similar items to be moved into or out of the
Building and Premises only at such times and in such manner as Landlord
shall direct in writing. Tenant shall not install or operate machinery or
any mechanical devises of a nature not directly related to Tenant's
ordinary use of the Premises without the prior written consent of Landlord.
(m) To show the Premises to prospective tenants at reasonable hours
during the last twelve (12) months of the Term (upon reasonable prior
notice to Tenant) or to prospective mortgagees, ground lessors or
purchasers of the Land or Building or both at any time (upon reasonable
prior notice to Tenant) and, if vacated or abandoned, to show the Premises
to prospective tenants at any time and to demolish, alter, remodel or
otherwise prepare the Premises for re-occupancy.
(n) To erect, use and maintain concealed pipes, ducts, wiring and
conduits, and appurtenances thereto, in and through the Premises in walls,
below the floor and above the suspended ceiling (upon twenty-four (24)
hours prior notice to Tenant, except in case of emergency in which case no
prior notice shall be required).
(o) From time to time to make and adopt such rules and regulations,
in addition to or as an amendment to rules and regulations contained in
Exhibit D attached to this lease or other Sections of this lease, or
adopted pursuant to this or other Sections of this lease, for the use,
entry, operation or management of the Premises or the Project or for the
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protection or welfare of the Project or its tenants or occupants, or any
property therein, as Landlord may reasonably determine, and Tenant agrees
to accept, abide by and comply with all such rules and regulations.
14. ALTERATIONS. Tenant shall not perform any Tenant Alterations without
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first obtaining the prior written consent of Landlord. Landlord may impose such
reasonable conditions with respect to Tenant Alterations as Landlord deems
appropriate, including, without limitation, requiring Tenant to furnish to
Landlord for its approval prior to commencement of any work or entry by Tenant's
contractors into the Premises or the Building, security for the payment of all
costs to be in connection with any such Tenant Alterations, insurance against
liabilities which may arise out of the Tenant Alterations and plans and
specifications and permits necessary for the Tenant Alterations. Tenant
Alterations shall be done at Tenant's expense by agents or contractors hired by
Tenant who are reasonably acceptable to Landlord, or at Landlord's election, by
Landlord's employees or contractors hired by Landlord. Before employing any such
contractors. Tenant shall submit to Landlord the names and addresses of such
contractors. Tenant shall promptly pay the cost, when due, of all Tenant
Alterations. In addition to the cost of such Tenant Alterations, Tenant shall
also pay to Landlord or to the managing agent of the Project, as Landlord shall
direct, an amount equal to fifteen percent (15%) of all of the costs of all
Tenant Alterations, as a coordination and management fee allocable to the Tenant
Alterations. Upon completion of any Tenant Alterations, Tenant shall deliver to
Landlord, if payment is made directly to contractors, evidence of payment,
contractors' affidavits and full and final waivers of all liens for labor,
services and materials sufficient to waive all rights to liens under the
Illinois Mechanic's Lien law arising from the work done. Tenant agrees to
indemnity, defend by counsel reasonably acceptable to Landlord and hold
Landlord, Landlord's beneficiaries, the managing agent of the Project and their
respective agents, partners and employees and the Project harmless of, from and
against any and all losses, damages, liabilities, claims, liens, costs and
expenses, including without limitation court costs and reasonable attorneys'
fees and expenses, arising in connection with any Tenant Alterations. All Tenant
Alterations done by Tenant or its contractors, including work done pursuant to
Section 9, shall be done in a first class workerlike manner using only good
grades of materials and shall comply with all insurance requirements of Landlord
and all Laws. Within thirty (30) days after substantial completion of any Tenant
Alterations by or on behalf of Tenant, Tenant shall furnish to Landlord "as
built" drawings of such Tenant Alterations. The Tenant Alterations described in
this Section 14 are separate and distinct from work performed pursuant to the
Workletter.
15. ASSIGNMENT AND SUBLETTING.
-------------------------
(a) Prohibitions. Tenant shall not, either prior or subsequent to the
------------
commencement of the Term, (i) assign, transfer, mortgage, pledge, hypothecate or
encumber or subject to or permit to exist upon or be subjected to any lien or
charge, this lease or any interest under it, (ii) allow to exist or occur any
transfer of or lien upon this lease or Tenant's interest herein by operation of
law, (iii) sublet the Premises or any part thereof, or (iv) permit the use or
occupancy of the Premises or any part thereof for any purpose not provided for
under Section 6 of this lease
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or by anyone other than Tenant and Tenant's employees, in each case, without the
prior written consent of Landlord. Landlord has the absolute right to withhold
its consent to any of such acts without giving any reason Whatsoever. except as
herein expressly provided to the contrary in Section 15(d). Notwithstanding the
foregoing, with respect to an assignment as a result of a transfer of control as
set forth in Section 15(g), Landlord shall not unreasonably withhold its consent
to such assignment. In no event shall this lease be assigned or assignable by
voluntary or involuntary bankruptcy proceedings or otherwise, except as provided
by law, and in no event shall this lease or any rights or privileges hereunder
be an asset of Tenant under any bankruptcy, insolvency or reorganization
proceedings, except as provided by law. Any of the foregoing performed or
attempted in violation of the provisions of this Section shall be null and void.
(b) Continuing Liability. No assignment, subletting, use, occupancy,
--------------------
transfer or encumbrance by Tenant shall operate to relieve Tenant from any
covenant, liability or obligation hereunder except to the extent, if any,
expressly provided for in any such written consent of Landlord to the foregoing
and none of the foregoing, and no consent to any of the foregoing, shall be
deemed to be a consent to or relieve Tenant from obtaining Landlord's consent to
any subsequent assignment, subletting, use occupancy, transfer or encumbrance.
Tenant shall pay all of Landlord's reasonable costs, charges and expenses,
including, without limitation, reasonable attorneys' fees and expenses, incurred
in connection with any assignment, subletting, use, occupancy, transfer or
encumbrance made or requested by Tenant.
(c) Notice of Proposed Assignment or Sublease; Recapture. Tenant shall, by
----------------------------------------------------
notice in writing, advise Landlord of its intention from, on and after a stated
date (which shall not be less than thirty (30) nor more than one hundred eighty
(180) days after the date of the giving of Tenant's notice to Landlord) to
assign this lease or sublet all or any part of the Premises for the balance or
any part of the Term, and, in such event, Landlord shall have the right, to be
exercised by giving written notice to Tenant within thirty (30) days after its
receipt of Tenant's notice, to terminate this lease with respect to the space
described in Tenant's notice as of the date stated in Tenant's notice for the
commencement of the proposed assignment or sublease. Tenant's notice shall
include the name and address of the proposed assignee or subtenant, a true and
complete copy of the proposed assignment or sublease and sufficient information,
as Landlord deems reasonably necessary, to permit Landlord to determine (i) the
financial responsibility and character and the nature of the business of the
proposed assignee or subtenant, and (ii) whether Landlord has the right, under
this lease to withhold consent to the proposed assignment or sublease. If
Tenant's notice covers all of the Premises and if Landlord exercises its right
to terminate this lease as to such space, then the Term of this lease shall
expire and end on the date stated in Tenant's notice for the commencement of the
proposed assignment or sublease as fully and completely as if that date had
otherwise been the Expiration Date. If, however, Tenant's notice covers less
than all of the Premises, and if Landlord exercises its right to terminate this
lease with respect to such space described in Tenant's notice, then as of the
date stated in Tenant's notice for the commencement of the proposed sublease,
the Base Rent and Tenant's Proportionate Share shall be adjusted on the basis of
the number of square feet Rentable Area retained by Tenan,. and this lease as so
amended, shall continue thereafter in full force and effect.
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(d) Grounds for Withholding Consent. If Landlord, upon receiving Tenant's
-------------------------------
notice with respect to any such space, does not exercise its right to terminate
as aforesaid. Landlord will not unreasonably withhold or delay its consent to
Tenant's assignment of this lease or subletting the space covered by Tenant's
notice. Landlord shall not be deemed to have unreasonably withheld its consent
to a proposed assignment of this lease or to a proposed sublease of part or all
of the Premises if its consent is withheld because: (i) Tenant is then in
default hereunder; (ii) any notice of termination of this lease or termination
of Tenant's right of possession shall have been given under Section 19; (iii)
either the portion of the Premises which Tenant proposes to sublease, or the
remaining portion of the Premises, or the means of ingress or egress to either
the portion of the Premises which Tenant proposes to sublease or the remaining
portion of the Premises is of such nature that it will violate any applicable
Law, is of such accessibility, size or irregular shape so as not to be suitable
for normal renting purposes as space on a multi-tenant floor within the
Building; (iv) the proposed use of the Premises by the proposed assignee or
subtenant does not conform with the use set forth in Section 6 hereof, or will
violate any applicable Law, will impose any obligation, upon Landlord or
increase Landlord's obligations under or cost of compliance with any Laws, or
will violate any exclusive right Landlord has granted or contemplates granting
in the future to any tenant of any part of the Project (v) in the reasonable
judgment of Landlord the proposed assignee or subtenant is of a character or is
engaged in a business which would be deleterious to the reputation of the
Project. Landlord or any of the beneficiaries of Landlord; (vi) in the
reasonable judgment of Landlord, the proposed assignee or subtenant is not
sufficiently financially responsible to perform its obligations under the
proposed assignment or sublease; (vii) the proposed assignee or subtenant is a
government (or subdivision or agency thereof); or (viii) the proposed assignee
or subtenant is an occupant of the Building or is a person or entity Landlord is
then dealing with or has dealt with during the prior twelve (12) months with
regard to leasing of space in the Building; provided, however, that the
foregoing are merely examples of reasons for which Landlord may withhold its
consent and shall not be deemed exclusive of any permitted reasons for
reasonably withholding consent, whether similar or dissimilar to the foregoing
examples, and Landlord may consider all relevant factors in determining whether
to give or withhold its consent. Tenant agrees that all advertising by Tenant or
on Tenant's behalf with respect to the assignment of this lease or subletting of
any part of the Premises must be approved in writing by Landlord prior to
publication.
(e) Excess Rent Payment. If Tenant (as Tenant or debtor-in-possession)
-------------------
shall assign this lease or sublet the Premises, or any part thereof, at a rental
or for other consideration in excess of the Rent or pro rata portion thereof due
and payable by Tenant under this lease, then Tenant shall pay to Landlord as
additional Rent one-half (1/2) of any such excess rent or other consideration
immediately upon receipt under any such assignment or, in the case of a
sublease, (i) on the later of the first day of each month during the term of any
sublease, or the day of receipt from such subtenant, one-half (1/2) of the
excess of all rent and other consideration paid by the subtenant for such month
over the Rent then payable to Landlord pursuant to the provisions of this lease
for said month (or if only a portion of the Premises is being sublet, one-half
(1/2) of the excess of all rent and other consideration due from the subtenant
for such month over the portion of the Rent then payable to Landlord pursuant to
the provisions of this lease for said month which
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is allocable on a Rentable Area basis to the space sublet), and (ii) immediately
upon the receipt thereof, one-half (1/2) of any other consideration realized by
Tenant from such subletting. Landlord shall not be responsible for any
deficiency if Tenant shall assign this lease or sublet the Premises or any part
thereof at a rental less than that provided for herein. Whenever reference is
made to the "excess" of rent or other consideration, such excess shall be
reduced by charging against the first rent or other consideration paid by such
assignee or subtenant reasonable brokerage commissions and leasehold
improvements which Tenant has paid in connection with leasing the Premises or
subleased space
(f) Lease Assumption: Subtenant Attornment. If Tenant shall assign this
--------------------------------------
lease, the assignee shall expressly assume all of the obligations of Tenant
hereunder in a written instrument provided by Landlord and delivered to Landlord
not later than ten (10) days prior to the effective date of the assignment. If
Tenant shall sublease any part of the Premises. Tenant shall obtain and furnish
to Landlord. not later than ten (10) days prior to the effective date of such
sublease and in form reasonably satisfactory to Landlord, the written agreement
of such subtenant to the effect that the subtenant will attorn to Landlord, at
Landlord's option and written request, if this lease terminates before the
expiration of the sublease. Tenant shall, not later than fifteen (15) days after
the effective date of any such assignment or sublease, deliver to Landlord a
certified copy of the instrument of assignment or sublease.
(g) Corporation and Partnership Transfers. If Tenant is a corporation, any
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transaction or series of transactions (including without limitation any
dissolution, merger, consolidation or other reorganization of Tenant, or any
issuance, sale, gift, transfer or redemption of any capital stock of Tenant,
whether voluntary, involuntary or by operation of law, or any combination of any
of the foregoing transactions) resulting in the transfer of control of Tenant,
other than by reason of death, shall be deemed to be a voluntary assignment of
this lease by Tenant subject to the provisions of this Section 15. If Tenant is
a partnership, any transaction or series of transactions (including without
limitation any withdrawal or admittance of a partner or any change in any
partner's interest in Tenant, whether voluntary, involuntary or by operation of
law, or any combination of any of the foregoing transactions) resulting in the
transfer of control of Tenant, other than by reason of death, shall be deemed to
be a voluntary assignment of this lease by Tenant subject to the provisions of
this Section 15. The term "control" as used in this lease means the power to
directly or indirectly direct or cause the direction of the management or
policies of Tenant.
16. WAIVER OF CERTAIN CLAIMS, INDEMNITY BY TENANT.
---------------------------------------------
(a) General Waiver. In addition to and without limiting or being limited
--------------
by any other releases or waivers of claims in this lease, but rather in
confirmation and furtherance thereof, to the extent not prohibited by law,
Landlord and Tenant each releases and waives any and all claims for, and rights
to recover, damages against and from the other, and the other's respective
agents, partners, shareholders, officers, directors, beneficiaries of Landlord,
and employees (collectively, the "Released Parties"), for loss, damage or
destruction to any of its property (including the
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Premises, the Building and their contents), the elements of which are insured
against or which would have been insured against had such party suffering such
loss, damage or destruction maintained the property or physical damage insurance
policies required under Section 22 hereof. In no event shall this clause be
deemed, construed or asserted (i) to affect or limit any claims or rights
against any Released Parties other than the right to recover damages for loss,
damage or destruction to property, or (ii) to benefit any third party other than
the Released Parties.
(b) Indemnity. In addition to and without limiting or being limited by any
---------
other indemnity in this lease, but rather in confirmation and furtherance
thereof, to the extent not prohibited by law. Tenant agrees to indemnify, defend
by counsel reasonably acceptable to Landlord and hold Landlord, Landlord's
beneficiaries (if Landlord is a land trust), the managing agent of the Project,
the leasing agent of the Project and their respective agents, partners,
shareholders, officers, directors and employees and the Project harmless of,
from and against any and all losses, damages, liabilities, claims, liens, costs
and expenses including court costs and reasonable attorneys' fees and expenses
and also including the monetary value of time expended by any such indemnified
party, in connection with injury to or death of any person or with damage to or
theft, loss or loss of the use of any property not owned by Landlord or any of
Landlord's beneficiaries occurring in or about the Premises or the Project
arising from Tenant's occupancy of the Premises, or the conduct of its business
or from any activity, work, or thing done. permitted or suffered by Tenant in or
about the Premises or the Project, or from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the part of Tenant to
be performed pursuant to the terms of this lease, or due to any other negligent
act or omission or wilful misconduct of Tenant, or any of its employees, agents,
licensees, invitees or contractors. Except as set forth in the last sentence of
this Section 16(b), the indemnification obligations of Tenant under this Section
16(b) are subject to compliance by Landlord. Landlord's beneficiaries and all
other parties that seek indemnification under this Section 16(b), with the
following procedures: (1) the party seeking indemnification shall provide Tenant
with prompt written notice after such party learns of any claim or suit that
such party believes may result in a claim by such party under this
indemnification, such notice to include a reasonable identification of the facts
giving rise to such belief; (2) the party seeking indemnification shall permit
Tenant or Tenant's insurer to defend or settle such claim or suit and shall, at
Tenant's sole expense, cooperate with Tenant and Tenant's insurer in defending
or settling such claim or suit; and (3) in the event that the party seeking
indemnification attempts to settle or compromise any such claim or suit, such
settlement or compromise shall not be relevant as to the liability of Tenant
unless consented to in writing by Tenant. Notwithstanding the foregoing, the
failure of any party seeking indemnification pursuant to this Section 16(b) to
comply with any of the foregoing procedures shall not relieve Tenant of its
indemnification obligations contained in this Section 16(b), except where, and
solely to the extent that, such failure actually and materially prejudices the
rights of Tenant.
(c) Landlord's Negligence. Subject to the provisions of Section 16(a) to
---------------------
the extent permitted by law, no agreement of Tenant in this Lease shall be
deemed to exempt Landlord from liability or damages for injury to persons or
damage to property caused by or resulting from the
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negligence of Landlord, its agents, servants or employees, in the operation or
maintenance of the Premises or Building.
17. DAMAGE OR DESTRUCTION BY CASUALTY.
---------------------------------
(a) Termination of Lease; Repair by Landlord. If the Premises or the
----------------------------------------
Building shall be damaged by fire or other casualty and if such damage does not
render all or a substantial portion of the Premises or the Building
untenantable, then Landlord shall proceed with reasonable promptness to repair
and restore the Premises or the core and shell of the Building so as to render
the Premises tenantable, subject to reasonable delays for insurance adjustments
and delays caused by matters beyond Landlord's reasonable control, and also
subject to zoning laws and building codes then in effect. If any such damage
renders all or a substantial portion of the Premises or the Building
untenantable, Landlord shall, with reasonable promptness after the occurrence of
such damage, estimate the length of time that will be required to substantially
complete the repair and restoration of the Premises or the core and shell of the
Building, as the case may be, necessitated by such damage and shall by notice
advise Tenant of such estimate. If it is so estimated that the amount of time
required to substantially complete such repair and restoration will exceed two
hundred seventy (270) days from the date such damage occurred, then either
Landlord or Tenant (but Tenant shall have such right only if all or a
substantial portion of the Premises is rendered untenantable and the estimated
time for Landlord required to substantially complete such repair or restoration
to render the Premises tenantable will exceed such two hundred seventy (270) day
period) shall have the right to terminate this lease as of the date of notice of
such election by giving notice to the other at anytime within twenty (20) days
after Landlord gives Tenant the notice containing said estimate (it being
understood that Landlord may, if it elects to do so, also give such notice of
termination together with the notice containing said estimate) Unless this lease
is terminated as provided in the preceding sentence, Landlord shall proceed with
reasonable promptness to repair and restore the core and shell of the Building
or the Premises so as to render the Premises tenantable, subject to reasonable
delays for insurance adjustments and delays caused by matters beyond Landlord's
reasonable control, and also subject to zoning laws and building codes then in
effect. Landlord shall have no liability to Tenant, and Tenant shall not be
entitled to terminate this lease (except as hereinafter provided) if such
repairs and restoration are not in fact completed within the time period
estimated by Landlord, as aforesaid, or within said two hundred seventy, (270)
days. However, if such repairs and restoration are not completed by a date
("Outside Date") which is twelve (12) months after the date of such fire or
other casualty (or ninety-five (95) days after the expiration of the time period
estimated by Landlord as aforesaid, if longer than two hundred seventy (270)
days and neither party terminated the lease as permitted), which Outside Date
shall be extended (as to Tenant's ability to terminate only) by all periods of
delay attributable to the acts or omissions of Tenant or Tenant's agents,
employees or contractors, for any reason whatsoever, then either party may
terminate this lease, effective as of the date of notice of such election, by
giving written notice to the other party within thirty (30) day period after
said Outside Date as extended as aforesaid, but prior to substantial completion
of repair or restoration. Notwithstanding anything to the contrary herein set
forth: (i) Landlord shall have no duty pursuant to this Section 17 to repair or
restore any portion of improvements, additions or
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alterations made by or on behalf of Tenant in the Premises, including
improvements performed by Landlord pursuant to the Workletter, if any; (ii)
Landlord shall not be obligated (but may, at its option, so elect) to repair or
restore the Premise's or Building if the damage is due to an uninsurable
casualty or if insurance proceeds are insufficient to pay for such repair or
restoration, or if any Mortgagee applies proceeds of insurance to reduce its
loan balance, and the remaining proceeds, if any, available to Landlord are not
sufficient to pay for such repair or restoration, or (iii) if any such damage
rendering all or substantial portion of the Premises or Building untenantable
shall occur during the last year of the Term. either party (but as to Tenant's
right, only if all or a substantial portion of the Premises is rendered
untenantable) shall have the option to terminate this lease by giving written
notice to the other within thirty (30) days after the date such damage occurred,
and if such option is so exercised this lease shall terminate as of the date of
such notice.
(b) Repair by Tenant. If this lease is not terminated pursuant to this
----------------
Section 17, Tenant shall, subject to Section 14, proceed with reasonable
promptness to repair and restore all alterations, additions and improvements in
the Premises, other than any repairs or restoration required to be made by
Landlord pursuant to Section 17(a) above, to as near the condition which existed
prior to the fire or other casualty as is reasonably possible. Tenant agrees and
acknowledges that Landlord shall be entitled to the proceeds of any insurance
coverage carried by Tenant relating to improvements and betterments to the
Premises, to the extent Landlord is obligated under this Section 17 to repair or
restore damage to those items covered by such insurance or if this lease
terminates.
(c) Abatement of Rent. In the event any such fire or casualty damage
-----------------
renders the Premises untenantable and if this lease shall not be terminated
pursuant to the foregoing provisions of this Section 17 by reason of such
damage, then Rent shall abate during the period beginning with the date of such
damage and ending with the date when Landlord substantially completes its repair
or restoration required hereunder. Such abatement shall be in an amount bearing
the same ratio to the total amount of Rent for such period as the portion of the
Rentable Area of the Premises which is untenantable and not used by Tenant from
time to time bears to the Rentable Area of the entire Premises. In the event of
termination of this lease pursuant to this Section 17, Rent shall be apportioned
on a per diem basis and be paid to the date of the termination.
(d) Untenantability. As used in this lease, the term "untenantable" means
---------------
reasonably incapable of being occupied for its intended use due to damage to the
Premises or Building. Notwithstanding anything contained to the contrary in this
Section 17, neither the Premises nor any portion of the Premises shall be deemed
untenantable if Landlord is not required to repair or restore same, or if
Landlord is required to repair or restore same, when Landlord has substantially
completed the repair and restoration work required to be performed by Landlord
under this Section 17.
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(e) Core and Shell. The term "core and shell" excludes any work related to
--------------
tenant improvements to be constructed by or for Tenant or other tenants or
installed within the Premises or within any other tenant's premises.
18. EMINENT DOMAIN. If the entire Project or the entire Building. or a
--------------
substantial, part of either of them, or any part of the Project which includes
all or a substantial part of the Premises. shall be taken or condemned by any
competent authority for any public or quasi-public use or purpose, the Term of
this lease shall end upon and not before the earlier of the date when the
possession of the part so taken shall be required for such use or purpose or the
effective date of the taking. If any condemnation proceeding shall be instituted
in which it is sought to take or damage any part of the Project, the taking or
damaging of which would, in Landlord's opinion. prevent the economical operation
of the Project, or if the grade of any street or alley adjacent to the Land or
the Building is changed or any such street or alley is closed by any competent
authority, and such taking, damage, change of grade or closing makes it
necessary or desirable to remodel the Building to conform to the taking damage,
change of grade or closing, Landlord shall have the right to terminate this
lease upon written notice to Tenant given not less than ninety (90) days prior
to the date of termination designated in the notice. In either of the events
above referred to, Rent shall be apportioned on a per diem basis and be payable
to the date of the termination. In the event of the termination of this lease
pursuant to this Section 18, no money or other consideration shall be payable by
Landlord to Tenant for the right of termination. Tenant shall have no right to
share in any condemnation award, whether for a total or partial taking, for loss
of Tenant's leasehold or in any judgment for damages caused by any change of
grade or street or alley closing.
