U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _________________
Commission file number: 33-28417
SITEK, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 86-0923886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1817 West Fourth Street
Tempe, Arizona 85281
(Address of principal executive offices)
Issuer's telephone number: (602) 921-8555
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Class)
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 report(s)), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant, based upon the closing bid price of the
registrant's Common Stock as reported on the OTC Bulletin Board on June 15, 1999
was approximately $49,249,492. Shares of Common Stock held by each officer and
director and by each person who owns 30% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily conclusive.
The number of outstanding shares of the registrant's Common Stock on June
15, 1999 was 12,302,813.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
SITEK, INCORPORATED
SITEK, Incorporated, a Delaware corporation ("SITEK"), is a holding company
which provides administrative and business support functions for its
semiconductor industry subsidiary companies. As of March 31, 1999, SITEK
operated two wholly-owned subsidiaries: CMP Solutions, Inc., an Arizona
corporation which provides engineering and manufacturing services to the
semiconductor industry and Advanced Technology Services, Inc., an Arizona
corporation which buys and sells pre-owned semiconductor capital equipment to a
world wide market. SITEK handles all the human resources, accounting, finance,
benefits administration and other general business services of its subsidiaries,
allowing them to focus their attention on generating revenues. On April 28,
1999, SITEK acquired a new subsidiary, VSM Corporation, an Arizona corporation
involved in semiconductor process equipment and subassembly manufacturing and
refurbishment. SITEK intends to continue diversifying the services and products
it supplies the semiconductor industry through acquisitions of established
companies in the next fiscal year.
SITEK's executive offices are located at 1817 West Fourth Street, Tempe,
Arizona 85281, and its telephone number is (480) 921-8555.
Although SITEK was incorporated in Delaware on June 30, 1998, its
predecessor has been in existence for over 10 years, the majority of which its
predecessor remained dormant and did not engage in any commercial operations.
SITEK is the successor to the Elgin Corporation, a publicly traded company
established under the laws of Delaware on April 5, 1989. The Elgin Corporation
entered into a merger from which the ultimate surviving corporation was Dentmart
Group, Inc. on February 15, 1991. On July 14, 1998, Dentmart then merged into
and became part of its wholly owned subsidiary, SITEK. SITEK then entered into a
Stock Purchase Agreement with CMP Solutions, Inc., an Arizona corporation to
acquire all the outstanding stock of CMP Solutions, Inc. on July 14, 1998.
Elgin was originally established to create a publicly held corporation in
which a suitable privately held company or companies could be merged. Toward
that goal, Elgin filed a registration statement with the United States
Securities and Exchange Commission on Form S-18 that was declared effective on
November 30, 1989. Elgin filed a certification and notice of suspension of duty
to file reports under Section 15(d) of the Securities Exchange Act of 1934 on
Form 15 in February 1991 and remained dormant until April 14, 1998 when Dentmart
filed a current report with the Securities and Exchange Commission reporting its
change in fiscal year from December 31 to March 31, its number of shareholders
exceeding 300 and its intention to resume filing of periodic reports under
Section 15(d) of the Securities Exchange Act of 1934.
CMP SOLUTIONS, INC.
SITEK completed an acquisition of CMP Solutions, Inc., an Arizona
corporation, pursuant to a Stock Purchase and Exchange Agreement dated as of
July 14, 1998. The terms of the acquisition are more fully described in SITEK's
Report on Form 8-K filed on August 17, 1998, which is incorporated herein by
reference.
"CMP" refers to "chemical mechanical planarization," the process by which
surface materials on a silicon wafer are removed or polished to make it possible
to add new layers of integrated circuit metal and insulator on the wafer. This
technology is primarily used by integrated circuit manufacturers who use this
process in their most advanced circuits. Most recently, smaller integrated
circuit and micro machine manufacturers have been leading the demand for new and
used CMP systems and CMP foundry services. Although the large companies which
use the CMP process on its wafer have the capability to manufacture their own
customized CMP treated wafer, the high cost associated with equipment
procurement, process design and the scarcity of qualified technicians makes
in-house CMP wafer treatment out of the reach of smaller companies. CMP
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Solutions uses its team of qualified and experienced engineers to produce
customized CMP processed wafers for the smaller company market as the industry's
major outsource provider of CMP wafer processing. To provide these products, CMP
Solutions has its own "foundry" to which customers submit their wafers for CMP
processing. CMP Solutions also expects to have the capability to install and
operate a CMP operation on-site at the customer's plant.
In addition to the manufacture of CMP processed wafers, CMP Solutions makes
its engineers available on a consulting basis for customers who have purchased
equipment, but need assistance designing and utilizing the CMP equipment. During
the fiscal year ending March 31, 1999, CMP Solutions continued in the
development phase, initial marketing and in establishing its silicon wafer
processing facility. Therefore, CMP Solutions revenues during the last fiscal
year were less than 5% of the total revenues.
ADVANCED TECHNOLOGY SERVICES, INC.
In July 1998 SITEK formed a wholly owned subsidiary, Advanced Technology
Services, Inc., an Arizona corporation ("ATSI"). ATSI is a business unit that
buys and sells pre-owned semiconductor processing and manufacturing equipment to
the world-wide market of semiconductor companies. ATSI generated nearly all of
SITEK's sales revenues for the year ending March 31, 1999.
Because of the high capital expenditures a semiconductor company must make
in purchasing new equipment, ASTI provides an alternative in pre-owned
equipment. ASTI sells mostly to semiconductor companies who seek to cut
production costs by purchasing pre-owned semiconductor manufacturing and
processing equipment.
MARKETS
SITEK currently has two principal markets: (i) pre-owned semiconductor
manufacturing equipment; and (ii) CMP services. The semiconductor market
contracted dramatically in 1997 and 1998, but SITEK believes the market is
expanding in 1999. SITEK believes there is significant pressure, especially as a
result of the 1997-98 downturn in semiconductor demand, on semiconductor
manufacturers to reduce capital equipment acquisition costs by purchasing
pre-owned equipment rather than new equipment. Also resulting from the 1997-98
downturn, several semiconductor fabricating facilities have closed in the past
two years, putting an unusually high amount of pre-owned semiconductor
manufacturing equipment on the market. As a result, SITEK, through ATSI, has
been able to successfully acquire pre-owned equipment at favorable prices and
sell it to semiconductor manufacturers on a global basis. In the pre-owned
equipment market, SITEK's principal customer during the fiscal year ending March
31, 1999 was Philips N.V. in Europe.
SITEK has begun differentiating itself from the other participants in the
pre-owned equipment market by providing total equipment turnkey solutions in a
number of cases, which include both process and hardware qualification. This has
been done either through contracting with companies with equipment-specific
expertise or from internally developed capabilities specifically in diffusion,
low pressure chemical vapor deposition ("LPCVD") equipment and CMP equipment
markets. SITEK has focused on building a reputation for excellent service and
ethical business practices. SITEK believes the CMP services market was created
due to the high cost of owning and operating CMP equipment making in-house CMP
operations prohibitive for some semiconductor manufacturers. SITEK believes that
semiconductor manufacturers are seeking reductions in costs of production.
SITEK, through CMP Solutions, intends to provide to semiconductor manufacturers
a lower cost, high quality source for CMP out-source production. This will allow
semiconductor manufacturers the ability to utilize CMP processing technology
with no expenditures for capital equipment and related facilitization. For
semiconductor manufacturers that desire in-house CMP processing capability,
SITEK intends to provide them with technical support for CMP process development
a well as CMP equipment upgrades to increase yields and reduce costs of
production.
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MARKETING AND SALES
SITEK has relied upon a few sales employees to generate its revenues in the
pre-owned equipment market during fiscal year 1999. SITEK intends to expand its
sales and marketing staff significantly in fiscal year 2000. SITEK expects to
use a combination of its own sales and marketing staff along with independent
sales representative companies that SITEK believes have excellent relations with
its target market customers in their respective regional markets, such as Asia
and Europe. See Note 12 of the Consolidated Financial Statements for revenue by
country and segment.
Substantially all of SITEK's sales revenue was generated in Europe during
fiscal year 1999. However, SITEK invoices primarily in U.S. dollars. There were
no foreign currency exchange issues in fiscal year 1999.
Almost all of SITEK's sales revenues for the fiscal year ending March 31,
1999 was generated in the sale of pre-owned semiconductor fabrication equipment,
supplies of which may be sporadic in the future if the semiconductor industry
improves and fewer semiconductor companies close. See "Special Risks -- Sporadic
Supply of Pre-owned Equipment." In addition, nearly all of the Company's
pre-owned semiconductor equipment sales were to a single customer, Phillips N.V.
A reduction in orders could have materially adverse effect on business. See
"Special Risks -- Dependence on Single Customer."
RESEARCH AND DEVELOPMENT
SITEK did not have any expenditures for product development in fiscal year
1999. SITEK expects to increase its product development expenditures in fiscal
year 2000. SITEK expects its first product development project to be an improved
CMP wafer carrier designed to improve yields from silicon wafers.
COMPETITION
PRE-OWNED EQUIPMENT
SITEK's competition in the pre-owned semiconductor fabrication equipment
market consists primarily of Comdisco, Inc., a large company that specializes in
financing new equipment and reselling pre-owned equipment, and semiconductor
fabrication OEMs such as Applied Materials, Inc. and Varian Semiconductor
Equipment Associates, Inc. However, several small pre-owned equipment brokerage
companies have recently begun operations as a result of: (i) the demand for
pre-owned equipment generated by semiconductor devices manufacturers attempting
to reduce their capital equipment expenditures; and (ii) a large supply of
pre-owned fabrication equipment currently on the market due to several
semiconductor fabrication facilities being closed in 1997 and 1998.
CMP SERVICES
There currently is no competition for SITEK, through CMP Solutions, in the
CMP services market -- other than the OEM demonstration labs doing CMP foundry
work. SITEK expects other competitors to enter the market during fiscal year
2000. SITEK intends to retain its leadership position in the CMP services market
by providing a comprehensive range of CMP services to all levels of end-users as
well as key CMP equipment suppliers.
INTELLECTUAL PROPERTY
SITEK believes that name recognition of its primary trade name "SITEK,
Incorporated" is important to its sales program. Although the "SITEK" name is
not available for federal trademark registration, SITEK has registered the
"SITEK" name as a trade name for exclusive use in the State of Arizona. However,
other companies may use or may already be using the SITEK name in other
jurisdictions. The Company owns no federal patents or trademarks.
EMPLOYEES
As of March 31, 1999, SITEK employed nine people, all of whom were
full-time employees. Two employees were engaged in sales and service, two were
full-time employees engaged in administrative activities and five were
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production workers. As of June 15, 1999, following the acquisition of VSM, the
Company employed 39 employees. None of the employees is covered by a collective
bargaining agreement, and management believes that its relations with its
employees are good.
REPORTS TO SHAREHOLDERS
Although SITEK is not required by the Securities and Exchange Commission
rules or stock exchange requirements to send an annual report to stockholders
for fiscal year 1999, SITEK intends to send an annual report which will include
audited financial statements to stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
SITEK began operations on July 14, 1998 when it acquired all the
outstanding stock of CMP Solutions, Inc. (CMP). On July 24, 1998, all of the
outstanding stock of Advanced Technology Services, Inc. (ATSI) was contributed
to SITEK as a wholly owned subsidiary. ATSI was formed on July 23, 1998. As
SITEK is in its initial year of operations, there are no prior year financial
statements.
Net sales of $2,721,000 in the current fiscal year were principally due to
sales by ATSI of pre-owned semiconductor capital equipment, which resulted in a
gross profit of 25.4% of net sales.
CMP began initial operations late in the fiscal year and generated minimal
net sales. Engineering expenses of $426,000 were incurred primarily to set up
CMP cleanroom operations, install equipment and develop planarization processes.
SITEK incurred $915,000 or 33.6% of net sales in selling, general and
administrative expense primarily relating to start-up activities and other
general business activities.
Interest expense of $277,000 or 10.2% of net sales relates to borrowings
mainly from TLD Funding Group. SITEK entered into a short-term note payable
agreement with TLD on March 15, 1999 for funds used to acquire substantially all
of the pre-owned semiconductor production equipment from a semiconductor plant
in Durham County, United Kingdom. The note includes $656,000 of financing fees,
which are amortized over the life of the loan. Payment is due on July 13, 1999.
A 5% penalty per month will be assessed on the outstanding balance if such
amount is not covered by a customer purchase order after the 91st day. If not
paid in full by 120 days, the outstanding balance will be assessed a monthly fee
of 5% until paid in full. The balance due on the note at March 31, 1999 is
$5,729,000.
In February, 1999, SITEK borrowed $207,000 from TLD under a line of credit,
which will expire on February 4, 2001. Interest is due monthly on the unpaid
balance at 1.5%. The line is personally guaranteed by two of SITEK's
shareholders and two related companies.
SITEK also has available a line of credit with TLD for amounts up to $1
million to be utilized to purchase equipment for resale. The line bears interest
on each advance at 1% of the advance amount for the initial 30 days and 2% per
month thereafter. SITEK also must pay a financing fee of 7% at the time of each
advance under the line. At March 31, 1999, SITEK owed $154,000 under this line
of credit.
Income taxes credits due on operating losses have been offset by a deferred
tax asset valuation allowance as management feels it is more likely than not the
deferred tax assets will not be realized.
SITEK owes $910,000 in Value Added Tax ("VAT") associated with the purchase
of the Durham County, UK inventory. The VAT will be refundable by the UK
government upon filing appropriate returns. This amount is reflected as both a
liability and a prepaid asset.
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SITEK has sold convertible debentures totaling $80,000 during the fiscal
period. The debentures earn interest at the rate of 6% and may be converted into
SITEK's common stock at favorable terms or repaid in cash after 90 days from
purchase through 24 months at which time they mature. The debentures are subject
to mandatory conversion to common stock after 24 months.
Advances from a shareholder and a related company have been received by
SITEK, of which $388,000 is outstanding on March 31, 1999.
PLAN OF OPERATIONS
As SITEK's predecessors were dormant until April, 1998 and did not have any
revenues from operations in any of the last three fiscal years, the following is
management's discussion of SITEK's plan of operations for the next 12 months.
SITEK began operations on July 14, 1998 with one operating subsidiary, CMP
Solutions, and acquired all of the outstanding stock of a second operating
subsidiary, ATSI, on July 24, 1998. Both subsidiaries had no activities prior to
these dates.
ATSI commenced its marketing efforts with sales revenues coming mostly from
sales to one customer. In March, 1999, ATSI purchased substantially all of the
pre-owned semiconductor production equipment from a semiconductor plant in the
United Kingdom. As a result, SITEK expects ATSI net revenues from equipment
resale operations during the fiscal year ending March 31, 2000 to significantly
exceed revenues earned in the current fiscal period.
During the fiscal year, CMP continued in the development phase and made
efforts in initial marketing activities as well as in building its silicon wafer
processing clean room facility. CMP had minimal revenues during the current
fiscal year due to start-up activities. SITEK expects continued development and
facilitization expenses for CMP during the next 12 months and anticipates CMP
revenues to commence in the second half of its fiscal year ending March 31,
2000.
