<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1997
REGISTRATION NO. 333-25673
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NICHI CAPITAL, LTD.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW YORK 6299 11-3334472
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
150 NASSAU STREET, 10TH FLOOR, NEW YORK, NEW YORK 10038
(800) 490-6074
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
150 NASSAU STREET, 10TH FLOOR, NEW YORK, NEW YORK 10038
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR INTENDED PRINCIPAL PLACE OF BUSINESS)
------------------------
OLAWANDE A. AGUNLOYE, PRESIDENT
NICHI CAPITAL, LTD.
150 NASSAU STREET, 10TH FLOOR, NEW YORK, NEW YORK 10038
(800) 490-6074
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPY OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
ARLEN G. LOSELLE, ESQ.
LOSELLE GREENAWALT KAPLAN & BLAIR LEON B. LIPKIN, ESQ.
140 EAST 45TH STREET 140 EAST 45TH STREET
NEW YORK, N.Y. 10017 NEW YORK, N.Y. 10017
(212) 986-6850 (212) 986-6850
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
DOLLAR AMOUNT PRICE AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED TO BE REGISTERED PER SHARE(1) OFFERING PRICE(1)(2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock(1).............................................. 1,800,000 Shares $ 5.00 $ 9,000,000 $2,727
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) The total minimum aggregate offering price is $3,000,000. All proceeds of
this offering shall be placed in an escrow account to be managed by
Citibank, NA until the minimum aggregate offering price has been received by
the Registrant in accordance with the provision of Rule 15c 2-4 under the
Securities Exchange Act of 1934. The maximum offering price is $9,000,000.
This offering is on a best efforts basis and shall be withdrawn if the
minimum offering price of $3,000,000 is not received by the Company.
(3) Calculated pursuant to Rule 457(a) based on a bona fide estimate of the
maximum offering price. This fee has been paid by the Registrant.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
CROSS REFERENCE SHEET
PART 1.
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND HEADING CAPTION AND LOCATION IN PROSPECTUS
- --------------------------------------------------------------------------- ------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover of
Prospectus......................................................... Front of Registration Statement and
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus.............. Inside Front and Outside Back Cover
Pages of Prospectus
3. Summary Information and Risk Factors................................. Prospectus Summary and Risk Factors
4. Use of Proceeds...................................................... Use of Proceeds
5. Determination of Offering Price...................................... Plan of Distribution
6. Dilution............................................................. Dilution
7. Plan of Distribution................................................. Plan of Distribution
8. Legal Proceedings.................................................... Business -- Legal Proceedings
9. Directors, Executive Officers, Promoters and Control Persons......... Management
10. Security Ownership of Certain Beneficial Owners and Management....... Principal Shareholders
11. Description of Securities............................................ Description of Securities
12. Interest of Named Experts and Counsel................................ Legal Matters; Experts
13. Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.................................................... Management -- Limitations on
Personal Liability of Directors
14. Organization within Last Five Years.................................. Business; Certain Transactions
15. Description of Business.............................................. Business
16. Management's Discussion and Analysis or Plan of Operation............ Management's Discussion and Analysis
of Financial Condition and Results
of Operations
17. Description Of Property.............................................. Business -- Properties
18. Certain Relationships and Related Transactions....................... Certain Transactions
19. Market for Common Equity and Related Stockholder Matters............. Description of Securities; Shares
Eligible for Future Sale
20. Executive Compensation............................................... Executive Compensation
21. Financial Statements................................................. Financial Statements
22. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure............................................... Not applicable
</TABLE>
<PAGE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 2, 1997
PROSPECTUS
NICHI CAPITAL, LTD.
1,800,000 SHARES OF COMMON STOCK
-----------------------------
All of the 1,800,000 shares of Common Stock, par value $.01 per share (the
'Common Stock'), offered hereby are being offered by Nichi Capital, Ltd. (the
'Company' or 'Nichi'). It is currently anticipated that the initial public
offering price per share will be $5.00. See 'Plan of Distribution' for
information relating to the factors considered in determining the initial public
offering price.
Prior to this offering, there has been no public market for the Common
Stock. The Company has applied to have the Common Stock quoted on the Niphix
System under the trading symbol 'Nichi.' See Plan of Distribution.
This offering is on a best efforts basis and with respect to the minimum
offering price on a best efforts all or none basis. All funds received by the
Company shall be placed in an escrow account with Citibank, NA for 180 days or
until at least $3,000,000, the minimum offering price, has been received by the
Company. If the minimum offering price is not received within 180 days from the
date hereof, this Offering will terminate and all funds will be returned
promptly to the subscribers by the escrow agent without deduction or interest.
The maximum offering price is $9,000,000 but the Company may receive less than
the maximum offering price. During the 180 day selling period potential
purchaser will not have the opportunity to have their funds returned. See 'Plan
of Distribution.'
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE 'RISK
FACTORS' BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROPOSED MAXIMUM UNDERWRITING
OFFERING PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSION(1) COMPANY(2)(3)
<S> <C> <C> <C>
Per Share................................................... $ 5.00 $ -- $ 5.00
Totals(3)................................................... $9,000,000 $ -- $ 9,000,000
</TABLE>
(1) There will be no Underwriting Discounts or Commissions.
(2) The total minimum aggregate offering price is $3,000,000. All proceeds of
this offering shall be placed in an escrow account to be managed by
Citibank, NA until the minimum aggregate offering price has been received by
the Registrant in accordance with the provisions of Rule 15c 2-4 under the
Securities Exchange Act of 1934. The maximum offering price is $9,000,000.
This offering is on a best efforts basis and shall be withdrawn if the
minimum offering price of $3,000,000 is not received by the Company.
------------------------
The shares of Common Stock are being offered by the Company on a best
efforts basis, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that delivery of certificates for
the shares of Common Stock will be made against payment therefor at the offices
of Citibank, NA at 111 Wall Street, Branch #003, New York, New York 10005.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements of the Company, after the end of each
fiscal year, and make available such other periodic reports as the Company may
deem appropriate or as may be required by law.
------------------------
, 1997
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. The term 'the Company' refers to Nichi Capital, Ltd. The
Company is a development stage company.
THE COMPANY
The Company was formed in New York in April 1996. Effective April 2, 1997,
the Company acquired all of the assets, goodwill and liabilities of the internet
financial and world wide web investment services business of Wise Choice
Discount Brokerage, Inc., ('Wise Choice'), in exchange for 3,795,302 shares of
common stock which were distributed to the shareholders of Wise Choice. Wise
Choice is owned and controlled by Mr. Olawande Agunloye, the Company's Chief
Executive Officer. As explained in Note 1 to the Financial Statements, the
financial statements of the Company reflect historical amounts at which the
assets and liabilities are shown and the historical operations of the
transferred business from it's inception on February 16, 1995. Except as the
context otherwise requires, the term 'Company' refers to both Nichi Capital, Ltd
and the acquired business. The Company's principal executive office is located
at 150 Nassau Street, Suite 1009-13, New York , New York 10038 and its telephone
number at such location is (212) 566-4143. Information contained in the
Company's Web site shall not be deemed a part of this Prospectus.
The Company is in the development stage and to a significant extent the
description of its business relate to activities in the planning stage. The
Company develops and provides branded, comprehensive Web-based financial
services that help users access and personalize the resources of the Internet.
The Company's primary service Nichi Money, is a free service targeted at
individual users which would among other things permit users to receive
information on companies going public thereby setting itself apart from other
free-to-use financial services.
The Internet is a computer network linked by data lines on a worldwide
basis. The Internet was established in 1969 by the U.S. Department of Defense.
The Worldwide Web (the 'Web') is a part of the Internet. The Web is a
multi-media, information storage and retrieval system; information is stored at
many computer sites but is made available by virtue of the linked data line
network. There are many access providers that offer access to the Internet
through local phone service. Some providers, such as America OnLine not only
provide access to the Internet but also provide its own informational content
programs, such as cartoon networks for children and access programs for finding
subject matter on the Internet.
The Internet has grown rapidly since its commercialization in the early
1990's. Currently, the primary uses of the Internet are E-mail, file transfers,
news, bulletin boards, advertising, shopping, and other online entertainment,
business and library services. It is generally believed that the Internet will
continue to attract significant numbers of new users in the years to come and
many new programs.
The Company believes that the Internet will significantly change the way
research, advertising and entertainment are made available to the public. Access
to the Internet can now be gained through television sets thus eliminating the
need for personal computers.
The Company's objective is to establish itself as a dominant, branded
financial services provider on the Internet in order to reach the greatest
audience. The Company seeks to build a high volume of traffic on its services to
provide a preferred platform for content providers and advertisers to reach
their target audiences. To achieve its objective, the Company intends to:
enhance the attractiveness of its service to users through the addition of new
features and functionality; develop and license innovative technologies which
can differentiate its service and scale with the growth of the Internet; offer
advertisers high impact, innovative advertising products; distribute its service
widely through software companies, access providers and others; and form
relationships with leading third party content providers.
The Company believes that it is well positioned to take advantage of the
growth of the Internet by serving the needs of advertisers. The Company believes
that the creation of internet communities which
2
<PAGE>
<PAGE>
match users needs with advertising specific to the needs, will result in a
cost-effective method of advertising on the web. The Company believes that
distributing and marketing its services widely is a key to successfully growing
its audience. The Company has advertised on Websites including Microsoft
Network, Webcrawler, Yahoo as well as through ad exchanges with Clubmaker
Online. The Company has purchased key words such as Stock Quotes, Funds,
Investing and Financial so that if a user of Yahoo's search engine types in the
word 'stock quotes', its banner will appear at the beginning of the results page
(the page where the results of a query is displayed). Once the user clicks on
the banner, the user is immediately taken to the Company's website. Once at the
Website the Company believes that users will register due to the free nature of
the service.
Apart from the search engines and websites listed above, Nichi Money will
continue to broaden its channels of distribution through other websites.
In addition the Company plans to execute brokerage transactions through
Wise Choice.
No assurance can be given that the Company will achieve the objectives
stated above. See 'Risk Factors' beginning on Page 5.
Insofar as the Company is a development stage enterprise it has sustained
losses from its inception. The Company's independent accountants have expressed
substantial doubt as to the Company's ability to continue as a going concern.
See Note 1b. Financial Statement p. F-7.
Effective August 11, 1997 the Company reverse stock split its common stock
1 share for each 2 shares held on this date. All references herein to share
ownership and shares outstanding reflects this stock split and other stock
splits declared in 1996. See Financial Statements footnote 6(a) p. F-9.
THE OFFERING
Common Stock offered by the Company on a best efforts basis: 600,000 shares
(minimum best efforts all or none), 1,800,000 shares (maximum). Common Stock to
be outstanding after the Offering: 4,395,302 (minimum), 5,595,302 (maximum).
<TABLE>
<CAPTION>
SELLING
CONCESSIONS PROCEEDS TO
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2)
--------------- ------------------ -----------
<S> <C> <C> <C>
Per Share........................................... $ 5.00 $ $ 5.00
Total Minimum....................................... $ 3,000,000 $ $ 3,000,000
Total Maximum....................................... $ 9,000,000 $ $ 9,000,000
</TABLE>
- ------------
(1) There will be no Selling Concessions or Commissions.
(2) Before deducting expenses of this Offering estimated at $250,000.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the maximum number of
Common Stock offered hereby, after deduction of Offering expenses will be
approximately $8,750,000 assuming an initial public offering price of $5.00 per
share. The Company intends to use the net proceeds for general corporate
purposes, including working capital, expansion of its marketings activities, its
staff and acquisition of additional computer equipment and funds necessary to
establish its Financial Reporting Services program referred to in the following
paragraph as 'EDGAR.' See 'Business.'
In early 1993, the Securities and Exchange Commission ('SEC') began to
mandate electronic filing through it's electronic data gathering, analysis, and
retrieval system ('EDGAR'). This system is intended to benefit electronic
filers, enhance the speed and efficiency of the SEC processing, and make
corporate and financial information available to investors, the financial
community and others in a matter of minutes. The Company is pursuing a contract
to be issued by the SEC for EDGAR which will allow the Company to accept and
redistribute EDGAR data for a fee which must be agreed upon by the SEC. The
Company anticipates spending $1 million in 1997 and the first quarter of 1998
for capital
3
<PAGE>
<PAGE>
expenditures in connection with this contract (if the offering is successful)
and for the Company's business expansion. See 'Business.'
Estimates of EDGAR related and certain other expenses payable out of the
net proceeds of this offering are approximately $3,500,000.
In the event the Company is only able to obtain net proceeds from the
minimum offering price of $3,000,000 it will only be able to obtain an EDGAR
data line and it will substantially curtail its other planned use of proceeds
for the EDGAR project. Other plans for marketing, staffing and additional
equipment will also be curtailed. The following columnar presentation shows the
principal expenditures of net proceeds assuming the minimum and maximum offering
price:
<TABLE>
<CAPTION>
MINIMUM
- --------------------------------------------------
<S> <C>
EDGAR data feed....................... 150,000
Various exchange fees................. 60,000
Equipment to run services............. 500,000
Technical staff & equipment........... 200,000
Working capital....................... 600,000
Marketing expenses.................... 750,000
Paying debt obligations............... 150,000
Director & officer liability
insurance........................... 60,000
Consultants building ticker plant and
setting up database for SEC EDGAR
feed and software................... 130,000
<CAPTION>
MAXIMUM
- --------------------------------------------------
<S> <C>
Partner for EDGAR contract............ 3,000,000
EDGAR data feed....................... 150,000
Various exchange fees for real-time
data................................ 60,000
Equipment to run various services..... 500,000
Technical staff to maintain
equipment........................... 200,000
Working capital....................... 2,050,000
Marketing expenses.................... 800,000
Paying debt obligations............... 150,000
Director and officer liability
insurance........................... 60,000
Consultants building ticker plant and
setting up database for SEC EDGAR
feed and Software................... 30,000
Company's marketing staff............. 700,000
</TABLE>
The foregoing use of proceeds are estimates only and there may be
significant variations in the uses of proceeds due to, among other things,
changes in the Company's business or financial condition or economic
circumstances. Accordingly, the Company reserves the right to reallocate among
the foregoing uses upon any such change.
The Company anticipates that the proceeds from the Offering, together with
projected cash flow from operations, will be sufficient to fund its operations,
including its proposed expansion, for approximately 12 months. However, there
can be no assurance that events affecting the Company's operations will not
result in the Company depleting its funds before that time. The Company may need
to raise substantial additional funding through public or private financings,
corporate collaborations or other sources. However, there can be no assurance
that additional financings will be available through any of these sources or, if
available, that such financing will be on acceptable terms. See 'Risk Factors --
Possible Need for Additional Financing' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'
Pending application of the net proceeds of the Offering, the Company will
make temporary investments in certificates of deposit, money market accounts
established by major commercial banks or financial institutions, United States
government obligations or high-grade commercial paper.
4
<PAGE>
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
investors should carefully consider the following risk factors:
LIMITED OPERATING HISTORY; HISTORY OF LOSSES
The Company has an extremely limited operating history, which makes it
difficult to predict future operating results. The Company was incorporated in
April 1996 and is the successor to a business organized in February 1995. It did
not generate any revenues until September 1996 and has generated limited
revenues since then to date. The Company has incurred significant net losses
since inception and expects to continue to incur significant losses on a
quarterly and annual basis for the foreseeable future. As of December 31, 1996,
the Company had an accumulated deficit of $328,934, a deficiency in
stockholders' equity of $93,050 and a working capital deficiency of $158,955.
These conditions among others raise substantial doubt about the Company's
ability to continue in business as a going concern. The report of the Company's
Independent Public Accountant's is qualified by reference to such conditions.
See 'Independent Accountant's Report.' The implementation of management's plan
to establish the Company as a dominant, branded financial services provider on
the Internet is dependent, among other things, on the success of this initial
public offering.
The Company and its prospects must be considered in light of the risks,
costs and difficulties frequently encountered by companies in their early stage
of development, particularly companies in the new and rapidly evolving Internet
market. In order to be successful, the Company must, among other things,
continue to attract, retain and motivate qualified personnel, successfully
implement its advertising program, continue to upgrade its technologies and
commercialize products and services incorporating such technologies, respond to
competitive developments and successfully expand its internal infrastructure.
Messrs Olawande Agunloye and Abraham Tu, President and Secretary of Company
have up until now had limited experience regarding the providing of internet
financial services. Messrs Agunloye and Tu also devote as much or more of their
time managing the business of Wise Choice. The Company currently does not have
any other directors who are not officers of the Company. The Company does not
have an audit committee nor does it have a compensation committee. See
'Management.'
From inception through August, 1997, the Company's operations were limited
and consisted primarily of start-up activities, including recruiting personnel,
raising capital, research and development, and the negotiation and execution of
agreements with various exchanges for stock quote information. All costs were
expensed as incurred during the development stage.
