SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________to________
Commission File No. 0-22384
MICRO COMPONENT TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-0985960
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3850 North Victoria Street, Saint Paul, Minnesota 55126
-------------------------------------------------------------------------
(Address of principal executive offices)
(612) 482-5100
----------------------------------
(Registrant's telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes __X__ No _____
The number of shares outstanding of the Registrant's Common Stock, as of October
28, 1996 was 7,031,170.
Page 1 of 47 pages
Exhibit index on page 13
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF OPERATIONS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
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MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
ITEM 1. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS Sept. 28, 1996 June 29, 1996
- --------------------------------------------------------------------- -------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash $ 8,035 $ 7,793
Notes and accounts receivable, less allowance
for doubtful accounts of $587 (Sept. 1996) and
$585 (June 1996) 3,369 4,380
Inventories
Raw Materials 1,085 1,215
Work in process 353 484
Finished goods 1,616 1,314
Other 390 540
-------- --------
Total current assets 14,848 15,726
-------- --------
Property, plant and equipment 4,401 4,663
Less accumulated depreciation 3,316 3,485
-------- --------
Property, plant and equipment, net 1,085 1,178
Other assets 118 76
-------- --------
Total assets $ 16,051 $ 16,980
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------
Current Liabilities
Current obligations under debt facilities and financing
obligations $ 340 $ 352
Accounts payable 888 1,044
Unearned service revenue 775 324
Other accrued liabilities 1,253 1,368
-------- --------
Total current liabilities 3,256 3,088
Long-term debt and financing obligations 171 183
Commitments and Contingencies
Stockholder's Equity:
Common Stock
Common, $.01 par value, 20,000,000 authorized, 7,207,244 and
7,187,244 issued, respectively 71 70
Redeemable convertible preferred stock, $.01 par value, 1,000,000
authorized, 315,789 issued 1,500 1,500
Additional paid-in capital 43,502 43,463
Cumulative translation adjustment (82) (82)
Accumulated deficit (28,059) (26,934)
Treasury stock 176,074 shares of Common Stock at cost (4,308) (4,308)
-------- --------
Total stockholders' equity 12,624 13,709
-------- --------
Total liabilities and stockholders' equity $ 16,051 $ 16,980
======== ========
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Sept. 28, Sept. 30,
1996 1995
--------- ---------
<S> <C> <C>
Net Sales $ 2,631 $ 6,890
Cost of sales 1,220 2,692
------- -------
Gross profit 1,411 4,198
------- -------
Operating expenses
Selling, general and administrative 1,774 2,439
Research and development 844 644
------- -------
Total operating expenses 2,618 3,083
------- -------
Income (loss) from operations (1,207) 1,115
Interest income (expense), net 79 4
------- -------
Income (loss) before income taxes (1,128) 1,119
Income tax provision -- 118
------- -------
Income (loss) from continuing operations (1,128) 1,001
Discontinued operations -- 474
------- -------
Net income (loss) (1,128) 1,475
======= =======
Income (loss) per share from continuing operations $ (.15) $ .16
Income (loss) per share from discontinued operations -- .08
------- -------
Net income (loss) per share $ (.15) $ .24
======= =======
Weighted average common and common equivalent shares outstanding 7,336 6,178
======= =======
See Notes to consolidated financial statements
</TABLE>
MICRO COMPONENT TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Sept. 28, Sept. 30,
1996 1995
--------- ---------
Cash flows from operating activities:
Net income (loss) $(1,128) $ 1,475
------- -------
Adjustments to reconcile net income (loss) to
net cash used by operating activities
Depreciation and amortization 113 97
Other, net (40) 3
Changes in assets and liabilities:
Notes and accounts receivable 1,011 (2,430)
Inventories (41) (643)
Other current assets 150 484
Accounts payable (154) (137)
Other accrued liabilities 335 (358)
Discontinued operations -- 977
------- -------
Total adjustments 1,374 (2,007)
------- -------
Net cash provided (used) by operating activities 246 (532)
------- -------
Cash flows from investing activities
Proceeds from sale of subsidiary -- 150
Additions to property, plant and equipment (20) (50)
------- -------
Net cash provided (used) by investing activities (20) 100
------- -------
Cash flows from financing activities:
Payments of long-term debt (24) (31)
Proceeds from issuance of stock 40 4,569
------- -------
Net cash provided by financing activities 16 4,538
------- -------
Effects of exchange rate changes -- (361)
Net increase in cash 242 3,745
Cash at beginning of period 7,793 1,156
------- -------
Cash at end of period $ 8,035 $ 4,901
======= =======
See Notes to consolidated financial statements
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited, condensed, consolidated financial statements
for the three-month periods ended September 28, 1996 and September 30,
1995 have been prepared in accordance with the instructions for SEC Form
10-Q and, accordingly, do not include all disclosures required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, consisting of
normal recurring accruals considered necessary for a fair presentation,
have been included.
Interim unaudited financial results should be read in conjunction with
the audited financial statements included in the SEC Annual Report, Form
10-K, for the fiscal year ended June 29, 1996.
The results of operations for the three months ended September 28, 1996
are not necessarily indicative of the operating results to be expected
for the full year.
2. CONTINGENCIES
The Securities and Exchange Commission has informed the Company that it
is conducting an investigation with respect to certain financial
reporting discrepancies announced by the Company in April 1994 dating
back to fiscal 1993 and the first two quarters of fiscal 1994. The
Company has submitted documents to the Commission pursuant to requests
from the Commission as part of the investigation.
On December 28, 1995, University/Joseph Associates, the former landlord
of Sym-Tek Systems, Inc., filed a lawsuit against the Company in Superior
Court in San Diego, California, seeking payment by the Company of
$500,000. The landlord alleges in the lawsuit that the Company agreed to
pay Sym-Tek's rent during the period in 1994 in which the Company and
Sym-Tek were negotiating a possible merger. The merger was not concluded,
and the Company has denied any liability to the landlord and intends to
vigorously defend the lawsuit.
On September 25, 1995 the Company sold all of the outstanding stock of
the Company's European subsidiary, Intertrade Scientific, Inc. (ITS) to
Cardine & Levy, a company based in France. In July 1996 Cardine & Levy
initiated an arbitration proceeding in Geneva, Switzerland under the
rules of the International Chamber of Commerce claiming damages from the
Company related to the discontinuation of a distribution relationship
between ITS and one of its significant equipment suppliers. The Company
has responded to the request for arbitration and denied any liability.
The Company intends to vigorously defend its position in the arbitration
proceeding.
3. STOCK COMPENSATION PLANS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." The Company adopted the
disclosure provisions of SFAS 123 in the first quarter of fiscal 1997,
the effect of which was not material for the period.
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the first quarter ended September 28, 1996, were $2.6 million, a
decrease of $4.3 million or 62.3% from $6.9 million of a year ago. The slowdown
in the semiconductor industry, combined with relatively low sales order backlog
levels at fiscal year-end 1996, severely impacted revenues for the first quarter
of fiscal year 1997. The impact was felt in all of the geographic areas in which
the Company operates. The Company anticipates that sales will continue to be
below comparable periods for 1996, unless semiconductor market conditions
improve significantly.
Gross profit for the first quarter 1997 was $1.4 million, a decrease of $2.8
million or 66.7% from $4.2 million of a year ago. Gross margin was 53.6%,
compared to 60.9% for the same period last year. The reduction in gross margin
is attributable to changes in product mix and to unabsorbed overhead expenses
due to lower production levels. The Company anticipates that quarterly gross
margins on current products for fiscal year 1997 will continue to be adversely
affected by unabsorbed overhead costs, unless semiconductor market conditions
improve significantly.
Selling, general and administrative expense in the first quarter 1997 was $1.8
million, a decrease of $0.6 million or 25.0% from $2.4 million of a year ago.
The reduction is attributed to efforts to contain costs, focused primarily in
personnel, consulting and facility expense reductions. As a percentage of net
sales, SG&A increased to 69.2% for the first quarter 1997 from 34.8% for the
same period last year. The percentage increase is due to the lower net sales
level.
Research and development expense for the first quarter of fiscal 1997 increased
$0.2 million or 33.3% to $0.8 million from $0.6 million for the same period one
year ago. As a percentage of net sales, R&D expenses increased to 30.8% from
8.7% in the prior year. The R&D expenditures and management's plans to continue
significant investment in R&D represent the Company's continued focus on new
product offerings.
The Company generated net interest income during the quarter of $79,000 as
compared to $4,000 for the same period one year ago. The increase in net
interest income is due to the Company's strengthened cash position and reduced
debt level in the first quarter of fiscal 1997 versus 1996.
Net loss for the first quarter of fiscal 1997 was $1.1 million as compared to
net income of $1.5 million (including $0.5 million of income from discontinued
operations) for the first quarter of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
In February 1996, the Company received $0.5 million from Hambrecht & Quist
Guaranty Finance L.P. ("H&Q") pursuant to its exercise of stock warrants for
160,000 shares of the Company's common stock. In December 1995, the Company
received $1.5 million in settlement of the escrow agreement established with
Megatest Corporation in connection with the November 1994 sale of the 1149
tester product line. In August 1995, the Company completed a private placement
offering of 1,500,000 shares of the Company's common stock, receiving net
proceeds of $4.6 million. These funds are being used for operations and the
unused portion is currently held in interest-bearing cash equivalents.
The Company generated $0.2 million of cash in its operating activities during
the quarter ended September 28, 1996, compared to cash used in operations of
$0.5 million in the same period the preceding year. Net loss and income,
respectively, offset by changes in accounts receivable were the primary factors
in change in cash from operations for each of the periods.
Capital expenditures for the first three months of fiscal 1997 were $20,000,
compared to $50,000 in the previous year. The Company does not anticipate making
significant capital investments in fiscal 1997.
At September 28, 1996, the Company had cash and cash equivalents of $8.0
million, versus $7.8 million at June 29, 1996.
Current assets at September 28, 1996 were $14.8 million, or $0.9 million lower
than the amount of current assets of $15.7 million at June 29, 1996. The $1.0
million decrease in accounts receivable was partially offset by the $0.2 million
increase in cash.
Current liabilities at September 28, 1996 were $3.3 million, an increase of $0.2
million compared to $3.1 million at June 29, 1996. An increase in unearned
service revenue was partially offset by a reduction in accounts payable and
accrued liabilities.
The Company's operations have been funded with proceeds from the private
placement, escrow settlement and operating cash flows. Management believes that
cash and cash equivalents on-hand, and anticipated cash flows from operations
are sufficient to sustain the Company's current operations in the current
semiconductor market environment through the current fiscal year.
IMPACT OF ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation." The Company adopted the disclosure
provisions of SFAS 123 in the first quarter of fiscal 1997, the effect of which
was not material for the period.
RISK FACTORS
Except for the historical information contained herein, certain of the matters
discussed in this report are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. These "forward-looking
statements" involve certain risks and uncertainties, including, but not limited
to, the following: (1) fluctuations and periodic downturns in the semiconductor
market which often have had a disproportionately negative effect on
manufacturers of semiconductor capital equipment; (2) rapid changes in
technology and in tester and handler products, which the Company must respond to
successfully in order for its products to avoid becoming noncompetitive or
obsolete; (3) customer acceptance of the Company's new products, including the
MCT 5100 and MCT 7632 handlers; (4) possible loss of any of the Company's key
customers, who account for a substantial percentage of the Company's business;
and (5) the possible adverse impact of competition in markets which are highly
competitive. All forecasts and projections in this report are "forward-looking
statements," and are based on management's current expectations of the Company's
near-term results, based on current information available pertaining to the
Company, including risk factors discussed above. Actual results could differ
materially.
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Securities and Exchange Commission has informed the Company that it is
conducting an investigation with respect to certain financial reporting
discrepancies announced by the Company in April 1994 dating back to fiscal 1993
and the first two quarters of fiscal 1994. The Company has submitted documents
to the Commission pursuant to requests from the Commission as part of the
investigation.
On December 28, 1995, University/Joseph Associates, the former landlord of
Sym-Tek Systems, Inc., filed a lawsuit against the Company in Superior Court in
San Diego, California, seeking payment by the Company of $500,000. The landlord
alleges in the lawsuit that the Company agreed to pay Sym-Tek's rent during the
period in 1994 in which the Company and Sym-Tek were negotiating a possible
merger. The merger was not concluded, and the Company has denied any liability
to the landlord and intends to vigorously defend the lawsuit.