On April 28, 1999, SITEK purchased all the outstanding shares of VSM
Corporation ("VSM") for $1,000,000, of which $50,000 had been paid prior to
March 31, 1999, in cash and for $200,000 to settle an outstanding liability to
the current shareholders of the target company. VSM is located in Tempe, Arizona
and is engaged in the manufacture and/or refurbishment of semiconductor process
equipment and subassemblies. The VSM ultra-pure gas and chemical handling
systems have wide applications in wafer manufacturing operations and plant
facilities. VSM has recently introduced a proprietary furnace system that is
utilized in the fabrication of nonvolatile semiconductor memory circuits and
other devices.
SITEK has hired advanced development engineers and intends to develop a new
CMP wafer carrier, which is expected to improve customer device yields. The
carrier head is anticipated to be available for initial beta site sales in the
second quarter of fiscal 2000 with production versions available in the third
quarter of fiscal 2000.
During the next 12 months, SITEK expects to engage in funding efforts and
acquisitions, complete CMP's manufacturing facilities, increase ATSI's revenues,
introduce the new carrier head product, and develop VSM's business. SITEK also
expects to acquire all of the capital stock of Global Semiconductor
Technologies, Inc., an Arizona corporation ("GST") and Advanced Control
Technologies, Inc., an Arizona corporation ("ACT"), both located in Tempe,
Arizona. Both GST and ACT have common ownership with SITEK. At the present time,
SITEK shares office space and staff with GST and ACT. All expenditures to date
between the companies have been treated as loans to or from these entities.
SITEK plans to raise additional capital during the next 12 months with a
private placement of up to $ 3 million in convertible debentures which earn
interest at 9.5% and are convertible into SITEK's common stock based upon a
formula, but in no case at a price per share lower than $3.50 or higher than
$5.00. SITEK also expects a possible private placement and/or public offering of
an undetermined number of shares of SITEK capital stock. SITEK intends to apply
any such additional capital to product development, equipment, and corporate
acquisitions in addition to working capital requirements above those funded from
operations.
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FUNDING REQUIREMENTS
SITEK believes it will need additional capital during the next 12 months to
meet its funding needs, including repayment of debt obligations when due, future
acquisitions, product development, and the continued costs of compliance with
reporting requirements of the Securities Exchange Act of 1934. CMP will need
additional funding before it is able to generate material revenues. There is no
assurance that SITEK will be able to attract additional capital or that the
funds, if acquired, will be sufficient to complete and integrate the
acquisitions of GST or ACT, or to meet SITEK's product development or operating
capital requirements. If the liquidity of the Company is not such that the debt
described in Note 6 to the consolidated financial statements is not paid off by
July 13, 1999, the Company will attempt to refinance the outstanding balance.
Neither management nor other of SITEK's shareholders has made commitments
to provide additional funds to SITEK. Accordingly, there can be no assurance
that any additional funds will be available to SITEK to allow it to cover its
capital needs. Management has a contingency plan to allow SITEK to sustain
itself without additional funding. However, the success of this plan depends
upon: (i) ATSI retaining its market position and substantially increasing its
sales revenues in fiscal 2000; (ii) CMP reaching production status and
attracting customers with minimal funding; (iii) VSM generating sufficient
revenues to fund its operations; (iv) ACT and GST generating approximately $ 1.0
million in revenues during fiscal 2000, assuming SITEK acquires ACT and GST; and
(v) collecting receivables in a timely fashion.
Irrespective of whether SITEK's cash assets meet SITEK's operational
capital needs during the next 12 months, SITEK might compensate providers of
services by issuances of SITEK's common stock in lieu of cash.
EXPECTED PURCHASES OF SIGNIFICANT EQUIPMENT
Depending on market conditions, demand, and the availability of funding,
SITEK expects to purchase approximately $1,000,000 worth of certain silicon
wafer processing and metrology equipment during fiscal year 2000. SITEK believes
this equipment will materially increase the likelihood of SITEK's efforts to
develop improved CMP processes as well as expand capacity at its CMP foundry and
engineering/manufacturing services operation.
During the next 12 months, SITEK expects to update business and
manufacturing systems for all aspects of SITEK. To conserve cash, SITEK may
elect to lease rather than purchase these systems.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. Statement No. 133 requires that an
enterprise recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
statement is effective for the Company's fiscal year ending March 31, 2001. The
Company has not completed evaluating the impact of implementing the provisions
of Statement No. 133.
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is commonly referred to as the Year 2000 Compliance issue. As the
Year 2000 approaches, such systems may be unable to accurately process certain
data-based information.
Most of SITEK's currently installed computer systems and software products
have been updated and made Year 2000 compliant.
SITEK relies exclusively on personal computer ("PC") based systems and does
not use mainframe or medium sized computer systems that employ older software
programs written in "COBAL." In recent weeks, numerous software packages have
become available at nominal cost that will evaluate PC systems for Year 2000
compliance, and in many cases apply corrections to the PC system or its
software. SITEK has begun certifying all PC systems under its control. All
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accounting programs and the PC system hardware have been upgraded and made Year
2000 compliant. Approximately 20 percent of the Company's word processing and
spreadsheet software applications continue to use the two-digit date code and
are not Year 2000 compliant. Software upgrades for these programs are available
at a cost of approximately $500. The Company intends on purchasing the upgrades
and plans to have all its software Year 2000 compliant well before the end of
calendar year 1999. However, there can be no assurance that such upgrades or
adjustments to hardware and software will be sufficient to make SITEK's
computers or equipment Year 2000 compliant in a timely manner or that allocated
resources will be sufficient. A failure to become Year 2000 compliant on its
computers or equipment could disrupt materially SITEK's operating results and
financial condition.
Because there are a large number of potential vendors and customers for
pre-owned semiconductor equipment and because the Year 2000 compliance of these
potential vendors and customers is unknown and is unreasonably burdensome to
ascertain, SITEK is unable to determine the impact, if any, of Year 2000
compliant issues on its pre-owned semiconductor equipment sales. If SITEK is
unable to address its Year 2000 compliance successfully or in a timely fashion,
the Company may need to devote more resources to the process and additional
costs may be incurred.
SPECIAL RISKS
FORWARD LOOKING STATEMENTS. Certain of the statements contained in this
document that are not historical facts, including statements of future
expectations, projections of results of operations and financial condition,
statements of future economic performance and other forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, are
subject to known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of SITEK to differ
materially from those contemplated in such forward-looking statements. There can
be no assurances that the forward-looking information will be accurate. In
addition to the specific matters referred to herein, important factors which may
cause actual results to differ from those contemplated in such forward-looking
statements include: the future supply of silicon; the future demand for
semiconductor and CMP products; world economic conditions; potential costs and
delays in integrating acquisitions; timing of market introductions; the
availability and cost of additional funding; and higher-than-expected costs of
product development.
Developments in any of these areas, which are more fully described
elsewhere in "Item 1. Description of Business" which is incorporated into this
section by reference, could cause SITEK' s results to differ materially from
results that have been or may be projected by or on behalf of SITEK.
SITEK cautions that the foregoing list of important factors is not
exclusive. SITEK does not undertake to update any forward-looking statement that
may be made from time to time by or on behalf of SITEK.
NEED FOR ADDITIONAL FINANCING. SITEK has limited funds, and such funds may
not be adequate to take advantage of any available business opportunities. Even
if SITEK's funds prove to be sufficient to acquire an interest in, or complete a
transaction with, a business opportunity, SITEK may not have enough capital to
exploit the opportunity. SITEK's ultimate success may depend upon its ability to
raise additional capital. SITEK has not investigated the availability, source,
or terms that might govern the acquisition of additional capital and will not do
so until it determines a need for additional financing. If additional capital is
needed, there is no assurance that funds will be available from any source or,
if available, that they can be obtained on terms acceptable to SITEK. If not
available, SITEK's operations will be limited to those that can be financed with
its modest capital.
REGULATION OF PENNY STOCKS. SITEK's securities are subject to a Securities
and Exchange Commission rule that imposes special sales practice requirements
upon broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
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or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
SITEK's securities and also may affect the ability of purchasers in this
offering to sell their securities in any market that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act of 1934.
Because SITEK's securities constitute "penny stocks" within the meaning of the
rules, the rules apply to SITEK and to its securities. The rules may further
affect the ability of owners of shares to sell SITEK's securities in any market
that might develop for them.
Stockholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include: (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. SITEK's
management is aware of the abuses that have occurred historically in the penny
stock market. Although SITEK does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to SITEK's
securities.
LIMITED OPERATING HISTORY. SITEK's predecessor was formed in April 1989,
but had no operations for several years before July 1998. Therefore, SITEK has
limited operating history, revenues from operations, or assets other than cash
from sales of stock. SITEK faces all of the same risks as a new business and the
special risks inherent in the investigation, acquisition, or involvement in a
new business opportunity. SITEK must be regarded as a developmental stage
company with all of the unforeseen costs, expenses, problems, and difficulties
to which such ventures are subject.
SPORADIC SUPPLY OF PRE-OWNED EQUIPMENT. During the fiscal year ending March
31, 1999 most all of SITEK's revenues were generated by its subsidiary involved
in the sale of pre-owned semiconductor equipment. However, the availability of
pre-owned semiconductor equipment is sporadic and determined in part by the age
of semiconductor equipment currently used by companies in the industry
semiconductor companies decisions to sell their capital equipment, both factors
which are beyond the control of SITEK. A material reduction in the availability
of pre-owned semiconductor equipment may have a material adverse effect on
SITEK's business, financial condition, and the results of operations.
NO FORESEEABLE DIVIDENDS. SITEK has not paid dividends on its stock and
does not anticipate paying such dividends in the foreseeable future.
LOSS OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. SITEK may consider
an acquisition in which it would issue as consideration for the business
opportunity to be acquired an amount of SITEK's authorized but unissued common
stock that would, upon issuance, represent the great majority of the voting
power and equity of SITEK. The result of such an acquisition would be that the
acquired company's stockholders and management would control SITEK, and SITEK's
management could be replaced by persons unknown at this time. Such a merger
would result in a greatly reduced percentage of ownership of SITEK by its
current shareholders.
8
<PAGE>
LIMITED PUBLIC MARKET. There is a limited public market for SITEK's common
stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
ABSENCE OF PROFITS. SITEK has not and may not become profitable for some
time or not at all. In order to become profitable, SITEK must, among other
things, achieve sufficient sales to cover operating costs. In order to increase
sales, SITEK must continue to organize its sales force, attract more sales
people and create a market awareness of SITEK and its products and services.
Failure to achieve these requirements would have an adverse effect on SITEK.
DEPENDENCE ON SINGLE CUSTOMER. Approximately $2.6 million, or 96%, of our
revenues in the fiscal year ended March 31, 1999 were generated from sales to
one customer. We cannot be certain that this significant customer will order as
much product in 1999 as we anticipate. A reduction in orders from our principal
customer or a failure to receive significant purchase commitments from
prospective customers could hinder our anticipated growth and may have a
material adverse effect on our business, financial condition and results of
operations.
COMPETITION. There are other companies in both the CMP services and
pre-owned semiconductor equipment businesses which may be better funded and/or
better established than SITEK.
RELIANCE ON KEY EXECUTIVES. SITEK's success depends on the efforts of Dr.
Don M. Jackson, Jr. , Chief Executive Officer; Julian Gates, President of ATSI;
Paul Jackson, Secretary of SITEK; and Mark Simon, President of CMP Solutions,
Inc. Dr. Jackson has been the key individual responsible for financing for the
development of SITEK. Mr. Gates has been primarily responsible for sales
activities of ATSI that consisted of nearly all of SITEK's revenues during the
fiscal year ended March 31, 1999. Messrs. Paul Jackson and Mark Simon, along
with Dr. Don Jackson were co-founders of CMP Solutions, Inc. SITEK believes its
relationships with these individuals are good. However, it cannot ensure that
the services of these individuals will continue to be available to us in the
future as each individual's employment is "at will."
9
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, SITEK's directors, its
executive officers, and any persons holding more than 10% of SITEK's common
stock are required to report their initial ownership of SITEK's common stock and
any subsequent changes in that ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established, and
SITEK is required to disclose any failure to file by these dates. SITEK believes
that all of these filing requirements were not satisfied during the fiscal year
ended March 31, 1999. Each of the directors, executive officers and 10%
beneficial owners made late Form 3 filings to the Securities and Exchange
Commission on July 29, 1999. In making these disclosures, SITEK has relied
solely on written representations of its directors and executive officers and
copies of the reports that they have filed with the Commission.
DIRECTORS OF THE REGISTRANT
The following sets forth certain information regarding the directors and
director nominees of the Company. Each director will be nominated for
re-election for a one year term at the Company's September 28, 1999 Annual
Meeting of Shareholders.
NAME AGE DIRECTOR SINCE TITLE
- ---- --- -------------- -----
Don M. Jackson, Jr. 64 1998 Chairman of the Board, President,
and Chief Executive Officer
Maurice L. McGill (1) 62 1998 Director
L. Richard Myers (1) 67 1998 Director
Daniel L. Shunk (1) 51 1998 Director
- ----------
(1) Member of the Audit and Compensation Committees.
DR. DON M. JACKSON, JR. is one of the founders of CMP Solutions, Inc. and
has served as Chairman of the Board, President, and Chief Executive Officer
since the inception of SITEK, Incorporated operations on July 14, 1998. Dr.
Jackson joined the company after an extensive career in various executive
positions in technology companies such as ASM America, Inc., Superwave
Technology, Inc., Microelectronic Packaging, Inc., Integrated Process Equipment
Corporation, Westech Systems, Inc., Global Semiconductor Technologies, L.L.C.,
and Motorola. Dr. Jackson holds a Ph.D. from Arizona State University in
Electrical Engineering. Dr. Jackson presently also is a director of Flexpoint
Sensor Systems, Inc. in Midvale, Utah and M&I Thunderbird Bank in Phoenix,
Arizona.
MAURICE L. MCGILL became a Director of SITEK, Incorporated on August 24,
1998. Mr. McGill is the Chairman of the Audit Committee. He presently serves as
a Director of Bluebonnet Savings Bank and Premium Standard Farms, Inc. Mr.
McGill held the positions of Executive V.P., CFO, and Director of IBP, Inc. in
Dakota City, Nebraska from which he retired in 1988. Mr. McGill previously
served as a Partner and National Director of Services for the meat industry for
Touche Ross & Co. in Phoenix, Arizona. He holds an MS in accounting and business
administration from the University of Missouri and is a CPA.
L. RICHARD MYERS has been a Director of SITEK, Incorporated since August
24, 1998 and serves as the Chairman of the Compensation Committee. He is a
retired Rear Admiral of the U.S. Navy and formerly was the Commanding Officer of
the USS John F. Kennedy. Mr. Myers served as Team Leader on President Reagan's
Private Sector Study formed to reduce waste in government spending. He holds a
MS in International Affairs from American University and a BA in Business
Administration and Economics from Fresno State College.
