<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the Quarter Ended June 30, 1998
or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the transition period from __________ to ___________.
Commission File Number 0-11370
CERPROBE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 86-0312814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1150 NORTH FIESTA BOULEVARD, GILBERT, ARIZONA 85233
(Address of principal executive offices) (Zip Code)
(602) 333-1500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of August 12, 1998, there were 8,127,728 shares of the registrant's
common stock outstanding.
<PAGE> 2
CERPROBE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
----
ITEM 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997...................................3
Condensed Consolidated Statements of Operations -
Three and Six Months Ended June 30, 1998 and 1997.....................4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997...............................5
Notes to Condensed Consolidated Financial Statements..................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...................................9
PART II - OTHER INFORMATION
ITEM 2. SALES OF UNREGISTERED SECURITIES.....................................15
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS....................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................16
SIGNATURE....................................................................17
2
<PAGE> 3
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 25,318,979 $ 30,347,173
Accounts receivable, net of allowance of $280,247
in 1998 and $292,000 in 1997 10,635,997 10,341,428
Inventories, net 10,476,668 8,483,141
Accrued interest receivable 79,207 202,939
Prepaid expenses 756,284 388,692
Income taxes receivable 1,002,299 624,574
Deferred tax asset 606,514 518,778
------------ ------------
Total current assets 48,875,948 50,906,725
Property, plant and equipment, net 18,639,795 15,141,902
Intangibles, net 2,762,708 2,396,301
Other assets 735,848 1,009,916
------------ ------------
Total assets $ 71,014,299 $ 69,454,844
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,863,467 $ 4,346,039
Accrued expenses 3,407,092 3,286,304
Current portion of notes payable 1,073,169 139,661
Current portion of capital leases 684,492 629,798
------------ ------------
Total current liabilities 7,028,220 8,401,802
Notes payable, less current portion 71,491 148,985
Capital leases, less current portion 1,410,887 1,165,722
Deferred tax liability 423,179 377,701
Other liabilities 11,718 16,700
------------ ------------
Total liabilities 8,945,495 10,110,910
------------ ------------
Minority interest 332,973 132,437
Commitments and contingencies -- --
Stockholders' equity:
Common stock, $.05 par value; authorized 25,000,000
shares; issued and outstanding 8,127,728 shares at
June 30, 1998 and 8,097,979 shares at December 31, 1997 406,464 404,899
Additional paid-in capital 55,212,822 55,136,307
Retained earnings 6,813,849 4,001,642
Foreign currency translation adjustment (617,716) (331,351)
------------ ------------
61,815,419 59,211,497
Less: Treasury stock (79,588) --
------------ ------------
Total stockholders' equity 61,735,831 59,211,497
------------ ------------
Total liabilities and stockholders' equity $ 71,014,299 $ 69,454,844
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 18,831,468 $ 18,683,829 $ 43,421,805 $ 34,582,921
Costs of goods sold 12,057,053 11,008,957 26,470,077 20,403,329
------------ ------------ ------------ ------------
Gross profit 6,774,415 7,674,872 16,951,728 14,179,592
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 5,615,591 4,954,862 11,271,351 9,127,311
Engineering and product development 796,149 164,455 1,626,236 617,774
Acquisition related expenses -- -- -- 6,164,156
------------ ------------ ------------ ------------
Total expenses 6,411,740 5,119,317 12,897,587 15,909,241
------------ ------------ ------------ ------------
Operating income (loss) 362,675 2,555,555 4,054,141 (1,729,649)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 452,113 32,504 736,848 67,664
Interest expense (61,655) (162,242) (122,588) (296,853)
Other income 41,363 55,955 34,832 114,846
------------ ------------ ------------ ------------
Total other income (expense) 431,821 (73,783) 649,092 (114,343)
------------ ------------ ------------ ------------
Income (loss) before income taxes and
minority interest 794,496 2,481,772 4,703,233 (1,843,992)
Minority interest share of (income) loss (43,123) 41,554 (25,393) 28,985
------------ ------------ ------------ ------------
Income (loss) before income taxes 751,373 2,523,326 4,677,840 (1,815,007)
Provision for income taxes (284,595) (934,000) (1,865,632) (1,490,300)
------------ ------------ ------------ ------------
Net income (loss) $ 466,778 $ 1,589,326 $ 2,812,208 $ (3,305,307)
============ ============ ============ ============
Net income (loss) per share:
Basic $ 0.06 $ 0.25 $ 0.35 $ (0.52)
============ ============ ============ ============
Weighted average number of common
shares outstanding 8,109,950 6,353,047 8,105,700 6,321,399
============ ============ ============ ============
Diluted $ 0.06 $ 0.24 $ 0.33 $ (0.52)
============ ============ ============ ============
Weighted average number of common and
common equivalent shares outstanding 8,386,794 6,596,069 8,432,402 6,321,399
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,812,208 $ (3,305,307)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 2,284,993 1,657,746
Purchased research and development -- 5,664,156
Loss on sale of equipment 144,484 426
Tax benefit from exercise of nonqualified stock options 71,000 --
Deferred income taxes (42,258) 72,819
Provision for losses on accounts receivable 12,000 (14,605)
Provision for obsolete inventory 330,613 167,132
Income (loss) applicable to minority interest in consolidated subsidiaries 25,393 (28,985)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (306,569) (3,255,550)
Inventories (2,324,140) 528,436
Prepaid expenses and other assets 127,029 (57,474)
Income taxes receivable (377,725) 539,904
Accounts payable and accrued expenses (2,253,136) 820,689
Accrued income taxes (108,648) 60,329
Other liabilities (4,982) 48,240
------------ ------------
Net cash provided by operating activities 390,262 2,897,956
------------ ------------
Cash flows from investing activities: --
Purchase of property, plant and equipment (5,917,413) (3,195,310)
Investment in CRPB Investors, L.L.C 78,322 (607)
Investment in Upsys-Cerprobe, L.L.C -- (21,892)
Purchase of Upsys-Cerprobe, L.L.C (376,366) --
Supplemental acquisition costs for CompuRoute -- (80,102)
Purchase of SVTR, net of cash acquired -- (2,565,697)
Proceeds from sale of equipment -- 71,183
Payment of notes receivable -- 250,000
Purchase of treasury stock (284,638) --
------------ ------------
Net cash used in investing activities (6,500,095) (5,542,425)
------------ ------------
Cash flows from financing activities:
Issuance of (payments on) notes payable and capital leases 1,155,874 (1,537,284)
Expenses from issuance of common stock (176,436) --
Net proceeds from employee stock purchase plan 203,703 --
Net proceeds from exercise of stock options 184,863 154,332
------------ ------------
Net cash provided by (used in) financing activities 1,368,004 (1,382,952)
------------ ------------
Effect of exchange rates on cash and short-term investments (286,365) (54,691)
------------ ------------
Net decrease in cash and short-term investments (5,028,194) (4,082,112)
Cash and short-term investments, beginning of period 30,347,173 5,564,557
------------ ------------
Cash and short-term investments, end of period $ 25,318,979 $ 1,482,445
============ ============
Supplemental schedule of non-cash financing activities
Equipment acquired under capital leases $ 620,509 $ 4,144
------------ ------------
Supplemental disclosures of cash flow information:
Interest paid $ 122,588 $ 296,853
------------ ------------
Income taxes paid $ 1,886,729 $ 1,315,096
------------ ------------
Supplemental disclosures of non-cash investing activities:
The Company acquired Silicon Valley Test & Repair, Inc. for $5.7 million in
the period ended June 30, 1997. The purchase price was allocated to
the assets acquired and the liabilities assumed based on their fair values as
indicated in the notes to the condensed consolidated financial statements
The Company acquired Upsys-Cerprobe. L.L.C for $376,366 in the period
ended June 30, 1998
A summary of the acquisition is as follows:
Purchase price $ 376,366 $ 5,715,263
Less cash acquired -- (285,316)
Common stock issued -- (2,864,250)
------------ ------------
Cash invested $ 376,366 $ 2,565,697
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
CERPROBE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PREPARATION
The accompanying condensed consolidated financial statements as of June
30, 1998 and for the three and six months ended June 30, 1998, and 1997,
are unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of financial position and operating results for
the interim periods. The condensed consolidated balance sheet as of
December 31, 1997 was derived from the audited consolidated financial
statements at such date.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the accompanying
condensed consolidated financial statements and notes do not include all
disclosures required by generally accepted accounting principles for
complete financial statements. Accordingly, these statements should be
read in conjunction with Cerprobe Corporation's (the "Company") annual
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
Results of operations for interim periods are not necessarily indicative
of those to be achieved for full fiscal years.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
Cerprobe Corporation and its subsidiaries: Cerprobe Europe Limited,
Cerprobe Asia Holdings PTE LTD, CompuRoute, Inc., SVTR, Inc.,
Upsys-Cerprobe, L.L.C., and Cobra Venture Management, Inc.
Cerprobe Asia Holdings PTE LTD is a 60% (70% prior to August 18, 1997)
owner of Cerprobe Asia PTE LTD; the balance is owned by Asian investors.
Cerprobe Asia PTE LTD's wholly owned subsidiaries, Cerprobe Singapore PTE
LTD and Cerprobe Taiwan Co. LTD, operate full service sales and
manufacturing plants. All significant intercompany transactions have been
eliminated in consolidation.
On May 30, 1997, the Company entered into a joint venture with Upsys
Reseau Eurisys ("Upsys"), a French company owned by IBM and GAME COGEMA
Group, a French testing and engineering company. The joint venture,
called Upsys-Cerprobe, L.L.C., assembled and repaired Upsys's vertical
probe card that had been distributed by Cerprobe throughout the United
States and Asia. Cerprobe owned 55% of the joint venture and Upsys owned
45%. Accordingly, the condensed consolidated financial statements include
the activities of Upsys-Cerprobe, L.L.C. since the date of inception of
the joint venture. On June 25, 1998, the Company terminated its
distribution agreement with Upsys, and in connection therewith Upsys's
45% interest in Upsys-Cerprobe, L.L.C. was purchased. (See Note 6)
6
<PAGE> 7
(2) COMMITMENTS AND CONTINGENCIES
LETTER OF INTENT
On April 20, 1998, Cerprobe Corporation signed a letter of intent to
purchase the probe card operation of Upsys for approximately $8,000,000
in cash. On July 14, 1998, the Company terminated negotiations.
EMPLOYEE STOCK PURCHASE PLAN
On December 17, 1997, the Board of Directors approved the Employee Stock
Purchase Plan (the "ESPP"). The ESPP provides for purchases by employees
of up to 150,000 shares. The Company may from time to time purchase
shares on the open market or through negotiated transactions, which
shares would be held for purchases by employees under the ESPP.
LEGAL CLAIM
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, ultimate
disposition of these matters would not have a material adverse effect on
the Company.
(3) COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130), effective January 1, 1998.
SFAS 130 establishes standards for the reporting and presentation of
comprehensive income and its components in financial statements.
Comprehensive income encompasses net income and "other comprehensive
income," which includes all other non-owner transactions and events which
change stockholders' equity.
The Company recognized comprehensive income of $2,640,389 for the six
months ended June 30, 1998 and comprehensive loss of $(3,338,120) for the
six months ended June 30, 1997 as follows:
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net income (loss) $ 2,812,208 $(3,305,307)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment (286,365) (54,689)
Tax benefit from foreign currency translation 114,546 21,876
----------- -----------
Net other comprehensive loss (171,819) (32,813)
----------- -----------
Comprehensive income (loss) $ 2,640,389 $(3,338,120)
=========== ===========
</TABLE>
(4) NEW CAPITAL LEASES
On May 7, 1998, the Company financed $389,290 of manufacturing equipment
under its current $3 million lease line of credit with Banc One Leasing
Corporation. The lease accrues interest at 7.2% annually with monthly
payments for 60 months of principal and interest of $7,745. As of June
30, 1998, there was $383,881 outstanding under the capital lease
obligation.
7
<PAGE> 8
On June 17, 1998, the Company financed an additional $231,219 of
manufacturing equipment with Banc One Leasing Corporation. The lease
accrues interest at 7.24% annually with monthly payments for 60 months of
principal and interest of $4,605. As of June 30, 1998, there was $228,010
outstanding under the capital lease obligation.
(5) TREASURY STOCK
In June 1998, the Company purchased on the open market 21,800 shares of
its common stock at an average purchase price of $13.06 per share. The
shares were held as common stock in treasury and were reserved to satisfy
the Company's obligation under the ESPP. Of these shares, 18,259 were
purchased by employees through the ESPP offering which ended June 30,
1998. The remaining 3,541 shares purchased, at $13.125, are being held to
satisfy future obligations.
In addition, a holder of the Company's warrants exercised 2,000 warrants
in a cash-less transaction. This resulted in the Company receiving 1,551
shares of its common stock at a price of $21.35.
A summary of treasury stock as of June 30, 1998, is as follows:
<TABLE>
<CAPTION>
Number
Of Shares Price Value
--------- ----- -----
<S> <C> <C>
3,541 $ 13.125 $ 46,475
1,551 21.350 33,113
----------
$ 79,588
==========
</TABLE>
On August 5, 1998, the Company announced a stock repurchase program
whereby up to 500,000 shares, or approximately 6%, of the Company's
common stock may be purchased from time to time in the open market. The
Company intends to utilize a portion of the reacquired shares for
reissuance in connection with its newly adopted aforementioned Employee
Stock Purchase Plan as well as to reduce dilution from the Company's
existing stock option plans.
6) UPSYS-CERPROBE L.L.C.
On June 25, 1998, Upsys's 45% interest in Upsys-Cerprobe L.L.C. was
purchased by the Company. The acquisition resulted in $376,365 of
Goodwill which will be amortized on a straight-line basis over eight
years.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Selected Consolidated Financial Data and the Consolidated Financial
Statements and related Notes thereto of the Company appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
OVERVIEW
Cerprobe offers comprehensive solutions for semiconductor test integration
and is a leading manufacturer of probe cards, ATE interface assemblies, and ATE
test boards. The Company's products and services enable semiconductor
manufacturers to test integrated circuits ("ICs") in wafer form and as packaged
ICs.
The Company has grown substantially over the last five years as the Company
has increased its market share and has benefited from the substantial growth in
the worldwide demand for ICs. Net sales have increased from $11.2 million for
1993 to $77.1 million for 1997. Similarly, the Company's net income has
increased from $1.5 million for 1993 to $6.7 million for 1997 (before a one-time
acquisition related expenses charge). Until 1995, substantially all of the
Company's growth was from the existing probe card product line.
Beginning with the April 1995 acquisition of Fresh Test Technology
Corporation ("Fresh Test"), acquisitions have contributed to the Company's
growth. Fresh Test expanded the Company's product line to include ATE interface
assemblies. The Company acquired CompuRoute in December 1996, which enabled the
Company to offer ATE test boards. The Company acquired SVTR in January 1997,
which added wafer prober remanufacturing and upgrading services. Net sales from
these acquired products and services together approximated $28 million, $7
million, and $4 million in 1997, 1996, and 1995, respectively.
The Company believes that it is positioned to continue its long term growth
as a result of its strength in designing, producing, and delivering, on a timely
and cost-efficient basis, a broad range of custom or customized, high quality
test products and services for semiconductor manufacturers in the United States,
Europe, and Asia. Beginning in the second quarter of 1998, however, the
worldwide demand for ICs fell dramatically due to excess inventory of older IC
designs, and slower transition to new IC designs resulting generally from
softening worldwide demand for end user products, especially personal computers.
Current Asian economic instability exacerbated the semiconductor industry
downturn. The Company's financial performance was negatively impacted by these
industry conditions. Net sales fell from $24.6 million for the first quarter of
1998 to $18.8 million, or a decline of 23.6%, for the second quarter of 1998.
Net income declined 79.7% from $2.3 million to $467,000. The more significant
percentage decrease in net income was a result of excess production capacity and
under-absorption of overhead costs. The Company is cautious about sales and net
income for the balance of 1998 due to the continued uncertainty in the industry.
The Company has reduced its workforce and has implemented other cost reduction
measures to improve its profitability at the current sales levels.
The Company maintains regional full service facilities in Arizona,
California, and Texas as well as sales offices in Colorado, Florida,
Massachusetts, and Oregon to service the U.S. market for its products and
services. The Company continues to expand into international markets, and
maintains a full service facility in Scotland to serve the European market and
full service facilities in Singapore and Taiwan to serve the Southeast Asia
market. Each of the Company's facilities is located in proximity to
semiconductor manufacturing centers.
9
<PAGE> 10
RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997.
Net Sales. Net sales for the three months ended June 30, 1998 were $18.8
million, an increase of 0.5% over net sales of $18.7 million for the three
months ended June 30, 1997. The flat second quarter 1998 sales were a result of
the current softness in the worldwide demand for semiconductors along with
weaker business conditions in Asia.
Gross Profit. Gross profit for the three months ended June 30, 1998 was
$6.8 million, a decrease of 11.7% from the gross profit of $7.7 million for the
same period in 1997. Gross margin decreased to 36.2% for the three months ended
June 30, 1998, from 41.2% for the same period of 1997. The decrease in gross
margin was primarily a result of lower sales from the recent softness in the
worldwide demand for semiconductors. The Company's production infrastructure was
capable of higher production run rates, thereby resulting in over capacity and
under-absorption of overhead. Revenues from the Company's core products, probe
cards and interfaces, were 76.8% of sales. Approximately 23.2% of net sales were
attributed to ATE test boards from the Company's CompuRoute subsidiary and wafer
prober products and services from the Company's SVTR subsidiary. This product
mix ratio was approximately the same for the period ended June 30, 1997.
Selling, General and Administrative. Selling, general and administrative
expenses were $5.6 million, or 29.8% of net sales, for the three months ended
June 30, 1998 as compared to $5.0 million, or 26.7% of net sales, for the same
period of 1997, an increase of $0.6 million. The increase in selling, general
and administrative expenses resulted primarily from domestic expansion occurring
in the latter part of 1997 and the first quarter of 1998.
Engineering and Product Development. Engineering and product development
expenses were $796,149 for the three months ended June 30, 1998, an increase of
384.1% over $164,455 for the same period of 1997. This increase resulted
primarily from Cerprobe's continued emphasis on engineering and product
development. Additionally, during the three months ended June 30, 1997, expenses
were offset by increased project funding receipts from collaborations on
engineering and product development with certain customers.
Interest Income. Interest income was $452,113 for the three months ended
June 30, 1998 as compared to $32,504 for the same period in 1997. The increase
was due to the investment of the net proceeds of the Company's 1997 common stock
offering.
Interest Expense. Interest expense was $61,655 for the three months ended
June 30, 1998 as compared to $162,242 for the same period in 1997, a decrease of
62.0%. A portion of the net proceeds from the Company's 1997 common stock
offering was used to repay the Company's short-term debt.
Minority Interest Share of (Income) Loss. The minority interest share of
income from operations of $43,123 for the three months ended June 30, 1998
represents the Company's joint venture partners' share (40.0%) of the income
from Cerprobe Asia PTE LTD and the Company's joint venture partner's share
(45.0%) of the loss from Upsys-Cerprobe, L.L.C. For the three months ended June
30, 1997, the minority interest share of loss from operations of $41,554
represents the Company's joint venture partner's share (40.0%, 30.0% prior to
August 18, 1997) of income from Cerprobe Asia PTE LTD and the Company's joint
venture partner's share (45.0%) of the loss from Upsys-Cerprobe, L.L.C.
10
<PAGE> 11
Provision for Income Taxes. The provision for income taxes was $284,595,
which represents an effective tax rate of 37.9% for the three months ended June
30, 1998, compared to the provision for income taxes for the three months ended
June 30, 1997 of $934,000, which represented an effective tax rate of 37.0%.
Net Income. Net income for the three months ended June 30, 1998 was
$466,778, a decrease of $1.1 million, or 68.8%, from net income of $1.6 million
for the same period of 1997. Net income for the three months ended June 30, 1998
was 2.7% of net sales compared to 8.6% for the same period of 1997. The
reduction in net income was due to lower sales with a production infrastructure
capable of higher production run rates resulting in over capacity.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997.