19. DEFAULT; LANDLORD'S RIGHTS AND REMEDIES.
---------------------------------------
(a) Default. The occurrence of any one or more of the following matters
-------
constitutes a "Default" by Tenant under this lease:
(i) Failure by Tenant to pay any Rent when due. if such failure
continues for five (5) days after written notice to Tenant of such failure;
(ii) Failure by Tenant to pay any other money required to be paid by
Tenant under this lease when due, if such failure continues for five (5)
days after written notice to Tenant of such failure;
(iii)Failure by Tenant to observe or perform any of the covenants in
respect of assignment and subletting set forth in Section 15;
(iv) Failure by Tenant to cure forthwith, immediately after receipt of
notice from Landlord. any hazardous condition which Tenant has created or
permitted in violation of law or of this lease;
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(v) Failure by Tenant to complete, execute and deliver any
instrument or document required to be completed, executed and delivered by
Tenant pursuant to Section 20 or Section 24 of this lease, within fifteen
(15) days after the initial written demand therefor to Tenant;
(vi) Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this lease, if such failure shall
continue for thirty (30) days after written notice thereof from Landlord to
Tenant; provided that such 30-day period shall be extended for the time
reasonably required to complete such cure, if such failure cannot
reasonably be cured within said 30-day period and Tenant commences to cure
such failure within said 30-day period and thereafter diligently and
continuously proceeds to cure such failure;
(vii) The levy upon execution or the attachment by legal process of
the leasehold interest of Tenant, or the filing or creation of a lien in
respect of such leasehold interest, which lien shall not be released or
discharged within ten (10) days from the date of such filing;
(viii) Tenant vacates or abandons the Premises or fails to take
possession of the Premises, when available for occupancy no later than
thirty (30) days after notice from Landlord that the Premises are available
for occupancy; provided however, the same shall not be deemed to be an
Event of Default if Tenant continues to make all payments of Rent and
otherwise continues to comply with all other terms and conditions of this
Lease. The transfer of a substantial part of the operations, business and
personnel of Tenant to some other location shall be deemed, without
limiting the meaning of the terms "vacates or abandons", to be a vacation
or abandonment within the meaning of this clause (viii);
(ix) Tenant becomes insolvent or bankrupt or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors, or applies for or consents to the appointment of a
trustee or receiver for Tenant or for the major part of its property;
(x) A trustee or receiver is appointed for Tenant or for a major
part of its property, without Tenant's application therefor or consent
thereto, and is not discharged within sixty (60) days after such
appointment;
(xi) Any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding for relief under any bankruptcy
law or similar law for the relief of debtors, is instituted (A) by Tenant,
or (B) against Tenant and is allowed against it or is consented to by it or
is not dismissed within sixty (60) days after such institution; or
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(xii) Failure by Tenant to observe or perform any of the obligations
in respect of the Letter of Credit set forth in Section 30;
(b) Landlord's Rights and Remedies. If a Default occurs, Landlord shall
------------------------------
have the rights and remedies hereinafter set forth, which shall be distinct,
separate and cumulative and shall not operate to exclude or deprive Landlord of
any other right or remedy allowed it at law or in equity:
(i) Landlord may terminate this lease, in which event the Term of
this lease shall end, and all right, title and interest of Tenant hereunder
shall expire, on the date stated in such notice;
(ii) Landlord may terminate the right of Tenant to possession of the
Premises without terminating this lease, Whereupon the right of Tenant to
possession of the Premises or any part: thereof shall cease on the date
stated in such notice; and
(iii)Landlord may enforce the provisions of this lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, and for the enforcement of any other appropriate legal or
equitable remedy, including without limitation distraint for rent,
injunctive relief, recovery of all money due or to become due from Tenant
under any of the provisions of this lease and recovery, of damages incurred
by Landlord by reason of the Default.
(iv) Landlord may cure or correct such Default or take steps to
perform any covenant, agreement, condition or provisions of this lease, and
all costs and expenses incurred by Landlord in so doing (including
reasonable attorneys' fees) shall be paid by Tenant to Landlord as
additional rent upon demand plus interest at the Default Rate (defined in
Section 28(i)) from the date of expenditure. Landlord's proceeding under
the rights reserved to Landlord under this Section 19(b)(iv) shall not in
any way prejudice or waive any rights as Landlord might otherwise have
against Tenant by reason of that or any other Default.
(c) Surrender. If Landlord exercises any of the remedies provided for in
---------
subparagraphs (i) and (ii) of Section 19(b), Tenant shall surrender possession
of and vacate the Premises and immediately deliver possession thereof to
Landlord, and Landlord may re-enter and take complete and peaceful possession of
the Premises, with or without process of law, full and complete license so to do
being hereby granted to Landlord and Landlord may remove all occupants and
property therefrom, using such force as may be necessary, without being deemed
in any manner guilty of trespass, eviction or forcible entry and detainer, and
without relinquishing Landlord's right to Rent or any other right given to
Landlord hereunder or by law or in equity.
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(d) Termination of Right of Possession. If Landlord terminates the right
----------------------------------
of Tenant to possession of the Premises without terminating this lease, as
provided for by subparagraph (ii) of Section 19(b), then Landlord shall be
entitled to recover from Tenant all the fixed dollar amounts of Rent accrued
and unpaid for the period up to and including such termination date, as well as
all other additional sums payable by Tenant, or for which Tenant is liable or in
respect of which Tenant has agreed to indemnify Landlord under any of the
provisions of this lease, which may be then owing and unpaid, and all costs and
expenses, including without limitation court costs and reasonable attorneys'
fees and expenses incurred by Landlord in the enforcement of its rights and
remedies hereunder, and in addition. Landlord shall be entitled to recover from
Tenant from time to time, and Tenant shall remain liable for, all Rent and all
other additional sums thereafter accruing as they become due under this lease
during the period from the date of such notice of termination of possession to
the stated end of the Term. In any such case, Landlord shall use reasonable
efforts to relet the Premises for the account of Tenant for such rent, for such
time (which may be for a term extending beyond the Term of this Lease), in such
portions and upon such terms as Landlord in Landlord's sole: discretion shall
determine, and Landlord shall not be required to accept any tenant offered by
Tenant or to observe any instructions given by Tenant relative to such
reletting. Landlord may give priority over leasing the Premises to any other
space Landlord desires to lease in the Building and shall not be required in any
case to offer rent, length of terms or other terms for the Premises which are or
would be less favorable to Landlord than being offered for comparable space of
Landlord in the Building. Also, in any such case, Landlord may make repairs,
alterations and additions in or to the Premises and redecorate the same to the
extent deemed by Landlord necessary or desirable, and in connection therewith
Landlord may change the locks to the Premises, and Tenant shall upon written
demand pay the cost thereof together with Landlord's expenses of reletting.
Landlord may collect the rents from any such reletting and shall apply the same
first to the payment of the expenses of reentry, redecoration, repair,
alterations and reletting and second to the payment of Rent herein provided to
be paid by Tenant, and any excess or residue shall operate only as an offsetting
credit against the amount of Rent, if any, due and owing or as the same
thereafter becomes due and payable hereunder, but the use of such offsetting
credit to reduce the amount of Rent due Landlord, if any, shall not be deemed to
give Tenant any right title or interest in or to such excess or residue and any
such excess or residue shall belong to Landlord solely; provided that in no
event shall Tenant be entitled to such a credit against Rent in excess of the
aggregate sum (including Base Rent and Additional Rent) which would have been
paid by Tenant for the period for which the credit to Tenant is being determined
had no Default occurred. No such re-entry, repossession, repairs, alterations,
additions or reletting shall be construed as an eviction or ouster of Tenant or
as an election on Landlord's part to terminate this lease, unless a written
notice of such intention is given to Tenant or shall operate to release Tenant
in whole or in part from any of Tenant's obligations hereunder, and Landlord
may, at any time and from time to time, sue and recover judgment for any
deficiencies from time to time remaining after the application from time to time
of the proceeds of any such reletting.
(e) Termination of Lease. In the event of the termination of this lease by
--------------------
Landlord as provided for by subparagraph (i) of Section 19(b), Landlord shall be
entitled to recover from
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Tenant all the fixed dollar amounts of Rent accrued and unpaid for the period up
to and including such termination date, as well as all other additional sums
payable by Tenant, or for which Tenant is liable or in respect of which Tenant
has agreed to indemnify Landlord under any of the provisions of this lease,
which may be then owing and unpaid, and all costs and expenses, including
without limitation court costs and reasonable attorneys' fees and expenses
incurred by Landlord in the enforcement of its rights and remedies hereunder,
and in addition. Landlord shall be entitled to recover an amount equal to the
present value (calculated using a discount rate equal to six percent (6%) per
annum) of the aggregate Base Rent payable for the period from the termination
date stated in Landlord's notice terminating this lease until the date which
would have been the Expiration Date but for such termination, less the present
value (calculated using a discount rate equal to six percent (6%) per annum) of
the fair rental value of the Premises for the same period (which fair rental
value shall be calculated so as to include a reasonable vacancy period for
reletting the Premises and deductions for reasonable expenses and inducements
incurred by Landlord to achieve such reletting, including without limitation
attorneys' fees and expenses, brokerage fees, advertising costs, rent
abatements, tenant improvement allowances and the like).
(f) Tenant's Property. All property of Tenant removed from the Premises by
-----------------
Landlord or which becomes Landlord's property pursuant to any provisions of this
lease or by law may be handled, removed or stored by Landlord at the cost and
expense of Tenant, and Landlord shall in no event be responsible for the value,
preservation or safekeeping thereof. Tenant shall pay Landlord for all expenses
incurred by Landlord in such removal and for storage charges for such property
so long as the same shall be in Landlord's possession or under Landlord's
control. All property not removed from the Premises or retaken from storage by
Tenant within thirty (30) days after the end of the Term, however terminated, or
the termination of Tenant's right of possession, shall, at Landlord's option, be
conclusively deemed to have been conveyed by Tenant to Landlord as by bill of
sale without further payment or credit by Landlord to Tenant.
(g) Bankruptcy Acceptance or Rejection. If Landlord shall not be permitted
----------------------------------
to terminate this lease or Tenant's right of possession of the Premises under
the Bankruptcy Code, Tenant on behalf of itself as a tenant-in-possession or on
behalf of any bankruptcy trustee for Tenant (alternatively referred to as
"Tenant" in this Section 19(g)) agrees, within sixty (60) days after request by
Landlord to the bankruptcy court having jurisdiction over Tenant's bankrupt
estate (the "Bankruptcy Court"), to assume or reject this lease, and Tenant
agrees not to seek or request any extension or continuation of such time in any
bankruptcy proceeding to assume or reject this lease.
Tenant's right to assume this lease as aforesaid shall be expressly
conditioned upon Tenant fully satisfying the requirements under Section
365(b)(1) of the Bankruptcy Code, as such Section may be amended from time to
time. In no event after such assumption of this lease shall any then existing
Default remain uncured for a period in excess of the earlier of ten (10) days or
the time period for curing such default as set forth herein. Failure to cure
such default within such time shall constitute a Default hereunder.
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Landlord and Tenant agree that adequate assurance of performance of this
lease, as set forth in Section 365(b)(1) of the Bankruptcy Code, as such Section
may be amended from time to time. with respect to any monetary Default under
this lease, shall be in the form of cash or immediately available funds in an
amount equal to at least the amount of such monetary Default so as to assure the
Landlord that it will realize the amount of such Default.
If Tenant assumes this lease and proposes to assign this lease pursuant to
the provisions of the Bankruptcy Code to any person or entity who shall have
made a bona fide offer to accept an assignment of this lease, then notice of
such proposed assignment, setting forth (i) the name and address of such person
or entity, (ii) all of the terms and conditions of such offer, and (iii) the
adequate assurance to be provided Landlord to assure such person's or entity's
future performance under this lease, shall be given to Landlord by Tenant within
twenty (20) days after receipt of such offer by Tenant and in no event later
than ten (10) days prior to the date that Tenant shall make application to the
Bankruptcy Court for authority and approval to enter into such assumption and
assignment. In addition. Landlord shall thereupon have the right of first
refusal, to be exercised by notice to Tenant given within ten (10) days prior to
the effective date of such proposed assignment, to accept an assignment of this
lease upon the same terms and conditions and for the same consideration, if any,
as the bona fide offer made by such person or entity, less any brokerage
commissions which may be payable out of any consideration to be paid by such
person or entity for the assignment of this lease.
Any person or entity to which this lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed, without further act or deed,
to have assumed all of the obligations arising under this lease on and after the
date of such assignment; provided, however, that (i) the amount of Rent payable
hereunder from the date of such assignment through and including the remainder
of the Term hereof shall be an amount equal to one hundred fifty percent (150%)
of the amount of Rent provided herein, and (ii) any options to renew or extend
the Term of this lease, and any right of offer or refusal or other options or
rights to lease additional space in the Building shall be terminated effective
as of the date on which such petition was filed with the Bankruptcy Court. In
addition, Tenant shall pay to Landlord fifty percent (50%) of any consideration
paid by such assignee to Tenant in connection with such assignment. Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption of this lease on such terms. Nothing contained in
this Section shall, in any way, constitute a waiver of any provisions of this
lease relating to assignment or subletting.
All monies or other considerations payable by Tenant or otherwise to be
delivered to or on behalf of Landlord under this lease, whether or not expressly
denominated as Rent hereunder, shall constitute rent for the purposes of Section
502(b)(6) of the Bankruptcy Code, as such Section may be amended from time to
time, and be the sole property of Landlord.
From and after the date of the filing of any petition with the Bankruptcy
Court, to the extent permitted by applicable law, Landlord shall have no
obligation to provide any services or utilities to the Premises as herein
required, unless and until Tenant shall have paid and be current
29
<PAGE>
in all payments or other charges therefor. Such payments and charges shall
constitute administrative charges or expenses under Section 507(a)(1) of the
Bankruptcy Code. as such Section may be amended from time to time.
(h) Waiver of Notices Not Provided for in this Lease. Except as expressly
------------------------------------------------
otherwise set forth in this Lease, Tenant expressly waives the service of: (i)
any notice of intention to terminate this lease or to reenter the Premises; (ii)
any demand for payment of rent or for possession; and (iii) any and every other
notice or demand prescribed by any ordinance, statute or other law; and Tenant
agrees that the breach of any covenants or agreements provided in this lease
shall, in and of itself, without the service of any notice or demand whatever
(except as expressly otherwise provided in this lease), constitute a forcible
detainer by Tenant of the Premises.
(i) Waiver of Trial by Jury. Landlord and Tenant hereby do waive trial by
-----------------------
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matter whatsoever arising out of or in any way
connected with this lease, the relationship of Landlord and Tenant. Tenant's use
of or occupancy of the Premises or any claim of injury or damage and any
emergency statutory or any other statutory remedy. If Landlord commences any
summary proceeding for non-payment of rent, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding.
20. RIGHTS OF MORTGAGEES AND GROUND LESSORS.
---------------------------------------
(a) Subordination of Lease. Landlord may have heretofore or may hereafter
----------------------
encumber with a mortgage or trust deed the Building, the Land, the Project, any
part thereof or any interest therein, may sell and lease back the Land. or any
part of the Project and may encumber the leasehold estate under such a sale and
leaseback arrangement with a mortgage or trust deed. (Any such mortgage or trust
deed is herein called a "Mortgage" and the holder of any such mortgage or the
beneficiary under any such trust deed, is herein called a "Mortgagee." Any such
lease of the Land or other part of the Project is herein called a "Ground Lease"
and the lessor Under any such lease is herein called a "Ground Lessor.") This
lease and the rights of Tenant hereunder shall be and are hereby expressly made
subject to and subordinate at all times to any Mortgage and to any Ground Lease
now or hereafter existing, and to all amendments, modifications, renewals,
extensions, consolidations and replacements thereof, and to all advances made or
hereafter to be made upon the security thereof. Tenant agrees to execute and
deliver to Landlord such further instruments consenting to or confirming the
subordination of this lease to any Mortgage and to any Ground Lease and
containing such other provisions which maybe requested in writing by Landlord
within ten (10) days after Tenant's receipt of such written request.
(b) Notice of and Opportunity to Cure Defaults. Tenant agrees that if
------------------------------------------
Landlord defaults in the performance or observance of any covenant or condition
of this lease required to be performed or observed by Landlord hereunder, Tenant
will give written notice specifying such
30
<PAGE>
default by certified or registered mail, postage prepaid to any Mortgagee or
Ground Lessor of which Tenant has been notified in writing, and before Tenant
exercises any right or remedy which it may have on account of any such default
of Landlord, such Mortgagee or Ground Lessor shall have a reasonable amount of
time to cure such default of Landlord, if such default can be cured without such
Mortgagee or Ground Lessor taking possession of the mortgaged or leased estate,
or to obtain possession of the mortgaged or leased estate and then to cure such
default of Landlord, if such default cannot be cured without such Mortgagee or
Ground Lessor taking possession of the mortgaged or leased estate.
(c) Rights of Successors. If any Mortgage is foreclosed or Landlord's
--------------------
interest under this lease is conveyed or transferred in lieu of foreclosure, or
if any Ground Lease is terminated:
(i) No person or entity which as the result of any of the foregoing
has succeeded to the interest of Landlord in this lease (any such person or
entity being hereafter called a ("Successor") shall be liable for any
default by Landlord or any other matter which occurred prior to the date
such Successor succeeded to Landlord's interest in this lease, nor shall
such Successor be bound by or subject to any offsets or defenses which
Tenant may have against Landlord or any other predecessor in interest to
such Successor.
(ii) Upon request of any Successor, Tenant will attorn to such
Successor, as Landlord under this lease, subject to the provisions of this
Section 20(c) and Section 20(e), and will execute and deliver such
instruments as may be necessary or appropriate to evidence such attornment
within ten (10) days after receipt of a written request to do so.
(iii)No Successor shall be bound to recognize any prepayment by more
than thirty (30) days of Base Rent or Additional Rent.
(d) Subordination of Mortgage. Notwithstanding anything to the contrary
-------------------------
contained herein, any Mortgagee may subordinate, in whole or in part, its
Mortgage to this lease by sending Tenant notice in writing subordinating all or
any part of such Mortgage to this lease, and Tenant agrees to execute and
deliver to such Mortgagee such further instruments consenting to or confirming
the subordination of all or any portion of its Mortgage to this lease and
containing such other provisions which may be requested in writing by such
Mortgagee within ten (10) days after Tenant's receipt of such written request.
(e) Liability of Mortgagee and Ground Lessor. Whether or not any Mortgage
----------------------------------------
is foreclosed or any Ground Lease is terminated or any Mortgagee or Ground
Lessor succeeds to any interest of Landlord under this lease, no Mortgagee or
Ground Lessor shall have any liability to Tenant for any security deposit paid
to Landlord by Tenant hereunder, unless such security deposit has actually been
received by such Mortgagee or Ground Lessor.
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(f) Requests by Mortgagee or Ground Lessor. Should any prospective
--------------------------------------
Mortgagee or Ground Lessor require a modification or modifications of this lease
which modification or modifications will nor cause an increased cost or expense
to Tenant or in any other way materially and adversely change the rights and
obligations of Tenant hereunder, in the reasonable judgment of Tenant, then and
in such event, Tenant agrees that this lease may be so modified and agrees to
execute whatever documents are required therefor and deliver the same to
Landlord within ten (10) days following written request therefor. Should any
prospective Mortgagee or Ground Lessor require execution of a short form of this
lease for recording (containing, among other customary provisions, the names of
the parties, a description of the Premises and the Term of this lease). Tenant
agrees to execute such short form of lease and deliver the same to Landlord
within ten (10) days following the request therefor.
(g) Power of Attorney. If Tenant fails within fifteen (15) days after
-----------------
initial written demand therefor to execute and deliver any instruments as may be
necessary or proper to effectuate any of the covenants of Tenant set forth above
in this Section 20, Tenant hereby makes constitutes and irrevocably appoints any
one of Landlord or any of Landlord's beneficiaries or partners in such
beneficiaries as attorney-in-fact for Tenant (such power of attorney being
coupled with an interest) with full power and authority (but with only such
power and authority) to execute and deliver any such instruments for and in the
name of Tenant.
(h) Modifications to or Surrender of Lease. This lease may not be modified
--------------------------------------
or amended so as to reduce the rent or shorten the Term, or so as to adversely
affect in any other respect to any material extent the rights of the Landlord,
nor shall this lease be canceled or surrendered, without the prior written
consent, in each instance, of the First Mortgagee or any Ground Lessor.
21. DEFAULT UNDER OTHER LEASES. If the term of any lease, other than this
--------------------------
lease, heretofore or hereafter made by Tenant for any space in the Building
shall be terminated or terminable after the making of this lease because of any
default by Tenant or any such other party under such other lease, such tact
shall empower Landlord, at Landlord's sole option, to terminate this lease by
written notice to Tenant or to exercise any of the rights or remedies set forth
in Section 19.
22. INSURANCE AND SUBROGATION.
--------------------------
(a) Tenant's Insurance. Tenant shall carry insurance during the entire
------------------
Term hereof insuring Tenant, and insuring Landlord, Landlord's beneficiaries (if
Landlord is ever a land trust), any building manager, all Mortgagees and Ground
Lessors and their respective agents, partners and employees, with terms,
coverages and in companies satisfactory to Landlord, and with such changes in
insured parties and increase in limits as Landlord may from time to time
request, but initially Tenant shall maintain the following coverages in the
following amounts:
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(i) Public liability insurance with the broad form commercial
liability endorsement, including contractual liability insurance
covering Tenant's indemnity obligations hereunder, insuring
against claims for death, bodily injury, personal injury and
property damage occurring upon, in or about the Premises in an
amount not less than $2,000,000.00 per occurrence and having a
general aggregate amount on a per location basis of not less than
$4,000,000.00, Landlord shall be named as an additional insured
on such policy.
(ii) "All risk" physical damage insurance including fire, sprinkler
leakage, vandalism and extended coverage for the full replacement
cost of all additions, improvements and alterations to the
Premises (providing that Landlord is an additional named insured
as its interest may appear) and of all office furniture, trade
fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises.
(iii) Extra expense and business interruption insurance for periods and
with limits not less than those carried by a prudent tenant.
Tenant shall, prior to the commencement of the Term and from time to time
during the Term, furnish to Landlord certified copies of policies or
certificates (with proof of payment) evidencing the foregoing insurance
coverage. Tenant's policies shall state that such insurance coverage may not be
amended, canceled or not renewed without at least thirty (30) days' prior
written notice to Landlord and Tenant (unless such cancellation is due to non-
payment of premium, and in that case only ten (10) days' prior written notice
shall be sufficient).
(b) Waiver of Subrogation. Landlord and Tenant each agree to have all
---------------------
property or physical damage insurance which it may carry endorsed with a clause
providing that any release from liability of or waiver of claim for recovery
from the other party or any of the parties named in Section 22(a) above or
Released Parties described in Section 16(a) entered into in writing by the
insured thereunder prior to any loss or damage shall not affect the validity of
said policy or the right of the insured to recover thereunder. Each such policy
shall provide further that the insurer waives all rights of subrogation which
such insurer might have against any of the parties named in Section 22(a) above.
Landlord and Tenant further agree to first seek recovery under any applicable
insurance policy before proceeding against the other. Notwithstanding the
foregoing or anything contained in this lease to the contrary, any release or
waiver of claims shall not be operative, nor shall the foregoing endorsements be
required, in any case where the effect of such release or waiver is to
invalidate insurance coverage or invalidate the right of the insured to recover
thereunder or increase the cost thereof (provided that in the case of increased
cost the other party shall have the right, within ten (10) days following
written notice, to pay such increased cost, thereby keeping such release or
waiver in full force and effect).
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(c) Landlord's Insurance. Landlord shall carry during the Term hereof
--------------------
replacement cost property insurance on the Building (but excluding alterations,
additions or improvements to the Premises) against fire and other extended
coverage perils in an amount sufficient to prevent Landlord from being deemed a
co-insurer of the risks insured under the policy.
