Table of Contents

 

 

UNITED STATES

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 March 31, 2014

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. 000-51072

 

 

CASCADE MICROTECH, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Oregon   93-0856709

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

9100 S.W. Gemini Drive

Beaverton, Oregon

  97008
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (503) 601-1000

 

 

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   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨   (Do not check if a smaller reporting company)    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

The number of shares of common stock outstanding as of May 5, 2014 was 16,231,517.

 

 

 


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CASCADE MICROTECH, INC.

INDEX TO FORM 10-Q

 

     Page  
PART I - FINANCIAL INFORMATION   
Item 1.  

Financial Statements

  
 

Condensed Consolidated Balance Sheets (unaudited) - March 31, 2014 and December 31, 2013

     2   
 

Condensed Consolidated Statements of Operations (unaudited) - Three Months Ended March 31, 2014 and 2013

     3   
 

Condensed Consolidated Statements of Comprehensive Income (unaudited) - Three Months Ended March 31, 2014 and 2013

     4   
 

Condensed Consolidated Statements of Cash Flows (unaudited) - Three Months Ended March 31, 2014 and 2013

     5   
 

Notes to Condensed Consolidated Financial Statements (unaudited)

     6   
Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     11   
Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

     17   
Item 4.  

Controls and Procedures

     17   
PART II - OTHER INFORMATION   
Item 1A.  

Risk Factors

     18   
Item 2.  

Unregistered Sales of Equity Securities and Use of Proceeds

     18   
Item 6.  

Exhibits

     19   

Signatures

     20   

 

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Cascade Microtech, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, In thousands)

 

     March 31,
2014
    December 31,
2013
 

Assets

    

Current Assets:

    

Cash and cash equivalents

   $ 24,945      $ 17,172   

Short-term marketable securities

     2,737        4,278   

Restricted cash

     831        1,082   

Accounts receivable, net of allowances of $229 and $269

     21,642        26,520   

Inventories

     25,598        24,884   

Prepaid expenses and other

     2,616        2,147   

Deferred income taxes

     2,270        2,268   
  

 

 

   

 

 

 

Total Current Assets

     80,639        78,351   

Fixed assets, net of accumulated depreciation of $27,489 and $27,730

     5,805        6,403   

Goodwill

     14,473        14,471   

Purchased intangible assets, net of accumulated amortization of $5,962 and $5,228

     16,206        16,937   

Deferred income taxes

     1,236        1,235   

Other assets, net of accumulated amortization of $4,404 and $4,349

     1,092        1,114   
  

 

 

   

 

 

 

Total Assets

   $ 119,451      $ 118,511   
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Accounts payable

   $ 7,193      $ 7,229   

Deferred revenue

     2,092        2,555   

Accrued liabilities

     9,158        8,859   
  

 

 

   

 

 

 

Total Current Liabilities

     18,443        18,643   

Deferred revenue

     566        548   

Other long-term liabilities

     1,897        2,119   
  

 

 

   

 

 

 

Total Liabilities

     20,906        21,310   

Shareholders’ Equity:

    

Common stock, $0.01 par value. Authorized 100,000 shares; issued and outstanding: 16,186 and 16,218

     162        162   

Additional paid-in capital

     107,646        107,908   

Accumulated other comprehensive income

     132        118   

Accumulated deficit

     (9,395     (10,987
  

 

 

   

 

 

 

Total Shareholders’ Equity

     98,545        97,201   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 119,451      $ 118,511   
  

 

 

   

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, In thousands, except per share amounts)

 

     For the Three Months Ended March 31,  
     2014     2013  

Revenue

   $ 33,810      $ 27,471   

Cost of sales

     17,537        15,928   
  

 

 

   

 

 

 

Gross profit

     16,273        11,543   

Operating expenses:

    

Research and development

     3,241        2,456   

Selling, general and administrative

     10,430        8,046   
  

 

 

   

 

 

 

Total operating expenses

     13,671        10,502   
  

 

 

   

 

 

 

Income from operations

     2,602        1,041   

Other income (expense):

    

Interest income, net

     2        20   

Other, net

     (69     (244
  

 

 

   

 

 

 

Total other income (expense), net

     (67     (224
  

 

 

   

 

 

 

Income before income taxes

     2,535        817   

Income tax expense

     943        70   
  

 

 

   

 

 

 

Net income

   $ 1,592      $ 747   
  

 

 

   

 

 

 

Basic net income per share

   $ 0.10      $ 0.05   
  

 

 

   

 

 

 

Diluted net income per share

   $ 0.10      $ 0.05   
  

 

 

   

 

 

 

Shares used in per share calculations:

    

Basic

     16,242        14,227   
  

 

 

   

 

 

 

Diluted

     16,679        14,599   
  

 

 

   

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, In thousands)

 

     For the Three Months Ended March 31,  
     2014      2013  

Net income

   $ 1,592       $ 747   

Change in cumulative translation adjustment

     14         (522
  

 

 

    

 

 

 

Comprehensive income

   $ 1,606       $ 225   
  

 

 

    

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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Cascade Microtech, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, In thousands)

 

     For the Three Months Ended March 31,  
     2014     2013  

Cash flows from operating activities:

    

Net income

   $ 1,592      $ 747   

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation expense

     829        963   

Amortization of intangibles

     785        237   

Stock-based compensation

     449        334   

Loss on write-down or disposal of long-lived assets

     63        1   

Deferred income taxes

     (4     30   

(Increase) decrease in:

    

Accounts receivable, net

     4,878        (63

Inventories

     (499     483   

Prepaid expenses and other

     (502     344   

Increase (decrease) in:

    

Accounts payable

     (36     1,441   

Deferred revenue

     (445     (1,050

Accrued and other long-term liabilities

     303        (2,008
  

 

 

   

 

 

 

Net cash provided by operating activities

     7,413        1,459   

Cash flows from investing activities:

    

Purchase of marketable securities

     (629     (3,405

Proceeds from sale of marketable securities

     2,171        3,436   

Decrease in restricted cash

     251        —     

Purchase of fixed assets

     (513     (559

Proceeds from sale of fixed assets

     10        13   

Cash paid for acquisitions, net of cash acquired

     (226     —     
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     1,064        (515

Cash flows from financing activities:

    

Principal payments on capital lease obligations

     —          (1

Witholding taxes paid on net settlement of vested restricted stock units

     (174     (141

Proceeds from issuances of common stock

     280        113   

Cash paid for repurchase of common stock

     (817     (58
  

 

 

   

 

 

 

Net cash used in financing activities

     (711     (87

Effect of exchange rate changes on cash and cash equivalents

     7        (196
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     7,773        661   

Cash and cash equivalents:

    

Beginning of period

     17,172        17,927   
  

 

 

   

 

 

 

End of period

   $ 24,945      $ 18,588   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for income taxes, net

   $ 146      $ 246   

Transfer of inventory from fixed assets

     (213     —     

See accompanying Notes to Condensed Consolidated Financial Statements.

 

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CASCADE MICROTECH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial information included herein has been prepared by Cascade Microtech, Inc. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, such information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 2013 is derived from our 2013 Annual Report on Form 10-K. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2013 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Note 2. Inventories

Inventories are stated at the lower of standard cost, which approximates cost computed on a first-in, first-out basis, or market, and include materials, labor and manufacturing overhead. Demonstration goods, which are included as a component of finished goods, represent inventory that is used for customer demonstration purposes. This inventory is typically sold after 12 to 18 months. We analyze the carrying value of our inventory quarterly, considering a combination of factors including, but not limited to, the following: forecasted sales or usage, historical usage rates, estimated service period, product end-of-life dates, estimated current and future market values, service inventory requirements and new product introductions. We estimate market value based on factors including, but not limited to, replacement cost and estimated resale value with declines in value below cost being recorded quarterly as a component of cost of sales, therefore establishing a new cost basis for the inventory.

Inventory charges were as follows (in thousands):

 

     Three Months Ended
March 31,
 
     2014      2013  

Inventory charges

   $ 454       $ 393   

Inventories consisted of the following (in thousands):

 

     March 31,
2014
     December 31
2013
 

Raw materials

   $ 15,668       $ 15,234   

Work-in-process

     3,120         2,958   

Finished goods

     6,810         6,692   
  

 

 

    

 

 

 
   $ 25,598       $ 24,884   
  

 

 

    

 

 

 

Note 3. Net Income Per Share

The following table reconciles the shares used in calculating basic net income per share and diluted net income per share (in thousands):

 

     Three Months Ended
March 31,
 
     2014      2013  

Shares used to calculate basic net income per share

     16,242         14,227   

Dilutive effect of outstanding stock options and restricted stock units (“RSUs”)

     437         372   
  

 

 

    

 

 

 

Shares used to calculate diluted net income per share

     16,679         14,599   
  

 

 

    

 

 

 

Securities not considered as they would have been antidilutive

     1,056         1,239   
  

 

 

    

 

 

 

 

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Note 4. Product Warranty

We estimate a liability for costs to repair or replace products under warranty for periods ranging from 90 days to one year when the related product revenue is recognized. The liability for product warranties is calculated as a percentage of sales. The percentage is based on historical product repair costs. The liability for product warranties is included in Accrued liabilities on our Condensed Consolidated Balance Sheets.

Product warranty activity was as follows (in thousands):

 

     Three Months Ended
March 31,
 
     2014     2013  

Warranty accrual, beginning of period

   $ 745      $ 716   

Reductions for warranty charges

     (243     (366

Additions to warranty reserve

     240        327   
  

 

 

   

 

 

 

Warranty accrual, end of period

   $ 742      $ 677   
  

 

 

   

 

 

 

Note 5. Goodwill and Purchased Intangible Assets

Goodwill

The change in goodwill was as follows (in thousands):

 

     Three Months
Ended

March 31, 2014
     Year Ended
December 31,
2013
 

Balance, beginning of period

   $ 14,471       $ 990   

Acquisition of the Reliability Test Product division of Aetrium Incorporated (“RTP”)

     —           641   

Acquisition of ATT Advanced Temperature Test Systems GmbH ATT (“ATT Systems”)

     —           12,551   

Effect of exchange rate changes

     2         289   
  

 

 

    

 

 

 

Balance, end of period

   $ 14,473       $ 14,471   
  

 

 

    

 

 

 

Purchased Intangible Assets

Purchased intangible assets, net included the following (in thousands):

 

     March 31,
2014
    December 31,
2013
 

Customer relationships

   $ 7,199      $ 7,198   

Core technology

     13,729        13,728   

Trademarks and tradenames

     1,240        1,239   
  

 

 

   

 

 

 
     22,168        22,165   

Less accumulated amortization

     (5,962     (5,228
  

 

 

   

 

 

 
   $ 16,206      $ 16,937   
  

 

 

   

 

 

 

Purchased intangible asset amortization is a component of Selling, general and administrative expense and was as follows (in thousands):

 

     Three Months Ended
March 31,
 
     2014      2013  

Amortization expense

   $ 730       $ 158   

 

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The estimated amortization of purchased intangible assets is as follows over the next five years and thereafter (in thousands):

 

Remainder of 2014

   $ 2,170   

2015

     2,814   

2016

     2,614   

2017

     2,595   

2018

     2,518   

Thereafter

     3,495   
  

 

 

 
   $ 16,206   
  

 

 

 

Note 6. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

     March 31,
2014
     December 31,
2013
 

Accrued compensation and benefits

   $ 2,859       $ 2,812   

Accrued sales taxes and VAT

     373         470   

Accrued income taxes

     1,284         492   

Accrued warranty

     742         745   

Contingent consideration related to our acquisition of RTP

     1,385         1,350   

Payable to seller related to our acquisition of ATT Systems

     518         746   

Accrued restructuring costs

     1,112         1,163   

Other

     885         1,081   
  

 

 

    

 

 

 
   $ 9,158       $ 8,859   
  

 

 

    

 

 

 

Note 7. Stock-Based Compensation and Stock-Based Plans

Stock-based compensation was included in our Condensed Consolidated Statements of Operations as follows (in thousands):

 

     Three Months Ended
March 31,
 
     2014      2013  

Cost of sales

   $ 58       $ 51   

Research and development

     64         53   

Selling, general and administrative

     327         230   
  

 

 

    

 

 

 
   $ 449       $ 334   
  

 

 

    

 

 

 

Stock Incentive Plans

Stock option activity for the first three months of 2014 was as follows:

 

     Options
Outstanding
    Weighted
Average
Exercise Price
 

Outstanding at December 31, 2013

     1,042,937      $ 6.52   

Granted

     90,000        9.61   

Exercised

     (30,175     9.27   

Forfeited

     (1,800     10.17   
  

 

 

   

Outstanding at March 31, 2014

     1,100,962        6.70   
  

 

 

   

 

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RSU activity for the first three months of 2014 was as follows:

 

     Restricted
Stock

Units
    Weighted
Average

Grant Date
Per Share
Fair Value
 

Outstanding at December 31, 2013

     409,403      $ 6.87   

Granted

     25,500        9.61   

Vested

     (42,645     6.76   

Forfeited

     —          —     
  

 

 

   

Outstanding at March 31, 2014

     392,258        7.06   
  

 

 

   

As of March 31, 2014, total unrecognized stock-based compensation related to outstanding, but unvested, options and RSUs was $4.2 million, which will be recognized over the weighted average remaining vesting period of 2.6 years.

Note 8. Segment Reporting

The segment data below is presented in the same manner that management currently organizes the segments for assessing certain performance trends. Our Chief Operating Decision Maker monitors the revenue streams and the operating income of our Systems sales and our Probes sales. We do not track our assets on a segment level, and, accordingly, that information is not provided.

Revenue and operating income information by segment was as follows (dollars in thousands):

 

     Systems     Probes     Corporate
Unallocated
    Total  

Three Months Ended March 31, 2014

        

Revenue

   $ 21,560      $ 12,250      $ —        $ 33,810   

Gross profit

   $ 9,198      $ 7,075      $ —        $ 16,273   

Gross margin

     42.7     57.8     —          48.1

Income (loss) from operations

   $ 2,479      $ 4,426      $ (4,303   $ 2,602   

Three Months Ended March 31, 2013

        

Revenue

   $ 17,700      $ 9,771      $ —        $ 27,471   

Gross profit

   $ 6,712      $ 4,831      $ —        $ 11,543   

Gross margin

     37.9     49.4     —          42.0

Income (loss) from operations

   $ 1,642      $ 2,424      $ (3,025   $ 1,041   

In preparing this financial information, certain expenses were allocated between the segments based on management estimates, while others were based on specific factors such as headcount. These factors can have a significant impact on the amount of income (loss) from operations for each segment. While we believe we have applied a reasonable methodology, assignment of other reasonable cost allocations to each segment could result in materially different segment income (loss) from operations.

No customer accounted for 10% or greater of our total revenue in the three-month periods ended March 31, 2014 or 2013.

Note 9. Fair Value Measurements

Various inputs are used in determining the fair value of our financial assets and liabilities and are summarized into three broad categories:

 

    Level 1 – quoted prices in active markets for identical securities;

 

    Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.; and

 

    Level 3 – significant unobservable inputs, including our own assumptions in determining fair value.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

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The disclosures related to our financial assets and (liabilities) that are reported at fair value on a recurring basis are as follows (in thousands):

 

     March 31, 2014    December 31, 2013
     Fair Value     Input Level    Fair Value     Input Level

Marketable securities – corporate equities

   $ 1      Level 1    $ 1      Level 1

Marketable securities – corporate obligations

   $ 2,736      Level 2    $ 4,277      Level 2

Forward sale contracts for Japanese yen

   $ 2,626      Level 2    $ 523      Level 2

Forward purchase contract for euro

   $ 1,375      Level 2    $ 2,061      Level 2

Forward sale contract for euro

   $ 24,821      Level 2    $ 24,561      Level 2

Contingent consideration related to our acquisition of RTP

   $ (1,385   Level 3    $ (1,350   Level 3

The fair value of our marketable securities is determined based on quoted market prices for similar or identical securities. The fair value of our forward contracts is based on quoted market prices for similar securities and is used for the purpose of determining any gain or loss on our foreign currency positions. We do not record the full value of the forward contracts on our Condensed Consolidated Balance Sheets. We record the net unrealized gain or loss in our Condensed Consolidated Balance Sheet and as a component of Other income (expense).