On September 25, 1995 the Company sold all of the outstanding stock of the
Company's European subsidiary, Intertrade Scientific, Inc. (ITS) to Cardine &
Levy, a company based in France. In July 1996 Cardine & Levy initiated an
arbitration proceeding in Geneva, Switzerland under the rules of the
International Chamber of Commerce claiming damages from the Company related to
the discontinuation of a distribution relationship between ITS and one of its
significant equipment suppliers. The Company has responded to the request for
arbitration and denied any liability. The Company intends to vigorously defend
its position in the arbitration proceeding.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10 (a). Lease for the Company's Corporate Headquarters
dated May 1, 1996
Exhibit 10 (b). Lease for the Company's Corporate Headquarters
dated October 16, 1996.
(b) Exhibit 11. Computation of Earnings Per Common and Common Equivalent
Share
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
SIGNATURES
Pursuant to the requirements 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.
Micro Component Technology, Inc.
Registrant
Dated: November 1, 1996 By: /s/ Roger E. Gower
-----------------------------------
Roger E. Gower
President and Chief Executive Officer
and
Dated: November 1, 1996 By: /s/ Jeffrey S. Mathiesen
-----------------------------------
Jeffrey S. Mathiesen
Chief Financial Officer and
Chief Accounting Officer
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Page
10(a) Lease for the Company's Corporate Headquarters dated
May 1, 1996 14
10(b) Lease for the Company's Corporate Headquarters dated
October 16, 1996 28
11 Computation of Earnings per Common and
Common Equivalent Share 47
MICRO COMPONENT TECHNOLOGY, INC.
FORM 10-Q
<TABLE>
<CAPTION>
COMPUTATION OF EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE
(In thousands, except per share data)
THREE MONTHS ENDED
-------------------------------
PRIMARY SEPT. 28, 1996 SEPT. 30, 1995
- ------------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Income (loss) from continuing operations $(1,128) $ 1,001
Income from discontinued operations -- 474
------- -------
Net income (loss) - primary
$(1,128) $ 1,475
======= =======
Weighted average number of shares outstanding during the period 7,020 5,596
Shares issuable on exercise of stock options and warrants
less shares repurchaseable from the proceeds -- 266
Shares issuable on conversion of redeemable preferred stock 316 316
------- -------
Common and common equivalent shares - primary 7,336 6,178
======= =======
Income (loss) per share from continuing operations $ (.15) $ .16
Income per share from discontinued operations -- .08
------- -------
Net income (loss) per common share - primary $ .15) $ .24
======= =======
FULLY DILUTED:
- ------------------------------------------------------------------
Income (loss) from continuing operations $(1,128) $ 1,001
Income from discontinued operations -- 474
------- -------
Net income (loss) - fully diluted
$(1,128) $ 1,475
======= =======
Common and common equivalent shares - primary 7,336 6,178
Shares issuable on exercise of stock options and warrants
less shares repurchaseable from the proceeds -- 64
------- -------
Common and common equivalent shares - fully diluted 7,336 6,242
======= =======
Income (loss) per share from continuing operations $ (.15) $ .16
Income per share from discontinued operations -- .08
------- -------
Net income (loss) per common share - fully diluted $ (.15) $ .24
======= =======
</TABLE>
F.N.
S.N.
LEASE
This Lease is made as of the 1st day of May, 1996 by and between MEDTRONIC,
INC., a Minnesota corporation ("Landlord") and MICRO COMPONENT TECHNOLOGY, INC.,
a Minnesota corporation ("Tenant").
1. Premises. Tenant shall relocate its operations to that space located on
the second floor of the Building, as described in Exhibit A, consisting of
approximately 59,969 square feet of usable space with a common square foot
factor of 34.538, for a total rentable area of 80,676 square feet of the
Building located at 3840 Victoria Street in Shoreview, Minnesota. Shared
common areas shall include a visitor lobby, employee entry, cafeteria,
food preparation space, mechanical space, dock space, major egress
hallways, restrooms and stairwells. The entire cost of Tenant relocation
shall be borne by Tenant.
2. Term. The term of the Lease shall be twelve (12) months, commencing on May
1, 1996 or upon the date of closing, whichever is later, and ending on
April 30, 1997.
3. Rent.
(a) Rent. Tenant shall pay as monthly Rent for the Premises the sum of
Sixty-Six Thousand Five Hundred Fifty-Seven Dollars and Ninety Cents
($66,557.90). Rent shall include the cost of utilities (gas, electric,
water and sewer) subject to the usage requirements of Paragraph 9 hereof,
taxes (real estate), insurance, building maintenance and housekeeping, as
described in Exhibit B annexed hereto.
(b) Late Charges. Tenant hereby acknowledges that late payments by Tenant
to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will
be extremely difficult to ascertain. Such costs include, but are not
limited to utility, processing and accounting charges, and late charges
which may be imposed upon Landlord. Accordingly, if any installment of
rent or other sum due from Tenant shall not be received by Landlord within
fifteen (15) days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late
charge equal to five percent (5%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payments by
Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's Default or Breach with respect to such
overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of Rent, then notwithstanding Paragraph 4 or any other
provision of this Lease to the contrary, Rent shall, at Landlord's option,
become due and payable quarterly in advance.
4. Relocation. Tenant will relocate from its current occupancy on the first
and third floors of the Building to the second floor in accordance
with the Schedule in Exhibit C. Landlord shall be entitled to
dedicated space on the second floor for dock access as shown
on Exhibit B.
5. Leasehold Improvements.
(a) Tenant Obligations. As part of its relocation, Tenant shall finish the
Premises in accordance with current building codes. Landlord is under no
obligation to make any structural or other alterations, decoration,
additions or improvements in or to the Premises. Tenant is taking the
premises "AS IS" and Landlord shall not be obligated to do any work in the
Premises.
(b) Tenant Restrictions. Tenant shall not make any material alterations,
additions or improvements in or to the Premises, or make any changes in
locks on doors, or add, disturb or in any way change any floor covering,
wall covering, fixtures, plumbing or wiring [other than as described in
Section 5(a)] without first obtaining the written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Tenant shall
deliver to Landlord full and complete plans and specifications for any
such alteration, addition or improvement. Tenant shall not add any
curtains, draperies or other hangings on or beside any windows that are
visible from outside the Building without Landlord's permission which
shall not be unreasonably withheld or delayed.
(c) Lien Protection. Tenant shall pay when due all claims for labor or
materials furnished or alleged to have been furnished to or for Tenant at
or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest
therein. Tenant shall give Landlord not less than ten (10) days' notice
prior to the commencement of any work in, on or about the Premises, and
Landlord shall have the right to post notices of non-responsibility in or
on the Premises as provided by law. If Tenant shall, in good faith,
contest the validity of any such lien, claim or demand, then Tenant shall,
at its sole expense, defend and protect itself, Landlord and the Premises
against the same and shall pay and satisfy any such adverse judgment that
may be rendered thereon before the enforcement thereof against the
Landlord or the Premises. If Landlord shall require, Tenant shall furnish
to Landlord a surety bond satisfactory to Landlord in an amount equal to
one and one-half times the amount of such contested lien claim or demand,
indemnifying Landlord against liability for the same, as required by law
for the holding of the Premises free from the effect of such lien or
claim. In addition, Landlord may require Tenant to pay Landlord's
attorneys' fees and costs in participating in such action if Landlord
shall decide it is to its best interest to do so.
6. Use.
(a) Tenant Use of Premises. Tenant will use and occupy the Premises solely
for general office and light manufacturing purposes. Tenant will not use
or occupy the Premises for any unlawful purpose, and will comply with all
present and future laws, ordinances, regulations and orders of all
governmental units having jurisdiction over the Premises. Tenant shall not
cause or permit any unusual noise, odors or nuisance in or about the
Premises. Landlord disclaims any warranty that the Premises are suitable
for Tenant's use.
(b) Rules and Regulations. Tenant shall use the Premises and the common
areas of the Building in accordance with the terms of this Lease and such
additional rules and regulations as may from time to time be agreed to by
Tenant and the Landlord for the general safety, comfort and convenience of
the owners, occupants and tenants of the Building, and Tenant shall use
its best efforts to cause Tenant's customers, employees and invitees to
abide by such rules and regulations. Landlord shall in no event be
responsible to Tenant for enforcement of such rules and regulations
against other tenants.
(c) Indemnification by Tenant. Tenant agrees to indemnify, defend and hold
Landlord and its partners, officers and employees and property manager
harmless from and against any claim, loss or expense arising out of
injury, death or property loss or damage occurring in the Premises, except
only to the extent caused by the negligent act or intentional misconduct
of Landlord, its officers, employees or property manager.
(d) Indemnification by Landlord. Landlord agrees to indemnify, defend and
hold Tenant and its partners, officers and employees harmless from and
against any claim, loss or expense arising out of injury, death or
property loss or damage occurring in the common areas of the Building,
except to the extent caused by the negligent act or intentional misconduct
of Tenant or its partners, officers or employees.
(e) Covenant of Quiet Enjoyment. Landlord covenants that it has the right
to make this Lease for the term aforesaid and covenants that if Tenant
shall pay the rent and perform all of the covenants, terms and conditions
of this Lease to be performed by Tenant, Tenant shall, during the Term
hereby created, freely, peaceably and quietly occupy and enjoy possession
of the Premises. Tenant acknowledges, however, that Landlord will be
remodeling spaces on the first and third floors beginning on or about the
effective date of this Lease. Landlord will use reasonable efforts to
minimize disruption to Tenant and shall in no case disrupt Tenant's
manufacturing operations during normal business hours.
(f) Employment of Receptionist. Landlord and Tenant may each at its own
expense employ a receptionist at the main entrance of the Building during
the term of this Lease.
7. Services by Landlord.
(a) Cleaning Services. Landlord Will provide cleaning services on or about
the Premises and common areas pursuant to Exhibit B annexed hereto.
(b) Maintenance Responsibility. Landlord shall keep and maintain the
structural walls and foundation of the Premises in good and safe condition
(except to the extent repairs, maintenance or replacement are made
necessary by the abuse, misuse or negligence of Tenant, its employees,
agents or contractors, in which case Tenant shall be responsible for
required repairs, maintenance or replacements). Landlord shall maintain
HVAC, electrical and mechanical systems for the Building and provide
exterior Building maintenance and grounds keeping.
(c) Food Services. Landlord will contract, effective August 1, 1996, with
an in-house vending/food service organization to provide food service in
the existing cafeteria. Tenant employees shall have the opportunity to use
the food service. Landlord shall not subsidize any food service costs. The
level of food service will be provided at the discretion of Landlord.
(d) Security. Landlord will provide on-site security twenty-four (24)
hours per day, seven (7) days per week.
8. Service and Utilities.
(a) Heating and Air Conditioning. Landlord will furnish reasonable heat
and air conditioning during normal business hours and during the usual and
appropriate seasons.
(b) Utilities and Services. Landlord will furnish electricity for standard
building lighting, manufacturing and office use, water, elevator service
and toilet facilities during normal business hours.
(c) Liability/Indemnification. Landlord shall not be liable to Tenant, its
agents, employees, representatives, customers or invitees for any
inconvenience, loss or damage resulting from any temporary failure or lack
of such services beyond Landlord's control, and Tenant shall indemnify
Landlord and hold Landlord harmless from any claim or damage because of
such inconvenience, loss or damage.
(d) Tenant Use/Responsibility. Tenant shall use heat, air conditioning,
water and electricity with due care, and such use shall be consistent with
Tenant's use for the previous twelve months and, without qualifying the
foregoing, Tenant shall not neglect or misuse water fixtures, electric
lights and heating and air conditioning apparatus.
(e) Services by Landlord. Landlord will provide services customary to
first-class office buildings in the Greater Minneapolis area, including
without limitation, electricity for lighting, manufacturing, office
machines, water and sewer, security system, and mechanical, cooling,
heating and ventilation at such times as Landlord normally furnishes this
service to other tenants of the Building, but in no event less than normal
business hours, and at such temperatures and in such amounts as are
reasonably standard for firstclass office buildings in the Greater
Minneapolis area. All services including elevator, Building access through
the security system, water and parking, but not including the cooling,
heating and ventilation systems, shall be available at all times. Normal
business hours shall be from 7:00 a.m. to 10:00 p.m. on weekdays, and 8:00
a.m. to noon on Saturdays, excluding legal holidays. Landlord shall not be
liable for any loss or damage caused by or resulting from any variation,
interruption or failure of such services unless due to Landlord's gross
negligence, and no temporary interruption or failure of such services
incident to the making of repairs, alterations or improvements or due to
accident or strike conditions shall be deemed as an eviction of Tenant or
relieve Tenant from any of Tenant's obligations hereunder. For those
services within Landlord's reasonable control, Landlord will correct any
interruption of services as soon as practicable. Landlord shall provide
mechanical, cooling, heating and ventilation at times other than normal
business hours upon Tenant's request and reasonable notice to Landlord. If
Tenant has special mechanical, cooling, heating, ventilation, electrical
or other requirements beyond its current needs, then the cost of
furnishing, installing, operating and maintaining the equipment and
appurtenances, including separate meters if requested by Landlord, to
satisfy these requirements shall be borne by Tenant, with Tenant either
paying directly to the utility if separately metered or paying to Landlord
as an expense in addition to Rent the reasonable cost of providing such
additional services.