10
<PAGE>
DR. DANIEL L. SHUNK became a Director of SITEK, Incorporated on August 24,
1998. Dr. Shunk is an Associate Professor of Engineering at Arizona State
University and formerly functioned as its CIM Systems Research Center Director.
He previously has held various executive and management positions in GCA
Corporation, International Harvester, and Rockwell. Dr. Shunk has received
several awards including the SME International Manufacturing Education Award in
1996 and Industrial Engineering Faculty of the Year Award in 1991. He received
his Ph.D. in Industrial Engineering from Purdue University.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive
officers of the Company. Each executive officer will nominated for re-election
by the Board of Directors at its regular meeting following the Company's
September 28, 1999 Annual Meeting of Shareholders.
NAME AGE OFFICER SINCE TITLE
- ---- --- ------------- -----
Don M. Jackson, Jr.(1) 64 1998 Chairman of the Board, President,
and Chief Executive Officer
Paul D. Jackson 40 1998 Secretary
Mark G. Simon 35 1998 President of CMP Solutions, Inc.
Julian W. Gates 28 1998 President of Advanced Technology
Services, Inc.
- ----------
(1) Dr. Don M. Jackson's biographical information appears above in the
Directors of the Registrant section.
PAUL D. JACKSON is a founder of CMP Solutions, Inc. and has served as
Secretary to SITEK, Incorporated since July 14, 1998. Mr. Jackson was employed
as the Executive V.P. and General Manager of Global Semiconductor Technologies
and previously held the position of V.P. of Advanced Technology at Integrated
Process Equipment Corporation. He has also served in various management and
engineering positions at McDonald Douglas Corporation. Mr. Jackson holds a BS in
Aerospace Engineering from the University of Kansas. Paul Jackson is the son of
Dr. Don M. Jackson, Jr.
MARK G. SIMON is a founder of CMP Solutions, Inc. and has served as its
President since July 14, 1998. Mr. Simon previously held several management
positions at Integrated Process Equipment Corporation in the field operations
and process engineering areas. Mr. Simon holds an AS degree in Electro
Mechanical Technology from St. Phillips College in San Antonio, TX.
JULIAN W. GATES is a founder of CMP Solutions, Inc. and has served as
President of Advanced Technology Services, Inc. since July 24, 1998. Mr. Gates
previously was the President of Alternative Technical Services, Inc. and a Vice
President of European Semiconductor, Inc. He holds a BS degree in Business
Administration from Chapman University.
11
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, with respect to the years ended March 31,
1999, compensation awarded to, earned by or paid to the Company's Chief
Executive Officer and the four other most highly compensated executive officers
who earned over $100,000 in total compensation who were serving as executive
officers at March 31, 1999. No compensation information exists for the fiscal
years ending March 31, 1998 or 1997 as the Company began operations in July
1998.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY COMPENSATION OPTIONS/SARS COMPENSATION
POSITION YEAR ($)(1) BONUS ($) ($) (#) ($)
- --------------------- ---- ------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Don M. Jackson, Jr. 1999 89,100 0 0 0 0
Director, President
and Chief Executive
Officer
</TABLE>
- ----------
(1) Salary listed reflects the partial year salary earned by Dr. Jackson since
August 1, 1998. Dr. Jackson's annual salary for the fiscal year ending
March 31, 2000 is $225,000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
No stock options were granted during the last fiscal year to the executive
officers named in the Summary Compensation Table. Consequently, no Option/SAR
Grant table is being provided.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Because none of the executive officers named in the Summary Compensation
Table had been granted any options, no options were exercised during the last
fiscal year and no Aggregate Option/SAR Exercises or FY-End Option/SAR Values
table is being provided.
12
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's common stock at June 15, 1999 with respect to (i)
each person known to the Company to own beneficially more than five percent of
the outstanding shares of the Company's common stock, (ii) each director of the
Company and each director nominee, (iii) each of the named executive officers
and (iv) all directors and executive officers of the Company as a group.
SHARES BENEFICIALLY
OWNED (1)(2)
----------------------
IDENTITY OF STOCKHOLDER OR GROUP NUMBER PERCENT
- ------------------------------------- --------- -------
Santina Anness (3) 900,000 7.32
Vince E. Birdwell (4) 952,054 7.74
Mark A. DiSalvo (5) 900,000 7.32
Sass DiSalvo (6) 895,490 7.28
Julian W. Gates 1,186,200 9.64
Dr. Don M. Jackson, Jr. 1,186,200 9.64
Kevin B. Jackson (7) 948,960 7.71
Paul D. Jackson 1,186,200 9.64
Maurice L. McGill (8) 49,000 *
L. Richard Myers 238,792 1.94
Parog S. Modi 1,186,200 9.64
Dr. Daniel L. Shunk (10) 49,000 *
Mark G. Simon 1,186,200 9.64
All directors and executive officers 6,030,552 49.0
as a group (8 persons) (11)
- ----------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares which may be acquired upon exercise of stock options which are
currently exercisable or which become exercisable within 60 days of the
date of the table are deemed beneficially owned by the optionee. Except as
indicated by footnote, and subject to community property laws where
applicable, the persons or entities named in the table above have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them.
(2) Unless otherwise noted, the mailing address for each of the beneficial
owners listed below is c/o SITEK, Incorporated, 1817 West Fourth Street,
Tempe, Arizona 85281. All information was obtained from the Company's stock
registry as of June 15, 1999.
(3) Ms. Anness whose mailing address is 9554 Via Salerno, Burbank, CA 91504, is
the registered owner of 900,000 shares of the Company's common stock and
the mother-in-law of Mark A. DiSalvo, a former director and officer of a
predecessor company, Dentmart Group, Inc.
(4) Mr. Birdwell is an employee of the Company and acts as Secretary of CMP
Solutions, Inc.
(5) Mr. DiSalvo was a director and officer of a predecessor Company to SITEK,
Incorporated. His address is 192 Searidge Court, Shell Beach, CA 93449.
13
<PAGE>
(6) Ms. DiSalvo, who mailing address is 248 North California Street, Burbank,
CA 91505, is the registered owner of 895,490 shares of the Company's common
stock and the mother of Mark A. DiSalvo, a former director and officer of a
predecessor company, Dentmart Group, Inc.
(7) Mr. Kevin B. Jackson is the President of VSM Corporation which was recently
acquired by the Company.
(8) Includes 25,000 shares Mr. McGill has a right to acquire upon exercise of
stock options.
(9) Includes 25,000 shares Mr. Meyers has a right to acquire upon exercise of
stock options.
(10) Includes 25,000 shares Dr. Shunk has a right to acquire upon exercise of
stock options.
(11) Includes 75,000 shares directors have a right to acquire upon exercise of
stock options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For a period of six months during the fiscal year ending March 31, 1999 the
Company leased several pieces of semiconductor equipment from Mark A. DiSalvo, a
beneficial owner of more than five percent of the Company's outstanding stock
and a former officer and director of the Company's predecessor company, Dentmart
Group, Inc. The total cost for the six-month lease was $42,000. At the end of
the lease in February 1999 the Company purchased the equipment from Mr. DiSalvo
for $340,000.
The Company has a line of credit with TLD Funding Group expiring February
4, 2001, with maximum borrowings of $207,181. Interest is due monthly on the
unpaid balance at an interest rate of 1.5 percent. The collateral for this line
of credit consists of the personal guarantees by Dr. Don M. Jackson, Jr., a
director, the President and Chief Executive Officer of the Company, and Mark G.
Simon, the President of CMP Solutions, Inc., a wholly owned subsidiary. Another
company, Global Semiconductor Technologies, Inc. is also guarantor on this line
of credit. Dr. Don M. Jackson, Jr. is a shareholder, the President and the sole
director of Global Semiconductor Technologies, Inc.; Paul D. Jackson, secretary
of the Company, is also the Executive Vice President, Secretary and a
shareholder of Global Semiconductor Technologies, Inc. Outstanding borrowings
under this line of credit with TLD Funding Group were $207,181 at March 31,
1999.
During the period ending March 31, 1999 Global Semiconductor Technologies,
Inc. made advances to SITEK for administrative services and rental payment on
the shared facilities. The advances totaled $227,478 at March 31, 1999. Dr. Don
M. Jackson, Jr., a director, President and the Chief Executive Officer of SITEK
is also a director, the President and Chief Executive Officer of Global
Semiconductor Technologies, Inc. Paul D. Jackson, Secretary of SITEK is also the
Executive Vice President, Secretary and shareholder of Global Semiconductor
Technologies, Inc.
During the fiscal year ending March 31, 1999, Julian Gates, President of
Advanced Technology Services, Inc., a wholly owned subsidiary of the Company,
paid certain expenses on behalf of the Company totaling $160,940. The advances
are short term and none interest bearing and will be repaid by the Company
within 12 months.
As of March 31, 1999 the Company owed Mark A. DiSalvo, a beneficial owner
of more than five percent of the Company's outstanding common stock, $125,000
for services related to the July 14, 1998 Stock Purchase and Exchange Agreement
between CMP Solutions, Inc. and SITEK, Incorporated. In addition the Company
paid Mr. DiSalvo $19,200 during the fiscal year ending March 31, 1999 for
consulting services.
Officers, directors and/or five percent beneficial owners Vince E.
Birdwell, Julian W. Gates, Dr. Don M. Jackson, Jr., Paul D. Jackson, L. Richard
Myers, Parag S. Modi and Mark G. Simons obtained their positions and/or holdings
of the Company in connection with the July 14, 1998 Stock Purchase and Exchange
Agreement between CMP Solutions and SITEK, Incorporated, then a wholly owned
subsidiary of the Dentmart Group, Inc. whose sole director, officer and
shareholder at the time was Mark A. DiSalvo. In accordance with the terms of the
exchange agreement the Dentmart Group, Inc. entered into a reverse merger with
its wholly owned subsidiary, SITEK, Incorporated from which SITEK, Incorporated
was the surviving company. The shareholders of CMP then exchanged their shares
of CMP Solutions for the number of shares of SITEK, Incorporated which are
listed in the Security Ownership of Certain Beneficial Owners and Management
table, except for outside director, Mr. Myers, whose shareholdings reflect
additional stock option grants and stock paid for services provided as a
director.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SITEK, INCORPORATED
Date: July 29, 1999 By /s/ Don M. Jackson, Jr.
-------------------------------------
Dr. Don M. Jackson, Jr.
President and Chief Executive Officer
By /s/ Gloria Zemla
-------------------------------------
Gloria Zemla
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Don M. Jackson, Jr. Director July 29, 1999
- ------------------------
Dr. Don M. Jackson, Jr.
/s/ L. Richard Myers Director July 29, 1999
- ------------------------
Mr. L. Richard Myers
/s/ Maurice L. McGill Director July 29, 1999
- ------------------------
Mr. Maurice L. McGill
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION INCORPORATED BY REFERENCE TO:
- ----------- --------------------------------------- ----------------------------------------
<S> <C> <C>
2.1 A copy of the Certificate of Ownership Form 8-K filed with the SEC on August 17, 1998
and Merger merging DentMart into SITEK,
including the Plan and Agreement of Merger
2.2 A copy of the Articles of Merger or Form 8-K filed with the SEC on August 17, 1998
Share Exchange filed in the State of Colorado
3.1 Articles of Incorporation of Registrant Form 8-K filed with the SEC on August 17, 1998
3.2 Bylaws of Registrant Form 10-K filed with the SEC on April 17, 1998
10.1 A copy of the Exchange Agreement Form 8-K filed with the SEC on August 17, 1998
10.2 A copy of the Registration Rights Agreement Form 8-K filed with the SEC on August 17, 1998
10.3 Equipment Lease dated February 5, 1999, Form 10-Q Filed with the SEC on February 26, 1999
as Amended
10.4 Line of Credit Agreement with Form 10-K Filed with the SEC on July 14, 1999
TLD Funding Group dated February 5, 1999
10.5 Finance Agreement with TLD Funding Form 10-K Filed with the SEC on July 14, 1999
Group dated March 19, 1999
10.6 $5.2 million Promissory Note and Equipment Form 10-K Filed with the SEC on July 14, 1999
Finance Agreement dated March 11, 1999
10.7 Amendment to Equipment Finance Agreement Form 10-K Filed with the SEC on July 14, 1999
10.8 Warrant Agreement Form 10-K Filed with the SEC on July 14, 1999
10.9 Compiled Lease Agreement for CMP Filed Herewith
Solutions, Inc.'s offices
16.1 Letter from Gerald R. Perlstein, C.P.A. Form 8-K filed with the SEC on December 7, 1998
to Securities and Exchange Commission
regarding resignation as Registrant's
principal accountant
16.2 Resignation Letter from Gereld R. Form 10-K Filed with the SEC on July 14, 1999
Perlstein to SITEK Board of Directors
21.1 Subsidiaries Form 10-K Filed with the SEC on July 14, 1999
27.1 Financial Data Schedule Form 10-K Filed with the SEC on July 14, 1999
</TABLE>
LEASE
[Compiled to include all amendments]
INDUSTRIAL - GROSS
REFERENCE PAGE
LEASE # __51_____
BUILDING: HOHOKAM 10 EAST PARK
HOHOKAM 10 INDUSTRIAL PARK,
a property of RREEF Performance
Partnership-I, L.P., an Illinois limited
partnership
LANDLORD'S ADDRESS: c/o RREFF Management Company
2201 East Camelback Road, Suite 230B
Phoenix, Arizona 85016
LEASE REFERENCE DATE: September 29, 1998
TENANT: CMP Solutions, Inc., an Arizona
Corporation
TENANT'S ADDRESS: 2450 W. 12Th Street, Suites #2 & 3, Tempe,
Arizona 85281
PREMISES IDENTIFICATION: 2450 W. 12th Street, Suites #302 & 303
Tempe, Arizona 85281
(For Outline of Premises See Exhibit A)
USE: Office/warehouse for
Semiconductor Wafer Processing
PREMISES RENTABLE AREA: approximately 4,284 SQ. FT.
SCHEDULED COMMENCEMENT DATE: October 1, 1998
TERMINATION DATE: September 30, 2001
TERM OF LEASE: 3 years, 0 months and 0 days beginning on
the commencement date and ending on the
termination date (unless sooner terminated
pursuant to the lease).
INITIAL ANNUAL RENT (ARTICLE 3): $41,126.40 See Article 38
INITIAL MONTHLY INSTALLMENT OF $3,427.20 See Article 38
ANNUAL RENT (ARTICLE 3):
<PAGE>
BASE YEAR (TAXES, INSURANCE &
DIRECT EXPENSE): 1998
TENANT'S PROPORTIONATE SHARE: .02%, consisting of the ratio that the
rentable area of the Premises bears to the
rentable area of the Building or Project
which is currently at 256,920 sq. ft.
SECURITY DEPOSIT: $3,500.00
ASSIGNMENT/SUBLETTING FEE: $500.00
REAL ESTATE BROKER DUE RREEF Management Company
COMMISSION:
The Reference Page information is incorporated into and made a part of the
Lease. In the event of any conflict between any Reference Page information and
the Lease, the Lease shall control. This Lease includes Exhibits A through E all
of which are made a part of this lease.