The fair value of the contingent consideration related to our acquisition of RTP is determined based on the present value of probability weighted payments expected to be made under the terms of the agreement.

The carrying values of Cash and cash equivalents, Restricted cash, Accounts receivable, Prepaid expenses and other, Accounts payable and Accrued liabilities approximate fair value due to their short maturities.

No changes were made to our valuation techniques during the first quarter of 2014.

The following table summarizes our Level 3 activity for our contingent consideration liability (in thousands):

 

     Level 3  

Balance at December 31, 2013

   $ 1,350   

Increase in contingent consideration due to re-measurement

     35   
  

 

 

 

Balance at March 31, 2014

   $ 1,385   
  

 

 

 

Note 10. Stock Repurchases

In November 2012, our Board of Directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. We repurchased 88,445 shares of our common stock in the first quarter of 2014 at a weighted average price of $9.24 per share, or a total of $0.8 million. As of March 31, 2014, $0.8 million remained available for repurchases. This plan does not have an expiration date.

Note 11. Recent Accounting Guidance

ASU 2013-11

In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 amends the guidance related to the presentation of unrecognized tax benefits and allows for the reduction of a deferred tax asset for a net operating loss (“NOL”) carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. ASU 2013-11 is effective for annual and interim periods for fiscal years beginning after December 15, 2013, and early adoption is permitted. Since ASU 2013-11 relates only to the presentation of unrecognized tax benefits, our adoption of ASU 2013-11 in January 2014 did not have a material effect on our financial position, results of operations or cash flows.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact made in this Quarterly Report on Form10-Q are forward-looking including, among others, statements regarding: industry prospects; future results of operations, including estimated revenue for the quarter ending June 30, 2014; our future financial position; our expectations and beliefs regarding future revenue growth; the future impact of any off-balance sheet arrangements; our estimated costs to repair or replace products under warranty; our strategies and intentions and potential sources of funds regarding acquisitions; our accounting and tax policies and the impact of adoption of accounting guidance, if any, on our financial position, results of operations or cash flows; potential charges to write down inventory in future periods; our future capital requirements and fixed asset additions for 2014; seasonality of our revenues and expected increases in revenue in the last month of each quarter; and our ability to meet our cash requirements for the next 12 months and for the foreseeable future. These statements relate to future events of our future financial performance. In some cases, you can identify forward-looking statements by terminology, including “intend,” “could,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “future,” or “continue,” the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those expressed or implied such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including: changes in demand for our products; changes in product mix; the timing of shipments, customer orders and capital expenditures; constraints on availability of components; excess or shortage of production capacity; potential failure of expected market opportunities to materialize; changes in foreign exchange rates; and other risks included in Item 1A to our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 5, 2014.

General

We design, develop, manufacture and market advanced wafer probing, thermal and reliability solutions for the electrical measurement and testing of high performance semiconductor devices. Our products enable precision on-wafer measurement of integrated circuits and are typically used in the early phases of the development of semiconductor processes where the accuracy and repeatability of measurements is critical to achieving yield from advanced process nodes. They are also used in production applications to test semiconductor devices prior to completion of the manufacturing process. We design, manufacture and assemble our products in Beaverton, Oregon, North St. Paul, Minnesota, Munich, Germany, and Dresden, Germany and maintain global sales, service and support centers in North America, Germany, Japan, Taiwan, China and Singapore.

We operate in two business segments: Systems and Probes. Sales of our probe stations, thermal subsystems and reliability test systems are included in the Systems segment and sales of our analytical probes and production probe cards are included in the Probes segment.

Our probe stations provide precise and accurate measurement of semiconductor electrical characteristics during device design or when optimizing the chip fabrication process. Our probe stations are highly configurable and are typically sold with various accessories, including our analytical probes, as well as accessories from third parties. In addition, we design and build custom probe stations to address the specific requirements of our customers. We also generate revenue through the sales of service contracts for our stations.

Our thermal subsystems are designed and produced by ATT Systems, a wholly-owned subsidiary based in Munich, Germany, which we acquired in October 2013. ATT Systems produces thermal chuck systems used in probe stations, as well as specific systems for testing electronic components, hybrids, PCBs or other assemblies at the test site. Designed for thermal and mechanical stability and precision, our thermal subsystems offer a broad range of modular solutions that can be used in new installations, as well as upgrades to existing equipment.

 

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Our reliability test products were acquired in July 2013 from Aetrium Incorporated and are designed and manufactured in St. Paul, Minnesota. The 1164 Reliability Test System is a modular and scalable test platform that can be used in a wide range of reliability test applications, including Electro Migration (EM), Stress Migration (SM), Time Dependent Dielectric Breakdown (TDDB), Stress Induced Leakage Current (SILC) and Bias Temperature Instability (BTI). In addition to the 1164 Reliability Test System, we also offer the Symphony Wafer Level Reliability (WLR) Test System which, when combined with either an automated or semi-automated probe station, and our Conductor software, provides users with the necessary tools for automated and unattended WRL testing to shorten product development cycles and enhance product quality.

Our analytical probes are sold to serve as components of our probe stations, or less often, to serve as components of test equipment manufactured by third parties. Our production probe cards are designed and sold for high-volume production test applications, ranging from very low current parametric testing to sophisticated, high-speed radio frequency integrated circuit (“RFIC”) testing. These probe cards are used in conjunction with third party equipment from manufacturers such as Advantest, Agilent and Teradyne.

Overview

Revenue and gross margin in the first quarter of 2014 increased to $33.8 million and 48.1%, respectively, compared to $27.5 million and 42.0%, respectively, in the first quarter of 2013, reflecting increased sales in both the Systems and Probes segments. Net income was $1.6 million in the first quarter of 2014 compared to $0.7 million in the first quarter of 2013.

Outlook

Based on our current backlog, projected bookings and scheduled shipments, we anticipate revenues will be in the range of $32 million to $35 million for the second quarter of 2014.

Critical Accounting Policies and the Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that have become increasingly difficult to make in the current economic environment. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.

On an on-going basis we evaluate our estimates, including those related to revenue recognition, bad debts, inventory, lives and recoverability of equipment and other long-lived assets, warranty obligations, deferred income tax assets, unrecognized income tax benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We reaffirm the critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on March 5, 2014.

 

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Results of Operations

The following table sets forth our consolidated statement of operations data for the periods indicated as a percentage of revenue. (1)

 

     For the Three Months
Ended March 31,
 
     2014     2013  

Revenue

     100.0     100.0

Cost of sales

     51.9        58.0   
  

 

 

   

 

 

 

Gross profit

     48.1        42.0   

Operating expenses:

    

Research and development

     9.6        8.9   

Selling, general and administrative

     30.8        29.3   
  

 

 

   

 

 

 

Total operating expenses

     40.4        38.2   
  

 

 

   

 

 

 

Income from operations

     7.7        3.8   

Other income (expense), net

     (0.2     (0.8
  

 

 

   

 

 

 

Income before income taxes

     7.5        3.0   

Income tax expense

     2.8        0.3   
  

 

 

   

 

 

 

Net income

     4.7     2.7
  

 

 

   

 

 

 

 

(1) Percentages may not add due to rounding.

Revenue and operating income information by segment was as follows (dollars in thousands):

 

     Systems     Probes     Corporate
Unallocated
    Total  

Three Months Ended March 31, 2014

        

Revenue

   $ 21,560      $ 12,250      $ —        $ 33,810   

Gross profit

   $ 9,198      $ 7,075      $ —        $ 16,273   

Gross margin

     42.7     57.8     —          48.1

Income (loss) from operations

   $ 2,479      $ 4,426      $ (4,303   $ 2,602   

Three Months Ended March 31, 2013

        

Revenue

   $ 17,700      $ 9,771      $ —        $ 27,471   

Gross profit

   $ 6,712      $ 4,831      $ —        $ 11,543   

Gross margin

     37.9     49.4     —          42.0

Income (loss) from operations

   $ 1,642      $ 2,424      $ (3,025   $ 1,041   

Revenue

Revenue information was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change
     % Change  

Revenue

   2014      2013        

Systems

   $ 21,560       $ 17,700       $ 3,860         21.8

Probes

     12,250         9,771         2,479         25.4
  

 

 

    

 

 

    

 

 

    

Total

   $ 33,810       $ 27,471       $ 6,339         23.1
  

 

 

    

 

 

    

 

 

    

Systems

The increase in Systems revenue in the first quarter of 2014 compared to the first quarter of 2013 was primarily attributable to increased unit sales related to our acquisitions from the second half of 2013. This increase was partially offset by a decrease in average selling prices as we sold fewer 300mm stations, which have higher average selling prices, relative to total unit sales.

Probes

The increase in Probes revenue in the first quarter of 2014 compared to the first quarter of 2013 was primarily the result of increased unit sales of both production probe cards and analytical probes.

Cost of Sales and Gross Margin

Cost of sales includes purchased materials, fabrication, assembly, test, installation labor, overhead, customer-specific engineering costs, warranty costs, royalties and provision for inventory valuation reserves.

 

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Cost of sales information was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change
     % Change  

Cost of Sales

   2014      2013        

Systems

   $ 12,362       $ 10,988       $ 1,374         12.5

Probes

     5,175         4,940         235         4.8
  

 

 

    

 

 

    

 

 

    

Total

   $ 17,537       $ 15,928       $ 1,609         10.1
  

 

 

    

 

 

    

 

 

    

Cost of sales was affected by changes in sales as discussed above combined with the factors that caused fluctuations in our gross margin (gross profit as a percentage of revenue), as discussed below.

Gross margins were as follows:

 

     Three Months Ended March 31,  

Gross Margins

   2014     2013  

Systems

     42.7     37.9

Probes

     57.8     49.4

Overall

     48.1     42.0

Systems

The increase in Systems gross margins in the first quarter of 2014 compared to the first quarter of 2013 was primarily attributable to our acquisitions during the second half of 2013. The acquired product lines increased the average gross margin of all Systems products.

Probes

The increase in Probes gross margins in the first quarter of 2014 compared to the first quarter of 2013 was primarily due to increased unit sales, which increased factory utilization and decreased unabsorbed period expenses.

Overall

The overall increase in gross margins in the first quarter of 2014 compared to the first quarter of 2013 was primarily attributable to product mix, as we sold a higher number of Probes relative to total sales. The increase in gross margin was also positively affected by sales of products acquired in the second half of 2013 as discussed above.

Research and Development

Research and development costs are expensed as incurred and include compensation and related expenses for personnel, materials, consultants and overhead.

Information regarding our research and development expense was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change
     % Change  
     2014      2013        

Research and development

   $ 3,241       $ 2,456       $ 785         32.0

The increase in research and development in the first quarter of 2014 compared to the first quarter of 2013 was primarily due to a $0.4 million increase in salaries and benefits related primarily to our acquisitions in the second half of 2013, a $0.3 million increase in project-related expenses and a $0.1 million decrease in government grant reimbursements.

Selling, General and Administrative

Selling, general and administrative, or SG&A, expense includes compensation and related expenses for personnel, travel, outside services, manufacturers’ representative commissions, intangible asset amortization and overhead incurred in our sales, marketing, customer support, management, legal and other professional and administrative support functions, as well as costs to operate as a public company.

 

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Information regarding our SG&A expense was as follows (dollars in thousands):

 

     Three Months Ended March 31,      Dollar
Change
     % Change  
     2014      2013        

Selling, general and administrative

   $ 10,430       $ 8,046       $ 2,384         29.6

The increase in SG&A in the first quarter of 2014 compared to the first quarter of 2013 was primarily due to $0.8 million increase in salaries and benefits related primarily to our expanded workforce due to our acquisitions in the second half of 2013, a $0.5 million increase in amortization of purchased intangibles, a $0.3 million increase in professional service fees, a $0.2 million increase in selling expenses, a $0.1 million increase in stock-based compensation, and a $0.1 million increase in recruiting and severance.

Other Income (Expense)

Other income (expense) typically includes interest income, interest expense, foreign currency gains and losses and gains and losses of foreign currency forward contracts. Other income (expense) may also include other miscellaneous non-operating gains and losses.

Other income (expense), net was comprised of the following (in thousands):

 

     Three Months Ended March 31,  
     2014     2013  

Interest income, net

   $ 2      $ 20   

Foreign currency gains (losses)

     18        (441

Gains (losses) on foreign currency forward contracts

     (53     203   

Other

     (34     (6
  

 

 

   

 

 

 
   $ (67   $ (224
  

 

 

   

 

 

 

Interest income represents interest earned on cash and cash equivalents and investments in marketable securities.

Foreign currency gains and losses primarily result from a combination of changes in foreign currency exchange rates and the net value of monetary assets and liabilities denominated in yen, euro and other foreign currencies.

Income Taxes

Information regarding our income tax expense was as follows:

 

     Three Months Ended March 31,  
     2014     2013  

Income tax provision

   $ 943      $ 70   

Income tax provision as a percentage of income before income taxes

     37.2     8.6

Our income tax expense in the first quarters of 2014 and 2013 primarily related to estimated tax expense on income in the U.S. and foreign tax jurisdictions.

Our effective tax rate may differ from the U.S. federal statutory rate primarily as a result of the effects of state and foreign income taxes and may be effected by changes in statutory tax rates and laws in the U.S. and foreign jurisdictions. The effective tax rate in the first quarter of 2014 does not include any benefit from research and experimentation tax credits since legislation related to such credits expired and has not been renewed.

Deferred tax assets arise from the tax benefit of amounts expensed for financial reporting purposes but not yet realized for tax purposes and from unutilized tax credits and net operating loss carryforwards. We evaluate our deferred tax assets on a regular basis to determine if a valuation allowance is required. To the extent it is determined that it is more likely than not that we will not realize the benefit of our deferred tax assets, we record a valuation allowance against deferred tax assets.

 

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As of March 31, 2014, the net deferred tax assets on our Consolidated Balance Sheets totaled $3.5 million, net of a valuation allowance of $0.2 million, and primarily related to tax credits and other temporary differences.

Liquidity and Capital Resources

Changes in our assets and liabilities as presented in our Consolidated Statements of Cash Flows do not equal the changes in such assets and liabilities as calculated from our Consolidated Balance Sheets due to the effects of fluctuating foreign currency exchange rates and acquisitions.

Net cash provided by operating activities in the first quarter of 2014 was $7.4 million and primarily consisted of our net income of $1.6 million, net non-cash charges of $2.1 million and net changes in our operating assets and liabilities as described below.

Accounts receivable, net decreased by $4.9 million to $21.6 million at March 31, 2014, compared to $26.5 million at December 31, 2013, primarily due to the timing of sales and collections.

Inventories increased by $0.7 million to $25.6 million at March 31, 2014, compared to $24.9 million at December 31, 2013. The increase in inventory was primarily related to lower than expected sales of probe stations, partially offset by inventory charges of $0.5 million in the first quarter of 2014 for excess and obsolete inventory and sales of finished goods. If our actual results are significantly different than our current expectations for 2014, we may incur additional charges to write down inventory in future periods.