9. Insurance.
(a) Tenant Obligations. Tenant agrees to carry in full force and effect
the following insurance:
(i) "All risk" property insurance covering the full
replacement value of all of Tenant's leasehold improvements, trade
fixtures and personal property within the Premises. Tenant shall be
named as loss payee under all such policies.
(ii) Commercial general liability insurance, providing
coverage on an "occurrence" rather than a "claims made" basis, which
policy shall include coverage for Bodily Injury, Property Damage,
Personal Injury, Contractual Liability (applying to this Lease), and
Independent Contractors. Tenant shall maintain a combined policy
limit of at least $2,000,000 applying to Bodily Injury, Property
Damage and Personal Injury, which limit may be satisfied by Tenant's
basic policy, or by the basic policy in combination with umbrella or
excess policies so long as the coverage is at least as broad as that
required herein. Landlord shall be named as additional insured under
all such policies.
(b) Evidence of Insurance. Tenant shall deliver to Landlord, at least five
(5) days prior to the effective date of this Lease, evidence that the
insurance required by this Lease is in full force and effect. At least ten
(10) days prior to expiration of any such coverage, Tenant shall deliver
evidence that the coverage in question will be renewed or replaced upon
expiration. Such evidence of insurance shall contain sufficient
information to enable Landlord to determine whether Tenant's insurance
complies with the requirements of this Lease. Upon request, Tenant shall
also furnish insurer certified copies of all pertinent policies. All
policies used to provide the coverage required by this Lease shall (i) be
endorsed to require the insurer to provide at least ten (10) days' notice
to Landlord prior to cancellation or non-renewal and (ii) be issued by
financially sound companies.
(c) Landlord Obligations. Landlord agrees to purchase or self insure, and
carry in full force and effect, the following insurance:
(i) "All risk" property insurance coverage on the Building,
exclusive of Tenant's leasehold improvements, in such amount as
Landlord deems prudent.
(ii) Comprehensive commercial public liability insurance
covering the Building, in a combined single limit amount of not less
than $2,000,000, and written on an "occurrence" basis.
(d) Waiver and Indemnity. Notwithstanding anything apparently to the
contrary in this Lease, Landlord and Tenant hereby release one another and
their respective partners, officers and employees and property manager
from any and all liability (to the other or anyone claiming through or
under them by way of subrogation or otherwise) for any loss or damage
covered by property insurance or coverable by a customary policy of
insurance, even if such loss or damage shall have been caused by the fault
or negligence of the other party, or anyone for whom such party may be
responsible.
10. Fire or Other Casualty. If the Premises or the Building shall be
damaged by fire or other cause, Landlord shall at its option either (a)
undertake to restore such damage with all due diligence or (b) in the
event the Premises or the Building is damaged by fire or other cause to
such extent that damage cannot, in Landlord's sole judgment, be
economically repaired within ninety (90) days after the date of such
damage (taking into account the time necessary to effectuate a
satisfactory settlement with any insurance company and using normal
construction methods without overtime or other premium), terminate this
Lease, by notice given to Tenant within fifteen (15) days after the date
of the damage. Any termination hereunder by reason of damage to the
Premises shall be effective as of the date of the damage. Any termination
by reason of damage to the Building but not the Premises shall be
effective as of the date notice is given. If Landlord elects to restore,
Landlord shall not be obligated to restore any improvements in the
Premises which were not owned and constructed by Landlord. This Lease
shall, unless terminated by Landlord pursuant to this Paragraph 11, remain
in full force and effect following such damage, and, in the case of damage
to the Premises, the Rent prorated to the extent that the Premises are
rendered untenantable, shall be equitably abated until such repairs are
completed, provided, however, that if Tenant does not restore its
leasehold improvements and trade fixtures with due diligence, abatement
shall cease as of the date restoration could have been completed using due
diligence.
11. Condemnation. If the whole or any substantial part of the Premises
shall be taken or condemned or purchased under threat of condemnation by
any governmental authority, then the Term of this Lease shall cease and
terminate effective upon the condemnation or purchase.
12. Assignment/Subletting. The Tenant shall not (i) assign, convey, mortgage,
pledge, encumber or otherwise transfer (whether voluntarily or otherwise)
this Lease or any interest under it; (ii) allow any transfer thereof or
any lien upon Tenant's interest by operation of law; (iii) sublet the
Leased premises or any part thereof; or (iv) permit the use of occupancy
of the Leased Premises or any part thereof by anyone other than the
Tenant.
13. Signs. Tenant shall not place or maintain any sign, advertisement or
notice on any part of the outside of the Building. Landlord shall have the
right to remove or relocate current signage on the Building in its
discretion. Tenant shall be permitted to maintain the foundation sign
currently located on the Premises and one sign near the main entrance to
the Premises.
14. No Right to Holdover. Tenant has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination
of this Lease. In the event that Tenant holds over in violation of this
Paragraph 15, then the Rent payable from and after the time of the
expiration or earlier termination of this Lease shall be increased to two
hundred percent (200%) of the Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein
shall be construed as a consent by Landlord to any holding over by Tenant.
15. Surrender/Restoration. Tenant shall surrender the Premises by the end of
the last day of the Lease term or any earlier termination date, clean
and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall
not include any damage or deterioration that would have been prevented
by Tenant performing all of its obligations under this Lease. Tenant
shall own and remove all fixtures, equipment and leasehold
improvements on the Premises. The obligation of Tenant shall include
the repair of any damage occasioned by the installation, maintenance
or removal of Tenant's Trade Fixtures, furnishings, equipment and
Tenant Owned Alterations and Utility Installations. Tenant's Trade
Fixtures shall remain the property of Tenant and shall be removed by
Tenant subject to its obligation to repair and restore the Premises
per this Lease.
16. Hazardous Waste.
(a) Tenant Use Restrictions. Tenant shall not install, use, generate,
store or dispose of in or about the Premises any hazardous substance,
toxic chemical, pollutant or other material regulated by the Comprehensive
Environmental Response, Compensation and Liability Act of 1985 or the
Minnesota Environmental Response and Liability Act or any similar law or
regulation, including without limitation any material containing asbestos
or PCB (collectively "Hazardous Materials") without Landlord's written
approval of each Hazardous Material. Landlord shall not unreasonably
withhold its approval of use by Tenant of immaterial quantities of
Hazardous Materials customarily used in office/manufacturing business
operations so long as Tenant uses such Hazardous Materials in accordance
with applicable laws.
(b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under
or about the Premises or the Building, other than as previously consented
to by Landlord, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice,
registration, application, permit business plan, license, claim, action or
proceeding given to, or received from, any governmental authority or
private party concerning the presence, spill, release, discharge of, or
exposure to, such Hazardous Substance, including but not limited to all
such documents as may be involved in any Reportable Use involving the
Premises. Tenant shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including,
without limitation, through the plumbing or sanitary sewer system).
(c) Indemnification. Tenant shall indemnify, protect, defend and hold
Landlord, its agents, employees, lenders and ground lessor, if any, and
the Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Tenant or by anyone under
Tenant's control. Tenant's obligations under this Paragraph 17 shall
include, but not be limited to, the effects of any contamination or injury
to person, property or the environment created thereof, or of any
contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Landlord and Tenant shall release Tenant from
its obligations under this Lease with respect to Hazardous Substances,
unless specifically so agreed by Landlord in writing at the time of such
agreement.
17. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this
Lease, including without limitation, Tenant's obligation to remove itself
from the Premises upon termination of the Lease. Tenant acknowledges that
Landlord will suffer significant and immeasurable damage should Tenant
attempt to hold over at termination of this Lease.
18. Relocation Progress. Landlord and Tenant acknowledge that Tenant will be
relocating its business upon Termination of the Lease. In order to assure
Landlord it is making sufficient progress toward its relocation plans,
Tenant shall periodically, but not less than once per quarter, update
Landlord on Tenant's progress towards ultimate relocation of its business
upon termination.
19. Default.
(a) Definition. Any one of the following events shall constitute an Event
of Default:
(i) Tenant shall fail to pay any monthly installment of Rent
and such default shall continue for a period of fifteen (15) days
after the due date therefor and written notice from Landlord;
(ii) Tenant shall violate or fail to perform any of the other
conditions, covenants or agreements herein made by Tenant and such
default shall continue for fifteen (15) days after written notice
from Landlord; or
(iii) Tenant shall file or have filed against it any
bankruptcy or other creditor's action which is not discharged within
sixty (60) days, or make an assignment for the benefit of its
credits.
(b) Option to Terminate. If an Event of Default shall have occurred and be
continuing, Landlord may at its sole option by written notice to Tenant
terminate this Lease. Neither the passage of time after the occurrence of
the Event of Default nor exercise by Landlord of any other remedy with
regard to such Event of Default shall limit Landlord's rights under this
Section 20.
(c) Reimbursement of Attorneys' Fees. In addition to all other remedies,
the prevailing party shall be entitled to reimbursement upon demand of all
reasonable attorneys' fees incurred in connection with any Event of
Default.
20. Right to Enter. Landlord, its agents representatives shall constantly
have pass keys to the Premises and may at all reasonable times during the
day and night enter to view and inspect the Leased remises, or to clean
and maintain the same, or to make repairs, or to make such improvements or
changes in the Leased Premises or the Building as Landlord may deem
proper. The right of entry reserved in the immediately preceding sentence
shall not be deemed to impose any greater obligation on Landlord to clean,
maintain, repair or change the Leased Premises than is specifically
provided in this Lease. The Landlord, its agents or representatives may at
any time in case of emergency enter the Leased Premises and do such acts
as Landlord may deem proper in order to protect the Leased Premises, the
Building or any occupants of the Building. There shall be no diminution of
rent or liability on the part of-Landlord by reason of inconvenience,
annoyance or injury to business on account of any such entry or acts by
Landlord, its agents or representatives.
21. Notices. All notices or other communications hereunder shall be in writing
and shall be hand delivered or sent by registered or certified first class
mail, postage prepaid (i) if to Landlord, at 3840 Victoria Street,
Shoreview, Minnesota - Attention: Facilities Manager and (ii) if to
Tenant, at the Premises delivered to its Chief Executive Officer or if
unavailable to his designee, unless notice of a change of address is given
pursuant to the provisions of this Paragraph. The day notice is given by
mail shall be deemed to be the day following the day of mailing.
22. Waiver. No waiver by either party of any breach of any agreement herein
contained shall operate as a waiver of such agreement itself, or of any
subsequent breach thereof. No payment by Tenant or receipt by Landlord of
a lesser amount than the monthly installments of rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated
rent nor shall any endorsement or statement on any check or letter
accompanying a check for payment of rent be deemed an accord and
satisfaction, nor shall acceptance of rent with knowledge of breach
constitute a waiver of the breach, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of
such rent, to terminate this Lease, to Repossess the Premises or to pursue
any other remedy provided by this Lease. No re-entry by Landlord, and no
acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of the Lease.
23. Prior Agreements. This lease and the Termination Agreement between Tenant
and Hambrecht & Quist supersede and replace all prior leases and
amendments for the Premises and Building, including the Lease and
Amendments between Tenant and Hambrecht & Quist dated December 1, 1994 and
the Amendment to said Lease dated November 7, 1995.
IN WITNESS WHEREOF, the parties hereto have set their hand and seal this 30th
day of April, 1996.
MEDTRONIC, INC. MICRO COMPONENT TECHNOLOGY, INC.
By /s/ Donald Hagmann By /s/ Roger E. Gower
-------------------------------- -----------------------------------
Title Corporate Real Estate Mgr. Title Pres/CEO
----------------------------- ---------------------------------
[LOGO] MEDTRONIC
SHOREVIEW FIRST FLOOR PLAN
BUILDING OCCUPANCY
MAY FY97 PLAN
Common Dock Area Shared by Medtronic and MCT.
[FLOOR PLAN MAP OMITTED]
SECOND FLOOR PLAN
EXHIBIT B
[See Section 8(a) of Lease]
Cleaning services provided by Landlord will include the following:
* Cleaning in main entry and restrooms (five times a week)
* Cleaning in office areas to include vacuum and trash removal (three times
a week)
* Cleaning in production area to include dust mop and vacuuming (two times a
week)
EXHIBIT C
[LOGO] MEDTRONIC
SHOREVIEW FIRST FLOOR PLAN
Space to be vacated by MCT on or before 17-Jun-96.