23. NONWAIVER. No waiver of any condition expressed in this lease shall
---------
be implied by any neglect of Landlord to enforce any remedy on account of the
violation of such condition, whether or not such violation be continued or
repeated subsequently, and no express waiver shall affect any condition other
than the one specified in such waiver and that one only for the time and in the
manner specifically stated. Without limiting Landlord's rights under the
provisions of Section 11, it is agreed that no receipt of money by Landlord from
Tenant after the termination in any way of the Term or of Tenant's right of
possession hereunder or after the giving any notice shall reinstate continue or
extend the Term or affect any notice given to Tenant prior to the receipt of
such money. It is also agreed that after the service of notice or the
commencement of a suit or after final judgment for possession of the Premises,
Landlord may receive and collect any money due, and Landlord's receipt and
collection of said money shall not waive or affect any said notice, suit or
judgment.
24. ESTOPPEL CERTIFICATE. Tenant agrees that from time to time upon not
--------------------
less than fifteen (15) days' prior request by Landlord, or any existing or
prospective Mortgagee or Ground Lessor, Tenant will, and Tenant will cause any
subtenant, licensee, concessionaire or other occupant of the Premises claiming
by, through or under Tenant, to complete, execute and deliver to Landlord or
Landlord's designee or to any existing or prospective Mortgagee or Ground
Lessor, a written estoppel certificate certifying (a) that this lease is
unmodified and is in full force and effect (or if there have been modifications,
that this lease, as modified, is in full force and effect and setting forth the
modifications); (b) the amounts of the monthly installments of Base Rent and
Additional Rent Estimate then required to be paid under this lease; (c) the date
to which Rent has been paid; (d) that to the best of Tenant's knowledge,
Landlord is not in default under any of the provisions of this lease, or if in
default, the nature thereof in detail and what is required to cure same; and (e)
such other information concerning the status of this lease or the parties'
performance hereunder reasonably requested by Landlord or the party to whom such
estoppel certificate is to be addressed. Tenant hereby appoints any one of
Landlord or any of Landlord's beneficiaries as attorney-in-fact for Tenant (such
power of attorney being coupled with an interest) with full power and authority
(but with only such power and authority) to execute and deliver for and in the
name of Tenant any such estoppel certificate so requested by Landlord or any
existing or prospective Mortgagee or Ground Lessor. Tenant's failure to
complete, execute and deliver such estoppel certificate within the aforesaid 15-
day period, shall be deemed to be an Event of Default under Section 19 of this
lease.
25. TENANT CORPORATION OR PARTNERSHIP. In case Tenant is a corporation,
---------------------------------
Tenant represents and warrants that this lease has been duly authorized,
executed and delivered by and on behalf of Tenant and constitutes the valid and
binding agreement of Tenant in accordance with the terms hereof. In case Tenant
is a partnership, (a) Tenant represents and
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warrants that all of the persons who are general or managing partners in said
partnership have executed this lease on behalf of Tenant, or that this lease has
been executed and delivered pursuant to and in conformity with a valid and
effective authorization therefor by all of the general or managing partners of
such partnership, and is and constitutes the valid and binding agreement of the
partnership and each and every partner therein in accordance with its terms, to
the extent permitted by law, and (b) if Landlord so requests. Tenant shall
deliver to Landlord, concurrently with the delivery of this lease executed by
Tenant, authorization of the general partners (and limited partners, if
required) of Tenant authorizing Tenant's execution and delivery of this lease
and the performance of Tenant's obligations hereunder, certified as true and
correct by a general partner of Tenant. Also, it is agreed that each and every
present and future individual partner, if Tenant is a partnership, in Tenant
shall be and remain at all times jointly and severally liable hereunder, to the
extent permitted by law, and that the death, resignation or withdrawal of any
such partner shall not release the liability of such partner under the terms of
this lease unless and until Landlord shall have consented in writing to such
release. If Tenant is a partnership or corporation whose stock is not publicly
traded. Tenant represents and warrants to Landlord that it has disclosed in
writing to Landlord the persons or entities who individually or collectively own
a controlling interest in Tenant as of the date of the execution of this lease.
26. REAL ESTATE BROKERS. Tenant represents and warrants to Landlord that
-------------------
Tenant did not deal with any broker in connection with this lease other than the
Brokers identified in Section l(b). Landlord hereby agrees to pay the brokerage
commissions payable to Said Brokers in accordance with a written agreement
between Landlord and such Broker. Tenant shall indemnify, defend and hold
Landlord, Landlord's beneficiaries, the managing agent of the Project, the
leasing agent of the Project and their respective agents, partners and employees
and the Project harmless of, from and against any and all losses, damages,
liabilities, claims, liens, costs and expenses, including without limitation
court costs and reasonable attorneys' fees and expenses, arising from any claims
or demands of any other broker or brokers or finders for any commission alleged
to be due such other broker or brokers or finders claiming to have dealt with
Tenant in connection with this lease or with whom Tenant hereafter deals or whom
Tenant employs.
27. NOTICES. All notices, waivers, demands, requests or other
-------
communications required or permitted hereunder shall, unless otherwise expressly
provided, be in writing and be deemed to have been properly given, served and
received (a) if delivered personally or by courier messenger, when delivered,
(b) if mailed, on the third (3rd) business day after deposit in the United
States Mail, certified or registered, postage prepaid, return receipt requested.
35
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If to Landlord: CStone-Oakbrook, Inc.
c/o Hines
One Lincoln Center
Oakbrook Terrace, Illinois 60181
Attention: Property Manager
with an additional copy to:
Cornerstone Properties, Inc.
126 East 56th Street
New York, New York 10022
Attention: Vice President - Asset Management
If to Tenant:
Prior to occupancy of
the Premises by Tenant: Marcam Corporation
801 Warrenville Road
Suite 250
Lisle, Illinois 60532
Attention: Tom Donofrio, Regional Manager
with a copy to:
General Counsel
Marcam Corporation
95 Wells Avenue
Newton, Massachusetts 02159
After occupancy of
the Premises by Tenant: Marcam Corporation
One Lincoln Centre
Suite 120
Oakbrook Terrace, Illinois 60181
Attention: Tom Donofrio, Regional Manager
with a copy to:
General Counsel
Marcam Corporation
95 Wells Avenue
Newton, Massachusetts 02159
36
<PAGE>
or to such other address(es) or addressee(s) as any party entitled to receive
notice hereunder shall designate to the others in the manner provided herein for
the service of notices. Rejection or refusal to accept or inability to deliver
because of changed address or because no notice of changed address was given,
shall be deemed receipt.
28. MISCELLANEOUS.
-------------
(a) Successors and Assigns. Each provision of this lease shall extend to
----------------------
and shall bind and inure to the benefit not only of Landlord and Tenant, but
also their respective heirs, legal representatives, successors and assigns, but
this provision shall not operate to permit any assignment, subletting, mortgage,
lien, charge, or other transfer or encumbrance contrary to the provisions of
this lease.
(b) Amendment. No modification, waiver or amendment of this lease or of
---------
any of its conditions or provisions shall be binding upon Landlord unless the
same shall be in writing and signed by Landlord.
(c) Offer. Submission of this instrument for examination shall not
-----
constitute a reservation of or option for the Premises or in any manner bind
Landlord, and no lease or obligation on Landlord shall arise until this
instrument is signed and delivered by Landlord and Tenant; provided, however,
the execution and delivery by Tenant of this lease to Landlord, or the managing
agent of the Project or the leasing agent of the Project shall constitute an
irrevocable offer by Tenant to lease the Premises on the terms and conditions
herein contained, which offer may not be revoked for thirty (30) days after such
delivery.
(d) Tenant. The word "Tenant" whenever used herein shall be construed to
------
mean Tenants or any one or more of them in all cases where there is more than
one Tenant; and the necessary grammatical changes required to make the
provisions hereof apply either to corporations or o[her organizations,
partnerships or other entities, or individuals, shall in all cases be assumed as
though in each case fully expressed. In all cases where there is more than one
Tenant, (a) the liability of each shall be joint and several and (b) any one
person or entity comprising Tenant may give any notice or approval required or
permitted to be given by Tenant under this Lease and such notice or approval
shall be deemed binding upon all persons or entities comprising Tenant and may
be relied upon by Landlord as if such notice or approval had been given by all
persons or entities comprising Tenant.
(e) Expenses of Enforcement. The non-prevailing party shall pay upon
-----------------------
demand all of the reasonable costs, charges and expenses (including the court
costs and fees and out-of-pocket expenses of counsel, agents and others retained
by the prevailing party) incurred by the prevailing party in enforcing the terms
of this lease, and a party shall also pay such costs and expenses incurred by
the other party in any litigation, negotiation or transaction in which said
party causes the other party without the other party's fault to become involved
or concerned. Any amount due
37
<PAGE>
from Tenant to Landlord pursuant to this Section shall be deemed to be
additional Rent due under this Lease.
(f) Exhibits and Riders. Exhibits and riders, if any, referred to in or
-------------------
affixed to this lease are made an integral part hereof.
(g) Approval of Plans and Specifications. Neither review nor approval by
------------------------------------
or on behalf of Landlord of any Tenant's Plans nor any plans and specifications
for any Tenant Alterations or any other work shall constitute a representation
or warranty by Landlord, any of Landlord's beneficiaries, the managing agent of
the Project or any of their respective agents, partners or employees that such
Tenant's Plans or other plans and specifications either (i) are complete or
suitable for their intended purpose, or (ii) comply with applicable Laws, it
being expressly agreed by Tenant that neither Landlord, nor any of Landlord's
beneficiaries, nor the managing agent of the Project nor any of their respective
agents, partners or employees assume any responsibility or liability whatsoever
to Tenant or to any other person or entity for such completeness, suitability or
compliance.
(h) Time of Essence. Time is of the essence of this lease and of each and
---------------
all provisions hereof.
(i) Due Date; Interest. Except as otherwise specifically provided in this
------------------
lease, all amounts owed by Tenant to Landlord pursuant to any provision of this
lease shall be paid by Tenant within ten (10) days after Landlord's written
demand, and all such amounts (including, without limitation, Base Rent and
Additional Rent) shall bear interest from the date due until paid at the annual
rate equal to the Default Rate (hereinafter defined), unless a lesser rate shall
then be the maximum rate permissible by law with respect thereto, in which event
such lesser rate shall be charged. The term "Default Rate" means three (3)
percentage points in excess of the rate of interest announced from time to time
by The First National Bank of Chicago, Chicago, Illinois, as its "prime rate" or
"corporate base rate," changing as and when such rate changes (the "Prime
Rate"). The provisions of this subparagraph shall in no way relieve Tenant of
the obligation to pay Rent or any other sums due hereunder on or before the date
on which payment is due, nor shall the collection by Landlord of any amount
under this subparagraph impair the ability of Landlord to collect any amount
under Section 19 of this lease.
(j) Interpretation. The invalidity of any provision of this lease shall
--------------
not, to the extent commercially reasonable, impair or affect in any manner the
validity, enforceability or effect of the rest of this lease.
(k) Force Majeure. Without limiting or being limited by the provisions of
-------------
Section 8 or Section 13, or any of the other provisions of this lease, if
Landlord tails to perform timely any of the terms, covenants or conditions of
this lease on Landlord's part to be performed, and such failure is due in whole
or in part to any strike, lockout, labor trouble, civil disorder, riot,
insurrection, act of terrorism, war, accident, fire or other casualty, adverse
weather condition, act
38
<PAGE>
of God, governmental inaction, restrictive governmental law or regulation,
inability, to procure materials, electricity, gas, other fuel or water or other
utilities at the Building after reasonable effort to do so, act or event caused
directly or indirectly by or by default of Tenant or any of Tenant's employees,
agents, licensees, invitees or contractors, concealed subsurface condition not
reasonably anticipated from test results obtained prior to commencement of work
or any cause beyond the reasonable control of Landlord, then Landlord shall not
be deemed in default under this lease as a result of such failure.
(l) Parking Areas. Tenant shall be entitled to the non-exclusive use of
-------------
available parking spaces, not in excess of three and six-tenths (3.6) spaces for
every one thousand (1,000) square feet of Rentable Area of the Premises, in
common with tenants and other persons in the parking area on a first-come, first
served basis, for the parking of automobiles. Landlord shall not be required to
monitor or police use of the parking area. Tenant may not park vehicles in the
parking area overnight and may not park in driveways, roadways or "no parking",
or "visitor parking" zones. Landlord reserves the right to designate spaces in
the parking area for the exclusive use of tenants or other persons, and such
spaces shall not be deemed available to tenant. Tenant shall comply with any
rules and regulations imposed by Landlord from time to time with respect to
parking areas. Any vehicle parked in violation of the parking provisions set
forth herein may be towed, and Tenant shall pay all towing charges. If for any
reason Landlord fails or is unable to provide all or any portion of the above-
described parking spaces to Tenant or Tenant is not permitted to utilize all or
any portion of such parking spaces at any time during the Term of this Lease,
such tact shall not be a default by Landlord as to permit Tenant to terminate
this Lease, either in whole or in part, and Tenant hereby waives all claims that
Tenant might otherwise have against Landlord by reason of Landlord's failure or
inability to provide Tenant with such parking spaces. Landlord shall not be
liable for damage to, or destruction of any automobile parked in the building
parking facility, or to any personal property contained within such automobile,
by any cause or occurrence, subject to the provisions of Section 16(c).
(m) Application of Payments. Landlord shall have the right to apply
-----------------------
payments received from Tenant pursuant to this lease (regardless of Tenant's
designation of such payments) to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole discretion, may elect.
(n) Cumulative Remedies; Illinois Law. The rights and remedies of
---------------------------------
Landlord under this lease are cumulative and none shall exclude any other rights
or remedies allowed by law or equity. This lease is for the lease of space in a
building located in the State of Illinois and is declared to be an Illinois
contract, and all of its terms shall be construed according to the laws of the
State of Illinois.
(o) Counterparts. This lease may be simultaneously executed in several
------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument, except that in the event of
variation or discrepancy between counterparts, the counterpart held by Landlord
shall control.
39
<PAGE>
(p) Relationship. Landlord and Tenant disclaim any intention to create a
------------
joint venture, partnership or agency relationship.
(q) Action on Behalf of Landlord. Any service which may be provided by
----------------------------
Landlord under this lease may be provided by Landlord, any beneficiary, of
Landlord, any partner of any such beneficiary, the managing agent of the Project
or any agent or contractor of any of them, and the cost to Landlord of any such
agent or contractor shall be included in any charge to Tenant for such service.
Except as provided in the following sentence, any right reserved to Landlord
under this lease may be exercised by Landlord, any beneficiary of Landlord, the
managing agent of the Project or any agent, contractor or designee of any of
them. Any notice, demand, consent or approval which may be given by Landlord
under this lease may be given only by Landlord, any beneficiary of Landlord, the
managing agent of the Project or any agent or attorney of any of them.
(r) Entire Agreement. This lease contains the entire: agreement between
----------------
Landlord, all beneficiaries of Landlord, the leasing agent of the Project, the
managing agent of the Project and their respective agents, partners and
employees and Tenant and its agents and employees, with respect to its subject
matter, and all negotiations, considerations, representations understandings and
agreements, oral or written, which may have been previously made between any of
the foregoing parties are incorporated and merged into this lease. In executing
and delivering this lease, Tenant has not relied on any representation, warranty
or statement by Landlord, any of Landlord's beneficiaries, the leasing agent of
the Project, the managing agent of the Project or any of their respective
agents, partners or employees, which is not set forth in this lease, including
without limitation any representation as to the amount of any Additional Rent,
or any component thereof, or any representation that Landlord is furnishing the
same services to other tenants, at all, on the same level or on the same basis.
(s) Financial Statements. Tenant shall deliver to Landlord, within thirty
--------------------
days after the end of each fiscal quarter, and within ninety (90) days after the
end of each fiscal year, of Tenant, Tenant's quarterly or annual financial
statements, as the case may be, including balance sheets, income statements and
cash flow statements, prepared in accordance with generally accepted accounting
principles consistently applied; provided, however, that Tenant shall be
required to make any such delivery only if so requested in writing by Landlord,
such requests to be made no more often than one time each per year unless Tenant
shall be in default under this Lease, in which event, no such limit in the
number of requests shall apply. Such financial statements shall be certified by
the chief financial officer of Tenant as being true, accurate and complete in
all material respects. Notwithstanding the foregoing, Tenant's obligations with
respect to such financial statements shall be deemed to be satisfied if Tenant
delivers to Landlord such financial statements as Tenant is otherwise required
to deliver or make available to shareholders of Tenant generally in accordance
with applicable legal requirements. Landlord shall have the right, exercisable
once during each year of the Term, to cause, at Landlord's expense, an
independent certified public accountant to audit Tenant's annual financial
statements. Tenant shall also, upon Landlord's reasonable requests from time to
time, deliver to Landlord such other
40
<PAGE>
financial information regarding Tenant as may be reasonably available. Landlord
shall not disclose such financial information to any third party other than its
lenders, consultants, advisors, attorneys and accountants or as may be otherwise
required by, a government or governmental agency or pursuant to court order.
29. EARLY OCCUPANCY. If Tenant takes possession of all or any part of the
---------------
Premises for purposes of conducting its business prior to the Commencement Date
(which Tenant may not do without Landlord's prior written consent), all of the
covenants and conditions of this lease shall be binding upon the parries with
respect to the Premises, or the part so occupied, as though the Commencement
Date had occurred on the date when Tenant so took such possession, and Tenant
shall pay Rent and all other amounts required to be paid by Tenant under this
lease for the period of such possession prior to the Commencement Date at the
annual rates which would be payable under this lease for the first year of the
Term (without taking into consideration any rent abatement that may be provided
for in this lease, rile same as if there was no such abatement if any), except
that if less than substantially all of the Premises is occupied, such Rent shall
be apportioned based on the proportionate Rentable Area of the total Premises so
occupied.
30. SECURITY DEPOSIT.
----------------
(a) Cash. Tenant has deposited with Landlord or Landlord's beneficiaries
----
the Security Deposit set forth in Section l(k) hereof as security for the full
and faithful performance of every provision of this lease to be performed by
Tenant. If Tenant defaults with respect to any provision of this lease,
including but not limited to the provisions relating to the payment of Rent,
Landlord may use, apply or retain all or any part of the Security Deposit for
the payment of any Rent and any other sum in default, or for the payment of any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of the
Security Deposit is so used or applied, Tenant shall within five (5) days after
written demand therefor deposit cash with Landlord or Landlord's beneficiaries
in an amount sufficient to restore the Security Deposit to its original amount,
and Tenant's failure to do so shall be a material breach of this lease. Except
to the extent required by law, neither Landlord nor any beneficiaries of
Landlord shall be required to keep the Security Deposit separate from its or
their general funds and Tenant shall not be entitled to interest on the Security
Deposit. If Tenant shall fully and faithfully perform each and every provision
of this lease to be performed by it, the Security Deposit or any balance thereof
shall be returned to Tenant (or at Landlord's option to the last permitted
assignee of Tenant's interest hereunder, if any) within thirty (30) days after
the expiration of the lease Term and Tenant's vacation of the Premises. Landlord
may deliver-the Security Deposit fund's deposited hereunder by Tenant to the
purchaser of Landlord's or Landlord's beneficiaries' interest in the Project, in
the event that such interest is sold, transferred or Conveyed, and thereupon
Landlord and Landlord's beneficiaries shall be discharged from any further
liability with respect to the Security Deposit.
41
<PAGE>
(b) Letter of Credit. Notwithstanding the foregoing, Tenant may
----------------
concurrently with the execution of this lease, deposit with Landlord in lieu of
cash, an irrevocable Letter of Credit for the benefit of Landlord in the amount
of the Letter of Credit Amount (as extended or replaced as provided below, the
"Letter of Credit") and such amount shall constitute the Security Deposit.
(i) The Letter of Credit shall be subject to the following terms
and conditions:
(A) The Letter of Credit shall be issued by a major national
bank acceptable to Landlord in its sole discretion and name Landlord as the
beneficiary thereunder. In any event, the Letter of Credit shall provide
that Landlord shall have the absolute right to drawn thereon upon the
submission by Landlord to the issuer of a statement certifying that
Landlord is entitled to use or apply any portion of the Security Deposit in
accordance with the terms of this lease.
(B) At least forty, five (45) days prior to the expiry date
of the then-current Letter of Credit, Tenant shall either: (I) substitute
the existing Letter of Credit with another letter of credit which satisfies
each of the conditions set forth herein, or (II) cause to be extended, and
the issuer of the then-current Letter of Credit shall therein expressly
engage to extend, the expiry date of the Letter of Credit for a period
expiring nor less than one (1) year after the expiry date of the then-
current Letter of Credit.
(C) Failure by Tenant to furnish a substitute letter of
credit as aforesaid or cause the expiry date of the then-current Letter of
Credit to be extended shall constitute a Default under this Lease. In such
event, Landlord shall have the right (but shall not be obligated) to draw
on the then-current Letter of Credit at any time within thirty (30) days
prior to the expiry date. If Landlord shall exercise such right, and
provided the issuer shall, in fact, honor any such draft of Landlord on the
then-current Letter of Credit promptly after presentation thereof, the
Default shall be deemed to have been cured and in such case the proceeds of
the Letter of Credit shall be held and applied as a cash Security Deposit
pursuant to Section 30(a) above.
-------------
(ii) The "Letter of Credit Amount" shall be $125,000.00 on the date
of this lease and shall thereafter, beginning on the date that is three (3)
months after the Commencement Date (or in the event the Commencement Date occurs
on a day other than the first day of a calendar month, beginning on the date
that is three months after the first day of the calendar month following the
calendar month in which the Commencement Date occurs), decrease in equal amounts
every three months on the following schedule, such that the Letter of Credit
Amount on the day after the Expiration Date shall be Zero Dollars ($0):
Date* Letter of Credit Amount
----- -----------------------
Date of Lease $125.000.00
6 months after Commencement Date $112,500.00
42
<PAGE>
1 year after Commencement Date $100,000.00
18 months after Commencement Date $ 87,500.00
2 years after Commencement Date $ 75,000.00
30 months after Commencement Date $ 62,000.00
3 years after Commencement Date $ 50,000.00
42 months after Commencement Date $ 37,500.00
4 years after Commencement Date $ 25,000.00
54 months after Commencement Date $ 12,500.00
1 day after the Expiration Date $ -0-
* For purposes of this schedule only, "Commencement Date" shall mean the
Commencement Date or, in the event the Commencement Date occurs on a day other
than the first day of a calendar month, the first day of the calendar month
following the calendar month in which the Commencement Date occurs.
31. SUBSTITUTION OF OTHER PREMISES.
------------------------------
(a) Right of Substitution. At any time after the Commencement Date,
---------------------
Landlord shall have the right to substitute for the Premises then being leased
(the "Existing Premises") other premises within the Building (the "New
Premises"), provided that the New Premises shall be of comparable size and shall
either have substantially the same configuration of the Existing Premises or a
configuration substantially as usable for the purposes for which the Existing
Premises are being used by Tenant and provided further that Tenant shall not be
moved more than twice during the Term and provided further that the New Premises
shall have elevator lobby exposure.
(b) Substitution Prior to Tenant's Possession. If possession of the
-----------------------------------------
Existing Premises has not yet been delivered to Tenant, then as of the date
Landlord gives notice of a substitution, such substitution shall be effective,
the New Premises shall be the Premises hereunder and the Existing Premises shall
cease to be the Premises hereunder.
(c) Substitution After Tenant's Possession. The provisions of this
--------------------------------------
subsection (c) shall apply if possession of the Existing Premises has already
been delivered to Tenant as of the date Landlord gives notice of substitution.