As a result of the Company's extremely limited operating history as well as
the very recent emergence of the market addressed by the Company, the Company
has neither internal nor industry-based historical financial data for any
significant period of time upon which to base planned operating expenses. The
Company has incurred significant net losses to date. Substantially all of the
Company's revenues have been generated from the subleasing of part of it's
office space and subscriptions to real time data. The Company has sold no
advertising space to date, therefore future sales and operating results are
difficult to forecast. In addition, significant portions of the Company's
revenues to date have been derived from it's subscriptions fees from it's
customers, and the Company currently anticipates that future quarters may
continue to reflect this trend. Therefore, the Company's inability to secure
subscribers and advertising contracts or license agreements could have a
material adverse effect on the Company's business, results of operations and
financial condition. The Company's expense levels are based in part on its
expectations as to future revenues and to a large extent are fixed. The Company
may not be able to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. Accordingly, any significant shortfall in relation
to the Company's expectations would have an immediate adverse impact on the
Company's business, results of operations and financial condition. Moreover, the
Company plans to significantly increase its operating expenses to fund greater
levels of research and development, establish its sales and marketing
operations, develop new distribution channels and broaden its customer support
capabilities. To the extent that any expenses in 1997 to 1998
5
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<PAGE>
precede or are not subsequently and timely followed by increased revenues, the
Company's business, results of operations and financial condition will be
materially adversely affected.
DEPENDENCE ON STOCK EXCHANGES
The Company's revenues in the near term will also be dependent to a
material degree on the Company's relationship with the various stock exchanges.
In 1996, the Company and the various stock exchanges entered into agreements,
which provide that, the exchanges will provide Nichi Money with stock quotes,
which Nichi Money will be able to redistribute subject to certain provisions.
The most important provision is that users who receive the data in real-time
will pay exchange fees which are to be collected by Nichi Money and passed on to
the exchanges as well as the necessary information collected on all those users.
In addition, the Exchanges have the right to cancel the agreement based upon the
Company's inability to make timely payments. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations,' 'Business -- Money
Brand' and 'Nichi Money.'
DEPENDENCY ON THE INTERNET
The market for the Company's products and services has only recently begun
to develop, is rapidly evolving and is characterized by an increasing number of
market entrants with products and services for use on the Internet. The
Company's future success is highly dependent upon the increased use of the
Internet for information publication, distribution and commerce. In particular,
because the Company expects to derive substantially all of its revenues in the
foreseeable future from sales of Internet advertising and subscriptions, the
future success of the Company is highly dependent on the development of the
Internet as an advertising medium and the use of the Internet to retrieve
real-time financial data. The Internet as an advertising medium has not been
available for a sufficient period of time to gauge its effectiveness as compared
with traditional advertising media.
In addition, the Company's success will depend in large part upon the
continued growth in the use of the Internet and in particular the use of the
Internet for investing purposes. There can be no assurance that Internet usage
will become widespread or that extensive content (such as Web pages) will
continue to be provided over the Internet. Issues concerning the commercial use
of the Internet such as security, reliability, cost, ease of access and use,
quality of service and acceptance of advertising, remain unresolved and may
negatively impact the growth of Internet usage or the acceptance of the Internet
as an advertising medium.
DEPENDENCE ON THIRD PARTY SUPPLIERS
The Company is dependent currently upon several suppliers for the integral
components of its current and future technologies. The Company currently uses
programs it has developed to perform various functions. Although the Company
continues to modify and develop its own proprietary core technology, there can
be no assurance that new features to Nichi Money will continue to be
successfully designed, developed, tested, marketed and introduced or accepted by
the marketplace in a timely manner. In the event that new features to Nichi
Money or an alternative technology, is not successfully introduced and accepted
in a timely manner, the Company will continue to be dependent upon the existing
technology it has developed. Given the technological changes occurring in the
industry, there is no assurance that the Nichi Money's technology will remain a
competitive technology in the future.
In addition, the Company has been developing services for distribution
through the use of technology developed by other companies. The Company intends
to utilize the software technology to organize it's business and distribute it's
products. Such products include 'Acrobat' a software package developed by Adobe
Software to distribute the Company's upcoming newsletter designed to keep users
up-to-date on what is happening on Nichi Money as well as to distribute exchange
agreements for subscriptions to real-time data.
A key element of the Company's strategy involves the use of unique content
developed by third parties for Nichi Money. A significant majority of the
Company's relationships with such third parties, however, have only recently
been developed. There can be no assurance that they will not seek to charge the
Company a significant fee for the supply of such content, that they will not
enter into similar
6
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<PAGE>
arrangements with or provide similar content to the Company's competitors, that
they will continue their relationship with the Company, or that they will not
establish their own services to compete against the Company for advertising
revenue. Nor can there be any assurance that the Company's current or future
third-party content providers will provide content that is attractive to Web
users or that their efforts will result in significant revenue to the Company.
Any failure of these parties to develop and maintain high-quality and attractive
content could result in dilution to the Nichi Money brand and could have a
material adverse effect on the Company's business, results of operations and
financial condition.
COMPETITION
The market for Internet products and services is highly competitive, with
no substantial barriers to entry, and the Company expects that competition will
continue to intensify. In addition, the market for the Company's products and
services has only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market entrants with competing products
and services. The Company does not believe this market will support the
increasing number of competitors and their products and services. Although the
Company believes that the diverse segments of the Internet market may provide
opportunities for more than one supplier of products and services similar to
those of the Company, it is possible that a single supplier may dominate one or
more market segments. Accordingly, any failure of the Company to provide product
and service offerings that achieve success in the short-term could result in an
insurmountable loss in market share and brand acceptance, and could, therefore,
have a material adverse and long-term effect upon the Company's business,
results of operations and financial condition.
A number of companies offer competitive products and services addressing
certain of the Company's target markets. These companies include America Online,
Inc., E-trade, Quote.Com., Microsoft Network, The Quicken Financial Network,
Charles Schwab, CompuServe Corporation, Prodigy Services Company and Yahoo!
Corporation. In addition, the Company competes with other companies that allows
users to search their databases over dedicated digital lines simultaneously. The
Company also competes indirectly with database vendors that offer information
search and retrieval capabilities with their core database products. In the
future, the Company may encounter competition from providers of Web browser
software, including Netscape and Microsoft Corporation ('Microsoft'), other
online services and other providers of other Internet products and services who
elect to incorporate their own financial search and retrieval features into
their offerings.
Many of the Company's existing and potential competitors have significantly
greater financial, technical and marketing resources than the Company. The
Company may also be adversely affected by competition from users of its products
and technology, current and future advertisers, as well as from its current,
future and former content providers. There can be no assurance that the
Company's competitors will not develop Internet products and services that are
superior to those of the Company or that achieve greater market acceptance than
the Company's offerings. Moreover, a number of the Company's future advertising
customers, licensees and licensors have also established relationships with
certain of the Company's competitors. In addition, the Company competes with
online services and other Web site operators as well as traditional off-line
media such as print and television for a share of advertisers' total advertising
budgets. There can be no assurance that the Company will be able to compete
successfully against its current or future competitors or that competition will
not have a material adverse effect on the Company's business, results of
operations and financial condition. See 'Business -- Competition.'
MANAGING EXPANSION; NEW TECHNOLOGIES
The rapid growth that the Company believes is necessary to successfully
offer its products and services has placed, and is expected to continue to place
a significant strain on the Company's managerial, operational and financial
resources. The Company continues to expand its operations and increase its
dependence and reliance on computer generated information. This evolution
necessitates continuous reassessment of the appropriateness of the Company's
computerized data and systems. The Company's current management information
system is cumbersome and inefficient and requires a
7
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significant amount of manual effort using personal computer spreadsheets in
order to process and analyze information. This situation makes it difficult for
management to obtain timely and accurate information.
There can be no assurance that the Company will be able to effectively
manage the expansion of its operations, that the Company's new management team
will work together effectively, that the Company will be able to attract and
retain qualified personnel, that the Company's systems, procedures or controls
will be adequate to support the Company's operations or that Company management
will be able to achieve the rapid execution necessary to fully exploit any
potential market opportunity for the Company's products and services and media
properties. In addition, the Company intends to establish at least one mirror,
or duplicate, site in another geographic location, which will create additional
operational and management complexities, including the need for continual
updating and maintenance of the Company's databases among geographically
dispersed network servers. Any inability to effectively manage growth could have
a material adverse effect on the Company's business, results of operations and
financial condition. See 'Business -- Employees' and 'Management.'
PROTECTION OF PROPRIETARY RIGHTS
The Company's success depends significantly upon its proprietary
technology. The Company currently relies on a combination of copyright and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. The Company generally enters into
confidentiality agreements with its employees and consultants. The Company seeks
to protect its software, documentation and other written materials under trade
secret and copyright laws, which afford only limited protection.
Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or
services or to obtain and use information that the Company regards as
proprietary. In addition, the laws of some foreign countries do not protect
proprietary rights to as great an extent as do the laws of the United States.
Litigation may be necessary to protect the Company's proprietary technology. Any
such litigation may be time-consuming and costly. There can be no assurance that
the Company's means of protecting its proprietary rights will be adequate or
that the Company's competitors will not independently develop similar technology
or duplicate the Company's products or services or design around patents or
other intellectual property rights of the Company.
There have been substantial amounts of litigation in the information
technology industry regarding intellectual property rights. There can be no
assurance that the Company will develop proprietary products or services or
technologies that are patentable or that the patents of others will not have a
material adverse effect on the Company's ability to do business. In addition,
there can be no assurance that third parties will not in the future claim
infringement by the Company with respect to current or future products or
services, trademarks or other proprietary rights, or that the Company will not
counterclaim against any such parties in such actions. Any such claims or
counterclaims could be time-consuming, result in costly litigation, cause
product release delays, require the Company to redesign its products or services
or require the Company to enter into royalty or licensing agreements, any of
which could have a material adverse effect upon the Company's business,
operating results and financial condition. Such royalty or licensing agreements,
if required, may not be available on terms acceptable to the Company or at all.
See ' -- Government Regulation and Legal Uncertainties,' ' -- Liability for
Information Retrieved from the Internet' and 'Business -- Intellectual Property
and Proprietary Rights.'
PERFORMANCE OF COMPANY PRODUCTS AND SERVICES
A key element of the Company's strategy is to generate a high volume of
traffic to its products and services. Accordingly, the performance of the
Company's products and services is critical to the Company's reputation, its
ability to attract advertisers to the Company's Web sites and market acceptance
of these products and services. Any system failure that causes interruptions or
that increases response time of the Company's products and services would result
in less traffic to the Company's Web sites and, if sustained or repeated, would
reduce the attractiveness of the Company's products and
8
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<PAGE>
services to advertisers and customers. In addition, an increase in the volume of
queries conducted through the Company's products and services could strain the
capacity of the software, hardware or telecommunications lines deployed by the
Company, which could lead to slower response time or system failures. As the
number of Web pages and users increase, there can be no assurance that the
Company's products, services and systems will be able to scale appropriately.
The Company is also dependent upon Web browser companies and Internet and online
service providers for access to its products and services, and users have
experienced and may in the future experience difficulties due to system or
software failures or incompatibilities not within the Company's control. The
Company is also dependent on hardware suppliers for prompt delivery,
installation and service of servers and other equipment and services used to
provide its products and services. Any disruption in the Internet access and
service provided by the Company or its service providers could have a material
adverse effect upon the Company's business, results of operations and financial
condition.
The process of managing advertising within large, high traffic Web sites
such as the Company's is an increasingly important and complex task. The Company
relies on internal advertising inventory management and analysis systems to
provide enhanced internal reporting and customer feedback on advertising. An
extended failure of the Company's advertising management system could result in
incorrect advertising insertions. In the event of such failure the Company may
be exposed to 'make good' obligations with its advertising customers, which, by
displacing advertising inventory, could have a material adverse effect on the
Company's business, results of operations and financial condition.
SAFE GUARDING OF COMPUTER SYSTEMS
The Company's operation depends upon its ability to maintain and protect
its computer systems located in New York City, New York. This system is
vulnerable to damage from fire, floods, earthquakes, power loss,
telecommunications failures, break-ins and similar events. The Company does not
currently have a disaster recovery plan in effect. Despite the implementation of
network security measures by the Company, its servers are also vulnerable to
computer viruses, break-ins and similar disruptive problems. Computer viruses,
break-ins or other problems caused by third parties could lead to interruptions,
delays in or cessation of service to users of the Company's products and
services. The occurrence of any of these risks could have a material adverse
effect on the Company's business, results of operations and financial condition.
See 'Business -- Facilities/Property.'
GOVERNMENT REGULATION
The SEC has adopted regulations that generally define a 'penny stock' to be
any equity security that has a market price of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include an equity security listed on NASDAQ, and an equity security
issued by an issuer that has [i] net tangible assets of at least $2,000,000, if
such issuer has been in continuous operation for three years, [ii] net tangible
assets of at least $5,000,000 if such issuer has been in continuous operation
for less than three years, [iii] average revenue of at least $6,000,000 for the
preceding three years. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, or a risk
disclosure schedule explaining the penny stock market and the risks associated
therewith.
If the Company's securities were to become subject to regulations
applicable to penny stock, the market liquidity for the securities would be
seriously affected, limiting the ability of broker-dealers to sell the
securities and the ability of purchasers in this Offering to sell their
securities in the secondary market. There is no assurance that trading in the
Company's securities will not be subject to these or other regulations that
would adversely affect the market for such securities.
The Company is not currently subject to direct regulation by any government
agency, other than by regulations applicable to businesses generally, and there
are currently few laws or regulations directly applicable to access to or
commerce on the Internet. It is possible that a number of laws and regulations
may be adopted with respect to the Internet, covering issues such issues as user
privacy, pricing and characteristics and quality of products and services. For
example, the recently enacted Telecommunications Reform Act of 1996 imposes
criminal penalties on anyone who distributes obscene, lascivious or
9
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<PAGE>
indecent communications on the Internet. The adoption of any such laws or
regulations may decrease the growth of the Internet, which could in turn
decrease the demand for the Company's products, increase the Company's cost of
doing business, or otherwise have an adverse effect on the Company's business,
results of operations or financial condition. Moreover, the applicability to the
Internet of existing laws governing issues such as property ownership,
copyright, trade secret, libel and personal privacy is uncertain. Any such new
legislation or regulation could have a material adverse effect on the Company's
business, results of operations or financial condition.
HIGH POTENTIAL FOR LITIGATION
Because Internet services provided by the Company require the Company to
link users to information which is downloaded, indexed and distributed from Web
pages published by a large number of Internet Web sites and content providers,
there is potential that claims will be made against the Company on theories such
as defamation, negligence, copyright or trademark infringement, distribution of
obscene, lascivious or indecent communications or other theories of liability
based on the nature and content of such materials. Such claims have been
brought, and sometimes successfully pressed, against online services in the
past. Additionally, claims could be made against the Company for copyright
infringement based on the improper dissemination of information. Although the
Company intends to carry general liability insurance, the Company's insurance
may not cover potential claims of this type, or may not be adequate to indemnify
the Company for all liability that may be imposed. Any imposition of liability
that is not covered by insurance or is in excess of insurance coverage could
have a material adverse effect on the Company.
DETERMINATION OF OFFERING PRICE AND ABSENCE OF PUBLIC MARKET
Prior to this Offering there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for the
Common Stock will develop or be sustained after the Offering. The initial
offering price was determined by the Company and may not be indicative of future
market prices. The trading price of the Company's Common Stock could be subject
to wide fluctuations in response to a number of factors, including quarterly
variations in operating results, announcements of technological innovations or
new products and services, applications or product enhancements by the Company
or its competitors, changes in financial estimates by securities analysts and
other events. In addition, the stock markets in general, and the market prices
for Internet-related companies in particular, have historically experienced
extreme volatility that at times has been unrelated to the operating performance
of such companies.
Sales of a substantial number of shares of Common Stock in the public
market following this Offering could adversely affect the market price for the
Common Stock. The number of shares of Common Stock available for sale in the
public market is limited by restrictions under the Securities Act of 1933, as
amended (the 'Securities Act'). As a result of Rule 144 under the Securities Act
the sale of unregistered stock is restricted for a period of one year from the
date of purchase.
Mr. Olawande Agunloye has agreed with the Company not to sell any of his
shares of common stock for a period of three years from the date hereof.
Upon completion of this Offering, the present directors, executive officers
and principal shareholders of the Company and their affiliates will beneficially
own approximately 80% and 63% assumed sale of the minimum and maximum offering
price of the outstanding Common Stock, and will be able to control all matters
requiring shareholder approval, including approval of significant corporate
transactions. Accordingly, the principal shareholders of the Company, who
collectively hold over 66 2/3% of the Company's outstanding stock, will be able
to control election of all directors of the Company. These provisions could
delay or make more difficult a proxy contest involving the Company, which could
adversely affect the market price of the Company's Common Stock.
DILUTION
Purchasers in this Offering will suffer an immediate and substantial
dilution in the net tangible book value of the Common Stock from the initial
public offering price. See 'Dilution.'
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POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company currently anticipates that the net proceeds of this Offering,
together with available funds and cash flows generated from advertising
revenues, will be sufficient to meet its anticipated needs for working capital,
capital expenditures and business expansion for at least the next 12 months.