LANDLORD: TENANT:
HOHOKAM 10 INDUSTRIAL PARK, CMP Solutions, Inc.
A Property of RREEF Performance an Arizona Corporation
Partnership-I, L.P.,
an Illinois Limited Partnership
By: RREEF MANAGEMENT COMPANY,
a Delaware Corporation
By: /s/ Sally Ryan By: /s/ Mark Simon
------------------------------ ------------------------
Sally Ryan Mark Simon
Title: District Manager Title: President
Date: 9/30/98 Date: 9/30/98
2
<PAGE>
LEASE
By this Lease Landlord leases to Tenant and Tenant leases from Landlord the
Premises in the Building as set forth and described on the Reference Page. The
Reference Page, including all terms defined thereon, is incorporated as part of
this Lease.
1. USE AND RESTRICTIONS ON USE.
1.1 The Premises are to be used solely for the purposes stated on the
Reference Page. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Building or injure, annoy, or disturb them or
allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose. Tenant shall not do, permit or suffer in, on, or about
the Premises the sale of any alcoholic liquor without the written consent of
Landlord first obtained, or the commission of any waste. Tenant shall comply
with all governmental laws, ordinances and regulations applicable to the use of
the Premises and its occupancy and shall promptly comply with all governmental
orders and directions for the correction, prevention and abatement of any
violations in or upon, or in connection with, the Premises, all at Tenant's sole
expense. Tenant shall not do or permit anything to be done on or about the
Premises or bring or keep anything into the Premises which will in any way
increase the rate of, invalidate or prevent the procuring of any insurance
protecting against loss or damage to the Building or any of its contents by fire
or other casualty or against liability for damage to property or injury to
persons in or about the Building or any part thereof.
1.2 Tenant shall not, and shall not direct, suffer or permit any of its
agents, contractors, employees, licensees or invitees to at any time handle,
use, manufacture, store or dispose of in or about the Premises or the Building
any (collectively "Hazardous Materials") flammables, explosives, radioactive
materials, hazardous wastes or materials, toxic wastes or materials, or other
similar substances, petroleum products or derivatives or any substance subject
to regulation by or under any federal, state and local laws and ordinances
relating to the protection of the environment or the keeping, use or disposition
of environmentally hazardous materials, substances, or wastes, presently in
effect or hereafter adopted, all amendments to any of them, and all rules and
regulations issued pursuant to any such laws or ordinances (collectively
"Environmental Laws"), nor shall Tenant suffer or permit any Hazardous Materials
to be used in any manner not fully in compliance with Environmental Laws, in the
Premises or the Building and appurtenant land or allow the environment to become
contaminated with any Hazardous Materials. Notwithstanding the foregoing, and
subject to Landlord's prior consent, Tenant may handle, store, use or dispose of
products containing small quantities of Hazardous Materials (such as aerosol
cans containing insecticides, toner for copiers, paints, paint remover and the
like) to the extent customary and necessary for the use of the Premises for
general office purposes; provided that Tenant shall always handle, store, use,
and dispose of any such Hazardous Materials in a safe and lawful manner and
never allow such Hazardous Materials to contaminate the Premises, Building and
appurtenant land or the environment. Tenant shall protect, defend, indemnify and
hold each and all of the Landlord Entities (as defined in Article 30) harmless
from and against any and all loss, claims, liability or costs (including court
costs and attorney's fees) incurred by reason of any actual or asserted failure
of Tenant to fully comply with all applicable Environmental Laws, or the
3
<PAGE>
presence, handling, use or disposition in or from the Premises of any Hazardous
Materials (even though permissible under all applicable Environmental Laws or
the provisions of this Lease), or by reason of any actual or asserted failure of
Tenant to keep, observe, or perform any provision of this Section 1.2.
2. TERM.
2.1 The Term of this Lease shall begin on the date ("Commencement Date")
which shall be the later of the Scheduled Commencement Date as shown on the
Reference Page and the date that Landlord shall tender possession of the
Premises to Tenant. Landlord shall tender possession of the Premises with all
the work, if any, to be performed by Landlord pursuant to Exhibit B to this
Lease substantially completed. Tenant shall deliver a punch list of items not
completed within 30 days after Landlord tenders possession of the Premises and
Landlord agrees to proceed with due diligence to perform its obligations
regarding such items. Landlord and Tenant shall execute a memorandum setting
forth the actual Commencement Date and Termination Date, if such dates differ
than that shown on the Reference Page.
2.2 Tenant agrees that in the event of the inability of Landlord to deliver
possession of the Premises on the Scheduled Commencement Date, Landlord shall
not be liable for any damage resulting from inability, but Tenant shall not be
liable for any rent until the time when Landlord can, after notice to Tenant,
deliver possession of the Premises to Tenant. No such failure to give possession
on the Scheduled Commencement Date shall affect the other obligations of Tenant
under this Lease, except that if Landlord is unable to deliver possession of the
Premises within one hundred twenty (120) days of the Scheduled Commencement Date
(other than as a result of strikes, shortages of materials or similar matters
beyond the reasonable control of Landlord and Tenant is notified by Landlord in
writing as to such delay), Tenant shall have the option to terminate this Lease
unless said delay is as a result of: (a) Tenant's failure to agree to plans and
specifications; (b) Tenant's request for materials, finishes or installations
other than Landlord's standard except those, if any, that Landlord shall have
expressly agreed to furnish without extension of time agreed by Landlord; (c)
Tenant's change in any plans or specifications; or (d) performance or completion
by a party employed by Tenant. If any delay is the result of any of the
foregoing, the Commencement Date and the payment of rent under this Lease shall
be accelerated by the number of days of such delay.
2.3 In the event Landlord shall permit Tenant to occupy the Premises prior
to the Commencement Date, such occupancy shall be subject to all the provisions
of this Lease. Said early possession shall not advance the Termination Date.
3. RENT.
3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to
time by paying the Monthly Installment of Rent then in effect on or before the
first day of each full calendar month during the Term, except that the first
month's rent shall be paid upon the execution of this Lease. The Monthly
Installment of Rent in effect at any time shall be one-twelfth of the Annual
Rent in effect at such time. Rent for any period during the Term which is less
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than a full month shall be a prorated portion of the Monthly Installment of Rent
based upon a thirty (30) day month. Said rent shall be paid to Landlord, without
deduction or offset and without notice or demand, at the Landlord's address, as
set forth on the Reference Page, or to such other person or at such other place
as Landlord may from time to time designate in writing.
3.2 Tenant recognizes that late payment of any rent or other sum due under
this Lease will result in administrative expense to Landlord, the extent of
which additional expense is extremely difficult and economically impractical to
ascertain. Tenant therefore agrees that if rent or any other sum is not paid
when due and payable pursuant to this Lease, a late charge shall be imposed in
an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) a sum
equal to five percent (5%) per month of the unpaid rent or other payment. The
amount of the late charge to be paid by Tenant shall be reassessed and added to
Tenant's obligation for each successive monthly period until paid. The
provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay
rent or other payments on or before the date on which they are due, nor do the
terms of this Section 3.2 in any way affect Landlord's remedies pursuant to
Article 19 in the event said rent or other payment is unpaid after date due.
4. RENT ADJUSTMENTS.
4.1 For the purposes of this Article 4, the following terms are defined as
follows:
4.1.1 Lease Year: Each calendar year falling partly or wholly within
the Term.
4.1.2 Direct Expenses: All direct costs of operation, maintenance,
repair and management of the Building (including the amount of any credits which
Landlord may grant to particular tenants of the Building in lieu of providing
any standard services or paying any standard costs described in this Section
4.1.2 for similar tenants), as determined in accordance with generally accepted
accounting principles, including the following costs by way of illustration, but
limitation: water and sewer charges; insurance charges of or relating to all
insurance policies and endorsements deemed by Landlord to be reasonably
necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas, and
waste disposal; the cost of janitorial services; the cost of security and alarm
services (including any central station signaling system); window cleaning
costs; labor costs; costs and expenses of managing the Building including
management fees; air conditioning maintenance costs; elevator maintenance fees
and supplies; material costs, equipment costs including the cost of maintenance,
repair and service agreements and rental and leasing costs; purchase costs of
equipment other than capital items; current rental and leasing costs of items
which would be amortizable capital items if purchased; tool costs; licenses,
permits and inspection fees; wages and salaries; employee benefits and payroll
taxes; accounting and legal fees; any sales, use or service taxes incurred in
connection therewith. Direct Expenses shall not include depreciation or
amortization of the Building or equipment in the Building except as provided
herein, loan principal payments, costs of alterations of tenants' premises,
leasing commissions, interest expenses on long-term borrowings, advertising
costs or management salaries for executive personnel other than personnel
located at the Building. In addition, Landlord shall be entitled to amortize and
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include as an additional rental adjustment; (i) an allocable portion of the
costs of capital improvement items which are reasonably calculated to reduce
operating expenses; (ii) fire sprinklers and suppression systems and other life
safety systems; and (iii) other capital expenses which are required under any
governmental laws, regulations or ordinances which were not applicable to the
Building at the time it was constructed. All such costs shall be amortized over
the reasonable life of such improvements in accordance with such reasonable life
and amortization schedules as shall be determined by Landlord in accordance with
generally accepted accounting principles, with interest on the unamortized
amount at one percent (1%) in excess of the prime lending rate announced from
time to time as such by The Northern Trust Company of Chicago, Illinois.
4.1.3 Taxes: Real estate taxes and any other taxes, charges and
assessments which are levied with respect to the Building or the land
appurtenant to the Building, or with respect to any improvements, fixtures and
other equipment or other property of Landlord, real or personal, located in the
Building and used in connection with the operation of the Building and said
land, any payments to any ground lessor in reimbursement of tax payments made by
such lessor; and all fees, expenses and costs incurred by Landlord in
investigating, protecting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any Taxes to
be paid by Landlord in any Lease Year. Taxes shall not include any corporate
franchise, or estate, inheritance or net income tax, or tax imposed upon any
transfer by Landlord of its interest in this Lease or the Building.
4.2 If in any Lease Year, (i) Direct Expenses paid or incurred shall exceed
Direct Expenses paid or incurred in the Base Year (Direct Expenses) and/or (ii)
Taxes paid or incurred by Landlord in any Lease Year shall exceed the amount of
such Taxes which became due and payable in the Base Year (Taxes), Tenant shall
pay as additional rent for such Lease Year Tenant's Proportionate Share of such
excess.
4.3 The annual determination of Direct Expenses shall be made by Landlord
and, if certified by a nationally recognized firm of public accountants selected
by Landlord, shall be binding upon Landlord and Tenant. Tenant may review the
books and records supporting such determination in the office of Landlord, or
Landlord's agent, during normal business hours, upon giving Landlord five (5)
days advance written notice within sixty (60) days after receipt of such
determination, but in no event more often than once in any one year period. In
the event that during all or any portion of any Lease Year, the Building is not
fully rented and occupied Landlord may make any appropriate adjustment in
occupancy-related Direct Expenses for such year for the purpose of avoiding
distortion of the amount of such Direct Expenses to be attributed to Tenant by
reason of variation in total occupancy of the Building, by employing sound
accounting and management principles to determine Direct Expenses that would
have been paid or incurred by Landlord had the Building been fully rented and
occupied, and the amount so determined shall be deemed to have been Direct
Expenses for such Lease Year.
4.4 Prior the actual determination thereof for a Lease Year, Landlord may
from time to time estimate Tenant's liability for Direct Expenses and/or Taxes
under Section 4.2, Article 6 and Article 28 for the Lease Year or portion
thereof. Landlord will give Tenant written notification of the amount of such
estimate and Tenant agrees that it will pay, by increase of its Monthly
Installments of Rent due in such Lease Year, additional rent in the amount of
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such estimate. Any such increased rate of Monthly Installments of Rent pursuant
to this Section 4.4 shall remain in effect until further written notification to
Tenant pursuant hereto.
4.5 When the above mentioned actual determination of Tenant's liability for
Direct Expenses and/or Taxes is made for any Lease Year and when Tenant is so
notified in writing, then:
4.5.1 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Direct Expenses and/or Taxes for the Lease Year is
less than Tenant's liability for Direct Expenses and/or Taxes, then Tenant shall
pay such deficiency to Landlord as additional rent in one lump sum within thirty
(30) days of receipt of Landlord's bill therefor; and
4.5.2 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Direct Expenses and/or Taxes for the Lease Year is
more than Tenant's liability for Direct Expenses and/or Taxes, then Landlord
shall credit the difference against the then next due payments to be made by
Tenant under this Article 4. Tenant shall not be entitled to a credit by reason
of actual Direct Expenses and/or Taxes in any Lease Year being less than Direct
Expenses and/or Taxes in the Base Year (Direct Expenses and/or Taxes).
4.6 If the Commencement Date is other than January 1 or if the Termination
Date is other than December 31, Tenant's liability for Direct Expenses and Taxes
for the Lease Year in which said Date occurs shall be prorated based upon a
three hundred sixty-five (365) day year.
5. SECURITY DEPOSIT.
Tenant shall deposit the Security Deposit with Landlord upon the execution
of this Lease. Said sum shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease
to be kept and performed by Tenant and not as an advance rental deposit or as a
measure of Landlord's damage in case of Tenant's default. If Tenant defaults
with respect to any provision of this Lease, Landlord may use any part of the
Security Deposit for the payment of any rent or any other sum in default, or for
the payment of any amount which Landlord may spend or become obligated to spend
by reason of Tenant's default, or to compensate Landlord for any other loss or
damage which Landlord may suffer by reason of Tenant's default. If any portion
is so used, Tenant shall within five (5) days after written demand therefor,
deposit with Landlord an amount sufficient to restore the Security Deposit to
its original amount and Tenant's failure to do so shall be a material breach of
this Lease. Except to such extent, if any, as shall be required by law, Landlord
shall not be required to keep the Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. If Tenant
shall fully and faithfully perform every provision of this Lease to be performed
by it, the Security Deposit or any balance thereof shall be returned to Tenant
at such time after termination of this Lease when Landlord shall have determined
that all of Tenant's obligations under this Lease have been fulfilled.
6. ALTERATIONS.
6.1 Except for those, if any, specifically provided for in Exhibit B to
this Lease, Tenant shall not make or suffer to be made any alterations,
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additions, or improvements, including, but not limited to, the attachment of any
fixtures or equipment in, on, or to the Premises or any part thereof or the
making of any improvements as required by Article 7, without the prior written
consent of Landlord. When applying for such consent, Tenant shall, if requested
by Landlord, furnish complete plans and specifications for such alterations,
additions and improvements.
6.2 In the event Landlord consents to the making of any such alteration,
addition or improvement by Tenant, the same shall be made using Landlord's
contractor (unless Landlord agrees otherwise) at Tenant's sole cost and expense.
If Tenant shall employ any Contractor other than Landlord's Contractor and such
other Contractor or any Subcontractor of such other Contractor shall employ any
non-union labor or supplier, Tenant shall be responsible for any and all delays,
damages and extra costs suffered by Landlord as a result of any dispute with any
labor unions concerning the wage, hours, terms or conditions of the employment
of any such labor. In any event Landlord may charge Tenant a reasonable charge
to cover its overhead as it relates to such proposed work.