Long-term and short-term deferred revenue decreased by $0.4 million to $2.7 million at March 31, 2014, compared to $3.1 million at December 31, 2013, primarily due to a decrease in customer deposits on product orders.

Other long-term liabilities decreased by $0.2 million to $1.9 million at March 31, 2014, compared to $2.1 million at December 31, 2013, primarily due to a decrease in accrued lease abandonment costs.

Fixed asset purchases of $0.5 million in the first quarter of 2014 primarily related to production-related equipment and research and development tools. We anticipate fixed asset additions for all of 2014 to be approximately $6.0 million.

In November 2012, our Board of Directors authorized a stock repurchase program under which up to $2.0 million of our common stock could be repurchased from time to time in the open market or in privately negotiated transactions. We repurchased 88,445 shares of our common stock in the first quarter of 2014 at a weighted average price of $9.24 per share, or a total of $0.8 million. As of March 31, 2014, $0.8 million remained available for repurchases. This plan does not have an expiration date.

In August 2013, we entered into a line of credit agreement with JPMorgan Chase Bank, N.A. for a maximum $10.0 million line of credit facility (the “LOC”), which may be limited by a borrowing base. The LOC expires August 31, 2015 and contains a $2.5 million sublimit for letters of credit. Interest is based primarily on the London Interbank Offered Rate (“LIBOR”). The LOC contains restrictive and financial covenants. On March 31, 2014, no amounts were outstanding under the LOC, no letters of credit were outstanding, $10.0 million was available for borrowing and we were in compliance with all covenants.

We anticipate meeting our cash requirements for the next 12 months and for the foreseeable future from existing Cash and cash equivalents and Short-term marketable securities, which totaled $27.7 million at March 31, 2014. In addition, we currently have $10 million available under the LOC as discussed above.

We continue to evaluate opportunities for acquisition and expansion and any such transactions, if consummated, may use a portion of our cash and marketable securities or may result in the issuance by us of debt or equity securities. Issuances of debt securities would increase our leverage and interest exposure; issuances of equity securities could dilute the ownership interest of our shareholders.

 

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Recent Accounting Guidance

See Note 11 of Notes to Condensed Consolidated Financial Statements.

Contractual Commitments

The following is a summary of our contractual commitments and obligations as of March 31, 2014 (in thousands):

 

     Payments Due By Period  

Contractual Obligation

   Total      Remainder of
2014
     2015 and
2016
     2017 and
2018
     2019 and
beyond
 

Operating leases

   $ 12,318       $ 2,786       $ 5,018       $ 3,253       $ 1,261   

Purchase order commitments (1)

     6,762         6,496         266         —           —     

Forward contracts

     28,822         28,822         —           —           —     

Fair value of contingent consideration related to our acquisition of RTP

     1,385         1,385         —           —           —     

Additional consideration related to our acquisition of ATT Systems

     1,036         518         518         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 50,323       $ 40,007       $ 5,802       $ 3,253       $ 1,261   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Purchase order commitments primarily represent open orders for inventory.

Seasonality

Typically, our first quarter revenues are lower than our revenues from the preceding fourth quarter. In addition, as is typical in our industry, we recognize a large percentage of our quarterly revenue in the last month of the quarter. However, our seasonality can be affected by general economic trends and it should not be expected that historical revenue patterns will continue.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our reported market risks or risk management policies since the filing of our 2013 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 5, 2014.

Item 4. Controls and Procedures

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

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Limitation on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all occurrences of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the control systems will detect all control issues, including instances of fraud, if any.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

Our Annual Report on Form 10-K for the year ended December 31, 2013 includes a detailed discussion of our risk factors. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K. Accordingly, the information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission on March 5, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

We made the following repurchases of our common stock during the first quarter of 2014:

 

     Total number
of shares
purchased
     Average
price paid
per share
     Total number of
shares purchased
as part of publicly
announced plan
     Maximum dollar
amount of shares
that may yet be
purchased under
the plan
 

January 1 to January 31

     —           —           —         $ 1.6 million   

February 1 to February 28

     28,648       $ 9.02         28,648       $ 1.4 million   

March 1 to March 31

     59,797       $ 9.35         59,797       $ 0.8 million   
  

 

 

       

 

 

    

Total

     88,445       $ 9.24         88,445       $ 0.8 million   
  

 

 

       

 

 

    

These shares were repurchased pursuant to a plan approved by our board of directors in November 2012, which authorized the repurchase of up to $2.0 million of our common stock from time to time in the open market or in privately negotiated transactions. This plan does not have an expiration date.

 

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Item 6. Exhibits

The following exhibits are filed herewith or incorporated by reference hereto and this list is intended to constitute the exhibit index:

 

  10.1    First amendment to Lease dated January 10, 2007, between Nimbus Center LLC and Cascade Microtech, Inc.
  10.2    Third amendment to Lease dated January 23, 2014, between Nimbus Center LLC and Cascade Microtech, Inc.
  10.3    Fourth amendment to Lease dated March 31, 2014, between Nimbus Center LLC and Cascade Microtech, Inc.
  31.1    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
  31.2    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
  32.1    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
  32.2    Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS    XBRL Instance Document.
101.SCH    XBRL Taxonomy Extension Schema Document.
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB    XBRL Taxonomy Extension Label Linkbase Document.
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.

 

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Table of Contents

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.

 

Date: May 9, 2014   CASCADE MICROTECH, INC.
  (Registrant)
  By:  

/s/ MICHAEL D. BURGER

  Michael D. Burger
  Director, President and Chief Executive Officer
  (Principal Executive Officer)
  By:  

/s/ JEFF KILLIAN

  Jeff Killian
  Chief Financial Officer and Treasurer
  (Principal Financial and Accounting Officer)

 

20

EXHIBIT 10.1

FIRST AMENDMENT

THIS FIRST AMENDMENT (the “Amendment”) is made and entered into as of January 10, 2007, by and between OR-NIMBUS CORPORATE CENTER, L.L.C., a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”).

RECITALS

 

A. Landlord (as successor in interest to Spieker Properties, L.P., a California corporation) and Tenant are parties to that certain lease dated April 2, 1999, which lease has not been previously amended (the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant space currently containing approximately 58,817 rentable square feet {the “Premises”) described as the entire building commonly known as Nimbus Building 6 (formerly known as Nimbus Building 7) located at 9100 SW Gemini Drive, Beaverton, Oregon (the “Building”).

 

B. The Lease by its terms shall expire on August 31, 2009 (“Prior Termination Date”), and the parties desire to extend the term of the Lease, all on the following terms and conditions.

NOW, THEREFORE, in consideration of the above recitals which by this reference are incorporated herein, the mutual covenants and conditions contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

 

1. Extension. The term of the Lease is hereby extended for a period of 64 months commencing on the day immediately following the Prior Termination Date and shall expire on December 31, 2014 (“Extended Termination Date”), unless sooner terminated in accordance with the terms of the Lease. That portion of the term of the Lease commencing the day immediately following the Prior Termination Date (“Extension Date”) and ending on the Extended Termination Date shall be referred to herein as the “Extended Term”.

 

2. Base Rent – Januarv 1. 2007 Through Prior Termination Date. Notwithstanding anything contained in the Lease to the contrary, the schedule of Base Rent payable with respect to the Premises during the period beginning January 1, 2007 and ending August 31, 2009 is the following:

 

Period

 

Annual Rate

Per Square Foot

 

Monthly Base Rent

1/1/07 through 12/31/07

  $13.68   $67,051.38

1/1/08 through 12/31/08

  $14.16   $69,404.06

1/1/09 through 8/31/09

  $14.64   $71 756.74

Notwithstanding the foregoing, so long as Tenant is not in default under the Lease, Tenant shall be entitled to an abatement of Base Rent in the amount of $67,051.38 per month for three consecutive full calendar months beginning with the month of January 2007 (the “Base Rent Abatement Period”). The total amount of Base Rent abated during the Base Rent Abatement Period shall equal $201,154.14 (the “Abated Base Rent”). If Tenant defaults at any time during the term of the Lease and fails to cure such default within any applicable cure period under the Lease, all Abated Base Rent shaii immediateiy become due and payable. The payment by Tenant of the Abated Base Rent in the event of a default shall not limit or affect any of Landlord’s other rights, pursuant to the Lease or at law or in equity. During the Base Rent Abatement Period, only Base Rent shall be abated, and all Additional Rent and other costs and charges specified in the Lease shall remain as due and payable pursuant to the provisions of the Lease.

All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.


3. Base Rent – Extension Date Through Extended Termination Date. As of the Extension Date, the schedule of Base Rent payable with respect to the Premises during the Extended Term is the following:

 

Period

 

Annual Rate

Per Square Foot

 

Monthly Base Rent

9/1/09 through 12/31/09

  $14.64   $71,756.74

1/1/10 through 12/31/10

  $15.00   $73,521.25

1/1/11 through 12/31/11

  $15.36   $75,285.76

1/1/12 through 12/31/12

  $15.72   $77,050.27

1/1/13 through 12/31/13

  $16.08   $78,814.78

1/1/14 through 12/31/14

  $16.44   $80,579.29

All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.

 

4. Definition of Project / Operating Expenses.

 

  4.01. Pursuant to, but without limiting, the second sentence of Section 7 of the Lease, for the portion of the term of the Lease commencing on January 1, 2007, the number of buildings which comprises the Project shall be increased, and the term “Project”, as used in the Lease, shall mean, collectively, the Building together with the 15 buildings located at 8910, 8920, 8930, 9000, 9020, 9030, 9040, 9090, 9300, 9400, 9450, 9500, 9525, 9595, 9590, 9705, 9775, and 9795 SW Gemini Drive and 9203, 9205, 9225, 9255, 9275, 9295, 9305, 9309, 9315, 9401, 9403, 9405, 9407, 9411, 9600, 9605, 9650, 9700, 9720, 9730, 9734, 9740, 9750, 9760, 9770, 9780, 9782, 9786, and 9790 SW Nimbus Avenue, Beaverton, Oregon, having a combined 689,797 rentable square feet. Accordingly, for the portion of the term of the Lease commencing on January 1, 2007, “Tenant’s Proportionate Share of Project”, as used in the Lease, with respect to the Premises is 8.5267% (i.e., 58,817rsf /689,797rsf).

 

  4.02. For the period commencing on the Extension Date and ending on the Extended Termination Date, Tenant shall pay for Tenant’s Proportionate Share of Operating Expenses in accordance with the terms of the Lease, as amended hereby.

 

5. Improvements to Premises.

 

  5.01. Condition of Premises. Tenant is in possession of the Premises and accepts the same “as is” without any agreements, representations, understandings or obligations on the part of Landlord to perform any alterations, repairs or improvements, except as may be expressly provided otherwise in this Amendment.

 

  5.02. Responsibility for Improvements to Premises. Tenant may perform improvements to the Premises in accordance with the Work Letter attached hereto as Exhibit A and Tenant shall be entitled to an improvement allowance in connection with such work as more fully described in Exhibit A.

 

6. Renewal Option.

 

  6.01. Grant of Option; Conditions . Tenant shall have the right to extend the term of the Lease (the “Renewal Option”) for one additional period of 5 years commencing on the day following the Extended Termination Date and ending on the 5th anniversary of the Extended Termination Date (the “Renewal Term”), if:

 

  A. Landlord receives notice of exercise (“Initial Renewal Notice”) not later than March 31, 2014 and not earlier than October 1, 2013; and

 

  B. Tenant is not in default under the Lease beyond any applicable cure periods at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant delivers its Binding Notice (as defined below); and

 

  C. No more than 20,000 rentable square feet of the Premises is sublet at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant delivers its Binding Notice; and

 

  D. The Lease has not been assigned prior to the date that Tenant delivers its Initial Renewal Notice or prior to the date Tenant delivers its Binding Notice.

 

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  6.02. Terms Applicable to Premises During Renewal Term.

 

  A. The initial Base Rent rate per rentable square foot for the Premises during the Renewal Term shall equal the Prevailing Market (hereinafter defined) rate per rentable square foot for the Premises. Base Rent during the Renewal Term shall increase, if at all, in accordance with the increases assumed in the determination of Prevailing Market rate. Base Rent attributable to the Premises shall be payable in monthly installments in accordance with the terms and conditions of Section 6 of the Lease.

 

  B. Tenant shall pay Additional Rent (i.e. Operating Expenses) for the Premises during the Renewal Term in accordance with Section 6 and Section 7 of the Lease, and the manner and method in which Tenant reimburses Landlord for Tenant’s share of Operating Expenses and the base year, if any, applicable to such matter, shall be some of the factors considered in determining the Prevailing Market rate for the Renewal Term.

 

  6.03. Procedure for Determining Prevailing Market . Within 30 days after receipt of Tenant’s Initial Renewal Notice, Landlord shall advise Tenant of the applicable Base Rent rate for the Premises for the Renewal Term. Tenant, within 15 days after the date on which Landlord advises Tenant of the applicable Base Rent rate for the Renewal Term, shall either (i) give Landlord final binding written notice (“Binding Notice”) of Tenant’s exercise of its Renewal Option, or (ii) if Tenant disagrees with Landlord’s determination, provide Landlord with written notice of rejection (the “Rejection Notice”). If Tenant fails to provide Landlord with either a Binding Notice or Rejection Notice within such 15 day period, Tenant’s Renewal Option shall be null and void and of no further force and effect. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant shall enter into the Renewal Amendment (as defined below) upon the terms and conditions set forth herein. If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith to agree upon the Prevailing Market rate for the Premises during the Renewal Term. When Landlord and Tenant have agreed upon the Prevailing Market rate for the Premises, such agreement shall be reflected in a written agreement between Landlord and Tenant, whether in a letter or otherwise, and Landlord and Tenant shall enter into the Renewal Amendment in accordance with the terms and conditions hereof. Notwithstanding the foregoing, if Landlord and Tenant are unable to agree upon the Prevailing Market rate for the Premises within 30 days after the date Tenant provides Landlord with the Rejection Notice, Tenant’s Renewal Option shall be deemed to be null and void and of no force and effect.

 

  6.04. Renewal Amendment. If Tenant is entitled to and properly exercises its Renewal Option, Landlord shall prepare an amendment (the “Renewal Amendment”) to reflect changes in the Base Rent, term of the Lease, termination date and other appropriate terms. The Renewal Amendment shall be sent to Tenant within a reasonable time after Landlord’s receipt of the Binding Notice or other written agreement by Landlord and Tenant regarding the Prevailing Market rate, and Tenant shall execute and return the Renewal Amendment to Landlord within 15 days after Tenant’s receipt of same, but, upon final determination of the Prevailing Market rate applicable during the Renewal Term as described herein, an otherwise valid exercise of the Renewal Option shall be fully effective whether or not the Renewal Amendment is executed.

 

  6.05. Definition of Prevailing Market . For purposes of this Renewal Option, “Prevailing Market” shall mean the arms length fair market annual rental rate per rentable square foot under renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Project and office buildings comparable to the Building in the Beaverton, Oregon area. The determination of Prevailing Market shall take into account any material economic differences between the terms of this Lease and any comparison lease or amendment, such as rent abatements, construction costs and other concessions and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes. The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under this Lease.

 

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7. Landlord’s Notice Addresses . Notwithstanding anything to the contrary contained in the Basic Lease Information Section of the Lease, Landlord’s Notice Addresses are as follows:

 

Landlord:

   With a copy to:   

OR-Nimbus Corporate Center, L.L.C.