Thereafter, the Company may need to raise additional funds. The Company may need
to raise additional funds sooner in order to fund more rapid expansion, to
develop new or enhanced services or products, to respond to competitive
pressures or to acquire complementary products, businesses or technologies. If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of the shareholders of the Company will be
reduced, shareholders may experience additional dilution and such securities may
have rights, preferences or privileges senior to those of the holders of the
Company's Common Stock. There can be no assurance that additional financing will
be available on terms favorable to the Company, or at all. If adequate funds are
not available or are not available on acceptable terms, the Company may not be
able to fund its expansion, take advantage of unanticipated acquisition
opportunities, develop or enhance services or products or respond to competitive
pressures.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock, and does not expect to pay cash dividends on its Common Stock in the
foreseeable future. The Company currently intends to retain its earnings, if
any, for use in its business.
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<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1997 (a) the historical
capitalization of the Company and (b) the pro forma capitalization of the
Company giving effect to the issuance of a maximum of 1,800,000 shares offered
hereby, and (c) the pro forma capitalization of the Company giving effect to the
issuance of a minimum of 600,000 shares of Common Stock being offered hereby.
This table should be read in conjunction with the Financial Statements and notes
thereto appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, 1997
------------------------------------------------------
AS ADJUSTED AS ADJUSTED
ACTUAL MAXIMUM MINIMUM
--------- ---------------- ----------------
<S> <C> <C> <C>
Debt:
Total liabilities........................................ $ 260,467 $ 260,467 $ 260,467
--------- ---------------- ----------------
--------- ---------------- ----------------
Stockholders' Equity:
Common Stock, $.01 par value; 15,000,000 shares
authorized; 3,795,302 shares issued and outstanding
actual; 5,599,672 shares issued and outstanding, As
adjusted -- Maximum; and 4,399,672 shares issued and
outstanding, As adjusted -- Minimum.................... 37,953 55,997(1)(4) 43,997(2)(4)
Additional paid-in Capital............................... 244,903 9,020,609(1)(4) 3,032,609(2)(4)
Deficit accumulated in the development stage............. (386,749) (386,749) (386,749)
--------- ---------------- ----------------
Total stockholders' equity (deficiency)............. (103,893) 8,689,857 2,689,857
--------- ---------------- ----------------
Total capitalization................................ $ 156,574 $8,950,324 $2,950,324
--------- ---------------- ----------------
--------- ---------------- ----------------
</TABLE>
- ------------
(1) Reflects the receipt of $8,750,000 in net proceeds from the issuance of
1,800,000 shares of Common Stock at $5.00 per share, after deducting
offering expenses aggregating $250,000.
(2) Reflects the receipt of $2,750,000 in net proceeds from the issuance of
600,000 shares of Common Stock at $5.00 per share, after deducting offering
expenses aggregating $250,000.
(3) Retroactively reflects a reverse stock split of 1 share for every 2 held
which was declared on August 11, 1997.
(4) Reflects the issuance of 4,370 shares of common stock in July 1997 to
Abraham Tu, an officer and Director, and his brother for $43,700 in cash.
12
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<PAGE>
DILUTION(1)
The difference between the Offering Price per share of Common Stock and the
pro forma net tangible book value per share after the Offering constitutes the
dilution per share of Common Stock to investors in the offering. The net
tangible deficiency in book value of Common Stock at June 30, 1997 was
($125,482) or ($.03) per share of Common Stock. Net tangible book value per
share of Common Stock on any given date is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) on such date by the number of shares of Common Stock outstanding on
such date.
After (i) giving effect to the sale of 1,800,000 shares of Common Stock
offered hereby by the Company at the Offering Price of $5.00 per share (ii) the
deduction of estimated offering expenses payable by the Company and, (iii) the
issuance of 4,370 shares of Common Stock in July 1997 to an Officer/Director and
his brother, the pro forma tangible book value of the Company as of June 30,
1997 would have been $8,728,255 or $1.56 per share. This represents an immediate
dilution of $3.44 per share to new public investors purchasing Common Stock in
the Offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Offering Price per share.................................................... $5.00
Net tangible book value before offering................................ ($0.03)
Increase attributed to new investors................................... 1.59
------
Pro forma net tangible book value after the Offering........................ 1.56
-----
Dilution to new investors................................................... $3.44
-----
-----
</TABLE>
If the minimum number of shares of Common stock are sold, the pro forma net
tangible book value per share at June 30, 1997, as adjusted for the Offering,
would be approximately $2,728,255 or $.62 per share and the dilution per share
to the purchasers of Common Stock in the Offering would be approximately $4.38.
The following table summarizes on a pro forma basis as of June 30, 1997 the
difference between existing shareholders and new investors with respect to the
number and percentage of shares of Common Stock purchased from the Company and
the average consideration and percentage of total consideration paid to the
Company and the average consideration per share paid (at an assumed public
offering price of $5.00 per share):
Assuming the maximum number of shares of Common Stock are sold:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
-------------------- -------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing Shareholders............ 3,799,672 67.86% 326,566 3.50% $0.09
Public investors................. 1,800,000 32.14% 9,000,000 96.50% $5.00
--------- ------- --------- -------
5,599,672 100.00% 9,326,566 100.00%
--------- ------- --------- -------
--------- ------- --------- -------
</TABLE>
Assuming the minimum number of shares of Common Stock are sold:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
-------------------- -------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing Shareholders............ 3,799,672 86.36% 326,566 9.82% $0.09
Public investors................. 600,000 13.64% 3,000,000 90.18% $5.00
--------- ------- --------- -------
4,399,672 100.00% 3,326,566 100.00%
--------- ------- --------- -------
--------- ------- --------- -------
</TABLE>
- ------------
(1) Retroactively reflects a reverse stock split of 1 share for every 2 held
which was declared on August 11, 1997.
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SELECTED FINANCIAL DATA
The following table represents selected historical financial data for the
years ended December 31, 1996 and 1995 and the six (6) months ended June 30,
1997 and 1996. The historical financial data for the years ended December 31,
1996 and 1995 is derived from the financial statement of the Company which have
been audited by Weinick, Sanders & Co. LLP, independent accountants and are
included in this prospectus. The financial data for the six month period ended
June 30, 1997 and 1996 is derived from the financial statements of the Company
which have not have been subject to audit, but which have been prepared on a
basis consistent with the audited financial statements. In the opinion of
management, the unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair statement
of the financial position and results of operations for those periods. The
results of operations for the six month ended June 30, 1997 and 1996 are not
necessarily indicative of the results of operations for the full fiscal year.
The information set forth below should be read in conjunction with
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and all of the financial statements of the Company and the notes
thereto and other financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER
ENDED JUNE 30, 31,
------------------------ ----------------------
1996 1996 1995
1997 -------- --------- --------
-----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Statements of Operations Data
Revenue............................................ $ 0 $ 0 $ 9,101 $ 4,542
----------- -------- --------- --------
Cost and expenses:
Consulting -- Officer/Stockholder............. 26,894 2,500 36,693 0
Advertising................................... 4,000 30,897 60,479 1,448
Depreciation and amortization................. 7,467 7,781 13,936 4,623
Other general and administrative expenses..... 19,454 40,502 132,967 92,431
----------- -------- --------- --------
Total cost and expenses....................... 57,815 81,680 244,075 98,502
----------- -------- --------- --------
Net loss........................................... $ (57,815) $(81,680) $(234,974) $(93,960)
----------- -------- --------- --------
----------- -------- --------- --------
Per Share Data(3)
Net loss per common share.......................... $(0.02) $(0.02) $(0.03) $(0.01)
----------- -------- --------- --------
----------- -------- --------- --------
Weighted average number of shares outstanding........... 3,795,152 3,770,379 8,463,955 8,396,644
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------------------
AS ADJUSTED AS ADJUSTED
ACTUAL MAXIMUM(1) MINIMUM(2)
--------- ---------------- ----------------
<S> <C> <C> <C>
Balance Sheet Data
Working capital (deficiency)................................... $(180,110) $8,613,640 $2,613,640
Total assets................................................... $ 156,574 $8,950,324 $2,950,324
Total shareholders equity (deficiency)......................... $(103,893) $8,689,857 $2,689,857
</TABLE>
- ------------
(1) Gives effect to the sale of 1,800,000 shares of Common Stock (the maximum
offering) being offered hereby, at $5.00 per share.
(2) Gives effect to the sale of 600,000 shares of Common Stock (the minimum
offering) being offered hereby, at $5.00 per share.
(3) Retroactively reflects a reverse stock split of 1 share for every 2 shares
held which was declared on August 11, 1997.
14
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATIONS
OVERVIEW
The Company was incorporated as Nichi Capital Ltd. on February 16, 1995.
For net capital reasons the Company changed it's name and sold off the assets to
Wise Choice in exchange for shares equal to the amount the shareholders owned in
Wisechoice. Wisechoice was made a member of the NASD in July 1996 and is a
discount broker dealer which allows it's customers to purchase stock, corporate
bonds and options using the internet or telephone.
From inception (February 16, 1995) to December 31, 1996, the Company's
operations were limited and consisted primarily of start-up activities,
including recruiting personnel, raising capital, research and development, and
the negotiation and execution of an agreement with various exchanges for stock
quote information.
The Company introduced its first products and services on July 1, 1996.
During 1995 and for the first quarter of 1996, the Company derived its revenues
substantially from sublease income and, to a lesser extent, from advisory fees
for the Company's services. During these periods, there were no advertising
revenues and the sublease and the advisory fees accounted for 75% and 25%,
respectively, of total revenues. However, the Company expects to derive
substantially all of its revenues for the foreseeable future from selling
advertising space on its Web sites and from subscribers. The Company's current
business model, which generates revenues through the sale of advertising on the
Internet, is unproven. There can be no assurance that advertisers will purchase
advertising space and services from the Company or that the Company will be able
to successfully attract additional advertisers. See 'Risk Factors -- Reliance on
Advertising Revenues.'
The Company has a limited operating history, which makes it difficult to
predict future operating results. The Company did not commence generating
revenues until September, 1996, and has generated limited revenues to date. The
Company has incurred significant net losses since inception and expects to
continue to incur significant losses on a quarterly and annual basis for the
foreseeable future. As of December 31, 1996, the Company had an accumulated
deficit of $328,934, a deficiency in stockholders' equity of $93,050 and a
working capital deficiency of $158,925. These conditions raise substantial doubt
about the Company's ability to continue in business as a going concern. The
report of the Company's Independent Public Accountant's is qualified by
reference to such conditions. See 'Independent Accountant's Report.' The
implementation of management's plan to establish the Company as the dominant,
branded financial services provider on the Internet is dependent, among other
things, on the success of the Company's initial public offering being made
hereby.
RESULTS OF OPERATIONS
From inception through the third quarter of 1996, the Company's operations
were limited and consisted primarily of start-up activities. Accordingly, the
Company believes period-to-period comparisons of the first, second and third
quarters of 1996 against the comparable period in 1995 or the entire year of
1995, are not meaningful. Accordingly the Company has not included such
comparisons in the following discussion. Likewise, because of the Company's
limited operations in 1995, the Company believes that future period-to-period
comparisons against 1995 may also not be meaningful. See 'Risk
Factors -- 'Limited Operating History.'
TOTAL REVENUE
From inception (February 16, 1995) to December 31, 1995 and fiscal 1996,
total revenues were $4,542 and $9,101, respectively, consisting principally of
rental income and from the third quarter of 1996, nominal revenues from selling
subscriptions on its Web sites. See 'Risk Factors -- Potential Fluctuations in
Future Results,' ' -- Reliance on Advertising Revenues' and ' -- Developing
Market; Unproven Acceptance of Internet Advertising and of the Company's
Products and Services,'
' -- Change in Exchange Relationship and Dependence on Other Third Party
Distribution Relationships' and 'Business -- Marketing and Distribution of the
Nichi Money Brand.'
15
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<PAGE>
OPERATING EXPENSES
SALES AND MARKETING
From inception to December 31, 1995 and fiscal 1996, sales and marketing
expenses were $1,448 and $60,479, respectively. Sales and marketing expenses
consisted primarily of advertising expenses. Sales and marketing expenses
included marketing efforts made through Softbank pursuant to advertising Nichi
Money on Yahoo! and ads placed on CNN All-Politics website as well as on
Webcrawler. Historically a large portion of the Company's traffic was derived
through Yahoo's Web page.
During the 30 day period from August 22 through September 22, 1996, the
Company's average daily traffic was approximately 48% higher than its average
daily traffic for the 30 day period immediately prior to the advertisement on
Yahoo's website. There can be no assurance that the Company will be able to
maintain or increase its current level of traffic. This agreement with Yahoo
provides for payments of up to an aggregate of $8,500 a month which is the term
of the agreement. The Company has the right to terminate the agreement at the
end of each month, in which case payments to Yahoo would not be reduced. The
Company expects to start hiring sales and marketing personnel and to increase
promotional and advertising expenses, and anticipates that these costs will
substantially increased in absolute dollars in future periods.
GENERAL AND ADMINISTRATIVE
From inception to December 31, 1995 and fiscal 1996, general and
administrative expenses were $97,054 and $183,596 respectively. General and
administrative expenses consist primarily of compensation of administrative and
executive personnel, occupancy costs and fees for professional services. The
Company anticipates that its general and administrative expenses will continue
to increase significantly in absolute dollar amounts as the Company expands its
administrative and executive staff, relocates to new facilities, adds
infrastructure and incurs additional costs related to being a public Company,
such as expenses related to directors' and officers' insurance, investor
relations programs and increased professional fees.
INCOME TAXES
The Company believes it is less likely than not to realize a net deferred
tax asset and, accordingly, a valuation allowance has not been provided.
LIQUIDITY AND CAPITAL RESOURCES
From inception through December 31, 1996, the Company financed its
operations and met its capital expenditure requirements primarily through cash
proceeds from private sales of it's Common Stock aggregating approximately
$236,000. The Company had $2,887 and $0 in cash at December 31, 1995 and
December 31, 1996, respectively.
From inception to December 31, 1995 and fiscal 1996, operating activities
used cash of $75,340 and $83,764 respectively. From inception to December 31,
1995 and fiscal 1996, investing activities used net cash of $48,747 and $42,244,
respectively, primarily associated with the purchase of property and equipment.
Financing activities generated cash of $126,974 and $123,121 from inception to
December 31, 1995 and fiscal 1996, respectively, primarily from Common Stock
sales.
The Company expects to use the net proceeds of this Offering for the
purchase of computer hardware and software as well as general corporate
purposes, including the expansion of the Company's product development and sales
and marketing organizations and working capital. Furthermore, from time to time
the Company expects to evaluate the acquisition of products, businesses and
technologies that complement the Company's business, for which a portion of
the net proceeds may be used. The Company does not, however, currently have
any understandings, commitments or agreements with respect to any such
acquisitions. Management expects that cash in excess of current requirements
will be invested in investment grade, short-term interest-bearing securities.
See 'Risk Factors -- No Specific Use of Proceeds.'
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The Company currently anticipates that the minimum net proceeds of this
Offering, advertising revenues and subscribers to the real-time version of it's
services will be sufficient to meet it's anticipated needs for working capital,
capital expenditures and business expansion for at least the next 12 months.
Thereafter, the Company may need to raise additional funds. The Company may need
to raise additional funds sooner, however, in order to fund more rapid
expansion, to develop new or enhanced services or products, to respond to
competitive pressures or to acquire complementary products, businesses or
technologies. If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of the shareholders of the
Company will be reduced, shareholders may experience additional dilution and
such securities may have rights, preferences or privileges senior to those of
the holders of the Company's Common Stock. There can be no assurance that
additional financing will be available on terms favorable to the Company, or at
all. If adequate funds are not available or are not available on acceptable
terms, it would limit the Company's ability to fund expansion, take advantage of
acquisition opportunities, develop or enhance services or products or respond to
competitive pressures. Such limitation could have a material adverse effect on
the Company's business, results of operations and financial condition.
BUSINESS
The Company is in the development stage and to a significant extent the
description of its business relate to activities in the planning stage. The
Company develops and provides branded, comprehensive Web-based financial
services that help users access and personalize the resources of the Internet.
The Company's primary service Nichi Money, is a free service targeted at
individual users. The Company believes that by permitting users to receive
information on companies going public, it will set itself apart from other
free-to-use financial services.
Nichi Money distributes, develops and provides branded, comprehensive
Web-based financial services that gives users access to delayed stock quotes,
graphs, stock recommendations, information on upcoming initial public offerings
and much more with a more advanced version to paying subscribers while providing
access by agreement to discount brokerage services. The Company's primary
service offering, Nichi Money, is a free service targeted at individual
investors who use the Internet to monitor their stock positions.
The Company has no advertising revenue to date. Advertising revenue, when
and if received, would be recognized over the period the service is provided.
The Company is also selling to users on the Internet real-time service for
$40.00 a month, which does not include exchange fees. The Company introduced the
service on the September 10, 1996, and has generated limited revenues to date.
Insofar as this service has just been recently introduced, there is no basis to
determine market acceptance or future revenue growth.