Space to be vacated by MCT on or before 31-July-96.
[FLOOR PLAN MAP OMITTED]
General: MCT shall vacate all other spaces not explicitly noted here on 1st and
3rd floors on or before 31-May-96.
[LOGO] MEDTRONIC
SHOREVIEW THIRD FLOOR PLAN
Space to be vacated by MCT on or before 31-May-96.
[FLOOR PLAN MAP OMITTED]
Computer room to be cohabitated by MCT and Medtronic during the lease term.
L E A S E
ARTICLE 1. LEASE TERMS
1.1 LANDLORD AND TENANT. This lease ("Lease") is entered into this 16TH DAY OF
OCTOBER, 1996 by and between CSM INVESTORS, INC., a Minnesota corporation,
("Landlord") and MICRO COMPONENT TECHNOLOGY, INC., a Delaware corporation,
("Tenant").
1.2 PREMISES. Landlord hereby rents, leases, lets and demises to Tenant the
following described property ("Premises") as illustrated on the site plan
attached hereto as EXHIBIT A: 65,500 SQUARE FEET OF SPACE IN THE GATEWAY WEST
BUSINESS CENTER PHASE II located at 2340 COUNTY ROAD C IN ROSEVILLE, MINNESOTA,
and consisting of approximately 79,600 square feet ("Building"). The area of the
Premises may be increased or decreased by up to 3,500 square feet, as determined
by Tenant's floor plan, prior to November 1, 1996.
For the purposes of this Lease, the determination of the number of square feet
in the Premises shall be made by measuring from the exterior face of exterior
walls, and from the midline or centerpoint of interior or party walls. "As-
built" measurements will be taken of the Premises as soon as construction has
progressed to the point where such measurement is possible. Landlord will
certify such "as built" measurements to Tenant and thereafter, Landlord and
Tenant shall execute an addendum to this Lease in the form of attached EXHIBIT
B, confirming said measurements and adjusting (i) the area of the Premises, (ii)
the Base Rent, and (iii) Tenant's pro rata share, to reflect the actual square
foot area of the Premises, and such addendum shall thereupon be deemed attached
hereto, incorporated herein, and by this reference made a part of this Lease.
1.3 LEASE TERM. The term of this Lease shall commence on the date which Landlord
delivers the Premises substantially complete, as documented by issuance of a
temporary occupancy permit or receipt of verbal approval by the appropriate city
official, and shall terminate on the last day of the one hundred twentieth
(120th) full month thereafter, unless sooner terminated as hereinafter provided.
In the event that Tenant does not vacate the Premises upon the expiration or
termination of this Lease, Tenant shall be a tenant at will for the holdover
period and all of the terms and provisions of this Lease shall be applicable
during that period, except that Tenant shall pay Landlord as base rental for the
period of such holdover an amount equal to two (2) times the base rent which
would have been payable by Tenant had the holdover period been a part of the
original term of this Lease, together with all additional rent as provided in
this Lease. Tenant agrees to vacate and deliver the Premises to Landlord upon
Tenant's receipt of notice from Landlord to vacate. The rental payable during
the holdover period shall be payable to Landlord on demand. No holding over by
Tenant, whether with or without the consent of Landlord, shall operate to extend
the term of this Lease. The occupancy date herein and Landlord's liability for
late delivery fees contained in Section 2.1 are predicated on receipt of an
approved tenant floor plan on or before November 1, 1996. Landlord warrants its
ability to provide Tenant occupancy of the Premises without a completed parking
surface, in the event that a parking lot is not in place in the Fall of 1996.
1.4 BASE RENT. Base Rent is:
MONTHS MONTHLY BASE RENT * PER SQ. FT. *
------ ------------------- -------------
INITIAL TERM: 1-60 $21,014.58 $3.85
61-120 $22,379.17 $4.10
OPTION TERM: 121-144 market market
* Subject to adjustment to reflect the actual area of the Premises, as
provided in Section 1.2 hereof.
1.5 PERMITTED USE: OFFICE, PRODUCTION, RESEARCH AND WAREHOUSE.
1.6 SECURITY DEPOSIT: NONE ($0.00)
1.7 PRO-RATA SHARE: Tenant's pro-rata share shall be the fraction of space
occupied by Tenant under Section 1.2 divided by the
total area of the Building, subject to adjustment as
provided in Section 2.2 hereof.
1.8 ADDRESSES. LANDLORD'S ADDRESS:
-------------------
CSM INVESTORS, INC.
2575 UNIVERSITY AVENUE WEST, SUITE 150
ST. PAUL, MN 55114-1024
(612) 646-1717
TENANT'S ADDRESS:
-----------------
MICRO COMPONENT TECHNOLOGY,INC.
2340 COUNTY ROAD C
ROSEVILLE, MN 55113
ARTICLE 2. RENT, OPERATING EXPENSES AND SECURITY DEPOSIT
2.1 BASE RENT. Tenant agrees to pay monthly as base rent during the term of this
Lease the sum of money set forth in Section 1.4 of this Lease, which amount
shall be payable to Landlord at the address shown above. One monthly installment
shall be due and payable on or before the first day of each calendar month
succeeding the Commencement Date during the term of this Lease; provided, if the
Commencement Date should be a date other than the first day of a calendar month,
the monthly rental set forth above shall be prorated to the end of that calendar
month, and all succeeding installments of rent shall be payable on or before the
first day of each succeeding calendar month during the term of this Lease.
Tenant shall pay, as additional rent, all other sums due under this Lease. If
Landlord, for any reason whatsoever (other than Tenant's default), cannot
deliver possession of the Premises to the Tenant on the Commencement Date, this
Lease shall not be void or voidable, nor shall Landlord be liable for any loss
or damage resulting therefrom, nor shall the expiration of the term be extended,
but all rent shall be abated until Landlord delivers possession, and Landlord
shall pay Tenant, as its only recourse, a late delivery fee in the amount of
$500.00 per day for each day Landlord fails to provide Tenant occupancy of the
Premises substantially complete after April 15, 1997.
2.2 OPERATING EXPENSES. Subject to Section 2.5 hereof, Tenant shall also pay as
additional rent Tenant's pro rata share of the operating expenses of Landlord
for the Building. Landlord may invoice Tenant monthly for Tenant's pro rata
share of the estimated operating expenses for each calendar year, which amount
shall be adjusted from time-to-time by Landlord based upon anticipated operating
expenses. Within six (6) months following the close of each calendar year,
Landlord shall provide Tenant an accounting showing in reasonable detail by line
item the computations of additional rent due under this Section. In the event
the accounting shows that the total of the monthly payments made by Tenant
exceeds the amount of additional rent due by Tenant under this Section, the
accounting shall be accompanied by evidence of a credit to Tenant's account. In
any event the accounting shows that the total of the monthly payments made by
Tenant is less than the amount of additional rent due by Tenant under this
Section, the accounting shall be accompanied by an invoice for the additional
rent. Within ninety (90) days of receipt of the operating expense reconciliation
for the previous year, Tenant shall have the right to audit Landlord's books and
records as they pertain to operating expenses for the immediately preceding
calendar year, in Landlord's office and with reasonable notice. If Tenant does
not provide notice to Landlord within ninety (90) days of its intent to audit,
Tenant shall automatically waive and release its right to audit for the
preceding calendar year. The cost of said audit shall be borne by Tenant unless
the audit discloses that Tenant has overpaid its proportionate share of
operating expenses for the calendar year in question by more than ten percent
(10%), in which case the reasonable expense of the audit shall be borne by
Landlord. If the audit reveals that Landlord's actual statement was incorrect in
any amount, the resulting excess or deficiency shall be paid by or reimbursed to
Tenant, as the case may be.
Notwithstanding any other provisions in this Lease, during the year in which
this Lease terminates, Landlord, prior to the termination date, shall have the
option to invoice Tenant for Tenant's pro rata share of the operating expenses
based upon the previous year's operating expenses and will be adjusted
appropriately when actual expenses have been compiled. If this Lease shall
terminate on a day other than the last day of a calendar year, the amount of any
additional rent payable by Tenant applicable to the year in which the
termination shall occur shall be prorated on the ratio that the number of days
from the commencement of the calendar year to and including such termination
date bears to 365. Tenant agrees to pay any additional rent due under this
Section within ten (10) days following receipt of the invoice or accounting
showing additional rent due. Tenant's pro rata share set forth in Section 1.7
shall, subject to reasonable adjustment by Landlord, be equal to a percentage
based upon a fraction, the numerator of which is the total area of the Premises
as set forth in Article 1 and the denominator of which shall be the net rentable
area of the Building, as the same may change from time to time.
2.3 DEFINITION OF OPERATING EXPENSES. The term "operating expenses" includes all
expenses incurred by Landlord with respect to the maintenance and operation of
the Building, including, but not limited to, the following: maintenance, repair
and replacement costs; electricity, fuel, water, sewer, gas and other common
Building utility charges; equipment used for maintenance and operation of the
Building; operational expenses; exterior window washing and janitorial services;
trash and snow removal; landscaping and pest control; commercially reasonable
management fees (not to exceed five percent (5%) of base rents), wages and
benefits payable to employees of Landlord whose duties are directly connected
with the operation and maintenance of the Building; all services, supplies,
repairs, replacements or other expenses for maintaining and operating the
Building or project including parking and common areas; improvements made to the
Building which are required under any governmental law or regulation that was
not applicable to the Building at the time it was constructed; installation of
any device or other equipment which improves the operating efficiency of any
system within the Premises and thereby reduces operating expenses with a
reasonable payback for the device or equipment; all other expenses which would
generally be regarded as operating, repair, replacement and maintenance
expenses; all real property taxes and installments of special assessments,
including dues and assessments by means of deed restrictions and/or owners'
associations which accrue against the Building during the term of this Lease and
legal fees incurred in connection with actions to reduce the same; and all
insurance premiums Landlord is required to pay or deems necessary to pay,
including fire and extended coverage, and rent loss and public liability
insurance, with respect to the Building. Notwithstanding the above, operating
expenses which for tax purposes would be considered capital improvements shall
be amortized straight line over the useful life that would govern such an
expense for federal income tax purposes.
The term "Operating Expenses" shall not include any repairs, restoration or
other work occasioned by fire or other casualty to the extent covered by
insurance; income or franchise taxes of the Landlord; expenses incurred in
leasing to or procuring tenants; leasing commissions; advertising expenses;
expenses of renovating or improving spaces for other tenants; interest or
principal on any indebtedness of the Landlord; legal or other professional fees
related to Landlord's title or financing or any such fees related to other
actual or prospective tenants in the property; any costs related to the original
construction or design of the Building; or any costs related to environmental
testing or remediation on the land underlying the Building,
2.4 INCREASE IN INSURANCE PREMIUMS. If an increase in any insurance premiums
paid by Landlord for the Building is caused by a change in Tenant's use of the
Premises or if Tenant vacates the Premises and causes an increase in such
premiums, then Tenant shall pay as additional rent the amount of such increase
to Landlord.
2.5 TENANT'S RIGHT TO CONTROL INTERIOR EXPENSES. Tenant will be allowed, at its
own expense, to control and/or provide its own services within the Premises
that do not affect the structure or exterior of the Building. Tenant will not be
charged for such interior expenses incurred by or for other tenants.
ARTICLE 3. OCCUPANCY AND USE
3.1 USE. Tenant warrants and represents to Landlord that the Premises shall be
used and occupied only for the purpose as set forth in Section 1.5. Tenant shall
occupy the Premises, conduct its business and control its agents, employees,
invitees and visitors in such a manner as is lawful, reputable and will not
create a nuisance. Tenant shall not permit any operation which emits any odor or
matter which intrudes into other portions of the Building or otherwise interfere
with, annoy or disturb any other lessee in its normal business operations or
Landlord in its management of the Building. Tenant shall not permit any waste on
the Premises to be used in any way which would, in the opinion of Landlord, be
extra hazardous on account of fire or which would, in any way, increase or
render void the fire insurance on the Building.
3.2 SIGNS. No sign of any type or description shall be erected, placed or
painted in or about the Premises or Building which are visible from the exterior
of the Premises, except those signs submitted to Landlord in writing, and which
signs are in conformance with Landlord's sign criteria, which is attached hereto
as EXHIBIT C.