Net Sales. Net sales for the six months ended June 30, 1998 were $43.4
million, an increase of 25.4% over net sales of $34.6 million for the six months
ended June 30, 1997. This increase, which occurred in the first quarter of 1998,
was a result of higher order rates for Cerprobe's probe card and interface
products. However, in the second quarter of 1998, slower sales rates resulted
from the softness in the worldwide demand for the semiconductors along with
weaker business in Asia.
Gross Profit. Gross profit for the six months ended June 30, 1998 was $17.0
million, an increase of 19.7% from the gross profit of $14.2 million for the
same period in 1997. Gross margin decreased to 39.2% for the six months ended
June 30, 1998, from 41.0% for the same period of 1997. The decrease in gross
margin primarily resulted from second quarter lower sales due to the softness in
the worldwide demand for semiconductors. The Company's production infrastructure
was capable of higher production run rates thereby resulting in over capacity.
Selling, General and Administrative. Selling, general and administrative
expenses were $11.3 million, or 26.0% of net sales, for the six months ended
June 30, 1998 as compared to $9.1 million, or 26.3% of net sales, for the same
period of 1997, an increase of $2.2 million. The increase in selling, general
and administrative expenses resulted primarily from domestic expansion occurring
in the later part of 1997 and first quarter of 1998.
Engineering and Product Development. Engineering and product development
expenses were $1.6 million for the six months ended June 30, 1998, an increase
of 166.7% over $617,774 for the same period of 1997. This increase resulted
primarily from Cerprobe's continued emphasis on engineering and product
development. Additionally, during the six months ended June 30, 1997, expenses
were offset by increased project funding receipts from collaborations on
engineering and product development with certain customers.
Interest Income. Interest income was $736,848 for the six months ended June
30, 1998 as compared to $67,664 for the same period in 1997. The increase was
due to the investment of the net proceeds of the Company's 1997 secondary
offering.
Interest Expense. Interest expense was $122,588 for the six months ended
June 30, 1998 as compared to $296,853 for the same period in 1997, a decrease of
58.7%. A portion of the net proceeds from the Company's 1997 secondary offering
was used to repay the Company's short-term debt.
Minority Interest Share of (Income) Loss. The minority interest share of
income from operations of $25,393 for the six months ended June 30, 1998
represents the Company's joint venture partners' share (40.0%) of the income
from Cerprobe Asia PTE LTD and the Company's joint venture partner's share
11
<PAGE> 12
(45.0%) of the loss from Upsys-Cerprobe, L.L.C. For the six months ended June
30, 1997, the minority interest share of loss from operations of $28,985
represents the Company's joint venture partner's share (40.0%, 30.0% prior to
August 18, 1997) of income from Cerprobe Asia PTE LTD and the Company's joint
venture partner's share (45.0%) of the loss from Upsys-Cerprobe, L.L.C.
Provision for Income Taxes. The provision for income taxes was $1.9
million, which represents an effective tax rate of 40.4% for the six months
ended June 30, 1998, compared to the provision for income taxes for the six
months ended June 30, 1997 of $1.5 million, which represented an effective tax
rate of 38.6%, excluding acquisition related expenses of $6.2 million.
Net Income. Net income for the six months ended June 30, 1998 was $2.8
million, an increase of $0.1 million, or 3.7%, from net income of $2.7 million,
before acquisition related expenses, for the same period of 1997. Net income for
the six months ended June 30, 1998 was 6.5% of net sales compared to 7.8% for
the same period of 1997. This reduction of net income as a percentage of sales
is due to lower sales with a production infrastructure capable of higher
production run rates resulting in over capacity.
LIQUIDITY AND CAPITAL RESOURCES
Cerprobe has financed its operations and capital requirements primarily
through cash flow from operations, equipment lease financing arrangements, and
sales of equity securities. At June 30, 1998, cash and short-term investments
were $25.3 million compared to $30.3 million at December 31, 1997.
Cerprobe generated approximately $390,262 in cash flow from operating
activities for the six months ended June 30, 1998. Net accounts receivable
increased by $294,569, or 2.9%, to $10.6 million at June 30, 1998. Net
inventories increased $2.0 million, or 23.5%, over December 31, 1997 to $10.5
million at June 30, 1998. Inventory levels were increased in anticipation of
continued growing demand for the Company's probe card and interface products.
Beginning with the second quarter of 1998, however, demand for the Company's
products fell sharply due to the onset of worldwide softness in semiconductor
demand.
Accounts payable and accrued expenses decreased $2.3 million, or 30.3%, to
$5.3 million at June 30, 1998. The decrease resulted from Cerprobe's short-term
financing of capital equipment purchased from vendors.
The current portions of notes payable and capital leases increased to $1.7
million at June 30, 1998, from $769,459 at December 31, 1997, primarily as a
result of financing capital equipment purchases.
Working capital decreased $657,000, or 1.6%, to $41.8 million at June 30,
1998 from December 31, 1997. The current ratio increased from 6.1 at December
31, 1997 to 7.0 at June 30, 1998. This increase was due to the longer term
financing of capital equipment.
Cerprobe increased its net investment in property, plant, and equipment
during the six months ended June 30, 1998 by $3.5 million, or 23.2%, to $18.6
million. This increase was attributable to the Company's first quarter efforts
to expand capacity to meet customer demand for its products. These capital
expenditures were funded from cash flow from operations and proceeds from the
secondary offering.
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In April 1998, the Company signed a letter of intent to purchase the probe
card operation of Upsys, a French testing and engineering company owned by IBM
and GAME COGEMA Group for approximately $8,000,000 in cash. On July 14, 1998,
the Company terminated negotiations.
On December 17, 1997, the Board of Directors approved the Employee Stock
Purchase Plan. The ESPP, was approved by the shareholders on May 29, 1998, at
the Company's annual shareholder meeting.
On August 5, 1998, the Company announced a stock repurchase program whereby
up to 500,000 shares, or approximately 6%, of the Company's common stock may be
purchased from time to time in the open market. The Company intends to utilize a
portion of the reacquired shares for reissuance in connection with its newly
adopted aforementioned Employee Stock Purchase Plan as well as to reduce
dilution from the Company's existing stock option plans.
Cerprobe believes that its working capital, together with the loan
commitments, and anticipated cash flow from operations, will provide adequate
sources to fund operations for at least the next 12 months. Cerprobe anticipates
that any additional cash requirements for operations or capital expenditures
will be financed through cash flow from operations, by borrowing from Cerprobe's
primary lender, by lease financing arrangements, or by sales of equity
securities. There can be no assurance that any such financing will be available
on acceptable terms and that any additional equity financing, if available,
would not result in additional dilution to existing investors.
YEAR 2000 ISSUE
The Company is in the process of performing a comprehensive review of its
Year 2000 issues and has completed its review of internal systems (information
technology ("IT") and non-IT). The majority of the Company's application
software programs are currently being replaced with Oracle applications which
are Year 2000 compliant. The Company estimates the status of progress on these
internal systems as follows:
IT Systems 20%
Non-IT Systems 50%
The Company presently believes that with modifications and updates to existing
software and the implementation of the Oracle applications, the Year 2000
problem will not pose significant operational problems for the Company's
internal systems. The Company also believes that remediation costs to become
Year 2000 compliant, excluding the costs associated with the replacement Oracle
applications, are not material.
The Company is also continuing to verify the Year 2000 readiness of third
parties (vendors and customers) with whom the Company has material
relationships. The Company is not able to determine the effect on the Company's
results of operations, liquidity, and financial condition in the event the
Company's material vendors and customers are not Year 2000 compliant. The
Company will continue to monitor the progress of its material vendors and
customers and formulate a contingency plan at that point in time when the
Company believes a material vendor or customer will not be compliant.
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BUSINESS OUTLOOK
The Company's business depends substantially on both the volume of IC
production by semiconductor manufacturers as well as new IC designs, which in
turn depend on the demand of ICs and products utilizing ICs. The semiconductor
industry is highly cyclical and historically has experienced periods of
oversupply, resulting in reduced demand for IC testing products, including the
products manufactured by the Company. Based on lower production rates among many
of the Company's customers, the Company is very cautious about net sales for the
remainder of 1998. In response to those lower sales, the Company analyzed its
current cost structure and in early July undertook a restructuring to bring its
production and overhead costs in line with the anticipated industry demand for
its products in the second half of this year.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this section regarding the Company's prospects for growth and
adequacy of sources of capital are forward-looking statements. Words such as
"believes," "expects," "anticipates," "intends," "may," "estimates," "should,"
"will likely," and similar expressions are intended to identify such
forward-looking statements. Actual results, however, could differ materially
from those anticipated for a number of reasons, including product demand and
development, technological advances, impact of competitive products and pricing,
growth in targeted markets and other factors identified under "Special
Considerations" of the Company's 1997 Form 10-K which has been filed with the
Securities and Exchange Commission. Additional risk factors are identified from
time to time in the Company's 1998 financial press releases. The cautionary
statements made in this Report should be read as being applicable to all related
forward-looking statements wherever they appear in this Report.
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<PAGE> 15
PART II - OTHER INFORMATION
Item 2 Sales of Unregistered Securities
In June 1998, the Company issued upon exercise of a warrant 2,000 shares
of its Common Stock at $16.55 per share to a representative of the sales
agent that placed the Company's Series A Convertible Preferred in January
of 1996. Payment was made in a cash-less exercise by surrender of 1,551
shares of the Company's Common Stock valued at $21.35 per share. The
offering was made pursuant to Section 4(2) of the Securities Act of 1933.
Item 4 Submission of Matters to Vote of Security Holders
a. An annual meeting of stockholders of the Company was held on May 29,
1998.
b. The name of each director elected at the meeting is as follows: Ross J.
Mangano, C. Zane Close, Kenneth W. Miller, Donald F. Walter, and William
A. Fresh.
c. The matters voted upon and the results of the voting were as follows:
1. The following five persons were elected as Directors at the annual
meeting pursuant to the following vote:
Votes For Votes Withheld
Ross J. Mangano 6,246,463 212,857
C. Zane Close 6,248,901 210,419
Kenneth W. Miller 6,246,501 212,819
Donald F. Walter 6,145,981 313,339
William A. Fresh 6,249,401 209,919
2. An amendment to the Company's First Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock from 10,000,000 to 25,000,000 was approved at the
annual meeting pursuant to the following vote:
Votes For 4,766,963
Votes Against 1,659,659
Votes Abstaining 32,698
3. An amendment to the Company's 1995 Stock Option Plan to increase
the number of shares of common stock that may be issued pursuant
to the plan from 800,000 to 1,400,000 was approved at the annual
meeting pursuant to the following vote:
Votes For 2,625,307
Votes Against 1,791,944
Votes Abstaining 35,721
Not Voted 2,006,348
4. An amendment to the Company's 1995 Stock Option Plan (a) to
increase the number of options granted to non-employee members of
the Board of Directors pursuant to annual automatic options from
options to acquire 2,000 shares to 3,000 shares, (b) to provide
that annual automatic options shall vest at the time of grant, and
(c) to eliminate the granting of initial automatic options to new
members of the Board of Directors was approved at the annual
meeting pursuant to the following vote:
Votes For 4,765,590
Votes Against 1,613,347
Votes Abstaining 37,545
Not Voted 42,838
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5. The Company's Employee Stock Purchase Plan was approved at
the annual meeting pursuant to the following vote:
Votes For 4,369,885
Votes Against 47,220
Votes Abstaining 35,867
Not Voted 2,006,348
6. The appointment of KPMG Peat Marwick LLP as the independent
auditors of the Company was ratified at the annual meeting
pursuant to the following vote:
Votes For 6,077,618
Votes Against 18,714
Votes Abstaining 362,988
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
10(fff) Lease agreement between CompuRoute and BancOne
Leasing Corporation dated May 7, 1998.
10(ggg) Lease agreement between CompuRoute and BancOne
Leasing Corporation dated June 17, 1998.
10(hhh) Lease agreement between Cerprobe Corporation and
Jackson-Shaw El Dorado Tech I Limited Partnership
dated May 15, 1998.
3(a) Second Restated Certificate of Incorporation of
Cerprobe Corporation, filed with the Delaware
Secretary of State on June 23, 1998.
(11) Computation of Net Income (Loss) Per Share.
(27.1) Financial Data Schedule - June 30, 1998
(27.2) Financial Data Schedule - June 30, 1997
b. No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1998.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigning
thereunto duly authorized.
CERPROBE CORPORATION
/s/ Randal L. Buness
----------------------------------------
Randal L. Buness
Vice President - Chief Financial Officer
August 14, 1998
<PAGE> 18
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10(fff) Lease agreement between CompuRoute and BancOne Leasing Corporation
dated May 7, 1998.
10(ggg) Lease agreement between CompuRoute and BancOne Leasing Corporation
dated June 17, 1998.
10(hhh) Lease agreement between Cerprobe Corporation and Jackson-Shaw El
Dorado Tech I Limited Partnership dated May 15, 1998.
3(a) Second Restated Certificate of Incorporation of Cerprobe Corporation,
filed with the Delaware Secretary of State on June 23, 1998.
(11) Computation of Net Income (Loss) Per Share.
(27.1) Financial Data Schedule - June 30, 1998
(27.2) Financial Data Schedule - June 30, 1997
<PAGE> 1
EXHIBIT 3(a)
SECOND RESTATED CERTIFICATE OF INCORPORATION
OF
CERPROBE CORPORATION
1. The name of the corporation is CERPROBE CORPORATION (which
is hereinafter referred to as the "Corporation").
2. The original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on March 23, 1987, under the
name CERPROBE CORPORATION.
3. This Second Restated Certificate of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board of
Directors of the Corporation, duly adopted by the stockholders of the
Corporation at a meeting duly called, and duly executed and acknowledged by the
officers of the Corporation in accordance with the provisions of Sections 103
and 245 of the General Corporation Law of the State of Delaware, and amends and
restates, and integrates the provisions of the Certificate of Incorporation of
the Corporation and, upon filing with the Secretary of State in accordance with
Section 103 and 242, shall thenceforth supersede the Certificate of
Incorporation and all amendments thereto, and shall, as it may thereafter be
amended in accordance with its terms and applicable law, be the Certificate of
Incorporation of the Corporation.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation shall be Cerprobe Corporation.
ARTICLE II
ADDRESS
The registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name and address of the Corporation's registered agent is The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
<PAGE> 2
ARTICLE III
PURPOSE
The purpose for which this Corporation is organized is the
transaction of any or all lawful business for which corporations may be
incorporated under the laws of the State of Delaware, as may be amended from
time to time.
ARTICLE IV
STOCK
The Corporation shall have the authority to issue twenty-five
million (25,000,000) shares of Common Stock. The par value of each share of
Common Stock shall be 5/100 Dollar ($0.05). The Corporation shall have the
authority to issue ten million (10,000,000) shares of Preferred Stock. The par
value of each share of Preferred Stock shall be 5/100 Dollar ($0.05).
Section 1.
Common Stock. The Board of Directors of the Corporation may,
from time to time, distribute on a pro rata basis to its Common Stock
shareholders, out of the capital surplus of the Corporation, a portion of its
assets, in cash or property.
The Board of Directors of the Corporation may, from time to
time, cause the Corporation to purchase its own Common Stock shares to the
extent of the unreserved and unrestricted earned and capital surplus of the
Corporation.
The Corporation may issue rights and options to purchase
shares of Common Stock of the Corporation to Directors, Officers or employees of
the Corporation or any affiliate thereof, and no shareholder approval or
ratification of any such issuance of rights and options shall be required.
Section 2.
Preferred Stock. The Corporation shall have authority to issue
its Preferred Stock in series. The Board of Directors is vested with authority
to establish and designate series and to fix the number of shares to be included
in each such series and the relative rights, preferences and limitations of each
such series, subject to the provisions set forth below. If the stated dividends
and amounts payable on liquidation are not paid in full, the shares of all
series of the same class shall share ratably in the payment of dividends
including accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in full, and in
any distribution of assets other than by way of dividends in accordance with the
sums which would be payable in such distribution if all sums payable were
discharged in full. The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to, determination of
the following:
a. The number of shares constituting that series and
the distinctive designation of that series;
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b. The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates;
c. Whether that series shall participate in unlimited
dividend rights, and, if so, the extent of such participation;
d. Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights, including whether it shall vote as a separate series, or with
other series of Preferred Stock, or as one class with the holders of Common
Stock, with or without other series of Preferred Stock, and whether differently
as to different matters, or any combination of the foregoing;
e. Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
f. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
g. The amounts payable on the shares of that series
in the event of voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
h. Any other relative rights, preferences and
limitations of that series.
Dividends on outstanding Preferred Stock of each series shall
be declared and paid, or set apart for payment, before any dividends shall be
declared and paid, or set apart for payment, on the Common Stock with respect to
the same dividend period.
Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Preferred
Stock shall be entitled to receive out of the assets of the Corporation, before
any distribution shall be made to the holders of the Common Stock, the amounts
determined to be payable on the Preferred Stock of each series in the event of
voluntary or involuntary liquidation.
No holder of Preferred Stock shall be entitled to any
preemptive rights.
The Corporation may issue rights and options to purchase
shares of Preferred Stock of the Corporation to Directors, Officers or employees
of the Corporation or any affiliate thereof, and no shareholder approval or
ratification of any such issuance of rights and options shall be required.
Section 3.
Cumulative Voting. At all elections of directors of the
Corporation, or at elections held under specified circumstances, each holder of
stock or of any class or classes or of a series or series thereof shall be
entitled to as many votes as shall equal the number of votes which he would be
entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors
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to be elected by him, and he may cast all of such votes for a single director or
may distribute them among the number to be voted for, or for any two or more of
them as he may see fit.
ARTICLE V
BOARD OF DIRECTORS
The number of persons to serve on the Board of Directors shall
be fixed by the Bylaws.
ARTICLE VI
INDEMNIFICATION
Section 1.
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholder of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section 2.
a. Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
(hereinafter an "Indemnitee"), whether the basis of such Proceeding is an
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith and such indemnification shall continue as to an Indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the Indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in paragraph (b) hereof with respect to
Proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such Indemnitee in
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<PAGE> 5
connection with a Proceeding (or part thereof) initiated by such Indemnitee only
if such Proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such Proceeding in advance of its final
disposition (hereinafter an "Advancement of Expenses"); provided, however, that,
if the Delaware General Corporation Law requires, an Advancement of Expenses
incurred by an Indemnitee in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
Indemnitee, including without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this Section or otherwise (hereinafter and
"Undertaking").
b. Right of Indemnitee to Bring Suit. If a claim
under paragraph (a) of this Section is not paid in full by the Corporation
within sixty days after a written claim has been received by the Corporation,
except in the case of a claim for an Advancement of Expenses, in which case the
applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the Indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right to an Advancement of Expenses) it
shall be a defense that, and (ii) any suit by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking the Corporation
shall be entitled to recover such expenses upon final adjudication that, the
Indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right hereunder, or by the Corporation to recover an Advancement of
Expenses pursuant to the terms of an undertaking, the burden of proving that the
Indemnitee is not entitled to be indemnified or to such Advancement of Expenses
under this Section or otherwise shall be on the Corporation.
c. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in this Section
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, this Certificate of Incorporation, Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise.
d. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another Corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
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<PAGE> 6
e. Indemnification of Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses,
to any agent of the Corporation to the fullest extent of the provisions of this
Section with respect to the indemnification and advancement of expenses of
directors, officers and employees of the Corporation.
ARTICLE VII
ELECTION OF DIRECTORS
All elections of Directors will be by ballot vote where a
ballot vote is demanded by any person entitled to vote prior to the time the
voting begins; otherwise, a voice vote will suffice.