INDUSTRY BACKGROUND
The Internet was originally created by the U.S. government to facilitate
the exchange of information and electronic mail ('e-mail') between a limited
number of academic institutions, defense contractors and government agencies.
The Internet was commercialized in the late 1980s and 1990s and technological
enhancements have since extended the Internet's reach to consumers and
businesses. The most important technological enhancement to the Internet was the
creation of the World Wide Web (the 'Web') in the early 1990s. The Web is an
interactive environment which facilitates the exchange of multimedia-rich
information and entertainment resources among users worldwide. In addition,
recent technological developments have enabled consumers and businesses to use
the Web for buying and selling products and services.
The open nature of the Web enables any individual or organization to
publish a Web site. New software-based authoring tools have lowered the cost of
publishing content on the Web relative to conventional publishing methods and
enabled new, exciting forms of multimedia content. The cost of delivering
content to a large audience is lower than that of conventional media, consisting
only of the cost of maintaining and operating computer equipment. In addition,
the interactive nature of the Internet provides an environment in which content
providers can track the appeal of their content by
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measuring the number of visits to a Web site and can respond quickly to
consumers' changing tastes and needs.
The dramatic increase in Web-based information and entertainment has
increased the appeal of the Web to consumers and has driven the high growth in
traffic on the Web. Continued enhancement to the Internet multimedia offering
technology and new compression technologies, should continue to attract new
content providers to this medium.
FINANCIAL SERVICES
The rapid growth in content on the Web combined with the web's unindexed
nature presents significant challenges for consumers seeking Financial-based
information and resources. With the emergence of navigational tools, users still
had to know lengthy Web addresses for each specific site, or use hypertext links
which enable users to go directly to the listed site by clicking on the address.
Content providers and advertisers also faced difficulties in making the
existence and location of their Web sites widely known and available to their
target audiences.
A number of financial websites have emerged to assist users in providing
financial information from their databases, including discount brokerage firms,
financial newspapers and magazines and search engines. The financial web sites
are typically for the use of their customers but do list other financial Web
sites by specific topics of interest. Directories generally list Web sites by
their hypertext address. Entries in a directory also may contain Web site
descriptions or reviews. Search engines offer users the ability to get delayed
quotes and Company news based upon specific word or phrase queries. The
information is then served from their database.
Although financial related companies help users obtain financial
information over the Web, the Company believes that such websites have certain
limitations which could enable the Company to provide added value to the
consumer. Most financial website and search engines only provide information of
financial products they are trying to sell or provide insufficient and untimely
information which makes informed financial decision making extremely difficult.
The Company believes that information should be disseminated in a simple format
so that users can get the information they need to determine which of the myraid
investment vehicles offered in today's marketplace would be suitable in
fulfilling their financial goals.
The Company believes that there is an opportunity to provide a more
comprehensive financial website that not only provides specific and relevant
information which would be provided in response to an investors queries, but
also aggregates and packages the information in a format which will serve a
consumer's unique and personal financial interest. The Company believes that
consumers will respond to services that aggregate specific and relevant
responses to queries with related financial information such as targeted
advertising, discussion groups and other resources.
ADVERTISING ON THE WEB
With the growth in the number of Internet users and content providers, the
Internet has begun to develop the attributes of a conventional mass medium,
where advertising subsidizes content delivered to users. Forrester Research,
Inc. estimates that spending on Web-based advertising will increase from $37
million in 1995 to approximately $700 million by 1998. Moreover, the 1995
Commerce Net/Nielsen Internet Demographics Survey indicates that on average, Web
users are upscale, professional and educated, providing an attractive
demographic profile for advertisers. However due to the low cost it takes to get
on the Internet, it is the Company's belief that this audience will attract
advertisers.
Unlike the more conventional print and broadcast media, the interactive and
global nature of the Internet has the potential to enable advertisers to
cost-effectively target specific audiences, measure the popularity of
advertising content, reach worldwide audiences and create innovative and
interactive advertisements. The Company believes that the web will become an
even more attractive advertising platform with the introduction of increased
transmission bandwidths through higher speed Internet connections coupled with
wider multimedia enabling technologies for the Web such as Java, VRM and others.
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Advertisers currently face difficulties, however, in placing their
advertisements strategically on the Web. It is difficult for advertisers to
understand the volume and demographics of traffic patterns on Web sites. As a
result, advertisers can find it difficult to make the existence and location of
their advertisements widely known and target their audiences effectively. The
Company believes that, in the near term, advertisers will migrate to sites which
can offer a high number of impressions per day. The Company also believes that,
over time, advertisers will be attracted to those services that experience a
high volume of traffic, track consumers carefully and deliver advertisers
audiences that fit specific buying profiles. In order to match advertisers with
consumers, sites must be develop to conduct complex demographic and
psychographic profiling of their consumers resulting in targeted, high impact
advertising ('narrowcasting' or 'microcasting'). The Company believes that those
sites which both garner a high volume of traffic and offer advertisers the
ability to target specific audiences effectively will be in the best position to
take advantage of the advertising potential of the Web.
REAL-TIME DATA ON THE WEB
It is the Company's belief that the Internet will become the principal
means of transmitting and receiving data. Real time data subscribers are looking
to the Internet because it is more accessible and it is between 10% and 30% of
the cost of other more conventional methods of transmitting real time market
data. The Company believes that distributors of market data can further reduce
costs through the elimination of costly dedicated terminals to serve out or
provide software to view such data.
NICHI MONEY
Nichi Money develops and provides branded, comprehensive Web-based
financial services that help users access and personalize the vast resources of
the Internet. Nichi's primary service offering, Nichi Money, not only provides
financial information, but also aggregates and packages the resources of the
Internet in order to serve a consumer's unique and personal financial interests.
By integrating the capabilities of a search engine and a database technology,
Nichi Money packages specific responses to queries for real-time and delayed
information. Nichi Money satisfies the needs of consumers to access relevant and
specific information; the needs of content providers to chat on topics of
interest; and the needs of advertisers to reach a targeted group of potential
customers.
With Nichi Money, the consumer can choose from the following offerings: (i)
specific and relevant initial public offering listings, (ii) information on
mutual funds, stock and mutual fund quotes, (iii) portfolio management tools,
(iv) stock and mutual fund graphs, (v) recommendations from leading investment
advisors, (vi) a chat forum to discuss financial strategies and (vii) trading
capabilities through Wise Choice. The Company's users also will receive unique
editorials on related financial subjects; articles on how to use Nichi Money
through our newsletter and access to authoritative financial literature by well
known authors from well established publishers. For example, a stock broker who
uses the Company's portfolio management tools to track the stock and mutual fund
position of his clients will have the ability to view the unrealized gain or
loss in his clients' portfolio at any point in time. This investor will also
have the ability to view the distribution of holdings among various classes of
assets i.e; cash, stock, bonds and mutual funds, etc., as well as allowing him
to view graphs on the individual stocks in his clients' portfolios. This
investor may also view advertising appropriate to his interests. The Company
believes that the creation of real-time content enhances a user's financial
knowledge and experience by immediately linking the user to relevant and
specific information.
The Company believes that its Nichi money service has the following
advantages:
(i) It has developed it's own system to retrieve information with high
accuracy and the ability to quickly perform complex searches. It has also
developed it's own data reader to accurately and quickly parse data
received at high speed from various third parties.
(ii) It integrates search and link functions, providing not only
specific responses to user queries, but also direct links in real-time to
areas of content of interest that contain relevant content related to the
specific request. Through this approach, consumers will find specific
answers to a search query and through links can access a broader
environment of other relevant and related financial information through the
web page.
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The Company plans to continue to enhance the attractiveness of its service
to users through additional features and functionality. Nichi Capital is
currently developing several enhancements to Nichi Money. Such enhancements will
allow for personalization of content, offer information from various other
financial centers and advertising according to user interests and allow users to
abstract specific financial information from newswires, stock and mutual fund
services, bulletin board topics and other financial resources. These
enhancements are expected to be released by spring 1998.
Nichi Money's services provide advertisers with an increased ability to
undertake measurable, targeted, cost-effective and interactive advertising on
the Internet. The Company's services provide advertisers with the flexibility to
target a specific audience by advertising on one of the Company's different
sections and to target special interest groups by placing advertisements in chat
forums about certain investment products. The Company believes that both types
of advertising can provide significant value to advertisers. While larger, mass
market campaigns increase brand awareness, narrower campaigns through directory
ads or quote ads provide opportunities to engage in high response, product
specific advertising.
EDGAR FINANCIAL REPORTING SERVICE
The Company is currently planning to provide extensive web service for the
SEC's Electronic Data Gathering Analysis and Retrieval financial reporting
system ('EDGAR'). Virtually all reports are required to be filed electronically
with the SEC and may be electronically transmitted to a user who possesses the
appropriate computer equipment.
It is the Company's intent to pursue the EDGAR contract (the 'Contract') in
partnership with an entity which possesses the expertise necessary to fulfill
the Contracts requirements. The Company will provide the funding. The Contract
will help to reduce the direct cost of processing the data feed. It will also
allow the Company to achieve a required rate of return on capital even though it
will still have to absorb the cost of the real-time data feed. The Company will
also be able to market the website and employ its own marketing staff to sell ad
space on the site.
In addition to funding the contract, the Company will provide both current
and historical data as well as enabling its users to plot charts and graphs
using such data. It is also the Company's intention to increase sales by hiring
its own marketing and sales staff.
WISE CHOICE
Wise Choice, which is affiliated with the Company by its common ownership
and management, offers discount brokerage services to its customers. The Company
will use the services of Wise Choice in connection with securities transactions
for its customers.
WEB SITE
From July 1996 the Company's service was listed on Clubmaker Online by way
of an ad exchange brokered by the Company. Due to the success of the ad
exchange, the Company is in the process of establishing similar links with
various other companies who have websites on the Internet. However since 70% of
the website's traffic has come from search engines which advertises on the
website, the Company plans to also enter into distribution agreements and
informal relationships with other software vendors and operators of online
networks and Web sites. Although none of these relationships currently
represents a significant portion of the Company's traffic, the Company expects
that they will become more important in the future.
BUSINESS STRATEGY
The Company's objective is to establish itself as a dominant branded quote
and content aggregation financial information provider on the Internet. The
Company seeks to build a high volume of traffic on its services to provide a
preferred platform for content providers and advertisers to reach their target
audiences. At the core of the Company's strategy, the Company seeks to provide
real-time financial information to subscribers, content rich Web communities
that create value for the user and establish
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the Company's platform as an attractive medium for advertisers. The Company's
strategy contains the following key elements:
(1) The Company believes that, as with many conventional media,
branding and consumer loyalty on the Internet are highly dependent on the
aggregation and packaging of content into innovative and appealing products
and the effective marketing of such products to consumers. To this end, the
Company developed Nichi Money, a financial information and content
aggregation service that differentiates the Company's service and enhances
a user's Internet experience through the real-time creation of Web
communities, stock and bond research and by interviewing market
professionals from various financial fields. The Company intends to build
upon its technical and media expertise to develop innovative new services,
as well as enhance and expand existing service offerings. The Company also
promotes its brand through online and print advertising and other
promotional activities. The Company believes that these promotional
campaigns are an important component in building brand awareness in the
emerging Internet market.
(2) The Company seeks to provide advertisers with innovative solutions
to effectively reach their target audiences through the Internet. The
Company currently offers a broad range of customized alternatives for
advertisers, providing advertisers with the flexibility to target mass
audiences or specific communities, or link advertisements to various
quotes.
(3) In addition, the Company is actively exploring new technologies
which will enable advertisers to utilize user demographic, profile, and
psychographic information. The Company believes that these innovative
advertising approaches, which will allow advertisers to direct
advertisements to specific user types based on sophisticated analysis of
searching behavior, will significantly differentiate the Company's
services.
CREATE AND EXPAND BRANDED CONTENT PARTNERSHIPS
The Company seeks to co-brand its service offerings with recognized
third-party content in order to enhance the value of the Nichi Money brand. The
Company believes that the use of third party branded content may lead to higher
perceived editorial value and provide incremental distribution outlets and
cross-promotion opportunities. In addition, the Company intends to develop
content in-house.
The Company intends to aggressively build and extend the branded content
available through Nichi Money by developing alliances with leading media
companies and content providers.
The Company seeks to form relationships that maximize audience reach and
create alternate distribution channels to the Company's services. The Company
established as one of its earliest and primary distribution channels an initial
relationship with Wise Choice to be the sole provider of financial information
to users of it's discount brokerage service at www.wisediscount.com. This
relationship enabled the Company to gain access to an audience of potential
subscribers and build brand awareness.
In order to maximize exposure, the Company has broadened and will continue
to broaden its distribution channels through other relationship and other
companies as well. The Company intends to continue to aggressively expand its
distribution relationships.
LEVERAGE MEDIA AND TECHNICAL EXPERTISE
The Company believes that the Internet represents a technology-driven mass
medium in which it intends to use advertising to subsidize content. As a result,
in-depth knowledge and understanding of publishing, advertising, technology and
media will be critical elements to the success of any Internet company. To this
end, the Company intends to assemble a management team with a depth of
experience in this area. The Company also believes that directly establishing
and maintaining relationships with advertisers is becoming important in
maintaining and capturing advertising market share. Accordingly, the Company
will assemble a highly experienced, direct sales force to promote and generate
advertising sales.
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NICHI MONEY'S SERVICES
Nichi's primary service offering, Nichi Money, is a financial information
and content aggregation service targeted towards individual investors and
offered free to users. In addition to Nichi Money, the Company offers Nichi
Real-Time, a subscription-based service featuring real-time financial
information and targeted to business and professional users. The Company plans
to continue to introduce new services for individual and professional users over
time. The Company's current and future service offerings are described below:
Nichi Money, the Company's primary financial and content aggregation
service, assists users in obtaining relevant information on the Internet.
Nichi Money provides to the user fast and relevant quote and search results
in response to each user's query. Nichi Money's users have access to
initial public offering information, mutual fund and stock data, graphs,
portfolio management tools, a chat forum, stock research and trading
facilities through Wise Choice Discount Brokerage. Nichi Money is offered
free of charge to Internet users. The service was introduced in July 1996.
Nichi Money integrates multiple methods of obtaining information from
its databases. Users are presented with two principal options, the free
service or the real-time version which is only available to subscribers.
The home screen gives the user the opportunity to access eight
different sections from which they can launch specific queries, browse or
access proprietary content.
THE IPO FUNCTION
The IPO Function allows the user to effect query-based searches of initial
public offerings that have been filed with the SEC. To perform a search, a user
types a query in the search box. The user is then presented with a highly
specific response from a search of the entire database. A search can be effected
using simple keywords. For example, a user can search for 'technology.' The
search results will display the ten most recent Initial Public Offerings
('IPO's') in the technology field.
The Company is currently working on its next generation financial
information website, Nichi 97, which the Company plans to release in the second
half of 1998. Nichi 97 will enable the searching of a much greater database of
information at even faster speeds without sacrificing accuracy.
THE FUNDS FUNCTION
The Funds Function allows a user to effect query-based searches for
information on thousands of public mutual funds. In order to receive an answer
to a query, the user has to simply type in the name of the mutual fund or the
symbol of the fund. A Fund Symbol Guide has been provided to help the user in
the search. Also available are mutual fund quotes. A user simply types in the
symbol and he or she is presented with the offer price, Net Asset Value, the
prior day's Net Asset Value, and offer information on the fund. Also included in
the Funds Section is the option to plot a graph on the fund's performance.
THE DATA FUNCTION
The Data Function allows users to access stock quotes, as well as the most
active stocks as it relates to unit volume, dollar volume and percentage
changes. Users are presented with the data screen which allows the user to type
in changes of up to ten stock symbols at a time.
THE GRAPHS FUNCTION
In the Graphs Function, users can look at customized graphs and graphs
which track stock prices for the past 30, 60 or 90 days. The Real-Time users can
speed up the search time by storing graphs of specific stocks in separate files.
THE PORTFOLIO FUNCTION
The Portfolio Function leads the user to the Company's Portfolio Management
Program which allows users to view the unrealized gains and losses of each stock
and mutual fund in their portfolio
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adjusted for any commissions paid to execute the trade. The Portfolio function
allows the user to view and edit prior entries made during the prior 45 days as
well as allowing the user to view pie charts which will show the distribution of
assets according to sector or position held.
Another Nichi Portfolio feature will allow the user to view the
recommendations of various Investment Advisors, Mutual Fund managers and other
investment professionals. The site allows the user to access the thought
patterns underlying the recommendations, the current price of the security and
the target price that the security is expected to reach. The portfolio screens
contains options which allow the user to view the actual text and a graph of
earnings estimates for the recommended stock.
THE PROFILES FUNCTION
The Profiles Function gives the user a description of a selected company's
business. This section also allows the user to link with that company's website
(if available) as well as access its most recent annual and quarterly reports.
THE BULLETIN BOARD
The Bulletin Board allows investors to gain from one another's experience
in the market place by providing a chat room where investment strategies and
other areas of the investment industry can be discussed. Users can search for
topics of interest by typing in the keyword(s). Topics which contain that
keyword will be displayed on the screen. A user has the option to reply
immediately to any comments or questions posted on the board.