   Equity Office   

c/o Equity Office

   One Market   

One SW Columbia Street

   Spear Tower, Suite 600   

Suite 300

   San Francisco, California 94105   

Portland, Oregon 97258

   Attn: Seattle Managing Counsel   

Attn: Property Manager

     

 

8. Permitted Use . The “Permitted Use” set forth in the Basic Lease Information of the Lease is hereby amended by adding the following words to the end thereof:

“; provided, however, in no event shall Tenant use or allow any other party to use all or any portion of the Premises for the operation of a health club facility, a private workout room, or shower facility.”

 

9. Limitations on Use / Liquid Nitrogen Storage.

 

  9.01. The second sentence of Section 4.8 of the Lease is deleted in its entirety and the following substituted therefor:

“Storage outside of the Premises of materials, vehicles or any other items is prohibited.”

 

  9.02. Notwithstanding anything to the contrary set forth in the Lease, Landlord acknowledges that Tenant currently stores liquid nitrogen in 2 tanks (the “Liquid Nitrogen Tanks”) outside of the Premises at the location outlined on Exhibit B attached hereto and made a part hereof (the “Liquid Nitrogen Storage Area”). Landlord shall have the right to require an acceptable enclosure to hide or disguise the existence of the Liquid Nitrogen Tanks and to minimize any adverse effect that the Liquid Nitrogen Tanks may have on the appearance of the Building or the Project. Tenant shall use the Liquid Nitrogen Tanks and Liquid Nitrogen Area in a safe and clean manner and in accordance with all applicable Regulations. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Liquid Nitrogen Tanks. Tenant shall also be responsible for the cost of all utilities consumed in the operation of the Liquid Nitrogen Tanks. Any increase in the size or number of the Liquid Nitrogen Tanks shall be subject to Landlord’s prior written consent.

 

  9.03.

Tenant shall be responsible for assuring that the installation, maintenance, operation and removal of the Liquid Nitrogen Tanks shall in no way damage any portion of the Building or the Project. To the maximum extent permitted by Regulations, the Liquid Nitrogen Tanks and all appurtenances in the Liquid Nitrogen Storage Area shall be at the sole risk of Tenant, and Landlord shall have no liability to Tenant if the Liquid Nitrogen Tanks, or any appurtenances installations are damaged for any reason. Tenant agrees to be responsible for any damage caused to the Building or the Project in connection with the installation, maintenance, operation or removal of the Liquid Nitrogen Tanks and, in accordance with the terms of Article 4.0. and Article 9.C. of the Lease, to indemnify, defend and hold Landlord and its members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents (the “Landlord Related Parties”) harmless from all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, including, without limitation, reasonable architects’ and attorneys’ fees (if and to the extent permitted by Regulations), which may be imposed upon, incurred by, or asserted against Landlord or any of the Landlord Related Parties in connection with the installation, maintenance, operation or removal of the Liquid Nitrogen Tanks, including, without limitation, any environmental and hazardous materials claims. In addition to, and without limiting Tenant’s obligations under the Lease, Tenant covenants and agrees that !he installation and use of the Liquid Nitrogen Tanks and appurtenances shall

 

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  not adversely affect the insurance coverage for the Building. If for any reason, the installation or use of the Liquid Nitrogen Tanks and/or the appurtenances shall result in an increase in the amount of the premiums for such coverage, then Tenant shall be liable for the full amount of any such increase.

 

  9.04. Tenant shall be responsible for the installation, operation, cleanliness, maintenance and removal of the Liquid Nitrogen Tanks and the appurtenances, all of which shall remain the personal property of Tenant, and shall be removed by Tenant at its own expense at the expiration or earlier termination of the Lease. Tenant shall repair any damage caused by such removal, including the patching of any holes to match, as closely as possible, the color surrounding the area where the Liquid Nitrogen Tanks, and appurtenances were attached. Such maintenance and operation shall be performed in a manner to avoid any unreasonable interference with any other tenants or Landlord. Tenant took the Liquid Nitrogen Storage Area “as is” in the condition in which the Liquid Nitrogen Storage Area was in as of the Commencement Date, without any obligation on the part of Landlord to prepare or construct the Liquid Nitrogen Storage Area for Tenant’s use or occupancy. Without limiting the foregoing, Landlord makes no warranties or representations to Tenant as to the suitability of the Liquid Nitrogen Storage Area for the installation and operation of the Liquid Nitrogen Tanks. Tenant shall have no right to make any changes, alterations, additions, decorations or other improvements to the Liquid Nitrogen Storage Area without Landlord’s prior written consent. Tenant agrees to maintain the Liquid Nitrogen Tanks, including without limitation, any enclosure installed around the Liquid Nitrogen Tanks in good condition and repair. Tenant shall be responsible for performing any maintenance and improvements to any enclosure surrounding the Liquid Nitrogen Tanks so as to keep such enclosure in good condition.

 

  9.05. Tenant, subject to the rules and regulations enacted by Landlord, shall have access to the Liquid Nitrogen Tanks for the purpose of installing, repairing, maintaining and removing said Liquid Nitrogen Tanks. Tenant shall be permitted to use the Liquid Nitrogen Storage Area solely for the maintenance and operation of the Liquid Nitrogen Tanks, and the Liquid Nitrogen Tanks, and Liquid Nitrogen Storage Area are solely for the benefit of Tenant. Landlord shall have no obligation to provide any services, including, without limitation, electric current, to the Liquid Nitrogen Storage Area.

 

  9.06. Tenant shall have no right to sublet the Liquid Nitrogen Storage Area except in connection with a sublease of the entire Premises to which Landlord has consented, or to assign its interest hereunder, except in connection with an assignment of the Lease to which Landlord has consented.

 

10. Compliance with Regulations. All of Section 4.C. of the Lease, other than the first and second sentences thereof, is deleted in its entirety and is replaced with the following:

“The Premises shall be used for the Permitted Use and for no other use whatsoever. Tenant, at its sole cost and expense, shall comply with all existing or future applicable municipal, state and federal and other governmental statues, rules, requirements, regulations, laws and ordinances, including zoning ordinances and regulations, and covenants, easements, and restrictions of record governing and relating to the use, occupancy or possession of the Premises (collectively, “Regulations”) regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises. In addition, Tenant shall, at its sole cost and expense, promptly comply with any Regulations that relate to the “Base Building” (defined below}, but only to the extent such obligations are triggered by Tenant’s use of the Premises, other than for general office use, or Alterations or improvements in the Premises performed or requested by Tenant. “Base Building” shall include the structural portions of the Building, the public restrooms and the Building mechanical, electrical and plumbing systems and equipment located in the internal core of the Building on the floor or floors on which the Premises are located. Tenant shall promptly provide Landlord with copies of any notices it receives regarding an alleged violation of Regulations.

Landlord shall, at Landlord’s expense (except to the extent properly included in Operating Expenses), cause structural elements of the Building, common areas, and the Base Building electrical, heating, ventilation and air conditioning, mechanical and plumbing systems and the common areas to comply with all applicable Regulations to the extent that (i) such compliance is necessary in order for Tenant to use the Premises

 

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for general office use in a normal and customary manner and for Tenant’s employees and visitors to have reasonably safe access to and from the Premises, or (ii) Landlord’s failure to cause such compliance would impose liability upon Tenant under applicable Regulations; provided, however, that Landlord shall not be obligated to cause such compliance to the extent that any non-compliance (i) is caused or triggered by any of the matters that are Tenant’s responsibility under any provision of this Lease, including, without limitation, the immediately preceding paragraph above or Paragraph 12 below, or (ii) arises under any provision of the Americans with Disabilities Act other than Title Ill thereof. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Regulation and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Regulation. Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment.”

 

11. Ha za rdous Materials.

 

  11.01. The first sentence of Section 4.0. of the Lease is hereby deleted in its entirety and is replaced with the following:

“As used in this Lease, “Hazardous Materials” shall mean any material or substance that is now or hereafter defined or regulated by any statute, regulation, ordinance, or governmental authority thereunder, as radioactive, toxic, hazardous, or waste, including but not limited to (i) petroleum and any of its constituents or byproducts, (ii) radioactive materials, (iii) asbestos in any form or condition, and (iv) substances or materials regulated by any of the following, as amended from time to time, and any rules promulgated thereunder: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §§2601, et seq.; the Clean Water Act, 33 U.S.C. §§1251 et seq; the Clean Air Act, 42 U.S.C. §§7401 et seq.”

 

  11.02. The final 3 sentences of Section 4.0 of the Lease are hereby deleted in their entirety and are replaced with the following:

“Landlord and any successor in interest of Landlord will indemnify, defend, hold harmless and reimburse Tenant and the Tenant Parties from and against any and all fines and reasonable direct remedial costs and expenses (including reasonable legal expenses and consultants’ fees) (collectively, “Costs”) that Tenant or the Tenant Parties may incur due to a clean up, abatement, removal, or other remedial response required of Tenant or the Tenant Parties by an appropriate governmental authority resulting from or caused by the introduction, production, use, generation, storage, treatment, disposal, discharge, release or other handling or disposition of any Hazardous Materials on or about the Building and/or the Project. However, this indemnity provision will not apply to any Costs caused by the negligence or intentional misconduct of Tenant or any Tenant Parties, or resulting from any Hazardous Materials introduced to, produced, stored or generated at the Premises, the Building or the Project by, or disturbed, distributed or exacerbated by, Tenant or any Tenant Parties. In addition, this indemnity obligation shall not be binding on any party that acquires Landlord’s interest in the Building by foreclosure or deed in lieu of foreclosure, except to the extent Costs, if any, incurred as a result of any remedial response that such party was required under applicable law to perform, but failed to perform, following such acquisition. Tenant’s and Landlord’s obligations under this Section 4.0 of the Lease shall survive any expiration or earlier termination of this Lease.”

 

12. Operating Expenses.

 

  12.01. The following is hereby added to the end of Section 7.A.(3)(d) of the Lease:

“notwithstanding the foregoing, however, if executive personnel or officers or partners of Landlord provide services directly related to the operation, maintenance or ownership of the Project that, if provided directly by a general manager or property manager or his or her general support staff, would normally be chargeable as an operating expense of a comparable project, then an

 

6


appropriate pro rata share of the wages, salaries, fees or fringe benefits paid to such individuals that reflects the extent to which such individuals provide such services to the Project may be included in Operating Expenses.”

 

  12.02. Section 7.A.(3)(xi) of the Lease is hereby deleted in its entirety and is replaced with the following:

“costs incurred by Landlord to cure any violation of Regulations for which Landlord is responsible under the second grammatical paragraph of Section 4.C. of this Lease, to the extent such violation exists as of the date of the Lease and such cure is required by Regulations as of the date of the Lease.”

 

  12.03. The final sentence of Section 7.0. of the Original Lease is hereby modified by the deletion of the phrase “and with all such expenses passed through to the Tenant as appropriate based on generally accepted accounting principals.”

 

13. Ins ur ance and Indemnification.

 

  13.01. Section B.8.1 of the Lease is hereby deleted in its entirety and is replaced with the following:

“Tenant shall procure at Tenant’s sole cost and expense and keep in effect from the date of this Lease and at all time until the end of the Term, Property Insurance written on an All Risk or Special Cause of Loss Form, including earthquake sprinkler leakage, at replacement cost value and with a replacement cost endorsement covering Tenant’s business and trade fixtures, equipment, movable partitions, furniture, merchandise and other personal property within the Premises all improvements, additions or alterations made by or for the benefit of Tenant, and all above-Building standard leasehold improvements and equipment existing in the Premises as of date of Lease execution (including, without limitation, clean rooms, HVAC, electrical, and plumbing equipment and systems servicing such clean rooms, safety showers, and change rooms located in the Premises).”

 

  13.02. Section B.C. of the Lease is hereby deleted in its entirety and is replaced with the following:

“Except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Related Parties (defined below), Tenant shall indemnify, defend and hold Landlord and Landlord Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by Regulations) (collectively referred to as “Losses” ), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Regulations) of Tenant, the Tenant Parties. Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant Parties, Landlord shall indemnify, defend and hold Tenant and the Tenant Parties harmless against and from all Losses which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant Parties by any third party and arising out of or in connection with the acts or omissions (including violations of Regulations) of Landlord or the Landlord Related Parties. Tenant hereby waives all claims against and releases Landlord and its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagees (defined below) and agents (the “Landlord Related Parties”) from all claims for any injury to or death of persons, damage to property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties, (c) the bursting or leaking of any tank, water closet, drain or other pipe, (d) the inadequacy or failure of any security or protective services, personnel or equipment, or (e) any matter not within the reasonable control of Landlord. Notwithstanding the foregoing, except as provided in Article 20 to the contrary, Tenant shall not be required to waive any claims against Landlord (other than for loss or damage to Tenant’s business) where such loss or damage is due to the negligence or willful misconduct of Landlord or any Landlord Related Parties. This provision of this Section B.C. shall survive the expiration or earlier termination of the Lease. As used herein, “Mortgagee” is a party having

 

7


the benefit of a Mortgage. As used herein, “Mortgage” means mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Project.”

 

13. Waiver of Subrogation . Section 9 of the Lease is hereby deleted in its entirety and is replaced with the following:

“Landlord and Tenant hereby waive and shall cause their respective insurance carriers to waive any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage with respect to business and trade fixtures, equipment, movable partitions, furniture, merchandise and other personal property within the Premises, improvements in and to the Premises, including any Alterations, the Building, the Premises, or any contents thereof, including rights, claims, actions and causes of action based on negligence, which loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by insurance. For the purposes of this waiver, any deductible with respect to a party’s insurance shall be deemed covered by and recoverable by such party under valid and collectable policies of insurance.

 

14. Landlord’s Repair and Maintenance . The fourth sentence of Section 10 of the Lease is hereby deleted in its entirety and is replaced with the following:

“Tenant shall immediately give Landlord written notice of any defect or need of repairs in such components of the Building for which Landlord is responsible, after which Landlord shall have a reasonable opportunity and the right to enter the Premises at all reasonable times to repair the same.”

 

15. Exterior Signs . The following provisions shall apply from and after the date of mutual execution and delivery of this Amendment:

 

  15.01. The final three sentences of Section 13 of the Lease are hereby deleted in their entirety and shall be of no further force or effect.

 

  15.02. Building Signage. Tenant currently has installed and may maintain one non- illuminated sign containing Tenant’s name on the exterior of the Building (the “Existing Sign”) and Tenant shall have the right to install and maintain a second non-illuminated sign containing Tenant’s name on the exterior of the Building in a location reasonably approved by Landlord and facing along SW Gemini Drive (the “New Sign”, and together with the Existing Sign, collectively, the “Sign” ). In the event Tenant desires to modify the Existing Sign, such modification shall be subject to the terms and conditions of this Section 15.02 which are applicable to a New Sign. Tenant, at its sole cost and expense, shall obtain any necessary zoning and/or regulatory approval in connection with the Sign. All costs in connection with the Sign, including any costs for the design, installation, supervision of installation, wiring, maintenance, repair and removal of the Sign, will be at Tenant’s expense. Tenant shall submit to Landlord reasonably detailed drawings of the proposed New Sign, including without limitation, the size, material, shape and lettering for review and approval by Landlord. The New Sign shall conform to the standards of design and motif established by Landlord for the exterior of the Project. Tenant shall reimburse Landlord for any costs associated with Landlord’s review and supervision as hereinbefore provided including, but not limited to, engineers and other professional consultants. Tenant will be responsible for the repair of any damage that the installation of the Sign may cause to the Building or the Project. Tenant agrees upon the expiration date or sooner termination of the Lease, upon Landlord’s request, to remove the Sign and to repair and restore any damage to the Building and the Project at Tenant’s expense. In addition, Landlord shall have the right to remove the Sign at Tenant’s sole cost and expense, if, at any time during the Term: (1) Tenant assigns its interest in this Lease, (2) Tenant ceases to occupy the Premises, or (3) Tenant defaults under any term or condition of the Lease and fails to cure such default within any applicable grace period.