ARTICLE VIII
AMENDMENT OF BYLAWS
The Bylaws may be altered, amended, repealed or temporarily or
permanently suspended, in whole or in part, or new bylaws adopted by the action
of the Board of Directors or the Stockholders, in accordance with the provisions
set forth below:
Section 1.
By Action of the Board of Directors. The Bylaws may be
altered, amended, repealed or temporarily or permanently suspended, in whole or
in part, or new bylaws adopted by the action of the Board of Directors only upon
the affirmative vote of a majority of the entire Board of Directors. Such vote
may be taken at any annual, regular or special meeting of the Board of Directors
if notice of such alteration, amendment, repeal or adoption of the new bylaws
shall be contained in the notice of such annual, regular or special meeting.
Section 2.
By Action of the Stockholders. The Bylaws may be altered,
amended or repealed or new bylaws may be adopted by the stockholders only (i)
upon the affirmative vote as to all the stock held by the holders of not less
than eighty percent (80%) of the Outstanding Voting Shares and (ii) by a
Majority of Stockholders. Such vote may be taken at any annual or special
meeting of the stockholders if notice of such alteration, amendment, repeal or
adoption of the new bylaws shall be contained in the notice of such annual or
special meeting.
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ARTICLE IX
BOARD CONSIDERATIONS UPON SIGNIFICANT EVENTS
The Board, when evaluating any (A) tender offer or invitation
for tenders, or proposal to make a tender offer or request or invitation for
tenders, by another party, for any equity security of the Corporation, or (B)
proposal or offer by another party to (1) merge or consolidate the Corporation
or any subsidiary with another corporation or other entity, (2) purchase or
otherwise acquire all or a substantial portion of the properties or assets of
the Corporation or any subsidiary, or sell or otherwise dispose of to the
Corporation or any subsidiary all or a substantial portion of the properties or
assets of such other party, or (3) liquidate, dissolve, reclassify the
securities of, declare an extraordinary dividend of, recapitalize or reorganize
the Corporation, shall take into account all factors that the Board deems
relevant, including, without limitation, to the extent so deemed relevant, the
potential impact on employees, customers, suppliers, partners, joint venturers
and other constituents of the Corporation and the communities in which the
Corporation operates.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this Second
restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article IX must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock (as defined in
Article XII), voting together as a single class.
ARTICLE X
Notwithstanding anything to the contrary contained in the
Corporation's Bylaws, the Corporation elects to be governed by Section 203 of
the Delaware General Corporation Law.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this Second
restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article X must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock (as defined in
Article XII), voting together as a single class.
ARTICLE XI
STOCKHOLDER CONSENT
No action that is required or permitted to be taken by the
stockholders of the Corporation at any annual or special meeting of stockholders
may be effected by written consent of stockholders in lieu of a meeting of
stockholders, unless the action to be effected by written consent of
stockholders and the taking of such action by such written consent have
expressly been approved in advance by the Board.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this Second
restated Certificate of Incorporation, any alteration, amendment or repeal
relating to
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this Article XI must be approved by the affirmative vote of the holders of at
least sixty six and two-thirds percent (66 2/3%) of the combined voting power of
the issued and outstanding shares of Voting Stock (as defined in Article XII),
voting together as a single class.
ARTICLE XII
BUSINESS COMBINATIONS; FAIR PRICE
A. In addition to any affirmative vote required by law or this
Second restated Certificate of Incorporation, and except as otherwise expressly
provided in paragraph B of this Article XII:
1. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder (as hereinafter defined), or (b) any
other corporation, partnership or other entity (whether or not
itself an Interested Stockholder) which is, or after such
merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder other than a merger
enacted in accordance with Section 253 of the Delaware General
Corporation Law or any successor thereof; or
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder,
including all Affiliates of the Interested Stockholder, of any
assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of ten
million dollars ($10,000,000) or more; or
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to any
Interested Stockholder, including all Affiliates of the
Interested Stockholder, in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
Fair Market Value of ten million dollars ($10,000,000) or more
(other than on a pro rata basis to all holders of Voting Stock
of the same class held by the Interested Stockholder pursuant
to a stock split, stock dividend or distribution of warrants
or rights and other than in connection with the exercise or
conversion of securities exercisable for or convertible into
securities of the Corporation of any of its subsidiaries which
securities have been distributed pro rata to all holders of
Voting Stock); or
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Stockholder or any Affiliates of an
Interested Stockholder; or
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not an
Interested Stockholder is a party thereto) which has the
effect, directly or indirectly, of increasing the
proportionate share by more than one percent (1%) of the
issued and outstanding shares of any class of equity or
convertible securities of the Corporation or any
8
<PAGE> 9
Subsidiary which are directly or indirectly owned by any
Interested Stockholder or one or more Affiliates of the
Interested Stockholder;
shall require the affirmative vote of the holders of at least sixty six and
two-thirds percent (66 2/3%) of the voting power of the then issued and
outstanding Voting Stock, as hereinafter defined, voting together as a single
class, including the affirmative vote of the holders of at least sixty six and
two-thirds percent (66 2/3%) of the voting power of the then issued and
outstanding Voting Stock not Beneficially Owned directly or indirectly by an
Interested Stockholder or any Affiliate of any Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be permitted, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Article XII shall not
be applicable to any particular Business Combination (as hereinafter defined),
and such Business Combination shall require only such affirmative vote as is
required by law or any other provision of this Second restated Certificate of
Incorporation, if the conditions specified in either of the following paragraph
1 or 2 are met:
1. the Business Combination shall have been approved
by a majority of the Continuing Directors (as hereinafter defined); or
2. all of the following price and procedural
conditions shall have been met:
(a) the aggregate amount of the cash and the
Fair Market Value (as hereinafter defined) as of the date of
the consummation of the Business Combination of consideration
other than cash, to be received per share by the holders of
Common Stock in such Business Combination, shall be at least
equal to the highest of the following:
(i) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common
Stock acquired by it (A) within the two (2) year
period immediately prior to the first public
announcement of the proposal of such Business
Combination (the "Announcement Date"), or (B) in the
transaction in which it became an Interested
Stockholder, whichever is higher;
(ii) the Fair Market Value per share
of Common Stock on the Announcement Date or on the
date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"),
whichever is higher; and
(iii) (if applicable) the price per
share equal to the Fair Market Value per share of
Common Stock determined pursuant to paragraph
2(a)(ii) above, multiplied by the ratio of (A) the
highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any
shares of Common Stock acquired by it within the two
(2) year period immediately prior to the Announcement
Date to (B) the Fair Market Value per share of Common
Stock on the first day in such two (2) year period
upon which the Interested Stockholder acquired any
shares of Common Stock; and
9
<PAGE> 10
(b) the aggregate amount of the cash and the
Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of shares of any other class,
other than Common Stock or Excluded Preferred Stock, of issued
and outstanding Voting Stock shall be at least equal to the
highest of the following (it being intended that the
requirements of this paragraph 2(b) shall be required to be
met with respect to every such class of issued and outstanding
Voting Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class of Voting
Stock):
(i) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of such
class of Voting Stock acquired by it (A) within the
two (2) year period immediately prior to the
Announcement Date, or (B) in the transaction in which
it became an Interested Stockholder, whichever is
higher;
(ii) (if applicable) the highest
preferential amount per share to which the holders of
shares of such class of Voting Stock are entitled in
the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
(iii) the Fair Market Value per
share of such class of Voting Stock on the
Announcement Date or on the Determination Date,
whichever is higher; and
(iv) (if applicable) the price per
share equal to the Fair Market Value per share of
such class of Voting Stock determined pursuant to
paragraph 2(b)(iii) above, multiplied by the ratio of
(A) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for
any shares of such class of Voting Stock acquired by
it within the two (2) year period immediately prior
to the Announcement Date to (B) the Fair Market Value
per share of such class of Voting Stock on the first
day in such two (2) year period upon which the
Interested Stockholder acquired any shares of such
class of Voting Stock; and
(c) the consideration to be received by
holders of a particular class of issued and outstanding Voting
Stock (including Common Stock and other than Excluded
Preferred Stock) shall be in cash or in the same form as the
Interested Stockholder has previously paid for shares of such
class of Voting Stock (if the Interested Stockholder has paid
for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of
Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock
previously acquired by it); and
(d) after such Interested Stockholder has
become an Interested Stockholder and prior to the consummation
of such Business Combination: (i) there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
issued and outstanding preferred stock, except as approved by
a majority of the Continuing Directors; (ii) there shall have
been
10
<PAGE> 11
no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of the
Continuing Directors; (iii) there shall have been an increase
in the annual rate of dividends as necessary fully to reflect
any recapitalization (including any reverse stock split),
reorganization or any similar reorganization which has the
effect of reducing the number of issued and outstanding shares
of the Common Stock, unless the failure so to increase such
annual rate is approved by a majority of the Continuing
Directors; and (iv) such Interested Stockholder shall not have
become the Beneficial Owner of any additional Voting Stock
except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder; and
(e) after such Interested Stockholder has
become an Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or
any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise; and
(f) a proxy or information statement
describing the proposed Business Combination and complying
with the requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be
mailed to stockholders of the Corporation at least thirty (30)
days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is
required to be marked pursuant to such Act or subsequent
provisions).
C. For purposes of this Article XII the following terms shall
have the following meanings:
1. "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on June
21, 1996.
2. "Beneficial Owner" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations of the
Securities Exchange Act of 1934, as in effect on June 21, 1996. In addition, a
Person shall be the "Beneficial Owner" of any Voting Stock which such Person or
any of its Affiliates or Associates has: (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; or (b) the right to
vote pursuant to any agreement, arrangement or understanding (but neither such
Person nor any such Affiliate or Associate shall be deemed to be the Beneficial
Owner of any shares of Voting Stock solely by reason of a revocable proxy
granted for a particular meeting of the stockholders, pursuant to a public
solicitation of proxies for such meeting, and with respect to which shares
neither such Person nor any such Affiliate of Associate is otherwise deemed the
Beneficial Owner).
3. "Business Combination" shall mean any transaction
described in any one or more of clauses (1) through (5) of Section A of this
Article XII.
11
<PAGE> 12
4. "Continuing Director" shall mean any member of the
Board who is unaffiliated with and is not the Interested Stockholder and was a
member of the Board prior to the time that the Interested Stockholder became an
Interested Stockholder, and any director who is thereafter chosen to fill any
vacancy on the Board or who is elected and who, in either event, is unaffiliated
with the Interested Stockholder and in connection with his or her initial
assumption of office is recommended for appointment or election by a majority of
Continuing Directors then on the Board.
5. "Excluded Preferred Stock" means any series of
Preferred Stock with respect to which a majority of the Continuing Directors
have approved a Preferred Stock Designation creating such series that expressly
provides that the provisions of this Article XII shall not apply.
6. "Fair Market Value" shall mean: (a) in the case of
stock, the highest closing sale price during the thirty (30) day period
immediately preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange listed stocks, or, if such stock is
not quoted on the composite tape, on the New York Stock Exchange, or, if such
stock is not listed on such exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
thirty (30) day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotation System or any system
then in use in its stead, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined by
the Board in accordance with Section D of this Article XII; and (b) in the case
of property other than cash or stock, the fair market value of such property on
the date in question as determined by the Board in accordance with Section D of
this Article XII.
7. "Interested Stockholder" shall mean any Person to
or which:
(a) itself, or along with its Affiliates, is
the Beneficial Owner, directly or indirectly, of more than
fifteen percent (15%) of the then issued and outstanding
Voting Stock; or
(b) is an Affiliate of the Corporation and
at any time within the two (2) year period immediately prior
to the date in question was itself, or along with its
Affiliates, the Beneficial Owner, directly or indirectly, of
fifteen percent (15%) or more of the then issued and
outstanding Voting Stock; or
(c) is an assignee of or has otherwise
succeeded to any Voting Stock which was at any time within the
two (2) year period immediately prior to the date in question
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
For the purpose of determining whether a Person is an
Interested Stockholder pursuant to paragraph 7 of this Section C, the number of
shares of Voting Stock deemed to be issued and outstanding shall include shares
deemed owned through application of paragraph 2 of this Section C but shall not
include any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options or otherwise.
12
<PAGE> 13
Notwithstanding anything to the contrary contained in this
Second restated Certificate of Incorporation, for purposes of this Second
restated Certificate of Incorporation, the term "Interested Stockholder" shall
not, for any purpose, include, and the provisions of Article XII(A) hereof shall
not apply to: (a) the Corporation or any Subsidiary; or (b) any employee stock
ownership plan of the Corporation or any Subsidiary.
8. In the event of any Business Combination in which
the Corporation survives, the phrase "other consideration to be received" as
used in paragraphs 2(a) and (b) and paragraph B of this Article XII shall
include the shares of Common Stock and/or the shares of any other class of
issued and outstanding Voting Stock retained by the holders of such shares.
9. "Person" shall mean any individual, firm,
corporation, partnership or other entity.
10. "Subsidiary" shall mean any corporation or other
entity of which the Corporation owns, directly or indirectly, securities that
enable the Corporation to elect a majority of the board of directors or other
persons performing similar functions of such corporation or entity or that
otherwise give to the Corporation the power to control such corporation or
entity.
11. "Voting Stock" means all issued and outstanding
shares of capital stock of the Corporation that pursuant to or in accordance
with this Second restated Certificate of Incorporation are entitled to vote
generally in the election of directors of the Corporation, and each reference
herein, where appropriate, to a percentage or portion of shares of Voting Stock
shall refer to such percentage or portion of the voting power of such shares
entitled to vote. The issued and outstanding shares of Voting Stock shall not
include any shares of Voting Stock that may be issuable pursuant to any
agreement, or upon the exercise or conversion of any rights, warrants or options
or otherwise.
D. The Continuing Directors of the Corporation shall have the
power and duty to determine for the purposes of this Article XII, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article XII, including, without limitation: (i)
whether a Person is an Interested Stockholder; (ii) the number of shares of
Voting Stock beneficially owned by any Person; (iii) whether a Person is an
Affiliate or Associate of another; (iv) whether the applicable conditions set
forth in paragraph 2 of paragraph B of this Article XII have been met with
respect to any Business Combination; (v) the Fair Market Value of stock or other
property in accordance with paragraph 6 of paragraph C of this Article XII; and
(vi) whether the assets which are the subject of any Business Combination have,
or the consideration to be received for the issuance or transfer of securities
by the Corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of ten million dollars ($10,000,000) or more.
E. Nothing contained in this Article XII shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
F. In addition to any affirmative vote required by applicable
law and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this Second
restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article XII must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock, voting
together as a single class.
13
<PAGE> 14
IN WITNESS WHEREOF, this Second restated Certificate of
Incorporation has been signed this ____ day of May 1998.
CERPROBE CORPORATION
By:
---------------------------------------
C. Zane Close, President
14
<PAGE> 1
EXHIBIT 10.fff
LEASE SCHEDULE NO. 1000065778
FINANCING LEASE
Master Lease Agreement dated NOVEMBER 17, 1997
Lessor: Banc One Leasing Corporation
Lessee: COMPUROUTE, INC.
1. GENERAL. This Lease Schedule is signed and delivered under the Master Lease
Agreement identified above, as amended from time to time ("Master Lease"),
between Lessee and Lessor. Capitalized terms defined in the Master Lease will
have the same meanings when used in this Schedule.
2. FINANCING. Lessor finances for Lessee, and Lessee finances with Lessor, all
of the property ("Equipment") described below or in Schedule A-1 attached
hereto (and Lessee represents that all Equipment is new unless specifically
identified as used):
3. AMOUNT FINANCED. $389,190.31 EQUIPMENT COST
$ 100.00 DOCUMENTATION FEE
$389,290.31 TOTAL AMOUNT FINANCED
4. FINANCING TERM. The Lease Term of this Schedule shall be SIXTY (60) months.
The Lease Term begins on the earlier of the Acceptance Date or the Commencement
Date and continues for the number of months after the Commencement Date as
stated above. The Acceptance Date is the date that Lessor accepts this Schedule
as stated below Lessor's signature. The Commencement Date is the 15th day of
the month in which the Acceptance Date occurs.
5. INSTALLMENT PAYMENTS. As financing for the Equipment, Lessee shall pay to
Lessor all amounts stated below on the due dates stated below. There shall be
added to each installment payment all applicable Taxes as in effect from time
to time.
MONTHLY INSTALLMENT PAYMENT (excluding Taxes): $7,745.20
FREQUENCY & TIMING OF INSTALLMENT PAYMENTS: MONTHLY IN ARREARS
NUMBER OF INSTALLMENT PAYMENTS: SIXTY (60)
INSTALLMENT PAYMENT DUE DATES: The first installment payment shall be paid
thirty (30) days from the Commencement Date and all subsequent installment
payments shall be paid on the same day of each month thereafter.
SET-UP/FILING FEE: $0.00 which shall be paid on the Commencement Date.
SECURITY DEPOSIT: $0.00 which shall be paid on the Commencement Date.
At the end of the lease term, Lessee shall make a final payment of $1.00.
Principal Amount: $389,290.31 Interest Rate Per Annum: 7.20%
Lessee promises to pay said principal, with interest at said rate, in the
amount and at the times stated in this schedule. Interest is calculated on
the basis of 30-day months and 360-day year.
6. SECURITY INTEREST. This Schedule is intended to be a secured debt financing
transaction, NOT a true lease. See Paragraph 7 below regarding Lessee's
ownership of the Equipment. As collateral security for payment and performance
of all Secured Obligations (defined in Paragraph 8 below) and to induce Lessor
to extend credit from time to time to Lessee (under the Lease or otherwise),
Lessee hereby grants to Lessor a first priority security interest in all of
Lessee's right, title and interest in the Equipment, whether now existing or
hereafter acquired, any sums specified in this Schedule as a "Security
Deposit", and in all Proceeds
Page 1 of 3
<PAGE> 2
(defined in Paragraph 8 below). At its option, Lessor may apply all or any part
of any Security Deposit to cure any default of Lessee under the Lease. If upon
final termination of this Schedule, Lessee has fulfilled all of the terms and
conditions hereof, then Lessor shall pay to Lessee upon Lessee's written
request any remaining balance of the Security Deposit for this Schedule,
without interest.
7. TITLE TO EQUIPMENT; FIRST PRIORITY LIEN. Lessee represents, warrants and
agrees: that Lessee currently is the lawful owner of the Equipment; that good
and marketable title to the Equipment shall remain with Lessee at all times;
that Lessee has granted to Lessor a first priority security interest in the
Equipment and all Proceeds; and that the Equipment and all Proceeds are, and at
all times shall be, free and clear of any Liens other than Lessor's security
interest therein. Lessee at its sole expense will protect and defend Lessor's
first priority security interest in the Equipment against all claims and
demands whatsoever.
8. CERTAIN DEFINITIONS. "Secured Obligations" means (a) all payments and other
obligations of Lessee under or in connection with this Schedule, and (b) all
payments and other obligations of Lessee (whether now existing or hereafter
incurred) under or in connection with the Master Lease and all present and
future Lease Schedules thereto, and (c) all other leases, indebtedness,
liabilities and/or obligations of any kind (whether now existing or hereafter
incurred, absolute or contingent, direct or indirect) of Lessee to Lessor or
to any affiliate of either Lessor or BANC ONE CORPORATION. "Proceeds" means all
cash and non-cash proceeds of the Equipment including, without limitation,
proceeds of insurance, indemnities and/or warranties.
9. AMENDMENTS TO MASTER LEASE. FOR PURPOSES OF THIS SCHEDULE ONLY, LESSEE AND
LESSOR agree to amend the Master Lease as follows: (a) public liability or
property insurance as described in the second sentence of Section 8 will not be
required; (b) the definition of "Stipulated loss Value" in clause (b) of Section
9 is deleted and replaced by Paragraph 10 below; (c) the text of Section 10 is
deleted in its entirety; (d) Subsections 23(a) and 23(c) are deleted; (e)
subsection 23(b)) and the last sentence of section 4 will apply only if an event
of default occurs; and(f) all references in the Lease at it relates to this
Schedule to "Lessee" and Lessor" shall be changed to "Borrower" and "Lender"
respectively.