THE TRADING FUNCTION
The Trading Function offers a link to the Wise Choice web page, and allows
users to trade stocks online for a fee which is payable to Wise Choice. The cost
of trading through Wise Choice is currently $14.50 for up to the first 5,000
shares traded online or placed over the phone.
THE PUBLIC ACCESS CENTER
The Public Access Center allows users to view the opinions of analysts,
advisors and brokers. Our newsletter, which among other things, will describe
new features on the website and articles on investing, will be featured in the
Public Access Center. The Newsletter is currently free of charge but the
intention is to develop it into an online magazine for which subscribers will be
charged. Other items available in the Public Access Center are press releases,
announcing our new products, terms and conditions of use, and Nichi Mart, where
users can buy financial related literature.
Nichi Money operates with the most popular Web browsers. Although browser
features vary by manufacturer and version, Nichi Money automatically configures
itself to conform to the specific features of each user's browser. Where
available, Nichi Money employs advanced features such as frames, which organize
the screen format into clickable areas to enhance the usability of the service
and the appeal to advertisers.
The Company plans to continue to enhance the attractiveness of its service
to users through additional features and functionality. Nichi Capital is
currently developing several enhancements to Nichi Money, which will allow for
personalization of content and advertising according to user interests. These
enhancements are expected to be released by the second quarter of 1998, and
will allow users to create permanent filters for Internet-based information
such as newswires, stock quotes, Chat room listings and other Internet
resources.
Nichi Real-Time is a subscription-based service targeted primarily to
professional investors featuring financial online data and content. Nichi
Real-Time provides access to multiple, premium content databases in addition to
the standard collections of Web pages, Chat Room discussions, and trading
services more widely available on the Internet. Nichi Real-Time currently costs
$40 a month plus the cost of the applicable Exchange Fees for the data they
would like to have access to. Nichi Real-Time has not been a source of
significant revenues to date for the Company.
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TECHNOLOGY
The Company believes it can differentiate itself by developing innovative
proprietary technology and integrating technology licensed from third parties
where appropriate. The Company's strategy is to develop and license only
technologies that have the flexibility to enable the Company to cost-effectively
adapt and grow with the Internet.
QUOTE ENGINE TECHNOLOGY.
The Company's quote engine seeks to deliver high accuracy, which is
characterized by a high level of precision and recall. Precision and recall are
two criteria by which the effectiveness of a quote engine technology is often
measured. Precision is a measure of how effectively a quote engine calculates
the relevance of data that match the query. Recall is a measure of the
percentage of relevant data in the database which is found during the search.
Together, these two measures of performance tend to be the most important
factors to users in evaluating the accuracy and usefulness of a quote engine.
For example, in a database of 100 symbols with 2 symbols which exactly match the
desired query, the ideal quote engine would retrieve only the two matching
quotes, with the correct bid and ask prices, correct volume, and correct last
sale price, thereby achieving both 100% precision and 100% recall.
In addition, due to the dynamic nature of the Internet, the retrieval of
up-to-date information and stock prices has become another key factor for the
evaluation of financial websites. To bring current information to the user, the
Company's employees will use technology to refresh its entire database,
excluding data from third parties, no less frequently than every four weeks,
while regularly updating with new information and research reports. This enables
Nichi Money to deliver accurate, relevant and up-to-date search results.
Nichi Money's quote/search engine is able to recognize proper nouns and
analyze keyword proximity. A request using the Fund Symbol Guide for 'Fidelity
Magellan' will return that specific fund name and symbol.
ADVERTISING MANAGEMENT
Nichi Money has developed certain proprietary systems for the instantaneous
placement of advertisements with targeted audiences on appropriate Nichi Money
Web pages. Nichi Money's advertising management systems are capable of
presenting real-time advertising that corresponds to a user's inquiry. If
certain key words have been purchased by more than one advertiser, the system
automatically determines which advertisement is displayed based upon the number
of impressions under contract and delivered to date. As part of the Company's
proprietary advertising management system, Nichi Money also maintains a database
that tracks the number of searches of each word queried by Nichi users, and the
number of impressions of each advertisement. This system assists the Company in
estimating the number of expected impressions of specific advertisement options
marketed by the Company or otherwise sought by advertisers.
ADVERTISING SALES
Advertisements appear on Nichi Money's Web page when a user enters the
service, performs a search, browses through the directory or obtains a quote. In
order to increase advertising revenues, the Company seeks to hire an ad
executive who will organize a direct sales force.
SALES FORCE
As of December 31, 1996, the Company had no sales representatives. The
Company believes that an experienced internal sales force will enable it to
better understand and meet advertisers' needs, increase its access to potential
advertisers and establish strong relationships with its advertising clients. The
Company plans to hire its staff by the end of 1997. In Europe, Asia and Latin
America, the Company intends to establish working relationships with
international advertising representation firms. No definitive arrangement with
any international firms have been reached to date.
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ADVERTISING PRODUCTS AND PRICING
The Company will offer advertisers four main advertising options that may
be purchased individually or in packages: general rotation, section pages,
keyword and special placement. These options all contain hypertext links to the
advertiser's home page. To date, no advertising contracts have been signed.
(1) General Rotation:
General rotation advertisements rotate on a random basis through Nichi
Money's search result pages. General rotation advertisements are typically
sold in blocks of one thousand impressions for a four week period.
Currently the base CPM (cost per thousand impressions) is $20 however, the
cost varies depending upon the number of impressions purchased.
(2) Section Pages:
These advertisements allow advertisers to target an audience with a
specific area of interest. Like general rotation advertisements, Section
Page advertisements are sold in blocks of impressions for a four week
period. Because of the greater selectivity of the audience, current CPMs
range from $25 with a rate card CPM of $20 for one million impressions.
(3) Keyword
Keyword advertisements are displayed when a user's search contains a
particular keyword selected by the advertiser. This option offers the
advertiser a highly targeted, self-selected audience. Through its
proprietary advertising management system, the Company tracks every word
and quote that is queried by Nichi Money's users. The minimum current four
week rate card CPM for a keyword is $1,000.
(4) Special Placement
Special placement advertisements are displayed on special feature
pages, such as 'Company Profiles' and can be customized to the needs of the
advertiser. Special placement advertisements include advertisements placed
on our newsletter.
TECHNOLOGICAL ADVANTAGES FOR ADVERTISERS
The online medium offers advertisers the ability to 'narrowcast' their
advertisements. For example, mutual fund companies can display their
advertisements when a user obtains a mutual fund quote. Nichi Money's technology
enables clients to monitor the effectiveness of their advertisements by tracking
click-through rates (the number of viewers who click to an advertiser's site).
Nichi Money advertising sales representatives will work closely with advertisers
to assimilate the data and integrate it into their overall advertising strategy.
MARKETING
The Company's strategy is to build a brand for Nichi Money through online
and trade advertising and promotions. The Company is aggressively marketing its
products in websites such as Yahoo!, Webcrawler and CNN's All-Politics Website.
In addition, the Company cross-promotes with other content providers through
advertising swaps in online media.
COMPETITION
The market for financial websites is highly competitive, with no
substantial barriers to entry, and the Company expects that competition will
continue to intensify. In addition, the market for the Company's products and
services has only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market entrants with competing products
and services. The Company does not believe this market will support the
increasing number of competitors and their
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products and services. Although the Company believes that the diverse segments
of the Internet market may provide opportunities for more than one supplier of
products and services similar to those of the Company, it is possible that a
single supplier may dominate one or more market segments. Accordingly, any
failure of the Company to provide product and service offerings that achieve
success in the short-term could result in an insurmountable loss in market share
and brand acceptance, and could, therefore, have a material adverse and
long-term effect upon the Company's business, results of operations and
financial condition.
A number of companies offer competitive products and services addressing
certain of the Company's target markets. These companies include Charles Schwab,
Quote.Com, Stockmaster.com, The Microsoft Network and Yahoo! Corporation. In
addition, the Company competes with metasearch services that allow a user to
search the databases of several catalogs and directories simultaneously. The
Company also competes indirectly with database vendors that offer information
search and retrieval capabilities with their core database products. In the
future, the Company may encounter competition from providers of Web browser
software, including Netscape and Microsoft, other online services and other
providers of other financial Internet products and services who elect to
incorporate their own search and retrieval features into their offerings.
Many of the Company's existing and potential competitors have significantly
greater financial, technical and marketing resources than the Company. The
Company may also be adversely affected by competition from licensees of its
products and technology, current and future advertisers, as well as from its
current, future and former content providers. There can be no assurance that the
Company's competitors will not develop Internet products and services that are
superior to those of the Company or that achieve greater market acceptance than
the Company's offerings. In addition, the Company competes with online services
and other Web site operators as well as traditional off-line media such as print
and television for a share of advertisers' total advertising budgets. There can
be no assurance that the Company will be able to compete successfully against
its future competitors or that competition will not have a material adverse
effect on the Company's business, results of operations and financial condition.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company's success depends significantly upon its proprietary
technology. The Company currently relies on a combination of copyright and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. The Company seeks to protect its
software, documentation and other written materials under trade secret, patent
and copyright laws, which afford only limited protection. The Company currently
has no United States patent applications pending. There can be no assurance that
any applications will be approved when made, or that if issued, such patents
will not be challenged, and if such challenges are brought, that such patents
will not be invalidated. There can be no assurance that the Company will develop
proprietary products or technologies that are patentable, that any issued patent
will provide the Company with any competitive advantages or will not be
challenged by third parties, or that the patents of others will not have a
material adverse effect on the Company's ability to do business. The Company
has registered and applied for registration for certain service marks and
trademarks, and will continue to evaluate the registration of additional service
marks and trademarks, as appropriate. The Company will generally enter into
confidentiality agreements with its employees and customers. Litigation may be
necessary to protect the Company's proprietary technology. Any such litigation
may be time-consuming and costly. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or services or to obtain and use information that the Company
regards as proprietary. In addition, the laws of some foreign countries do not
protect proprietary rights to as great an extent as do the laws of the United
States. There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar technology or duplicate the Company's products
or design around patents issued to the Company or other intellectual property
rights of the Company.
There have been substantial amounts of litigation in the computer/Internet
industry regarding intellectual property rights. There can be no assurance that
third parties will not in the future claim
26
<PAGE>
<PAGE>
infringement by the Company with respect to current or future products,
trademarks or other proprietary rights, or that the Company will not
counterclaim against any such parties in such actions. Any such claims or
counterclaims could be time-consuming, result in costly litigation, cause
product release delays, require the Company to redesign its products or require
the Company to enter into royalty or licensing agreements, any of which could
have a material adverse effect upon the Company's business, operating results
and financial condition. Such royalty or licensing agreements, if required, may
not be available on terms acceptable to the Company or at all.
EMPLOYEES
As of December 31, 1996, the Company had 6 full-time employees. The
Company's future performance depends in significant part upon the continued
service of Olawande Agunloye, the Company's founder, President, Chief Executive
Officer and Chairman of the Board. The Company will provide incentives such as
benefits and stock options (which are typically subject to withdrawal over two
years) to attract and retain qualified employees. The loss of the services of
Mr. Agunloye could have a material adverse effect on the Company's business,
operating results and financial condition. The Company's future success also
depends on its continuing ability to attract and retain highly qualified
technical and management personnel.
FACILITIES/PROPERTY
The Company's principal administrative, sales, marketing, and research and
development facility is located in approximately 1,100 square feet of space in
New York, New York. This facility is leased pursuant to a five year lease
through Sylvan Lawrence. The lease expires in the year 2000. The Company
believes that its existing facilities are adequate for its current needs and
that additional space will be available as needed. There can be no assurance
that a system failure at the Company's principal location would not adversely
affect the performance of the Company's products and services.
27
<PAGE>
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, and their ages as of
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------------------- --- -----------------------
<S> <C> <C>
Olawande A. Agunloye..................................... 24 President and Chairman
of the Board
Abraham Tu............................................... 27 Secretary and Director
</TABLE>
Olawande A. Agunloye, founder of the Company, has been a Director of the
Company and Chairman of the Board of Directors since February, 1995. Prior to
February, 1995, Mr. Agunloye served as a registered representative with J.
Gregory & Co. from January 1994 to September 1994. He also served as registered
representative with V.T.R. Capital from September 1994 to December 1994. Mr.
Agunloye served as a consultant for Nigerian-American Consultants. Prior
thereto, Mr. Agunloye attended the International School of Lagos, Nigeria,
University of Ife, Oshun State of Nigeria and Pace University. Mr. Agunloye's
prior positions are set forth as follows:
<TABLE>
<CAPTION>
FIRM NAME PERIOD POSITION HELD
- --------------------------------------------------------- --------------- -------------------------
<S> <C> <C>
P.C.M. Securities........................................ 02/95 - 05/95 Supervisor
Northeast Securities..................................... 02/95 - 02/95 Supervisor
V.T.R. Capital........................................... 09/94 - 12/94 Senior Portfolio Manager
J. Gregory & Co. ........................................ 01/94 - 09/94 Senior Portfolio Manager
F.J.C. Ltd. ............................................. 10/93 - 01/94 Manager
University of Ife........................................ 10/89 - 10/93 Full Time Student
International School of Lagos............................ 10/85 - 10/89 Full Time Student
</TABLE>
Mr. Abraham Tu has been Secretary and a Director of the Company since
April, 1997. Prior thereto he was employed at the following firms:
<TABLE>
<CAPTION>
FIRM NAME PERIOD POSITION HELD
- --------------------------------------------------------- --------------- -------------------------
<S> <C> <C>
Bishop Rosen & Co., New York............................. 11/96 - 4/97 Stockbroker
I.A. Rabinowitz & Co. ................................... 9/94 - 11/96 Stockbroker
J. Gregory & Co. ........................................ 5/94 - 9/94 Stockbroker
Commonwealth Associates.................................. 9/92 - 12/92 Stockbroker Trainee
</TABLE>
Mr. Tu received a Bachelor of Business Administration in Finance and
Economics from Bernard M. Baruch College, City University of New York, in 1991.
Both Messrs Tu and Agunloye divide their responsibilities between Nichi and
Wise Choice. Olawande Agunloye spends 50% of his time handling the affairs of
Nichi and approximately 50% with Wise Choice. Mr. Tu spends approximately 25% of
his time with Nichi and 75% with Wise Choice. These percentages may depend upon
the requirement of Wise Choice and its Company.
The Company has two directors, Messrs Agunloye and Tu. Each director holds
office until the next annual meeting of shareholders or until their successors
are duly elected and qualified. Directors of the Company do not receive
compensation for services provided as directors. The Company also does not pay
compensation for committee participation or special assignments of the Board of
Directors. There are no family relationships among any of the directors and
executive officers of the Company.
The Company intends to appoint an Audit Committee which will review and act
on and report to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's auditors, the scope
of the annual audits, fees to be paid to the auditors, the performance of the
Company's auditors and the accounting practices of the Company.
The Company also intends to appoint a Compensation Committee which will
establish salaries, incentives and other forms of compensation for officers and
other future employees of the Company and administer incentive compensation and
benefit plans if implemented.
28
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the Company
for 1996 to the Company's Chief Executive Officer. Prior to 1996 Mr. Agunloye
was not paid for his services. No executive officer received compensation in
excess of $100,000 during either of the last two fiscal years.
The Company currently has no stock option plan, and no officer has been
paid a bonus for fiscal year 1995.
<TABLE>
<CAPTION>
SALARY OR OTHER
ANNUAL
NAME OF INDIVIDUAL POSITION COMPENSATION
- --------------------------------------------------------- -------- ---------------
<S> <C> <C>
Olawande A. Agunloye..................................... CEO $36,693
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN
The Company intends to set up an Employee Stock Purchase Plan for its
future employees and to set aside 200,000 shares for this purpose.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The Company currently does not have any employment agreements with its
employees. Terms of employment agreements will be determined by a compensation
committee to be formed after the successful completion of its initial public
offering.
CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
Olawande Agunloye was involved in the founding and organization of the
Company and may be considered a promoter of the Company. Mr. Agunloye received
3,728,067 shares of the Company's Common Stock as his share of the consideration
paid by the Company for its acquisition of the Internet financial services
business of Wise Choice. Mr. Agunloye acquired his shares of Wise Choice on
February 16, 1995, for an aggregate payment of $75,000.
Mr. Agunloye has given shares of Common Stock of the Company effective June
1, 1996 to certain individuals. See 'Recent Sales of Unregistered Securities.'