 

16. Inspection/Posting Notices.

 

  16.02. Section 14 of the Lease is hereby deleted in its entirety and is replaced with the following:

“Landlord may enter the Premises to inspect, show or clean the Premises or to perform or facilitate the performance of repairs, alterations or additions to the

 

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Premises or any portion of the Building; provided, however, Landlord shall only enter the Premises for purposes of showing it to prospective tenants during the last 6 months of the Term. Except in emergencies or to provide Building services, Landlord shall provide Tenant with 24 hours’ prior verbal notice of entry and shall use reasonable efforts to minimize any interference with Tenant’s use of the Premises and Tenant shall be entitled to have an employee of Tenant accompany the person(s) entering the Premises, provided Tenant makes such employee available at the time Landlord or such other party desires to enter the Premises. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and outside of normal business hours. Entry by Landlord shall not constitute a constructive eviction or entitle Tenant to an abatement or reduction of Rent. Notwithstanding the foregoing, Tenant, at its own expense, may provide its own locks to the cleanrooms within the Premises (“Secured Area”). Tenant need not furnish Landlord with a key, but upon the scheduled expiration date of the Lease or earlier expiration or termination of Tenant’s right to possession, Tenant shall surrender all such keys to Landlord. If Landlord must gain access to a Secured Area in a non- emergency situation, Landlord shall contact Tenant, and Landlord and Tenant shall arrange a mutually agreed upon time for Landlord to have such access. Landlord shall comply with all reasonable security measures pertaining to the Secured Area. If Landlord determines in its reasonable discretion that an emergency in the Building or the Premises, including, without limitation, a suspected fire or flood, requires Landlord to gain access to the Secured Area, Tenant hereby authorizes Landlord to forcibly enter the Secured Area. In such event, Landlord shall have no liability whatsoever to Tenant, and Tenant shall pay all reasonable expenses incurred by Landlord in repairing or reconstructing any entrance, corridor, door or other portions of the Premises damaged as a result of a forcible entry by Landlord. If, as a result of Landlord’s entry into the Premises, Landlord acquires knowledge of any information pertaining to the operations. financial or otherwise, financial condition or trade secrets of Tenant’s business or any information pertaining to Tenant’s customers that such customers would have a reasonable expectation of being kept confidential, Landlord shall not knowingly disclose, or knowingly and actively cause any of the Landlord Related Parties or Landlord’s contractors to disclose, such information to any third parties, except to the extent, if any, that such disclosure is, in Landlord’s reasonable judgment, required by applicable Regulations.”

 

17. Financial Statements. Section 17 of the Lease is hereby modified by the deletion of the phrase “and which Landlord shall keep confidential” and the substitution therefor of the following phrase:

“and which Landlord shall not knowingly disclose, or knowingly and actively cause any of the Landlord Related Parties or Landlord’s contractors to disclose, to any third parties, except to the extent, if any, that such disclosure is, in Landlord’s reasonable judgment, required by applicable Regulations”

 

18. Limitation of Landlord’s Li abi lity. Section 20 of the Lease is hereby deleted in its entirety and the following is substituted therefor:

“NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN THE BUILDING AND THE LAND ON WHICH IT IS LOCATED. TENANT SHALL LOOK SOLELY TO LANDLORD’S INTEREST IN THE BUILDING AND THE LAND ON WHICH IT IS LOCATED FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES, NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT.”

 

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19. Intentionally Omitted .

 

20. Surrender of Premises . The third sentence of Section 36 of the Lease is hereby deleted in its entirety. The second sentence of Section 36 of the Lease is hereby deleted in its entirety and is replaced with the following:

“Notwithstanding anything to the contrary set forth herein, Tenant shall remove on or before the date of expiration or earlier termination of the Lease, all equipment and leasehold improvements existing in the Premises on the Commencement Date which relate to Tenant’s manufacturing and production of testing and calibration equipment (e.g., clean rooms, and HVAC, electrical and plumbing equipment and systems servicing such clean rooms, safety showers, and change rooms), and restore the Premises to shell condition in areas where such leasehold improvements and equipment are removed.”

 

21. Landlord’s Consents . The second sentence of Section 37.K. of the Leae is hereby deleted in its entirety.

 

22. Satellite Dish / Antenna

 

  22.01. During the Term, Tenant shall have the right, to lease space on the roof of the Building for the purpose of installing (in accordance with Section 12 of the Lease), operating and maintaining a 60 inch Dish/Antenna or other communication device approved by the Landlord (the “Dish/Antenna”). No monthly fee shall be payable by Tenant to Landlord in connection with the Dish/Antenna.

 

  22.02. The exact location of the space on the roof to be leased by Tenant shall be designated by Landlord and shall not exceed 100 square feet (the “Roof Space”). Landlord reserves the right to relocate the Roof Space as reasonably necessary during the Term. Landlord’s designation shall take into account Tenant’s use of the Dish/Antenna. Notwithstanding the foregoing, Tenant’s right to install the Dish/Antenna shall be subject to the approval rights of Landlord and Landlord’s architect and/or engineer with respect to the plans and specifications of the Dish/Antenna, the size of the Dish/Antenna, the manner in which the Dish/Antenna is attached to the roof of the Building and the manner in which any cables are run to and from the Dish/Antenna. The Dish/Antenna must be tagged with weatherproof labels showing manufacturer, model, frequency range, and name of Tenant. In addition, the cable between the Dish/Antenna and Tenant’s suite, and any other cable connected to the Dish/Antenna (the “Dish!Antenna Cable”) must be tagged in the telecom closet on each floor with a label showing Tenant’s name, phone number and suite number. The precise specifications and a general description of the Dish/Antenna along with all documents Landlord reasonably requires to review the installation of the Dish/Antenna (the “Plans and Specifications”) shall be submitted to Landlord for Landlord’s written approval no later than 20 days before Tenant commences to install the Dish/Antenna. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Dish/Antenna. Tenant shall notify Landlord upon completion of the installation of the Dish/Antenna. If Landlord determines that the Dish/Antenna equipment does not comply with the approved Plans and Specifications, that the Building has been damaged during installation of the Dish/Antenna or that the installation was defective, Landlord shall notify Tenant of any noncompliance or detected problems and Tenant immediately shall cure the defects. If the Tenant fails to immediately cure the defects, Tenant shali pay to Landlord upon demand the cost, as reasonably determined by Landlord, of correcting any defects and repairing any damage to the Building caused by such installation. If at any time Landlord, in its sole discretion, deems it necessary, Tenant shall provide and install, at Tenant’s sole cost and expense, appropriate aesthetic screening, reasonably satisfactory to Landlord, for the Dish/Antenna (the “Aesthetic Screening”).

 

  22.03.

Landlord agrees that Tenant, upon reasonable prior written notice to Landlord, shall have access to the roof of the Building and the Roof Space for the purpose of installing, maintaining, repairing and removing the Dish/Antenna, Dish/Antenna Cable, the appurtenances and the Aesthetic Screening, if any (collectively, the “Dish/Antenna Items”), all of which shall be performed by Tenant or Tenant’s authorized representative or contractors, which shall be approved by Landlord, at

 

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  Tenant’s sole cost and risk. It is agreed, however, that only authorized engineers, employees or properly authorized contractors of Tenant, FCC inspectors, or persons under their direct supervision will be permitted to have access to the roof of the Building and the Roof Space. Tenant further agrees to exercise firm control over the people requiring access to the roof of the Building and the Roof Space in order to keep to a minimum the number of people having access to the roof of the Building and the Roof Space and the frequency of their visits.

 

  22.04. It is further understood and agreed that the installation, maintenance, operation and removal of the Dish/Antenna Items are not permitted to damage the Building or the roof thereof, or interfere with the use of the Building and roof by Landlord. Tenant agrees to be responsible for any damage caused to the roof or any other part of the Building, which may be caused by Tenant or any of its agents or representatives.

 

  22.05. Tenant agrees to install only equipment of types and frequencies which will not cause unreasonable interference to Landlord or existing tenants of the Building. If Tenant’s equipment causes such interference, Tenant will change the frequency on which it transmits and/or receives and take any other steps necessary to eliminate the interference. If said interference cannot be eliminated within a reasonable period of time, in the judgment of Landlord, then Tenant agrees to remove the Dish/Antenna from the Roof Space and to remove such other Dish/Antenna Items as Landlord may request.

 

  22.06. Tenant, at its sole cost and expense, and at its sole risk, shall install, operate and maintain the Dish/Antenna Items in a good and workmanlike manner, and in compliance with all Building, electric, communication, and safety codes, ordinances, standards, regulations and requirements, now in effect or hereafter promulgated, of the Federal Government, including, without limitation, the Federal Communications Commission {the “FCC”), the Federal Aviation Administration (“FAA”) or any successor agency of either the FCC or FAA having jurisdiction over radio or telecommunications, and of the state, city and county in which the Building is located. Under the Lease, the Landlord and its agents assume no responsibility for the licensing, operation and/or maintenance of Tenant’s equipment. Tenant has the responsibility of carrying out the terms of its FCC license in all respects. The Dish/Antenna shall be connected to Landlord’s power supply in strict compliance with all applicable Building, electrical, fire and safety codes. Neither Landlord nor its agents shall be liable to Tenant for any stoppages or shortages of electrical power furnished to the Dish/Antenna or the Roof Space because of any act, omission or requirement of the public utility serving the Building, or the act or omission of any other tenant, invitee or licensee or their respective agents, employees or contractors, or for any other cause beyond the reasonable control of Landlord, and Tenant shall not be entitled to any rental abatement for any such stoppage or shortage of electrical power. Neither Landlord nor its agents shall have any responsibility or liability for the conduct or safety of any of Tenant’s representatives, repair, maintenance and engineering personnel while in or on any part of the Building or the Roof Space.

 

  22.07. The Dish/Antenna Items shall remain the personal property of Tenant, and shall be removed by Tenant at its own expense at the expiration or earlier termination of this Lease or Tenant’s right to possession hereunder. Tenant shall repair any damage caused by such removal, including the patching of any holes to match, as closely as possible, the color surrounding the area where the equipment and appurtenances were attached. Tenant agrees to maintain all of the Tenant’s equipment placed on or about the roof or in any other part of the Building in proper operating condition and maintain same in satisfactory condition as to appearance and safety in Landlord’s sole discretion. Such maintenance and operation shall be performed in a manner to avoid any interference with any other tenants or Landlord. Tenant agrees that at all times during the Term, it will keep the roof of the Building and the Roof Space free of all trash or waste materials produced by Tenant or Tenant’s agents, employees or contractors.

 

  22.08.

In light of the specialized nature of the Dish/Antenna, Tenant shall be permitted to utilize the services of its choice for installation, operation, removal and repair of the Dish/Antenna Items, subject to the reasonable approval of Landlord. Notwithstanding the foregoing, Tenant must provide Landlord with prior written notice of any such installation, removal or repair and coordinate such work with

 

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  Landlord in order to avoid voiding or otherwise adversely affecting any warranties granted to Landlord with respect to the roof. If necessary, Tenant, at its sole cost and expense, shall retain any contractor having a then existing warranty in effect on the roof to perform such work (to the extent that it involves the roof), or, at Tenant’s option, to perform such work in conjunction with Tenant’s contractor. If Landlord contemplates roof repairs that could affect Tenant’s Dish/Antenna, or which may result in an interruption of the Tenant’s telecommunication service, Landlord shall formally notify Tenant at least 30 days in advance (except in cases of an emergency) prior to the commencement of such contemplated work in order to allow Tenant to make other arrangements for such service.

 

  22.09. Tenant shall not allow any provider of telecommunication, video, data or related services (“Communication Services”) to locate any equipment on the roof of the Building or in the Roof Space for any purpose whatsoever, nor may Tenant use the Roof Space and/or Dish/Antenna to provide Communication Services to an unaffiliated tenant, occupant or licensee of another building, or to facilitate the provision of Communication Services on behalf of another Communication Services provider to an unaffiliated tenant, occupant or licensee of the Building or any other building.

 

  22.10. Tenant acknowledges that Landlord may at some time establish a standard license agreement (the “License Agreement”) with respect to the use of roof space by tenants of the Building. Tenant, upon request of Landlord, shall enter into such License Agreement with Landlord provided that such agreement does not materially alter the rights of Tenant hereunder with respect to the Roof Space.

 

  22.11. Tenant specifically acknowledges and agrees that the terms and conditions of Section B.C. of the Lease (Indemnity and Waiver of Claims) shall apply with full force and effect to the Roof Space and any other portions of the roof accessed or utilized by Tenant, its representatives, agents, employees or contractors.

 

  22.12. If Tenant defaults under any of the terms and conditions of this Section or the Lease, and Tenant fails to cure said default within any applicable cure period provided for in the Lease, Landlord shall be permitted to exercise all remedies provided under the terms of the Lease, including removing all or any of the Dish/Antenna Items, and restoring the Building and the Roof Space to the condition that existed prior to the installation of the Dish/Antenna Items. If Landlord removes the Dish/Antenna Items as a result of an uncured default, Tenant shall be liable for all costs and expenses Landlord incurs in removing the Dish/Antenna Items and repairing any damage to the Building, the roof of the Building and the Roof Space caused by the installation, operation or maintenance of the Dish/Antenna Items.

 

23. Supplemental Condensing Unit The following provisions shall apply from and after the date of mutual execution and delivery of this Amendment:

 

  A.

Tenant, subject to Landlord’s review and approval of Tenant’s plans therefor, shall have the right to install a compressor-condensing unit (the “Condensing Unit”) for the purpose of providing an external cooling source for the interior air- handling unit shown as shaded and labeled “AHU” on Exhibit C attached hereto and made a part hereof. The Condensing Unit shall have a cooling capacity of not more than 125 tons and shall be placed within the area {the “Condensing Unit Area”) that is adjacent to the Building and shown as shaded and labeled “CU” on Exhibit C attached hereto and made a part hereof. Notwithstanding the foregoing, Tenant’s right to install the Condensing Unit shall be subject to Landlord’s approval of the manner in which the Condensing Unit is installed, the manner in which any power cable or fuel pipe is installed, the manner in which any ventilation and exhaust systems are installed, the manner in which any cables are run to and from the Condensing Unit to the Premises and the measures that will be taken to minimize any vibrations or sound disturbances from the operation of the Condensing Unit, including, without limitation, any necessary 2-hour rated enclosures or sound installation. Landlord shall have the right to require an acceptable enclosure to disguise the existence of the Condensing Unit and to minimize any adverse effect that the installation of the Condensing Unit may have on the appearance of the Building or the Project; provided, however, that Tenant shall not be required to enclose the Condensing Unit in a way that would materially impede the flow of air into or out of the

 

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  Condensing Unit. Without limiting the foregoing, the Condensing Unit shall be (i) designed and manufactured to emit less than 70 dB(A) at 30 feet; (ii) placed upon a concrete pad that does not touch the Building or its foundation or footings, and (iii) enclosed in a white, louvered enclosure located along the perimeter of the Condensing Unit Area. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Condensing Unit. Tenant shall not install or operate the Condensing Unit until Tenant has obtained and submitted to Landlord copies of all required governmental permits, licenses and authorizations necessary for the installation and operation of the Condensing Unit. In addition to and without limiting Tenant’s obligations under the Lease, Tenant shall comply with all applicable environmental and fire prevention laws pertaining to Tenant’s use of the Condensing Unit Area. Tenant shall also be responsible for the cost of all utilities consumed in the operation of the Condensing Unit. Notwithstanding anything herein to the contrary, if Tenant does not install the Condensing Unit on or before December 31, 2007, or if Tenant, after installation, removes the Condensing Unit from the Condensing Unit Area for reasons other than the repair and replacement of the Condensing Unit, Tenant’s right to install and maintain the Condensing Unit and to use the Condensing Unit Area shall be null and void.