3.3 COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Tenant, at Tenant's sole cost
and expense, shall comply with all laws, ordinances, orders, rules and
regulations of state, federal, municipal or other agencies or bodies having
jurisdiction over the use, condition or occupancy of the Premises, provided,
however, that Tenant shall not be required to make exterior structural capital
improvements not related to Tenant's business. Tenant will comply with the
reasonable rules and regulations of the Building adopted by Landlord. Landlord
shall have the right at all times to change and amend the rules and regulations
in any reasonable manner as may be deemed advisable for the safety, care,
cleanliness, preservation of good order and operation or use of the Building or
the Premises. All rules and regulations of the Building will be sent by Landlord
to Tenant in writing and shall thereafter be carried out and observed by Tenant.
3.4 WARRANTY OF POSSESSION. Landlord warrants that it has the right and
authority to execute this Lease, and Tenant, upon payment of the required rents
and subject to the terms, conditions, covenants and agreements contained in this
Lease, shall have possession of the Premises during the full term of this Lease
as well as any extension or renewal thereof. Landlord shall not be responsible
for the acts or omissions of any other lessee or third party that may interfere
with Tenant's use and enjoyment of the Premises.
3.5 RIGHT OF ACCESS. Landlord or its authorized agents shall, upon 24 hours
advance notice to Tenant (except in emergencies), have the right to enter the
Premises to inspect the same, to show the Premises to prospective purchasers,
lessees, mortgagees, insurers or other interested parties, and to alter, improve
or repair the Premises or any other portion of the Building. Except in emergency
situations, Landlord and its agents will be accompanied by a representative of
Tenant during such access. Tenant hereby waives any claim for damages for injury
or inconvenience to or interference with Tenant's business, any loss of
occupancy or use of the Premises, and any other loss occasioned thereby.
Landlord and its agents acknowledge and will not violate the confidentiality of
Tenant's operations. Tenant shall not change Landlord's lock system or in any
other manner prohibit Landlord from entering the Premises. Tenant may, however,
install its own security system. Landlord shall have the right to use any and
all means which Landlord may deem proper to open any door in an emergency
without liability therefor. Tenant shall permit Landlord to erect, use, maintain
and repair pipes, cables, conduits, plumbing, vents and wires in, to and through
the Premises as often and to the extent that Landlord may now or hereafter deem
to be necessary or appropriate for the proper use, operation and maintenance of
the Building, provided that Landlord's action does not interfere with Tenant's
reasonable use of the Premises.
ARTICLE 4. UTILITIES AND ACTS OF OTHERS
4.1 BUILDING SERVICES. Tenant shall pay when due, all charges for utilities
furnished to or for the use or benefit of Tenant or the Premises. Tenant shall
have no claim for rebate of rent on account of any interruption in service.
4.2 THEFT OR BURGLARY. Landlord shall not be liable to Tenant for losses to
Tenant's property or personal injury caused by criminal acts or entry by
unauthorized persons into the Premises or the Building.
ARTICLE 5. REPAIRS AND MAINTENANCE
5.1. LANDLORD REPAIRS. Landlord shall not be required to make any improvements,
replacements or repairs of any kind or character to the Premises or the Building
during the term of this Lease except as are set forth in this Section. Landlord
shall maintain only the roof, foundation, parking and common areas, the
structural soundness of the exterior walls, doors, corridors, and other
structures serving the Premises, provided that Landlord's cost of maintaining,
replacing and repairing the items set forth in this Section are operating
expenses subject to the additional rent provisions in Section 2.2 and 2.3, and
provided that Landlord's action does not interfere with Tenant's reasonable use
of the Premises. Landlord shall not be liable to Tenant, except as expressly
provided in this Lease, for any damage or inconvenience, and Tenant shall not be
entitled to any abatement or reduction of rent by reason of any repairs,
alterations or additions made by Landlord under this Lease, unless caused by the
gross negligence of Landlord.
5.2 TENANT REPAIRS. Tenant shall, at all times throughout the term of this
Lease, including renewals and extensions, and at its sole expense, keep and
maintain the Premises in a clean, safe, sanitary and first class condition and
in compliance with all applicable laws, codes, ordinances, rules and
regulations. Tenant's obligations hereunder shall include, but not be limited
to, the maintenance, repair and replacement, if necessary, of all heating,
ventilation, air conditioning, lighting and plumbing fixtures and equipment,
fixtures, motors and machinery, all interior walls, partitions, doors and
windows, including the regular painting thereof, all exterior entrances,
windows, doors and docks and the replacement of all broken glass. When used in
this provision, the term "repairs" shall include replacements or renewals when
necessary, and all such repairs made by the Tenant shall be equal in quality and
class to the original work. The Tenant shall keep and maintain all portions of
the Premises and the sidewalk and areas adjoining the same in a clean and
orderly condition, free of accumulation of dirt, rubbish, snow and ice. If
Tenant fails, refuses or neglects to maintain or repair the Premises as required
in this Lease after notice shall have been given Tenant, in accordance with this
Lease, Landlord may make such repairs without liability to Tenant for any loss
or damage that may accrue to Tenant's merchandise, fixtures or other property or
to Tenant's business by reason thereof, and upon completion thereof, Tenant
shall pay to Landlord all costs plus fifteen percent (15%) for overhead incurred
by Landlord in making such repairs upon presentation to Tenant of bill therefor.
5.3. TENANT DAMAGES. Tenant shall not allow any damage to be committed on any
portion of the Premises or Building or common areas, and at the termination of
this lease, by lapse of time or otherwise, Tenant shall deliver the Premises to
Landlord in as good condition as existed at the Commencement Date of this Lease,
ordinary wear and tear excepted. The cost and expense of repairs necessary to
restore the condition of the Premises shall be borne by Tenant.
ARTICLE 6. ALTERATIONS AND IMPROVEMENTS
6.1 LANDLORD IMPROVEMENTS. Landlord will complete the construction of the
improvements to the Premises in accordance with plans and specifications agreed
to by Landlord and Tenant prior to November 1, 1996, which plans and
specifications are made a part of this Lease by reference, and Tenant shall
execute a copy of the plans and specifications and, if applicable, change orders
setting forth the amount of any costs to be borne by Tenant. In the event Tenant
fails to execute the plans and specifications and change orders prior to
November 1, 1996, Landlord may, at its sole option, declare this Lease cancelled
or notify Tenant that the base rent shall commence on the completion date even
though the improvements to be constructed by Landlord may not be complete. Any
changes or modifications to the approved plans and specifications shall be made
and accepted by written change orders or agreement signed by Landlord and Tenant
and shall constitute an amendment to this Lease.
Landlord agrees to provide an allowance of up to $20.00 per square foot towards
construction of the improvements to the Premises beyond the scope of the shell
building improvements depicted in EXHIBIT D. Immediately upon completion of the
Landlord improvements, Landlord and Tenant shall enter into an addendum to this
Lease in the form of the sample addendum which is attached hereto as EXHIBIT B
documenting the actual construction costs and amortizing costs of up to $17.00
per square foot into the base rental rate on a straight line basis at a ten
percent (10%) interest rate over the original term of this Lease, and an
additional $3.00 per square foot amortized without interest over the first year
of this Lease. Tenant shall immediately reimburse Landlord for its contribution
to tenant improvements in excess of $20.00 per square foot. Said allowance shall
include only "hard costs" of construction, which shall be defined as labor and
materials which result in improvements which remain with the Building upon
Tenant's vacation of the Premises, except that Tenant's architectural fees for
space planning may be included in the allowance.
Construction of the improvements will be undertaken on an "open book" basis with
Landlord procuring a minimum of three bids from reputable general contractors
which my be reviewed by Tenant. Landlord will not charge any additional fee for
oversight of construction of the improvements.
6.2 TENANT IMPROVEMENTS. Tenant shall not make or allow to be made any
alterations or physical additions in or to the Premises without first obtaining
the written consent of Landlord, which consent may in the sole and absolute
discretion of Landlord be denied. Any alterations, physical additions or
improvements to the Premises made by Tenant shall at once become the property of
Landlord and shall be surrendered to Landlord upon the termination of this
Lease; provided, however, Landlord, at its option, may require Tenant to remove
any physical additions and/or repair any alterations in order to restore the
Premises to the conditions existing at the time Tenant took possession, all
costs of removal and/or alterations to be borne by Tenant. This clause shall not
apply to moveable equipment or furniture owned by Tenant or a list of items to
be removed by Tenant which will be provided by Tenant and approved by Landlord
prior to occupancy, which may be removed by Tenant at the end of the term of
this Lease if Tenant is not then in default and if such equipment and furniture
are not subject to any other rights, liens and interests of Landlord, and Tenant
agrees to repair any damage caused by the removal of said items.
ARTICLE 7. CASUALTY AND INSURANCE
7.1 SUBSTANTIAL DESTRUCTION. If all or a substantial portion of the Premises or
the Building should be totally destroyed by fire or other casualty, or if the
Premises or the Building should be damaged so that rebuilding cannot reasonably
be completed within one hundred eighty (180) working days after the date of
written notification by Tenant to Landlord of the destruction, or if insurance
proceeds are not made available to Landlord, or are inadequate, for restoration,
this Lease shall terminate at the option of Landlord by written notice to Tenant
within sixty (60) days following the occurrence, and the rent shall be abated
for the unexpired portion of the Lease effective as of the date of the written
notification.
7.2 PARTIAL DESTRUCTION. If the Premises should be partially damaged by fire or
other casualty, and rebuilding or repairs can reasonably be completed within one
hundred eighty (180) working days from the date of written notification by
Tenant to Landlord of the destruction, and insurance proceeds are adequate and
available to Landlord for restoration, this Lease shall not terminate, and
Landlord shall at its sole risk and expense proceed with reasonable diligence to
rebuild or repair the Building or other improvements to substantially the same
condition in which they existed prior to the damage. If the Premises are to be
rebuilt or repaired and are untenantable in whole or in part following the
damage, and the damage or destruction was not caused or contributed to by act or
negligence of Tenant, its agents, employees, invitees or those for whom Tenant
is responsible, the rent payable under this Lease during the period for which
the Premises are untenantable shall be adjusted to such an extent as may be fair
and reasonable under the circumstances. In the event that Landlord fails to
complete the necessary repairs or rebuilding within one hundred eighty (180)
working days from the date of written notification by Tenant to Landlord of the
destruction, Tenant may at its option terminate this Lease by delivering written
notice of termination to Landlord, whereupon all rights and obligations under
this Lease shall cease to exist.
7.3 PROPERTY INSURANCE. Landlord shall not be obligated in any way or manner to
insure any personal property (including, but not limited to, any furniture,
machinery, goods or supplies) of Tenant upon or within the Premises, any
fixtures installed or paid for by Tenant upon or within the Premises, or any
improvements which Tenant may construct on the Premises. Tenant shall maintain
property insurance on its personal property. Tenant shall have no right in or
claim to the proceeds of any policy of insurance maintained by Landlord even if
the cost of such insurance is borne by Tenant as set forth in Article 2, except
that Landlord agrees to apply any proceeds of an insurance award towards the
event leading to the award, unless the terms of Landlord's mortgage on the
property, if any, does not allow such expenditure.
7.4 WAIVER OF SUBROGATION. Anything in this Lease to the contrary withstanding,
Landlord and Tenant hereby waive and release each other of and from any and all
right of recovery, claim, action or cause of action, against each other, their
agents, officers and employees, for any loss or damage that may occur to the
Premises, the improvements of the Building or personal property within the
Building, by reason of fire or the elements, regardless of cause or origin,
including negligence of Landlord or Tenant and their agents, officers and
employees, but excluding any damage or loss caused by the willful intent of
Tenant or Landlord. Landlord and Tenant agree immediately to give their
respective insurance companies which have issued policies of insurance covering
all risk of direct physical loss, written notice of the terms of the mutual
waivers contained in this Section.
7.5 HOLD HARMLESS. Neither party shall be liable to the other party's employees,
agents, invitees, licensees or visitors, or to any other person, for an injury
to person or damage to property on or about the Premises caused by any act or
omission of the other party, its agents, servants or employees, or of any other
person entering upon the Premises under express or implied invitation by the
other party. Each party agrees to indemnify and hold harmless the other party of
and from any loss, attorney's fees, expenses or claims arising out of any such
damage or injury.
7.6 PUBLIC LIABILITY INSURANCE. Tenant shall during the term hereof keep in full
force and effect at its expense a policy or policies of commercial general
liability insurance with respect to the Premises and the business of Tenant, on
terms and with companies approved in writing by Landlord, in which both Tenant
and Landlord shall be covered by being named as insured parties under reasonable
limits of liability not less than $1,000,000, or such greater coverage as
Landlord may reasonably require, combined single limit coverage for bodily
injury, property damage or death. Such policy or policies shall provide that
thirty (30) days' written notice must be given to Landlord prior to cancellation
thereof. Tenant shall furnish evidence satisfactory to Landlord at the time this
Lease is executed that such coverage is in full force and effect.