10. STIPULATED LOSS VALUE. FOR PURPOSES OF THIS SCHEDULE ONLY, the "Stipulated
Loss Value" of any item of Equipment during its lease Term equals the aggregate
of the following as of the date specified by Lessor: (a) all accrued and unpaid
interest, late charges and other amounts due under this Schedule and the Master
Lease to the extent it relates to this Schedule as of such specified date,
plus(b) the remaining principal balance due and payable by Lessee under this
Schedule as of such specified date, plus (c) interest on the amount described
in the foregoing clauses (a) and (b) at the Overdue Rate commencing with the
specified date; provided, that the foregoing calculation shall not exceed the
maximum amount which may be collected by lessor from lessee under applicable
law in connection with enforcement of Lessor's rights under this schedule and
the Master Lease to the extent it relates to this Schedule.
11. LESSEE TO PAY ALL TAXES. FOR PURPOSES OF THIS SCHEDULE AND ITS EQUIPMENT
ONLY: Lessee shall pay any and all Taxes relating to this Schedule and its
Equipment directly to the applicable taxing authority; Lessee shall prepare and
file all reports or returns concerning any such Taxes as may be required by
applicable law or regulation (provided, that Lessor shall not be identified as
the owner of the Equipment in such reports or returns); and Lessee shall, upon
Lessor's request, send Lessor evidence of payment of such Taxes and copies of
any such reports or returns.
12. LESSEE'S ASSURANCES. Lessee irrevocably and unconditionally: (a) reaffirms
all of the terms and conditions of the Master Lease and agrees that the Master
Lease remains in full force and effect; (b) agrees that the Equipment is and
will be used at all times solely for commercial purposes, and not for personal,
family or household purposes; and (c) incorporates all of the terms and
conditions of the Master Lease as if fully set forth in this Schedule.
13. REPRESENTATIONS AND WARRANTIES: Lessee represents and warrants that: (a)
Lessee is a corporation, partnership or proprietorship duly organized, validly
existing and in good standing under the laws
Page 2 of 3
<PAGE> 3
of the state of its organization and is qualified to do business and is in good
standing under the laws of each other state in which the Equipment is or will be
located; (b) Lessee has full power, authority and legal right to sign, deliver
and perform the Master Lease, this Schedule and all related documents and such
actions have been duly authorized by all necessary corporate/partnership/
proprietorship action; and (c) the Master Lease, this Schedule and each related
document has been duly signed and delivered by Lessee and each such document
constitutes a legal, valid and binding obligation of Lessee enforceable in
accordance with its terms.
14. CONDITIONS. No lease of Equipment under this Schedule shall be binding on
Lessor, and Lessor shall have no obligation to purchase the Equipment covered
hereby, unless: (a) Lessor has received evidence of all required insurance; (b)
in Lessor's sole judgment, there has been no material adverse change in the
financial condition or business of Lessee or any guarantor; (c) Lessee has
signed and delivered to Lessor this Schedule, which must be satisfactory to
Lessor, and Lessor has signed and accepted this Schedule; (d) no change in the
Code or any regulation thereunder, which in Lessor's sole judgment would
adversely affect the economics to Lessor of the lease transaction, shall have
occurred or shall appear to be imminent; (e) Lessor has received, in form and
substance satisfactory to Lessor, such other documents and information as Lessor
shall reasonably request; and (f) Lessee has satisfied all other reasonable
conditions established by Lessor.
15. OTHER DOCUMENTS: EXPENSES: Lessee agrees to sign and deliver to Lessor any
additional documents deemed desirable by Lessor to effect the terms of the
Master Lease or this Schedule including, without limitation, Uniform Commercial
Code financing statements which Lessor is authorized to file with the
appropriate filing officers. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact with full power and authority in the place of Lessee
and in the name of Lessee to prepare, sign, amend, file or record any Uniform
Commercial Code financing statements or other documents deemed desirable by
Lessor to perfect, establish or give notice of Lessor's interests in the
Equipment or in any collateral as to which Lessee has granted Lessor a security
interest. Lessee shall pay upon Lessor's written request any actual
out-of-pocket costs and expenses paid or incurred by Lessor in connection with
the above terms of this section or the funding and closing of this Schedule.
16. PURCHASE ORDERS AND ACCEPTANCE OF EQUIPMENT. Lessee agrees that (i) Lessor
has not selected, manufactured, sold or supplied any of the Equipment, (ii)
Lessee has selected all of the Equipment and its suppliers, and (iii) Lessee has
received a copy of, and approved, the purchase orders or purchase contracts for
the Equipment. AS BETWEEN LESSEE AND LESSOR, LESSEE AGREES THAT: (a) LESSEE HAS
RECEIVED, INSPECTED AND APPROVED ALL OF THE EQUIPMENT; (b) ALL EQUIPMENT IS IN
GOOD WORKING ORDER AND COMPLIES WITH ALL PURCHASE ORDERS OR CONTRACTS AND ALL
APPLICABLE SPECIFICATIONS; (c) LESSEE IRREVOCABLY ACCEPTS ALL EQUIPMENT FOR
PURPOSES OF THE LEASE "AS-IS, WHERE-IS" WITH ALL FAULTS; AND (d) LESSEE
UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO REVOKE ITS ACCEPTANCE OF
THE EQUIPMENT.
LESSEE HAS READ AND UNDERSTOOD ALL OF THE TERMS OF THIS SCHEDULE. LESSEE AGREES
THAT THERE ARE NO ORAL OR UNWRITTEN AGREEMENTS WITH LESSOR REGARDING THE
EQUIPMENT OR THIS SCHEDULE.
BANC ONE LEASING CORPORATION COMPUROUTE, INC.
(Lessor) (Lessee)
By: Illegible Signature By: /s/ Alexander D. Wasserzug
- -------------------------------- ------------------------------------
Title: MGR, FUNDING Title: PRESIDENT
- -------------------------------- ------------------------------------
Acceptance Date: 6/17/98 Witness: Illegible Signature
- -------------------------------- ------------------------------------
Page 3 of 3
<PAGE> 4
CORPORATE LEASE ACKNOWLEDGMENT
State of Texas :
: SS
County of Dallas :
The above mentioned foregoing instrument, was acknowledged before me this 7 May
1998 by (Officers' Name) Alexander D. Wasserzug, (Officer's Title) President,
of CompuRoute, a Delaware corporation, on behalf of the corporation.
/s/ Linda J. Adams
-----------------------
[Notary Seal] Notary Public
Commission Expires 6-23-98
<PAGE> 5
BANC ONE LEASING CORPORATION
SCHEDULE A-1 EQUIPMENT LEASED HEREUNDER
QUANTITY DESCRIPTION PAGE 1
=========== ====================================================================
EQUIPMENT LOCATION: 10365 SANDEN DRIVE
DALLAS, TEXAS 75238
COUNTY: DALLAS
EQUIPMENT COST: $389,190.31
EQUIPMENT DESCRIPTION:
ONE (1) PLURITEC USA MULTISTATION PCB CNC DRILL, SERIAL NO. 07001197-1
FIVE (5) MILLER SQA WORKSTATIONS
ONE (1) ISHII HYOKI JET SCRUBBER, WITH COMPONENTS:
ULTRA SONIC GENERATOR, SERIAL NO. U-7018
RINSE DRYER, SERIAL NO. U-7012
CONTROL PANEL, SERIAL NO. U-97020
ONE (1) GERBER SYSTEMS SCAN HEAD UPGRADE W/VIDEO, SERIAL NO. 9723563S
TOGETHER WITH ALL ATTACHMENTS, ADDITIONS, ACCESSIONS, PARTS,
REPAIRS, IMPROVEMENTS, REPLACEMENTS AND SUBSTITUTIONS THERETO.
This Schedule A-1 is attached to and made a part of Lease Number 1000065778 and
constitutes a true and accurate description of the equipment.
Lessee:
COMPUROUTE, INC.
By: /s/ Alexander D. Wasserzug
-----------------------------
Date: 07 May 1998
----------------------------
<PAGE> 6
PREPAYMENT SCHEDULE ADDENDUM
(For Prepayment of a Financing Lease Schedule)
Dated 07 May 1998
Lease Schedule No. 1000065778 Dated 07 May 1998
- --------------------------------------- ---------------------
Lessee: COMPUROUTE, INC.
Reference is made to the above Lease Schedule as previously amended
("Schedule") and to the Master Lease Agreement as previously amended ("Master
Lease") identified in the Schedule, which are by and between Banc One Leasing
Corporation ("Lessor") and the above lessee ("Lessee"). As used herein: "Lease"
shall mean the Schedule and the Master Lease, but only to the extent that the
Master Lease relates to the Schedule; and "Equipment" shall mean the equipment
covered by the Schedule. This Schedule Addendum amends and supplements the terms
and conditions of the Lease. Unless otherwise defined herein, capitalized terms
defined in the Lease shall have the same meaning when used herein. SOLELY FOR
PURPOSES OF THE SCHEDULE, LESSOR AND LESSEE AGREE AS FOLLOWS:
1. Notwithstanding anything to the contrary in the Lease, Lessee and Lessor
agree that so long as Lessee gives Lessor at least 20 days prior written notice
(the "Notice Period"), Lessee may elect to prepay the outstanding principal
balance of the Schedule, in whole or in part, on the rent payment date (a
"Prepayment Date") following the Notice Period by paying to Lessor (whether made
voluntarily or involuntarily as a result of an acceleration of the Maturity Date
or otherwise), the total of the following: (a) all accrued rent or installment
payments, interest, Taxes, late charges and other amounts then due and payable
under the Schedule and the Master Lease to the extent it relates to the
Schedule; plus (b) the principal amount selected by Lessee for prepayment in the
notice of prepayment (hereinafter, the "Prepaid Principal"); plus (c) a
prepayment premium, if any, equal to the product of (i) a Average Lost Monthly
Interest Income and (ii) the number of months from the Prepayment Date to the
Maturity Date (with any fraction of a month counted as a month), discounted to
present value at the Discount Rate. At the option of Lessor, in its absolute and
sole discretion, any prepayment shall be applied to installments coming due
hereunder in the inverse order of their due dates.
2. Solely for purposes of this Addendum, the following definitions in this
paragraph 2 shall apply to this Addendum. "Maturity Date" means the scheduled
expiration of the Lease Term of the Schedule as set forth in the Schedule.
"Average Lost Monthly Interest Income" means the amount determined by dividing
(i) the product of the Average Principal and the Lost Rate, by (ii) twelve (12).
"Average Principal" is the amount equal to either (i) one-half of the sum of (A)
the amount of Prepaid Principal and (B) the amount of principal that is
scheduled to be due on the Maturity Date ("Balloon Amount"), or (ii) the amount
of
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<PAGE> 7
Prepaid Principal, if such amount is less than the Balloon Amount. "Lost Rate"
is the rate per annum equal to the percentage, if any, by which (i) the yield to
maturity of United States Treasury debt obligations having a maturity date
nearest to the Maturity Date ("Treasury Obligations") determined on the date
hereof exceeds (ii) the yield to maturity of Treasury Obligations determined on
the date of prepayment. "Discount Rate" is the rate per annum equal to the yield
to maturity of Treasury Obligations determined on the date of prepayment. The
maturity date and yield to maturity of the Treasury Obligations shall be
determined by Lessor, in its absolute and sole discretion, on the basis of
quotations published in The Wall Street Journal, or other comparable sources.
Treasury Obligations shall exclude any stripped U.S. Treasury obligations and
any U.S. Treasury obligations which have multiple maturity or call dates, and if
more than one issue of U.S. Treasury obligations has the applicable maturity
month, then the U.S. Treasury obligation with the highest yield to maturity
shall be used.
3. Except as expressly amended or supplemented by this Addendum and other
instruments signed by Lessor, the Lease remains unchanged and in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the date referenced above.
COMPUROUTE, INC. Banc One Leasing Corporation
(Lessee) (Lessor)
By: /s/ Alexander D. Wasserzug By: Illegible Signature
- ------------------------------ -----------------------------
Title: PRESIDENT Title: MGR, FUNDING
- ------------------------------ -----------------------------
Page 2
<PAGE> 8
CORPORATE GUARANTY
(Limited to the "Guaranteed Lease")
Master Lease Agreement Date: NOVEMBER 17, 1997
Lessee Name: COMPUROUTE, INC.
Lease Schedule Number: 1000065778
Equipment Cost/Amount Financed: $389,290.31
1. For valuable consideration, the receipt of which is hereby acknowledged, the
undersigned jointly and severally unconditionally guarantee to BANC ONE LEASING
CORPORATION (hereinafter called "Lessor") the full and prompt performance by the
lessee identified above (hereinafter called "Lessee") of all obligations which
Lessee now has or may hereafter have to Lessor under the GUARANTEED LEASE (as
defined below) and unconditionally guarantee the prompt payment when due
(whether at scheduled maturity, upon acceleration or otherwise) of any and all
sums, indebtedness and liabilities of whatsoever nature, due or to become due,
direct or indirect, absolute or contingent, now or hereafter at any time owed or
contracted by Lessee to Lessor under the GUARANTEED LEASE, and all costs and
expenses of and incidental to collection of any of the foregoing, including
reasonable attorneys' fees (all of the foregoing hereinafter called
"Obligations"). "GUARANTEED LEASE" shall mean the Lease Schedule identified
above (whether now existing or hereafter arising) together with the Master Lease
Agreement identified above ("Master Lease") to the extent that it relates to the
above-described Lease Schedule.
2. This is an absolute and unconditional guarantee of payment and not of
collection. Lessor shall not be required, as a condition of the liability of the
undersigned, to resort to, enforce or exhaust any of its remedies against the
Lessee or any other party who may be liable for payment on any Obligation or to
resort to, marshall, enforce or exhaust any of its remedies against any leased
property or any property given or held as security for this Guaranty or any
Obligation.
3. The undersigned hereby waive and grant to Lessor, without notice to the
undersigned and without in any way affecting the liability of the undersigned,
the right at any time and from time to time, to extend other and additional
credit, leases, loans or financial accommodations to Lessee apart from the
Obligations, to deal in any manner as it shall see fit with any Obligation of
Lessee to Lessor and with any leased property or security for such Obligation,
including, but not limited to, (i) accepting partial payments on account of any
Obligation, (ii) granting extensions or renewals of all or any part of any
Obligation, (iii) releasing, surrendering, exchanging, dealing with, abstaining
from taking, taking, abstaining from perfecting, perfecting, or accepting
substitutes for any or all leased property or security which it holds or may
hold for any Obligation, (iv) modifying, waiving, supplementing or otherwise
changing any of the terms, conditions or provisions contained in any Obligation
and (v) the addition or release of any other party or person liable hereon,
liable on the Obligations or liable on any other guaranty executed to guarantee
any of Lessee's Obligations. The undersigned jointly and severally hereby agree
that any and all settlements, compromises, compositions, accounts stated and
agreed balances made in good faith between Lessor and Lessee shall be binding
upon the undersigned.
4. Every right, power and discretion herein granted to Lessor shall be for the
benefit of the successors or assigns of Lessor and of any transferee or assignee
of any Obligation covered by this Guaranty, and in the event any such Obligation
shall be transferred or assigned, every reference herein to Lessor shall be
construed to mean, as to such Obligation, the transferee or assignee thereof.
This Guaranty shall be binding upon each of the undersigned's executors,
administrators, heirs, successors and assigns.
5. This Guaranty shall continue in force for so long as Lessee shall be
obligated to Lessor pursuant to the Obligations described above. The undersigned
expressly waive notice of the incurring by Lessee of any Obligation to Lessor.
The undersigned also waive presentment, demand of payment, protest, notice of
dishonor or nonpayment of or nonperformance of any Obligation.
6. The undersigned hereby waive any claims or rights which they might now have
or hereafter acquire against Lessee or any other person primarily or
contingently liable on any Obligation of Lessee, which claims or rights arise
from the existence or performance of the undersigned's obligations under this
Guaranty or any other guaranty or under any instrument or agreement with respect
to any leased property or any property constituting collateral or security for
this Guaranty or any other guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution, indemnification, or any
right to participate in any claim or remedy of Lessor or any other creditor
which the undersigned now has or hereafter acquires, whether such claim or right
arises in equity, under contract or statute, at common law, or otherwise.
7. Lessor's rights hereunder shall be reinstated and revived, and this Guaranty
shall be fully enforceable, with respect
Page 1
<PAGE> 9
to any amount at any time paid on account of the Obligations which thereafter
shall be required to be restored or returned by Lessor upon the bankruptcy,
insolvency or reorganization of the Lessee, the undersigned or any other person,
or as a result of any other fact or circumstance, all as though such amount had
not been paid.
8. The undersigned jointly and severally agree to pay to Lessor all costs and
expenses, including reasonable attorneys' fees, incurred by Lessor in the
enforcement or attempted enforcement of this Guaranty, whether or not suit is
filed in connection therewith, or in the exercise by Lessor of any right,
privilege, power or remedy conferred by this Guaranty.
9. The undersigned represent and warrant that they have relied exclusively on
their own independent investigation of Lessee, the leased property and the
collateral for their decision to guarantee Lessee's Obligations now existing or
thereafter arising. The undersigned agree that they have sufficient knowledge of
the Lessee, the leased property, and the collateral to make an informed decision
about this Guaranty, and that Lessor has no duty or obligation to disclose any
information in its possession or control about Lessee, the leased property, and
the collateral to the undersigned. The undersigned warrant to Lessor that they
have adequate means to obtain from the Lessee on a continuing basis information
concerning the financial condition of the Lessee and that they are not relying
on Lessor to provide such information either now or in the future.
10. As long as any indebtedness under any of the Obligations remains unpaid or
any credit is available to Lessee under any of the Obligations, the undersigned
agree to furnish to Lessor: (a) annual financial statements setting forth the
financial condition and results of operation of the undersigned (financial
statements shall include balance sheet, income statement, changes in financial
position and all notes thereto) within 120 days of the end of each fiscal year
of the undersigned; (b) quarterly financial statements setting forth the
financial condition and results of operation of the undersigned within 60 days
of the end of each of the first three fiscal quarters of the undersigned; and
(c) such other financial information as Lessor may from time to time request
including, without limitation, financial reports filed by the undersigned with
federal or state regulatory agencies.
11. No postponement or delay on the part of Lessor in the enforcement of any
right hereunder shall constitute a waiver of such right. The failure of any
person or entity to sign this Guaranty shall not discharge the liability of any
of the undersigned.
12. This Guaranty remains fully enforceable irrespective of any claim, defense
or counterclaim which the Lessee may or could assert on any of the Obligations
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, fraud, bankruptcy, accord
and satisfaction, and usury, some of which the undersigned hereby waive along
with any standing by the undersigned to assert any said claim, defense or
counterclaim.
13. This Guaranty contains the entire agreement of the parties and supersedes
all prior agreements and understandings, oral or written, with respect to the
subject matter hereof. This Guaranty is not intended to replace or supersede any
other guaranty which the undersigned have entered into or may enter into in the
future. The undersigned may enter into additional guaranties in the future which
may or may not refer to the Master Lease identified above and such guaranties
are not intended to replace or supersede this Guaranty unless specifically
provided in the additional guaranty. The interpretation, construction and
validity of this guaranty shall be governed by the laws of the State of Ohio.
With respect to any action brought by Lessor against Guarantor to enforce any
term of this guaranty, Guarantor hereby irrevocably consents to the jurisdiction
and venue of any state or federal court in Franklin County, Ohio, where Lessor
has its principal place of business and where payments are to be made by Lessee
and Guarantor.
ALL PARTIES TO THIS GUARANTY, INCLUDING GUARANTOR AND LESSOR, WAIVE ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION
WITH OR IN ANY WAY RELATED TO THIS GUARANTY.