 

  B. Tenant shall be responsible for assuring that the installation, maintenance, operation and removal of the Condensing Unit shall in no way damage any portion of the Building or the Project. To the maximum extent permitted by applicable law, the Condensing Unit and all appurtenances in the Condensing Unit Area shall be at the sole risk of Tenant, and Landlord shall have no liability to Tenant if the Condensing Unit or any appurtenances installations are damaged for any reason. Tenant agrees to be responsible for any damage caused to the Building or the Project in connection with the installation, maintenance, operation or removal of the Condensing Unit and, in accordance with the terms of 8.C of the Lease (as amended hereby), to indemnify, defend and hold Landlord and the Landlord Related Parties harmless from all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, including, without limitation, reasonable architects’ and attorneys’ fees (if and to the extent permitted by applicable law), which may be imposed upon, incurred by, or asserted against Landlord or any of the Landlord Related Parties in connection with the installation, maintenance, operation or removal of the Condensing Unit, including, without limitation, any environmental and hazardous materials claims. In addition to, and without limiting Tenant’s obligations under the Lease, Tenant covenants and agrees that the installation and use of the Condensing Unit and appurtenances shall not adversely affect the insurance coverage for the Building or the Project. If for any reason, the installation or use of the Condensing Unit and/or the appurtenances shall result in an increase in the amount of the premiums for such coverage, then Tenant shall be liable for the full amount of any such increase.

 

  C. Tenant shall be responsible for the installation, operation, cleanliness, maintenance and removal of the Condensing Unit and appurtenances, all of which shall remain the personal property of Tenant, and shall be removed by Tenant at its own expense at the expiration or earlier termination of the Lease. Tenant shall repair any damage caused by such installation, operation, maintenance or removal, including, without limitation, the repair or replacement of any damaged or destroyed landscaping and the patching of any holes to match, as closely as possible, the color surrounding the area where the Condensing Unit and appurtenances were attached. Such maintenance and operation shall be performed in a manner to avoid any unreasonable interference with any other tenants or Landlord. Tenant shall take the Condensing Unit Area “as is” in its condition existing on the date of mutualexecution and delivery of this Amendment, without any obligation on the part of Landlord to prepare or construct the Condensing Unit Area for Tenant’s use. Without limiting the foregoing, Landlord makes no warranties or representations to Tenant as to the suitability of the Condensing Unit Area for the installation and operation of the Condensing Unit. Tenant shall have no right to make any changes, alterations, additions, decorations or other improvements to the Condensing Unit Area without Landlord’s prior written consent. Tenant agrees to maintain the Condensing Unit, including without limitation, any enclosure installed around the Condensing Unit in good condition and repair. Tenant shall be responsible for performing any maintenance and improvements to any enclosure surrounding the Condensing Unit so as to keep such enclosure in good condition.

 

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  D. Tenant. upon prior notice to Landlord and subject to the rules and regulations enacted by Landlord, shall have access to the Condensing Unit and its surrounding area for the purpose of installing, repairing, maintaining and removing the Condensing Unit.

 

  E. Tenant shall be permitted to use the Condensing Unit Area solely for the maintenance and operation of the Condensing Unit, and the Condensing Unit and Condensing Unit Area are solely for the benefit of Tenant. All products generated by the Condensing Unit may only be used by Tenant in the Premises.

 

  F. Landlord shall have no obligation to provide any services, including, without limitation, electric current, to the Condensing Unit Area.

 

  G. Tenant shall have no right to sublet the Condensing Unit Area or to assign its interest hereunder.

 

  H. Notwithstanding anything to the contrary contained herein, if at any time during the Term Landlord determines in its sole but bona fide business judgment, that the Condensing Unit and/or any appurtenances interfere with the operations of the Building or the Project or the operations of any of the occupants of the Building or the Project, then Tenant shall, upon notice from Landlord, cease any further operation of the Condensing Unit. From and after such notice by Landlord, Tenant shall have no further right to operate the Condensing Unit unless and until Tenant shall have redesigned and modified the Condensing Unit and/or installations in a manner approved by Landlord, provided however, that Landlord’s approval of such redesign and modification shall constitute the mere permission to operate the Condensing Unit, which permission shall in no event be construed to abrogate or diminish Landlord’s rights or Tenant’s obligations under this Section 23 or the Lease.

 

24. Deleted Provisions . The following portions of the Lease are hereby deleted in their entirety and are of no further force or effect: the final sentence of Section 19, Section 38.B., Section 38.0., Section 38.E., Section 38.F., Section 38.H., and Section 38.K.

 

25. Miscellaneous.

 

  25.01. This Amendment and the attached exhibits, which are hereby incorporated into and made a part of this Amendment, set forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Under no circumstances shall Tenant be entitled to any Rent abatement, improvement allowance, leasehold improvements, or other work to the Premises, or any similar economic incentives that may have been provided Tenant in connection with entering into the Lease, unless specifically set forth in this Amendment.

 

  25.02. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

 

  25.03. In the case of any inconsistency between the provisions of the Lease and this Amendment. the provisions of this Amendment shall govern and control.

 

  25.04. Submission of this Amendment by Landlord is not an offer to enter into thi Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered the same to Tenant.

 

  25.05. The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that such capitalized terms are defined therein and not redefined in this Amendment.

 

  25.06.

Tenant hereby represents to Landlord that Tenant has dealt with no broker in connection with this Amendment, other than Craig Reinhart of CRESA Partners (“Tenant’s Broker”). Tenant agrees to indemnify and hold Landlord, its members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and

 

14


  agents, and the respective principals and members of any such agents (collectively, the “Landlord Related Parties”) harmless from all claims of any brokers, other than Tenant’s Broker, claiming to have represented Tenant in connection with this Amendment. Landlord hereby represents to Tenant that Landlord has dealt with no broker in connection with this Amendment, other than Matt Cole of Equity Office Properties Management Corp. (“Landlord’s Broker”). Landlord agrees to indemnify and hold Tenant, its members, principals, beneficiaries, partners, officers, directors, employees, and agents, and the respective principals and members of any such agents (collectively, the “Tenant Related Parties”) harmless from all claims of any brokers, including Landlord’s Broker, claiming to have represented Landlord in connection with this Amendment.

 

  25.07. Tenant represents and warrants to Landlord that each individual executing this Lease on behalf of Tenant is authorized to do so on behalf of Tenant and that Tenant is not, and the entities or individuals constituting Tenant or which may own or control Tenant or which may be owned or controlled by Tenant are not, (i) in violation of any laws relating to terrorism or money laundering, or (ii) among the individuals or entities identified on any list compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http:f/www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list.

 

  25.08. Each signatory of this Amendment represents hereby that he or she has the authority to execute and deliver the same on behalf of the party hereto for which such signatory is acting.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the day and year first above written.

 

LANDLORD:
OR-NIMBUS CORPORATE CENTER, L.L.C.,
a Delaware limited liability company
By:   Equity Office Management, L.L.C.,
  a Delaware limited liability company

 

  By:  

/s/ John D. Gallander

    John D. Gallander
    Vice President Asset Management

 

TENANT:
CASCADE MICROTECH, INC.,
an Oregon corporation
By:  

/s/ Steve Sipowicz

  Steve Sipowicz
  Chief Financial Officer

 

15


EXHIBIT A

WORKLETIER

This Exhibit (“Work Letter”) is attached to and made a part of the First Amendment (the “Amendment”) by and between OR-NIMBUS CORPORATE CENTER, L.L.C., a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”), for the entire Building located at 9100 SW Gemini Drive, Beaverton, Oregon, and commonly known as Nimbus Building 6 (the “Building”). Capitalized terms used but not otherwise defined herein shall have the meanings given in the Amendment.

As used in this Work Letter, the “Premises” shall be deemed to mean the Premises, as initially defined in the attached Amendment.

 

I. Alterations and Allowance.

 

  A. Tenant, following the delivery of the Premises by Landlord and the full and final execution and delivery of the Amendment to which this Exhibit is attached and all prepaid rental and security deposits required under such agreement, shall have the right to perform alterations and improvements in the Premises (the “Initial Alterations”). Notwithstanding the foregoing, Tenant and its contractors shall not have the right to perform Initial Alterations in the Premises unless and until Tenant has complied with all of the terms and conditions of Section 9 of the Lease, including, without limitation, approval by Landlord of the final plans for the Initial Alterations and the contractors to be retained by Tenant to perform such Initial Alterations. Tenant shall be responsible for all elements of the design of Tenant’s plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the design, the configuration of the premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve Tenant of the responsibility for such design. Landlord’s approval of the contractors to perform the Initial Alterations shall not be unreasonably withheld, conditioned or delayed. The parties agree that Landlord’s approval of the general contractor to perform the Initial Alterations shall not be considered to be unreasonably withheld if any such general contractor (i) does not have trade references reasonably acceptable to Landlord, (ii) does not maintain insurance as required pursuant to the terms of this Lease, (iii) does not have the ability to be bonded for the work in an amount of no less than 150% of the total estimated cost of the Initial Alterations, (iv) does not provide current financial statements reasonably acceptable to Landlord, or (v) is not licensed as a contractor in the state/municipality in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exclusive list of the reasons why Landlord may reasonably withhold its consent to a general contractor.

 

  B. Provided Tenant is not in default, Landlord agrees to contribute the sum of $448,185.54 (the “Allowance”) toward the cost of performing the Initial Alterations in preparation of Tenant’s occupancy of the Premises. The Allowance may only be used for the cost of preparing design and construction documents and mechanical and electrical plans for the Initial Alterations and for hard costs in connection with the Initial Alterations. The Allowance shall be paid to Tenant or, at Landlord’s option, to the order of the general contractor that performed the Initial Alterations, within 30 days following receipt by Landlord of (1) receipted bills covering all labor and materials expended and used in the Initial Alterations; (2) a sworn contractor’s affidavit from the general contractor and a request to disburse from Tenant containing an approval by Tenant of the work done; (3) full and final waivers of lien; (4) as-built plans of the Initial Alterations; and (5) the certification of Tenant and its architect that the Initial Alterations have been installed in a good and workmanlike manner in accordance with the approved plans, and in accordance with applicable laws, codes and ordinances. The Allowance shall be disbursed in the amount reflected on the receipted bills meeting the requirements above. Notwithstanding anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Allowance during the continuance of an uncured default under the Lease, and Landlord’s obligation to disburse shall only resume when and if such default is cured.

 

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  C. In no event shall the Allowance be used for the purchase of equipment, furniture or other items of personal property of Tenant. Any portion of the Allowance which exceeds the cost of the Initial Alterations or is otherwise remaining after June 30, 2007 (“Unused Allowance”) shall accrue to the sole benefit of Landlord, it being agreed that, subject to the following, Tenant shall not be entitled to any credit, offset, abatement or payment with respect thereto; provided, however, upon completion of the Initial Alterations and payment of all costs related thereto, Landlord shall apply up to $301,143.04 (i.e., $5.12 per rentable square foot of the Premises) of such Unused Allowance against the installments of Base Rent and Additional Rent next and subsequently becoming due under this Lease. Tenant shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Initial Alterations and/or Allowance.

 

  D. Tenant agrees to accept the Premises in its “as-is” condition and configuration, it being agreed that Landlord shall not be required to perform any work or, except as provided above with respect to the Allowance, incur any costs in connection with the construction or demolition of any improvements in the Premises. Nothing in this Section D shall be deemed to waive or diminish any ongoing obligation of Landlord under the Lease to maintain or repair the Building.

 

  E. This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK

 

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EXHIBIT B

OUTLINE AND LOCATION OF LIQUID NITROGEN STORAGE AREA

 

LOGO


EXHIBIT C

OUTLINE AND LOCATION OF CONDENSING UNIT AREA

Nimbus Corporate Center

 

LOGO

Exhibit 10.2

THIRD AMENDMENT TO LEASE

(Extension of Term)

THIS THIRD AMENDMENT TO LEASE (this “Third Amendment”) is dated as of the 23rd day of January, 2014, between NIMBUS CENTER LLC, a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”).

RECITALS

A. Landlord (as successor-in-interest to OR-Nimbus Corporate Center, L.L.C.) and Tenant are parties to a lease dated as of April 2, 1999 (the “Original Lease”), as amended by First Amendment dated as of January 10, 2007 (the “First Amendment”) and Second Amendment dated as of February 25, 2013 (the “Second Amendment”, and together with the Original Lease and First Amendment, collectively referred to herein as the “Lease”), pursuant to which Tenant leases from Landlord certain premises (the “Existing Premises”) consisting of the entire building (the “Building 6 Premises”) located at 9100 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 6 (“Building 6”) and a portion of the building (the “Suite 9203B Premises”) located at 9203-9205 SW Nimbus Avenue, Beaverton, Oregon commonly known as Nimbus Building 9 (“Building 9”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Lease.

B. The Term expires on December 31, 2019.

C. Landlord and Tenant presently desire to amend the Lease to (i) confirm the Base Rent for the Building 6 Premises, (ii) and provide for certain other Lease modifications, all as more particularly set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1. Building 6 Base Rent . Tenant shall continue to pay Base Rent for the Building 6 Premises in the amount set forth in the Lease throughout December 31, 2014. Pursuant to the terms and conditions set forth in Paragraph 2 of the Second Amendment, Landlord and Tenant have agreed upon the Prevailing Market Rate for the Building 6 Premises. Effective as of January 1, 2015 and continuing thereafter during the Extension Term, Tenant shall pay Base Rent for the Building 6 Premises pursuant to the Lease in the following amounts:

 

Period

   Annual Rate Per SF      Monthly Base Rent  

1/01/15 - 3/31/15

   $ 13.00       $ 63,718.42   

4/01/15 - 3/31/16

   $ 13.39       $ 65,629.97   

4/01/16 - 3/31/17

   $ 13.79       $ 67,590.54   

4/01/17 - 3/31/18

   $ 14.20       $ 69,600.12   

4/01/18 - 3/31/19

   $ 14.63       $ 71,707.73   

4/01/19 - 12/31/19

   $ 15.07       $ 73,864.35   

2. Building 6 Premises; Expenses and Taxes . Tenant shall continue to pay Tenant’s Proportionate Share of Operating Expenses with respect to the Building 6 Premises throughout the Term.

3. Landlord Work; Existing Premises . Tenant shall accept the Existing Premises in its as-is condition as of the date of this Third Amendment, and, except as provided in the Work Letter attached to the Second Amendment as Exhibit J , Landlord shall have no obligation to make or pay for any alterations, additions, improvements or renovations in or to the Existing Premises. Notwithstanding the foregoing, the parties agree that Tenant is permitted to perform certain improvements to the Building 6 Premises as described in the Work Letter attached to the Second Amendment as Exhibit J . In addition, Exhibit J-1 attached to the Second Amendment to Lease is hereby deleted in its entirety and replaced with Exhibit J-1 attached hereto.