Tenant shall vacate and surrender the Existing Premises not later than the later
of the sixtieth (60th) day after the date Landlord gives notice of substitution
or the day after Landlord has substantially completed the work to be done by
Landlord in the New Premises pursuant to this subsection (c). As of the earlier
of the date of such vacation and surrender or the date when such vacation and
surrender is required, the New Premises shall be the Premises hereunder and the
Existing Premises shall cease to be the Premises hereunder, Landlord shall (i)
pay the actual and reasonable out-of-pocket expenses incurred by Tenant in
connection with moving its property (including reasonable business card and
stationery expenses) from the Existing Premises to the New Premises, and (ii)
improve the New Premises so that they are substantially similar to the Existing
Premises and promptly reimburse Tenant for its actual and reasonable out-of-
pocket costs incurred in connection with the relocation of any telephone or
other
43
<PAGE>
communications equipment from the Existing Premises to the New Premises.
However, instead of paying Tenant's expenses incurred in connection with moving
its property. Landlord may elect to either move Tenant's property or provide
personnel to do so under Tenant's direction, in which event such move may not be
made except during evenings, weekends or holidays, so as to incur the least
inconvenience to Tenant.
(d) No Compensation or Damages. Tenant shall not be entitled to any
--------------------------
compensation for any inconvenience or interference with Tenant's business, nor
to any abatement or reduction i11 Rent, nor shall Tenant's obligations under
this lease be otherwise affected, as a result of the substitution of the New
Premises, except as otherwise expressly provided in this Section 31. Tenant
agrees to cooperate with Landlord so as to facilitate the prompt completion by
Landlord of its obligations under this Section 31. Without limiting the
generality of the preceding sentence, Tenant agrees to promptly provide to
Landlord such approvals, instructions, plans, specifications and other
information as may be reasonably requested by Landlord in connection with such
obligations.
(e) Miscellaneous. Upon substitution of the New Premises for the Existing
-------------
Premises, the Rentable Area of the: New Premises shall be substituted for the
Rentable Area of the Existing Premises. Further Tenant Proportionate Share and
Base Rent shall be recalculated and adjusted based on the new Rentable Area of
the New Premises. At Landlord's request, Tenant shall execute a supplement to
this lease confirming the substitution of the New Premises for the Existing
Premises.
32. LANDLORD. The term "Landlord" as used in this lease means only the
--------
owner of Landlord's interest in the Premises from time to time. In the event of
any assignment, conveyance or sale, once or successively, of Landlord's interest
in the Premises or any assignment of this lease by Landlord, said Landlord
making such assignment, conveyance or sale shall be and hereby is entirely freed
and relieved of all covenants and obligations of Landlord hereunder accruing,
after such assignment, conveyance, or sale, and Tenant agrees to look solely, to
such assignee, or grantee or purchaser with respect thereto. The holder of a
Mortgage (or assignment., in connection with a Mortgage) shall not be deemed
such an assignee, grantee or purchaser under this Section 32 unless and until
the foreclosure of the Mortgage or the conveyance or transfer of Landlord's
interest under this lease in lieu of foreclosure, and then subject to the
provisions of Section 20. This lease shall not be affected by any such
assignment, conveyance or sale, and Tenant agrees to attorn to the assignee,
grantee or purchaser.
33. TITLE AND COVENANT AGAINST LIENS.
--------------------------------
Landlord's title is and always shall be paramount to the title of Tenant,
and nothing in this lease contained shall empower Tenant to do any act which
can, shall or may encumber the title of Landlord. Tenant has no authority or
power to cause or permit any lien or encumbrance of any kind whatsoever, whether
created by act of Tenant, operation of law or otherwise, to attach to or be
placed upon Landlord's title or interest in the Premises or any part of the
Project, and any and
44
<PAGE>
all liens and encumbrances created by Tenant shall attach to Tenant's interest
only. Tenant covenants and agrees not to suffer or permit any lien of mechanics
or materialmen or others to be placed against the Premises or any part of the
Project or Tenant's interest in the Premises with respect to work or services
claimed to have been performed for or materials claimed to have been furnished
to Tenant or the Premises or any part of the Project. In the event such lien or
claim of lien is not immediately released and removed within ten (10) days after
notice from Landlord. Landlord, at its sole option and in addition to any of its
other rights and remedies, may take any and all action necessary, to release and
remove such lien or claim of lien (it being agreed by Tenant that Landlord shall
have no duty to investigate the validity thereof), and Tenant shall promptly
upon notice thereof reimburse Landlord for all sums, costs and expenses,
including court costs and reasonable attorneys' fees and expenses, incurred by
Landlord in connection with such lien or claim of lien plus interest thereon at
the Default Rate.
34. COVENANT OF QUIET ENJOYMENT. Landlord agrees that Tenant, on paying
---------------------------
the Rent and other payments herein reserved and on keeping, observing and
performing all the other terms, covenants, conditions, provisions and agreements
herein contained on the part of Tenant to be kept, observed and performed,
shall, during the Term, peaceably and quietly have, hold and enjoy the Premises,
subject to the terms, covenants, conditions, provisions and agreements of this
lease, tree from hindrance by Landlord or any person claiming by, through or
under Landlord.
35. EXCULPATORY PROVISIONS. The liability of any Landlord under this
----------------------
lease or any amendment to this lease, or any instrument or document executed in
connection with this lease, shall be limited to and enforceable solely against
the assets of such Landlord constituting an interest in the Land or Building
(including, where the Landlord is a trustee of a land trust, the subject matter
of the trust) and not other assets of such Landlord. Assets of a Landlord which
is a partnership do not include the assets of the partners of such Landlord, and
negative capital account of a partner in a partnership which is a Landlord and
an obligation of a partner to contribute capital to the partnership which is
Landlord shall not be deemed to be assets of the partnership which is Landlord.
No directors, officers, employees or shareholders of any corporation which is
Landlord shall have any personal liability arising from or in connection with
this lease. At any time during which Landlord is trustee of a land trust, all of
the representations, warranties, covenants and conditions to be performed by it
under this lease or any documents or instruments executed in connection with
this lease are undertaken solely as trustee, as aforesaid, and not individually,
and no personal liability shall be asserted or be enforceable against it or any
of the beneficiaries under said trust agreement by reason of any of the
representations, warranties, covenants or conditions contained in this lease or
any documents or instruments executed in connection with this lease.
45
<PAGE>
IN WITNESS WHEREOF, the parties have caused this lease to be executed as of
the date first written above.
LANDLORD: TENANT:
CSTONE OAKBROOK, INC. MARCAM CORPORATION,
a Delaware corporation a Massachusetts Corporation
By: /s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
---------------------------------------- ----------------------------
Its: Executive Vice President & CEO Its: Chief Financial Officer
----------------------------------- ---------------------------
President & CEO
-----------------------------------
46
<PAGE>
EXHIBIT A
---------
FLOOR PLAN(S) OF PREMISES
-------------------------
[see attached]
A-1
<PAGE>
[FLOOR PLAN(S) APPEARS HERE]
<PAGE>
EXHIBIT B
---------
LEGAL DESCRIPTION OF LAND
-------------------------
Lot 2 in Lincoln Centre Unit No. 1. being a subdivision in a part of
the South East 1/4 of Section 21, and a part of the North East 1/4 of Section
28, both in Township 39 North, Range 11, East of the Third Principal Meridian,
according to the Plat thereof recorded May 19, 1986 as Document R86-47717, in
DuPage County, Illinois.
B-1
<PAGE>
EXHIBIT C
---------
OTHER DEFINITIONS
-----------------
1. "Calculation Date" means the first day of the Term and each January 1
thereafter falling within the Term.
2. "Calculation Year" means each calendar year during which a
Calculation Date falls.
3. "Expenses" shall mean those costs and expenses paid or incurred by or
on behalf of Landlord for owning, managing, operating, maintaining and repairing
the Building, the Land and the personal property used in conjunction therewith
(or allocated to the Project under easement agreements, operating agreements,
parking agreements, declarations, covenants or instruments providing for
easements, the sharing of facilities or payment for services in, on or under the
Land) including without limitation: the cost of maintaining adjoining pedestrian
tunnels and walkways and related lighting, the cost of security and security
devices and systems, snow and ice and trash removal, cleaning and sweeping,
planting and replacing decorations, flowers and landscaping, maintenance, repair
and replacement of utility systems, telephone building riser cable, elevators
and escalators; electricity, gas, steam, water, sewers, fuel, heating, lighting,
air conditioning; window cleaning; janitorial service; insurance (including but
not limited to, fire, extended coverage, all risk, liability, worker's
compensation, elevator, or any other insurance carried by the Landlord and
applicable to the Project), painting; uniforms; management fees; supplies;
sundries; sales or use taxes on supplies or services; rent, telephone service,
postage, office supplies, maintenance and repair of office equipment and similar
costs related to operation of the building manager's office licenses, permits
and similar fees and charges related to ownership, management, operation, repair
and maintenance of the Project; the share of costs and expenses allocated to the
Building and the Land relating to the management, maintenance, operation and
repair of any common lobby or other facilities connecting the Building or any of
its facilities to any other adjoining building, facilities or land; cost of
wages and salaries of all persons engaged in the operation, management,
maintenance and repair of the Project, and so-called fringe benefits (including
social security taxes, unemployment insurance taxes, cost for providing coverage
for disability benefits, cost of any pensions, hospitalization, welfare or
retirement plans, or any other similar or like expenses incurred under the
provisions of any collective bargaining agreement, or any other cost or expense
which Landlord pays or incurs to provide benefits for employees so engaged in
the operation, management, maintenance and repair of the Project); the charges
of any independent contractor who, under contract with the Landlord or its
representatives, does any of the work of operating, managing, maintaining or
repairing of the Project; legal and accounting expenses (including, but not
limited to, such expenses as relate to preparation of statements of Expenses and
Taxes and seeking or obtaining reductions in and refunds of real estate taxes);
sales and excise taxes; or any other expense or charge which would be considered
as an expense of owning, managing, operating, maintaining or repairing the
Project, whether or not the expense may be considered a capital improvement
except as hereinafter provided, Landlord and Tenant
C-1
<PAGE>
acknowledge and agree that an association (the "Association") has been
established for the purpose of performing certain maintenance to the development
of which the Project is a part (which maintenance includes, without limitation,
the maintenance of the fire protection facilities which serve such development).
Without limiting anything contained in the above definition of Expenses, the
term "Expenses" shall also include any and all payments made or required to be
made by Landlord to the Association in respect of the Project, and/or as a
result of Landlord's ownership of (or other interest in or to) the Project.
Expenses shall not include: costs or other items included within the
meaning of the term "Taxes" (as hereinafter defined); costs of alterations and
relocations of the premises of tenants of the Building; costs of capital
improvements to the Building other than those specifically included in Expenses
as set forth below: depreciation charges; interest and principal payments on
mortgages; ground rental payments (except as otherwise expressly provided
herein); legal fees in connection with disputes with tenants; fines and
penalties on late payments; real estate brokerage and leasing commissions;
salaries of employees involved in operating the garage in the Building; costs
and expenses attributable to leased retail areas (as reasonably determined by
Landlord) and which are reimbursed by retail tenants in the Building; and any
expenditures for which Landlord has been reimbursed by tenants (other than
pursuant to rent escalation or tax and operating expense reimbursement
provisions in leases), except as hereinafter provided.
Notwithstanding any contained in the above definition of Expenses to the
contrary:
(a) The cost of any capital improvements to the Building made after
construction of the Building which are intended to reduce Expenses or which are
required under any governmental laws, regulations, or ordinances which were not
applicable to the Building as of the date of this Lease, or which are intended
to enhance the safety of the Building or its occupants shall be included in
Expenses in the year of installation and subsequent Calculation Years. If
Landlord shall lease such item of capital equipment, then the rentals or other
operating costs paid pursuant to such leasing shall be included in Expenses for
each year in which they are paid or incurred. In any Calculation Year, the
portion includible in Expenses shall be the annual amortization of such cost
using as the amortization period such reasonable period as Landlord shall
determine, together with interest on the unamortized cost of any such
improvements (at the prevailing construction loan rate available to Landlord on
the date the cost of such improvements was incurred). Costs of repairing,
restoring or replacing any portion of the Project which constitute capital
improvement shall be included in Expenses to the extent of deductible amounts
under insurance policies, in the case of loss or damage to the Project.
(b) If the office area of the Building is not fully (at least 95 % for
the purposes of this paragraph) occupied by tenants during all or a portion of
any Calculation Year, or if during all or a portion of any Calculation Year,
Landlord is not furnishing to any tenant or tenants any particular service, the
cost of which, if furnished by Landlord, would be included in Expenses, then
Landlord may elect to make an appropriate adjustment in Expenses for the year,
by adjusting those components of Expenses which vary with the occupancy level of
the Building, to reflect the
C-2
<PAGE>
Expenses that would have been paid or incurred by Landlord for such year had the
office area of the Building been fully occupied by tenants or services furnished
to all tenants during such entire Calculation Year. Any such adjustments shall
be deemed costs and expenses paid or incurred by Landlord and included in
Expenses for such year.
(c) If any item of Expenses, though paid or incurred in one calendar
year, relates to more than one calendar year, at the option of Landlord, such
item may be proportionately allocated among such related calendar years.
4. "Taxes" shall mean real estate taxes, assessments (whether they be
general or special), sewer rents, rates and charges (to the extent not included
as Expenses), transit taxes, taxes based upon leases or the receipt of rent, and
any other federal, state or local governmental charge, general, special,
ordinary or extraordinary (but not including income or franchise taxes or any
other taxes imposed upon or measured by the Landlord's income or profits, except
as provided herein), which may now or hereafter be levied, assessed or imposed
against the Land or the Building or Landlord as a result of its ownership of the
Project.
Notwithstanding anything contained in the above definition of Taxes to the
contrary:
(a) If at any time the method of taxation then prevailing shall be
altered so that any new or additional tax, assessment, levy, imposition or
charge or any part thereof shall be imposed upon Landlord in place or partly in
place of any Taxes or contemplated increase therein, or in addition to Taxes,
and shall be measured by or be based in whole or in part upon the Project, the
rents or other income therefrom or any leases of any part thereof, then all such
new taxes, assessments, levies, impositions or charges or part thereof, to the
extent that they are so measured or based, shall be included in Taxes levied,
assessed or imposed against the Project to the extent that such items would be
payable if the Project were the only property of Landlord subject thereto and
the income received by Landlord from the Project were the only income of
Landlord.
(b) Notwithstanding the year for which any such taxes or assessments are
levied, (i) in the case of special taxes or assessments which may be payable in
installments, the amount of each installment, plus any interest payable thereon,
paid during an Calculation Year shall be included in Taxes for that year and
(ii) if any taxes or assessments payable during an Calculation Year shall be
computed with respect to a period in excess of twelve (12) calendar months, then
taxes or assessments applicable to the excess period shall be included in Taxes
for that year. Except as may be provided in the preceding sentence, all
references to Taxes "for" a particular Calculation Year shall be deemed to refer
to Taxes payable within such Calculation Year, without regard to when such Taxes
are levied, assessed or otherwise imposed.
(c) Taxes shall also include any personal property taxes (attributable to
the Calculation Year in which paid) imposed upon the furniture, fixtures,
machinery, equipment, apparatus, systems or appurtenances used in connection
with the Building or the operation thereof.
C-3
<PAGE>
5. "Rentable Area" with respect to the Building means the sum of the
areas on all floors of the Building, computed by measuring from the outside
surface of the exterior walls (or the outside edge of the floor slab if the slab
does not extend to the exterior wall); and subtracting (a) the thickness of the
outside walls at solid walls and one-half (1/2) the thickness of perimeter glass
at curtain walls or glazed walls where more than fifty percent (50%) of the
interior surface of the wall from floor to ceiling is glass; and also
subtracting (b) all shafts passing through each floor, including elevator
shafts, mechanical shafts and exit stairways (collectively "shafts"); but
including (c) Building common space, including the central Building lobby,
interior loading facilities, the central mechanical rooms and Building service
areas such as shops and maintenance rooms. No deduction shall be made for
Building columns or projections. The Rentable Area of the Building shall be
deemed to be 293,673 square feet.
6. "Rentable Area" with respect to the Premises means (a) for any space
constituting an entire floor, the area of the entire floor calculated by
measuring from the outside surface of the exterior walls (or the outside edge of
the floor slab if the slab does not extend to the exterior wall); and
subtracting (i) the thickness of the outside walls at solid walls and one-half
(1/2) the thickness of perimeter glass at curtain walls or glazed walls where
more than fifty percent (50 %) of the interior surface of the wall from floor to
ceiling is glass; and also subtracting (ii) all shafts passing through such
floor; and adding (iii) a proportionate share of Building common space,
including washrooms, equipment rooms and service rooms on each floor; the
central Building lobby; interior loading facilities, the central mechanical
rooms and Building service areas such as shops and maintenance and central
storage rooms; and (b) for any space constituting less than an entire floor, the
area calculated by measuring from the center line of all demising partitions and
from the outside face (corridor side) of all corridor partitions to the outside
surface of exterior walls (or the outside edge of the floor slab if the slab
does not extend to the exterior wall); and subtracting (i) the thickness of the
outside walls at solid walls and 1/2 the thickness of perimeter glass at curtain
walls or glazed walls where more than 50% of the interior surface of the wall
from floor to ceiling is glass; and also subtracting (ii) all shafts passing
through the demised area on the floor; and adding (iii) a proportionate share of
the Building common space, including washrooms, equipment rooms and service
rooms on each floor; the central Building lobby; interior loading facilities;
the central mechanical rooms and Building service areas such as shops and
maintenance rooms; and also adding (iv) a proportionate share of Building public
areas on the floor on which such space is located, including corridors and
elevator lobby. No deduction shall be made for Building columns or projections.
The Rentable Area of the Premises shall be deemed to be the number of square
feet set forth in Section 1(m) of this lease.
C-4
<PAGE>
EXHIBIT D
---------
RULES AND REGULATIONS
---------------------
1. Access to Building. On Saturdays, Sundays and Holidays, and on other
------------------
days between the hours of 6:00 P.M and 8:00 A.M the following day, access to the
Project or any part thereof, such as but not limited to the halls, corridors,
elevators, stairways, loading and parking areas in the Building and the
Premises, may be restricted and access shall be gained only by exhibiting an
appropriate security pass or by otherwise complying with the established
Building security regulations. Landlord may from time to time establish security
controls and regulations for the purpose of regulating access to the Building.
Tenant shall abide by all such security controls and regulations so established.
2. Protecting Premises. Before leaving the Premises unattended, Tenant
-------------------
shall close and securely lock all doors or other means of entry to the Premises
and shut off all utilities, lights and machines in the Premises. Tenant shall be
responsible for protecting the Premises and all property and persons in the
Premises from theft, robbery, pilferage, personal assault and oilier crimes and
keeping the Premises secure.
3. Building Directories. Landlord will provide a building directory or
--------------------
directories displaying the names and locations of tenants of the Building, at
Landlord's expense. Landlord will include in such directory or directories, at
Landlord's expense. Tenant's name and location within the Building. Any
additional names requested by Tenant to be displayed in the directory or
directories must be approved by Landlord in writing, and, if so approved, will
be provided at the sole expense of the Tenant.
4. Movement of Property. Furniture, freight and other large or heavy
--------------------
articles may be brought into the Building only at times and in the manner
(including use of freight elevators and the loading area) designated by
Landlord. All damage done to the Building by moving or maintaining such
furniture, freight or articles shall be repaired at the expense of Tenant. If
requested by Landlord, all furniture, equipment, cartons and similar articles
desired by Tenant to be removed from the Premises or the Building shall first be
listed in writing by Tenant with Landlord and Tenant shall first obtain a
removal permit therefor. Movements of any of Tenant's property, whether of a
large or heavy nature or otherwise, into or out of the Building or the Premises
or within the Building, shall be entirely at the risk and responsibility of
Tenant.
5. Signs. Tenant shall not paint, display, inscribe, maintain or affix
-----
any sign, placard, picture, advertisement, name, notice, lettering or direction
on any part of the outside or inside of the Building, or on any part of the
outside of the Premises, or any part of the inside of the Premises which can be
seen from the outside of the Premises, without the prior written consent of
Landlord, and then only such name or names or content and in such color, size,
style, character, material and manner of affixing as may be first approved by
Landlord in writing.
D-1
<PAGE>
Landlord reserves the right to remove at Tenant's expense all sign matter which
requires Landlord's consent or approval and which has not been consented to or
approved by Landlord.
6. Advertising. Tenant shall not in any manner use the name of the
-----------
Building for any purpose or use any picture or likeness of the Building in any
letterheads, envelopes, circulars, notices, advertisements, containers or
wrapping material without Landlord's prior written consent.
7. Unsightliness and Overloading. Tenant shall not place anything or
-----------------------------
allow anything to be placed in the Premises near the glass of any door,
partition, wall or window which may be unsightly from outside the Premises, and
Tenant shall not place or permit to be placed any article of any kind on any
window ledge or on the outside of the exterior walls of the Premises or the
Building, Blinds, shades, awnings or other forms of outside window ventilators
or similar devices shall not be placed in or about the outside windows in the
Premises. No blinds, shades, draperies or other forms of inside window covering
other than those provided or designated by Landlord may be installed in the
Premises. Tenant shall not overload any floor or part thereof in the Premises in
excess of the live load therefor, and Tenant shall not overload any facility,
corridor, elevator or other area of the Building in excess of the live load
therefor while bringing in or removing any large or heavy articles or otherwise.
Landlord may direct and control the location of safes and all other heavy
articles and, if considered necessary by Landlord, require supplementary
supports at the expense of Tenant of such materials and dimensions as Landlord
may deem necessary to properly distribute the weight.
8. Obstruction of Common Areas. Tenant shall not take or permit to be
---------------------------
taken in or out of public entrances of the Building, or take or permit on
passenger elevators, any item normally or required by Landlord to be taken in or
out through service doors or in or on freight elevators; and Tenant shall not,
whether temporarily, accidentally or otherwise, allow anything to remain in,
place or store anything, in, or obstruct in any way, any common area of the
Building, including without limitation any sidewalk, court, passageway,
entrance, exit, loading area, shipping area, hall, corridor, elevator, stairway
or parking area. Tenant shall lend its full cooperation to keep such areas free
from all obstruction and in a clean and sightly condition, and move all
supplies, furniture and equipment as soon as received directly to the Premises,
and shall move all such items and waste (other than waste customarily removed by
Building employees) that are at any time being taken from the Premises directly
to the areas designated for disposal. All courts, passageways, entrances, exits,
loading areas, shipping areas, elevators, stairways, corridors, halls, root's
and other areas designated by Landlord from time to time are not for the use of
the general public and Landlord shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgment of
Landlord shall be prejudicial to the safety or security of the Building, its
occupants or others. Neither Tenant nor any employee, agent, licensee, invitee
or contractor of Tenant shall enter into areas reserved for the exclusive use of
another tenant or of Landlord, any of Landlord's beneficiaries, the managing
agent of the Project or any of their respective agents, employees, licensees or
invitees.
D-2
<PAGE>
9. Communication or Utility Connections. If Tenant desires signal,
------------------------------------
communication, alarm or other utility or similar service connections installed
or changed. Tenant shall not install or change the same without the prior
written approval of Landlord, and then only under direction of Landlord and at
Tenant's expense. Tenant shall not install in the Premises any equipment which
requires a substantial amount of electrical current, including without
limitation computer or data processing equipment, without the advance written
consent of Landlord, and Tenant shall ascertain from Landlord the maximum amount
of load or demand for or use of electrical current which can safely be permitted
in the Premises, taking into account the capacity of the electric wiring, the
Building and Premises and the needs of other tenants of the Building, and shall
not in any event connect a greater load than such safe capacity.
10. Management Office. Service requirements of Tenant will be attended to
-----------------
only upon application at the management office for the Building. Employees of
Landlord, any beneficiaries of Landlord or the managing agent of the Project
shall not perform any work or do anything outside of their duties unless under
special instructions from Landlord.