CERPROBE CORPORATION
(Guarantor/Undersigned)
By: /s/ Randal L. Buness
---------------------------
Title: VP & CFO Witness: /s/ Laura M. Back
------------------------ ------------------------
Date: 6/4/98
-------------------------
Page 2
<PAGE> 10
CORPORATE ACKNOWLEDGEMENT
State of Arizona )
) SS.
County of Maricopa )
The foregoing instrument, Corporate Guaranty, was acknowledged before me this
June 5, 1998 by (Officers' Name) Randal L. Buness, (Officer's Title) V.P. &
CFO, of (Name of Corporation) Cerprobe Corporation, a Delaware corporation, on
behalf of the corporation.
[Notary Seal] /s/ Laura M. Back
---------------------------
Notary Public
Commission Expires July 14, 2001
- ---------------------------------
OFFICIAL SEAL
LAURA M. BACK
Notary Public - State of Arizona
MARICOPA COUNTY
My Comm. Expires July 14, 2001
- ---------------------------------
<PAGE> 1
[BANK ONE LETTERHEAD]
Exhibit 10.ggg
Amendment of Lease No. 1000065410
Be it understood and agreed by and between COMPUROUTE, INC. (Lessee) and Banc
One Leasing Corporation (Lessor), that:
1) Lease shall herein be referred to as Lease No. 1000065638.
2) Monthly lease payments shall now be $4,604.66.
3) The Interest Per Annum shall now be (7.24%) Seven and twenty-four
hundredths percent.
All other terms, provisions, and conditions thereof shall remain the same.
Lessee:
COMPUROUTE, INC.
By: /s/ [illegible]
------------------
Title: PRESIDENT
---------------
Lessor:
BANC ONE LEASING CORPORATION
Approved and Accepted this 17th day of June, 1998.
By: /s/ [illegible]
--------------------
Title: MGR., FUNDING
-----------------
<PAGE> 2
LEASE SCHEDULE NO. 1000065410
FINANCING LEASE
Master Lease Agreement dated NOVEMBER 17, 1997
Lessor: Banc One Leasing Corporation
Lessee: COMPUROUTE, INC.
1. GENERAL. This Lease Schedule is signed and delivered under the Master
Lease Agreement identified above, as amended from time to time ("Master
Lease"), between Lessee and Lessor. Capitalized terms defined in the Master
Lease will have the same meanings when used in this Schedule.
2. FINANCING. Lessor finances for Lessee, and Lessee finances with Lessor,
all of the property ("Equipment") described below or in Schedule A-1 attached
hereto (and Lessee represents that all Equipment is new unless specifically
identified as used):
3. AMOUNT FINANCED. $231,119.93
$ 100.00
$231,219.93
4. FINANCING TERM. The Lease Term of this Schedule shall be SIXTY (60)
months. The Lease Term begins on the earlier of the Acceptance Date or the
Commencement Date and continues for the number of months after the Commencement
Date as stated above. The Acceptance Date is the date that Lessor accepts this
Schedule as stated below Lessor's signature. The Commencement Date is the 15TH
day of the month in which the Acceptance Date occurs.
5. INSTALLMENT PAYMENTS. As financing for the Equipment, Lessee shall pay to
Lessor all amounts stated below on the due dates stated below. There shall be
added to each installment payment all applicable Taxes as in effect from time
to time.
MONTHLY INSTALLMENT PAYMENT (excluding Taxes): $4,587.16
FREQUENCY & TIMING OF INSTALLMENT PAYMENTS: MONTHLY IN ARREARS
NUMBER OF INSTALLMENT PAYMENTS: SIXTY (60)
INSTALLMENT PAYMENT DUE DATES: The first installment payment shall be paid
thirty (30) days from the Commencement Date and all subsequent installment
payments shall be paid on the same day of each month thereafter.
SET-UP/FILING FEE: $0.00 which shall be paid on the Commencement Date.
SECURITY DEPOSIT: $0.00 which shall be paid on the Commencement Date.
At the end of the lease term, Lessee shall make a final payment of $1.00.
Principal Amount: $231,219.93 Interest Rate Per Annum: 7.08%
Lessee promises to pay said principal, with interest at said rate, in the
amount and at the times stated in this schedule. Interest is calculated on
the basis of 30-day months and 360-day year.
6. SECURITY INTEREST. This Schedule is intended to be a secured debt
financing transaction, NOT a true lease. See Paragraph 7 below regarding
Lessee's ownership of the Equipment. As collateral security for payment and
performance of all Secured Obligations (defined in Paragraph 8 below) and to
induce Lessor to extend credit from time to time to Lessee (under the Lease or
otherwise), Lessee hereby grants to Lessor a first priority security interest
in all of Lessee's right, title and interest in the Equipment, whether now
existing or hereafter acquired, any sums specified in this Schedule as a
"Security Deposit", and in all Proceeds
Page 1 of 3
<PAGE> 3
(defined in Paragraph 8 below). At its option, Lessor may apply all or any part
of any Security Deposit to cure any default of Lessee under the Lease. If upon
final termination of this Schedule, Lessee has fulfilled all of the terms and
conditions hereof, then Lessor shall pay to Lessee upon Lessee's written
request any remaining balance of the Security Deposit for this Schedule,
without interest.
7. TITLE TO EQUIPMENT; FIRST PRIORITY LIEN. Lessee represents, warrants and
agrees: that Lessee currently is the lawful owner of the Equipment; that good
and marketable title to the Equipment shall remain with Lessee at all times;
that Lessee has granted to Lessor a first priority security interest in the
Equipment and all Proceeds; and that the Equipment and all Proceeds are, and at
all times shall be, free and clear of any Liens other than Lessor's security
interest therein. Lessee at its sole expense will protect and defend Lessor's
first priority security interest in the Equipment against all claims and demands
whatsoever.
8. CERTAIN DEFINITIONS. "Secured Obligations" means (a) all payments and
other obligations of Lessee under or in connection with this Schedule, and (b)
all payments and other obligations of Lessee (whether now existing or hereafter
incurred) under or in connection with the Master Lease and all present and
future Lease Schedules thereto, and (c) all other leases, indebtedness,
liabilities and/or obligations of any kind (whether now existing or hereafter
incurred, absolute or contingent, direct or indirect) of Lessee to Lessor or to
any affiliate of either Lessor or BANC ONE CORPORATION. "Proceeds" means all
cash and non-cash proceeds of the Equipment including, without limitation,
proceeds of insurance, indemnities and/or warranties.
9. AMENDMENTS TO MASTER LEASE. FOR PURPOSES OF THIS SCHEDULE ONLY, Lessee
and Lessor agree to amend the Master Lease as follows: (a) public liability or
property insurance as described in the second sentence of Section 8 will not be
required; (b) the definition of "Stipulated Loss Value" in clause (b) of Section
9 is deleted and replaced by Paragraph 10 below; (c) the text of Section 10 is
deleted in its entirety; (d) Subsections 23(a) and 23(c) are deleted; (e)
subsection 23(b) and the last sentence of section 4 will apply only if an event
of default occurs; and (f) all references in the Lease as it relates to this
Schedule to "Lessee" and "Lessor" shall be changed to "Borrower" and "Lender"
respectively.
10. STIPULATED LOSS VALUE. FOR PURPOSES OF THIS SCHEDULE ONLY, the
"Stipulated Loss Value" of any item of Equipment during its Lease Term equals
the aggregate of the following as of the date specified by Lessor: (a) all
accrued and unpaid interest, late charges and other amounts due under this
Schedule and the Master Lease to the extent it relates to this Schedule as of
such specified date, plus (b) the remaining principal balance due and payable
by Lessee under this Schedule as of such specified date, plus (c) interest on
the amount described in the foregoing clauses (a) and (b) at the Overdue Rate
commencing with the specified date; provided, that the foregoing calculation
shall not exceed the maximum amount which may be collected by Lessor from
Lessee under applicable law in connection with enforcement of Lessor's rights
under this Schedule and the Master Lease to the extent it relates to this
Schedule.
11. LESSEE TO PAY ALL TAXES. FOR PURPOSES OF THIS SCHEDULE AND ITS
EQUIPMENT ONLY: Lessee shall pay any and all Taxes relating to this Schedule
and its Equipment directly to the applicable taxing authority; Lessee shall
prepare and file all reports or returns concerning any such Taxes as may be
required by applicable law or regulation (provided, that Lessor shall not be
identified as the owner of the Equipment in such reports or returns); and
Lessee shall, upon Lessor's request, send Lessor evidence of payment of such
Taxes and copies of any such reports or returns.
12. LESSEE'S ASSURANCES. Lessee irrevocably and unconditionally: (a)
reaffirms all of the terms and conditions of the Master Lease and agrees that
the Master Lease remains in full force and effect; (b) agrees that the
Equipment is and will be used at all times solely for commercial purposes, and
not for personal, family or household purposes; and (c) incorporates all of the
terms and conditions of the Master Lease as if fully set forth in this Schedule.
13. REPRESENTATIONS AND WARRANTIES: Lessee represents and warrants that:
(a) Lessee is a corporation, partnership or proprietorship duly organized,
validly existing and in good standing under the laws
Page 2 of 3
<PAGE> 4
of the state of its organization and is qualified to do business and is in good
standing under the laws of each other state in which the Equipment is or will be
located; (b) Lessee has full power, authority and legal right to sign, deliver
and perform the Master Lease, this Schedule and all related documents and such
actions have been duly authorized by all necessary corporate/partnership/
proprietorship action; and (c) the Master Lease, this Schedule and each related
document has been duly signed and delivered by Lessee and each such document
constitutes a legal, valid and binding obligation of Lessee enforceable in
accordance with its terms.
14. CONDITIONS. No lease of Equipment under this Schedule shall be binding on
Lessor, and Lessor shall have no obligation to purchase the Equipment covered
hereby, unless: (a) Lessor has received evidence of all required insurance; (b)
in Lessor's sole judgment, there has been no material adverse change in the
financial condition or business of Lessee or any guarantor; (c) Lessee has
signed and delivered to Lessor this Schedule, which must be satisfactory to
Lessor, and Lessor has signed and accepted this Schedule; (d) no change in the
Code or any regulation thereunder, which in Lessor's sole judgment would
adversely affect the economics to Lessor of the lease transaction, shall have
occurred or shall appear to be imminent; (e) Lessor has received, in form and
substance satisfactory to Lessor, such other documents and information as Lessor
shall reasonably request; and (f) Lessee has satisfied all other reasonable
conditions established by Lessor.
15. OTHER DOCUMENTS: EXPENSES: Lessee agrees to sign and deliver to Lessor any
additional documents deemed desirable by Lessor to effect the terms of the
Master Lease or this Schedule including, without limitation, Uniform Commercial
Code financing statements which Lessor is authorized to file with the
appropriate filing officers. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact with full power and authority in the place of Lessee
and in the name of Lessee to prepare, sign, amend, file or record any Uniform
Commercial Code financing statements or other documents deemed desirable by
Lessor to perfect, establish or give notice of Lessor's interests in the
Equipment or in any collateral as to which Lessee has granted Lessor a security
interest. Lessee shall pay upon Lessor's written request any actual
out-of-pocket costs and expenses paid or incurred by Lessor in connection with
the above terms of this section or the funding and closing of this Schedule.
16. PURCHASE ORDERS AND ACCEPTANCE OF EQUIPMENT. Lessee agrees that (i) Lessor
has not selected, manufactured, sold or supplied any of the Equipment, (ii)
Lessee has selected all of the Equipment and its suppliers, and (iii) Lessee has
received a copy of, and approved, the purchase orders or purchase contracts for
the Equipment. AS BETWEEN LESSEE AND LESSOR, LESSEE AGREES THAT: (a) LESSEE HAS
RECEIVED, INSPECTED AND APPROVED ALL OF THE EQUIPMENT; (b) ALL EQUIPMENT IS IN
GOOD WORKING ORDER AND COMPLIES WITH ALL PURCHASE ORDERS OR CONTRACTS AND ALL
APPLICABLE SPECIFICATIONS; (c) LESSEE IRREVOCABLY ACCEPTS ALL EQUIPMENT FOR
PURPOSES OF THE LEASE "AS-IS, WHERE-IS" WITH ALL FAULTS; AND (d) LESSEE
UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO REVOKE ITS ACCEPTANCE OF
THE EQUIPMENT.
LESSEE HAS READ AND UNDERSTOOD ALL OF THE TERMS OF THIS SCHEDULE, LESSEE AGREES
THAT THERE ARE NO ORAL OR UNWRITTEN AGREEMENTS WITH LESSOR REGARDING THE
EQUIPMENT OR THIS SCHEDULE.
BANC ONE LEASING CORPORATION COMPUROUTE, INC.
(Lessor) (Lessee)
By: Illegible Signature By: /s/ Alexander D. Wasserzug
- ----------------------------- ------------------------------------
Title: Mgr. Funding Title: President
- ----------------------------- ------------------------------------
Acceptance Date: 6/17/98 Witness: Illegible Signature
- ----------------------------- ------------------------------------
Page 3 of 3
<PAGE> 5
CORPORATE LEASE ACKNOWLEDGEMENT
State of Texas :
County of Dallas : SS
:
The above mentioned foregoing instrument, was acknowledged before me this 4/24,
1998 by (Officers' Name) Alexander D. Wasserzug, (Officer's Title) President, of
Compuroute, Inc., a Delaware corporation, on behalf of the corporation.
[Notary Seal] Linda J. Adams
Notary Public
Commission Expires 6-23-98
<PAGE> 6
BANC ONE LEASING CORPORATION
SCHEDULE A-1 EQUIPMENT LEASED HEREUNDER
QUANTITY DESCRIPTION PAGE 1
===============================================================================
EQUIPMENT LOCATION: 10365 SANDEN DRIVE
DALLAS, TEXAS 75238
COUNTY: DALLAS
EQUIPMENT COST: $231,119.93
EQUIPMENT DESCRIPTION:
AS DESCRIBED ON TECHNOLOGIES CORPORATION INVOICE NO. 1601
ONE (1) MODEL TT30 HOT AIR LEVELER
ONE (1) MODEL 3500 PRECLEANING SYSTEM
ONE (1) MODEL 2500 POSTCLEANING SYSTEM
ONE (1) MODEL 1550 FREE STANDING FLEXER/HOLDER SYSTEM
ONE (1) MODEL 750 COOL DOWN
AS DESCRIBED ON INTELLIGENT INTERIORS PO# 546
ONE (1) (30) 6X6 Q SYSTEM WORKSTATIONS
TOGETHER WITH ALL ATTACHMENTS, ADDITIONS, ACCESSIONS, PARTS, REPAIRS,
IMPROVEMENTS, REPLACEMENTS AND SUBSTITUTIONS THERETO.
This Schedule A-1 is attached to and made a part of Lease Number 1000065410 and
constitutes a true and accurate description of the equipment.
Lessee:
COMPUROUTE, INC.
By: /s/ Alexander D. Wasserzug
- ------------------------------------
Date: 27 April 1998
- ------------------------------------
<PAGE> 7
PREPAYMENT SCHEDULE ADDENDUM
(For Prepayment of a Financing Lease Schedule)
Dated 6/17/98
Lease Schedule No. 1000065410 Dated 6/17/98
--------------- --------------
Lessee: COMPUROUTE, INC.
Reference is made to the above Lease Schedule as previously amended
("Schedule") and to the Master Lease Agreement as previously amended ("Master
Lease") identified in the Schedule, which are by and between Banc One Leasing
Corporation ("Lessor") and the above lessee ("Lessee"). As used herein: "Lease"
shall mean the Schedule and the Master Lease, but only to the extent that the
Master Lease relates to the Schedule; and "Equipment" shall mean the equipment
covered by the Schedule. This Schedule Addendum amends and supplements the terms
and conditions of the Lease. Unless otherwise defined herein, capitalized terms
defined in the Lease shall have the same meaning when used herein. SOLELY FOR
PURPOSES OF THE SCHEDULE, LESSOR AND LESSEE AGREE AS FOLLOWS:
1. Notwithstanding anything to the contrary in the Lease, Lessee and Lessor
agree that so long as Lessee gives Lessor at least 20 days prior written notice
(the "Notice Period"), Lessee may elect to prepay the outstanding principal
balance of the Schedule, in whole or in part, on the rent payment date (a
"Prepayment Date") following the Notice Period by paying to Lessor (whether made
voluntarily or involuntarily as a result of an acceleration of the Maturity Date
or otherwise), the total of the following: (a) all accrued rent or installment
payments, interest, Taxes, late charges and other amounts then due and payable
under the Schedule and the Master Lease to the extent it relates to the
Schedule; plus (b) the principal amount selected by Lessee for prepayment in the
notice of prepayment (hereinafter, the "Prepaid Principal"); plus (c) a
prepayment premium, if any, equal to the product of (i) a Average Lost Monthly
Interest Income and (ii) the number of months from the Prepayment Date to the
Maturity Date (with any fraction of a month counted as a month), discounted to
present value at the Discount Rate. At the option of Lessor, in its absolute and
sole discretion, any prepayment shall be applied to installments coming due
hereunder in the inverse order of their due dates.
2. Solely for purposes of this Addendum, the following definitions in this
paragraph 2 shall apply to this Addendum. "Maturity Date" means the scheduled
expiration of the Lease Term of the Schedule as set forth in the Schedule.
"Average Lost Monthly Interest Income" means the amount determined by dividing
(i) the product of the Average Principal and the Lost Rate, by (ii) twelve (12).
"Average Principal" is the amount equal to either (i) one-half of the sum of (A)
the amount of Prepaid Principal and (B) the amount of principal that is
scheduled to be due on the Maturity Date ("Balloon Amount"), or (ii) the amount
of
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<PAGE> 8
Prepaid Principal, if such amount is less than the Balloon Amount. "Lost Rate"
is the rate per annum equal to the percentage, if any, by which (i) the yield
to maturity of United States Treasury debt obligations having a maturity date
nearest to the Maturity Date ("Treasury Obligations") determined on the date
hereof exceeds (ii) the yield to maturity of Treasury Obligations determined on
the date of prepayment. "Discount Rate" is the rate per annum equal to the
yield to maturity of Treasury Obligations determined on the date of prepayment.
The maturity date and yield to maturity of the Treasury Obligations shall be
determined by Lessor, in its absolute and sole discretion, on the basis of
quotations published in The Wall Street Journal, or other comparable sources.
Treasury Obligations shall exclude any stripped U.S. Treasury obligations and
any U.S. Treasury obligations which have multiple maturity or call dates, and
if more than one issue of U.S. Treasury obligations has the applicable maturity
month, then the U.S. Treasury obligation with the highest yield to maturity
shall be used.
3. Except as expressly amended or supplemented by this Addendum and other
instruments signed by Lessor, the Lease remains unchanged and in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the date referenced above.
COMPUROUTE, INC. Banc One Leasing Corporation
(Lessee) (Lessor)
By: /s/ Alexander D. Wasserzug By: Illegible Signature
-------------------------- ------------------------
Title: PRESIDENT Title: MGR., FUNDING
----------------- ---------------------
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<PAGE> 9
CORPORATE GUARANTY
(Limited to the "Guaranteed Lease")
Master Lease Agreement Date: NOVEMBER 17,1997
Lessee Name: COMPUROUTE INC.
Lease Schedule Number: 1000065638
Equipment Cost/Amount Financed: $231,219.93
1. For valuable consideration, the receipt of which is hereby acknowledged, the
undersigned jointly and severally unconditionally guarantee to BANC ONE LEASING
CORPORATION (hereinafter called "Lessor") the full and prompt performance by the
lessee identified above (hereinafter called "Lessee") of all obligations which
Lessee now has or may hereafter have to Lessor under the GUARANTEED LEASE (as
defined below) and unconditionally guarantee the prompt payment when due
(whether at scheduled maturity, upon acceleration or otherwise) of any and all
sums, indebtedness and liabilities of whatsoever nature, due or to become due,
direct or indirect, absolute or contingent, now or hereafter at any time owed or
contracted by Lessee to Lessor under the GUARANTEED LEASE, and all costs and
expenses of and incidental to collection of any of the foregoing, including
reasonable attorneys' fees (all of the foregoing hereinafter called
"Obligations"). "GUARANTEED LEASE" shall mean the Lease Schedule identified
above (whether now existing or hereafter arising) together with the Master Lease
Agreement identified above ("Master Lease") to the extent that it relates to the
above-described Lease Schedule.