ARTICLE 8. CONDEMNATION
8.1 SUBSTANTIAL TAKING. If all or a substantial part of the Premises are taken
for any public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain or by purchase in lieu thereof, and
the taking would prevent or materially interfere with the use of the Premises
for the purpose for which it is then being used, this Lease shall terminate and
the rent shall be abated during the unexpired portion of this Lease effective on
the date physical possession is taken by the condemning authority. Tenant shall
have no claim to the condemnation award or proceeds in lieu thereof, except that
Tenant shall be entitled to a separate award for the cost of removing and moving
its personal property.
8.2 PARTIAL TAKING. If all or a substantial part of the Premises are taken for
any public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain or by purchase in lieu thereof, and
this Lease is not terminated as provided in Section 8.1 above, the rent payable
under this Lease during the unexpired portion of the term shall be adjusted to
such an extent as may be fair and reasonable under the circumstances. Tenant
shall have no claim to the condemnation award or proceeds in lieu thereof,
except that Tenant shall be entitled to a separate award for the cost of
removing and moving its personal property.
ARTICLE 9. ASSIGNMENT OR SUBLEASE
9.1 LANDLORD ASSIGNMENT. Landlord shall have the right to sell, transfer or
assign, in whole or in part, its rights and obligations under this Lease and in
the Building. Any such sale, transfer or assignment shall operate to release
Landlord from any and all liabilities under this Lease arising after the date of
such sale, assignment or transfer.
9.2 TENANT ASSIGNMENT. Other than to a related entity, Tenant shall not assign,
in whole or in part, this Lease, or allow it to be assigned, in whole or in
part, by operation of law or otherwise or mortgage or pledge the same, or sublet
the Premises, in whole or in part, without the prior written consent of
Landlord, and in no event shall said such assignment or sublease ever release
Tenant or any guarantor from any obligation or liability hereunder.
Notwithstanding anything in this Lease to the contrary, in the event of any
assignment or sublease, any option or right of first refusal granted to Tenant
shall not be assignable by Tenant to any assignee or sublessee. No assignee or
sublessee of the Premises or any portion thereof may assign or sublet the
Premises or any portion thereof.
9.3 CONDITIONS OF ASSIGNMENT. If Tenant desires to assign or sublet all or any
part of the Premises, it shall so notify Landlord at least thirty (30) days in
advance of the date on which Tenant desires to make such assignment or sublease.
Tenant shall provide Landlord with a copy of the proposed assignment or sublease
and such information as Landlord might request concerning the proposed sublessee
or assignee to allow Landlord to make informed judgments as to the financial
condition, reputation, operations and general desirability of the proposed
sublessee or assignee. Within fifteen (15) days after Landlord's receipt of
Tenant's proposed assignment or sublease and all required information concerning
the proposed sublease or assignee, Landlord shall have the following options:
(1) cancel this Lease as to the Premises or portion thereof proposed to be
assigned or sublet; (2) consent to the proposed assignment or sublease, and, if
the rent due and payable by any assignee or sublessee under any such permitted
assignment or sublease (or a combination of the rent payable under such
assignment or sublease plus any bonus or any other consideration or any payment
incident thereto) exceeds the rent payable under this Lease for such space,
Tenant shall pay to Landlord fifty percent (50%) of all such excess rent (after
reduction for reasonable expenses incurred by Tenant to procure such rent) and
other excess consideration within ten (10) days following receipt thereof by
Tenant; or (3) refuse, in its sole and absolute discretion and judgement, to
consent to the proposed assignment or sublease, which refusal shall be deemed to
have been exercised unless Landlord gives Tenant written notice providing
otherwise. Upon the occurrence of an event of default, if all or any part of the
Premises are then assigned or sublet, Landlord, in addition to any other
remedies provided by this Lease or provided by law, may, at its option, collect
directly from the assignee or sublessee all rents becoming due to Tenant by
reason of the assignment or sublease. Any collection directly by Landlord from
the assignee or sublessee shall not be construed to constitute a novation or a
release of Tenant or any guarantor from the further performance of its
obligations under this Lease.
9.4 RIGHTS OF MORTGAGE. Tenant accepts this Lease subject and subordinate to any
recorded mortgage presently existing or hereafter created upon the Building and
to all existing recorded restrictions, covenants, easements and agreements with
respect to the Building. Landlord is hereby irrevocably vested with full power
and authority to subordinate Tenant's interest under this Lease to any first
mortgage lien hereafter placed on the Premises, and Tenant agrees upon demand to
execute additional instruments subordinating this Lease as Landlord may require.
If the interests of Landlord under this Lease shall be transferred by reason of
foreclosure or other proceedings for enforcement of any first mortgage or deed
of trust on the Premises, Tenant shall be bound to the transferee (sometimes
called the "Purchaser") at the option of the Purchaser, under the terms,
covenants and conditions of this Lease for the balance of the term remaining,
including any extensions or renewals, with the same force and effect as if the
Purchaser were Landlord under this Lease, and, if requested by the Purchaser,
Tenant agrees to attorn to the Purchaser, including the first mortgagee under
any such mortgage if it be the Purchaser, as its Landlord. Notwithstanding the
foregoing, Tenant shall not be disturbed in its possession of the Premises so
long as Tenant is not in default hereunder.
9.5 TENANT'S STATEMENT. Tenant agrees to furnish, from time to time, within ten
(10) days after receipt of a request from Landlord or Landlord's mortgagee, a
statement certifying, if applicable, the following: Tenant is in possession of
the Premises; the Premises are acceptable; the Lease is in full force and
effect; the Lease is unmodified; Tenant claims no present charge, lien, or claim
or offset against rent; the rent is paid for the current month, but is not
prepaid for more than one month and will not be prepaid for more than one month
in advance; there is no existing default by reason of some act or omission by
Landlord; and such other matters as may be reasonably required by Landlord or
Landlord's mortgagee. Tenant's failure to deliver such statement, in addition to
being a default under this Lease, shall be deemed to establish conclusively that
this Lease is in full force and effect except as declared by Landlord, that
Landlord is not in default of any of its obligations under this Lease, and that
Landlord has not received more than one month's rent in advance. Tenant agrees
to furnish, from time to time, within ten (10) days after receipt of a request
from Landlord, the most current financial statement of Tenant.
ARTICLE 10. LANDLORD'S LIEN AND SECURITY AGREEMENT
10.1 LANDLORD'S LIEN. As security for payment of rent, damages and all other
payment required to be made by this Lease, Tenant hereby grants to Landlord a
lien upon all fixtures of Tenant now or subsequently located upon the Premises.
If Tenant abandons or vacates any substantial portion of the Premises or is in
default in the payment of any rentals, damages or other payments required to be
made by this Lease or is in default of any other provision of this Lease,
Landlord may enter upon the Premises, by picking or changing locks if necessary,
and take possession of all or any part of such fixtures, and may sell all or any
part of such fixtures at a public or private sale, in one or successive sales,
with or without notice, to the highest bidder for cash, and, on behalf of
Tenant, sell and convey all or part of such fixtures to the highest bidder,
delivering to the highest bidder all of Tenant's title and interest in the
fixtures sold. The proceeds of the sale of such fixtures shall be applied by
Landlord toward the reasonable costs and expenses of the sale, including
attorney's fees, and then toward the payment of all sums then due by Tenant to
Landlord under the terms of this Lease. Any excess remaining shall be paid to
Tenant or any other person entitled thereto by law.
10.2 SECURITY AGREEMENT. (Intentionally Omitted)
ARTICLE 11. DEFAULT AND REMEDIES
11.1 DEFAULT BY TENANT. The following shall be deemed to be events of default
("Default") by Tenant under this Lease: (1) Tenant shall fail to pay within five
(5) days of the date due any installment of rent or any other payment required
pursuant to this Lease and such failure is not cured within forty-eight (48)
hours after written notice; (2) Tenant shall abandon any substantial portion of
the Premises and such abandonment is not cured within ten (10) days after
written notice; (3) Tenant shall fail to comply with any term, provision or
covenant of this Lease, other than the payment of rent, and the failure is not
cured within ten (10) days after written notice to Tenant; (4) Tenant shall file
a petition or an involuntary petition is filed against Tenant; or Tenant becomes
insolvent under any applicable federal or state bankruptcy or insolvency law; or
Tenant admits that it cannot meet its financial obligations as they become due;
or a receiver or trustee shall be appointed for all or substantially all of the
assets of Tenant; or Tenant shall make a transfer in fraud of creditors or shall
make an assignment for the benefit of creditors; or (5) Tenant shall do or
permit to be done any act which results in a lien being filed against the
Premises or the Building and/or project of which the Premises are a part, and
said lien is not discharged within thirty (30) days of recording of said lien or
notice thereof..
In the event that an order for relief is entered in any case under Title 11,
U.S.C. (the "Bankruptcy Code") in which Tenant is the debtor and: (A) Tenant as
debtor-in-possession, or any trustee who may be appointed in the case (the
"Trustee") seeks to assume the lease, then Tenant, or Trustee if applicable, in
addition to providing adequate assurance described in applicable provisions of
the Bankruptcy Code, shall provide adequate assurance to Landlord of Tenant's
future performance under the Lease by depositing with Landlord a sum equal to
the lesser of twenty-five percent (25%) of the rental and other charges due for
the balance of the Lease term or six (6) months' rent ("Security"), to be held
(without any allowance for interest thereon) to secure Tenant's obligation under
the Lease, and (B) Tenant, or Trustee if applicable, seeks to assign the Lease
after assumption of the same, then Tenant, in addition to providing adequate
assurance described in applicable provisions of the Bankruptcy Code, shall
provide adequate assurance to Landlord of the proposed assignee's future
performance under the Lease by depositing with Landlord a sum equal to the
Security to be held (without any allowance or interest thereon) to secure
performance under the Lease. Nothing contained herein expresses or implies, or
shall be construed to express or imply, that Landlord is consenting to
assumption and/or assignment of the Lease by Tenant, and Landlord expressly
reserves all of its rights to object to any assumption and/or assignment of the
Lease. Neither Tenant nor any Trustee shall conduct or permit the conduct of any
"fire", "bankruptcy", "going out of business" or auction sale in or from the
Premises.
11.2 REMEDIES FOR TENANT'S DEFAULT. Upon the occurrence of a Default as defined
above, Landlord may elect either (i) to cancel and terminate this Lease and this
Lease shall not be treated as an asset of Tenant's bankruptcy estate, or (ii) to
terminate Tenant's right to possession only without cancelling and terminating
Tenant's continued liability under this Lease. Notwithstanding the fact that
initially Landlord elects under (ii) to terminate Tenant's right to possession
only, Landlord shall have the continuing right to cancel and terminate this
Lease by giving three (3) days' written notice to Tenant of such further
election, and shall have the right to pursue any remedy at law or in equity that
may be available to Landlord.
In the event of election under (ii) to terminate Tenant's right to possession
only, Landlord may, at Landlord's option, enter the Premises and take and hold
possession thereof, without such entry into possession terminating this Lease or
releasing Tenant in whole or in part from Tenant's obligation to pay all amounts
hereunder for the full stated term. Upon such reentry, Landlord may remove all
persons and property from the Premises and such property may be removed and
stored in a public warehouse or elsewhere at the cost and for the account of
Tenant, without becoming liable for any loss or damage which may be occasioned
thereby. Such reentry shall be conducted in the following manner: without resort
to judicial process or notice of any kind if Tenant has abandoned or voluntarily
surrendered possession of the Premises; and, otherwise, by resort to judicial
process. Upon and after entry into possession without termination of the Lease,
Landlord may, but is not obligated to, relet the Premises, or any part thereof,
to any one other than the Tenant, for such time and upon such terms as Landlord,
in Landlord's sole discretion, shall determine. Landlord may make alterations
and repairs to the Premises to the extent deemed by Landlord necessary or
desirable to relet the Premises.
Upon such reentry, Tenant shall be liable to Landlord as follows:
A. For all attorneys' fees incurred by Landlord in connection
with exercising any remedy hereunder;
B. For the unpaid installments of base rent, additional rent or
other unpaid sums which were due prior to such reentry,
including interest and late payment fees, which sums shall be
payable immediately.
C. For the installments of base rent, additional rent, and other
sums falling due pursuant to the provisions of this Lease for
the period after reentry during which the Premises remain
vacant, including late payment charges and interest, which
sums shall be payable as they become due hereunder.
D. For all expenses incurred in releasing the Premises, including
leasing commissions, attorneys' fees, and costs of alteration
or repairs necessary to restore the Premises to their original
condition, ordinary wear and tear excepted, which shall be
payable by Tenant as they are incurred by Landlord; and
E. While the Premises are subject to any new lease or leases made
pursuant to this Section, for the amount by which the monthly
installments payable under such new lease or leases is less
than the monthly installment for all charges payable pursuant
to this Lease, which deficiencies shall be payable monthly.