6.3 All alterations, additions or improvements proposed by Tenant shall be
constructed in accordance with all government laws, ordinances, rules and
regulations and Tenant shall, prior to construction, provide the additional
insurance required under Article 11 in such case, and also all such assurances
to Landlord, including but not limited to waivers of lien, surety company
performance bonds and personal guaranties of individuals of substance as
Landlord shall require to assure payment of the costs thereof and to protect
Landlord and the Building and appurtenant land against any loss from any
mechanic's, materialmen's or other liens. Tenant shall pay in addition to any
sums due pursuant to Article 4, any increase in real estate taxes attributable
to any such alteration, addition or improvement for so long, during the Term, as
such increase is ascertainable; at Landlord's election said sums shall be paid
in the same way as sums due under Article 4.
6.4 All alterations, additions and improvements in, on, or to Premises made
or installed by Tenant, including carpeting, shall be and remain the property of
Tenant during the Term but, excepting furniture, furnishings, movable partitions
of less than full height from floor to ceiling and other trade fixtures, shall
become a part of the realty and belong to Landlord without compensation to
Tenant upon the expiration of sooner termination of the Term, at which time
title shall pass to Landlord under this Lease as by a bill of sale, unless
Landlord elects otherwise. Upon such election by Landlord, Tenant shall upon
demand by Landlord, at Tenant's sole cost and expense, forthwith and with all
due diligence remove any such alterations, additions or improvements which are
designated by Landlord to be removed, and Tenant shall forthwith and with all
due diligence, at its sole cost and expense, repair and restore the Premises to
their original condition, reasonable wear and tear and damage by fire or other
casualty excepted. Tenant shall remove the existing clean room from the premises
upon the expiration of the Lease term, repairing any damage caused by the
removal and returning the space occupied by the clean room to leasable
condition.
7. REPAIR.
7.1 Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises, except as specified in Exhibit B if attached to
this Lease and except that Landlord shall repair and maintain the structural
portions of the roof, walls and foundation of the Building. By taking possession
of the Premises, Tenant accepts them as being in good order, condition and
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repair and in the condition in which Landlord is obligated to deliver them. It
is hereby understood and agreed that no representations respecting the condition
of the Premises or the Building have been made by Landlord to Tenant, except as
specifically set forth in this Lease. Landlord shall not be liable for any
failure to make any repairs or to perform any maintenance unless such failure
shall persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Landlord by Tenant. Landlord shall be
responsible for any needed repairs or replacements to the existing HVAC system
during the initial ninety (90) days of the Lease term.
7.2 Tenant shall at its own cost and expense keep and maintain all parts of
the Premises and such portion of the Building and improvements as are within the
exclusive control of Tenant in good condition, promptly making all necessary
repairs and replacements, whether ordinary or extraordinary, with materials and
workmanship of the same character, kind and quality as the original (including,
but not limited to, repair and replacement of all fixtures installed by Tenant,
water heaters serving the Premises, windows, glass and plate glass, doors,
exterior stairs, skylights, any special office entries, interior walls and
finish work, floors and floor coverings, heating and air conditioning systems
serving the Premises, electrical systems and fixtures, sprinkler systems, dock
boards, truck doors, dock bumpers, plumbing work and fixtures, and performance
of regular removal of trash and debris). Tenant as part of its obligations
hereunder shall keep the Premises in a clean and sanitary condition. Tenant
will, as far as possible keep all such parts of the Premises from deterioration
due to ordinary wear and from falling temporarily out of repair, and upon
termination of this Lease in any way Tenant will yield up the Premises to
Landlord in good condition and repair, loss by fire or other casualty excepted
(but not excepting any damage to glass). Tenant shall, at its own cost and
expense, repair any damage to the Premises or the Building resulting from and/or
caused in whole or in part by the negligence or misconduct of Tenant, its
agents, employees, invitees, or any other person entering upon the Premises as a
result of Tenant's business activities or caused by Tenant's default hereunder.
7.3 Except as provided in Article 22, there shall be no abatement of rent
and no liability of Landlord by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or to
fixtures, appurtenances and equipment in the Building. Except to the extent, if
any, prohibited by law, Tenant waives the right to make repairs at Landlord's
expense under any law, statute or ordinance now or hereafter in effect.
7.4 Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Landlord for servicing all heating and air conditioning systems and
equipment serving the Premises (and a copy thereof shall be furnished to
Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual and must become
effective within thirty (30) days of the date Tenant takes possession of the
Premises. Landlord may, upon notice to Tenant, enter into such a
maintenance/service contract on behalf of Tenant or perform the work and in
either case, charge Tenant the cost thereof along with a reasonable amount for
Landlord's overhead.
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8. LIENS.
Tenant shall keep the Premises, the Building and appurtenant land and
Tenant's leasehold interest in the Premises free from any liens arising out of
any services, work or materials performed, furnished, or contracted for by
Tenant, or obligations incurred by Tenant. In the event that Tenant shall not,
within ten (10) days following the imposition of any such lien, either cause the
same to be released of record or provide Landlord with insurance against the
same issued by a major title insurance company or such other protection against
the same as Landlord shall accept, Landlord shall have the right to cause the
same to be released by such means as it shall deem proper, including payment of
the claim giving rise to such lien. All such sums paid by Landlord and all
expenses incurred by it in connection therewith shall be considered additional
rent and shall be payable to it by Tenant on demand.
9. ASSIGNMENT AND SUBLETTING.
9.1 Tenant shall not have the right to assign or pledge this Lease or to
sublet the whole or any part of the Premises whether voluntarily or by operation
of law, or permit the use or occupancy of the Premises by anyone other than
Tenant, and shall not make, suffer or permit such assignment, subleasing or
occupancy, without the prior written consent of Landlord, and said restrictions
shall be binding upon any and all assignees of the Lease and subtenants of the
Premises. In the event Tenant desires to sublet, or permit such occupancy of,
the Premises, or any portion thereof, or assign this Lease, Tenant shall give
written notice thereof to Landlord at least ninety (90) days but no more than
one hundred eighty (180) days prior to the proposed commencement date of such
subletting or assignment, which notice shall set forth the name of the proposed
subtenant or assignee, the relevant terms of any sublease or assignment and
copies of financial reports and other relevant financial reports and other
relevant financial information of the proposed subtenant or assignee.
9.2 Notwithstanding any assignment or subletting, permitted or otherwise,
Tenant shall at all times remain directly, primarily and fully responsible and
liable for the payment of the rent specified in this Lease and for compliance
with all of its other obligations under the terms, provisions and covenants of
this Lease. Upon the occurrence of an Event of Default, if the Premises or any
part of them are then assigned or sublet, Landlord, in addition to any other
remedies provided in this Lease or provided by law, may, at its option, collect
directly from such assignee or subtenant all rents due and becoming due to
Tenant under such assignment or sublease and apply such rent against any sums
due to Landlord from Tenant under this Lease, and no such collection shall be
construed to constitute a novation or release of Tenant from the further
performance of Tenant's obligations under this Lease.
9.3 In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event
of any proposed subletting or assignment, to terminate this Lease, or in the
case of a proposed subletting of less than the entire Premises, to recapture the
portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised, if at all, by
Landlord giving Tenant written notice given by Landlord to Tenant within sixty
(60) days following Landlord's receipt of Tenant's written notice as required
above. If this Lease shall be terminated with respect to the entire Premises
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pursuant to this Section, the Term of this Lease shall end on the date stated in
Tenant's notice as the effective date of the sublease or assignment as if that
date had been originally fixed in this Lease for the expiration of the Term. If
Landlord recaptures under this Section only a portion of the Premises, the rent
to be paid from time to time during the unexpired Term shall abate
proportionately based on the proportion by which the approximate square footage
of the remaining portion of the Premises shall be less than that of the Premises
as of the date immediately prior to such recapture. Tenant shall, at Tenant's
own cost and expense, discharge in full any outstanding commission obligation on
the part of the Landlord with respect to this Lease, and any commissions which
may be due and owing as a result of any proposed assignment or subletting,
whether or not the Premises are recaptured pursuant to this Section 9.3 and
rented by Landlord to the proposed tenant or any other tenant.
9.4 In the event that Tenant sells, sublets, assigns or transfers this
Lease, Tenant shall pay to Landlord as additional rent an amount equal to one
hundred percent (100%) of any Increased Rent (as defined below) when and as such
Increased Rent is received by Tenant. As used in this Section, "Increased Rent"
shall mean the excess of (i) all rent and other consideration which Tenant is
entitled to receive by reason of any sale, sublease, assignment or purposes of
the foregoing, any consideration received by Tenant in form other than cash
shall be valued at its fair market value as determined by Landlord in good
faith.
9.5 Notwithstanding any other provision hereof, Tenant shall have no right
to make (and Landlord shall have the absolute right to refuse consent to) any
assignment of this Lease or sublease of any portion of the Premises if at the
time of either Tenant's notice of the proposed assignment or sublease or the
proposed commencement date thereof, there shall exist any uncured default of
Tenant or matter which will become a default of Tenant which passage of time
unless cured, of if the proposed assignee or sublessee is an entity: (a) with
which Landlord is already in negotiation as evidenced by the issuance of a
written proposal; (b) is already an occupant of the Building unless Landlord is
unable to provide the amount of space required by such occupant; (c) is a
governmental agency; (d) is incompatible with the character of occupancy of the
Building; or (e) would subject the Premises to a use which would: (i) involve
increased personnel or wear upon the Building; (ii) violate any exclusive right
granted to another tenant of the Building; (iii) require any addition to or
modification of the Premises or the Building in order to comply with building
code or other governmental requirements; or, (iv) involve a violation of Section
1.2. Tenant expressly agrees that Landlord shall have the absolute right to
refuse consent to any such assignment or sublease and that for the purposes of
any statutory or other requirement of reasonableness on the part of Landlord
such refusal shall be reasonable.
9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the
Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord's
costs, including attorney's fees, incurred in investigating and considering any
proposed or purported assignment or pledge of this Lease or sublease of any of
the Premises, regardless of whether Landlord shall consent to, refuse consent,
or determine that Landlord's consent is not required for, such assignment,
pledge or sublease. Any purported sale, assignment, mortgage, transfer of this
Lease or subletting which does not comply with the provisions of this Article 9
shall be void.
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9.7 If Tenant is a corporation, partnership or trust, any transfer or
transfers of or change or changes within any twelve month period in the number
of outstanding voting shares of the corporation, the general partnership
interests in the partnership or the identify of the persons or entities
controlling the activities of such partnership or trust resulting in the persons
or entities owning or controlling a majority of such shares, partnership
interests or activities of such partnership or trust at the beginning of such
period no longer having such ownership or control shall be regarded as
equivalent to an assignment of this Lease to the persons or entities acquiring
such ownership or control and shall be subject to all the provisions of this
Article 9 to the same extent and for all intents and purposes as though such an
assignment.
10. INDEMNIFICATION.
None of the Landlord Entities shall be liable and Tenant hereby waives all
claims against them for any damage to any property or any injury to any person
in or about the Premises or the Building by or from any cause whatsoever
(including without limiting the foregoing, rain or water leakage of any
character from the roof, windows, walls, basement, pipes, plumbing works or
appliances, the Building not being in good condition or repair, gas, fire, oil,
electricity or theft), except to the extent caused by or arising from the gross
negligence or willful misconduct of Landlord or its agents, employees or
contractors. Tenant shall protect, indemnify and hold the Landlord Entities
harmless from and against any and all loss, claims, liability or costs
(including court costs and attorneys' fees) incurred by reason of (a) any damage
to any property (including but no limited to property of any Landlord Entity) or
any injury (including but not limited to death) to any person occurring in, or
about the Premises or the Building to the extent that such injury or damage
shall be caused by or arise from any actual or alleged act, neglect, fault, or
omission by or of Tenant, its agents, servants, employees, invitees, or visitors
to meet any standards imposed by any duty with respect to the injury or damage;
(b) the conduct or management of any work or thing whatsoever done by the Tenant
in or about the Premises or from transactions of the Tenant concerning the
Premises; (c) Tenant's failure to comply with any and all government laws,
ordinances and regulations applicable to the condition or use of the Premises or
its occupancy; or (d) any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of the Tenant to be
performed pursuant to this Lease. The provisions of this Article shall survive
the termination of this Lease with respect to any claims or liability accruing
prior to such termination.
11. INSURANCE.
11.1 Tenant shall keep in force throughout the Term: (a) a Commercial
General Liability insurance policy or policies to protect the Landlord Entities
against any liability to the public or to any invitee of Tenant or a Landlord
Entity incidental to the use of or resulting from any accident occurring in or
upon the Premises with a limit of not less than $1,000,000.00 per occurrence and
not less than $2,000,000.00 in the annual aggregate, or such larger amount as
Landlord may prudently require from time to time, covering bodily injury and
property damage liability and $1,000,000 products/completed operations
aggregate; (b) Business Auto Liability covering owned, non-owned and hired
vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker's Compensation Laws with limits at
least as required by statute; (d) Employers Liability with limits of $500,000
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each accident, $500,000 disease policy limit, $500,000 disease--each employee;
(e) All Risk or Special Form coverage protecting Tenant against loss of or
damage to Tenant's alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business
personal property situated in or about the Premises to the full replacement
value of the property so insured; and (f) Business Interruption Insurance with
limit of liability representing loss of at least approximately six months of
income.
11.2 Each of the aforesaid policies shall (a) be provided at Tenant's
expense; (b) name the Landlord and the building management company, if any, as
additional insureds; (c) to be issued by an insurance company with a minimum
Best's rating of "AVII" during the Term; and (d) provide that said insurance
shall not be canceled unless thirty (30) days prior written notice (ten days for
non-payment of premium) shall have been given to Landlord; and said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant upon
the Commencement Date and at least thirty (30) days prior to each renewal of
said insurance.
11.3 Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises ("Work") the aforesaid insurance
protection must extend to and include injuries to persons and damage to property
arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.
12. WAIVER OF SUBROGATION.
So long as their respective insurers so permit, Tenant and Landlord hereby
mutually waive their respective rights of recovery against each other for any
loss insured by fire, extended coverage, All Risks or other insurance now or
hereafter existing for the benefit of the respective party but only to the
extent of the net insurance proceeds payable under such policies. Each party
shall obtain any special endorsements required by their insurer to evidence
compliance with the aforementioned waiver.
13. SERVICES AND UTILITIES.
Tenant shall pay for all water, gas, heat, light, power, telephone, sewer,
sprinkler system charges and other utilities and services used on or from the
Premises, together with any taxes, penalties, and surcharges or the like
pertaining thereto and any maintenance charges for utilities. Tenant shall
furnish all electric light bulbs, tubes and ballasts, battery packs for
emergency lighting and fire extinguishers. If any such services are not
separately metered to Tenant, Tenant shall pay such proportion of all charges
jointly metered with other premises as determined by Landlord, in its sole
discretion, to be reasonable. Any such charges paid by Landlord and assessed
against Tenant shall be immediately payable to Landlord on demand and shall be
additional rent hereunder. Landlord shall in no event be liable for any
interruption or failure of utility services on or to the Premises.