2. This is an absolute and unconditional guarantee of payment and not of
collection. Lessor shall not be required, as a condition of the liability of
the undersigned, to resort to, enforce or exhaust any of its remedies against
the Lessee or any other party who may be liable for payment on any Obligation
or to resort to, marshal, enforce or exhaust any of its remedies against any
leased property or any property given or held as security for this Guaranty or
any Obligation.
3. The undersigned hereby waive and grant to Lessor, without notice to the
undersigned and without in any way affecting the liability of the undersigned,
the right at any time and from time to time, to extend other and additional
credit, leases, loans or financial accommodations to Lessee apart from the
Obligations, to deal in any manner as it shall see fit with any Obligation of
Lessee to Lessor and with any leased property or security for such Obligation,
including, but not limited to, (i) accepting partial payments on account of any
Obligation, (ii) granting extensions or renewals of all or any part of any
Obligation, (iii) releasing, surrendering, exchanging, dealing with, abstaining
from taking, taking, abstaining from perfecting, perfecting, or accepting
substitutes for any or all leased property or security which it holds or may
hold for any Obligation, (iv) modifying, waiving, supplementing or otherwise
changing any of the terms, conditions or provisions contained in any Obligation
and (v) the addition or release of any other party or person liable hereon,
liable on the Obligations or liable on any other guaranty executed to guarantee
any of Lessee's Obligations. The undersigned jointly and severally hereby agree
that any and all settlements, compromises, compositions, accounts stated and
agreed balances made in good faith between Lessor and Lessee shall be binding
upon the undersigned.
4. Every right, power and discretion herein granted to Lessor shall be for the
benefit of the successors or assigns of Lessor and of any transferee or assignee
of any Obligation covered by this Guaranty, and in the event any such
Obligation shall be transferred or assigned, every reference herein to Lessor
shall be construed to mean, as to such Obligation, the transferee or assignee
thereof. This Guaranty shall be binding upon each of the undersigned's
executors, administrators, heirs, successors and assigns.
5. This Guaranty shall continue in force for so long as Lessee shall be
obligated to Lessor pursuant to the Obligations described above. The
undersigned expressly waive notice of the incurring by Lessee of any Obligation
to Lessor. The undersigned also waive presentment, demand of payment, protest,
notice of dishonor or nonpayment of or nonperformance of any Obligation.
6. The undersigned hereby waive any claims or rights which they might now have
or hereafter acquire against Lessee or any other person primarily or
contingently liable on any Obligation of Lessee, which claims or rights arise
from the existence or performance of the undersigned's obligations under this
Guaranty or any other guaranty or under any instrument or agreement with
respect to any leased property or any property constituting collateral or
security for this Guaranty or any other guaranty, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, or any right to participate in any claim or remedy of Lessor
or any other creditor which the undersigned now has or hereafter acquires,
whether such claim or right arises in equity, under contract or statute, at
common law, or otherwise.
7. Lessor's rights hereunder shall be reinstated and revived, and this Guaranty
shall be fully enforceable, with respect
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<PAGE> 10
to any amount at any time paid on account of the Obligations which thereafter
shall be required to be restored or returned by Lessor upon the bankruptcy,
insolvency or reorganization of the Lessee, the undersigned or any other person,
or as a result of any other fact or circumstance, all as though such amount had
not been paid.
8. The undersigned jointly and severally agree to pay to Lessor all costs and
expenses, including reasonable attorneys' fees, incurred by Lessor in the
enforcement or attempted enforcement of this Guaranty, whether or not suit is
filed in connection therewith, or in the exercise by Lessor of any right,
privilege, power or remedy conferred by this Guaranty.
9. The undersigned represent and warrant that they have relied exclusively on
their own independent investigation of Lessee, the leased property and the
collateral for their decision to guarantee Lessee's Obligations now existing or
thereafter arising. The undersigned agree that they have sufficient knowledge
of the Lessee, the leased property, and the collateral to make an informed
decision about this Guaranty, and that Lessor has no duty or obligation to
disclose any information in its possession or control about Lessee, the leased
property, and the collateral to the undersigned. The undersigned warrant to
Lessor that they have adequate means to obtain from the Lessee on a continuing
basis information concerning the financial condition of the Lessee and they
are not relying on Lessor to provide such information either now or in the
future.
10. As long as any indebtedness under any of the Obligations remains unpaid or
any credit is available to Lessee under any of the Obligations, the undersigned
agree to furnish to Lessor: (a) annual financial statements setting forth the
financial condition and results of operations of the undersigned (financial
statements shall include balance sheet, income statement, changes in financial
position and all notes thereto) within 120 days of the end of each fiscal year
of the undersigned; (b) quarterly financial statements setting forth the
financial condition and results of operation of the undersigned within 60 days
of the end of each of the first three fiscal quarters of the undersigned; and
(c) such other financial information as Lessor may from time to time request
including, without limitation, financial reports filed by the undersigned with
federal or state regulatory agencies.
11. No postponement or delay on the part of Lessor in the enforcement of any
right hereunder shall constitute a waiver of such right. The failure of any
person or entity to sign this Guaranty shall not discharge the liability of any
of the undersigned.
12. This Guaranty remains fully enforceable irrespective of any claim, defense
or counterclaim which the Lessee may or could assert on any of the Obligations
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, fraud, bankruptcy, accord
and satisfaction, and usury, same of which the undersigned hereby waive along
with any standing by the undersigned to asset any said claim, defense or
counterclaim.
13. This Guaranty contains the entire agreement of the parties and supersedes
all prior agreements and understandings, oral or written, with respect to the
subject matter hereof. This Guaranty is not intended to replace or supersede
any other guaranty which the undersigned have entered into or may enter into
in the future. The undersigned may enter into additional guaranties in the
future which may or may not refer to the Master Lease identified above and
such guaranties are not intended to replace or supersede this Guaranty unless
specifically provided in that additional guaranty. The interpretation,
construction and validity of this guaranty shall be governed by the laws of
the State of Ohio. With respect to any action brought by Lessor against
Guarantor to enforce any term of this guaranty, Guarantor hereby irrevocably
consents to the jurisdiction and venue of any state or federal court in
Franklin County, Ohio, where Lessor has its principal place of business and
where payments are to be made by Lessee and Guarantor.
ALL PARTIES TO THIS GUARANTY, INCLUDING GUARANTOR AND LESSOR, WAIVE ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION
WITH OR IN ANY WAY RELATED TO THIS GUARANTY.
CERPROBE CORPORATION
(Guarantor/Undersigned)
By: Randal L. Buness
-------------------
Title: VP & CFO Witness: /s/ Laura M. Back
---------------- ----------------------------------
Date: 6/4/98
-----------------
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<PAGE> 11
CORPORATE ACKNOWLEDGEMENT
State of Arizona:
---------: ss.
County of Maricopa:
---------
The foregoing instrument, Corporate Guaranty
--------------------------------------------,
was acknowledged before me this June 5 ,1998 by (Officers'
--------------- --
Name) Randal L. Buness
----------------------------------------------------------------,
(Officer's Title) V.P. & CFO
----------------------------------------, of (Name of
Corporation) Cerprobe Corporation
---------------------------------------------------------,
a Delaware corporation, on behalf of the corporation.
--------
/s/ Laura M. Back
----------------------------------
Notary Public
[Notary Seal]
- -------------------------------------- Commission Expires July 14, 2001
OFFICIAL SEAL -------------
LAURA M. BACK
[SEAL] Notary Public-State of Arizona
MARICOPA COUNTY
My Comm. Expires July 14, 2001
- ---------------------------------------
<PAGE> 1
EXHIBIT 10.hhh
[LEE & ASSOCIATES LOGO]
INDUSTRIAL REAL ESTATE
LEASE
(MULTI-TENANT FACILITY)
ARTICLE ONE: BASIC TERMS
This Article One contains the Basic Terms of this Lease between the Landlord and
Tenant named below. Other Articles, Sections and Paragraphs of the Lease
referred to in this Article One explain and define the Basic Terms and are to be
read in conjunction with the Basic Terms.
Section 1.01. DATE OF LEASE: May 15, 1998
Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY): Jackson-Shaw/El Dorado
Tech I Limited Partnership
Address of Landlord: 4890 Alpha Road, Suite 100, Dallas, Texas 75244
Section 1.03. TENANT (INCLUDE LEGAL ENTITY): Cerprobe Corporation, a
Delaware Corporation
Address of Tenant: 1150 N. Fiesta Blvd., Gilbert, Arizona 85233-2237
Section 1.04. PROPERTY: The Property is part of Landlord's multi-tenant
real property development known as El Dorado Commerce Center and described or
depicted in Exhibit "A"(the "Project"). The Project includes the land, the
buildings and all other improvements located on the land, and the common areas
described in Paragraph 4.05(a). The Property is (include street address,
approximate square footage and description) Building Two (2) at the El Dorado
Commerce Center is approximately 52,780 square feet. Located south of the
southeast corner of San Angelo Street and Colorado Street in Gilbert, Arizona,
a.k.a. 973 N. Colorado Street. Tenant to occupy 100% of the building.
Section 1.05. LEASE TERM: Ten (10) years Zero (0) months BEGINNING ON
AUGUST 1, 1998 or such other date as is specified in this Lease, and ENDING ON
JULY 30, 2008. TENANT HAS ONE (1) FIVE (5) YEAR OPTION TO EXTEND THE LEASE AT
NINETY PERCENT (90%) OF THE THEN PREVAILING MARKET RENT, AS SUCH TERM IS MORE
SPECIFICALLY DEFINED ON ADDENDUM B.
Section 1.06. PERMITTED USES: (See Article Five) ADMINISTRATIVE OFFICE,
MACHINE SHOP, ELECTRONIC TEST MANUFACTURING AND OTHER USES ALLOWED BY THEN
EXISTING ZONING.
Section 1.07. TENANT'S GUARANTOR: (If none, so state) None
Section 1.08. BROKERS: (See Article Fourteen) (If none, so state)
Landlord's Broker: Lee & Associates Arizona
Tenant's Broker: Lee & Associates Arizona
Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article
Fourteen) $ Per separate agreement
Section 1.10. INITIAL SECURITY DEPOSIT: (See Section 3.03) $ 25,800.00
Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (See Section
4.05) 123 TENANT, AT ITS SOLE EXPENSE AND ENFORCEMENT, MAY RESERVE THE SPACES
ALLOCATED ABOVE.
Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:
(a) BASE RENT: See Addendum A Dollars ($____) per month for the first
_____ months, as provided in Section 3.01, and shall be increased on the first
day of the ____ month(s) after the Commencement Date, either (i) as provided in
Section 3.02, or (ii) _______________
(b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses AND PROPERTY TAXES
46.7 % (See Section 4.05); (v) Impounds for Insurance Premiums and Property
Taxes (See Section 4.08); (vi) Maintenance, Repairs and Alterations (See Article
Six).
Section 1.13. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE: (See
Section 9.05) FIFTY PERCENT percent ( 50 %) of the Profit (the "Landlord's
Share") SHALL NOT APPLY TO ANY TENANT'S AFFILIATE (AS DEFINED IN SECTION 9.02).
Section 1.14. RIDERS: The following Riders are attached to and made a
part of this Lease: (If none, so state)
Addendum A - Rent Schedule
Exhibit 1 - Tenant Improvements
Rules and Regulations
Lee & Associates Arizona Disclosure Statement
Hazardous Waste Rider
Addendum B - Market Rent
ARTICLE TWO: LEASE TERM
1
<PAGE> 2
Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the beginning
or end of the Lease Term is changed under any provision of this Lease. The
"Commencement Date" shall be the date specified in Section 1.05 above for the
beginning of the Lease Term, unless advanced or delayed under any provision of
this Lease.
[***]
Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior to
the Commencement Date, Tenant's occupancy of the Property shall be subject to
all of the provisions of this Lease. Early occupancy of the Property shall not
advance the expiration date of this Lease. [***]
Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse Landlord
for and indemnity Landlord against all damages which Landlord incurs-s from
Tenant's delay in vacating the Property. If Tenant does not vacate the Property
upon the expiration or earlier termination of the Lease and Landlord thereafter
accepts rent from Tenant, Tenant's occupancy of the Property shall be a
month-to-month" tenancy, subject to all of the terms of this Lease applicable to
a month-to-month tenancy, except that the Base Rent then in effect shall be
increased by twenty-five percent (25%).
ARTICLE THREE: BASE RENT
Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay. Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.
[***]
[***]
[***]
Section 3.03. SECURITY DEPOSIT; INCREASES.
(a) Upon the execution of this Lease, Tenant shall deposit with Landlord
a cash Security Deposit in the amount set forth in Section 1.10 above. Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
charges due from Tenant or to cure any other defaults of Tenant. If Landlord
uses any part of the Security Deposit, Tenant shall restore the Security Deposit
to its full amount Within ten (10) days after Landlord's written request.
Tenant's failure to do so shall be a material default under this Lease. No
Interest shall be paid on the Security Deposit. Landlord shall not be required
to keep the Security Deposit separate from its other accounts and no trust
relationship is created with respect to the Security Deposit. AS LONG AS TENANT
IS NOT IN DEFAULT, LANDLORD SHALL RETURN THE SECURITY DEPOSIT TO TENANT AFTER
THE THIRD (3RD) ANNIVERSARY OF THE LEASE.
[***]
[Confidential Treatment Requested]
2
<PAGE> 3
Section 3.04. TERMINATIONS, ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.
ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT
Section 4.01. Additional Rent. All charges payable by Tenant other than
Base Rent are called "Additional Rent" unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.
Section 4.02. PROPERTY TAXES.
(a) REAL PROPERTY TAXES. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result of,
any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term, Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to the
delinquency date of the taxes. Within such ten (10) day period, Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid. Landlord shall reimburse Tenant for any real property taxes paid by
Tenant covering any period of time prior to or after the Lease Term. If Tenant
falls to pay the real property taxes when due, Landlord may pay the taxes and
Tenant shall reimburse Landlord for the amount of such tax payment as Additional
Rent.
(b) DEFINITION OF "REAL PROPERTY TAX." Real property tax" means: (i)any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority against
the Property; (ii) any tax on the Landlord's right to receive, or the receipt
of, rent or income from the Property or against Landlord's business of leasing
the Property; (iii) any tax or charge for fire protection, streets, sidewalks,
road maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest In the
Property; and (v) any charge or fee replacing any tax previously included within
the definition of real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise, inheritance or estate
taxes.
(c) JOINT ASSESSMENT. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's worksheets or
other reasonably available information. Tenant shall pay such share to Landlord
within fifteen (15) days after receipt of Landlord's written statement.
(d) PERSONAL PROPERTY TAXES.
(i) Tenant shall pay all taxes charged against trade fixtures,
furnishings, equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from the Property.
(ii) If any of Tenant's personal property is taxed with the Property,
Tenant shall pay Landlord the taxes for the personal property within fifteen
(15) days after Tenant receives a written statement from Landlord for such
personal property taxes.
Section 4.03. Utilities. Tenant shall pay directly to the appropriate
supplier the cost of all natural gas heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, If any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.
Section 4.04. INSURANCE POLICIES.
(a) LIABILITY INSURANCE. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability Insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The initial
amount of such Insurance shall be One Million Dollars ($1,000,000) per
occurrence and shall be subject to REASONABLE periodic increase based upon
Inflation, increased liability awards, recommendation of Landlord's professional
Insurance advisers and other relevant factors. The liability insurance obtained
by Tenant under this Paragraph 4.04(a) shall (i) be primary and
non-contributing; (ii) contain cross-liability endorsements; and (iii) insure
Landlord against Tenant's performance under Section 5.05, if the matters giving
rise to the indemnity under Section 5.05 result from the negligence of Tenant.
The amount and coverage of such insurance shall not limit Tenant's liability nor
relieve Tenant of any other obligation under this Lease. Landlord may also
obtain comprehensive public liability insurance in an amount and with coverage
determined by Landlord Insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The policy obtained by
Landlord shall not be contributory and shall not provide primary insurance.
(b) PROPERTY AND RENTAL INCOME INSURANCE. During the Lease Term, [***]
TENANT shall maintain policies of Insurance covering loss of or damage to the
Property in the full amount of Its replacement value. Such policy shall contain
an Inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. [***] TENANT shall
[***] obtain flood [***] Insurance if required by any lender holding a security
interest In the Property. Landlord shall not obtain Insurance for Tenant's
fixtures or equipment or building improvements installed by Tenant on the
Property. During the Lease Term, [***] TENANT shall also maintain a rental
income insurance policy, with loss payable to Landlord, In an amount equal to
one year's Base Rent, plus estimated real property taxes [***]. Tenant shall be
liable for the payment of any deductible amount under [***] Tenant's insurance
policies maintained pursuant to this Section 4.04, in an amount not to exceed
Ten Thousand Dollars ($10,000). Tenant shall not do or permit anything to be
done which invalidates any such insurance policies.
[Confidential Treatment Requested]
3
<PAGE> 4
(c) PAYMENT OF PREMIUMS. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant's
receipt of a copy of the premium statement or other evidence of the amount due,
except Landlord shall pay all premiums for non-primary comprehensive public
liability insurance which Landlord elects to obtain as provided in Paragraph
4.04(a). For insurance policies maintained by Landlord which cover improvements
on the entire Project, Tenant shall pay Tenant's prorated share of the premiums,
in accordance with the formula in Paragraph 4.05(e) for determining Tenant's
share of Common Area costs. If insurance policies maintained by Landlord cover
improvements on real property other than the Project, Landlord shall deliver to
Tenant a statement of the premium applicable to the Property showing in
reasonable detail how Tenant's share of the premium was computed. If the Lease
Term expires before the expiration of an insurance policy maintained by
Landlord, Tenant shall be liable for Tenant's prorated share of the insurance
premiums. Before the Commencement Date, Tenant shall deliver to Landlord a copy
of any policy of insurance which Tenant Is required to maintain under this
Section 4.04. At least thirty (30) days prior to the expiration of any such
policy, Tenant shall deliver to Landlord a renewal of such policy. As an
alternative to providing a policy of insurance, Tenant shall have the right to
provide Landlord a Certificate of Insurance, executed by an authorized officer
of the insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 Is In full force and effect and containing such
other information which Landlord reasonably requires.
(d) GENERAL INSURANCE PROVISIONS.
(i) Any insurance which Tenant is required to maintain under this Lease
shall include a provision which requires the insurance carrier to give Landlord
not less than thirty (30) days' written notice prior to any cancellation or
modification of such coverage.
(ii) If Tenant falls to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time period or if any
such policy Is canceled or modified during the Lease Term without Landlord's
consent, Landlord may obtain such Insurance, in which case Tenant shall
reimburse Landlord for the cost of such insurance within fifteen (15) days after
receipt of a statement that indicates the cost of such insurance.
(iii) Tenant shall maintain all Insurance required under this Lease with
companies holding a "General Policy Rating" of A-12 or better, as set forth In
the most current issue of "Best Key Rating Guide". Landlord and Tenant
acknowledge the insurance markets are rapidly changing and that insurance in the
form and amounts described in this Section 4.04 may not be available In the
future. Tenant acknowledges that the insurance described in this Section 4.04 Is
for the primary benefit of Landlord. If at any time during the Lease Term,
Tenant is unable to maintain the insurance required under the Lease, Tenant
shall nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant's type of business,
as that coverage may change from time to time. Landlord makes no representation
as to the adequacy of such insurance to protect Landlord's or Tenant's
Interests. Therefore, Tenant shall obtain any such additional property liability
insurance which Tenant deems necessary to protect Landlord and Tenant.