11. Outside Services. Tenant shall not obtain for use upon the Premises
----------------
ice, drinking water, towel or other similar services on the Premises, except
from persons authorized by Landlord and at the hours and under regulations fixed
by Landlord.
12. Toilet Rooms. The toilet rooms, urinals, wash bowls and the other
------------
bathroom apparatus shall not be used for any purpose other than that for which
they were constructed, and no foreign substance of any kind whatsoever shall be
thrown therein, and the expense of any breakage, stoppage or damage resulting
from the violation of this rule shall be borne by the tenant who, or whose
employees, agents, licensees, invitees or contractors, shall have caused it.
13. Intoxication. Landlord reserves the right to exclude or expel from
------------
the Building any person who, in the judgment of Landlord, is intoxicated or
under the influence of liquor or other drugs, or who shall in any manner do any
act in violation of any of the rules and regulations of the Building.
14. Vending Machines. No vending machines of any description shall be
----------------
installed, maintained or operated in the Premises or the Building without the
prior written consent of Landlord.
15. Nuisances and Certain Other Prohibited Uses. Tenant shall not (i)
-------------------------------------------
conduct itself or permit its employees, agents, licensees, invitees or
contractors to conduct themselves in a manner inconsistent with the comfort or
convenience of other tenants or the first-class character of the Building; (ii)
except as hereinafter provided in this Paragraph 15, install or operate any
internal combustion engine, boiler, machinery, refrigerating, heating or air-
conditioning apparatus or space heater in or about the Premises; (iii) carry on
any business in or about the Premises or the Building or sell any article, thing
or service except those ordinarily embraced within the permitted use of the
Premises specified in Section 6; (iv) use the Premises for housing, lodging
D-3
<PAGE>
or sleeping purposes; (v) except as hereinafter provided in this Paragraph 15,
permit preparation or warming of food in the Premises; (vi) place any radio or
television antennae on the roof or on or in any part of the inside or outside of
the Building other than the inside of the Premises; (vii) operate or permit to
be operated any radio, television, video cassette recorder, record or compact
disk-player, stereo, tape player, musical instrument or other sound producing
instrument, device or equipment inside or outside the Premises which may be
heard outside the Premises; (viii) use any illumination or power for the
operation of any equipment or device other than electricity; (ix) operate any
electrical or other device from which may emanate electrical or other waves
which may interfere with or impair radio or television broadcasting or reception
to, from or in the Building or elsewhere or telephone transmission to, from or
in the Building or elsewhere; (x) bring or permit to be in the Building any
bicycle or other vehicle, or dog (except in the company of a blind, deaf or
disabled person) or other animal or bird; (xi) make or permit any objectionable
noise or odor (including, without limitation, cigarette, cigar and pipe smoke or
odor) to emanate from the Premises; (xii) disturb, solicit or canvass any
occupant of the Building; (xiii) do anything in or about the Premises tending to
create or maintain a nuisance or do any act tending to injure the reputation of
the Building; or (xiv) throw or drop or permit to be thrown or dropped any
article from any window or other opening in the Building. Notwithstanding the
foregoing to the contrary, Tenant may, at Tenant's, expense, subject to Section
14 and the Workletter, install in the Premises a standard office kitchen and
employee eating area which shall be for the exclusive use of Tenant and its
employees only, and for no other person, containing a standard residential size
or smaller sink, a standard residential size or smaller refrigerator, a standard
residential size or smaller microwave oven and a standard residential size or
smaller coffee maker.
16. Room-to-Room Canvass. Tenant shall not make any room-to-room canvass
--------------------
to solicit business from other tenants or occupants of the Building or for any
other purpose and shall not exhibit, sell or offer to sell, use, rent or
exchange any products or services in or from the Premises unless ordinarily
embraced within the permitted use of the Premises specified in Section 6.
17. Waste. Tenant shall not waste electricity, water, heat or air-cooling
-----
and agrees to cooperate fully with Landlord to assure the most effective and
energy efficient operation of the Building, and shall not allow the adjustment
(except by Landlord's authorized building personnel) of any electricity, water,
heat, air cooling or ventilation controls. Tenant shall keep corridor doors
closed and shall not open any windows, except that if the air circulation shall
not be in operation, windows which are openable may be opened with Landlord's
prior written consent. Tenant shall lower and adjust any venetian blinds, shades
or draperies on the windows in the Premises if such lowering and adjustment
reduces the sunlight and additional heat load created thereby in the Premises.
18. Keys and Additional Locks. Tenant shall not attach or permit to be
-------------------------
attached additional locks or similar devices to any door or window, change
existing locks or the mechanisms thereof, or make or permit to be made any keys
or other entry devices for any door
D-4
<PAGE>
other than those provided by Landlord. If more than two keys or other entry,
devices for one lock are desired, Landlord will provide them to Tenant upon
payment therefor by Tenant. Upon termination of this lease or of Tenant's
possession, Tenant shall surrender all keys and other entry devices to the
Premises and all keys and other entry, devices for offices, rooms or toilet
rooms which have been furnished to Tenant or which Tenant shall have made.
19. No Smoking. No smoking will be allowed in any portion of the Premises
----------
or the Building (including, without limitation, the common or public areas of
the Building and the walkways or other areas surrounding the Building), other
than in areas which Landlord, in its sole and absolute discretion, may designate
for such purpose from time to time, and, without limiting the generality of the
foregoing, Tenant shall comply with any applicable smoking ordinances passed
from time to time by any governmental agency having jurisdiction over the
Building.
D-5
<PAGE>
EXHIBIT E
---------
JANITORIAL SERVICES
-------------------
The Landlord shall furnish janitorial services described below:
Daily - Five (5) times a week.
- -----
- -- Sweep, dry mop or vacuum all floors. Remove gum, tar, etc. adhering to the
floor.
- -- Empty and damp wipe all ashtrays.
- -- Dust all horizontal surfaces, including tops of desks, file cabinets and
counters, that can be reached without a ladder with a treated cloth, mitt
or duster. (Papers and other objects on horizontal surfaces are not to be
disturbed.)
- -- Clean, polish and sanitize all drinking fountains.
- -- Sweep all steps, sidewalks, plazas and interior landings leading to
building.
- -- Clean freight and passenger elevator cabs and landing doors including
floors.
- -- Empty all waste containers of waste paper and rubbish in quantities normal
for office space.
- -- Clean all common area washrooms and restrooms.
- -- Spot clean all entrance doors, switch plates, walls and glass areas
adjacent to such doors.
- -- Dust exterior of all light fixtures other than ceiling fixtures with a
feather duster.
Weekly
- ------
- -- Wash glass in building directory.
- -- Police parking area and grounds (empty exterior waste container) and sweep
areas.
- -- Dust mop stairwells.
- -- Damp wipe all waste containers.
- -- Wash all glass entrance doors and side panels inside and out.
Monthly
- -------
- -- Scrub and recondition all resilient floor areas using buffable non-slip
type floor finish.
- -- Damp mop stairwell landings and treads.
- -- Sweep and hose down exterior walks, trucking areas and shipping platforms.
- -- Remove hard water stains from toilet fixtures.
- -- Dust with treated dusters all venetian blinds.
Every Three Months
- ------------------
- -- Strip and refinish all resilient floors and clean up mop slop.
- -- Machine scrub all common area lavatory and vestibule floors.
- -- Shampoo all elevator carpeting.
E-1
<PAGE>
NOTE: Subject to Section 8 of this lease, cleaning of computer rooms, locked
- ----
storage or work areas, vaults, kitchens, vending areas and washrooms and
restrooms located within the Premises will be the sole responsibility of
Tenant.
The foregoing schedule of services, including types, quality and time of
services to be performed, are subject to change by Landlord.
E-2
<PAGE>
EXHIBIT F
---------
FORM OF
-------
CONFIRMATION AGREEMENT
----------------------
THIS CONFIRMATION AGREEMENT is made and agreed upon as of this _______ day of
______________, 19__, by and between CSTONE-OAKBROOK, INC., a Delaware
corporation (the "Landlord"), and _________________, a _________ corporation
(the "Tenant")
WITNESSETH
----------
WHEREAS, Landlord and Tenant have previously entered into that certain
lease agreement dated ____________, 19__ (the "Lease"), covering certain
premises located in One Lincoln Centre, Oakbrook Terrace, Illinois 60181 as more
particularly described in the Lease; and
WHEREAS, Landlord and Tenant wish to set forth their agreements as to the
commencement and termination of the Term of the Lease;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
mutually agree as follows:
1. For the purpose of confirming the establishment of the Commencement
Date and Expiration Date, as required by the provisions of the Lease,
Landlord and Tenant hereby agree that:
a. The date of _____________, 19__, is hereby established as the
"Commencement Date" referred to in the Lease.
b. The date of _____________, 19_, is hereby established as the
"Expiration Date" referred to in the Lease.
2. This Confirmation Agreement and each and all provisions hereof shall
inure to the benefit of, or bind, as the case may require, the parties
hereto and their respective heirs, successors and assigns.
F-1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the date and year first written above.
LANDLORD: TENANT:
CSTONE-OAKBROOK, INC. ___________________________________,
a Delaware corporation a ________________ corporation
By:______________________________ By:______________________________
Its:__________________________ Its:__________________________
F-2
<PAGE>
EXHIBIT W
---------
WORKLETTER
----------
1. Definitions. Terms which are defined elsewhere in this lease shall
-----------
have the same meanings in this Workletter. Terms which are defined in this
Workletter shall have the same meanings elsewhere in this lease. In addition to
the terms defined elsewhere in this Workletter, the following terms shall have
the following meanings:
A. "Landlord's Construction Management Fee" means zero percent (0%)
of the cost of Landlord's Work (other than installation of
telecommunications cabling and carpeting) which shall be paid by Landlord
to Landlord's Construction Manager from the Tenant Improvement Allowance.
B. "Tenant's Construction Manager" means Hines Interests Limited
Partnership or such other parry as may be selected by Landlord in its sole
discretion.
C. "Landlord's Contractor" means the contractor hired by Landlord
to do the Landlord's Work.
D. "Landlord Delay" means a delay in the Landlord's Work arising
directly out of or on account of (1) Landlord's failure to review and
approve (or disapprove) the Tenant Plans or any revised Tenant Plans
submitted to Landlord hereunder within the applicable times specified in
Paragraph 2 of this Workletter, (2) Landlord's failure to solicit bids for
Landlord's Work within the applicable time specified in Paragraph 3 of this
Workletter, or (3) any other delay caused by Landlord, any of Landlord's
employees or Landlord's Contractor.
E. "Landlord's Work" means the work required to be performed by
Landlord under this Workletter.
F. "Mechanical System Plans" means the final working drawings, plans
and specifications for the mechanical, sprinkler, heating, air
conditioning, electrical and plumbing systems in the Premises, which shall
be prepared by Tenant's Engineer based upon and in accordance with the
Space Plans and fully coordinated with the remainder of the Working Plans,
and which shall contain sufficient detail and shall be otherwise suitable
in all respects for submission to the building department to obtain a
building permit.
G. "Move-In Conditions" means all of the following events: (i)
Tenant has inspected the Premises and the Landlord's Work as provided in
Paragraph 7A of this Workletter: (ii) Tenant and Landlord have prepared the
Punchlist described in
W-1
<PAGE>
Paragraph 7A of this Workletter and Tenant is thereby deemed to have
accepted the Premises and the Landlord's Work as and to the extent provided
in Paragraph 7A of this Workletter; and (iii) Tenant has taken possession
of all of the Premises for purposes of conducting its business.
H. "Space Plans" means plans, drawings, plans and specifications
prepared by Tenant's Architect showing the intended design, character and
finishes of the Premises, including partition and door locations, all in
sufficient detail to enable the Working Plans (including the Mechanical
System Plans) to be prepared.
I. "Substantial completion" or "substantially completed" or words of
similar import means that the work in question has been sufficiently
completed such that it is suitable for its intended purpose.
J. "Tenant's Architect" means the architect hired by Tenant to
prepare the Space Plans and Working Plans.
K. "Tenant's Contractors" means Tenant's agents, contractors,
licensees and invitees and their respective agents, subcontractors and
employees.
L. "Tenant's Engineer" means Environmental Systems Design.
M. "Tenant Delay" means a delay in the Landlord's Work arising,
directly or indirectly, out of or on account of any of the following
events:
(1) Tenant's failure to cause the Space Plans, any revised Space
Plans, the Working Plans or any revised Working Plans required
hereunder, to be made and submitted to Landlord within the applicable
times specified in Paragraph 2 of this Workletter.
(2) Tenant's request for a Change, as defined in Paragraph 2 of
this Workletter, or any permitted modified Change, including without
limitation. Landlord's exercise of its rights to approve or
disapprove any Change or permitted modified Change, or any revised
Working Plans which reflect a Change or a permitted modified Change;
the preparation of revised Working Plans to reflect a Change or a
permitted modified Change; the ordering of any materials or the
performance of any work necessary to incorporate a Change into the
Landlord's Work: or any delay in the commencement of any work
necessary to incorporate a Change into the Landlord's Work which is
necessitated, required or permitted under the terms of this
Workletter.
(3) The performance of any work or activities on or about the
Project or the Premises by Tenant or any of Tenant's employees or
Tenant's Contractors.
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<PAGE>
(4) Any delay caused by Tenant or any of Tenant's employees or
Tenant's Contractors.
(5) Any default of Tenant under this lease.
N. "Tenant Improvement Allowance" means the amount of $120,892.50
----------
(which is $22.50 per square foot of Rentable Area of the Premises).
-----
O. "Tenant Plans" means the Space Plans. the Mechanical System Plans
and the Working Plans.
P. "Turnover Date" means the earlier of (i) the date Landlord's Work
is substantially completed or (ii) the date Landlord's Work would have been
substantially completed but for one or more Tenant Delays.
Q. "Working Plans" means the final working drawings, plans and
specifications (including the Mechanical System Plans) for all work to be
performed by Landlord in the Premises, as prepared by Tenant's Architect
and Tenant's Engineer which shall be based upon and in accordance with the
Space Plans, and which shall contain sufficient detail and shall be
otherwise suitable in all respects for submission to the building
department of the Village of Oakbrook Terrace to obtain a building permit.
2. Preparation and Approval of Tenant Plans.
-----------------------------------------
A. Tenant has previously entered into a separate agreement with Tenant's
Architect for the preparation of the Space Plans and the Working Plans and a
separate agreement with Tenant's Engineer for the preparation of the Mechanical
System Plans, all at Tenant's sole cost and expense except as otherwise provided
in this Workletter. Tenant shall cause the Tenant Plans to be prepared and
submitted to Landlord within two (2) business days after the date hereof for
Landlord's review and approval and in sufficient quantities for Landlord's use
in the bidding process, as determined by Landlord.
B. Within three (3) business days after Landlord has received the Tenant
Plans or any revised Tenant Plans required hereunder, Landlord shall give Tenant
written notice of Landlord's approval or disapproval thereof (or of any one or
more individual components thereof, and in the event of disapproval, such notice
shall specify the reasons for disapproval. Within two (2) business days after
Tenant has received written notice from Landlord in accordance herewith that
Landlord disapproves the Tenant Plans or any revised Tenant Plans required
hereunder, Tenant shall cause the Tenant Plans or any revised Tenant Plans
required hereunder, as the case may be, to be revised by Tenant's Architect
and/or Tenant's Engineer, as applicable, and thereafter to be resubmitted to
Landlord for Landlord's review and approval.
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C. If Tenant desires a change (i) in the Space Plans or Working Plans,
or any revised Space Plans or Working Plans required hereunder, after Landlord
has approved such plans or any such revised plans, or (ii)in the Landlord's Work
(any such change being a "Change"). Tenant shall give Landlord written notice of
the Change, specifying the Change in reasonable detail. Within three (3)
business days after Landlord has received Tenant's written notice of a Change or
any modified Change permitted hereunder, Landlord shall give Tenant written
notice of its approval or disapproval thereof, and in the event of disapproval,
such notice shall specify the reasons for disapproval. If Landlord disapproves
of a Change or any modified Change permitted hereunder. Tenant may modify the
Change or such permitted modified Change, as the case may be, and give Landlord
written notice thereof. After Landlord has approved a Change or any modified
Change permitted hereunder, Tenant shall cause the Working Plans to be revised
by Tenant's Architect to reflect the Change or such modified Change and
resubmitted to Landlord for Landlord's review and approval in accordance with
the process set forth in Paragraph 2B.
D. Landlord agrees that it will not unreasonably withhold its approval
of the Tenant Plans or any revised Tenant Plans required hereunder, or any
Change or modified Change permitted hereunder provided, however, Landlord shall
not be deemed to have acted unreasonably if it withholds its consent because, in
Landlord's opinion, any portion of Landlord's Work covered by any such Tenant
Plans or Change (i) is likely to adversely affect the structural, mechanical,
electrical, plumbing HVAC, life safety, communications, security or other
operating systems of the Project or the safety of its occupants, (ii) would
increase the costs or expenses incurred by or on behalf of Landlord for owning,
managing, operating, maintaining or repairing the Project, (iii) would impair
Landlord's ability to furnish services to Tenant or any other tenant of the
Project, (iv) would violate any Laws or provisions of this lease (v) would
adversely affect the appearance of the Project, (vi) would adversely affect the
premises of any other tenant of the Project or such tenant's use or occupancy
thereof, or (vii) is prohibited by the provisions of any mortgage or ground
lease encumbering the Project. The foregoing reasons shall not be exclusive of
the reasons for which Landlord may withhold consent, it being understood and
agreed that such other reasons may be similar or dissimilar to the foregoing.
E. The cost of the Tenant Plans and any revision therein required
hereunder shall be paid as provided in this Workletter.
F. Within three (3) business days after the Working Plans have been
revised to reflect a Change which has been approved by Landlord, Landlord shall
notify Tenant in writing of Landlord's good faith estimate of the cost of
performing the work necessary to incorporate such Change into the Landlord's
Work and of the number of days of Tenant Delay that may result from performing
such work. Landlord shall not cause Landlord's Contractor to commence any work
necessary to incorporate a Change into the Landlord's Work until Tenant has
approved Landlord's estimate of the cost of such work and the number of days of
Tenant Delay that may result from such work.
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<PAGE>
3. Performance of Landlord's Work.
-------------------------------
A. After Landlord has approved the Working Plans or any revised Working
Plans. Landlord shall, within one (1) business day, solicit bids for Landlord's
Work from such contractors as Landlord deems appropriate, and after Landlord's
Contractor shall have been selected. Landlord shall promptly cause such
Landlord's Contractor to do the Landlord's Work covered by the Working Plans or
such revised Working Plans. After Landlord has approved any revised Working
Plans required hereunder which reflect a Change or a permitted modified Change
in the Landlord's Work, Landlord shall promptly, subject to the terms of
Paragraph 2 above, cause Landlord's Contractor to incorporate such Change into
the Landlord's Work.
B. Landlord shall cause the Landlord's Work, to be done in a first class
workerlike manner using only good grades of materials and shall comply with
all governmental laws, ordinances, codes, rules and regulations applicable at
the time of the performance of the Landlord's Work.
4. Payment for Tenant Plans and Landlord's Work.
---------------------------------------------
A. Landlord shall pay the aggregate, cost of Landlord's Work and the
Landlord's Construction Management Fee up to an amount not to exceed the Tenant
Improvement Allowance and Tenant shall pay the excess of the aggregate cost of
Landlord's Work and the Landlord's Construction Management Fee over the Tenant
Improvement Allowance (the "Excess") plus the cost of all work other than the
Landlord's Work, if any, which Tenant may, elect to do in order to make the
Premises ready for Tenant's occupancy and which has been approved by Landlord
pursuant to paragraph 6E below. Tenant shall pay the Excess as provided in
Paragraph 4B, and Tenant shall pay the cost of such other work, if any, directly
to the persons or entities performing such other work.
B. If Landlord estimates at any time or from time to time that there
will be an Excess, Landlord shall notify Tenant in writing of Landlord's good
faith estimate of the amount thereof, which estimate shall be itemized in
reasonable detail. Landlord shall bill Tenant for the Excess in periodic
installments at Landlord's discretion, provided that, in any event, Landlord
may, at least as often as Landlord is required to make payments for Landlord's
Work, bill Tenant for Tenant's pro-rata share (as estimated by Landlord by
comparing the estimated total cost of Landlord's Work to the Tenant Improvement
Allowance) of each such payment. Tenant shall pay each installment of the Excess
billed by Landlord within ten (10) business days after it receives Landlord's
bill therefor. At such time as the total cost of the Tenant Plans and the
Landlord's Work is finally determined. Landlord shall notify Tenant of such
amount in writing. If Tenant has not paid all of the Excess, such notice shall
include Landlord's bill to Tenant for the balance of the Excess not previously
paid by Tenant, and if Tenant has paid more than the Excess, such notice shall
include Landlord's statement to Tenant showing the amount of the overpayment of
the Excess. Tenant shall pay any such balance of the Excess to Landlord within
ten (10) business days after the date when Tenant receives such notice and bill
from Landlord, and Landlord shall
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<PAGE>
pay any such overpayment of the Excess to Tenant within ten (10) business days
after the later of the date when Landlord gives such notice and statement to
Tenant or the Commencement Date. All Landlord's bills to Tenant for portions of
the Excess and Landlord's notice to Tenant of the finally determined cost of the
Tenant Plans and the Landlord's Work shall itemize the costs in question in
reasonable detail and shall contain reasonable supporting documentation, such as
invoices.
C. If the aggregate total cost of the Tenant Plans and the Landlord's
Work is less than the Tenant Improvement Allowance, and provided that Tenant is
not in default under this lease and all, of the Move-In Conditions, have
occurred, then the amount of the difference shall be applied to the next
installment(s) of Base Rent coming due after the determination of such total
costs, until such difference is applied in full. However, if at the time an
installment of Base Rent is due, Tenant is in default under this lease, such
application shall not be made against such installment of Base Rent but shall,
instead, be deferred and made against the next installment of Base Rent coming
due after such default has been cured.
D. For purposes of this Paragraph 4, the cost of the Tenant Plans shall
be deemed to include the cost of any revision in the Tenant Plans required
hereunder, including any such revision to reflect a Change or a permitted
modified Change.
5. Landlord Delay/Extension of Commencement Date.
---------------------------------------------
A. If the Landlord's Work is not substantially completed by the
Commencement Date, due solely to a Landlord Delay, the Commencement Date shall
be extended one day for each day that the Landlord's Work is not substantially
completed due solely to such Landlord Delay; otherwise, regardless of when the
Landlord's Work is substantially completed, the Commencement Date shall not be
extended. Tenant shall use its best efforts to give prompt notice to Landlord of
any Landlord Delay or any delay in the Landlord's Work claimed to be caused by
Landlord's Contractor or any other person or entity engaged in performing
Landlord's Work.
B. If there is a delay in the substantial completion of the Landlord's
Work for any reason, neither Landlord, nor any of Landlord's beneficiaries, nor
the managing or leasing agent of the Project, nor any of their respective
agents, partners or employees, shall have any liability to Tenant in connection
with such delay, nor shall this lease be affected in any way, except as
specifically provided in this Paragraph 5. Notwithstanding the foregoing, if the
Commencement Date shall be extended as set forth in Paragraph 5A for more than
fifteen (15) days due solely to a Landlord Delay, Landlord shall pay to Tenant
all reasonable and actual out-of-pocket rental expenses incurred by Tenant for
each day after such initial thirty (30) day extension until the Commencement
Date.