4. Suites 9225 and 9215 Must Take Space .

a. Paragraph 4.c. of the Second Amendment shall be deleted in its entirety and replaced with the following:

“c. Base Rent; Operating Expenses . Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suites 9225 and 9215 Must Take Space pursuant to the Lease shall commence as of the date (the “Suites 9225 and 9215 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suites 9225 and 9215 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suites 9225 and 9215 Must Take Space or any portion thereof. From and after the

 

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Suites 9225 and 9215 Must Take Space Rent Commencement Date, and for the balance of the Term, Tenant shall pay Base Rent for the Suites 9225 and 9215 Must Take Space pursuant to the Lease in the following amounts:

 

Period

   Annual Rate Per SF      Monthly Base Rent  

Suites 9225 and 9215 Must Take Space Rent Commencement Date - 3/31/15

   $ 13.00       $ 9,871.33   

4/01/15 - 3/31/16

   $ 13.39       $ 10,167.47   

4/01/16 - 3/31/17

   $ 13.79       $ 10,471.21   

4/01/17 - 3/31/18

   $ 14.20       $ 10,782.53   

4/01/18 - 3/31/19

   $ 14.63       $ 11,109.05   

4/01/19 - 12/31/19

   $ 15.07       $ 11,443.15 ” 

5. Suites 9225 and 9215 Work Letter . Exhibit D to the Second Amendment is hereby deleted in its entirety and replaced with Exhibit D attached hereto.

6. Suite 9205 Must Take Space .

a. Paragraphs 5.a. and 5.c of the Second Amendment shall be deleted in their entirety and replaced with the following”

“a. Suite 9205 Must Take Space . Effective as of the Suite 9205 Must Take Space Commencement Date (as defined below), and continuing for the balance of the Term as applicable to the Premises and any extension thereof, the space consisting of 3,634 rentable square feet on the first (1st) floor of Nimbus Building 9, as shown on the demising plan attached hereto as Exhibit E (the “Suite 9205 Must Take Space”) shall be added to the premises covered by the Lease. Commencing on the Suite 9205 Must Take Space Commencement Date, all references in the Lease to the “Premises” shall be deemed to include the Suite 9205 Must Take Space. All terms, covenants and conditions of the Lease applicable to the Premises, as modified hereunder, shall apply to the Suite 9205 Must Take Space, except as expressly set forth in this Paragraph 5.

The “Suite 9205 Must Take Space Commencement Date” shall mean the date on which Landlord shall deliver the Suite 9205 Must Take Space to Tenant in the condition required by Paragraph 5.b. below. The scheduled Suite 9205 Must Take Space Commencement Date is April 1, 2014. The parties agree that the Suite 9205 Must Take Space Commencement Date will not occur prior to April 1, 2014 unless agreed to in writing by Landlord and Tenant. If Landlord is unable to deliver possession of the Suite 9205 Must Take Space to Tenant on or before such scheduled Suite 9205 Must Take Space Commencement Date for any reason whatsoever, neither the Lease nor Tenant’s obligation to lease the Suite 9205 Must Take Space hereunder shall be void or voidable, nor shall any such delay in delivery of possession of the Suite 9205 Must Take Space operate to extend the Term with respect to the Suite 9205 Must Take Space or the balance of the Premises, or amend the Suite 9205 Must Take Space Rent Commencement Date (as defined below) or Tenant’s other obligations with respect to the Suite 9205 Must Take Space or under the Lease. If Landlord is unable to deliver possession of the Suite 9205 Must Take Space to Tenant by November 1, 2014, Landlord shall not incur any liability under the Lease, but Tenant shall have the right to terminate Tenant’s obligation to lease the Suite 9205 Must Take Space by providing Landlord with written notice on or before November 15, 2014. So long as Tenant is not in default under the Lease, during the period commencing on the date of this Second Amendment and ending on the earlier of (i) Tenant’s delivery to Landlord of Tenant’s termination notice pursuant to the terms of this Paragraph 5.a. or (ii) the Suite 9205 Take Space Commencement Date, Landlord shall not enter into any new lease or amend an existing lease which term or extension term extends beyond April 1, 2014.”

“c. Base Rent; Operating Expenses . Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suite 9205 Must Take Space pursuant to the Lease shall commence as of the date (the “Suite 9205 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suite 9205 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suite 9205 Must Take Space or any portion thereof. From and after the Suite 9205 Must Take Space Rent Commencement Date, and for the balance of the Term, Tenant shall pay Base Rent for the Suite 9205 Must Take Space pursuant to the Lease in the following amounts:

 

Period

   Annual Rate Per SF      Monthly Base Rent  

Suite 9205 Must Take Space Rent Commencement Date -3/31/15

   $ 13.00       $ 3,936.83   

4/01/15 - 3/31/16

   $ 13.39       $ 4,054.94   

4/01/16 - 3/31/17

   $ 13.79       $ 4,176.07   

4/01/17 - 3/31/18

   $ 14.20       $ 4,300.23   

4/01/18 - 3/31/19

   $ 14.63       $ 4,430.45   

4/01/19 - 12/31/19

   $ 15.07       $ 4,563.70 ” 

 

2


7. Suite 9500 Must Take Space . Paragraph 6.c. of the Second Amendment shall be deleted in its entirety and replaced with the following:

“c. Base Rent; Operating Expenses . Tenant’s obligation to pay Base Rent and Tenant’s Proportionate Share of Operating Expenses for the Suite 9500 Must Take Space pursuant to the Lease shall commence as of the date (the “Suite 9500 Must Take Space Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Suite 9500 Must Take Space Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Suite 9500 Must Take Space or any portion thereof. From and after the Suite 9500 Must Take Space Rent Commencement Date, and for the balance of the Term, Tenant shall pay Base Rent for the Suites 9225 and 9215 Must Take Space pursuant to the Lease in the following amounts:

 

Period

   Annual Rate Per SF      Monthly Base Rent  

Suite 9500 Must Take Space Rent Commencement Date - 3/31/15

   $ 13.00       $ 13,187.42   

4/01/15 - 3/31/16

   $ 13.39       $ 13,583.04   

4/01/16 - 3/31/17

   $ 13.79       $ 13,988.81   

4/01/17 - 3/31/18

   $ 14.20       $ 14,404.72   

4/01/18 - 3/31/19

   $ 14.63       $ 14,840.92   

4/01/19 - 12/31/19

   $ 15.07       $ 15,278.26 ” 

8. Renewal Option . The Renewal Option set forth in Section 6 of the First Amendment, as amended by Paragraph 9 of the Second Amendment shall continue in full force and effect through the Term.

9. Supplemental HVAC Units . Tenant may, upon written consent from Landlord, install supplemental HVAC units (the “Supplemental HVAC Units”) outside the Premises in a location selected by Landlord in Landlord’s sole discretion; provided, however, Landlord agrees that the location selected by Landlord will be within the area set forth in Exhibit A attached hereto. In the event Tenant installs the Supplemental HVAC Units, Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, repairing, maintaining and replacing such Supplemental HVAC Units. Tenant shall also be required to remove the Supplemental HVAC Units upon the expiration of the Term and for restoring the area where the Supplemental HVAC Units were installed to the area’s pre-existing condition.

10. Roof Top HVAC Units .

a. Notwithstanding anything to the contrary contained in the Lease, including but not limited to Article 11 of the Lease, Tenant, at its sole cost and expense, shall perform all maintenance and repairs to all roof top HVAC units serving the Premises (including any existing and new HVAC units located in Buildings 6 and 9). Without limiting the foregoing, Tenant shall enter into, and maintain in effect throughout the Term, an HVAC maintenance contract with respect to all roof top HVAC units serving the Premises, in form and substance reasonably approved in writing by Landlord, with a contractor reasonably approved in writing by Landlord, which contract shall require, among other things, that maintenance be performed on such HVAC system not less than once every 6 months. To the extent Landlord is not reimbursed by insurance proceeds, Tenant shall reimburse Landlord for the cost of repairing damage to the Building caused by the acts of Tenant, Tenant Related Parties and their respective contractors and vendors in connection with such HVAC maintenance and repairs. If Tenant fails to make any repairs to the roof top HVAC units serving the Premises for more than 15 days after notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and, within 30 days after demand, Tenant shall pay the reasonable cost of the repairs, together with an administrative charge in an amount equal to 5% of the cost of the repairs.

b. Notwithstanding the foregoing, if the roof top HVAC system serving the Premises needs to be replaced (rather than merely maintained or repaired), Landlord shall perform such replacement at

 

3


Landlord’s sole cost and expense. Except as otherwise expressly set forth herein, neither Base Rent nor Additional Rent will be reduced, nor will Landlord be liable, for loss or injury to or interference with Tenant’s property, profits or business arising from or in connection with Landlord’s performance of its obligations under this section.

11. Real Estate Brokers . Tenant represents and warrants that it has negotiated this Amendment directly with Shorenstein Realty Services, L.P., on behalf of Landlord, and Cresa Portland, LLC, on behalf of Tenant (collectively, the “Brokers”), and Tenant has not authorized or employed, or acted by implication to authorize or to employ, any other real estate broker or salesman to act for Tenant in connection with this Third Amendment. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims by any real estate broker or salesman other than the Brokers for a commission, finder’s fee or other compensation as a result of Tenant’s entering into this Amendment.

12. No Offer . Submission of this instrument for examination and signature by Tenant does not constitute an offer to amend the Lease or a reservation of or option to amend the Lease, and this instrument is not effective as a lease amendment or otherwise until executed and delivered by both Landlord and Tenant.

13. Authority . If Tenant is a corporation, partnership, trust, association or other entity, Tenant and each person executing this Third Amendment on behalf of Tenant, hereby covenants and warrants that (a) Tenant is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Tenant has and is duly qualified to do business in the state in which the Building is located, (c) Tenant has full corporate, partnership, trust, association or other appropriate power and authority to enter into this Third Amendment and to perform all Tenant’s obligations under the Lease, as amended by this Third Amendment, and (d) each person (and all of the persons if more than one signs) signing this Third Amendment on behalf of Tenant is duly and validly authorized to do so.

14. Lease in Full Force and Effect . Except as provided above, the Lease is unmodified hereby and remains in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Third Amendment as of the date and year first above written.

 

LANDLORD:       TENANT:
NIMBUS CENTER LLC,       CASCADE MICROTECH, INC.,
a Delaware limited liability company       an Oregon corporation
By:  

/s/ Greg Meyer

      By:  

/s/ Jeff Killian

Name:  

Greg Meyer

      Name:  

Jeff Killian

Title:  

Vice President

      Title:  

Chief Financial Officer

 

4


EXHIBIT D

Suites 9225 and 9215 Work Letter

This Exhibit (the “Suites 9225 and 9215 Work Letter”) is attached to and made a part of the Second Amendment to Lease (the “Second Amendment”) by and between NIMBUS CENTER LLC, a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”), for space in the building located at 9100 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 6. Capitalized terms used but not defined herein shall have the meanings set forth in the Amendment.

1. Tenant, following the Suites 9225 and 9215 Must Take Space Commencement Date, shall have the right to perform alterations and improvements to the Suites 9225 and 9215 Must Take Space (the “Suites 9225 and 9215 Tenant Improvements”). Notwithstanding the foregoing, Tenant and its contractors shall not have the right to perform the Suites 9225 and 9215 Tenant Improvements unless and until Tenant has complied with all of the terms and conditions of Section 9 of the Original Lease, including, without limitation, approval by Landlord of the final plans for the Suites 9225 and 9215 Tenant Improvements and the contractors to be retained by Tenant to perform such Suites 9225 and 9215 Tenant Improvements. Tenant shall be responsible for all elements of the design of Tenant’s plans (including, without limitation, compliance with laws, functionality of design, the structural integrity of the design, the configuration of the Premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve Tenant of the responsibility for such design. Landlord’s approval of final plans for the Suites 9225 and 9215 Tenant Improvements and the contractors to perform the Tenant Improvements shall not be unreasonably withheld, conditioned or delayed. The parties agree that Landlord’s approval of the general contractor to perform the Suites 9225 and 9215 Tenant Improvements shall not be considered to be unreasonably withheld if any such general contractor (i) does not have trade references reasonably acceptable to Landlord, (ii) does not maintain insurance as required pursuant to the terms of the Lease, (iii) does not have the ability to be bonded for the work, or (iv) is not licensed as a contractor in the state/municipality in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exhaustive list of the reasons why Landlord may reasonably withhold its consent to a general contractor. In the event that the Suites 9225 and 9215 Tenant Improvements includes the removal of any demising walls, Landlord agrees that Tenant shall not be obligated to restore the demising walls at the end of the Term.

2. Landlord agrees to contribute the sum of: (i) $159,460.00 (i.e., $17.50 per rentable square foot of Suite 9225 and $17.50 per rentable square foot of Suite 9215) plus (ii) $251,208.00 to be applied toward the cost of the Suites 9225 and 9215 Tenant Improvements (the “Suites 9225 and 9215 Allowance”). The Suites 9225 and 9215 Allowance shall be paid to Tenant in 1 disbursement within 30 days after completion of the Suites 9225 and 9215 Tenant Improvements and Landlord’s receipt of the following documentation: (i) general contractor and architect’s (if an architect is required) completion affidavits, (ii) full and final waivers of lien, (iii) receipted bills covering all labor and materials expended and used, (iv) as-built plans of the Suites 9225 and 9215 Tenant Improvements, and (v) the certification of Tenant and its architect (if an architect is required) that the Suites 9225 and 9215 Tenant Improvements have been installed in a good and workmanlike manner in accordance with the approved plans, and in accordance with applicable Laws. Notwithstanding anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Suites 9225 and 9215 Allowance during the continuance of an uncured default under the Lease, and Landlord’s obligation to disburse shall only resume when and if such default is cured.

3. Unless utilized for the Existing Premises Tenant Improvements, Suite 9205 Tenant Improvements or the 9500 Tenant Improvements pursuant to Section 4 below, any portion of the Suites 9225 and 9215 Allowance which exceeds the cost of the Suites 9225 and 9215 Tenant Improvements or is otherwise remaining after December 31, 2014 shall accrue to the sole benefit of Landlord, it being agreed that Tenant shall not be entitled to any credit, offset, abatement or payment with respect thereto. In addition, if the Suites 9225 and 9215 Allowance is utilized for the Existing Premises Tenant Improvements, Suite 9205 Tenant Improvements or the 9500 Tenant Improvements pursuant to Section 4 below, any portion of the Suites 9225 and 9215 Allowance which has been moved and is still remaining after June 30, 2015 shall accrue to the sole benefit of Landlord. In the event the cost of the Suites 9225 and 9215 Tenant Improvements exceeds the Suites 9225 and 9215 Allowance, Tenant shall pay all such excess costs after the full amount of the Suites 9225 and 9215 Allowance has been disbursed hereunder directly to Tenant’s contractor or subcontractor or suppliers involved and shall furnish to Landlord copies of receipted invoices therefor and such waivers of lien rights as Landlord may reasonably require.

4. In no event shall the Suites 9225 and 9215 Allowance be used for the purchase of equipment, furniture or other items of personal property of Tenant. Tenant shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Suites 9225 and 9215 Tenant Improvements and/or Suites 9225 and 9215 Allowance. Notwithstanding anything to the contrary contained herein, Tenant shall be permitted to use any outstanding portion of the Suites 9225 and 9215 Allowance toward the Existing Premises Tenant Improvements, Suite 9205 Tenant Improvements and the Suite 9500 Tenant Improvements; provided that Tenant must provide Landlord with a monthly accounting and six (6) month forecast for the use of each of the Existing Premises Allowance, Suite 9225 and 9215 Allowance, Suite 9205 Allowance, and the Suite 9500 Allowance so that Landlord can properly account for the use and outstanding amount of each respective allowance.