Notwithstanding Landlord's election to terminate Tenant's right to possession
only, and notwithstanding any reletting without termination, Landlord, at any
time thereafter, may elect to terminate this Lease, and to recover (in lieu of
the amounts which would thereafter be payable pursuant to the foregoing, but not
in diminution of the amounts payable as provided above before termination), as
damages for loss of bargain and not as a penalty, an aggregate sum equal to the
present value at ten percent (10%) per annum of the amount by which the rental
value of the portion of the term unexpired at the time of such election is less
than an amount equal to the unpaid base rent, percentage rent, and additional
rent and all other charges which would have been payable by Tenant for the
unexpired portion of the term of this Lease, which deficiency and all expenses
incident thereto, including commissions, attorneys' fees, expenses of
alterations and repairs to restore the Premises to their original condition,
ordinary wear and tear excepted, shall be due to Landlord as of the time
Landlord exercises said election, notwithstanding that the term had not expired.
If Landlord, after such reentry, leases the Premises, then the rent payable
under such new lease shall be conclusive evidence of the rental value of the
unexpired portion of the term of this Lease.
If this Lease shall be terminated by reason of bankruptcy or insolvency of
Tenant, Landlord shall be entitled to recover from Tenant or Tenant's estate, as
liquidated damages for loss of bargain and not as a penalty, the amount
determined by the immediately preceding paragraph.
11.3 LANDLORD'S RIGHT TO PERFORM FOR ACCOUNT OF TENANT. If Tenant shall be in
Default under this Lease, Landlord may, after five (5) days written notice, cure
the Default at any time for the account and at the expense of Tenant. If
Landlord cures a Default on the part of Tenant, Tenant shall reimburse Landlord
upon demand for any amount expended by Landlord in connection with the cure,
including, without limitation, attorneys' fees and interest.
11.4 INTEREST, ATTORNEY'S FEES AND LATE CHARGE. In the event of a Default by
Tenant: (1) if a monetary default, interest shall accrue on any sum due and
unpaid at the rate of the lesser of fifteen percent (15%) per annum or the
highest rate permitted by law and, if Landlord places in the hands of an
attorney the enforcement of all or any part of this Lease, the collection of any
rent due or to become due or recovery of the possession of the Premises, Tenant
agrees to pay Landlord's costs of collection, including reasonable attorney's
fees for the services of the attorney, whether suit is actually filed or not.
Other remedies for nonpayment of rent notwithstanding, if the monthly rental
payment or any other payment due from Tenant to Landlord is not received by
Landlord on or before the fifth (5th) day of the month for which the rent is
due, a late payment charge of two and one-half percent (2.5%) of such past due
amount shall become due and payable in addition to such amounts owed under this
Lease.
11.5 ADDITIONAL REMEDIES, WAIVERS, ETC.
A. The rights and remedies of Landlord set forth herein shall be
in addition to any other right and remedy now and hereafter
provided by law. All rights and remedies shall be cumulative
and not exclusive of each other. Landlord may exercise its
rights and remedies at any times, in any order, to any extent,
and as often as Landlord deems advisable without regard to
whether the exercise of one right or remedy precedes, concurs
with or succeeds the exercise of another.
B. A single or partial exercise of a right or remedy shall not
preclude a further exercise thereof, or the exercise of
another right or remedy from time to time.
C. No delay or omission by Landlord in exercising a right or
remedy shall exhaust or impair the same or constitute a waiver
of, or acquiescence to, a Default.
D. No waiver of Default shall extend to or affect any other
Default or impair any right or remedy with respect thereto.
E. No action or inaction by Landlord shall constitute a waiver of
Default.
F. No waiver of a Default shall be effective unless it is in
writing and signed by Landlord.
ARTICLE 12. RELOCATION (Intentionally Omitted)
ARTICLE 13. AMENDMENT AND LIMITATION OF WARRANTIES
13.1 ENTIRE AGREEMENT. IT IS EXPRESSLY AGREED BY TENANT, AS A MATERIAL
CONSIDERATION FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE
SPECIFIC REFERENCES TO WRITTEN EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT OF
THE PARTIES: THAT THERE ARE, AND WERE, NO VERBAL REPRESENTATIONS, WARRANTIES,
UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES PERTAINING TO THIS LEASE OR
TO THE EXPRESSLY MENTIONED WRITTEN EXTRINSIC DOCUMENTS NOT INCORPORATED IN
WRITING IN THIS LEASE.
13.2 AMENDMENT. THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR EXTENDED
EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LANDLORD AND TENANT.
13.3 LIMITATION OF WARRANTIES. LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE
ARE AND SHALL BE NO IMPLIED WARRANTIES OR MERCHANTABILITY, HABITABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, AND
THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS
LEASE.
ARTICLE 14. MISCELLANEOUS
14.1 SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and inure to the
benefit of Landlord and Tenant and their respective heirs, personal
representatives, successors and assigns. It is hereby covenanted and agreed that
should Landlord's interest in the Premises cease to exist for any reason during
this Lease, then notwithstanding the happening of such event this Lease
nevertheless shall remain unimpaired and in full force and effect, and Tenant
hereunder agrees to attorn to the then owner of the Premises.
14.2 USE OR RENT TAX. If applicable in the jurisdiction where the Premises are
issued, Tenant shall pay and be liable for all rental, sales and use taxes or
other similar taxes, if any, levied or imposed by any city, state, county or
other governmental body having authority, such payments to be in addition to all
other payments required to be paid to Landlord under the terms of this Lease.
Any such payment shall be paid concurrently with the payment of the rent,
additional rent, operating expenses or other charge upon which the tax is based
as set forth above.
14.3 ACT OF GOD. Neither party shall be required to perform any covenant or
obligation in this Lease, or be liable in damages to the other party, so long as
the performance or non-performance of the covenant or obligation is delayed,
caused or prevented by an act of God, force majeure or by the other party.
14.4 HEADINGS. The section headings appearing in this Lease are inserted only as
a matter of convenience and in no way define, limit, construe or describe the
scope or intent of any Section.
14.5 NOTICE. All rent and other payments required to be made by Tenant shall be
payable to Landlord at the address set forth in Section 1.8. All payments
required to be made by Landlord to Tenant shall be payable at the address set
forth in Section 1.8, or at any other address within the United States as Tenant
may specify from time to time by written notice. Any notice or document required
or permitted to be delivered by the terms of this Lease shall be deemed to be
delivered (whether or not actually received) when deposited in the United States
Mail, postage prepaid, certified mail, return receipt requested, addressed to
the parties at the respective addresses set forth in Section 1.8.
14.6 TENANT'S AUTHORITY. If Tenant executes this Lease as a corporation, each of
the persons executing this Lease on behalf of Tenant does hereby personally
represent and warrant that Tenant is a duly authorized and existing corporation,
that Tenant is qualified to do business in the state in which the Premises are
located, that the corporation has full right and authority to enter into this
Lease, and that each person signing on behalf of the corporation is authorized
to do so. In the event any representation or warranty is false, all persons who
execute this lease shall be liable, individually, as Tenant.
14.7 HAZARDOUS SUBSTANCES. Tenant, its agents or employees, shall not bring or
permit to remain on the Premises or Building any asbestos, petroleum or
petroleum products, explosives, toxic materials, or substances defined as
hazardous wastes, hazardous materials, or hazardous substances under any
federal, state, or local law or regulation ("Hazardous Materials"), except items
related to Tenant's use, which use, storage and disposal shall be in accordance
with applicable codes, permits and regulations, and more stringent standard
industry practices, if applicable. Tenant's violation of the foregoing
prohibition shall constitute a material breach and default hereunder and Tenant
shall indemnify, hold harmless and defend Landlord from and against any claims,
damages, penalties, liabilities, and costs (including reasonable attorney fees
and court costs) caused by or arising out of (i) a violation of the foregoing
prohibition by Tenant or (ii) the presence of any Hazardous Materials on, under,
or about the Premises or the Building during the term of the Lease caused by or
arising, in whole or in part, out of the actions of Tenant, its agents or
employees. Tenant shall clean up, remove, remediate and repair any soil or
ground water contamination and damage caused by the presence and any release of
any Hazardous Materials in, on, under or about the Premises or the Building
during the term of the Lease caused by or arising, in whole or in part, out of
the actions of Tenant, its agents or employees, in conformance with the
requirements of applicable law. Tenant shall immediately give Landlord written
notice of any suspected breach of this paragraph; upon learning of the presence
of any release of any Hazardous Materials, and upon receiving any notices from
governmental agencies pertaining to Hazardous Materials which may affect the
Premises or the Building. The obligations of Tenant hereunder shall survive the
expiration of earlier termination, for any reason, of this Lease.
Landlord and Tenant acknowledge that Landlord has completed removal of
underground petroleum storage tanks formerly on the Premises, and that the
Minnesota Pollution Control Agency has issued a "no action, no association"
letter dated August 1, 1996, which refers to the removal of these tanks as well
as the presence of certain non-petroleum compounds on the Premises.
Notwithstanding Sections 7.5 or 13.3 hereof or any other provision of this
Lease: (a) Tenant shall not be liable for, and Landlord will hold Tenant
harmless from, any and all claims, costs, actions, administrative procedures,
fines and liabilities (including reasonable fees for attorneys and environmental
engineers) arising in any way from the past or continuing presence of petroleum
leakage or of the specified non-petroleum compounds; (b) Landlord warrants that
it does not know of the presence of any non-petroleum Hazardous Materials on the
Premises other than the specific non- petroleum compounds specified in said
letter of August 1, 1996 and in the reports identified therein; (c) Landlord
agrees to use its best efforts to have Tenant also named by the Minnesota
Pollution Control Agency as one of the "Listed Parties" to said letter of August
1, 1996; and (d) Landlord agrees that it will comply with the three "conditions"
specified on Page 3 of said letter of August 1, 1996.
14.8 SEVERABILITY. If any provision of this Lease or the application thereof to
any person or circumstances shall be invalid or unenforceable to any extent, the
remainder of this Lease and the application of such provisions to other persons
or circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
14.9 LANDLORD'S LIABILITY. If Landlord shall be in default under this Lease and,
if as a consequence of such default, Tenant shall recover a money judgment
against Landlord, such judgment shall be satisfied only out of the right, title
and interest of Landlord in the Building as the same may then be encumbered and
neither Landlord nor any person or entity comprising Landlord shall be liable
for any deficiency. In no event shall Tenant have the right to levy execution
against any property of Landlord nor any person or entity comprising Landlord
other than its interest in the Building as herein expressly provided.
14.10 BROKERAGE. Landlord and Tenant each represents and warrants to the other
that there is no obligation to pay any brokerage fee, commission, finder's fee
or other similar charge in connection with this Lease, other than fees due to
THE TEGRA GROUP, which are the responsibility of LANDLORD. Each party covenants
that it will defend, indemnify and hold harmless the other party from and
against any loss or liability by reason of brokerage or similar services alleged
to have been rendered to, at the instance of, or agreed upon by said
indemnifying party. Notwithstanding anything herein to the contrary, Landlord
and Tenant agree that there shall be no brokerage fee or commission due on
expansions, options or renewals by Tenant.
14.11 MANAGEMENT AGENT. Landlord hereby notifies Tenant that the person
authorized to execute this Lease and manage the Premises is CSM Corporation, a
Minnesota corporation, which has been appointed to act as the agent in leasing
management and operation of the Building for owner and is authorized to accept
service of process and receive or give receipts for notices and demands on
behalf of Landlord. Landlord reserves the right to change the identity and
status of its duly authorized agent upon written notice to Tenant.
14.12 RIGHT TO TERMINATE. Tenant shall have the one time option to terminate
this Lease, with no further obligation, upon the expiration of lease month
EIGHTY-FOUR (84) with delivery of written notice and a payment of a lease
termination fee in the amount of three (3) months base rent and the value of the
then unamortized improvements, delivered to Landlord prior to the expiration of
lease month SEVENTY-TWO (72). It shall be a condition of Tenant's right to
terminate that Tenant shall not be in default under Section 11 of this Lease.
14.13 MARKET RATE OPTION. Upon two hundred seventy (270) days written notice,
The Tenant may extend the term of this Lease for one (1) additional twenty-four
(24) month term under the same conditions contained herein, except that the Base
Rental shall be adjusted to reflect the prevailing market rate for comparable
space in the Roseville, Minnesota area. In no case shall the adjusted rate(s) be
less than the latest rate paid by the Tenant during the primary term of this
Lease. It shall be a condition of the exercise of this option that the Tenant
not be in default per Section 11 of this Lease.