6. Tenant's Access to the Premises. Landlord shall permit Tenant,
-------------------------------
Tenant's employees and Tenant's Contractors which have been reasonably approved
by Landlord to enter the Premises prior to the Commencement Date in order that
Tenant may do work in addition to
W-6
<PAGE>
the Landlord's Work, if any, as may be desired by Tenant to make the Premises
ready for Tenant's occupancy, provided that Tenant shall fully perform and
comply with each of the following covenants, conditions and requirements:
A. If Landlord permits such entry prior to the Commencement Date,
then such permission is conditioned upon Tenant. Tenant's employees and
Tenant's Contractors working in harmony and not interfering with or
delaying Landlord or Landlord's Contractor in doing the Landlord's Work or
with Landlord or any person or entity doing work in the Building, whether
for Landlord or another tenant or occupant of the Building; and if at any
time such entry shall in the reasonable judgment of Landlord cause or
threaten to cause such disharmony, interference or delay, Landlord shall
have the right to withdraw such permission upon 24 hours' written notice.
B. Any such entry prior to the Commencement Date shall be under and
subject to all of the terms and provisions of this lease, the same as if
the Commencement Date had occurred, except that Tenant shall not be
obligated to pay any Base Rent prior to the Commencement Date. To the
extent not prohibited by law, all entry, to the Project, the Building or
the Premises by Tenant, Tenant's employees or Tenant's Contractors prior to
the Commencement Date shall be solely at the risk of Tenant, Tenant's
employees and Tenant's Contractors, and Landlord, Landlord's beneficiaries,
the managing agent of the Project and their respective agents, partners and
employees shall not be liable in any way for, and Tenant hereby
indemnifies, waives and releases them and holds them harmless from any
liability for and claims arising from (including court costs and reasonable
attorneys' fees and expenses incurred by, and also including the monetary,
value of time expended by, any such indemnified party in connection with
any of the same), any injury or death of any person or damage to or theft,
robbery, pilferage, loss or loss of the use of any property of Tenant. or
any other person or entity or any of Tenant's work or installations in or
about the Premises or the Project which occurs in connection with such
entry; provided however, Landlord, Landlord's beneficiaries, the managing
agent of the Project and their respective agents, partners and employees
shall be liable for, and Tenant does not indemnify, waive or release them
or hold them harmless from liability for and claims arising from, their
respective negligence or willful misconduct which occurs in connection with
such entry and causes any injury to or death of any person or such damage
to, theft, pilferage, loss or loss of the use of any such property. Except
as set forth in the next sentence of this Paragraph 6B, the indemnification
obligations of Tenant under this Paragraph 6B are subject to compliance by
Landlord, Landlord's beneficiaries and all other parties that seek
indemnification under this Paragraph 6B, with the following procedure's:
(1) the party seeking indemnification shall provide Tenant with prompt
written notice after such party learns of any claim or suit that such party
believes may result in a claim by such party under this indemnification,
such notice to include a reasonable identification of the facts giving rise
to such belief: (2) the party seeking indemnification shall permit Tenant
or Tenant's insurer to defend or settle such claim or suit and shall, at
Tenant's sole expense, cooperate with Tenant and Tenant's insurer in
defending or settling such claim
W-7
<PAGE>
or suit; and (3) in the event that the party seeking indemnification
attempts to settle or compromise any such claim or suit, such settlement or
compromise shall not be relevant as to the liability of Tenant unless
consented to in writing by Tenant. Notwithstanding the foregoing, the
failure of any party seeking indemnification pursuant to this Paragraph 6B
to comply with any of the foregoing procedures shall not relieve Tenant of
its indemnification obligations contained in this Paragraph 6B, except
where, and solely to the extent that, such failure actually and materially
prejudices the rights of Tenant. The foregoing indemnification, release and
waiver of claims shall be in addition to and shall not limit or be limited
by any other indemnifications, releases or waivers of claims in this lease.
In addition, and without limiting any other provisions of this lease
including this Workletter. Tenant shall require all persons and entities
performing work on behalf of Tenant to provide protection for existing
improvements reasonably satisfactory to Landlord, shall allow Landlord and
Landlord's Contractor access to the Premises at all times during the period
when Tenant or any person or entity is undertaking work therein and in the
event any person or, entity performing work on behalf of Tenant, other than
the Landlord's Work, causes any damage to the property of Landlord or
others, or to the Landlord's Work. Tenant shall cause such damage to be
repaired at Tenant's expense, and if Tenant tails to cause such damage to
be repaired promptly upon Landlord's demand therefor, Landlord may, in
addition to any other rights or remedies available to Landlord under this
lease or at law or equity, cause such damage to be repaired, in which event
Tenant shall promptly upon Landlord's demand pay to Landlord the cost of
such repair.
C. All persons and entities performing work or supplying materials
to Tenant shall use only those service corridors and service entrances
designated by Landlord for ingress and egress of personnel, and the
delivery and removal of equipment and material through or across any common
areas of the Building shall only be permitted with the written approval of
Landlord, not to be unreasonably withheld, and during hours reasonably
determined by Landlord. Landlord shall have the right to order Tenant or
any person or entity who violates the above requirements to cease work and
to remove itself, its equipment and its employees from the Building.
D. Tenant, Tenant's employees and Tenant's Contractors shall abide
by the rules of the site applicable to all contractors and others in or
upon the Project or the Premises and shall coordinate and schedule their
access to the Premises for labor and materials delivery through the general
contractor for the Building and Landlord's Contractor, or the managing
agent for the Project, if so directed by Landlord.
E. All work to be performed pursuant to this Paragraph 6 shall be
subject to the terms and provisions of Section 14 of this lease, including
without limitation the requirement of first obtaining the prior written
consent of Landlord thereto.
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<PAGE>
7. Acceptance of Work.
-------------------
A. Landlord shall give Tenant three (3) business days' prior written
notice of the expected Turnover Date. On or before the expected Turnover Date,
Tenant shall conduct an inspection of the Premises and the Landlord's Work with
Landlord's representatives and Landlord's Contractor and develop with such
representatives and deliver to Landlord a punchlist of all items of the
Landlord's Work which are not complete or which require correction (the
"Punchlist"). Landlord shall cause Landlord's Contractor to complete and/or
correct all items on the Punchlist promptly after Landlord receives the
Punchlist and shall give Tenant written notice when all, of the items on the
Punchlist have been completed and/or corrected. Any items not on the Punchlist
which could have, with reasonable diligence, been discovered by Tenant and
included on the Punchlist shall be deemed accepted by Tenant. If Tenant fails to
appear for such inspection or fails to arrange a different date for inspection
with Landlord within one (1) business day after receipt of Landlord's notice of
the expected Turnover Date, Tenant shall be deemed to have agreed that no items
exist that are incomplete or require correction and therefore Landlord's Work
has been completed and Landlord shall not be required to complete or correct any
such items which may in fact exist: or at Landlord's election, Landlord or
Landlord's Construction Manager may prepare and approve the Punchlist on
Tenant's behalf.
B. Landlord and Tenant agree to cooperate with each other in scheduling
the inspections of the Premises and the Landlord's Work described in this
Paragraph 7, to make their respective personnel and representatives available on
reasonable notice to attend such inspections and develop the Punchlist within
the inspection time described in this Paragraph 7 and to act reasonably in
determining whether or not an item of the Landlord's Work should be included in
the Punchlist.
C. At any time after the Turnover Date, Landlord, Landlord's Contractor,
their agents, employees or contractors may enter the Premises to complete and
correct Punchlist items and such entry for such purpose shall not constitute an
actual or constructive eviction of Tenant, in whole or in part, or entitle
Tenant to any abatement or diminution of rent or relieve Tenant from any of its
obligations under the lease, or subject to the provisions of Section 16(c) of
this lease, impose any other liability on Landlord, Landlord's Contractor, their
agents, employees or contractors.
8. Miscellaneous.
--------------
A. Except as expressly set forth herein or in the lease, Landlord has no
other agreement with Tenant and has no other obligation to do any other work or
pay any amounts with respect to the Premises. Any other work in the Premises
which may be permitted by Landlord pursuant to the terms and conditions of this
lease shall be done at Tenant's sole cost and expense and in accordance with the
terms and conditions of this lease.
B. This Workletter shall not be deemed applicable to any additional
space added to the original Premises at any time or from time to time, whether
by any option under this lease or
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<PAGE>
otherwise, or to any portion of the original Premises or any additions thereto
in the event of a renewal or extension of the initial term of this lease,
whether by any option under this lease or otherwise, unless expressly so
provided in this lease or any amendment or supplement thereto.
C. The failure by Tenant to pay any monies due Landlord pursuant to this
Workletter within the time period herein stated shall be deemed a default in the
payment of Rent under the terms of this lease for which Landlord shall be
entitled to exercise all remedies available to Landlord for nonpayment of Rent.
All late payments shall bear interest pursuant to Section 28(i) of this lease.
D. This Workletter is expressly made a part of this lease and is subject
to each and every term and condition thereof, including, without limitation, the
limitations of liability set forth therein.
E. Tenant shall be solely responsible to determine at the site all
dimensions of the Premises and the building which affect any work that may be
performed by Tenant or any of Tenant's Contractors hereunder.
F. All of the Landlord's Work paid for by Landlord may be depreciated by
Landlord.
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<PAGE>
[LOGO OF ALLIANCE BUSINESS CENTERS] LEASE AND SERVICE AGREEMENT
MONTH TO MONTH RIDER
RE: Lease and Service Agreement between Vargas Virginia, Inc. and Inventa
("Agreement").
DATE: October 28, 1999
CENTER: ALLIANCE Rental
Suite 322
This Agreement is hereby modified as follows:
1. The term of this Agreement shall continue for a period of one month
commencing on January 1, 2000 and ending on January 31, 2000. This month term
shall automatically renew for successive one month terms upon the same terms and
conditions except the monthly rent shall increase one time by 5% for each such
month, that said amount(s) to be calculated based upon the entire amount of the
January's 2000 rent including any and all prior increase(s).
Either party may terminate the said Agreement upon 30 days notice prior to said
intended termination date.
All other terms and conditions of the Agreement shall remain in full force and
effect.
ACCEPTED BY LESSOR: ACCEPTED BY LESSEE:
By: /s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
---------------------------- -------------------------------
Date: 11/19/99 Title: Controller
-------------------------- -----------------------------
Date: 11/?/99
------------------------------
<PAGE>
EXHIBIT 10.10
INVENTA CORPORATION
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Employment and Noncompetition Agreement (the "Agreement") is made by
and between Inventa Corporation, a California corporation (the "Company") having
its principal business offices at 2620 Augustine Drive, Suite 225, Santa Clara,
California, 95054, and David A. Lavanty ("Executive"), an Ohio resident residing
at 6479 Paderborne Circle, Hudson, Ohio, 44236 as of December 31/st/, 1998.
RECITALS
A. The Company desires to have Executive's active services as President
and Chief Executive Officer for the period set forth in this Agreement.
B. The Company and Executive desire to enter into this Agreement on the
terms and conditions set forth in this Agreement and that this Agreement
supersede the Employment Agreement dated December 7, 1998 in its entirety so
that the Employment Agreement shall be null and void.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and in consideration of Executive's continued employment by the Company, the
parties hereto agree as follows:
1. Duties and Scope of Employment
------------------------------
(a) Duties. The Company shall employ Executive to render services to
------
the Company. Executive agrees that he will devote his full business time and
efforts to the business of the Company, excluding reasonable vacation and sick
leave in accordance with the Company's policies. In the course of Executive's
employment, Executive shall perform the duties of President and Chief Executive
Officer of the Company under the direction of the Board of Directors.
(b) Term of Employment. Executive's employment with the Company
------------------
pursuant to this Agreement shall be effective January 4, 1999 or such later date
as Executive shall begin full-time employment with the Company, but in any event
no later than January 15, 1998 (the "Effective Date") and shall continue until
the three (3) year anniversary of this Agreement, or upon earlier termination in
accordance with this Agreement (the "Employment Period"). This Employment Period
will be automatically renewed for successive one-year periods, unless either
party provides written
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<PAGE>
notice at least thirty (30) days prior to the end of the Employment Period that
such party does not wish to renew this Agreement.
(c) Location. Executive's position as President and Chief Executive
--------
Officer shall be located at the offices of Inventa at 2620 Augustine Drive,
Suite 225, Santa Clara, CA 95054. Executive shall continue to physically reside
in Hudson, Ohio, but will make himself available at the Company's offices at
Santa Clara, California as necessary according to the Company's business
circumstances and as required to fulfill the responsibilities of Executive's
position.
2. Compensation
------------
(a) Base Compensation. The Company shall pay the Executive as
-----------------
compensation for his service a base compensation of $20,833.33 per month, which
is equivalent to $250,000 on an annualized basis ("Salary") effective as of the
Effective Date. Such Salary shall be reviewed at least annually and not later
than January 31 of each calendar year hereafter (beginning in January, 2000)
during the Employment Period and shall be increased from time to time subject to
accomplishment of such performance and contribution goals and objectives as may
be established from time to time by the Board of Directors in good faith
consultation with Executive. Any increase to Executive's Salary shall be
retroactively applied as of January 1 of the applicable calendar year. Such
Salary shall be paid semi-monthly in accordance with normal Company payroll
policies. The annual compensation specified in this Section 2(a), together with
any increases in such compensation that the board of Directors may grant from
time to time, is referred to in this Agreement as "Base Compensation."
(b) Bonuses. In addition to Executive's base salary, Executive shall
-------
be entitled to receive an annual performance bonus (the "Performance Bonus") in
the maximum amount of up to $100,000 to be paid on January 15 of each calendar
year hereafter (beginning on January 15, 2000), the exact amount of which will
be determined in good faith by the Company's Board of Directors based on
achievement of objectives met during the previous calendar period as determined
by the Board of Directors in consultation with Executive. The Performance Bonus
shall be subject to annual review and increase by mutual agreement, provided
that Executive is employed by the Company on such dates. Executive shall be
entitled to receive $25,000 at the end of each quarter as a draw against such
bonus (the "Quarterly Payment"), and any amounts paid to Executive in excess of
Executive's performance bonus shall be repaid to the Company by March 31 of the
same year following the performance bonus determination. In the event that
Executive is terminated by the Company without Cause (as hereinafter defined),
Executive shall not be obligated to repay any Quarterly Payments. In addition,
Executive will receive upon commencement of employment with the Company (i) a
commencement bonus of $25,000 (less applicable withholdings) and (ii) $50,000,
representing a guaranteed Performance Bonus for the calendar year 1999 in lieu
of the Quarterly Payments for the first two quarters of 1999. Executive shall be
eligible for Performance Bonuses for the third and fourth quarters of 1999.
(c) Executive Benefits. The Company will provide Executive four (4)
------------------
weeks paid vacation each year, and Executive will be entitled to receive such
benefits as the Company offers
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<PAGE>
generally, including without limitation medical insurance, disability insurance,
health, accident and other insurance programs, subject to any modification or
alteration by the Company's Board of Directors.
(d) Option Grant. In connection with the commencement of Executive's
------------
employment, it will be recommended that the Board of Directors authorize the
grant of an incentive stock option to purchase 865,000 shares of Common Stock
(the "Option Shares") pursuant to the Company's applicable Stock Option Plan
(the "Plan"). The exercise price of the Option Shares will be the fair market
value of the Common Stock on the date of grant of the option. Such Option
Shares shall vest in accordance with the following schedule: 1/4th of the Option
Shares shall vest on the Effective Date, and 1/48th of the Option Shares shall
vest on the one year anniversary of the Commencement Date at the end of each
month thereafter, such that the Option Shares shall vest in full after four
years, subject to Executive's continued employment with the Company.
(e) Milestone Options. In connection with the commencement of
-----------------
Executive's employment, it will be recommended that the Board of Directors also
authorize the grant of incentive stock options to purchase up to an aggregate of
290,000 shares of Common Stock (the "Milestone Shares") pursuant to the Plan,
with such options to be granted following achievement of certain milestones as
set forth below. The exercise price of the Milestone Shares shall be the fair
market value of Common Stock on the date of grant of the relevant option.
Options for the Milestone Shares shall be granted in accordance with the
following schedule: (i) 145,000 shares shall be granted on January 31, 2001 if
the Company attains revenue of at least $35 million in the calendar year 2000,
and (ii) 145,000 shares shall be granted on January 31, 2003 if the Company
attains revenue of at least $100 million in calendar year 2002. In the event of
an initial public offering of the Company's Common Stock at a price of at least
$4.00 per share and aggregate proceeds to the Company in excess of $15,000,000
(an "IPO"), options for all of the Milestone Shares will be granted prior to the
closing of such IPO.
(f) Expenses During Employment. The Company shall reimburse the
--------------------------
Executive for all reasonable business, entertainment and travel expenses
actually incurred or paid by the Executive in the performance of his services on
behalf of the Company, in accordance with the Company's expense reimbursement
policy as from time to time in effect. Expense reimbursement shall include
housing/hotel, meal and travel expenses in connection with Executive's commute
between Hudson, Ohio and Santa Clara, California.
3. Termination of Employment
-------------------------
(a) By Death. The Employment Period shall terminate automatically upon
--------
the death of the Executive. In such event, the Company shall pay to Executive's
beneficiaries or his estate, as the case may be, any accrued Base Compensation,
the pro rata amount of the Performance Bonus determined in accordance with
Section 2(b) above, less any Quarterly Payments, any vested deferred
compensation (other than pension plan or Profit-sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plan of
the Company in which Executive is a participant to the full extent of
Executive's rights under such plan, any accrued vacation pay and
-3-
<PAGE>
any appropriate business expenses incurred by Executive in connection with his
duties hereunder, all to the date of termination (collectively "Accrued
Compensation"), but no other compensation or reimbursement of any kind,
including, without limitation, severance compensation, and thereafter, the
Company's obligations hereunder shall terminate, except as otherwise required by
existing law. Nothing in this Section shall affect any entitlement of the
Executive's heirs to the benefits of any life insurance provided by the Company
as act forth above.
(b) By Disability. If Executive is prevented from properly performing his
-------------
duties hereunder by reason of any physical or mental incapacity for a period of
more than 60 days in the aggregate in any 365-day period, then, to the extent
permitted by law, the Company may terminate the Employment Period on the 60th
day of such incapacity. In such event, the Company shall pay to Executive all
Accrued Compensation, and shall continue to pay to Executive the Salary and the
pro rata amount of the Performance Bonus determined in accordance with Section
2(b) above, less any Quarterly Payments, until such time as Executive shall
become entitled to receive disability insurance payments under the disability
insurance policy maintained by the Company (but not more than 90 days following
termination), as well as continued medical insurance benefits coverage,
including short and long-term (permanent) disability benefits, and in all other
respects coverage substantially comparable to the coverage in place prior to the
date of termination for twelve (12) months after the date of termination, but no
other compensation or reimbursement of any kind, including without limitation,
severance compensation, and thereafter the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect Executive's rights under any
disability plan in which he is a participant or abrogate, extinguish, modify,
alter, waive or release any rights Executive has under existing law, including
but not limited to the Americans with Disabilities Act, the Family Medical Leave
Act, the Employee Retirement Income Security Act, and parallel state
legislation.
(c) By Resignation or By Company for Cause. If Executive's employment with
--------------------------------------
the Company terminates due to his voluntary resignation or if the Company
terminates Executive's employment due to Cause (as defined below), the Company
shall pay Executive all Accrued Compensation less the pro rata amount of the
Performance Bonus (which shall not be paid to Executive), but no other
compensation or reimbursement of any kind, including without limitation,
severance compensation, and thereafter the Company's obligations hereunder shall
terminate. Executive shall also return any Quarterly Payments received in the
calendar year of Executive's termination to the Company. Termination shall be
for "Cause" in the event of the occurrence of any of the following: (i)
Executive's conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent and final jurisdiction for any crime which constitutes a
felony in the jurisdiction involved, which conviction materially injures the
Company; or (ii) Executive's commission of a material act of fraud or
misappropriation of funds, whether prior to or subsequent to the date hereof,
upon the Company; or (iii) gross negligence by Executive in the scope of
Executive's services to the Company; or (iv) Executive's failure to follow the
reasonable policies or directions of the Board of Directors of the Company; or
(v) Executive's intentional breach of any material term of this Agreement;
provided
-4-
<PAGE>
that in the event that any of the foregoing events is capable of being cured,
the Company shall provide written notice to the Executive describing the nature
of such event and the Executive shall thereafter have ten (10) business days to
cure such event.
(d) By Company for Other Than Cause. If the Company terminates Executive's
-------------------------------
employment with the Company for any reason Other Than Cause (as defined below),
Executive shall be entitled to receive: (i) Accrued Compensation to the date of
termination; (the "Termination Date"); (ii) severance compensation equal to
Executive's Base Compensation and Performance Bonus, immediately prior to the
termination, for twelve (12) months after the Termination Date payable in
accordance with the Company's normal payroll practice; and (iii) continued
medical insurance benefits coverage, including short and long-term (permanent)
disability benefits, and in all other respects coverage significantly comparable
to those in place immediately prior to the Termination Date, for twelve (12)
months after the Termination Date. If the Company terminates Executive's
employment with the Company for any reason Other Than Cause or Executive
voluntarily resigns upon a Change in Control (as defined below), (in addition to
the aforementioned items) Executive's Option Shares will continue to vest for an
additional twelve (12) months from the date of termination or Change in Control,
as the case may be. "Other Than Cause" shall include, but not be limited to the
following: (i) without the Executive's express written consent, the assignment
to the Executive of any duties or the significant reduction of the Executive's
duties, either of which is materially inconsistent with the Executive's position
with the Company and responsibilities in effort immediately prior to such
assignment, or the removal of the Executive from such position and
responsibilities, which is not affected for Disability or for Cause; (ii) a
material reduction by the Company in the Base Compensation and/or Performance
Bonus of the Executive as in effect immediately prior to such reduction; (iii) a
material reduction by the Company in the kind or level of Executive benefits to
which the Executive is entitled immediately prior to such reduction with the
result that the Executive's overall benefits package is significantly reduced
(other than a nondiscriminatory reduction affecting the Company's employees
generally); (iv) the relocation of the Executive, without the Executive's
express written consent; or (v) a decision by the Company under Section 1(b) of
this Agreement not to renew the Agreement, either after the initial three-year
term or any subsequent one-year term. If Executive resigns due to one of the
above enumerated factors within thirty (30) days after the date of the
occurrence of one of the above enumerated factors, such resignation shall be
deemed a termination by the Company for Other Than Cause and shall be governed
by this Section 3(d).
(e) Change in Control. In the event of a Change in Control and the
-----------------
termination of Executive's employment with the Company without Cause within one
(1) year following such Change in Control, any remaining unvested portion of
Executive's Option Shares will accelerate and vest in full such that the total
number of Option Shares will be immediately exercisable on the date of
termination. A "Change in Control" shall mean (i) an acquisition of the Company
by another entity by means of any transaction or series of related transactions
(including any reorganization, merger or consolidation) or (ii) a sale of all or
substantially all of the assets of the Company (collectively, a "Merger")
whereby the Company's stockholders of record immediately prior to such Merger
will, immediately after such Merger, hold less than 50% of the voting power of
the surviving or acquiring entity.
-5-
<PAGE>
4. Covenants Not to Compete or Solicit.
-----------------------------------
(a) Non-Competition. The Executive agrees that he will not, while
---------------
employed by the Company and for a period of one (1) year following termination
of such employment for any or no reason, directly or indirectly (other than on
behalf of the Company), without the prior written consent of the Company, engage
in a Competitive Business Activity anywhere in the Restricted Territory.
Engaging in a "Competitive Business Activity" shall mean engaging in, whether
independently or as an employee, agent, consultant, advisor, independent
contractor, partner, stockholder, officer, director or otherwise, any business
which is materially competitive with the business of the Company as conducted or
actively planned to be conducted by the Company during his employment by it,
provided that Executive shall not be deemed to engage in a Competitive Business
Activity solely by reason of (i) owning 2% or less of the outstanding common
stock of any corporation if such class of common stock is registered under
Section 12 of the Securities Exchange Act of 1934, or (ii) after the termination
of his employment by the Company, being employed by or otherwise providing
services to a corporation having total revenue of at least $500 million (or such
lower number as may be agreed by the Company) so long as such services are
provided solely to a division or other business unit of such corporation which
does not engage in a business which is then competitive with the business of the
Company. The term "Restricted Territory" shall mean each state of the United
States, each province of Canada, and each other country in the world in which
the Company, during the term of this non-competition provision, sells or markets
its products and services or otherwise engages in business.