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14. HOLDING OVER.
Tenant shall pay Landlord for each day Tenant retains possession of the
Premises or part of them after termination of this Lease by lapse of time or
otherwise at the rate ("Holdover Rate") which shall be 200% of the greater of:
(a) the amount of the Annual Rent for the last period prior to the date of such
termination plus all Rent Adjustments under Article 4; and (b) the then market
rental value of the Premises as determined by Landlord assuming a new lease of
the Premises of the then usual duration and other terms, in either case prorated
on a daily basis, and also pay all damages sustained by Landlord by reason of
such retention. If Landlord gives notice to Tenant of Landlord's election to
that effect, such holding over shall constitute renewal of this Lease for a
period from month to month or one year, whichever shall be specified in such
notice, in either case at the Holdover Rate, but if the Landlord does not so
elect, no such renewal shall result notwithstanding acceptance by Landlord of
any sums due hereunder after such termination; and instead, a tenancy at
sufferance at the Holdover Rate shall be deemed to have been created. In any
event, no provision of this Article 14 shall be deemed to waive Landlord's right
of reentry or any other right under this Lease or at law.
15. SUBORDINATION.
Without the necessity of any additional document being executed by Tenant
for the purpose of effecting a subordination, this Lease shall be subject and
subordinate at all times to ground or underlying leases and to the lien of any
mortgages or deeds of trust now or hereafter placed on, against or affecting the
Building. Landlord's interest or estate in the Building, or any ground or
underlying lease; provided, however, that if the lessor, mortgagee, trustee, or
holder of any such mortgage or deed of trust elects to have Tenant's interest in
this Lease be superior to any such instrument, then, by notice to Tenant, this
Lease shall be deemed superior, whether this Lease was executed before or after
said instrument. Notwithstanding the foregoing, Tenant covenants and agrees to
execute and deliver upon demand such further instruments evidencing such
subordination or superiority of this Lease as may be required by Landlord.
16. RULES AND REGULATIONS.
Tenant shall faithfully observe and comply with all the rules and
regulations as set forth in Exhibit C to this Lease and all reasonable
modifications of and additions to them from time to time put into effect by
Landlord. Landlord shall not be responsible to Tenant for the non-performance by
any other tenant or occupant of the Building of any such rules and regulations.
17. REENTRY BY LANDLORD.
17.1 Landlord reserves and shall at all times have the right to re-enter
the Premises to inspect the same, to show said Premises to prospective
purchasers, mortgagees or tenants, and to alter, improve or repair the Premises
and any portion of the Building, without abatement of rent, and may for that
purpose erect, use and maintain scaffolding, pipes, conduits and other necessary
structures and open any wall, ceiling or floor in and through the Building and
Premises where reasonably required by the character of the work to be performed,
provided entrance to the Premises shall not be blocked thereby, and further
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provided that the business of Tenant shall not be interfered with unreasonably.
Landlord agrees to obtain Tenant's permission, and follow Tenant's procedures
prior to entering the clean room inside the leased Premises, except in an
emergency affecting the entire building in which the Premises are located.
17.2 Landlord shall have the right at any time to change the arrangement
and/or locations of entrances, or passageways, doors and doorways, and
corridors, windows, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building is
commonly known. In the event that Landlord damages any portion of any wall or
wall covering, ceiling, or floor or floor covering within the Premises, Landlord
shall repair or replace the damaged portion to match the original as nearly as
commercially reasonable but shall not be required to repair or replace more than
the portion actually damaged.
17.3 Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 17. Tenant agrees to reimburse Landlord,
on demand, as additional rent, for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this Lease.
17.4 Landlord shall have the right to use any and all means which Landlord
may deem proper to open said doors in an emergency to obtain entry to any
portion of the Premises. As to any portion to which access cannot be had by
means of a key or keys in Landlord's possession, Landlord is authorized to gain
access by such means as Landlord shall elect and the cost of repairing any
damage occurring in doing so shall be borne by Tenant and paid to Landlord as
additional rent upon demand.
18. DEFAULT.
18.1 Except as otherwise provided in Article 20, the following events shall
be deemed to be Events of Default under this Lease:
18.1.1 The Tenant shall fail to pay when due any sum of money becoming
due to be paid to Landlord under this Lease, whether such sum be any installment
of the rent reserved by this Lease, any other amount treated as additional rent
under this Lease, or any other payment or reimbursement to Landlord required by
this Lease, whether or not treated as additional rent under this Lease, and such
failure shall continue for a period of five days after written notice that such
payment was not made when due, but if any such notice shall be given, for the
twelve month period commencing with the date of such notice, the failure to pay
within five days after due any additional sum of money becoming due to be paid
to Landlord under this Lease during such period shall be an Event of Default,
without notice.
18.1.2 Tenant shall fail to comply with any term, provision or
covenant of this Lease which is not provided for in another Section of this
Article and shall not cure such failure within twenty (20) days (forthwith, if
the failure involves a hazardous condition) after written notice of such failure
to Tenant.
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18.1.3 Tenant shall fail to vacate the Premises immediately upon
termination of this Lease, by lapse of time or otherwise, or upon termination of
Tenant's right to possession only.
18.1.4 Tenant shall become insolvent, admit in writing its inability
to pay its debts generally as they become due, file a petition in bankruptcy or
a petition to take advantage of any insolvency statute, make an assignment for
the benefit of creditors, make a transfer in fraud of creditors, apply for or
consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any other applicable law or statute of the
United States or any state thereof.
18.1.5 A court of competent jurisdiction shall enter an order,
judgment or decree adjudicating Tenant bankrupt, or appointing a receive of
Tenant, or of the whole or any substantial part of its property, without the
consent of Tenant, or approving a petition filed against Tenant seeking
reorganization or arrangement of Tenant under the bankruptcy laws of the United
States, as now in effect or hereafter amended, or any state thereof, and such
order, judgment or decree shall not be vacated or set aside or stayed within
thirty (30) days from the date of entry thereof.
19. REMEDIES.
19.1 Except as otherwise provided in Article 20, upon the occurrence of any
of the Events of Default described or referred to in Article 18, Landlord shall
have the option to pursue any one or more of the following remedies without any
notice or demand whatsoever, concurrently or consecutively and not
alternatively:
19.1.1 Landlord may, at its election, terminate this Lease or
terminate Tenant's right to possession only, without terminating the Lease.
19.1.2 Upon any termination of this Lease, whether by lapse of time or
otherwise, or upon any termination of Tenant's right to possession without
termination of the Lease, Tenant shall surrender possession and vacat the
Premises immediately, and deliver possession thereof to Landlord, and Tenant
hereby grants to Landlord full and free license to enter into and upon the
Premises in such event and to repossess Landlord of the Premises as of
Landlord's former estate and to expel or remove Tenant and any others who may be
occupying or be within the Premises and to remove Tenant's signs and other
evidence of tenancy and all other property of Tenant therefrom without being
deemed in any manner guilty of trespass, eviction or forcible entry or detainer,
and without incurring any liability for any damage resulting therefrom, Tenant
waiving any right to claim damages for such re-entry and expulsion, and without
relinquishing Landlord's right to rent or any other right given to Landlord
under this Lease or by operation of law.
19.1.3 Upon any termination of this Lease, whether by lapse of time or
otherwise, Landlord shall be entitled to recover as damages, all rent, including
any amounts treated as additional rent under this Lease, and other sums due and
payable by Tenant on the date of termination, plus as liquidated damages and not
as a penalty, an amount equal to the sum of: (a) an amount equal to the then
present value of the rent reserved in this Lease for the residue of the stated
Term of this Lease including any amounts treated as additional rent under this
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Lease and all other sums provided in this Lease to be paid by Tenant, minus the
fair rental value of the Premises for such residue; (b) the value of the time
and expense necessary to obtain a replacement tenant or tenants, and the
estimated expenses described in Section 19.1.4 relating to recovery of the
Premises, preparation for reletting and for reletting itself; and (c) the cost
of performing any other covenants which would have otherwise been performed by
Tenant.
19.1.4 Upon any termination of Tenant's right to possession only
without termination of the Lease:
19.1.4.1 Neither such termination of Tenant's right to possession
nor Landlord's taking and holding possession thereof as provided in Section
19.1.2 shall terminate the Lease or release Tenant, in whole or in part, from
any obligation, including Tenant's obligation to pay the rent, including any
amounts treated as additional rent, under this Lease for the full Term, and if
Landlord so elects Tenant shall pay forthwith to Landlord the sum equal to the
entire amount of the rent, including any amounts treated as additional rent
under this Lease, for the remainder of the Term plus any other sums provided in
this Lease to be paid by Tenant for the remainder of the Term.
19.1.4.2 Landlord may, but need not, relet the Premises or any
part thereof for such rent and upon such terms as Landlord, in its sole
discretion, shall determine (including the right to relet the premises for a
greater or lesser term than that remaining under this Lease, the right to relet
the Premises as a part of a larger area, and the right to change the character
or use made of the Premises). In connection with or in preparation for any
reletting, Landlord may, but shall not be required to, make repairs, alterations
and additions in or to the Premises and redecorate the same to the extent
Landlord deems necessary or desirable, and Tenant shall, upon demand, pay the
cost thereof, together with Landlord's expenses of reletting, including, without
limitation, any commission incurred by Landlord. If Landlord decides to relet
the Premises or a duty to relet is imposed upon Landlord by law, Landlord and
Tenant agree that nevertheless Landlord shall at most be required to use only
the same efforts Landlord then uses to lease premises in the Building generally
and that in any case that Landlord shall not be required to give any preference
or priority to the showing or leasing of the Premises over any other space that
Landlord may be leasing or have available and may place a suitable prospective
tenant in any such other space regardless of when such other space becomes
available. Landlord shall not be required to observe any instruction given by
Tenant about any reletting or accept any tenant offered by Tenant unless such
offered tenant has a credit-worthiness acceptable to Landlord and leases the
entire Premises upon terms and conditions including a rate of rent (after giving
effect to all expenditures by Landlord for tenant improvements, broker's
commissions and other leasing costs) all no less favorable to Landlord than as
called for in this Lease, nor shall Landlord be required to make or permit any
assignment or sublease for more than the current term or which Landlord would
not be required to permit under the provisions of Article 9.
19.1.4.3 Until such time as Landlord shall elect to terminate the
Lease and shall thereupon be entitled to recover the amounts specified in such
case in Section 19.1.3, Tenant shall pay to Landlord upon demand the full amount
of all rent, including any amounts treated as additional rent under this Lease
and other sums reserved in this Lease for the remaining Term, together with the
costs of repairs, alterations, additions, redecorating and Landlord's expenses
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of reletting and the collection of the rent accruing therefrom (including
attorney's fees and broker's commissions), as the same shall then be due or
become due from time to time, less only such consideration as Landlord may have
received from any reletting of the Premises; and Tenant agrees that Landlord may
file suits from time to time to recover any sums falling due under this Article
19 as they become due. Any proceeds of reletting by Landlord in excess of the
amount then owed by Tenant to Landlord from time to time shall be credited
against Tenant's future obligations under this Lease but shall not otherwise be
refunded to Tenant or inure to Tenant's benefit.
19.2 Landlord may, at Landlord's option, enter into and upon the Premises
if Landlord determines in its sole discretion that Tenant is not acting within a
commercially reasonable time to maintain, repair or replace anything for which
Tenant is responsible under this Lease and correct the same, without being
deemed in any manner guilty of trespass, eviction or forcible entry and detainer
and without incurring any liability for any damage or interruption of Tenant's
business resulting therefrom. If Tenant shall have vacated the Premises,
Landlord may at Landlord's option re-enter the Premises at any time during the
last six months of the then current Term of this Lease and make any and all such
changes, alterations, revisions, additions and tenant and other improvements in
or about the Premises as Landlord shall elect, all without any abatement of any
of the rent otherwise to be paid by Tenant under this Lease.
19.3 If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney
concerning or to enforce or defend any of Landlord's rights or remedies arising
under this Lease, Tenant agrees to pay all Landlord's attorney's fees so
incurred. Tenant expressly waives any right to: (a) trial by jury; and (b)
service of any notice required by any present or future law or ordinance
applicable to landlords or tenants but not required by the terms of this Lease.
19.4 Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies provided in this Lease or any other remedies provided
by law (all such remedies being cumulative), nor shall pursuit of any remedy
provided in this Lease constitute a forfeiture or waiver of any rent due to
Landlord under this Lease or of any damages accruing to Landlord by reason of
the violation of any of the terms, provisions and covenants contained in this
Lease.
19.5 No act or thing done by Landlord or its agents during the Term shall
be deemed a termination of this Lease or an acceptance of the surrender of the
Premises, and no agreement to terminate this Lease or accept a surrender of said
Premises shall be valid, unless in writing signed by Landlord. No waiver by
Landlord of any violation or breach of any of the terms, provisions and
covenants contained in this Lease shall be deemed or construed to constitute a
waiver of any other violation or breach of any of the terms, provisions and
covenants contained in this Lease. Landlord's acceptance of the payment of
rental or other payments after the occurrence of an Event of Default shall not
be construed as a waiver of such Default, unless Landlord so notifies Tenant in
writing. Forbearance by Landlord in enforcing one or more of the remedies
provided in this Lease upon an Event of Default shall not be deemed or construed
to constitute a waiver of such Default or of Landlord's right to enforce any
such remedies with respect to such Default or any subsequent Default.
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19.6 To secure the payment of all rentals and other sums of money becoming
due from Tenant under this Lease, Landlord shall have and Tenant grants to
Landlord a first lien upon the leasehold interest of Tenant under this Lease,
which lien may be enforced in equity, and a continuing security interest upon
all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract
rights, chattel paper and other personal property of Tenant situated on the
Premises, and such property shall not be removed therefrom without the consent
of Landlord until all arrearages in rent as well as any and all other sums of
money then due to Landlord under this Lease shall first have been paid and
discharged. In the event of a Default under this Lease, Landlord shall have, in
addition to any other remedies provided in this Lease or by law, all rights and
remedies under the Uniform Commercial Code, including without limitation the
right to sell the property described in this Section 19.6 at public or private
sale upon five (5) days' notice to Tenant. Tenant shall execute all such
financing statements and other instruments as shall be deemed necessary or
desirable in Landlord's discretion to perfect the security interest hereby
created.
19.7 Any and all property which may be removed from the Premises by
Landlord pursuant to the authority of this Lease or of law, to which Tenant is
or may be entitled, may be handled, removed and/or stored, as the case may be,
by or at the direction of Landlord but at the risk, cost and expense of Tenant,
and Landlord shall in no event be responsible for the value, preservation or
safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Landlord's possession or under Landlord's
control. Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal from the Premises shall, at Landlord's option, be
deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale
without further payment or credit by Landlord to Tenant.