14.14 EXPANSION OPTION. Landlord hereby grants Tenant an option to expand the
Premises into the area marked "Expansion Area" on EXHIBIT A attached hereto,
pursuant to the following terms and conditions:
A. This option may be exercised in writing, provided Tenant is
not in default in performance of its obligations under the
Lease, at any time prior to the expiration of lease month
THIRTY-SIX (36). If not timely and properly exercised, this
option will automatically be null and void and of no further
force and effect.
B. The Expansion Area will be leased to Tenant under the same
terms and conditions as are contained in this Lease, except
for base rent which shall be adjusted as hereinafter provided,
and Tenant's pro rata share which shall be adjusted to reflect
Tenant's increased square footage.
C. Base rent for the Expansion Area (which shall be in addition
to the base rent for the original Premises) shall equal the
sum of the following:
i. Four and 10/100 Dollars ($4.10) per square foot; plus
ii. The amortized cost per square foot of the leasehold
improvement allowance provided to Tenant by Landlord
for the Expansion Area (up to a maximum of Seventeen
and no/100 Dollars ($17.00) per square foot), which
amortization shall be at a rate of ten percent (10%)
over the remaining term of the Lease, subject to
Tenant maintaining a general financial condition
equal or better than that of the Tenant at the time
of execution of this Lease; and
iii. The amortized cost per square foot of unamortized
tenant improvements costing up to $10.00 per square
foot located in the Expansion Area prior to Tenant's
occupancy, based upon a ten percent (10%) rate and a
useful life of ten (10) years. The amortization of
these costs shall be at a rate of ten percent (10%)
over the remaining term of the Lease.
D. The Expansion Area shall be delivered to Tenant with completed
tenant improvements under Section 14.14.C(ii) no earlier than
the commencement of lease month forty-eight (48) and no later
than the expiration of lease month sixty (60), with the timing
of said delivery to be determined by Landlord. Landlord shall
provide at least thirty (30) days advance written notice of
the delivery date.
E. Upon exercise of this option by Tenant, Landlord and Tenant
shall execute an addendum to lease adding the Expansion Area,
to the Premises pursuant to the foregoing terms and
conditions.
F. In the event that Landlord is unable to provide Tenant with
the Expansion Area depicted in this section, Tenant, as its
only recourse, shall have the option to terminate this Lease
at the expiration of lease month sixty (60) with delivery of
sixty (60) days prior written notice to Landlord.
14.15 PARKING. Tenant shall have a minimum of one hundred eighty (180) parking
spaces available for its use during the term of this Lease, and two hundred
thirty (230) spaces available for its use after delivery of Tenant's Expansion
Area, if applicable.
14.16 SUBMISSION OF LEASE. Submission of this Lease to Tenant for signature
does not constitute a reservation of space or an option to lease. This Lease is
not effective until execution by and delivery to both Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease effective the
day and year first above written.
LANDLORD: TENANT:
CSM INVESTORS, INC. MICRO COMPONENT TECHNOLOGY, INC.
BY: /s/ ILLEGIBLE BY: /s/ Roger E. Glower
---------------------------------- ----------------------------------
ITS: V.P. ITS: Pres/CEO
------------------------------- ---------------------------------
EXHIBIT A
[GRAPHIC OMITTED]
Gateway West Business Center
EXHIBIT B
ADDENDUM TO LEASE
(EXAMPLE)
THIS ADDENDUM TO LEASE to that certain Lease dated ________, 19_____, ("Lease")
by and between _______________, a ________________, ("Landlord") and __________
_____________, a ____________________ , ("Tenant"), is entered into this ______
day of _______________ , 19_____.
If any provisions contained in the printed form of said Lease is inconsistent
with any provisions contained herein, then and in the event the provisions in
this Addendum to Lease shall control.
In consideration of the mutual covenants herein contained, and for other good
and valuable consideration, Landlord and Tenant hereby amend the aforementioned
Lease as follows:
SECTION 1.B. PREMISES. Landlord and Tenant agree that the rentable area of the
Premises, according to "as-built" measurements, is__________________square feet.
SECTION 2.C. COMMENCEMENT DATE. Landlord and Tenant agree that the Commencement
Date of the Lease is__________________, and that the Lease shall expire on
__________________, unless otherwise terminated or extended as contained herein.
SECTION 4. RENTAL. The Base Rent for the Lease Term shall be:
LEASE MONTHLY ANNUAL PER
MONTHS BASE RENT BASE RENT SQ. FT.
------ --------- --------- -------
INITIAL TERM 1-60 ________ ________ ______
61-120 ________ ________ ______
OPTION TERM 121-144 market market market
The rental rate depicted in this Section represents the additional Base Rent
consisting of the amortization of $________ in tenant improvements reimbursed to
Tenant by Landlord over the original term of the Lease at a ten percent (10%)
interest rate.
SECTION 5. PRO RATA SHARE. Tenant's pro rata share of operating expenses shall
be_________ percent (__________%).
All other terms and conditions of the Lease remain unchanged.
LANDLORD: TENANT:
BY:________________________________ BY:________________________________
ITS:_______________________________ ITS:_______________________________
EXHIBIT C
GATEWAY WEST BUSINESS CENTER
ROSEVILLE, MINNESOTA
SIGNAGE CRITERIA
GENERAL NOTES
1) TENANT SHALL BE RESPONSIBLE FOR THE PURCHASE, INSTALLATION AND MAINTENANCE
OF ALL SIGNS DESCRIBED IN THIS CRITERIA PACKAGE.
2) TENANT SHALL OBTAIN OWNER'S APPROVAL AND CITY PERMITS PRIOR TO ANY SIGNAGE
INSTALLATION.
3) TENANT MAY SOLICIT BIDS FROM ANY SIGNAGE MANUFACTURE OF TENANT'S CHOICE.
4) OWNER RESERVES THE RIGHT TO APPROVE ANY ALTERNATE SIGNAGE WHEN DEEMED
APPROPRIATE AT THE OWNER'S SOLE DISCRETION.
5) SIGNAGE ON THE BUILDING FRONT SHALL BE AS DESCRIBED ON PAGE 2 AND 3.
6) DOCK AND DRIVE-IN DOORS SHALL BE IDENTIFIED AS DESCRIBED ON PAGE 4. THIS
SIGNAGE MAY BE PROVIDED AT THE TENANT'S DISCRETION-IT IS NOT REQUIRED BY THE
OWNER.
7) SERVICE AND MAN DOORS IN THE TRUCK DOCK AREA SHALL BE IDENTIFIED AS
DESCRIBED ON PAGE 5. THIS SIGNAGE MAY BE PROVIDED AT THE TENANT'S
DISCRETION-IT IS NOT REQUIRED BY THE OWNER.
SUBMITTALS
1) TENANT SHALL SUBMIT TO THE OWNER. TWO COPIES OF ALL SIGN FACE LAYOUTS, AND
THE LOCATION OF ALL SIGNS ON THE BUILDING, FOR APPROVAL.
2) TENANT OR THE TENANT'S SIGN CONTRACTOR SHALL SUBMIT SIGNAGE PLANS TO THE
CITY, AS REQUIRED BY THE CITY, FOR PERMITS.
CSM CORPORATION
2575 UNIVERSITY AVE. W.
ST.PAUL, MN 55114
PHONE 646-1717
FAX 646-2404 30 MAY 96
GATEWAY WEST BUSINESS CENTER
ROSEVILLE, MINNESOTA
SIGNAGE CRITERIA.
[GRAPHIC OMITTED]
PARTIAL ELEVATION SINGLE LINE
[GRAPHIC OMITTED]
PARTIAL ELEVATION MULTIPLE LINES
CSM CORPORATION
2575 UNIVERSITY AVE. W.
ST.PAUL, MN 55114
PHONE 646-1717
FAX 646-2404 30 MAY 96
GATEWAY WEST BUSINESS CENTER
ROSEVILLE, MINNESOTA
SIGNAGE CRITERIA.
[GRAPHIC OMITTED]
SIGNAGE NOTES
1. LOGO: MAX. SIZE 4'-0" LONG x 3'-0" HIGH
MAX. AREA: 12 SQUARE FEET
COLOR: MAY MATCH TENANT'S COLOR CRITERIA
LIGHTING: MAY BE INTERIOR ILLUMINATED
WITH FACE LIGHTED.
2. TENANT NAME: SINGLE LINE SHALL BE 30" MAX. HEIGHT
MULTIPLE LINES SHALL BE NO HIGHER THAN
36" HEIGHT WITH CHARACTERS NOT EXCEEDING 30".
CSM CORPORATION
2575 UNIVERSITY AVE. W.
ST.PAUL, MN 55114
PHONE 646-1717
FAX 646-2404 30 MAY 96
GATEWAY WEST BUSINESS CENTER
ROSEVILLE, MINNESOTA
SIGNAGE CRITERIA.
[GRAPHIC OMITTED]
PARTIAL ELEVATION
OVERHEAD DOOR IDENTIFICATION
CSM CORPORATION
2575 UNIVERSITY AVE. W.
ST.PAUL, MN 55114
PHONE 646-1717
FAX 646-2404 30 MAY 96
GATEWAY WEST BUSINESS CENTER
ROSEVILLE, MINNESOTA
SIGNAGE CRITERIA.
[GRAPHIC OMITTED]
EXTERIOR SERVICE DOOR ELEVATION
FOR SERVICE AND MAN DOORS IN TRUCK COURT AREA
CSM CORPORATION
2575 UNIVERSITY AVE. W.
ST.PAUL, MN 55114
PHONE 646-1717
FAX 646-2404 30 MAY 96
EXHIBIT D
LANDLORD SHELL IMPROVEMENTS
Prepared by:
CSM CORPORATION
MAY 29, 1996
The landlord will provide the following improvements to the tenant at
landlord's expense:
1. Exterior shell shall be 12 inch reinforced, insulated concrete block wall
in the truck dock area with brick facia on the front facia exposures.
Interior elevations shall be plain exposed concrete block.
2. Exterior window systems shall be thermally broken aluminum storefront
glazing units with thermal insulated, reflective glass. 1" horizontal mini
blinds are included at the main level buildings as part of the shell
building construction.
3. A single 3'-0" x 7'-0" aluminum and glass main entry door at designated
entry location, as shown on drawings, (excluding vestibule) shall be
included in shell building construction.
4. Shell building existing ceiling is an exposed prime painted structural
steel and metal deck with a single ply EPDM membrane, insulated roof
system.
5. Shell building floor is a 5 inch reinforced, sealed concrete slab on grade.
6. High bay brass upright sprinkler heads for minimum (ordinary hazard)
density requirements (laterals only, no drops) are included as part of
shell building construction.
7. A 2" waterline in the bar joists, and a 4" P.V.C. sanitary sewer line under
the concrete slab are included as part of the shell building construction.
8. 1600 ampere main service to the building utility room is included in the
shell building construction.
9. A concrete walkway shall be installed from the parking lot to the existing
main entry door as part of the shell building construction.
10. 8'-0" x 8'-0" flush insulated steel doors.
All other improvements shall be at tenant's sole expense, including but not
limited to the following:
A. Gypsum wall construction.
B. Interior doors.
C. Interior hardware.
D. Hollow metal frames.
E. Rooftop heating, Ventilation, and Air Conditioning units.
F. Muzak or telephone communication systems.
G. Security systems or access control systems.
H. Appliances, vending machines, kitchen equipment.
I. Office furniture, moveable partitions, etc.
J. Extra cooling capacity for tenant furnished equipment.
K. Window treatments, i.e. curtains, etc. (Horizontal mini blinds are included
as part of the shell building construction.)
L. Millwork/Built ins: counters, cabinets, shelving, closets, etc..
M. Computer terminal outlets, wiring or systems.
N. Electrical items, i.e., light fixtures, power feeds, outlets, disconnects,
etc..
O. Plumbing rough ins, connections, stub ups, vent risers, fixtures, etc..
P. Ramps and/or overhead doors to accommodate Drive-in capability, dock
levelers, shelters, etc.
Q. Tenant signage.
R. Additional structural reinforcement for tenant's roof top units, including
roof curb, roof deck penetration, and roof repair. These items shall be
performed by the owner's shell building roofing contractor in order to
maintain the roof warranty.
S. Increased City of Chanhassen, Sewer Access Charge (SAC) over and above SO.18
per square foot.
T. Gas piping. A meter socket is provided at the nearest building manifold
location.
U. Electric service to leasehold space. Including 480/277 volt feeders,
disconnect and panel.
V. Construction general conditions, including but not limited to: building
permits, field supervision, Clean up, dumpsters, and project management.
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