The Company was formed in New York in April 1996. Effective April 2, 1997,
the Company acquired all of the assets, goodwill and liabilities of the internet
financial services business of Wise Choice Discount Brokerage, Inc. ['Wise
Choice'], in exchange for 3,793,802 shares of Common Stock which were
distributed to the shareholders of Wise Choice. As explained in Note 1 to the
Financial Statements, the financial statements of the Company reflects
historical amounts at which the assets and liabilities are shown and the
historical operations of the transferred business from its inception [February
16, 1995]. Except as the context otherwise requires, the term 'Company' refers
to both Nichi Capital, Ltd. and the acquired business.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal shareholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors on the Board of
Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1996, as adjusted to
reflect the sale of the shares offered hereby, (i) by each person who is known
by the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) by each director and the Chief Executive Officer of the
Company and (iii) by all directors and executive officers of the Company as a
group. Unless otherwise indicated below,
29
<PAGE>
<PAGE>
all persons listed below have sole voting and investment power with respect to
their shares of Common Stock, except to the extent authority is shared by
spouses under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY ---------------------------------------
OWNED PRIOR TO PERCENT ASSUMING
OFFERING --------------------------
-------------------- MINIMUM MAXIMUM
BENEFICIAL OWNER SHARES PERCENT SHARES SHARES SOLD SHARES SOLD
- ---------------------------------------------------- --------- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Olawande A. Agunloye(1)............................. 3,497,389 92.0% 3,497,389 79.5% 62.5%
Abraham Tu(1)....................................... 45,650 1.2 45,650 1.0 .8
All executive officers and directors as a group (2
persons).......................................... 3,543,039 93.2 3,543,039 80.5 63.7
</TABLE>
- ------------
(1) Messrs Agunloye's and Tu's business address is 150 Nassau Street, New York,
New York 10038.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company upon the closing of this
Offering will consist of 15,000,000 shares of Common Stock, one cent par value.
As of July 15, 1997, the Company had issued 3,799,672 shares of Common
Stock. All shares were issued and outstanding held of record by 28 shareholders.
There will be 4,399,672 and 5,599,672 shares of Common Stock outstanding after
giving effect to the sale of the minimum and maximum shares of Common Stock
respectively offered hereby.
The holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. The holders of Common Stock are
entitled to receive dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available thereof. See 'Dividend
Policy.' In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and non-assessable, and the shares of Common
Stock to be issued upon completion of this Offering will be fully paid and
non-assessable.
LIMITED LIABILITY AND INDEMNIFICATION
As permitted by the New York Business Corporation Law ('BCL'), the
Company's Restated Certificate of Incorporation provides that, to the fullest
extent permitted by the BCL, no director of the Company shall be liable to the
Company or its shareholders for monetary damages for breach of fiduciary duty in
such capacity. Such provision does not eliminate or limit the liability of any
director (i) if a judgment or other final adjudication adverse to such director
establishes that its acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of the law or that he personally gained in
fact a material profit or other advantage to which he was not legally entitled
or that his acts violated Section 719 of the BCL, or (ii) for any act or
omission prior to the adoption of this provision. As a result of this provision,
the Company and its shareholders may be unable to obtain monetary damages from a
director for breach of his duty of care. Although shareholders may continue to
seek injunctive or other equitable relief for an alleged breach of fiduciary
duty a director, shareholders may not have any effective remedy against the
challenged conduct if equitable remedies are unavailable. In addition, under the
Restated Certificate of Incorporation, the Company has agreed to indemnify its
officers, directors, employees and agents to the fullest extent permitted by the
BCL against actions that may arise against them in such capacities, and to
advance expenses in connection with any such actions.
30
<PAGE>
<PAGE>
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is the Bank of New
York.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no market for the Common Stock of
the Company. Therefore, future sales of substantial amounts of Common Stock in
the public market could adversely affect market prices prevailing from time to
time. Furthermore, since only a limited number of shares will be available for
sale shortly after this Offering because of certain contractual and legal
restrictions on resale (as described below), sales of substantial amounts of
Common Stock of the Company in the public market after the restrictions lapse
could adversely affect the prevailing market price and the ability of the
Company to raise equity capital in the future.
Upon completion of this Offering, the Company will have outstanding an
aggregate of 5,595,302 shares of Common Stock assuming the sale of the maximum
number of shares offered. Of these outstanding shares of Common Stock, the
1,800,000 shares sold in this Offering will be freely tradeable without
restriction or further registration under the Securities Act, unless purchased
by an 'affiliate' of the Company, as that term is defined in Rule 144 under the
Securities Act (an 'Affiliate'). The remaining 3,795,302 shares of Common Stock
existing are 'restricted securities' as that term is defined in Rule 144 under
the Act.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain conditions, a person, including an affiliate of the
Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least one year is entitled to sell
within any three month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same class or, if
the Common Stock is quoted on a national quotation system, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least the three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least two years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above.
PLAN OF DISTRIBUTION
The Company is offering a minimum of 600,000 shares and a maximum of
1,800,000 shares of Common Stock at a purchase price of $5.00 per share.
The proceeds from the sale of shares will be held in an Escrow Account at
Citibank, NA until a minimum of 600,000 shares have been sold. If at least
600,000 shares are not sold by 180 days from the date of this Prospectus, the
proceeds received from investors will be promptly refunded to the investors in
full without interest thereon and or deduction of any kind therefrom. Until the
proceeds from the sale of at least 600,000 shares are deposited in escrow
investors will not be security holders nor able to demand return of their
subscription proceeds.
The Company's common stock will trade on the Niphix System ('System') under
the trading symbol 'Nichi.' Niphix System ('System') is a proprietary electronic
broker-dealer trading system operated by Niphix Investment, Inc., a
broker-dealer registered with the Commission under Section 15(b) of the Exchange
Act and a member of NASD. Niphix is an introducing broker-dealer, clearing its
transaction with Computer Clearing Services, Inc., ('the Clearing Broker') a
clearing broker who is a participant with National Securities Clearing
Corporation.
The system is designed to facilitate the offering and subsequent trading
among investors of the equity and fixed income securities of small businesses.
The securities offered and sold on the System will be exempt from registration
pursuant to Regulation A under the Securities Act or registered on Form SB-1 or
SB-2 of the Securities Act available to small business issuers. The system is an
electronic dial-up computer system and serves an electronic medium for the
furnishing by the issuers of disclosure and related documents. Issuers offering
circulars or prospectuses under Regulation A exemption or pursuant to a
registration on SB-1 or SB-2, respectively, are available to investors on the
System.
31
<PAGE>
<PAGE>
Investors trading on the System are customers of Niphix and their accounts
are carried by the Clearing Broker. All investors deposit sufficient funds into
their account to cover every trade that they propose to make on the System.
All purchasers' checks should be made payable to 'Nichi Capital,
Ltd. -- Escrow Account.' Certificates evidencing Common Stock will be issued to
purchasers only if the proceeds from the sale of at least 600,000 shares are
actually deposited in escrow and released to the Company pursuant to the Escrow
Agreement. Until such time as the proceeds are actually received by the Company
and the certificates delivered to the purchasers thereof, such purchasers will
be deemed subscribers and not security holders of the Company. During the
selling period, purchasers will have no right to demand return of their
subscription proceeds. If the minimum proceeds are successfully obtained, the
Offering will be continued until completed, until the maximum period of the
Offering has elapsed or until the Offering is terminated by the Company,
whichever occurs first.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the firm of Loselle Greenawalt Kaplan & Blair and Leon
B. Lipkin, Esq.
EXPERTS
The audited financial statements of Nichi Capital, Ltd. at December 31,
1995 and 1996, appearing in this Prospectus and Registration Statement have been
included herein in reliance upon the report of Weinick, Sanders & Co., LLP,
independent certified public accountants, whose report thereon appears elsewhere
in this prospectus and upon the authority of said firm as experts in Accounting
and Auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules to the Registration Statement. For further information with respect to
the Company and such Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement. Statements contained in this Prospectus concerning the
contents of any contract or any other document referred to are not necessarily
complete; reference is made in each instance to the copy of such contract or
document filed as an exhibit to the Registration Statement. Each such statement
is qualified in all respects by such reference to such exhibit. The Registration
Statement, including exhibits and schedules thereto, may be inspected without
charge at the Securities and Exchange Commission public reference facilities at
450 Fifth Street, N.W. Washington, D.C. 20549. Copies of such material may also
be obtained upon payment of certain fees prescribed by the Commission.
Electronic registration statements made through the Electronic Data Gathering
Analysis and Retrieval system are publicly available through the Commission's
Web site (http://www.sec.gov).
32
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Independent Accountants' Report........................................................................ F-2
Balance Sheets as at June 30, 1997 (Unaudited), December 31, 1996 and 1995............................. F-3
Statement of Operations
For the Six Months Ended June 30, 1997 and 1996 (Unaudited); For the Year Ended December 31, 1996;
For the Period from February 16, 1995 (Inception) to December 31, 1995; Cumulative For the Period
February 16, 1995 (Inception) to June 30, 1997 (Unaudited)....................................... F-4
Statement of Stockholders' Equity (Capital Deficiency)
For the Six Months Ended June 30, 1997 and 1996 (Unaudited); For the Year Ended December 31, 1996;
For the Period from February 16, 1995 (Inception) to December 31, 1995........................... F-5
Statement of Cash Flows
For the Six Months Ended June 30, 1997 (Unaudited); For the Year Ended December 31, 1996; For the
Period from February 16, 1995 (Inception) to December 31, 1995; Cumulative For the Period
February 16, 1995 (Inception) to June 30, 1997 (Unaudited)....................................... F-6
Notes to Financial Statements.......................................................................... F-7 - F-9
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders
NICHI CAPITAL, LTD.
We have audited the accompanying balance sheets of Nichi Capital, Ltd. (A
Development Stage Enterprise) as at December 31, 1996 and December 31, 1995, and
the related statements of operations, stockholders' deficit and cash flows for
the year ended December 31, 1996, for the period from February 16, 1995
(Inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nichi Capital, Ltd., as at
December 31, 1996 and December 31, 1995 and the results of its operations and
its cash flows for the year ended December 31, 1996 and for the period from
February 16, 1995 (Inception) to December 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 1, the accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. At December
31, 1996, the Company has a working capital deficiency of $158,925 and a
stockholders' deficiency of $93,050. In addition, the Company has incurred
losses from inception to December 31, 1996. These conditions raise substantial
doubt about its ability to continue as a going concern. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
WEINICK, SANDERS & CO. LLP
New York, N.Y.
March 21, 1997
(Except for Note 1 as to which the
date is April 2, 1997, Note 5 as to
which the date is August 4, 1997,
and Note 6 for which the dates are
July 25, 1997 and August 11, 1997)
F-2
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
JUNE 30, --------- --------
-----------
1997
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................................................. $ 74,490 $ -- $ 2,887
Prepaid expenses...................................................... 671 900 900
----------- --------- --------
Total current assets............................................. 75,161 900 3,787
----------- --------- --------
Property and equipment -- net of accumulated depreciation (Note 3)......... 59,824 66,327 36,091
----------- --------- --------
Other assets:
Deferred offering costs............................................... 16,448 -- --
Organization costs -- net of accumulated amortization of $4,499,
$3,535 and $1,607, respectively (Note 3)............................ 5,141 6,105 8,033
----------- --------- --------
Total other assets............................................... 21,589 6,105 8,033
----------- --------- --------
$ 156,574 $ 73,332 $ 47,911
----------- --------- --------
----------- --------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Cash overdraft........................................................ $ -- $ 27 $ --
Accounts payable...................................................... 142,723 144,223 13,146
Notes payable -- stockholders (Notes 5)............................... 103,300 -- --
Capital lease obligations -- current portion (Note 7)................. 8,300 7,627 7,210
Accrued expenses and other current liabilities........................ 948 7,948 1,751
----------- --------- --------
Total current liabilities........................................ 255,271 159,825 22,107
----------- --------- --------
Capital lease obligations -- less current maturities (Notes 7)............. 5,196 6,557 11,764
----------- --------- --------
Commitment (Note 6)........................................................ -- -- --
Stockholders' equity (deficiency) (Notes 1 and 6):
Common stock -- $.01 par value
Authorized -- 15,000,000 shares
Issued and outstanding shares -- 3,795,302, 3,793,802 and
3,765,728 shares, respectively................................. 37,953 37,938 37,658
Additional paid-in capital....................................... 244,903 203,946 70,342
Deficit accumulated in the development stage..................... (386,749) (328,934) (93,960)
Stock subscriptions receivable................................... -- (6,000) --
----------- --------- --------
Total stockholders' equity (deficiency)..................... (103,893) (93,050) 14,040
----------- --------- --------
$ 156,574 $ 73,332 $ 47,911
----------- --------- --------
----------- --------- --------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE PERIOD FOR THE PERIOD
FEBRUARY 16, FEBRUARY 16,
FOR THE SIX MONTHS FOR THE 1995 1995
ENDED JUNE 30, YEAR ENDED (INCEPTION) TO (INCEPTION) TO
--------------------- DECEMBER 31, DECEMBER 31, JUNE 30,
1997 1996 1996 1995 1997
-------- -------- ------------ -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue................................. $ -- $ -- $ 9,101 $ 4,542 $ 13,643
-------- -------- ------------ -------------- --------------
Costs and expenses:
Consulting --
officer/stockholder.............. 26,894 2,500 36,693 -- 63,587
Advertising (Note 1)............... 4,000 30,897 60,479 1,448 65,927
Depreciation and amortization...... 7,467 7,781 13,936 4,623 26,026
Other general and administrative
expenses (Note 4)................ 19,454 40,502 132,967 92,431 244,852
-------- -------- ------------ -------------- --------------
Total costs and expenses...... 57,815 81,680 244,075 98,502 400,392
-------- -------- ------------ -------------- --------------
Net loss................................ $(57,815) $(81,680) $ (234,974) $(93,960) $ (386,749)
-------- -------- ------------ -------------- --------------
-------- -------- ------------ -------------- --------------
Net loss per common share............... $(0.02) $(0.02) $(0.06) $(0.03)
-------- -------- ------------ --------------
-------- -------- ------------ --------------
Weighted average number of common shares
outstanding (Note 5).................. 3,795,152 3,770,379 3,781,978 3,748,322
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
FOR THE PERIOD FEBRUARY 16, 1995 (INCEPTION) TO JUNE 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK DEFICIT TOTAL
------------------- ACCUMULATED STOCKHOLDERS'
NUMBER ADDITIONAL IN THE STOCK EQUITY
OF PAID-IN DEVELOPMENT SUBSCRIPTION (CAPITAL
SHARES AMOUNT CAPITAL STAGE RECEIVABLE DEFICIENCY)
--------- ------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at February 16, 1995 (inception)... -- $ -- $ -- $ -- $-- $ --
Common stock issued for cash............... 3,765,728 37,658 70,342 -- -- 108,000
Net loss for the period February 16, 1995
(inception) to December 31, 1995......... -- -- -- (93,960) -- (93,960)
--------- ------- ---------- ----------- ------------ -------------
Balance at December 31, 1995............... 3,765,728 37,658 70,342 (93,960) -- 14,040
Common stock isued for cash................ 27,774 277 127,607 -- -- 127,884
Common stock subscribed.................... 300 3 5,997 -- (6,000)
Net loss for the year ended December 31,
1996..................................... -- -- -- (234,974) -- (234,974)
--------- ------- ---------- ----------- ------------ -------------
Balance at December 31, 1996............... 3,793,802 37,938 203,946 (328,934) (6,000) (93,050)
Cash received on stock subscription
receivable............................... -- -- -- -- 6,000 6,000
Common stock issued for cash............... 1,500 15 29,985 -- -- 30,000
Net loss for the six months ended June 30,
1997..................................... -- -- -- (57,815) -- (57,815)
Capital contribution made by stockholder... -- -- 10,972 -- -- 10,972
--------- ------- ---------- ----------- ------------ -------------
Balance at June 30, 1997 (Unaudited)....... 3,795,302 $37,953 $244,903 ($386,749) $-- ($103,893)
--------- ------- ---------- ----------- ------------ -------------
--------- ------- ---------- ----------- ------------ -------------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
CUMULATIVE
FOR THE PERIOD PERIOD
FEBRUARY 16 FEBRUARY 16
FOR THE SIX FOR THE 1995 1995
MONTHS ENDED YEAR ENDED (INCEPTION) TO (INCEPTION) TO
JUNE 30, DECEMBER 31, DECEMBER 31, JUNE 30, 1997
1997 1996 1995 1997
------------ ------------ -------------- --------------
(UNAUDITED) UNAUDITED
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss...................................... $ (57,815) $ (234,974) $ (93,960) $ (386,749)
------------ ------------ -------------- --------------
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization................. 7,467 13,936 4,623 26,026
Increase (decrease) in cash flows as a result of
changes in asset and liability account balances:
Prepaid expenses.............................. 229 -- (900) (671)
Accounts payable.............................. (1,500) 131,077 13,146 142,723
Accrued expenses and other current
liabilities................................. (7,000) 6,197 1,751 948
------------ ------------ -------------- --------------
Total adjustments........................ (804) 151,210 18,620 169,026
------------ ------------ -------------- --------------
Net cash used in operating activities.............. (58,619) (83,764) (75,340) (217,723)
------------ ------------ -------------- --------------
Cash flows from investing activities:
Purchase of property and equipment............ -- (42,244) (39,107) (81,351)
Organization costs............................ -- -- (9,640) (9,640)
------------ ------------ -------------- --------------
Net cash used in investing activities.............. -- (42,244) (48,747) (90,991)
------------ ------------ -------------- --------------
Cash flows from financing activities:
Cash overdraft................................ (27) 27 -- --
Proceeds from sale of common stock............ 30,000 127,884 108,000 265,884
Increase (decrease) in capital leases......... (688) (4,790) 18,974 13,496
Deferred offering costs....................... (16,448) -- -- (16,448)
Proceeds from notes payable to stockholders... 103,300 -- -- 103,300
Payment of stock subscriptions receivable..... 6,000 -- -- 6,000
Capital contributions by stockholder.......... 10,972 -- -- 10,972
------------ ------------ -------------- --------------
Net cash provided by financing activities.......... 133,109 123,121 126,974 383,204
------------ ------------ -------------- --------------
Net increase (decrease) in cash.................... 74,490 (2,887) 2,887 74,490
Cash at beginning of period........................ -- 2,887 -- --
------------ ------------ -------------- --------------
Cash (overdraft) at end of period.................. $ 74,490 $ -- $ 2,887 $ 74,490
------------ ------------ -------------- --------------
------------ ------------ -------------- --------------
Supplemental Schedule of Non-cash investing and
financing activities:
Issuance of common stock for subscription
receivable.................................. $ -- $ 6,000 $ -- $ 6,000
------------ ------------ -------------- --------------
------------ ------------ -------------- --------------
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(INFORMATION RELATING TO THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 IS
UNAUDITED)
NOTE 1. BASIS OF PRESENTATION, DEVELOPMENT STAGE ENTERPRISE.