(b) Non-Solicit of Employees. Executive agrees that he will not, while
------------------------
employed by the Company and for a period of one (1) year following termination
of such employment:
(i) directly solicit, encourage, or take any other action which
is intended to induce any other employee of the Company or any of its
subsidiaries to terminate his or her employment with the Company or any of its
subsidiaries; or
(ii) directly interfere in any manner with the contractual or
employment relationship between the Company or any of its subsidiaries and any
such employee of the Company or any of its subsidiaries.
The foregoing shall not prohibit Executive or any entity with which
Executive may be affiliated from hiring a former or existing employee of the
Company or any of its subsidiaries, provided that such hiring does not result
from the direct actions of Executive.
(c) Non-Solicit of Customers with respect to Competitive Business
-------------------------------------------------------------
Activity. Executive agrees that he will not, while employed by the Company and
- --------
for a period of one (1) year following termination of such employment, directly
or indirectly, whether for his own account or for the account of any other
individual or entity, solicit the business or patronage of any customers of the
Company with respect to products and/or services directly related to a
Competitive Business Activity.
-6-
<PAGE>
(d) Severability. The scope of the geographic, time and subject matter
------------
restrictions set forth in this Section 4 are intended to conform to applicable
law. If, however, a court determines that the scope of any such restriction
exceeds what is permitted by law, then such restriction shall be limited or
otherwise reformed as necessary to comply with and be enforceable under
applicable law. If a court determines that any provision of this Section 4 is
unenforceable and cannot be reformed, then such provision shall be deemed
eliminated from this Section to the extent necessary to permit the remaining
provisions of this Section to be enforced.
5. Confidential Information.
------------------------
(a) Company Information. Executive agrees at all times during the term
-------------------
of Executive's employment and thereafter, to hold in strictest confidence, and
not to use, except for the benefit of the Company, or to disclose to any person,
firm or corporation without written authorization of the Board of Directors of
the Company, any Confidential Information of the Company. Executive understands
that "Confidential Information" means any Company proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, customer lists and customers
(including, but not limited to, customers of the Company on whom Executive
called or with whom Executive became acquainted during the term of Executive's
employment), markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, finances or other business information disclosed to Executive by the
Company either directly or indirectly in writing, orally or by drawings or
observation of parts or equipment. Executive further understands that
Confidential Information does not include any of the foregoing items which has
become publicly known or made generally available through no wrongful act of
Executive's or of others who were under confidentiality obligations as to the
item or items involved.
(b) Former Employer Information. Executive agrees that he will not,
---------------------------
during his employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity and that Executive will not bring onto the premises of
the Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
(c) Third Party Information. Executive recognizes that the Company has
-----------------------
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Executive agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Executive's
work for the Company consistent with the Company's agreement with such third
party.
6. Representations. Executive represents and warrants that the execution
---------------
of this Agreement and the Company's Nondisclosure and Assignment of Inventions
Agreement, and the performance of Executive's obligations hereunder and
thereunder, will not conflict with, or result in a
-7-
<PAGE>
violation or breach of any other agreement to which Executive is a party, or any
judgment, order or decree to which Executive is subject. It is expressly agreed
that any continuing consulting services provided by Executive to Siebel Systems,
Inc. shall not constitute a breach of this Agreement.
7. Arbitration. Executive and Company agree that any dispute or
-----------
controversy arising out of or relating to any interpretation, construction,
performance or breach of this Agreement shall be settled by arbitration of a
single arbitrator to be held in Santa Clara, California, in accordance with the
rules then in effect of the American Arbitration Association. The arbitrator
may grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator's decision in any
court having jurisdiction. The Company and Executive shall each pay one-half of
the costs and expenses of such arbitration, and each party shall separately pay
counsel fees and expenses.
8. General Provisions
------------------
(a) Governing Law; Consent to Personal Jurisdiction. This Agreement
-----------------------------------------------
will be governed by the laws of the State of California. Executive and Company
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in California for any lawsuit filed relating to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire agreement
----------------
and understanding between the Company and Executive relating to the subject
matter herein, merges all prior discussions between the parties and supersedes
the Employment Agreement dated December 7, 1998 entered into between the
parties. No modification of or amendment to this agreement, nor any waiver of
any rights under this agreement, will be effective unless in writing signed by
both parties hereto. Any subsequent change or changes in Executive's duties,
salary or compensation will not affect the validity or scope of this agreement.
(c) Severability. If one or more of the provisions in this Agreement
------------
are deemed void by law, then the remaining provisions will continue in full
force and effect.
(d) Successors.
----------
i) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers an appropriate assumption agreement or which becomes bound
by the terms of this Agreement by operation of law.
-8-
<PAGE>
(ii) Executive's Successors. The terms of this Agreement and all rights
----------------------
of the Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successor, heirs, distributees, devisees or legatees.
(e) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but all of which together will constitute one
and the same instruments.
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement of the
Company by its duly authorized officer, as of the day and year first written
above.
DAVID A. LAVANTY, an individual
Date: 12/31/98 /s/ David A. Lavanty
- ----------------------------- -------------------------------
INVENTA CORPORATION
Date: 12/31/98 By: /s/ A. Santhanam
- ----------------------------- ----------------------------
Ashok Santhanam
Chairman of the Board of Directors
<PAGE>
EXHIBIT 10.11
[LETTERHEAD OF INVENTA CORPORATION APPEARS HERE]
March 17, 1999
Tony Moretto
18715 Timoney Court
Leesburg, VA 20176
Dear Tony:
I am pleased to offer you the position of Sr. Vice President of Operations with
Inventa Corporation. You will have responsibility for establishing and growing
operations for the southeast region of the United States and implementing a
standard operational model across all regions. You will be based in the
Washington DC metropolitan area and will report to Dave Lavanty, President and
CEO.
Your base salary will be $8,333.33, which is paid semi-monthly, and is
equivalent to $200,000 when paid over a year. Salaries are reviewed at least
once a year and are adjusted as needed in relation to individual performance and
salaries in the marketplace. You will also be eligible to receive a quarterly
bonus based on company and individual performance. The target bonus percentage
for your position and salary grade level is 37.5% of your base salary or $75,000
annually. The plan outline is attached. You will receive a one time $25,000
sign on bonus contingent upon a start date of April 7/th/ and your Q2 and Q3
bonus target will be guaranteed at $37,500. Both bonuses will be payable within
7 days of your start date.
Under the terms of the company's Incentive Stock Option Plan, you will also
receive an option to acquire 200,000 shares of Inventa common stock at an
exercise price per share equal to the market value as determined by the Board of
Directors on the next option grant date. This option will vest 25% (or 50,000
shares) on your start date, and ratably every month starting at month 13 of your
employment over the next three years until fully vested after four years of
employment. In the event of a change of control during your first or second
year of employment with Inventa, 50% of your remaining unvested balance shall
vest immediately upon completion of the change of control. You may receive
additional option grants over time as a result of performance and/or added
responsibilities. All option grants are, of course, subject to approval by the
Inventa Board of Directors.
You will be entitled to the complete Inventa benefits package which is outlined
in the enclosed Benefits Summary. Please feel free to call Katherine Chalk at
408-987-0220, ext. 352 or send e-mail to [email protected] if you have any
questions or would like more information on the benefits.
In addition, Should your employment with Inventa be terminated without Cause at
any time, Inventa will continue to pay your base compensation for six (6) months
after your effective termination date, as severance compensation.
Further, in the event your employment is terminated without Cause within six (6)
months following a Change of Control ("Termination Following Change of Control")
Inventa will:
<PAGE>
Tony Moretto
Page 2
A. Continue to pay your base compensation for a period of twelve (12) months
from the date of termination, or, if sooner, until the date you obtain
other full-time employment, as severance compensation;
B. Pay all costs which Inventa would otherwise have incurred to maintain all
of your health and welfare, and retirement benefits (either on the same or
substantially equivalent terms and conditions) if you had continued to
render services to Inventa for twelve (12) continuous months after the date
of termination of employment, or, if sooner, until you obtain other full-
time employment; and
C. Permit options granted to you which have not then vested to continue to
vest in accordance with their stated vesting schedule(s) during the twelve
(12) month period after the date of termination, and to be exercisable
during such twelve (12) month period to the extent vested, including any
options which would not otherwise have been exercisable during the first
year after grant of such options.
During the period when such severance compensation is being paid to you, you
agree not to (i) engage, directly or indirectly, in providing services to any
other business, program or project that is competitive to a business, program or
project being conducted by Inventa or any affiliate of Inventa at the time of
such employment termination, or (ii) solicit, or attempt to solicit on behalf of
yourself or any other party, any employee or exclusive consultant of Inventa.
Upon joining Inventa, you will be required to sign a Confidentiality and
Proprietary Information Agreement as a condition of employment with the company.
Your employment is at will which means either you or the company can terminate
your employment at any time.
The United States government requires all new employees to present evidence of
their identity and legal right to work in the this country within three days of
the date they begin work. The enclosed "Lists of Acceptable Documents" show the
documents you may present to fulfill these requirements. Please note you must
either 1) present a document from List A or 2) present one document from List B
and one document from List C. You will need to bring appropriate documents with
you the day you report for work. If you elect to use a U.S. social security
card as proof of employment eligibility, it must be an original card.
<PAGE>
Tony Moretto
Page 3
If you have any questions regarding this offer please feel free to contact me.
If this offer is acceptable to you, please indicate your acceptance and
anticipated start date via e-mail to [email protected]. Once your
confirmation and acceptance is received, we will send out a written offer on
Inventa letter head for your formal signature. This offer is valid until
Friday, March 19/th/, 1999.
Tony, we are committed to build Inventa into a world-class company. Of course,
this will require dedication and hard work from all of us. We feel you would be
a valuable addition to Inventa and look forward to having you as part of our
team in meeting this challenge.
Sincerely,
/s/ David A. Lavanty
David A. Lavanty
President and CEO
Inventa Corporation
SIGNATURE: /s/ Antony H. Morretto
--------------------------------
DATE: 3/19/99
--------------------------------
STARTING DATE: April 7, 1999
--------------------------------
<PAGE>
[LOGO OF INVENTA] EXHIBIT 10.12
October 29, 1999
Mr. Toby Younis
13513 Granite Rock Drive
Chantilly, VA 20151
Dear Toby:
As we discussed, we are pleased to offer you the position of Vice President,
Marketing with Inventa. You will report to Dave Lavanty, President and CEO and
will be based out of our Redwood Shores headquarters. Your responsibility will
encompass all marketing efforts for the firm to include Marketing Communications
and Public Relations, Lead Generation activities, Solution packaging and
Strategic Alliances.
Your base salary will be $7708.33 which is paid semi-monthly, and is equivalent
to $185,000 when paid over a year. Salaries are reviewed at least once a year
and are adjusted as needed in relation to individual performance and salaries in
the marketplace. You will also be eligible to receive a quarterly performance
bonus of 30% of your base salary. The metrics for payment of the bonus will be
based on 50% Company revenue performance and 50% personal MBO's (marketing)
performance.
Under the terms of the company's Incentive Stock Option Plan, you will also
receive an option to acquire 200,000 shares of Inventa common stock at an
exercise price per share equal to the market value as determined by the Board of
Directors on the next option grant date. This option will vest 25% on your
first anniversary of employment and ratably every month over the next three
years until fully vested after four years of employment. You may receive
additional option grants over time as a result of performance and/or added
responsibilities. All option grants are, of course, subject to approval by the
Inventa Board of Directors.
You will be entitled to the complete Inventa benefits package, which is outlined
in the enclosed Benefits Summary. Please feel free to call Michelle Burnham at
650-413-1128 or send e-mail to [email protected] if you have any questions or
--------------------
would like more information on the benefits.
Upon joining Inventa, you will be required to sign a Confidentiality and
Proprietary Information Agreement as a condition of employment with the company.
Your employment is at-will which means either you or the company can terminate
your employment at any time. If your employment terminates for any reason, you
shall not be entitled to any payments, benefits, damages, awards or compensation
other than as provided by this offer letter, or as may otherwise be available in
accordance with the Company's established employee plans and policies at the
time of termination.
<PAGE>
[LOGO OF INVENTA]
Toby Younis
Page 2
Should your employment with Inventa be terminated without Cause (to be defined
below) at any time, or within six months following a Change of Control
("Termination Following Change of Control") Inventa will:
A. Continue to pay your base compensation for a period of six months from the
date of termination, or, if sooner, until the date you obtain other full-
time employment, as severance compensation;
B. Pay all costs which Inventa would otherwise have incurred to maintain all
of your health and welfare, and retirement benefits (either on the same, or
substantially equivalent terms and conditions) if you had continued to
render services to Inventa for six continuous months after the date of
termination of employment, or, if sooner, until you obtain other full-time
employment; and
C. Permit options granted to you which have not then vested to continue to
vest in accordance with their stated vesting schedule(s) during the six
month period after the date of termination, and to be exercisable during
such six month period to the extent vested, including any options which
would not otherwise have been exercisable during the first year after grant
of such options.
During the period when such severance compensation is being paid to you, you
agree not to (i) engage, directly or indirectly, in providing services to any
other business, program or project that is competitive to a business, program or
project being conducted by Inventa or any affiliate of Inventa at the time of
such employment termination, or (ii) solicit, or attempt to solicit on behalf of
yourself or any other party, any employee or exclusive consultant of Inventa.
Additionally, should it become necessary for Inventa to establish a formal
severance plan for key management in anticipation of a Change of Control, you
will be included as a participant in that plan and its terms will supersede the
"Termination Following Change of Control" provisions in this letter.
For the purposes of this Offer Letter, "cause" shall mean the discharge
resulting from a determination by the Board of Directors of the Company that the
Employee
(i) has been convicted of a misdemeanor or felony involving dishonesty,
fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow reasonable
written policies or directives established by the Board of
Directors,
(iii) has willfully and persistently failed to attend to material duties
or obligations imposed on him under this agreement, or
(iv) has performed or failed to act, which if he were prosecuted and
convicted would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value
in excess of $1,000), or which would constitute a felony in the
jurisdiction involved
<PAGE>
[INVENTA LETTERHEAD]
Toby Younis
Page 3
The United States government requires all new employees to present evidence of
their identity and legal right to work in this country within three days of the
date they begin work. The enclosed "Lists of Acceptable Documents" show the
documents you may present to fulfill these requirements. Please note you must
either 1) present a document from List A or 2) present one document from List B
and one document from List C. You will need to bring appropriate documents with
you the day you report for work. If you elect to use a U.S. social security
card as proof of employment eligibility, it must be an original card.
If you have any questions regarding this offer please feel free to contact Dave
or myself. Please note that this offer is contingent upon a successful
completion of a background check based on the information you will provide to us
on the " Release Form for Consumer Reports" (attached). If this offer is
acceptable to you, please sign and date the original in the spaces provided
below and, if you know it, indicate the date you can begin work. Please keep
the copy of this letter for your records and return the original to me by
September 29, 1999.
Toby, we are committed to building Inventa into a world-class company. You will
be a major part of that effort, as well, our success. This will require
dedication and hard work from all of us. We feel you would be a valuable
addition to Inventa and look forward to having you as part of our team in
meeting this challenge.
Sincerely,
/s/ Elizabeth Campbell
Elizabeth Campbell
Director, Human Resources
Inventa Corporation
Enclosures (3)
SIGNATURE:/s/ [Illegible]^^
----------------------------------------
DATE: 01 NOV 99
---------------------------------------------
STARTING DATE: 15 NOV 99
-----------------------------------
<PAGE>
EXHIBIT 10.13
March 30, 1999 [INVENTA LOGO APPEARS HERE]
Robert J. Kudis
39613 Golden Cedar Lane
Oconomowoc, WI 53068
Dear Bob:
We are pleased to offer you the position of Vice President and General Manager
of Central Region Operations with Inventa. You will be based out of our Chicago
office and will report to Dave Lavanty, President and CEO.
Your base salary will be $7,291.66, which is paid semi-monthly, and is
equivalent to $175,000 when paid over a year. Salaries are reviewed at least
once a year and are adjusted as needed in relation to individual performance and
salaries in the marketplace. You will also be eligible to receive a performance
bonus of 25% paid quarterly.
Additionally, if you accept this offer, and start employment by April 19, 1999,
your bonuses for Inventa's Q2 and Q3 will be guaranteed. The minimum set of
payments are as follows: your Q2 bonus ($10,937.50) will be paid seven days
after your start date and your Q3 bonus ($10,937.50) will be paid as soon as
practical after the end of Q2. In the event that your employment should
terminate for cause or due to your resignation prior to the first anniversary of
your start date, you will be expected to repay the above bonuses less the earned
amount per the incentive compensation plan attached.
Under the terms of the company's Incentive Stock Option Plan, you will also
receive an option to acquire 90,000 shares of Inventa common stock at an
exercise price per share equal to the market value as determined by the Board of
Directors on the next option grant date. This option will vest at 2.083% per
month commencing at your start date until fully vested after four years of
employment. In the event of a change of control during your first or second year
of employment with Inventa, 50% of your remaining unvested balance shall vest
immediately upon completion of the change of control. You may receive
additional option grants over time as a result of performance and/or added
responsibilities. All option grants are, of course, subject to approval by the
Inventa Board of Directors.
You will be entitled to the complete Inventa benefits package outlined in the
enclosed Benefits Summary. Please feel free to call Dixie Smith at 408-987-
0220, ext. 320 or send E-mail to [email protected] if you have any questions or
would like more information on the benefits.
<PAGE>
Robert J. Kudis
Page 2
In addition, should your employment with Inventa be terminated without Cause at
any time, Inventa will continue to pay your base compensation for three months
after your effective termination date, as severance compensation.
Further, in the event your employment is terminated without Cause within six
months following a Change of Control ("Termination Following Change of Control")
Inventa will:
A. Continue to pay your base compensation for a period of six months from the
date of termination, or, if sooner, until the date you obtain other full-
time employment, as severance compensation;
B. Continue to pay our portion of the costs for all of your health, welfare
and retirement benefits (either on the same or substantially equivalent
terms and conditions) for six continuous months after the date of
termination, or, if sooner, until the date you obtain other full-time
employment, as part of your severence compensation;
C. Permit options granted to you which have not then vested to continue to
vest in accordance with their stated vesting schedule(s) during the six
month period after the date of termination, and to be exercisable during
such six month period to the extent vested, including any options which
would not otherwise have been exercisable during the first year after grant
of such options.
During the period when such severance compensation is being paid to you, you
agree not to (i) engage, directly or indirectly, in providing services to any
other business, program or project that is competitive to a business, program or
project being conducted by Inventa or any affiliate of Inventa at the time of
such employment termination, or (ii) solicit, or attempt to solicit on behalf of
yourself or any other party, any employee or exclusive consultant of Inventa.
Should it become necessary for Inventa to establish a formal severance plan for
key management in anticipation of a Change of Control, you will be included as a
participant in that plan and its terms will supersede the Termination Following
Change of Control provisions in this letter to the extent it is not less than
the terms of this offer letter.
Upon joining Inventa, you will be required to sign a Confidentiality and
Proprietary Information Agreement as a condition of employment with the company.
Your employment is and shall continue to be at-will, as defined under applicable
law. If your employment terminates for any reason, you shall not be entitled to
any payments, benefits, damages, awards or compensation other than as provided
by this offer letter, or provided the law or as may otherwise be available in
accordance with the Company's established employee plans and policies at the
time of termination.
<PAGE>
Robert J. Kudis
Page 3
The United States government requires all new employees to present evidence of
their identity and legal right to work in the this country within three days of
the date they begin work. The enclosed "Lists of Acceptable Documents" show the
documents you may present to fulfill these requirements. Please note you must
either 1) present a document from List A or 2) present one document from List B
and one document from List C. You will need to bring appropriate documents with
you the day you report for work. If you elect to use an U.S. social security
card as proof of employment eligibility, it must be an original card.
If you have any questions regarding this offer please feel free to contact me.
If this offer is acceptable to you, please indicate your acceptance via e-mail
and we will FedEx an original copy on Inventa letterhead for you to sign and
date. This offer is valid until March 31, 1999.
Bob, we are committed to build Inventa into a world-class company. Of course,
this will require dedication and hard work from all of us. We feel you would be
a valuable addition to Inventa and look forward to having you as part of our
team in meeting this challenge.
Sincerely,
/s/ David A. Lavanty
David A. Lavanty
President and CEO
Inventa Corporation
SIGNATURE: /s/ Robert J. Kudis
--------------------------------
DATE: 4/5/99
--------------------------------
STARTING DATE: 4/19/99
--------------------------------
<PAGE>
EXHIBIT 10.14
March 12, 1999 [LETTERHEAD OF INVENTA]
Carol C. Halliday
3175 Cole Street
Golden, CO 80401
Dear Carol:
We are pleased to offer you the position of Vice President and General Manager
of Western Region Operations with Inventa. You will be based at Inventa's Santa
Clara office and will report to Dave Lavanty, President and CEO.
Your base salary will be $7,500, which is paid semi-monthly, and is equivalent
to $180,000 when paid over a year. Salaries are reviewed at least once a year
and are adjusted as needed in relation to individual performance and salaries in
the marketplace. You will also be eligible to receive a performance bonus of
25% paid quarterly. Your bonus for Q2 and Q3 of this year will be guaranteed.
The details of the plan are attached.
Under the terms of the company's Incentive Stock Option Plan, you will also
receive an option to acquire 145,000 shares of Inventa common stock at an
exercise price per share equal to the market value as determined by the Board of
Directors on the next option grant date. This option will vest 25% on your
first anniversary of employment, and ratably every month over the next three
years until fully vested after four years of employment. You may receive
additional option grants over time as a result of performance and/or added
responsibilities. All option grants are, of course, subject to approval by the
Inventa Board of Directors.
You will be entitled to the complete Inventa benefits package which is outlined
in the enclosed Benefits Summary. Please feel free to call Dixie Smith at 408-
987-0220, ext. 320 or send E-mail to [email protected] if you have any
questions or would like more information on the benefits.
Upon joining Inventa, you will be required to sign a Confidentiality and
Proprietary Information Agreement as a condition of employment with the company.
Your employment is and shall continue to be at-will, as defined under applicable
law. If your employment terminates for any reason, you shall not be entitled to
any payments, benefits, damages, awards or compensation other than as provided
by this offer letter, or as may otherwise be available in accordance with the
Company's established employee plans and policies at the time of termination.
Should your employment with Inventa be terminated without Cause (to be defined
below) at any time, Inventa will continue to pay your base compensation for
three months after your effective termination date, as severance compensation.
<PAGE>
Carol C. Halliday
Page 2
The United States government requires all new employees to present evidence of
their identity and legal right to work in the this country within three days of
the date they begin work. The enclosed "Lists of Acceptable Documents" show the
documents you may present to fulfill these requirements. Please note you must
either 1) present a document from List A or 2) present one document from List B
and one document from List C. You will need to bring appropriate documents with
you the day you report for work. If you elect to use an U.S. social security
card as proof of employment eligibility, it must be an original card.
If you have any questions regarding this offer please feel free to contact me.
If this offer is acceptable to you, please sign and date the original in the
spaces provided below and, if you know it, indicate the date you can begin work.
Please keep the copy of this letter for your records and return the original to
me by Friday, March 19, 1999.
Carol, we are committed to build Inventa into a world-class company. Of course,
this will require dedication and hard work from all of us. We feel you would be
a valuable addition to Inventa and look forward to having you as part of our
team in meeting this challenge.