5. This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.


EXHIBIT J-1

 

LOGO

McKinstry | 16790 NE Mason St., Suite 100 | Portland, Oregon | (503) 849-6484 |
CCB #172811
McKinstry
For The Life Of Your Building
To: Albert Spliethof
Company: Shorenstein Phone:
Cell:
From: Darren Brault
Pages: 1
Date: 9/05/13
Re: Cascade Microtech Rebuild
Rebuild Trane Units at Cascade Microtech
Provide the following work and materials:
Lock out and tag out
Reclaim Refrigerant
Remove existing compressors from both units and haul away Provide and Install (4) new large compressors for both Trane units Remove (2) evaporator coils
Remove (2) condensing coils
Provide and install (1) new evaporator coil for both Trane units Provide and install (1) new condensing coil for both Trane units Remove (2) supply fan motors
Remove (2) return fan motors
Provide and install (2) new inverter duty HE supply fan motors for both Trane units Provide and install (2) new inverter duty HE return fan motors for both Trane units Remove existing condensing motors
Provide and install new condensing motors for both Trane units
Remove (2) existing supply shafts Remove (2) existing return shafts Provide and install (2) supply shafts Provide and install (2) return shafts Demo existing bearings
Provide and install (4) new pillow block bearings for both Trane units
Demo existing sheaves
Provide and install (4) new sheaves for both Trane units
Provide and install new belts
Remove existing control ignition boards
Provide and install (2) new control ignition boards
Provide crane services
Charge systems
Provide startup and test
Provide one-year parts and labor warranty
**This rebuild of the RTU’s will make the existing Trane units as good as new with the same warranty and life span of new Trane units**
Total Project Cost $129,850.00
Clarifications/ Exclusions
Any work related to asbestos to be performed by others
All work to be performed during normal business hours unless stated differently Structural modifications or structural engineering is not included in this bid Seismic upgrades are excluded
The Shell of the RTU’s are excluded from replacement
New sheetmetal/ ductwork is excluded
HVAC Screens are excluded
No other repairs are part of this bid
New electrical, gas meter or water service not included
This proposal is valid for 60 days from the date proposed.
Upon your favorable review, please sign and return this proposal for scheduling and implementation. Should you have any questions or require additional information, please feel free to call me at 503-849-6484.
Sincerely,
Darren Brault
McKinstry Co.
Project Manager
Acceptance:
Customer Signature
P.O.

Exhibit 10.3

FOURTH AMENDMENT TO LEASE

(Adding Additional Premises)

THIS FOURTH AMENDMENT TO LEASE (this “Fourth Amendment”) is dated as of the 31st day of March, 2014, between NIMBUS CENTER LLC, a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”).

RECITALS

A. Landlord (as successor-in-interest to OR-Nimbus Corporate Center, L.L.C.) and Tenant are parties to a lease dated as of April 2, 1999 (the “Original Lease”), as amended by First Amendment dated as of January 10, 2007 (the “First Amendment”), Second Amendment dated as of February 25, 2013 (the “Second Amendment”), and Third Amendment dated as of January 23, 2014 (the “Third Amendment”, and together with the Original Lease, First Amendment, and Second Amendment, collectively referred to herein as the “Lease”), pursuant to which Tenant leases from Landlord certain premises (the “Existing Premises”) consisting of the entire building (the “Building 6 Premises”) located at 9100 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 6 (“Building 6”) , a portion of the building (the “Suite 9500 Premises”) located at 9500 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 3 (“Building 3”), and portions of the building (the “Suite 9203B Premises”, the “Suites 9225 and 9215 Premises” and the “Suite 9205 Premises”) located at 9203-9215 SW Nimbus Avenue, Beaverton, Oregon commonly known as Nimbus Building 9 (“Building 9”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Lease.

B. The Term expires on December 31, 2019.

C. Landlord and Tenant desire to amend the Lease to provide for: (i) the leasing by Tenant of additional space in Building 3; (ii) modification of Base Rent payable under the Lease; (iii) modification of Tenant’s Proportionate Share of the Project; and (iv) certain other Lease modifications, all as more particularly set forth herein.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1. Additional Premises . Effective as of the Additional Premises Commencement Date (as defined below), and continuing for the balance of the Term, the space on the first (1 st ) floor of Building 3 shown outlined on the attached Exhibit A and known as Suite 100A (the “Additional Premises”) shall be added to the premises covered by the Lease. Commencing on the Additional Premises Commencement Date, all references in the Lease and in this Fourth Amendment to the “Premises” shall be deemed to refer to the Existing Premises and the Additional Premises, collectively. Landlord and Tenant hereby stipulate for all purposes of the Lease that the rentable square footage of the Additional Premises is deemed to be 5,120 rentable square feet.

The “Additional Premises Commencement Date” shall mean the date on which Landlord shall deliver the Additional Premises to Tenant in the condition required under Paragraph 4 below. The scheduled Additional Premises Commencement Date is May 1, 2014. If Landlord is unable to deliver possession of the Additional Premises to Tenant on the scheduled Additional Premises Commencement Date for any reason whatsoever, neither this Fourth Amendment nor the Lease shall be void or voidable, nor shall any such delay in delivery of possession of the Additional Premises operate to extend the Term beyond the Termination Date or amend Tenant’s obligations hereunder or under the Lease. Upon either party’s request after the Additional Premises Commencement Date, the parties shall execute a letter confirming the Additional Premises Commencement Date.

2. Base Rent; Additional Premises . Commencing as of the date (the “Additional Premises Rent Commencement Date”) that is the earlier to occur of (i) 90 days following the Additional Premises Commencement Date or (ii) the date Tenant shall commence the conduct of business in the Additional Premises or any portion thereof (the “Additional Premises Rent Commencement Date”), Tenant shall pay Base Rent for the Additional Premises pursuant to the Lease in the following amounts:

 

Period

   Annual Rate
Per Square Foot
     Monthly Base Rent  

The Additional Premises Rent Commencement Date- 04/30/15

   $ 13.00       $ 5,546.67   

05/01/15 – 04/30/16

   $ 13.39       $ 5,713.07   

05/01/16 – 04/30/17

   $ 13.79       $ 5,883.73   

05/01/17 – 04/30/18

   $ 14.20       $ 6,058.67   

05/01/18 – 04/30/19

   $ 14.63       $ 6,242.13   

05/01/19 – 12/31/19

   $ 15.07       $ 6,429.87   

 

1


The foregoing Base Rent for the Additional Premises shall be in addition to the Base Rent payable by Tenant for the Existing Premises pursuant to the Lease.

3. Expenses and Taxes; Additional Premises . Effective as of the Additional Premises Commencement Date, and continuing to the Termination Date, the provisions of Section 4 of the First Amendment shall apply to the Additional Premises, and for such purposes, Tenant’s Proportionate Share of the Project shall mean 0.7422 % with respect to the Additional Premises. The foregoing Additional Rent for the Additional Premises shall be in addition to the Additional Rent payable by Tenant for the Existing Premises pursuant to the Lease.

4. Landlord Work; Additional Premises . Tenant shall accept the Additional Premises in its as-is condition as of the date of this Fourth Amendment, and, except as provided in the Work Letter attached hereto as Exhibit B (the “Work Letter”) , Landlord shall have no obligation to make or pay for any alterations, additions, improvement or renovations in or to the Additional Premises to prepare the same for Tenant’s occupancy. Following the Additional Premises Commencement Date, Tenant shall perform the Additional Premises Tenant Improvements (defined in the Work Letter) as described in the Work Letter.

5. Parking . With respect the Additional Premises, the parking provisions set forth in the Lease shall continue to apply on the terms and conditions set forth therein, except that effective as of the Additional Premises Commencement Date (i) the parking made available to Tenant shall be increased by 20 unreserved parking spaces in the surface parking lot serving Building 3, and (ii) Tenant shall be entitled to the use of such unreserved parking spaces at no additional charge.

6. Real Estate Brokers . Tenant represents and warrants that it has negotiated this Fourth Amendment directly with Shorenstein Realty Services, L.P., on behalf of Landlord, and Cresa Portland, LLC, on behalf of Tenant (collectively, the “Brokers”), and Tenant has not authorized or employed, or acted by implication to authorize or to employ, any other real estate broker or salesman to act for Tenant in connection with this Fourth Amendment. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims by any real estate broker or salesman other than the Brokers for a commission, finder’s fee or other compensation as a result of Tenant’s entering into this Fourth Amendment.

7. No Offer . Submission of this instrument for examination and signature by Tenant does not constitute an offer to amend the Lease or a reservation of or option to amend the Lease, and this instrument is not effective as a lease amendment or otherwise until executed and delivered by both Landlord and Tenant.

8. Authority . If Tenant is a corporation, partnership, trust, association or other entity, Tenant and each person executing this Fourth Amendment on behalf of Tenant, hereby covenants and warrants that (a) Tenant is duly incorporated or otherwise established or formed and validly existing under the laws of its state of incorporation, establishment or formation, (b) Tenant has and is duly qualified to do business in the state in which the Building is located, (c) Tenant has full corporate, partnership, trust, association or other appropriate power and authority to enter into this Fourth Amendment and to perform all Tenant’s obligations under the Lease, as amended by this Fourth Amendment, and (d) each person (and all of the persons if more than one signs) signing this Fourth Amendment on behalf of Tenant is duly and validly authorized to do so.

9. Lease in Full Force and Effect . Except as provided above, the Lease is unmodified hereby and remains in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Fourth Amendment as of the date and year first above written.

 

LANDLORD:     TENANT:
NIMBUS CENTER LLC,     CASCADE MICROTECH, INC.,
a Delaware limited liability company     an Oregon corporation
By:  

/s/ Greg Meyer

    By:  

/s/ Jeff Killian

Name:  

Greg Meyer

    Name:  

Jeff Killian

Title:  

Vice President

    Title:  

Chief Financial Officer

 

2


EXHIBIT B

Work Letter

This Exhibit (the “Work Letter”) is attached to and made a part of the Fourth Amendment to Lease (the “Fourth Amendment”) by and between NIMBUS CENTER LLC, a Delaware limited liability company (“Landlord”), and CASCADE MICROTECH, INC., an Oregon corporation (“Tenant”), for space in the building located at 9500 SW Gemini Drive, Beaverton, Oregon commonly known as Nimbus Building 3. Capitalized terms used but not defined herein shall have the meanings set forth in the Amendment.

1. Landlord shall perform improvements to the Additional Premises in accordance with the following work list (the “Work List”) using Building standard methods, materials and finishes. The improvements to be performed in accordance with the Work List are hereinafter referred to as the “Landlord Work.” Landlord and Tenant agree that Landlord shall pay for the cost of the Landlord Work. Landlord shall enter into a direct contract for the Landlord Work with a general contractor selected by Landlord. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the Landlord Work.

WORK LIST

 

ITEM
Construct a demising wall between the Additional Premises and the adjacent Suite 120 and separate the necessary utilities (including electrical and HVAC) in the Additional Premises from the adjacent Suite 120 to establish separate suites for the Additional Premises and Suite 120 as determined by Landlord in Landlord’s reasonable discretion.

2. Tenant, following the Additional Premises Commencement Date, shall have the right to perform alterations and improvements to the Additional Premises (the “Additional Premises Tenant Improvements”). Notwithstanding the foregoing, Tenant and its contractors shall not have the right to perform the Additional Premises Tenant Improvements unless and until Tenant has complied with all of the terms and conditions of Section 9 of the Original Lease, including, without limitation, approval by Landlord of the final plans for the Additional Premises Tenant Improvements and the contractors to be retained by Tenant to perform such Additional Premises Tenant Improvements. Tenant shall be responsible for all elements of the design of Tenant’s plans (including, without limitation, compliance with laws, functionality of design, the structural integrity of the design, the configuration of the Additional Premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans shall in no event relieve Tenant of the responsibility for such design. Landlord’s approval of final plans for the Additional Premises Tenant Improvements and the contractors to perform the Additional Premises Tenant Improvements shall not be unreasonably withheld, conditioned or delayed. The parties agree that Landlord’s approval of the general contractor to perform the Additional Premises Tenant Improvements shall not be considered to be unreasonably withheld if any such general contractor (i) does not have trade references reasonably acceptable to Landlord, (ii) does not maintain insurance as required pursuant to the terms of the Lease, (iii) does not have the ability to be bonded for the work, or (iv) is not licensed as a contractor in the state/municipality in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exhaustive list of the reasons why Landlord may reasonably withhold its consent to a general contractor. Tenant shall not be required to remove the demising wall between the Additional Premises and the adjacent Suite 120 upon the expiration of the Term.

3. Landlord agrees to contribute the sum of $104,960.00 (i.e., $20.50 per rentable square foot of the Additional Premises) to be applied toward the cost of the Additional Premises Tenant Improvements (the “Additional Premises Allowance”). The Additional Premises Allowance shall be paid to Tenant in 1 disbursement within 30 days after completion of the Additional Premises Tenant Improvements and Landlord’s receipt of the following documentation: (i) general contractor and architect’s (if an architect is required) completion affidavits, (ii) full and final waivers of lien, (iii) receipted bills covering all labor and materials expended and used, (iv) as-built plans of the Additional Premises Tenant Improvements, and (v) the certification of Tenant and its architect (if an architect is required) that the Additional Premises Tenant Improvements have been installed in a good and workmanlike manner in accordance with the approved plans, and in accordance with applicable Laws. Notwithstanding anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Additional Premises Allowance during the continuance of an uncured default under the Lease, and Landlord’s obligation to disburse shall only resume when and if such default is cured.

4. Any portion of the Additional Premises Allowance which exceeds the cost of the Additional Premises Tenant Improvements or is otherwise remaining after December 31, 2014 shall accrue to the sole benefit of Landlord, it being agreed that Tenant shall not be entitled to any credit, offset, abatement or payment with respect thereto. In the event the cost of the Additional Premises Tenant Improvements exceeds the Additional Premises Allowance, Tenant shall pay all such excess costs after the full amount of the


Additional Premises Allowance has been disbursed hereunder directly to Tenant’s contractor or subcontractor or suppliers involved and shall furnish to Landlord copies of receipted invoices therefor and such waivers of lien rights as Landlord may reasonably require.

5. In no event shall the Additional Premises Allowance be used for the purchase of equipment, furniture or other items of personal property of Tenant. Tenant shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Additional Premises Tenant Improvements and/or Additional Premises Allowance.

6. This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Michael D. Burger, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Cascade Microtech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 9, 2014

/s/ Michael D. Burger

Michael D. Burger
Director, President and Chief Executive Officer
Cascade Microtech, Inc.

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Jeff Killian, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Cascade Microtech, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 9, 2014

/s/ Jeff Killian

Jeff Killian
Chief Financial Officer and Treasurer
Cascade Microtech, Inc.

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Cascade Microtech, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Burger, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Michael D. Burger

Michael D. Burger
Chief Executive Officer
Cascade Microtech, Inc.
May 9, 2014

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Cascade Microtech, Inc. and will be retained by Cascade Microtech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Cascade Microtech, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeff Killian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Jeff Killian

Jeff Killian
Chief Financial Officer
Cascade Microtech, Inc.
May 9, 2014

This certification is made solely for the purpose of 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to Cascade Microtech, Inc. and will be retained by Cascade Microtech, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.