(A) BASIS OF PRESENTATION:
Nichi Capital, Ltd. (the 'Company') began business on February 16, 1995 as
a division of Wise Choice Discount Brokerage, Inc. ('Wise Choice') a company
related through common ownership and control. The Company was later incorporated
on April 22, 1996 under the laws of the State of New York to develop and provide
branded comprehensive web-based financial services which is designed to help
users access and personalize the resources of the Internet.
Effective April 22, 1996, the Company acquired the assets, goodwill and
liabilities of Wise Choice in exchange for 3,793,802 shares of the Company's
common stock. On April 2, 1997 such common stock was distributed to the
stockholders of Wise Choice. The accompanying financial statements of the
Company reflect historical cost basis in assets and liabilities and the
historical operations of the transferred business retroactive to February 16,
1995, its inception. Except as the context otherwise requires the term 'Company'
refers both to Nichi Capital, Ltd. and the acquired business.
(B) DEVELOPMENT STAGE ENTERPRISE:
From inception through June 30, 1997, the Company's operations were limited
and consisted primarily of start-up activities, including recruiting personnel,
raising capital, research and development, and the negotiation and execution of
agreements with various exchanges for stock quote information. All costs were
expensed as incurred during the development stage.
As a result of the start-up nature of its business, the Company has and can
be expected in the future to sustain substantial operating expenses without
generating sufficient revenues to cover operating costs. That matter raises
substantial doubt as to the Company's ability to continue as a going concern.
Management believes that sufficient revenues can be achieved through the
implementation of its plan, the objective of which is to establish itself as a
dominant, branded financial services provider on the Internet in order to reach
the greatest audience. The Company seeks to build a high volume of traffic on
its services to provide a preferred platform for content providers and
advertisers to reach their target audiences.
To achieve its objective, the Company intends to (i) enhance the
attractiveness of its service to users through the addition of new features and
functionality; (ii) develop and license innovative technologies which can
differentiate its service and scale with the growth of the Internet; (iii) offer
advertisers high impact, innovative advertising products; (iv) distribute its
service widely through software companies, access providers and others; and (v)
form relationships with leading third party content providers.
The implementation of this plan is, according to management, dependent on,
among other things, a successful proposed public offering of its common stock.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
(C) INTERIM FINANCIAL STATEMENTS:
The balance sheet as of June 30, 1997 and the related statements of
operations, stockholders' equity and cash flows for the six month period ended
June 30, 1997 and 1996, are unaudited. However, in the opinion of management
these interim financial statements include all adjustments (consisting of only
normal recurring adjustments) which are necessary for the fair presentation of
the results for the interim periods presented. The results of operations for the
unaudited six month periods ended June 30, 1997
F-7
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996 AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(INFORMATION RELATING TO THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 IS
UNAUDITED)
and 1996 are not necessarily indicative of the results which may be expected for
the entire 1997 and 1996 fiscal years.
(D) ADVERTISING:
The Company expenses advertising costs as incurred.
(E) INCOME TAXES:
At December 31, 1996, the Company has a deferred tax asset arising
primarily from a net operating loss carry-forward of approximately $55,000
available to reduce future taxable income, which expires through the year 2011.
Since management estimates that it is not likely that the Company will be able
to utilize this asset in the future, it has been fully reserved.
NOTE 2. OFFERING PLAN.
The Company plans to offer for sale to the public a minimum of 600,000
shares and a maximum of 1,800,000 shares of its common stock at $5 per share.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(A) USES OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
(B) PROPERTY AND EQUIPMENT:
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets using the straight-line method. Upon sale or
retirement, the related costs and accumulated depreciation are eliminated from
the accounts and gains or losses are reflected in income. Repairs and
maintenance expenditures which do not extend asset lives are charged to income
as incurred.
The major classifications of property and equipment at December 31, 1996
and May 31, 1997 (unaudited) are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1996 USEFUL LIVES
JUNE 30, ------------ ------------
1997
-----------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures....................................... $ 1,061 $ 1,061 5 years
Computers.................................................... 66,955 66,955 5 years
Telephone system............................................. 13,335 13,335 5 years
----------- ------------ ------------
81,351 81,351
Less: Accumulated depreciation............................... 21,527 15,024
----------- ------------ ------------
$59,824 $ 66,327
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
NOTE 4. RELATED PARTY TRANSACTIONS.
The Company sublet a portion of its operating facility to Wise Choice, on a
month to month basis. Sublease rental income of $4,200 and $1,050 is included in
other general and administrative expenses in
F-8
<PAGE>
<PAGE>
NICHI CAPITAL, LTD.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1996 AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(INFORMATION RELATING TO THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 IS
UNAUDITED)
the accompanying statement of operations for the year ended December 31, 1996
and the six months ended June 30, 1997, respectively.
NOTE 5. BRIDGE FINANCING.
During the six months ended June 30, 1997 (9) nine stockholders loaned the
Company an aggregate of $103,300. Such loans bear interest at 10% per annum and
are payable on the earlier of (i) ninety days from the loans inception or (ii) a
successful offering of the Company's common stock to the public. Under the terms
of the agreement, the noteholders have an option to convert the debt into stock
at the offering price upon the effective date of an initial public offering.
NOTE 6. STOCKHOLDERS' EQUITY.
(A) CAPITAL STOCK:
The Board of Directors of the Company approved stock splits of 3 shares for
each share outstanding on February 16, 1996, 3 shares for each 2 shares
outstanding on October 31, 1996 and 1 share for each 2 shares on August 11,
1997. The accompanying financial statements retroactively reflect these two
stock splits as if they had occurred at the inception of the Company.
On February 16, 1995, the Company issued 3,732,945 shares of its $.01 per
value Common Shares (the 'Common Shares') to Olawande Agunloye, its President
and founding stockholder for $75,000 in cash.
During 1995, the Company sold 32,783 Common Shares to fourteen (14)
investors for cash consideration aggregating $33,000.
During 1996, the Company sold 27,774 Common Shares to twenty (20) investors
for cash consideration aggregating $127,884.
During December 1996, three (3) investors subscribed for 300 Common Shares
at a price of $20 per share. Such shares were paid for in February 1997.
During May 1997, the Company sold 1,500 common shares to two (2) investors
for cash consideration aggregating $30,000.
On July 25, 1997, the Company sold 3,620 shares of its common stock to an
officer/director and 750 shares to his brother for aggregate cash consideration
aggregating $43,700.
(B) CAPITAL CONTRIBUTION:
During the six months ended June 30, 1997, the Company's majority
stockholder contributed $10,972 to the Company as additional paid-in capital.
F-9
<PAGE>
<PAGE>
__________________________________ __________________________________
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING,
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................ 2
Risk Factors...................................... 5
Use of Proceeds...................................
Dividend Policy................................... 11
Capitalization.................................... 12
Dilution.......................................... 13
Selected Financial Data........................... 14
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 15
Business Strategy................................. 20
Management........................................ 28
Principal Shareholders............................
Certain Transaction and Related Transactions...... 29
Description of Capital Stock...................... 30
Shares Eligible For Future Sale................... 31
Plan of Distribution.............................. 31
Legal Matters..................................... 32
Experts........................................... 32
Additional Information............................ 32
Index to Financial Statements..................... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
__________________________________ __________________________________
__________________________________ __________________________________
1,800,000 SHARES
NICHI CAPITAL LTD.
COMMON STOCK
----------------------
PROSPECTUS
----------------------
, 1997
__________________________________ __________________________________
<PAGE>
<PAGE>
COMMON STOCK
PROSPECTUS
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has adopted provisions in its Restated Articles of
Incorporation that limit the liability of directors in certain instances. As
permitted by the New York General Corporation Law, directors will not be liable
to the Company for monetary damages arising from a breach of their fiduciary
duty as directors in certain circumstances. Such limitation does not affect
liability for any breach of a director's duty to the Company or its shareholders
(i) with respect to approval by the director of any transaction from which he
derives an improper personal benefit, (ii) with respect to acts or omissions
involving an absence of good faith, that he believes to be contrary to the best
interests of the Company or its shareholders, that involve intentional
misconduct or a knowing and culpable violation of law, that constitute an
unexcused pattern of inattention that amounts to an abdication of his duty to
the Company or its shareholders, or that show a reckless disregard for his duty
to the Company or its shareholders in circumstances in which he was, or should
have been, aware, in the ordinary course of performing his duties, of a risk of
serious injury to the Company or its shareholders, or (iii) based on
transactions between the Company and its directors or another corporation with
interrelated directors or on improper distributions, loans or guarantees under
applicable sections of the New York General Corporation Law. Such limitation of
liability also does not affect the availability of equitable remedies such as
injunctive relief or rescission, although in certain circumstances equitable
relief may not be available as a practical matter. The limitation may relieve
the directors of monetary liability to the Company for grossly negligent
conduct, including conduct in situations involving attempted takeovers of the
Company. No claim or litigation is currently pending against the Company's
directors that would be affected by the limitation of liability.
The Company's Restated Articles of Incorporation and Bylaws provide that
the Company shall indemnify its directors and may indemnify its officers to the
full extent permitted by New York law. The Company has entered into separate
indemnification agreements with its directors and officers, which may require
the Company, among other things, to indemnify them against certain liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
and to advance their expenses incurred as a result of any proceeding against
them as to which they could be indemnified. To the extent the Company may be
required to make substantial payments under the indemnification agreements that
are not covered by insurance, the Company's available cash and shareholder's
equity would be adversely affected.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates except
the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration fee....................................................... $2,727
Printing and engraving..................................................... $
Legal fees and expenses of the Company..................................... $
Accounting fees and expenses............................................... $
Blue sky fees and expenses................................................. $
Miscellaneous.............................................................. $
------
Total................................................................. $
------
</TABLE>
- ------------
* To be completed by amendment
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Effective April 22, 1996, the Company acquired certain of the assets,
goodwill and liabilities by Wise Choice from Olawande Agunloye, the Company's
Chief Executive Officer in exchange for 3,795,302 shares of the Company's Common
Stock.
II-1
<PAGE>
<PAGE>
Effective July 27, 1997, 3,799,672 shares of Common Stock were sold by the
Company or given without consideration by Olawande Agunloye to the following:
<TABLE>
<CAPTION>
SHARES RECEIVED
FROM
SHARES PURCHASED OLAWANDE AGUNLOYE TOTAL OWNED
--------------------- ------------------ ---------------------
SHAREHOLDER NAME # AMOUNT # AMOUNT # AMOUNT
- ----------------------------------------- --------- -------- -------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Jokotade Agunloye........................ 0 $ 0 900 $0 900 $ 0
Olawande Agunloye........................ 3,758,528 86,012 (261,139) 0 3,497,389 86,012
George & Angela Becharas................. 450 2,000 1,350 0 1,800 2,000
Joe Bellacomo............................ 562 2,500 1,687 0 2,249 2,500
Adrienne Blue............................ 450 2,000 1,350 0 1,800 2,000
Robert Boschert.......................... 225 1,000 675 0 900 1,000
Raymond Brubaker......................... 2,250 10,000 6,750 0 9,000 10,000
Dana Bruno............................... 6,300 28,000 30,150 0 36,450 28,000
Marie Cappiello.......................... 1,350 6,000 4,050 0 5,400 6,000
Carl & Ethel Carlzen..................... 4,800 26,000 18,600 0 23,400 26,000
Theobaldo Delorenzo...................... 1,175 6,000 4,225 0 5,400 6,000
Edwin Der................................ 2,250 10,000 6,750 0 9,000 10,000
Aristeshoma M. Dodoh..................... 0 0 20,430 0 20,430 0
Daniel Dragonetti........................ 1,800 8,000 5,400 0 7,200 8,000
Ernest Focht............................. 4,600 22,000 15,200 0 19,800 22,000
James Foxhall............................ 450 2,000 1,350 0 1,800 2,000
J.P.H. Freeman........................... 225 1,000 675 0 900 1,000
Tenny Hassan............................. 0 0 68,500 0 68,500 0
Boiajl Hassan............................ 0 0 9,000 0 9,000 0
Stuart Lucas............................. 747 4,444 3,253 0 4,000 4,444
Norman Roth.............................. 653 2,900 1,956 0 2,609 2,900
Joan-Ann Sam............................. 225 1,000 675 0 900 1,000
Joseph & Maxine Stephens................. 1,125 5,000 3,375 0 4,500 5,000
Willie Taylor............................ 1,125 5,000 3,375 0 4,500 5,000
Delbert Torno............................ 1,250 7,500 5,500 0 6,750 7,500
Abraham Tu............................... 7,333 70,200 38,316 0 45,649 70,200
Anthony Tu............................... 1,125 15,000 5,625 0 6,750 15,000
Kim Weeks................................ 337 1,500 1,011 0 1,348 1,500
Sabrina Williams......................... 337 1,500 1,011 0 1,348 1,500
--
--------- -------- -------- --------- --------
3,799,672 $326,556 0 $0 3,799,672 $326,556
--------- -------- -------- -- --------- --------
--------- -------- -------- -- --------- --------
</TABLE>
II-2
<PAGE>
<PAGE>
During 1997 the Company issued promissory notes in the aggregate principal
amount of $220,300 to the following individuals:
<TABLE>
<CAPTION>
DATE NOTE HOLDERS AMOUNT
- --------- ---------------------------------------------------------------------- --------
<S> <C> <C>
06/24/97 Steven Alterman(*).................................................... $ 25,000
07/02/97 Hardsoft Solutions(*)................................................. 25,000
06/25/97 Leon Messer(*)........................................................ 50,000
07/02/97 Roy Peterson(*)....................................................... 25,000
07/15/97 Dennis Walker(*)...................................................... 2,000
07/11/97 Joel Celestion(*)..................................................... 10,000
07/14/97 Thomas Connelly(*).................................................... 5,000
07/23/97 Eileen Carvilli/Ariea Higmann(*)...................................... 5,000
07/28/97 Thomas Green(*)....................................................... 20,000
08/04/97 Antonio Afonso(*)..................................................... 12,500
08/04/97 Paul Ragosta(*)....................................................... 12,500
04/16/97 Carl Cartzen.......................................................... 6,000
04/14/97 Theobaldo DeLofenzo................................................... 2,000
04/01/97 Edwin Des............................................................. 6,000
05/28/97 Josephine & Maxine Stephens........................................... 6,000
04/14/97 Daniel Dragonetti..................................................... 1,000
04/21/97 Ernest Focht.......................................................... 6,000
06/30/97 Abraham Tu............................................................ 1,300
--------
$220,300
--------
--------
</TABLE>
- ------------
* These individuals were also offered the option to convert their debt into
shares of Common Stock of the Company at the initial offering price of this
Offering.
The issuances of the securities were deemed to be exempt from registration
under the Act in reliance on Section 4(2) of the Act as transactions by an
issuer not involving any public offering. In addition, the recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information about the Company.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------------
<C> <S>
1.1 -- Escrow agreement between Citibank, NA and the Company dated August 22, 1997.
3.1* -- Certificate of Incorporation of Registrant filed in the Department of State of New York on April 22,
1996; Certificate of Amendment of the Certificate of Incorporation of Registrant filed in the Department
of State of New York on May 16, 1996
3.1 -- Restated Articles of Incorporation of the Registrant filed with the Department of State of New York on
October 2, 1997
3.2* -- Bylaws of the Registrant
5.1 -- Opinion and consent of Loselle Greenawalt Kaplan & Blair and Leon B. Lipkin, Esq.
10.1* -- Asset Transfer Agreement (Reorganization Agreement) dated as of April 2, 1997 between the Company and
Wise Choice Discount Brokerage, Inc.