Sincerely,
/s/ Elizabeth Campbell
Elizabeth J. Campbell
Director of Human Resources
Inventa Corporation
Enclosures (4)
SIGNATURE: /s/ [ILLEGIBLE]^^
--------------------------------
DATE: [ILLEGIBLE]^^
--------------------------------
STARTING DATE: [ILLEGIBLE]^^
--------------------------------
<PAGE>
EXHIBIT 10.15
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 13, 1998, by and between Massimo Chiocca (the
"Employee") and Inventa Corporation, a California corporation (the "Company").
R E C I T A L S
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of Marketing Manager, as such position has been defined in
terms of responsibilities and compensation as of the effective date of this
Agreement; provided, however, that the
1
<PAGE>
Board shall have the right, at any time prior to the occurrence of a Change
of Control, to revise such responsibilities and compensation as the Board
in its discretion may deem necessary or appropriate. The Employee shall
comply with and be bound by the Company's operating policies, procedures
and practices from time to time in effect during his employment. During the
term of the Employee's employment with the Company, the Employee shall
continue to devote his full time, skill and attention to his duties and
responsibilities, and shall perform them faithfully, diligently and
competently, and the Employee shall use his best efforts to further the
business of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $80,000.00. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The annualized compensation specified in this Section 2, as such
compensation may be increased or decreased by the Board or the Compensation
Committee of the Board, is referred to in this Agreement as "Base
Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained
by the Company applicable to other key executives of the Company,
including, without limitation, retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability,
health, accident and other insurance programs, paid vacations, and similar
plans or programs, subject in each case to the generally applicable terms
and conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan or
program.
4. Employment Relationship. The Company and the Employee acknowledge
-----------------------
that the Employee's employment is and shall continue to be at-will, as
defined under applicable law. If the Employee's employment terminates for
any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
or as may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's Base
Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially
2
<PAGE>
equivalent terms and conditions) if the Employee had continued to render
services to the Company for six (6) continuous months after the date of
termination of employment, or, if sooner, until the Employee obtains other full-
time employment; and
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent vested, including any options
which would not otherwise have been exercisable during the first year after
grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
(i) has been convicted of a misdemeanor or felony
involving dishonesty, fraud, theft or embezzlement or any
other felony,
(ii) has failed or refused in any material respect, to
follow reasonable written policies or directives established by the Board of
Directors,
(iii) has willfully and persistently failed to attend to
material duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were
prosecuted and convicted would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value in excess of
$1,000), or which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
3
<PAGE>
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for
in this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in
4
<PAGE>
order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, upon a Change of Control, would preclude accounting for any proposed
business combination of the Company involving a Change of Control as a pooling
of interests, and the Board otherwise desires to approve such a proposed
business transaction which requires as a condition to the closing of such
transaction that it be accounted for as a pooling of interests, then any such
Section of this Agreement shall be null and void, but only if the absence of
enforcement of such Section would preserve the pooling treatment. For purposes
of this Section 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all
---------------------
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by
5
<PAGE>
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or
---------------
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any
------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company and the Employee shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses. Punitive damages shall not be
awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11(f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
COMPANY: INVENTA CORPORATION
By: /s/ A. Santhanam
------------------------------------
Title: President
----------------------------------
EMPLOYEE: /s/ Massimo Chiocca
-----------------------------------------
Massimo Chiocca
7
<PAGE>
EXHIBIT 10.16
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 10, 1998, by and between Ashok Santhanam (the
"Employee") and Inventa Corporation, a California corporation (the "Company").
R E C I T A L S
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of President and Chief Executive Officer, as such position has
been defined in terms of responsibilities and compensation as of the effective
date of this Agreement; provided, however, that the Board shall have the right,
at any time prior to the occurrence of a Change of Control, to revise such
responsibilities and compensation as the Board in its discretion may deem
necessary or
<PAGE>
appropriate. The Employee shall comply with and be bound by the Company's
operating policies, procedures and practices from time to time in effect during
his employment. During the term of the Employee's employment with the Company,
the Employee shall continue to devote his full time, skill and attention to his
duties and responsibilities, and shall perform them faithfully, diligently and
competently, and the Employee shall use his best efforts to further the business
of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $120,000.00. Such salary
shall be paid periodically in accordance with normal Company payroll practices.
The annualized compensation specified in this Section 2, as such compensation
may be increased or decreased by the Board or the Compensation Committee of the
Board, is referred to in this Agreement as "Base Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained by the
Company applicable to other key executives of the Company, including, without
limitation, retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in
each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program.
4. Employment Relationship. The Company and the Employee acknowledge
-----------------------
that the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any reason,
the Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's Base
Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially equivalent terms and conditions) if the Employee
had continued to render services to the Company for six (6) continuous months
after the date of termination of employment, or, if sooner, until the Employee
obtains other full-time employment; and
-2-
<PAGE>
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent vested, including any options
which would not otherwise have been exercisable during the first year after
grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
(i) has been convicted of a misdemeanor or felony involving
dishonesty, fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow
reasonable written policies or directives established by the Board of Directors,
(iii) has willfully and persistently failed to attend to material
duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were prosecuted
and convicted would constitute a crime or offense involving money or property of
the Company (in either case in an amount or at a value in excess of $1,000), or
which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
-3-
<PAGE>
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
-4-
<PAGE>
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, upon a Change of Control, would preclude accounting for any proposed
business combination of the Company involving a Change of Control as a pooling
of interests, and the Board otherwise desires to approve such a proposed
business transaction which requires as a condition to the closing of such
transaction that it be accounted for as a pooling of interests, then any such
Section of this Agreement shall be null and void, but only if the absence of
enforcement of such Section would preserve the pooling treatment. For purposes
of this Section 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
---------------------
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
-5-
<PAGE>
(b) Whole Agreement. No agreements, representations or understandings
---------------
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company and the Employee shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses. Punitive damages shall not be
awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11(f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
COMPANY: INVENTA CORPORATION
By: /s/ A. Santhanam
-------------------------------
Title: President
-----------------------------
EMPLOYEE: /s/ A. Santhanam
-----------------------------------
Ashok Santhanam
<PAGE>
Exhibit 10.17
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 13, 1998, by and between Ed Leppert (the "Employee")
and Inventa Corporation, a California corporation (the "Company").
R E C I T A L S
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of Managing Director, Eastern U.S. Operations, as such
position has been defined in terms of responsibilities and compensation as
of the effective date of this Agreement;
1
<PAGE>
provided, however, that the Board shall have the right, at any time prior
to the occurrence of a Change of Control, to revise such responsibilities
and compensation as the Board in its discretion may deem necessary or
appropriate. The Employee shall comply with and be bound by the Company's
operating policies, procedures and practices from time to time in effect
during his employment. During the term of the Employee's employment with
the Company, the Employee shall continue to devote his full time, skill and
attention to his duties and responsibilities, and shall perform them
faithfully, diligently and competently, and the Employee shall use his best
efforts to further the business of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $160,000.00. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The annualized compensation specified in this Section 2, as such
compensation may be increased or decreased by the Board or the Compensation
Committee of the Board, is referred to in this Agreement as "Base
Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained
by the Company applicable to other key executives of the Company,
including, without limitation, retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability,
health, accident and other insurance programs, paid vacations, and similar
plans or programs, subject in each case to the generally applicable terms
and conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan or
program.
4. Employment Relationship. The Company and the Employee acknowledge
-----------------------
that the Employee's employment is and shall continue to be at-will, as
defined under applicable law. If the Employee's employment terminates for
any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
or as may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's Base
Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially
2
<PAGE>
equivalent terms and conditions) if the Employee had continued to render
services to the Company for six (6) continuous months after the date of
termination of employment, or, if sooner, until the Employee obtains other full-
time employment; and
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent vested, including any options
which would not otherwise have been exercisable during the first year after
grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
i. has been convicted of a misdemeanor or felony involving
dishonesty, fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow
reasonable written policies or directives established by the Board of Directors,
(iii) has willfully and persistently failed to attend to
material duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were
prosecuted and convicted would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value in excess of
$1,000), or which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
3
<PAGE>
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in
4
<PAGE>
order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, upon a Change of Control, would preclude accounting for any proposed
business combination of the Company involving a Change of Control as a pooling
of interests, and the Board otherwise desires to approve such a proposed
business transaction which requires as a condition to the closing of such
transaction that it be accounted for as a pooling of interests, then any such
Section of this Agreement shall be null and void, but only if the absence of
enforcement of such Section would preserve the pooling treatment. For purposes
of this Section 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
---------------------
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by
5
<PAGE>
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
---------------
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company and the Employee shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses. Punitive damages shall not be
awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11(f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
COMPANY: INVENTA CORPORATION
By: /s/ A. Santhanam
------------------------------
Title: President
----------------------------
EMPLOYEE: /s/ Ed Leppert
----------------------------------
Ed Leppert
7
<PAGE>
EXHIBIT 10.18
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 13, 1998, by and between Michael Makishima (the
"Employee") and Inventa Corporation, a California corporation (the "Company").
R E C I T A L S
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of Controller, as such position has been defined in terms
of responsibilities and compensation as of the effective date of this
Agreement; provided, however, that the Board
1
<PAGE>
shall have the right, at any time prior to the occurrence of a Change of
Control, to revise such responsibilities and compensation as the Board in
its discretion may deem necessary or appropriate. The Employee shall comply
with and be bound by the Company's operating policies, procedures and
practices from time to time in effect during his employment. During the
term of the Employee's employment with the Company, the Employee shall
continue to devote his full time, skill and attention to his duties and
responsibilities, and shall perform them faithfully, diligently and
competently, and the Employee shall use his best efforts to further the
business of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $90,000.00. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The annualized compensation specified in this Section 2, as such
compensation may be increased or decreased by the Board or the Compensation
Committee of the Board, is referred to in this Agreement as "Base
Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained
by the Company applicable to other key executives of the Company,
including, without limitation, retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability,
health, accident and other insurance programs, paid vacations, and similar
plans or programs, subject in each case to the generally applicable terms
and conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan or
program.
4. Employment Relationship. The Company and the Employee acknowledge that
-----------------------
the Employee's employment is and shall continue to be at-will, as defined
under applicable law. If the Employee's employment terminates for any
reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
or as may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's
Base Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially equivalent terms and conditions) if the Employee
had continued to render services to the Company
2
<PAGE>
for six (6) continuous months after the date of termination of employment, or,
if sooner, until the Employee obtains other full-time employment; and
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent vested, including any options
which would not otherwise have been exercisable during the first year after
grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
(i) has been convicted of a misdemeanor or felony involving
dishonesty, fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow
reasonable written policies or directives established by the Board of Directors,
(iii) has willfully and persistently failed to attend to
material duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were
prosecuted and convicted would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value in excess of
$1,000), or which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
3
<PAGE>
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in
4
<PAGE>
order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, upon a Change of Control, would preclude accounting for any proposed
business combination of the Company involving a Change of Control as a pooling
of interests, and the Board otherwise desires to approve such a proposed
business transaction which requires as a condition to the closing of such
transaction that it be accounted for as a pooling of interests, then any such
Section of this Agreement shall be null and void, but only if the absence of
enforcement of such Section would preserve the pooling treatment. For purposes
of this Section 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
---------------------
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by
5
<PAGE>
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
---------------
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company and the Employee shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses. Punitive damages shall not be
awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11(f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
COMPANY: INVENTA CORPORATION
By: /s/ A. Santhanam
----------------------------------
Title: President
------------------------------
EMPLOYEE: /s/ Michael Makishima
-------------------------------------
Michael Makishima
7
<PAGE>
EXHIBIT 10.19
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of January 10, 1998, by and between Srikantan Moorthy (the
"Employee") and Inventa Corporation, a California corporation (the "Company").
R E C I T A L S
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors
of the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
A G R E E M E N T
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of Director of Operations, as such position has been
defined in terms of responsibilities and compensation as of the effective
date of this Agreement; provided,
1
<PAGE>
however, that the Board shall have the right, at any time prior to the
occurrence of a Change of Control, to revise such responsibilities and
compensation as the Board in its discretion may deem necessary or
appropriate. The Employee shall comply with and be bound by the Company's
operating policies, procedures and practices from time to time in effect
during his employment. During the term of the Employee's employment with
the Company, the Employee shall continue to devote his full time, skill and
attention to his duties and responsibilities, and shall perform them
faithfully, diligently and competently, and the Employee shall use his best
efforts to further the business of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $120,000.00. Such
salary shall be paid periodically in accordance with normal Company payroll
practices. The annualized compensation specified in this Section 2, as such
compensation may be increased or decreased by the Board or the Compensation
Committee of the Board, is referred to in this Agreement as "Base
Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained
by the Company applicable to other key executives of the Company,
including, without limitation, retirement plans, savings or profit-sharing
plans, stock option, incentive or other bonus plans, life, disability,
health, accident and other insurance programs, paid vacations, and similar
plans or programs, subject in each case to the generally applicable terms
and conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan or
program.
4. Employment Relationship. The Company and the Employee acknowledge
-----------------------
that the Employee's employment is and shall continue to be at-will, as
defined under applicable law. If the Employee's employment terminates for
any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement,
or as may otherwise be available in accordance with the Company's
established employee plans and policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's Base
Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially
2
<PAGE>
equivalent terms and conditions) if the Employee had continued to render
services to the Company for six (6) continuous months after the date of
termination of employment, or, if sooner, until the Employee obtains other full-
time employment; and
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent vested, including any options
which would not otherwise have been exercisable during the first year after
grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
(i) has been convicted of a misdemeanor or felony involving
dishonesty, fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow
reasonable written policies or directives established by the Board of Directors,
(iii) has willfully and persistently failed to attend to
material duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were
prosecuted and convicted would constitute a crime or offense involving money or
property of the Company (in either case in an amount or at a value in excess of
$1,000), or which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
3
<PAGE>
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for in
this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in
4
<PAGE>
order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any Section or subsection of this
Agreement, upon a Change of Control, would preclude accounting for any proposed
business combination of the Company involving a Change of Control as a pooling
of interests, and the Board otherwise desires to approve such a proposed
business transaction which requires as a condition to the closing of such
transaction that it be accounted for as a pooling of interests, then any such
Section of this Agreement shall be null and void, but only if the absence of
enforcement of such Section would preserve the pooling treatment. For purposes
of this Section 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
---------------------
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by
5
<PAGE>
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
---------------
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company and the Employee shall each pay
one-half of the costs and expenses of such arbitration, and each shall
separately pay its counsel fees and expenses. Punitive damages shall not be
awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11(f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case
of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
COMPANY: INVENTA CORPORATION
By:/s/ A. Santhanam
--------------------------------
Title: President
-----------------------------
EMPLOYEE: /s/ Srikantan Moorthy
----------------------------------
Srikantan Moorthy
7
<PAGE>
Exhibit 10.20
SEVERANCE AGREEMENT
-------------------
This Severance Agreement (the "Agreement") is made and entered into
effective as of July 14, 1999, by and between Elizabeth Campbell (the
"Employee") and Inventa Corporation, a California corporation (the "Company").
RECITALS
A. The Company may from time to time need to address the possibility of
an acquisition transaction or change of control event. The Board of Directors of
the Company (the "Board") recognizes that such events can be a distraction to
the Employee and can cause the Employee to consider alternative employment
opportunities. The Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 6 below) of
the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain benefits upon a Change of Control and, under certain circumstances, upon
termination of the Employee's employment in connection with a Change of Control,
which benefits are intended to provide the Employee with financial security and
provide sufficient incentive and encouragement to the Employee to remain with
the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board has directed the
Company, upon execution of this Agreement by the Employee, to agree to the terms
provided herein.
AGREEMENT
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment. The Company shall employ the Employee
------------------------------
in the position of Director of Human Resources, as such position has been
defined in terms of responsibilities and compensation as of the effective date
of this Agreement; provided, however, that the Board shall have the right, at
any time prior to the occurrence of a Change of Control, to revise such
responsibilities and compensation as the Board in its discretion may deem
necessary or appropriate. The Employee shall comply with and be bound by the
Company's operating policies, procedures and practices from time to time in
effect during his employment. During the term of the Employee's employment with
the Company, the Employee shall continue to devote his full time,
<PAGE>
skill and attention to his duties and responsibilities, and shall perform them
faithfully, diligently and competently, and the Employee shall use his best
efforts to further the business of the Company and its affiliated entities.
2. Compensation. The Company shall pay the Employee as compensation for
------------
his services a base salary at the annualized rate of $115,000. Such salary shall
be paid periodically in accordance with normal Company payroll practices. The
annualized compensation specified in this 2, as such compensation may be
increased or decreased by the Board or the Compensation Committee of the Board,
is referred to in this Agreement as "Base Compensation."
3. Employee Benefits. The Employee shall be eligible to participate in
-----------------
the employee benefit plans and executive compensation programs maintained by the
Company applicable to other key executives of the Company, including, without
limitation, retirement plans, savings or profit-sharing plans, stock option,
incentive or other bonus plans, life, disability, health, accident and other
insurance programs, paid vacations, and similar plans or programs, subject in
each case to the generally applicable terms and conditions of the applicable
plan or program in question and to the sole determination of the Board or any
committee administering such plan or program.
4. Employment Relationship. The Company and the Employee acknowledge that
-----------------------
the Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
policies at the time of termination.
5. Termination Without Cause Following a Change of Control. In the event
-------------------------------------------------------
of the Employee's termination of employment without cause within 6 months
following a Change of Control, the Company shall
(a) continue to pay to the Employee as provided herein Employee's
Base Compensation over the period equal to six (6) months from the date of
termination, or, if sooner, until the date Employee obtains other full-time
employment, as severance compensation;
(b) pay all costs which the Company would otherwise have incurred to
maintain all of Employee's health and welfare, and retirement benefits (either
on the same or substantially equivalent terms and conditions) if the Employee
had continued to render services to the Company for six (6) continuous months
after the date of termination of employment, or, if sooner, until the Employee
obtains other full-time employment; and
(c) permit options granted to the Employee which have not then vested
to continue to vest in accordance with their stated vesting schedule(s) during
the six (6) month period after the date of termination and to be exercisable
during such six (6) month period to the extent
-2-
<PAGE>
vested, including any options which would not otherwise have been exercisable
during the first year after grant of such options.
During the period when such severance compensation is being paid to
Employee, Employee shall not (i) engage, directly or indirectly, in providing
services to any other business, program or project that is competitive to a
program or project being conducted by the Company or any affiliated company at
the time of such employment termination (provided that Executive may own less
than one percent (1%) of the outstanding securities of any publicly-traded
corporation), or (ii) solicit, or attempt to solicit on behalf of himself or any
other party, any employee or exclusive consultant of the Company.
For purposes of this Agreement, "cause" shall mean the discharge resulting
from a determination by the Board of Directors of the Company that the Employee
(i) has been convicted of a misdemeanor or felony involving
dishonesty, fraud, theft or embezzlement or any other felony,
(ii) has failed or refused in any material respect, to follow
reasonable written policies or directives established by the Board of Directors,
(iii) has willfully and persistently failed to attend to material
duties or obligations imposed on him under this Agreement, or
(iv) has performed or failed to act, which if he were prosecuted
and convicted would constitute a crime or offense involving money or property of
the Company (in either case in an amount or at a value in excess of $1,000), or
which would constitute a felony in the jurisdiction involved.
(d) Notwithstanding the foregoing, if, following a Change of Control,
the Employee resigns from employment by the Company or the acquiring company (or
a subsidiary thereof) due to a relocation of the Employee beyond a 30-mile
radius from the Company's headquarters as it existed on the day before the
execution of the definitive agreement with respect to the Change of Control, the
Employee shall receive the severance compensation described in Sections 5(a),
5(b) and 5(c) above. For purposes of this subsection, a change in employment
title or level by itself shall not constitute a material adverse change.
6. Definition of Change of Control. "Change of Control" shall mean the
-------------------------------
occurrence of any of the following events:
(a) The acquisition by any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company, of the
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty
-3-
<PAGE>
percent (50%) of the total voting power represented by the Company's then
outstanding voting securities; or
(b) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the approval by the stockholders of the Company of a plan of
complete liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
7. Limitation on Payments.
----------------------
(a) In the event that the severance and other benefits provided for
in this Agreement or otherwise payable to the Employee (i) constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) but for this Section 7 would be subject
to the excise tax imposed by Section 4999 of the Code, then the severance
compensation under Section 5 shall occur either (i) in full, or (ii) as to such
lesser amount which would result in no portion of such severance compensation
being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt
by the Employee on an after-tax basis, of the greatest benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code.
(b) Unless the Company and the Employee otherwise agree in writing,
any determination required under this Section 7 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 7, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 7.
8. Certain Business Combinations. In the event it is determined by the
-----------------------------
Board, upon receipt of a written opinion of the Company's independent public
accountants, that the enforcement of any or sub of this Agreement, upon a Change
of Control, would preclude accounting for any proposed business combination of
the Company involving a Change of Control as a pooling of interests, and the
Board otherwise desires to approve such a proposed business transaction which
requires as a condition to the closing of such transaction that it be accounted
for as a pooling of
-4-
<PAGE>
interests, then any such of this Agreement shall be null and void, but only if
the absence of enforcement of such would preserve the pooling treatment. For
purposes of this 8, the Board's determination shall only require the approval of
a majority of the disinterested Board members.
9. Successors.
----------
(a) Company's Successors. Any successor to the Company (whether
--------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and assets which
executes and delivers the assumption agreement described in this Section 9(a) or
which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
---------------------
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, devisees and legatees.
10. Notice. Notices and all other communications contemplated by this
------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
11. Miscellaneous Provisions.
------------------------
(a) Waiver. No provision of this Agreement shall be modified, waived
------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
---------------
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
California.
-5-
<PAGE>
(d) Severability. The invalidity or unenforceability of any provision
------------
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(e) Arbitration. Any dispute or controversy arising out of, relating
-----------
to or in connection with this Agreement shall be settled exclusively by binding
arbitration in San Francisco, California, in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. The Company and the Employee shall each pay one-
half of the costs and expenses of such arbitration, and each shall separately
pay its counsel fees and expenses. Punitive damages shall not be awarded.
(f) No Assignment of Benefits. The rights of any person to payments
-------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 11 (f) shall be
void.
(g) Assignment by Company. The Company may assign its rights under
---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.
(h) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
COMPANY: INVENTA CORPORATION
By: /s/ [ILLEGIBLE]^^
--------------------------------
Title: Chairman
------------------------------
EMPLOYEE: /s/ Elizabeth Campbell
------------------------------------
Elizabeth Campbell
-7-
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our reports dated January 21, 2000 relating to the consolidated financial
statements for Inventa Corporation, and January 7, 2000 relating to the
financial statements of XTEND-Tech, Inc., which appear in such Registration
Statement. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
PRICEWATERHOUSECOOPERS LLP
San Jose, California
January 31, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INVENTS
CORPORATION BALANCE SHEET AT SEPTEMBER 30, 1999 AND STATEMENT OF OPERATIONS FOR
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
*Identify the financial statement(s) to be reference in the legend:
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,156
<SECURITIES> 0
<RECEIVABLES> 808
<ALLOWANCES> 174
<INVENTORY> 0
<CURRENT-ASSETS> 4780
<PP&E> 2488
<DEPRECIATION> 870
<TOTAL-ASSETS> 6661
<CURRENT-LIABILITIES> 3170
<BONDS> 0
14,387
1
<COMMON> 5
<OTHER-SE> (11,250)
<TOTAL-LIABILITY-AND-EQUITY> 6,661
<SALES> 7,924
<TOTAL-REVENUES> 7,924
<CGS> 0
<TOTAL-COSTS> 14,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> (6,811)
<INCOME-TAX> 15
<INCOME-CONTINUING> (6,826)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,826)
<EPS-BASIC> 1.69
<EPS-DILUTED> 1.69
</TABLE>