(iv) Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive any and all rights of recovery
against the other, or against the officers, employees, agents or representatives
of the other, for loss of or damage to its property or the property of others
under its control, if such loss or damage is covered by any insurance policy in
force (whether or not described in this Lease) at the time of such loss or
damage. Upon obtaining the required policies of insurance, Landlord and Tenant
shall give notice to the Insurance carriers of this mutual waiver of
subrogation.
Section 4.05. COMMON AREAS; USE, MAINTENANCE AND COSTS.
(a) COMMON AREAS. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, [***], access roads, corridors, landscaping and planted areas.
Landlord, from time to time, may change the size, location, nature and use of
any of the Common Areas, convert Common Areas into leaseable areas, construct
additional parking facilities (including parking structures) in the Common
Areas, and increase or decrease Common Area land and/or facilities, PROVIDED
HOWEVER ANY SUCH CHANGE SHALL NOT MATERIALLY AND ADVERSELY EFFECT TENANT'S
PARKING OR ACCESS TO THE PROPERTY. Tenant acknowledges that such activities may
result in inconvenience to Tenant. Such activities and changes are permitted it
they do not materially affect Tenant's use of the Property. TENANT SHALL NOT BE
RESPONSIBLE FOR ANY COST FOR SUCH CHANGES TO THE COMMON AREAS.
(b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject to
such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Tenant's express or implied
permission to abide by Landlord's rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.
(c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be entitled to
use the number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional rent. Tenant's parking
[***] shall be limited to vehicles no larger than standard size automobiles or
pickup utility vehicles. Tenant shall not cause large trucks or other large
vehicles to be parked within the Project or on the adjacent public streets.
Temporary parking of large delivery vehicles in the Project may be permitted by
the rules and regulations established by Landlord. Vehicles shall be parked only
in striped parking spaces and not in driveways, loading areas or other locations
not specifically designated for parking. Handicapped spaces shall only be used
by those legally permitted to use them. If Tenant parks more vehicles in the
parking area than the number set forth in Section 1.11 of this Lease, such
conduct shall be a material breach of this Lease. In addition to Landlord's
other remedies under the Lease, Tenant shall pay a daily charge determined by
Landlord for each such additional vehicle. LANDLORD REPRESENTS AND WARRANTS THAT
THE NUMBER OF PARKING SPACES SPECIFIED IN SECTION 1.11 OF THIS LEASE ARE
AVAILABLE FOR TENANT'S USE AND SHALL BE AVAILABLE FOR TENANT'S USE THROUGHOUT
THE LEASE TERM.
(d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair and shall operate the Project, in Landlord's
[***] REASONABLE discretion, as a first-class industrial/commercial real
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property development. Tenant shall pay Tenant's pro rata share (as determined
below) of all costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Area costs Include, but are not limited to, costs and
expenses for the following: gardening and landscaping; utilities, water and
sewage charges; maintenance of signs (other than tenants' signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common Areas and all Common Area
improvements; all personal property taxes levied on or attributable to personal
property used in connection with the Common Areas; straight-line depreciation on
personal property owned by Landlord which it consumed in the operation or
maintenance of the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and other
appropriate reserves; and a reasonable allowance to Landlord for Landlord's
supervision of the Common Areas (not to exceed five percent (5%) of the gross
rents of the Project for the calendar year). Landlord may cause any or all of
such services to be provided by third parties and the cost of such services
shall be included in Common Area costs. Common Area costs shall not Include
depreciation of real property which forms part of the Common Areas. COMMON AREA
COSTS FOR ANY CAPITAL ITEMS (INCLUDING RESURFACING AND REPAVING OF THE PARKING
LOT) SHALL BE AMORTIZED OVER THE USEFUL LIFE OF THE IMPROVEMENT.
(e) TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro rata
share of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event prior
to delinquency. Tenant's pro rata share shall be calculated by dividing the
square foot area of the Property, as set forth in Section 1.04 of the Lease, by
the aggregate square foot area of THE BUILDINGS BUILT OR WHICH MAY BE BUILT IN
the Project [***], as of the date on which the computation is made. Tenant's
initial pro rata share is set out in Paragraph 1.1 2(b). Any changes in the
Common Area costs and/or the aggregate [***] SQUARE FOOT AREA OF THE BUILDINGS
BUILT OR WHICH MAY BE BUILT IN the Project [***] shall be effective on the first
day of the month after such change occurs. Landlord may, at Landlord's election,
estimate in advance and charge to Tenant as Common Area costs, NOT MORE THAN ONE
(1) TIME PER YEAR, all real property taxes for which Tenant is liable under
Section 4.02 of the Lease, all Insurance premiums for which Tenant Is liable
under Section 4.04 of the Lease, all maintenance and repair costs for which
Tenant is liable under Section 6.04 of the Lease, and all other Common Area
costs payable by Tenant hereunder. At Landlord's election, such statements of
estimated Common Area costs shall be delivered monthly, quarterly or at any
other periodic Intervals to be designated by Landlord. Landlord may adjust such
estimates at any time based upon Landlord's experience and reasonable
anticipation of costs. Such adjustments shall be effective as of the next rent
payment date after notice to Tenant. Within sixty (60) days after the end of
each calendar year of the Lease Term, Landlord shall deliver to Tenant a
statement prepared in accordance with generally accepted accounting principles
setting forth, in reasonable detail, the Common Area costs paid or incurred by
Landlord during the preceding calendar year and Tenant's pro rata share. Upon
receipt of such statement, there shall be an adjustment between Landlord and
Tenant, with payment to or credit given by Landlord (as the case may be) so that
Landlord shall receive the entire amount of Tenant's share of such costs and
expenses for such period.
Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
Impractical or extremely difficult to ascertain. Such costs may include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Landlord by any ground lease, mortgage or trust deed encumbering the
Property. Therefore, If Landlord does not receive any rent payment within [***]
FIVE [***] (5) days after NOTICE TO TENANT THAT it becomes due, Tenant shall pay
Landlord a late charge equal to [***] FIVE percent [***] (5%) of the overdue
amount. The parties agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will Incur by reason of such late payment.
Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid WITHIN FIVE (5) DAYS AFTER NOTICE, [***] shall
bear interest THEREAFTER at the rate of fifteen percent (15%) per annum [***]
However, interest shall not be payable on late charges to be paid by Tenant
under this Lease. The payment of interest on such amounts shall not excuse or
cure any default by Tenant under his Lease. If the interest rate specified in
this Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.
Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES.
[***] If Tenant is more than ten (10) days late in the payment of REAL PROPERTY
TAXES, LANDLORD MAY ELECT TO HAVE TENANT PAY LANDLORD [***] a sum equal to
one-twelfth (1/12) of the annual real property taxes [***], together with each
payment of Base Rent. Landlord shall hold such payments in a non-interest
bearing impound account. If unknown, Landlord shall reasonably estimate the
amount of real property taxes [***] when due. Tenant shall pay any deficiency of
funds in the impound account to Landlord upon written request. If Tenant
defaults under this Lease, Landlord may apply any funds in the impound account
to any obligation then due under this Lease. ONCE TENANT HAS TIMELY PAID ITS
IMPOUNDS AND RENT FOR SIX (6) CONSECUTIVE MONTHS THE REQUIREMENT TO IMPOUND
SHALL CEASE.
ARTICLE FIVE: USE OF PROPERTY
Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section l.06 above.
Section 5.02. MANNER OF USE. Tenant shall not cause or permit the
Property to be used in any way which constitutes a violation of any law,
ordinance, or governmental regulation or order, which annoys or Interferes with
the rights of tenants of the Project, or which constitutes a nuisance or waste.
Tenant shall obtain and pay for all permits, including a Certificate of
Occupancy, required for Tenant's occupancy of the Property and shall promptly
take all actions necessary to comply with all applicable statutes, ordinances,
rules, regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.
Section 5.03. HAZARDOUS MATERIALS. SEE ATTACHED RIDER. [***]
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Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.
Section 5.05. INDEMNITY. Tenant shall Indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property; (b) the conduct of Tenant's business or anything
else done or permitted by Tenant to be done in or about the Property, including
any contamination of the Property or any other property resulting from the
presence or use of Hazardous Material caused or permitted by Tenant PURSUANT TO
THE HAZARDOUS WASTE RIDER: (c) any breach or default in the performance of
Tenant's obligations under this Lease; (d) any misrepresentation or breach of
warranty by Tenant under this Lease; or (a) other acts or omissions of Tenant.
Tenant shall defend Landlord against any such cost, claim or liability at
Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any legal fees or costs
incurred by Landlord in connection with any such claim. As a material part of
the consideration to Landlord, Tenant assumes all risk of damage to property or
injury to persons in or about the Property arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except for any
claim arising out of Landlord's [***] negligence or willful misconduct. As used
in this Section, the term "Tenant" shall include Tenant's employees, agents,
contractors and invitees, if applicable.
LANDLORD SHALL INDEMNIFY TENANT AGAINST AND HOLD TENANT HARMLESS FROM ANY AND
ALL COSTS, CLAIMS OR LIABILITY WHICH DIRECTLY ARISE FROM: (A) LANDLORD'S BREACH
OF ANY OBLIGATION IT HAS PURSUANT TO THE HAZARDOUS WASTE RIDER; (B) ANY BREACH
OR DEFAULT IN LANDLORD'S PERFORMANCE OF ITS OBLIGATION UNDER THIS LEASE; OR (C)
OTHER NEGLIGENT ACTS OR OMISSIONS OR INTENTIONAL MISCONDUCT OF LANDLORD. IN SUCH
EVENT, LANDLORD SHALL DEFEND TENANT AGAINST ANY SUCH COST, CLAIM OR LIABILITY AT
LANDLORD'S EXPENSE WITH COUNSEL REASONABLY ACCEPTABLE TO TENANT OR, AT TENANT'S
ELECTION, LANDLORD SHALL REIMBURSE TENANT FOR ANY ACTUAL AND REASONABLE LEGAL
FEES OR COSTS INCURRED BY TENANT IN CONNECTION WITH ANY SUCH CLAIM. AS USED IN
THIS SECTION, THE TERM "LANDLORD" SHALL INCLUDE LANDLORD'S EMPLOYEES, AGENTS,
CONTRACTORS AND INVITEES, IF APPLICABLE.
Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property WITH REASONABLE NOTICE at all reasonable times to show the Property to
potential buyers, investors or tenants or other parties; to do any other act or
to inspect and conduct tests in order to monitor Tenant's compliance with all
applicable environmental laws and all laws governing the presence and use of
Hazardous Material; or for any other purpose Landlord deems necessary. Landlord
shall give Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place customary "For Sale" or "For Lease" signs on the
Property ONLY WITHIN THE LAST SIX (6) MONTHS OF THE LEASE TERM.
Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.
ARTICLE SIX: CONDITION OF PROPERTY, MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made Its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord's Broker has provided a Property
Information Sheet or other Disclosure Statement regarding the Property, a copy
is attached as an exhibit to the Lease.
Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Property or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's [***] negligence or willful misconduct.
Section 6.03. LANDLORD'S OBLIGATIONS.
(a) Except as provided in Article Seven (Damage or Destruction) and
Article Eight (Condemnation), Landlord shall keep the following in good order,
condition and repair: the foundations, exterior walls and roof, INCLUDING ALL
SUB-STRUCTURE THEREOF, of the Property (including painting the exterior surface
of the exterior walls of the Property not more often than once every five ( 5)
years, if necessary) and all components of electrical, mechanical, plumbing,
heating and air conditioning systems and facilities located in the Property
which are concealed or used in common by tenants of the Project. However,
Landlord shall not be obligated to maintain or repair windows, doors, plate
glass or the Interior surfaces of exterior walls EXCEPT FOR DAMAGE CAUSED BY
LANDLORD OR LANDLORD'S AGENTS. Landlord shall make repairs under this Section
6.03 within a reasonable time after receipt of written notice from Tenant of the
need for such repairs.
(b) Tenant shall pay or reimburse Landlord for all costs Landlord
ACTUALLY incurs under Paragraph 6.03(a) above as Common Area costs as provided
for in Section 4.05 of the Lease. [***]
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Section 6.04. TENANT'S OBLIGATIONS.
(a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of
the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including Interior repainting
and refinishing, as needed). It any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the Property
or system or equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term; but if the benefit or useful
life of such replacement extends beyond the Lease Term (as such term may be
extended by exercise of any options), the useful life of such replacement shall
be prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which Is applicable to
the Lease Term (as extended). [* * *] EXCEPT AS PROVIDED IN ARTICLE 7, If any
part of the Property or the Project is damaged by any act or omission of Tenant,
Tenant shall pay Landlord the cost of repairing or replacing such damaged
property, whether or not Landlord would otherwise be obligated to pay the cost
of maintaining or repairing such property. It is the intention of Landlord and
Tenant that at all times Tenant shall maintain the portions of the Property
which Tenant is obligated to maintain in an attractive, first-class and fully
operative condition.
(b) Tenant shall fulfill all of Tenant's obligations under this Section
6.04 at Tenant's sole expense. If Tenant falls to maintain, repair or replace
the Property as required by this Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.
Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
(a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for non-structural
alterations which do not exceed [***] FIVE HUNDRED Thousand Dollars [***]
($500,000.00) In cost cumulatively over the Lease Term and FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00) PER YEAR, which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed In violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.
(b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.
Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). [* * *] All alterations,
additions and improvements which [* * *] Tenant [***] HAS NOT removed shall
become Landlord's property and shall be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that Tenant may remove
any of Tenant's machinery or equipment which can be removed without material
damage to the Property. Tenant shall repair, at Tenant's expense, any damage to
the Property caused by the removal of any such machinery or equipment. In no
event, however, shall Tenant remove any of the following materials or equipment
(which shall be deemed Landlord's property) without Landlord's prior written
consent: any power wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or other floor
coverings; heaters, air conditioners or any other heating or air conditioning
equipment; fencing or security gates; or other similar building operating
equipment and decorations.
ARTICLE SEVEN: DAMAGE OR DESTRUCTION
Section 7.01. PARTIAL DAMAGE TO PROPERTY,
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is unrentable as a
result of such damage or less than fifty percent (50%) of Tenant's operations
are materially Impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs (AND IF THEY ARE INSUFFICIENT AND IF THE DAMAGE OR DESTRUCTION
WAS CAUSED BY AN ACT OF TENANT AND IF TENANT IS CARRYING THE INSURANCE, TENANT
SHALL PAY LANDLORD THE DIFFERENCE), this Lease shall remain in effect and
Landlord shall repair the damage as soon as reasonably possible. Landlord may
elect (but is not required) to repair any damage to Tenant's fixtures,
equipment, or improvements.
(b) If the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which [* * *] ARE MAINTAINED under Paragraph 4.04(b) (AND
IN EITHER EVENT IF TENANT DOES NOT ELECT TO PAY THE SHORTFALL), Landlord may
elect [* * *] to [* * *] repair the damage as soon as reasonably possible, in
which case this Lease shall remain in full force and effect, or [* * *] LANDLORD
OR TENANT MAY terminate this Lease as of the date the damage occurred AS HEREIN
AFTER PROVIDED. [* * *] EACH PARTY shall notify [* * *] THE OTHER within thirty
(30) days after [* * *] the occurrence of the damage whether
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[* * *] IT elects to repair the damage or terminate the Lease. If Landlord
elects to repair the damage, Tenant shall pay Landlord the "deductible amount"
(if any) under [* * *] THE insurance policies and, if the damage was due to an
act or omission of Tenant, or Tenant's employees, agents, contractors or
invitees, the difference between the actual cost of repair and any insurance
proceeds received by Landlord. If Landlord elects to terminate the Lease, Tenant
may elect to continue this Lease in full force and effect, [* * *] AND CAUSE
LANDLORD TO repair any damage to the Property and any building In which the
Property is located [* * *], BY TENANT PAYING ANY SHORTFALL IN INSURANCE
PROCEEDS. Tenant shall give Landlord written notice of such election within [* *
*] TWENTY [* * *] (20) days after receiving Landlord's termination notice.
(c) If the damage to the Property occurs during the last six (6) months
of the Lease Term (OR EXTENSION THEREOF) and such damage will COST MORE THAN
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) TO REPAIR AND WILL require more
than thirty (30) days to repair, either Landlord or Tenant may elect to
terminate this Lease as of the date the damage occurred, regardless of the
sufficiency of any insurance proceeds. The party electing to terminate this
Lease shall give written notification to the other party of such election within
thirty (30) days after Tenant's notice to Landlord of the occurrence of the
damage.
Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property Is greater than partial damage as described In Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding the preceding
sentence, if the Property can be rebuilt within six (6) months after the date of
destruction, TENANT OR Landlord may elect to [* * *] CAUSE the Property TO BE
REBUILT at Landlord's own expense, in which case this Lease shall remain In full
force and effect. [* * *] THE PARTY ELECTING TO CAUSE THE REBUILDING shall
notify [* * *] THE OTHER of such election within thirty (30) days after [* * *]
the occurrence of total or substantial destruction. [* * *], Landlord shall
rebuild the Property at Landlord's sole expense, except that if the destruction
was caused by an act or omission of Tenant, Tenant shall pay Landlord the
difference between the actual cost of rebuilding and any insurance proceeds
received by Landlord.
Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed
or damaged and Landlord or Tenant repairs or restores the Property pursuant to
the provisions of this Article Seven, any [* * *] AMOUNTS payable HEREUNDER
during the period of such damage, repair and/or restoration shall be reduced
according to the degree, if any, to which Tenant's use of the Property is
impaired. However, the reduction shall not exceed the sum of one year's payment
of Base Rent, Insurance premiums, [* * *] real property taxes AND OTHER AMOUNTS
PAYABLE HEREUNDER. Except for such possible [* * *] REDUCTIONS in Base Rent,
insurance premiums, [* * *] real property taxes AND OTHER AMOUNTS PAYABLE
HEREUNDER, Tenant shall not be entitled to any compensation, reduction, or
reimbursement from Landlord as a result of any damage, destruction, repair, or
restoration of or to the Property.
Section 7.04. WAIVER. Tenant waives the protection of any statute, code
or judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.
ARTICLE EIGHT: CONDEMNATION
If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken, [* * *] or
IF ANY OTHER PART OF THE PROPERTY IS TAKEN WHICH RESULTS, IN TENANT'S REASONABLE
BUSINESS JUDGMENT, IN A SUBSTANTIAL IMPAIRMENT OF TENANT'S ABILITY TO CONDUCT
ITS THEN CURRENT AND REASONABLY CONTEMPLATED FUTURE BUSINESS AT THE PROPERTY
Tenant may terminate this Lease as of the date the condemning authority takes
title or possession, by delivering written notice to [* * *] LANDLORD within [*
* *] TWENTY [* * *] (20) days after receipt of written notice of such taking (or
in the absence of such notice, [* * *] TWENTY [* * *] (20) days after the
condemning authority takes title or possession). If [* * *] TENANT DOES NOT
TERMINATE this Lease, this Lease shall remain in effect as to the portion of the
Property not taken, except that the Base Rent [* * *], Additional Rent AND ANY
OTHER CHARGES PAYABLE HEREUNDER shall be EQUITABLY reduced [* * *]. Any
Condemnation award or payment shall be distributed in the following order: (a)
first, to any ground lessor, mortgagee or beneficiary under a deed of trust
encumbering the Property, the amount of its Interest in the Property; (b)
second, to Tenant, [* * *] THE VALUE OF ITS LEASEHOLD AND the amount of any
award specifically designated for loss of or damage to Tenant's trade fixtures
or removable personal property; and (e) third, to Landlord, the remainder of
such award, whether as compensation for [* * *], the taking of the fee, or
otherwise. If this Lease is not terminated, Landlord shall repair any damage to
the Property caused by the Condemnation, except that Landlord shall not be
obligated to repair any damage for which Tenant has been reimbursed by the
condemning authority. If the [* * *] damages received by Landlord are not
sufficient to pay for such repair AND IF TENANT REFUSES TO FUND THE SHORTFALL,
Landlord shall have the right to either terminate this Lease or make such repair
at Landlord's expense.