20. TENANT'S BANKRUPTCY OR INSOLVENCY.
20.1 If at any time and for so long as Tenant shall be subjected to the
provisions of the United States Bankruptcy Code or other law of the United
States or any state thereof for the protection of debtors as in effect at such
time (each a "Debtor's Law"):
20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or
receiver of Tenant's assets (each a "Tenant's Representative") shall have no
greater right to assume or assign this Lease or any interest in this Lease, or
to sublease any of the Premises than accorded to Tenant in Article 9, except to
the extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor's Law. Without limitation of the
generality of the foregoing, any right of any Tenant's Representative to assume
or assign this Lease or to sublease any of the Premises shall be subject to the
conditions that:
20.1.1.1 Such Debtor's Law shall provide to Tenant's
Representative a right of assumption of this Lease which Tenant's Representative
shall have timely exercised and Tenant's Representative shall have fully cured
any default of Tenant under this Lease.
20.1.1.2 Tenant's Representative or the proposed assignee, as the
case shall be, shall have deposited with Landlord as security for the timely
payment of rent an amount equal to the larger of: (a) three months' rent and
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other monetary charges accruing under this Lease; and (b) any sum specified in
Article 5; and shall have provided Landlord with adequate other assurance of the
future performance of the obligations of the Tenant under this Lease. Without
limitation, such assurances shall include at least, in the case of assumption of
this Lease, demonstration to the satisfaction of the Landlord that Tenant's
Representative has and will continue to have sufficient unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Landlord that Tenant's Representative will have sufficient funds to
fulfill the obligations of Tenant under this Lease; and, in the case of
assignment, submission of current financial statements of the proposed assignee,
audited by an independent certified public accountant reasonably acceptable to
Landlord and showing a net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future performance by such assignee of
all of the Tenant's obligations under this Lease.
20.1.1.3 The assumption or any contemplated assignment of this
Lease or subleasing any part of the Premises, as shall be the case, will not
breach any provision in any other lease, mortgage, financing agreement or other
agreement by which Landlord is bound.
20.1.1.4 Landlord shall have, or would have had absent the
Debtor's Law, no right under Article 9 to refuse consent to the proposed
assignment or sublease by reason of the identity or nature of the proposed
assignee or sublessee or the proposed use of the Premises concerned.
21. QUIET ENJOYMENT.
Landlord represents and warrants that it has full right and authority to
enter into this Lease and that Tenant, while paying the rental and performing
its other covenants and agreements contained in this Lease, shall peaceably and
quietly have, hold and enjoy the Premises for the Term without hindrance or
molestation from Landlord subject to the terms and provisions of this Lease.
Landlord shall not be liable for any interference or disturbance by other
tenants or third persons, nor shall Tenant be released from any of the
obligations of this Lease because of such interference or disturbance.
22. DAMAGE BY FIRE, ETC.
22.1 In the event the Premises or the Building are damaged by fire or other
cause and in Landlord's reasonable estimation such damage can be materially
restored within two hundred fifty (250) days, Landlord shall forthwith repair
the same and this Lease shall remain in full force and effect, except that
Tenant shall be entitled to a proportionate abatement in rent from the date of
such damage. Such abatement of rent shall be made pro rata in accordance with
the extent to which the damage and the making of such repairs shall interfere
with the use and occupancy by Tenant of the Premises from time to time. Within
forty-five (45) days from the date of such damage, Landlord shall notify Tenant,
in writing, of Landlord's reasonable estimation of the length of time within
which material restoration can be made, and Landlord's determination shall be
binding on Tenant. For purposes of this Lease, the Building or Premises shall be
deemed "materially restored" if they are in such condition as would not prevent
or materially interfere with Tenant's use of the Premises for the purpose for
which it was being used immediately before such damage.
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22.2 If such repairs cannot, in Landlord's reasonable estimation, be made
within two hundred fifty (250) days, Landlord and Tenant shall each have the
option of giving the other, at any time within sixty (60) days after such
damage, notice terminating this Lease as of the date of such damage. In the
event of the giving of such notice, this Lease shall expire and all interest of
the Tenant in the Premises shall terminate as of the date of such damage as if
such date had been originally fixed in this Lease for the expiration of the
Term. In the event that neither Landlord not Tenant exercises its option to
terminate this Lease, then Landlord shall repair or restore such damage, this
Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 22.1.
22.3 Landlord shall not be required to repair or replace any damage or loss
by or from fire or other cause to any panelings, decorations, partitions,
additions, railings, ceilings, floor coverings, office fixtures, or any other
property or improvements installed on the Premises or belonging to Tenant. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building or Premises shall be for the sole benefit of the party carrying
such insurance and under its sole control.
22.4 In the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 22.4, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in this Lease
for the expiration of the Term; provided, however, that if construction is
delayed because of changes, deletions or additions in construction requested by
Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor
shortages, government regulation or control or other causes beyond the
reasonable control of Landlord, the period for restoration, repair or rebuilding
shall be extended for the amount of time Landlord is so delayed.
22.5 Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 22 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord's notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.
22.6 In the event of any damage or destruction to the Building or Premises
by any peril covered by the provisions of this Article 22, it shall be Tenant's
responsibility to properly secure the Premises and upon notice from Landlord to
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remove forthwith, at its sole cost and expense, such portion of all of the
property belonging to Tenant or its licensees from such portion or all of the
Building or Premises as Landlord shall request.
23. EMINENT DOMAIN.
If all or any substantial part of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent
domain, or conveyance in lieu of such appropriation, either party to this Lease
shall have the right, at its option, of giving the other, at any time within
thirty (30) days after such taking, notice terminating this Lease, except that
Tenant may only terminate this Lease by reason of taking or appropriation, if
such taking or appropriation shall be so substantial as to materially interfere
with Tenant's use and occupancy of the Premises. If neither party to this Lease
shall so elect to terminate this Lease, the rental thereafter to be paid shall
be adjusted on a fair and equitable basis under the circumstances. In addition
to the rights of Landlord above, if any substantial part of the Building shall
be taken or appropriated by any public or quasi-public authority under the power
of eminent domain or conveyance in lieu thereof, and regardless of whether the
Premises or any part thereof are so taken or appropriated, Landlord shall have
the right, at its sole option, to terminate this Lease. Landlord shall be
entitled to any and all income, rent, award, or any interest whatsoever in or
upon any such sum, which may be paid or made in connection with any such public
or quasi-public use or purpose, and Tenant hereby assigns to Landlord any
interest it may have in or claim to all or any part of such sums, other than any
separate award which may be made with respect to Tenant's trade fixtures and
moving expenses; Tenant's trade fixtures and moving expenses; Tenant shall make
no claim for the value of any unexpired Term.
24. SALE BY LANDLORD.
In event of a sale or conveyance by Landlord of the Building, the same
shall operate to release Landlord from any future liability upon any of the
covenants or conditions, expressed or implied, contained in this Lease in favor
of Tenant, and in such event Tenant agrees to look solely to the responsibility
of the successor in interest of Landlord in and to this Lease. Except as set
forth in this Article 24, this Lease shall not be affected by any such sale and
Tenant agrees to attorn to the purchaser or assignee. If any security has been
given by Tenant to secure the faithful performance of any of the covenants of
this Lease, Landlord may transfer or deliver said security, as such, to
Landlord's successor in interest and thereupon Landlord shall be discharged from
any further liability with regard to said security.
25. ESTOPPEL CERTIFICATES.
Within ten (10) days following any written request which Landlord may make
from time to time, Tenant shall execute and deliver to Landlord or mortgagee or
prospective mortgagee a sworn statement certifying: (a) the date of commencement
of this Lease; (b) the fact that this Lease is unmodified and in full force and
effect (or, if there have been modifications to this Lease, that this Lease is
in full force and effect, as modified, and stating the date and nature of such
modifications); (c) the date to which the rent and other sums payable under this
Lease have been paid; (d) the fact that there are no current defaults under this
Lease by either Landlord or Tenant except as specified in Tenant's statement;
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and (e) such other matters as may be requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Article 25 may be relied
upon by any mortgagee, beneficiary or purchaser and Tenant shall be liable for
all loss, cost or expense resulting from the failure of any sale or funding of
any loan caused by any material misstatement contained in such estoppel
certificate. Tenant irrevocably agrees that if Tenant fails to execute and
deliver such certificate within such ten (10) day period Landlord or Landlord's
beneficiary or agent may execute and deliver such certificate on Tenant's
behalf, and that such certificate shall be fully binding on Tenant.
26. SURRENDER OF PREMISES.
26.1 Tenant shall, at least thirty (30) days before the last day of the
Term, arrange to meet Landlord for a joint inspection of the Premises. In the
event of Tenant's failure to arrange such joint inspection to be held prior to
vacating the Premises, Landlord's inspection at or after Tenant's vacating the
Premises shall be conclusively deemed correct for purposes of determining
Tenant's responsibility for repairs and restoration.
26.2 At the end of the Term or any renewal of the Term or other sooner
termination of this Lease, Tenant will peaceably deliver up to Landlord
possession of the Premises, together with all improvements or additions upon or
belonging to the same, by whomsoever made, in the same conditions received or
first installed, broom clean and free of all debris, excepting only ordinary
wear and tear and damage by fire or other casualty. Tenant may, and at
Landlord's request shall, at Tenant's sole cost, remove upon termination of this
Lease, any and all furniture, furnishings, movable partitions of less than full
height from floor to ceiling, trade fixtures and other property installed by
Tenant, title to which shall not be in or pass automatically to Landlord upon
such termination, repairing all damage caused by such removal. Property not so
removed shall, unless requested to be removed, be deemed abandoned by the Tenant
and title to the same shall thereupon pass to Landlord under this Lease as by a
bill of sale. All other alterations, additions and improvements in, on or to the
Premises shall be dealt with and disposed of as provided in Article 6.
26.3 All obligations of Tenant under this Lease not fully performed as of
the expiration or earlier termination of the Term shall survive the expiration
or earlier termination of the Term. In the event that Tenant's failure to
perform prevents Landlord from releasing the Premises, Tenant shall continue to
pay rent pursuant to the provisions of Article 14 until such performance is
complete. Under the expiration or earlier termination of the Term, Tenant shall
pay to Landlord the amount, as estimated by Landlord, necessary to repair and
restore the Premises as provided in this Lease and/or to discharge Tenant's
obligation for unpaid amounts due or to become due to Landlord. All such amounts
shall be used and held by Landlord for payment of such obligations of Tenant,
with Tenant being liable for any additional costs upon demand by Landlord, or
with any excess to be returned to Tenant after all such obligations have been
determined and satisfied. Any otherwise unused Security Deposit shall be
credited against the amount payable by Tenant under this Lease.
27. NOTICES.
Any notice or document required or permitted to be delivered under this
Lease shall be addressed to the intended recipient, shall be transmitted
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personally, by fully prepaid registered or certified United States Mail return
receipt requested, or by reputable independent contract delivery service
furnishing a written record of attempted or actual delivery, and shall be deemed
to be delivered when tendered for delivery to the addressee at its address set
forth on the Reference Page, or at such other address as it has then last
specified by written notice delivered in accordance with this Article 27, or if
to Tenant at either its aforesaid address or its last known registered office or
home of a general partner or individual owner, whether or not actually accepted
or received by the addressee.
28. TAXES PAYABLE BY TENANT.
In addition to rent and other charges to be paid by Tenant under this
Lease, Tenant shall reimburse to Landlord, upon demand, any and all taxes
payable by Landlord (other than net income taxes) whether or not now customary
or within the contemplation of the parties to this Lease: (a) upon, allocable
to, or measured by or on the gross or net rent payable under this Lease,
including without limitation any gross income tax or excise tax levied by the
State, any political subdivision thereof, or the Federal Government with respect
to the receipt of such rent; (b) upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy of the Premises or any portion thereof, including any sales, use or
service tax imposed as a result thereof; (c) upon or measured by the Tenant's
gross receipts or payroll or the value of Tenant's equipment, furniture,
fixtures and other personal property of Tenant or leasehold improvements,
alterations or additions located in the Premises; or (d) upon this transaction
or any document to which Tenant is a party creating or transferring any interest
of Tenant in this Lease or the Premises. In addition to the foregoing, Tenant
agrees to pay, before delinquency, any and all taxes levied or assessed against
Tenant and which become payable during the term hereof upon Tenant's equipment,
furniture, fixtures and other personal property of Tenant located in the
Premises.
29. DEFINED TERMS AND HEADINGS.
The Article headings shown in this Lease are for convenience of reference
and shall in no way define, increase, limit or describe the scope or intent of
any provision of this Lease. Any indemnification or insurance of Landlord shall
apply to and inure to the benefit of all the following "Landlord Entities",
being Landlord, Landlord's investment manager, and the trustees, boards of
directors, officers, general partners, beneficiaries, stockholders, employees
and agents of each of them. Any option granted to Landlord shall also include or
be exercisable by Landlord's trustee, beneficiary, agents and employees, as the
case may be. In any case where this Lease is signed by more than one person, the
obligations under this Lease shall be joint and several. The terms "Tenant" and
"Landlord" or any pronoun used in place thereof shall indicate and include the
masculine or feminine, the singular or plural number, individuals, firms or
corporations, and each of their respective successors, executors, administrators
and permitted assigns, according to the context hereof. The term "rentable area"
shall mean the rentable area of the Premises or the Building as calculated by
the Landlord on the basis of the plans and specifications of the Building
including a proportionate share of any common areas. Tenant hereby accepts and
agrees to be bound by the figures for the rentable space footage of the Premises
and Tenant's Proportionate Share shown on the Reference Page.
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31. TENANT'S AUTHORITY.
If Tenant signs as a corporation each of the persons executing this Lease
on behalf of Tenant represents and warrants that Tenant has been and is
qualified to do business in the state in which the Building is located, that the
corporation has full right and authority to enter into this Lease, and that all
persons signing on behalf of the corporation were authorized to do so by
appropriate corporate actions. If Tenant signs as a partnership, trusts or other
legal entity, each of the persons executing this Lease on behalf of Tenant
represents and warrants that Tenant has complied with all applicable laws, rules
and governmental regulations relative to its right to do business in the state
and that such entity on behalf of the Tenant was authorized to do so by any and
all appropriate partnership, trust or other actions. Tenant agrees to furnish
promptly upon request a corporate resolution, proof of due authorization by
partners, or other appropriate documentation evidencing the due authorization of
Tenant to enter into this Lease.
32. COMMISSIONS.
Each of the parties represents and warrants to the other that it has not
dealt with any broker or finder in connection with this Lease, except as
described on the Reference Page.
33. TIME AND APPLICABLE LAW.
Time is of the essence of this Lease and all of its provisions. This Lease
shall in all respects be governed by the laws of the state in which the Building
is located.
34. SUCCESSORS AND ASSIGNS.
Subject to the provisions of Article 9, the terms, covenants and conditions
contained in this Lease shall be binding upon and inure to the benefit of the
heirs, successors, executors, administrators and assigns of the parties to this
Lease.