ARTICLE NINE: ASSIGNMENT AND SUBLETTING
Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent. [* * *]
Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any [* * *] ENTITY which
controls, is controlled by or is under common control with Tenant, or to any
corporation ENTITY resulting from the merger of or consolidation with Tenant OR
TO [* * *] ANY ENTITY TO
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WHOM ALL OR SUBSTANTIALLY ALL OF THE ASSETS AND/OR OUTSTANDING STOCK OF TENANT
IS TRANSFERRED ("TENANT'S AFFILIATE"). In such case, any Tenant's Affiliate
shall assume in writing all of Tenant's obligations under this Lease.
Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant's liability under
this Lease.
Section 9.04. OFFER TO TERMINATE. If Tenant desires to assign the Lease
or sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified In the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and all the terms
and provisions of the Lease governing termination shall apply. If Landlord does
not so elect, the Lease shall continue in effect until otherwise terminated and
the provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.
Section 9.05. LANDLORD'S CONSENT.
(a) Tenant's request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer, including
the name, business and financial condition of the prospective transferee,
financial details of the proposed transfer (e.g. the term of and the rent and
security deposit payable under any proposed assignment or sublease), and any
other information Landlord deems relevant. Landlord shall have the right to
withhold consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and the proposed
use of the Property; (ii) the net worth and financial reputation of the proposed
assignee or subtenant, (iii) Tenant's compliance with all of its obligations
under the Lease; and (iv) such other factors as Landlord may reasonably deem
relevant. If Landlord objects to a proposed assignment solely because of the net
worth and/or financial reputation of the proposed assignee, Tenant may
nonetheless sublease (but not assign), all or a portion of the Property to the
proposed transferee, but only on the other terms of the proposed transfer.
(b) If Tenant assigns or subleases, the following shall apply:
(i) Tenant shall pay to Landlord as Additional Rent under the Lease the
Landlord's Share ([* * *] SUBJECT TO Section 1.13) of the Profit (defined
below) on such transaction as and when received by Tenant, unless Landlord gives
written notice to Tenant and the assignee or subtenant that Landlord's Share
shall be paid by the assignee or subtenant to Landlord directly. The "Profit"
means (A) all amounts paid to Tenant for such assignment or sublease, including
"key" money, monthly rent in excess of the monthly rent payable under the Lease,
and all fees and other consideration paid for the assignment or sublease,
including fees under any collateral agreements, less (B) costs and expenses
directly incurred by Tenant in connection with the execution and performance of
such assignment or sublease for real estate broker's commissions and costs of
renovation or construction of tenant improvements required under such assignment
or sublease. Tenant is entitled to recover such costs and expenses before Tenant
is obligated to pay the Landlord's Share to Landlord. The Profit in the case of
a sublease of less than all the Property is the rent allocable to the subleased
space as a percentage on a square footage basis.
(ii) Tenant shall provide Landlord a written statement certifying all
amounts to be paid from any assignment or sublease of the Property within thirty
(30) days after the transaction documentation is signed, and Landlord may
inspect Tenant's books and records to verity the accuracy of such statement. On
written request, Tenant shall promptly furnish to Landlord copies of all the
transaction documentation, all of which shall be certified by Tenant to be
complete, true and correct. Landlord's receipt of Landlord's Share shall not be
a consent to any further assignment or subletting. The breach of Tenant's
obligation under this Paragraph 9.05(b) shall be a material default of the
Lease.
Section 9.06. NO MERGER. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.
ARTICLE TEN: DEFAULTS; REMEDIES
Section 10.01. COVENANTS AND CONDITIONS. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.
Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:
(a) [* * *] If Tenant's vacation of the Property results in the
cancellation of any insurance described in Section 4.04;
(b) If Tenant fails to pay rent or any other charge [* * *] WITHIN FIVE
(5) DAYS AFTER TENANT RECEIVES NOTICE OF FAILURE TO PAY WHEN DUE;
(c) If Tenant falls to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that It more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) -day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.
(d) (i) If Tenant makes a general assignment or general arrangement for
the benefit of creditors; (ii) if a petition for adjudication of bankruptcy or
for reorganization or rearrangement is filed by or against Tenant and Is not
dismissed within [* * *] SIXTY [* * *] (60) days; (iii) if a trustee or receiver
is appointed to take possession of substantially all of Tenant's assets located
at the Property or of Tenant's interest in this Lease and possession is not
restored to Tenant within [* * *] SIXTY [* * *] (60) days; or (iv) if
substantially all of Tenant's assets located at the Property or of Tenant's
Interest in this
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Lease is subjected to attachment, execution or other judicial seizure which is
not discharged within [***] SIXTY [***] (60) days. If a court of competent
jurisdiction determines that any of the acts described in this subparagraph (d)
is not a default under this Lease, and a trustee is appointed to take possession
(or if Tenant remains a debtor in possession) and such trustee or Tenant
transfers Tenant's interest hereunder, then Landlord shall receive, as
Additional Rent, the excess, If any, of the rent (or any other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.
(e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or other wise terminate, any guaranty of all or any portion
of Tenant's obligations under the Lease. Unless otherwise expressly provided, no
guaranty of the Lease is revocable.
Section l0.03 REMEDIES. On the occurrence of any material default by
Tenant, Landlord may at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:
(a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (1) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have paid
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
thereof from, including, but not limited to, any costs or expenses Landlord
incurs in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, [***] of the
Property, Landlord's reasonable attorneys fees incurred in connection therewith,
and any real estate commission paid or payable. As used in subparts (i) and (ii)
above, the "worth at the time of the award" is computed by allowing interest on
unpaid amounts at the rate of fifteen percent (15%) per annum, or such lesser
amount as may then be the maximum lawful rate. As used in subpart (iii) above,
the "worth at the time of the award" is computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%). If Tenant has abandoned the Property, AND
DEFAULTED ON THIS LEASE, Landlord shall have the option of (i) retaking
possession of the Property and recovering from Tenant the amount specified In
this Paragraph 10.03(a), or (ii) proceeding under Paragraph 10.03(b);
(b) Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;
(c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.
[***]
Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord's damages for default shall
include all costs and fees, including reasonable attorneys' fees that Landlord
incurs in connection with the filing, commencement, pursuing and/or defending of
any action in any bankruptcy court or other court with respect to the Lease; the
obtaining of relief from any stay in bankruptcy restraining any action to evict
Tenant; or the pursuing of any action with respect to Landlord's right to
possession of the Property. All such damages suffered (apart from Base Rent and
other rent payable hereunder) shall constitute pecuniary damages which must be
reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Tenant in any bankruptcy or other proceeding.
Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.
ARTICLE ELEVEN: PROTECTION OF LENDERS
Section 11.01. SUBORDINATION. CONDITIONAL UPON TENANT'S RECEIPT OF A
NON-DISTURBANCE AGREEMENT IN FORM REASONABLY SATISFACTORY TO TENANT, Landlord
shall have the right to subordinate this Lease to any ground lease, deed of
trust or mortgage encumbering the Property, any advances made on the security
thereof and any renewals, modifications, consolidations, replacements or
extensions thereof, whenever made or recorded. Tenant shall cooperate with
Landlord and any lender which is acquiring a security interest in the Property
or the Lease. [***] Tenant's right to quiet possession of the Property during
the Lease Term shall not be disturbed if Tenant pays the rent and performs all
of Tenant's obligations under this Lease and is not otherwise in default. If any
ground lessor, beneficiary or mortgagee elects to have this Lease prior to the
lien of its ground lease, deed of trust or mortgage and gives written notice
thereof to Tenant, this Lease shall be deemed prior to
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such ground lease, deed of trust or mortgage whether this Lease is dated prior
or subsequent to the date of said ground lease, dead of trust or mortgage or the
date of recording thereof.
Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.
Section 11.03. SIGNING OF DOCUMENTS. . CONDITIONAL UPON TENANT'S RECEIPT
OF A NON-DISTURBANCE AGREEMENT IN FORM REASONABLY SATISFACTORY TO TENANT, Tenant
shall [***] EXECUTE and deliver SUCH ANY [***] attornment [***], subordination
or agreement CONTAINING SUCH REASONABLE TERMS AND CONDITIONS AS LANDLORD, TENANT
AND LANDLORD'S LENDER SHALL AGREE.[***]
Section 11.04. ESTOPPEL CERTIFICATES.
(a) Upon [***] written request, OF EITHER PARTY Tenant AND LANDLORD shall
execute, acknowledge and deliver to Landlord a written statement certifying: (i)
that none of the terms or provisions of this Lease have been changed (or if they
have been changed, stating how they have been changed); (ii) that this Lease has
not been canceled or terminated; (iii) the last date of payment of the Base Rent
and other charges and the time period covered by such payment; (iv) that [***]
THE REQUESTING PARTY is not in default under this Lease (or, if [***] THE
REQUESTING PARTY is claimed to be in default, stating why); and (v) such other
representations or information with respect to [***] THE OTHER PARTY or the
Lease as [***] THE REQUESTING PARTY may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require. [***] A PARTY
shall deliver such statement to [***] THE REQUESTING PARTY within ten (10) days
after [***] request. [***] A PARTY may give any such statement [***] to any
prospective purchaser, [***] encumbrancer, ASSIGNEE, SUBLEASEE, TRANSFEREE OR
FINANCIER (A "BENEFITED PERSON"). [***]. Such [***] BENEFITED PERSON may rely
conclusively upon such statement as true and correct.
(b) If [***] THE OTHER PARTY does not deliver such statement to [***] THE
REQUESTING PARTY within such ten (10) day period [***] THE REQUESTING PARTY, and
any [***], BENEFITED PERSON may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this Lease have not been changed
except as otherwise represented by [***] THE REQUESTING PARTY, (ii) that this
Lease has not been canceled or terminated except as otherwise represented by
[***] THE REQUESTING PARTY,(iii) that not more than one month's Base Rent or
other charges have been paid in advance; and (iv) that [***] THE REQUESTING
PARTY, is not In default under the Lease. In such event, [***] THE OTHER PARTY
shall be estopped from denying the truth of such facts.
Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement is
a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth In this Lease.
ARTICLE TWELVE: LEGAL COSTS
Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights-or
otherwise. Furthermore, if any action for breach of or to enforce the provisions
of this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys' fees and
costs. The losing party in such action shall pay such attorneys' fees and costs.
[***] "LANDLORD AND TENANT SHALL INDEMNIFY AND HOLD EACH OTHER HARMLESS FROM ALL
COSTS, EXPENSES, DEMANDS AND LIABILITY WHICH THE INDEMNIFIED PARTY MAY INCUR IF
THE INDEMNIFIED PARTY BECOMES OR IS MADE A PARTY TO ANY CLAIM OR ACTION:
(A) INSTITUTED BY THE INDEMNIFYING PARTY AGAINST ANY THIRD PARTY OR BY
ANY THIRD PARTY AGAINST THE INDEMNIFYING PARTY, OR BY OR AGAINST ANY THIRD
PERSON HOLDING AN INTEREST UNDER OR USING THE PROPERTY BY LICENSE OF OR
AGREEMENT WITH THE INDEMNIFYING PARTY;
(B) FOR FORECLOSURE OF ANY LIEN FOR LABOR OR MATERIAL FURNISHED TO OR FOR
THE INDEMNIFYING PARTY OR SUCH THIRD PERSON;
(C) OTHERWISE ARISING OUT OF OR RESULTING FROM ANY ACT OR TRANSACTION OF
THE INDEMNIFYING PARTY OR SUCH THIRD PERSON; OR
(D) NECESSARY TO PROTECT THE INTEREST OF THE INDEMNIFIED PARTY UNDER THIS
LEASE IN A BANKRUPTCY PROCEEDING, OR OTHER PROCEEDING UNDER TITLE XI OF THE
UNITED STATES CODE AS AMENDED.
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THE INDEMNIFYING PARTY SHALL DEFEND AND HOLD THE INDEMNIFIED PARTY
HARMLESS AGAINST ANY SUCH CLAIM OR ACTION AT THE INDEMNIFYING PARTY'S EXPENSE
WITH COUNSEL REASONABLY ACCEPTABLE TO THE INDEMNIFIED PARTY OR AT THE ELECTION
OF THE INDEMNIFIED PARTY, THE INDEMNIFYING PARTY SHALL REIMBURSE THE INDEMNIFIED
PARTY FOR ANY LEGAL COSTS OR COSTS THE INDEMNIFIED PARTY INCURS IN ANY SUCH
CLAIM OR ACTION."
Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.
ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS
Section 13.01. Non-Discrimination. Tenant promises, and it is a condition to the
continuance of this Lease, that there will be no discrimination against, or
segregation of, any person or group of persons on the basis of race, color, sex,
creed, national origin or ancestry in the leasing, subleasing, transferring,
occupancy, tenure or use of the Property or any portion thereof.
Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.
(a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet been
applied under the terms of this Lease.
(b) Tenant shall give written notice of any failure by Landlord to
perform any of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust encumbering the
Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure, Landlord
shall not be in default if such cure is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
(c) Notwithstanding any term or provision herein to the contrary the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.
Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain In full force and effect.
Section 13.04. INTERPRETATION. The captions of the Articles or Sections
of this Lease are to assist the parties in reading this Lease and are not a part
of the terms or provisions of this Lease. Whenever required by the context of
this Lease, the singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission.
Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties, any other attempted amendment
shall be void.
Section 13.06. NOTICES. All notices required or permitted under this
Lease shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.03 above, except that upon
Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
delivery. Either party may change its notice address upon written notice to the
other party.
Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.
Section 13.08. NO RECORDATION. Tenant shall not record this Lease Without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees,
Section 13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party
who legally acquires any rights or interest in this Lease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.
Section 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written
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notice to Landlord of any general partner's withdrawal or addition. Within
thirty (30) days after this Lease is signed, Tenant shall deliver to Landlord a
copy of Tenant's recorded statement of partnership or certificate of limited
partnership.
Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this
Lease as Tenant shall be jointly and severally liable for all obligations of
Tenant.
Section 13.12. FORCE MAJEURE. If [***] EITHER PARTY cannot perform any of
Its RESPECTIVE obligations due to events beyond [***] SUCH PARTIES control
(EXCLUDING FINANCIAL INABILITY), the time provided for performing such
obligations shall be extended by a period of time equal to the duration of such
events. Events beyond [***] A PARTY'S control include, but are not limited to,
acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other
casualty, shortages of labor or material, government regulation or restriction
and weather conditions.
Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.
Section 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.
ARTICLE FOURTEEN: BROKERS
Section 14.01. BROKER'S FEE. When this Lease is signed by and delivered
to both Landlord and Tenant, Landlord AT NO EXPENSE TO TENANT shall pay a real
estate commission to Landlord's Broker named in Section 1.08 above, if any, as
provided in the written agreement between Landlord and Landlord's Broker, or the
sum stated in Section 1.09 above for services rendered to Landlord by Landlord's
Broker in this transaction. Landlord shall pay Landlord's Broker a commission if
Tenant exercises any option to extend the Lease Term or to buy the Property, or
any similar option or right which Landlord may grant to Tenant, or it Landlord's
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord's Broker's commission schedule in effect as of the
execution of this Lease. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of Its commission to Tenant's
Broker if so provided in any agreement between Landlord's Broker and Tenant's
Broker. Nothing contained in this Lease shall impose any obligation on Landlord
to pay a commission or fee to any party other than Landlord's Broker.
Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees
shall be fixed by the court in such action. This Paragraph is Included In this
Lease for the benefit of Landlord's Broker.
Section 14.03. AGENCY DISCLOSURE; NO OTHER BROKERS. Landlord and Tenant
each warrant that they have dealt with no other real estate broker(s) in
connection with this transaction except: Lee & Associates Arizona, who
represents Both Landlord and Tenant and _______________________________________
who represents ________________________________________________________________.
In the event that Lee & Associates Arizona represents both Landlord and
Tenant, Landlord and Tenant hereby confirm that they were timely advised of the
dual representation and that they consent to the same, and that they do not
expect said broker to disclose to either of them the confidential information of
the other party.
ARTICLE FIFTEEN: COMPLIANCE
The parties hereto agree to comply with all applicable federal, state and
local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this Agreement,
including, but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment In Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and The Americans With
Disabilities Act.
ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR
IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED, PLEASE DRAW
A LINE THROUGH THE SPACE BELOW.
[Confidential Treatment Requested]
13
<PAGE> 14
Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialed all Riders which
are attached to or incorporated by reference in this Lease.
"LANDLORD"
Signed on ______________,19_____ Jackson-Shaw/El Dorado Tech I
at _____________________________ Limited Partnership
By: Jackson-Shaw/Arizona, Inc.
Its: General Partner
By: _____________________________
J. Michael Bray
Its: Vice President
"TENANT"
Signed on ______________,19_____ Cerprobe Corporation
at _____________________________ a Delaware Corporation
By: _____________________________
C. Zane Close
Its: President and C.E.O.
By:
Its:
IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.
THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS? INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS? INC., ITS
LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.
14
<PAGE> 1
CERPROBE CORPORATION EXHIBIT 11
COMPUTATION OF NET INCOME (LOSS) PER SHARE
EXHIBIT 11
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income (loss) $ 466,778 $ 1,589,326 $ 2,812,208 $(3,305,307)
=========== =========== =========== ===========
Weighted average common shares outstanding 8,109,950 6,353,047 8,105,700 6,321,399
Common equivalent shares representing shares
issuable upon exercise of stock options 276,844 243,022 326,702 238,626
Subtraction of common equivalent shares due to
antidilutive nature -- -- -- (238,626)
----------- ----------- ----------- -----------
Dilutive adjusted weighted average shares
and assumed conversions 8,386,794 6,596,069 8,432,402 6,321,399
=========== =========== =========== ===========
Basic net income (loss) per share $ 0.06 $ 0.25 $ 0.35 $ (0.52)
=========== =========== =========== ===========
Diluted net income (loss) per share $ 0.06 $ 0.24 $ 0.33 $ (0.52)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 25,318,979
<SECURITIES> 0
<RECEIVABLES> 10,916,244
<ALLOWANCES> 280,247
<INVENTORY> 10,476,668
<CURRENT-ASSETS> 48,875,948
<PP&E> 27,612,780
<DEPRECIATION> 8,972,985
<TOTAL-ASSETS> 71,014,299
<CURRENT-LIABILITIES> 7,028,220
<BONDS> 1,482,378
0
0
<COMMON> 406,464
<OTHER-SE> 61,329,367
<TOTAL-LIABILITY-AND-EQUITY> 71,014,299
<SALES> 43,421,805
<TOTAL-REVENUES> 43,421,805
<CGS> 26,470,077
<TOTAL-COSTS> 12,897,587
<OTHER-EXPENSES> 122,588
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 122,588
<INCOME-PRETAX> 4,703,233
<INCOME-TAX> (1,865,632)
<INCOME-CONTINUING> 2,812,208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,812,208
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,482,445
<SECURITIES> 0
<RECEIVABLES> 9,937,076
<ALLOWANCES> 218,278
<INVENTORY> 6,525,933
<CURRENT-ASSETS> 18,178,196
<PP&E> 19,749,173
<DEPRECIATION> 5,979,208
<TOTAL-ASSETS> 36,231,963
<CURRENT-LIABILITIES> 11,373,944
<BONDS> 1,591,591
16
0
<COMMON> 317,652
<OTHER-SE> 22,471,275
<TOTAL-LIABILITY-AND-EQUITY> 36,231,963
<SALES> 34,582,921
<TOTAL-REVENUES> 34,582,921
<CGS> 20,403,329
<TOTAL-COSTS> 15,909,241
<OTHER-EXPENSES> 296,853
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 296,853
<INCOME-PRETAX> (1,843,992)
<INCOME-TAX> 1,490,300
<INCOME-CONTINUING> (3,305,307)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,305,307)
<EPS-PRIMARY> (0.52)
<EPS-DILUTED> (0.52)
</TABLE>