35. ENTIRE AGREEMENT.
This Lease, together with its exhibits, contains all agreements of the
parties to this Lease and supersedes any previous negotiations. There have been
no representations made by the Landlord or understandings made between the
parties other than those set forth in this Lease and its exhibits. This Lease
may not be modified except by a written instrument duly executed by the parties
to this Lease.
36. EXAMINATION NOT OPTION.
Submission of this Lease shall not be deemed to be a reservation of the
Premises. Landlord shall not be bound by this Lease until it has received a copy
of this Lease duly executed by Tenant and has delivered to Tenant a copy of this
Lease duly executed by Landlord, and until such delivery Landlord reserves the
right to exhibit and lease the Premises to other prospective tenants.
Notwithstanding anything contained in this Lease to the contrary, Landlord may
withhold delivery of possession of the Premises from Tenant until such time as
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Tenant has paid to Landlord any security deposit required by Article 5, the
first month's rent as forth in Article 3 and any sum owed pursuant to this
Lease.
37. RECORDATION.
Tenant shall not record or register this Lease or a short form memorandum
hereof without the prior written consent of Landlord, and then shall pay all
charges and taxes incident such recording or registration.
38. RENTAL SCHEDULE.
Date Monthly Rent Annual Rent
------------------------------------ ------------ -----------
October 1, 1998 - September 30, 2000 $3,427.20 $41,126.40
October 1, 2000 - September 30, 2001 $3,598.56 $43,182.72
39. LIMITATION OF LANDLORD'S LIABILITY.
Redress for any claim against Landlord under this Lease shall be limited to
and enforceable only against and to the extent of Landlord's interest in the
Building. The obligations of Landlord under this Lease are not intended to and
shall not be binding on, nor shall any resort be had to the private properties
of, any of its trustees or board of directors and officers, as the case may be,
its investment manager, the general partners thereof, or any beneficiaries,
stockholders, employees, or agents of Landlord or the investment manager.
LANDLORD: TENANT:
HOHOKAM 10 INDUSTRIAL PARK, CMP Solutions, Inc.,
a property of RREEF Performance Partnership-I, L.P., an Arizona corporation
an Illinois limited partnership
By: RREEF MANAGEMENT COMPANY,
a Delaware corporation
By: /s/ Sally Ryan By: /s/ Mark Simon
----------------------- -------------------
Title: District Manager Title: President
-------------------- ----------------
Date: 9/30/98 Date: 9/29/98
-------------------- ----------------
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EXHIBIT A
attached to and made a part of Lease bearing the
Lease Reference Date of September 29, 1998
between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P.,
an Illinois limited partnership, as Landlord and
CMP Solutions, Inc., an Arizona corporation,
as Tenant.
PREMISES
Exhibit A is intended only to show the general location of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede any of
Landlord's rights set forth in Section 17.2 with respect to arrangements and/or
location of public parts of the Building and changes in such arrangements and/or
locations. It is not to be scaled; any measurements or distances shown should be
taken as approximate.
HOHOKAM 10 INDUSTRIAL - EAST PARK
[PICTURE PROVIDED]
<PAGE>
EXHIBIT B
attached to and made a part of Lease bearing the
Lease Reference Date of September 29, 1998
between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P.,
an Illinois limited partnership, as Landlord and
CMP Solutions, Inc., an Arizona corporation,
as Tenant.
INITIAL ALTERATIONS
Tenant hereby acknowledges and agrees that the Premises are being assumed by
Tenant in an as-is condition and that Tenant is responsible to return the
Premises to original broom clean condition at the expiration of this Lease or
any extension thereof, ordinary wear and tear excepted.
<PAGE>
EXHIBIT C
attached to and made a part of Lease bearing the
Lease Reference Date of September 29, 1998
between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P.,
an Illinois limited partnership, as Landlord and
CMP Solutions, Inc., an Arizona corporation,
as Tenant.
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without
the prior written consent of the Landlord. Landlord shall have the right to
remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on
doors and walls shall be printed, painted, affixed or inscribed at the
expense of Tenant by a pension or vendor chosen by Landlord. In addition,
Landlord reserves the right to change from time to time the format of the
signs or lettering and to require previously approved signs or lettering to
be appropriately altered.
2. If Landlord objects in writing to any curtains, blinds, shades or screens
attached to or hung in or used in connection with any window or door of the
Premises, Tenant shall immediately discontinue such use. No awning shall be
permitted on any part of the Premises. Tenant shall not place anything or
allow anything to be placed against or near any glass partitions or doors
or windows which may appear unsightly, in the opinion of Landlord, from
outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances,
of the Building. Landlord shall in all cases retain the right to control
and prevent access to the Building of all persons whose presence in the
judgment of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its tenants provided that
nothing contained in this rule shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No tenant
and no employee or invitee of any tenant shall go upon the roof of the
Building.
4. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
5. Tenant shall not place a load upon any floor which exceeds the load per
square foot which such floor was designed to carry and is allowed by law.
Landlord shall have the right to prescribe the weight, size and position to
all equipment, materials, furniture or other property brought in the
Building. Heavy objects shall stand on such platforms as determined by
Landlord to be necessary to properly distribute the weight. Business
machines and mechanical equipment belonging to Tenant which cause noise or
vibration that may be transmitted to the structure of the Building or to
any space in the Building to such a degree as to be objectionable to
Landlord or to any tenants shall be placed and maintained by Tenant, at
Tenant's expenses, on vibration eliminators or other devices sufficient to
eliminate noise or vibration. The persons employed to move such equipment
<PAGE>
in or out of the Building must be acceptable to Landlord. Landlord will not
be responsible for loss of, or damage to, any such equipment or other
property from any cause, and all damage done to the Building by maintaining
or moving such equipment or other property shall be repaired at the expense
of Tenant.
6. Tenant shall not use any method of heating or air conditioning other than
that supplied by Landlord. Tenant shall not waste electricity, water or air
conditioning.
7. Tenant shall close and lock the doors of its premises and entirely shut off
all water faucets or other water apparatus and electricity, gas or air
outlets before Tenant and its employees leave the Premises. Tenant shall be
responsible for any damage or injuries sustained by other tenants or
occupants of the Building or by Landlord for noncompliance with this rule.
8. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown
into any of them, and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant who,
or whose employees or invitees, shall have caused it.
9. Tenant shall not install any radio or television antenna, satellite dish,
loudspeaker or other device on the roof or exterior walls of the Building.
Tenant shall not interfere with radio or television broadcasting or
reception from or in the Building or elsewhere.
10. Except as approved by Landlord, Tenant shall not mark, drive nails, screw
or drill into the partitions, woodwork or plaster or in any way deface the
Premises. Tenant shall not cut or bore holes for wires. Tenant shall not
affix any floor covering to the floor of the Premises in any manner except
as approved by Landlord. Tenant shall repair any damage resulting from
noncompliance with this rule.
11. Tenant shall store all its trash and garbage within Premises. Tenant shall
not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
12. No cooking shall be permitted by any Tenant on the Premises, except by
utilizing Underwriters' Laboratory approved microwave oven or equipment for
brewing coffee, tea, hot chocolate and similar beverages provided that such
equipment use is in accordance with all applicable federal, state and city
laws, codes, ordinances, rules and regulations.
13. Tenant shall not use in any space of the Building any hand trucks except
those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring
any other vehicles of any kind into the Building.
14. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant except as Tenant's address.
15. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do
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<PAGE>
anything outside of their regular duties unless under special instruction
from Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.
16. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of
any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all o f the tenants of the
Building.
17. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of premises in the Building.
18. Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the
preservation of good order in and about the Building. Tenant agrees to
abide by all such rules and regulations in this Exhibit C stated and any
additional rules and regulations which are adopted.
19. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
20. No pets shall be allowed in the Premises.
3
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EXHIBIT C
attached to and made a part of Lease bearing the
Lease Reference Date of September 29, 1998
between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P.,
an Illinois limited partnership, as Landlord and
CMP Solutions, Inc., an Arizona corporation,
as Tenant.
SIGNAGE CRITERIA
HOHOKAM EAST AND WEST PARKS
TENANT IDENTIFICATION:
These signs will occur above the entry door to each suite. The signs shall be
applied to the existing sign accent panel, painted Sinclair CM8689 Blue.
DIMENSIONS: The copy shall not exceed 80% of the panel area.
COPY: The copy shall be 2" tall white vinyl letters in "Palatino
Bold Italic" style.
ILLUMINATION: None allowed.
PERMIT: A sign permit will be required from the City prior to sign
installation. (East Park is Tempe, West Park is Phoenix)
WINDOW GRAPHICS:
This section stipulates the use of window graphics as a means of Tenant
identification.
DIMENSIONS: The area of the suite number will vary. There will be tenant
copy allowed on sidelights adjacent to the main entry. This
copy will vary in size depending on Tenant name and logo but
shall not exceed 4 square feet.
COPY: The suite number shall be "Palatino Italic" style. Tenant
copy shall be "Palatino Bold Italic". The maximum height for
all copy shall be 4". The copy will be white vinyl letters
fixed to the exterior of the glass 5'6" above the floor and
1 1/2" away from the mullions. Rear door identification will
consist of 2" white vinyl in "Palatino Bold Italic" style.
<PAGE>
PRICING SCHEDULE:
Each Tenant will be allowed one overhead sign location and one window graphic
per building, regardless of the number of suites occupied, to be installed at
Tenant's sole cost and expense. Tenant is responsible for the cost to remove
tenant identification signage upon lease termination.
Please contact Sign A Rama, USA for pricing and sign layout information at (602)
756-1577.
The above sign criteria has been developed to allow for maximum visibility for
Tenants and potential clients set forth by RREEF Management and the Cities of
Phoenix and Tempe. The success of the sign design relies on the compliance of
these guidelines, consistently maintaining a high standard. No deviations from
this criteria may be implemented without prior written consent from Landlord.
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EXHIBIT D-1
[PICTURE PROVIDED]
<PAGE>
EXHIBIT D-2
[PICTURE PROVIDED]
<PAGE>
EXHIBIT E
attached to and made a part of Lease bearing the
Lease Reference Date of September 29, 1998
between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P.,
an Illinois limited partnership, as Landlord and
CMP Solutions, Inc., an Arizona corporation,
as Tenant.
CONTINUING LEASE GUARANTY
(Corporation)
Whereas, CMP Solutions, Inc., an Arizona corporation, ("Tenant") is (a) engaged
in business as a corporate affiliate of the undersigned, or (b) engaged in
selling, marketing, using or otherwise dealing in merchandise, supplies,
products, equipment or other articles supplied to it by the undersigned. Because
of our inter-corporate or business relations, or by reason of any of the
foregoing, it will be in our direct interest and advantage to assist Tenant in
securing a lease. Therefore, in consideration of the making of the lease
agreement by and between HOHOKAM 10 INDUSTRIAL PARK, a property of RREEF
Performance Partnership-I, L.P., an Illinois limited partnership, as Landlord
and Tenant, dated September 29, 1998 for the premises commonly described as 2450
W. 12th Street, Suite #2 & 3, Tempe, AZ 85281 (hereinafter referred to as the
"Lease") and for the purpose of inducing Landlord to enter into and make the
Lease the undersigned hereby unconditionally guarantees the full and prompt
payment of rent and all other sums required to be paid by Tenant under the Lease
("Guaranteed Payments") and the full and faithful performance of all terms,
conditions, covenants, obligations and agreements contained in the Lease on the
Tenant's part to be performed ("Guaranteed Obligations") and the undersigned
further promises to pay all of Landlord's costs and expenses (including
reasonable attorney's fees) incurred in endeavoring to collect the Guaranteed
Payments or to enforce the Guaranteed Obligations or incurred in enforcing this
guaranty as well as all damages which Landlord may suffer in consequence of any
default or breach under the lease or this guaranty.
1. Landlord may at any time and from time to time, without notice to the
undersigned, take any or all of the following actions without affecting or
impairing the liability and obligations of the undersigned on this
guaranty:
a. grant an extension or extensions of time of payment of any Guaranteed
Payment or time for performance of any Guaranteed Obligation;
b. grant an indulgence or indulgences in any Guaranteed Payment or in the
performance of any Guaranteed Obligation;
c. modify or amend the Lease or any term thereof, or any obligation of
Tenant arising thereunder;
<PAGE>
d. consent to any assignment or assignments, sublease or subleases and
successive assignments or subleases by Tenant or the Tenant's assigns
or sublessees or a change or different use of the leased premises.
e. consent to an extension or extensions of the term of the Lease;
f. accept other guarantors; and/or
g. release any person primarily or secondarily liable.
The liability of the undersigned under this guaranty shall in no way be affected
or impaired by any failure or delay in enforcing any Guaranteed Payment or
Guaranteed Obligation or this guaranty or any security therefor or in exercising
any right or power in respect thereto, or by any compromise, waiver, settlement,
change, subordination, modification or disposition of any Guaranteed Payment or
Guaranteed Obligation or of any security therefor. In order to hold the
undersigned liable hereunder, there shall be no obligation on the part of
Landlord, at any time, to resort for payment to Tenant or any other guaranty or
to any security or other rights and remedies, and Landlord shall have the right
to enforce this guaranty irrespective of whether or not other proceedings or
steps are pending or being taken seeking resort to or realization upon or from
any of the foregoing.
2. The undersigned waives all diligence in collection or in protection or any
security, presentment, protest, demand, notice of dishonor or default,
notice of acceptance of this guaranty, notice of any extensions granted or
other action taken in reliance hereon and all demands and notices of any
kind in connection with this guaranty or any Guaranteed Payment or
Guaranteed Obligation.
3. The undersigned hereby acknowledges full and complete notice and knowledge
of all of the terms, conditions, covenants, obligations and agreements of
the Lease.
4. The payment by the undersigned of any amount pursuant to this guaranty
shall not in any way entitle the undersigned to any right, title or
interest (whether by subrogation or otherwise) of the Tenant under the
Lease or to any security being held for any Guaranteed Payment or
Guaranteed Obligation.
5. This guaranty shall be continuing, absolute and unconditional and remain in
full force and effect until all Guaranteed Payments are made, all
Guaranteed Obligations are performed, and all obligations of the
undersigned under this guaranty are fulfilled.
6. This guaranty shall also bind the successors and assigns of the undersigned
and inure to the benefit of Landlord, its successors and assigns. This
guaranty shall be construed according to the laws of the state in which the
leased premises are located, in which state it shall be performed by the
undersigned.
7. If this guaranty is executed by more than one person, all singular nouns
and verbs herein relating to the undersigned shall include the plural
number and the obligation of the several guarantors shall be joint and
several.
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8. The Landlord and the undersigned intend and believe that each provision of
this guaranty comports with all applicable law. However, if any provision
of this guaranty is found by a court to be invalid for any reason, the
parties intend that the remainder of this guaranty shall continue in full
force and effect and the invalid provision shall be construed as if it were
not contained herein.
IN WITNESS WHEREOF, the undersigned has caused this guaranty to be executed by
its duly authorized officers this 29 day of September, 1998.
GUARANTOR:
SITEK, INC.,
ATTEST:
A DELAWARE CORPORATION
By: /s/ Don Jackson
------------------------
Don Jackson, PHD
Title: President