10.2 -- Lease Agreement relating to premises at 150 Nassau Street, New York dated February 8, 1995 and
Modification thereto dated January, 1997 between the Company and Lancet 150 Nassau LP
10.3** -- Bond Quotation Dissemination Service Vendor Agreement between The Nasdaq Stock Market, Inc. and the
Company.
10.4** -- NQDS Information Vendor agreement between The Nasdaq Stock Market, Inc and the Company.
10.5** -- The Nasdaq Stock Market, Inc. Vendor Agreement for level 1 Service and Last Sale Service, between The
Nasdaq Stock Market, Inc. and the Company.
</TABLE>
II-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------------------
<C> <S>
10.6** -- Agreement made as of the 15th day of April 1996, between the Company and the New York Stock Exchange,
Inc.
10.7* -- Agreement dated August 1, 1996, between the Company and Wise Choice Discount Brokerage, Inc.
10.8** -- Form of Transfer Agency agreement between the Bank of New York and the Company
10.9 -- Issuer Agreement between Niphix Investment, Inc., and the Company dated August 30, 1997
23.1 -- Consent of Weinick, Sanders & Co., LLP
23.2 -- Consent of Loselle Greenawalt Kaplan & Blair and Leon B. Lipkin, Esq. (included in Exhibit 5.1)
</TABLE>
- ------------
* Previously filed.
** To be supplied by amendment.
ITEM 28. UNDERTAKINGS
The Company hereby undertakes to provide to the shareholders certificates
in such denominations and registered in such names as required by the Escrow
Agent to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the New York Corporation Law, the Articles of Incorporation or the
Bylaws of the Company, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer, or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The Company hereby undertakes that: (1) For purposes of determining any
liability under the Securities Act, the information omitted from the form of
Prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of Prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it is declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on this 2nd day of October, 1997.
NICHI CAPITAL, LTD.
By: /s/ OLAWANDE A. AGUNLOYE
..................................
OLAWANDE A. AGUNLOYE, PRESIDENT
In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ OLAWANDE A. AGUNLOYE President, Chief Executive Officer & October 2, 1997
......................................... Director
(OLAWANDE A. AGUNLOYE)
/s/ ABRAHAM TU Secretary, Chief Financial Officer, Chief October 2, 1997
......................................... Accounting Officer &
(ABRAHAM TU) Director
</TABLE>
II-5
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as........................ 'D'
The double dagger symbol shall be expressed as................. 'DD'
The degree symbol shall be expressed as........................ [d]
<PAGE>
<PAGE>
NICHI CAPITAL LIMITED
ESCROW AGREEMENT
AGREEMENT dated this 22nd day of August, 1997 among Citibank, N.A. (the "Escrow
Agent") and Nichi Capital Limited , a New York corporation (the "Placement
Agent") and Nichi Capital Limited, a New York corporation (the "Company")
WHEREAS, the Company proposes to offer a minimum of 600,000 Shares up to
a maximum of 1,800,000 Shares of the Company's Private Placement (the "Shares")
at $5.00 per Share for aggregate offering proceeds of up to $ 9,000,000 (the
"Offering Proceeds"); and
WHEREAS, the Company may sell the Shares, through members of the
National Association of Securities Dealers, Inc. on an "all or none" basis for
the first 600,000 Shares (the "Minimum") and on a "best efforts basis for the
remaining Shares, in a public offering pursuant to the Securities Act of 1933,
as amended (the "Offering") and
WHEREAS, the Company desires to establish an escrow account in which
funds received from subscribers will be deposited, pending completion of the
sale of the Minimum Shares or escrow period; and
WHEREAS, the Escrow Agent to serve as escrow agent in accordance with
the terms and conditions set forth herein.
________________________________________________________________________________
NICHI CAPITAL LIMITED
150 NASSAU STREET, 10TH FLOOR NEW YORK, NEW YORK 10038 1 212-566-4143
<PAGE>
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. Establishment of Escrow Account. On or prior to the date of the
commencement of the Offering, the Company hereto shall establish a non-interest
bearing escrow account with the Escrow Agent, which escrow shall be entitled
"Nichi Capital Limited. Escrow Account" (the "Escrow Account"). The Escrow Agent
undertakes to deposit the escrow funds in accordance with the Rule 15C2-4 under
the Securities Exchange Act of 1934.
2. Delivery of Checks. The Company will instruct subscribers to make
checks for subscriptions payable to the order of Citibank as Escrow Agent for
Nichi Capital limited and delivered to the Escrow Agent at 111 Wall Street,
Branch #003, New York, New York 10005. Attention: Branch Manager. Any checks
received that are made payable to a party other than the Escrow Agent shall be
returned directly to the sender (together with any Subscription Information, as
defined below, or other documents delivered therewith) by noon of the second
business day following receipt of such check by Escrow Agent, and such check
shall be deemed not to have been delivered to the Escrow Agent pursuant to the
terms of this Agreement.
3. Escrow Period The Company shall deliver to the Escrow Agent a
certificate setting forth the date when the Offering shall expire, which
certificate shall be attached as Exhibit A, and when and if the Offering is
extended, at least two business days prior to the effective date of such
extension with a certificate setting forth the date when the Offering, as
extended, shall expire (such initial or extended date is hereinafter referred to
as the "Expiration Date").
4. Deposits in the Escrow Account. The Company agrees that it shall, by
noon the next business day, deliver all monies received from subscribers for the
payment of the Shares to the Escrow Agent for deposit in the Escrow Account
together with a written account of each sale, which account shall set forth,
among other things. the subscriber's name, address and certified taxpayer
identification number, the number of Shares purchased, the amount paid therefore
(collectively the "Subscription Information"), and whether the consideration
received was in the form of a check, draft or money order. The Escrow Agent
shall not be required to make deposits into the Escrow Account which are not
accompanied by Subscription Information. All monies so deposited in the Escrow
Account which have cleared the banking system are hereinafter referred to as the
"Escrow Amount".
<PAGE>
<PAGE>
5. Disbursement from the Escrow Account.
(a) If prior to the Expiration Date, the escrow agent has received
subscriptions for the Minimum Shares, and if, within up to 14 days thereafter,
the Escrow Agent is in possession of cleared funds in the amount of $ 3,000,000,
the Escrow Agent, within two business days after the clearance of such funds,
shall notify the Company and the Placement Agent, upon receipt of written
instruction from the Company and the Placement Agent, the Escrow Agent shall
disburse all funds in the Escrow Account, pursuant to said instructions to the
extent that such funds are not then subject to judicial restraint served on the
Escrow Agent.
(b) Upon presentation of a certificate signed by the Company stating
that the Company is terminating the Offering or if the Escrow Agent has
determined that it had not received, prior to the Expiration Date, subscriptions
for the Minimum Shares, or if the Escrow Agent has received subscriptions for
the Minimum Shares prior to expiration date but has determined that it has not
received cleared funds in the amount of $ 3,000,000 in the escrow account within
14 days of the expiration date, the Escrow Agent shall, as soon as possible
thereafter cause to be distributed to each subscriber the amount received from
such subscriber, to the extent that such amount is not then subject to judicial
restraint served on the Escrow Agent.
6. Collection Procedures.
(a) The Escrow Agent is hereby authorized to forward each check for
collection and, upon collection of the proceeds of such check, deposit the
collected proceeds in the Escrow Account. Any check returned unpaid to the
Escrow Agent shall be returned to the sender. In such cases, the Escrow Agent
will promptly notify the Company of such return.
(b) If the Company rejects any subscription for which the Escrow
Agent has already collected funds, the Escrow Agent shall, within two business
days, issue a refund check to the rejected subscriber upon the written request
of the Company. If the Company rejects any subscription for which the Escrow
Agent has not yet received collected funds, but has submitted the subscriber's
check for collection, the Escrow Agent shall within two business days, issue a
check in the amount of the subscriber's check to the rejected subscriber after
the Escrow Agent has cleared such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collections the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber. The Escrow
Agent shall not be required to comply with the provisions of this subparagraph
(b) If the funds in question are then subject to judicial restraint served on
the Escrow Agent.
<PAGE>
<PAGE>
7. Reimbursement of Escrow Agent. Upon completion or termination of the
Offering the Company shall reimburse the Escrow Agent for all of its
out-of-pocket expenses incurred in performance of its services there under. If
it is necessary for Escrow Agent to return funds to subscribers of the Shares,
the Company shall pay to the Escrow Agent an additional amount sufficient to
reimburse it for its actual cost in disbursing such funds. These amounts shall
be in additional to the fee in Section 8. However, no such reimbursement for
costs and expense, indemnification for any damages incurred by the Escrow Agent,
or any monies whatsoever shall be paid out of or chargeable to the funds on
deposit in the Escrow Account.
8. Fees. Upon execution of this Agreement, the Company shall pay the
Escrow Agent a fee in the amount of $1,000 which shall cover fees of the Escrow
Agent in connection with the services provided under this Agreement.
9. Escrow Agent's Rights and Duties. It is understood and agreed by the
parties to this Agreement as follows:
a) The Escrow Agent shall not be responsible for or be required to
enforce any of the terms or conditions of any agreement between a member of the
NASD and the Company. Nor shall the Escrow Agent be responsible for the
performance by a member of the NASD or the Company of their respective
obligations under any Agreement between them.
b) The Escrow Agent is not and shall not be desired to be trustee for
any party for any purpose and is merely acting as a depository and in a
ministerial capacity hereunder with the limited duties herein prescribed.
c) The Escrow agent shall be entitled to rely upon the accuracy, act in
reliance upon the contents, and assume genuineness, of any notice, instruction,
certificate, signature, instrument or other document which is given to the
Escrow Agent without verifying the truth or accuracy thereof. The Escrow Agent
shall not be obligated to make any inquiry as to the authority, capacity,
existence or identity of any person purporting to give any such notice or
instructions or the execution of any such certificate, instrument or other
document which is given to the Escrow Agent or to verify the truth or accuracy
thereof.
d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Amount or the offering proceeds which, in its sole determination, are in
conflict either with other instructions received by it or with any provision of
the Agreement, it shall be entitled to hold the Offering Proceeds, or the
portion thereof, in the Escrow Account pending the resolution of such
uncertainty to the Escrow Agent's sole satisfaction, by final judgment of a
court or courts of competent jurisdiction or otherwise; or the Escrow Agent, at
its sole option,
<PAGE>
<PAGE>
may dispose of the Offering Proceeds (and any other amounts that thereafter
become part of the Offering Proceeds) with the Clerk of a court of competent
jurisdiction in a proceeding to which all parties in interest are joined. Upon
the deposit by the Escrow Agent of the Offering Proceeds with the Clerk of any
court, the Escrow Agent shall be relieved of all further obligations and
released from all liability there under.
e) The Escrow Agent is not and shall not be deemed to be liable for any
action taken or omitted by it in good faith and may rely upon, and act in
accordance with, the advice of its counsel without liability on its part for any
action taken or omitted in accordance with such advice. In any event, its
liability hereunder shall be limited to liability for gross negligence, willful
misconduct or bad faith on its part.
f) The Escrow Agent shall have no duty or obligation to invest any
amounts received from the prospective purchasers, or their agents, and shall
keep any and all such amounts so received deposited in a non-interest bearing
escrow account established hereunder during the term of this Agreement.
g) The Company and the Placement Agent agree to hold harmless, indemnify
and defend the Escrow Agent for, from and against any loss, damage, liability,
judgment, cost and expense whatsoever, including attorney's fees, suffered or
incurred by it by reason of, or on account of, any misrepresentation made to it
or its status or activities as Escrow Agent under this Agreement except for any
loss, damage, liability, judgment, cost or expense resulting from gross
negligence, willful misconduct or bad faith on the part of the Escrow Agent.
h) The Escrow Agent shall not be required to defend any legal proceeding
which may be instituted against it in respect of the subject matter of this
Agreement. If any such legal proceeding is instituted against it, the Escrow
Agent agrees promptly to give notice of such proceeding to the Company. The
Escrow Agent shall not be required to institute legal proceedings of any kind.
i) The Escrow Agent shall not, by act, delay, omission or otherwise, be
deemed to have waived any right or remedy it may have either under this
Agreement or generally, unless such waiver be in writing, and no waiver shall be
valid unless it is in writing, signed by the Escrow Agent, and only to the
extent expressly therein set forth. A waiver by the Escrow Agent under the terms
of this Agreement shall not be construed as a bar to, nor waiver of, the same or
any such right or remedy which it would otherwise have on any other occasion.
j) The Escrow Agent may resign as such hereunder by giving thirty (30)
days written notice thereof to the Company. Should the Escrow Agent resign as
herein provided, it shall not be required to accept any deposit, make any
disbursements or otherwise dispose of the Offering Proceeds, but its only duty
shall be to hold the Offering Proceeds for a period of not more than twenty (20)
days following the effective date of such resignation, at which time (a) if the
successor escrow agent, which shall be a bank
<PAGE>
<PAGE>
meeting the requirements of Rule 15c-4(b) under the Securities Exchange Act of
1934, as amended, shall be appointed and written notice thereof (including the
name and address of such successor escrow agent) shall have been given to the
resigning Escrow Agent by the Company and such Successor Escrow Agent, then the
resigning Escrow Agent shall pay over to the successor escrow agent the Offering
Proceeds; or (b) if the resigning Escrow Agent shall not have received written
notice signed by the Company and a successor escrow agent, then the resigning
Escrow Agent shall promptly refund the Offering Proceeds to each prospective
purchaser, without interest thereon or deduction therefrom, (to the extent that
such Proceeds are not then subject to Judicial restraint served on the Escrow
Agent) and the resigning Escrow Agent shall notify the Company in writing of its
liquidation and distribution of the Offering Proceeds; whereupon, in either
case, the Escrow Agent shall be relieved of all further obligations and released
from all liability under this Agreement. Without limiting the provision of
Section 7 hereof, the resigning Escrow Agent shall not be entitled to be
reimbursed by the Company for any expenses incurred in connection with its
resignation, transfer of the Offering Proceeds to a successor escrow agent or
distribution of the Offering Proceeds pursuant to this Section 9. Each
substitute Escrow Agent shall thereafter hold any funds received by it pursuant
to the terms of this Agreement and otherwise act hereunder as if it were the
Escrow Agent originally named herein. The Escrow Agent's duties and
responsibilities hereunder shall terminate upon the disbursement of the Escrow
Amount then held in escrow according to such written instructions or upon
delivery as herein provided. This Agreement shall not otherwise be assignable by
the Escrow Agent without the prior written consent of the Company.
10. Notice. All communications hereunder will be in writing and mailed,
delivered or telegraphed and confirmed which notice shall be effective only on
receipt at the appropriate address specified in this Section 10 as follows:
If sent to the Escrow Agent:
Citibank, N.A.
Branch #003
111 Wall Street
New York, NY 10005
Attention: Branch Manager
If sent to the Company:
Nichi Capital Limited
150 Nassau Street, 10th Fl.
New York, New York 10038
Attention: Wande Agunloye, President.
<PAGE>
<PAGE>
with a copies to:
Arlen G. Loselle, Esq.
Loselle Greenwalt Kaplan Blair & Adler
140 East 45th Street
New York, NY 10017
(212) 986-6850
and
Leon B. Lipkin, Esq.
140 East, 45th Street
New York, NY 10017
(212) 986-6850
11. General. This Agreement (a) constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof; (b) supersedes any and
all prior understandings or agreements relating to the subject matter hereof;
(c) may not be assigned, modified, amended or terminated except in a writing
signed by all the parties hereto; (d) Shall be governed by, and construed in
accordance with the laws of the State of New York; (e) shall be binding upon an
inure solely to the benefit of the parties hereto and their respective
successors and assigns; (f) shall not confer upon any person not referred to in
(e) hereof any rights or remedies of any nature whatsoever or by reason of this
Agreement; and (g) may be executed in counterparts, each of which shall be
deemed to be an original, but which together shall constitute one and the same
instrument.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
Company: Nichi Capital Limited
By: WANDE AGUNLOYE
-------------------------------
Wande Agunloye, President
Escrow Agent: Citibank, N.A.
By: [SIGNATURE]
-------------------------------
Placement Agent: Nichi Capital Limited
By: WANDE AGUNLOYE
-------------------------------
Wande Agunloye, President
<PAGE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
NICHI CAPITAL, LTD.
(Under Section 807 of the Business Corporation Law)
We, Olawande A. Agunloye and Abraham Tu, being respectively the
President and Secretary of NICHI CAPITAL, LTD., hereby certify:
FIRST: The name of the corporation is NICHI CAPITAL, LTD. (the
"Corporation").
SECOND: The certificate of incorporation of the Corporation was
originally filed with the Department of State of the State of New York on April
22, 1996, and an amendment thereto was filed on May 16, 1996.
THIRD: The certificate of incorporation of the Corporation as heretofore
amended is hereby amended or changed to effect one or more of the amendments or
changes authorized by the Business Corporation Law, as follows:
1. To add a provision denying preemptive rights to the
shareholders of the Corporation.
2. To add a provision specifying the number of directors and
providing that directors may be removed only with cause either by action of the
Board of Directors or by vote of the shareholders.
3. To add a provision limiting directors' and officers'
liability.
4. To add a provision indemnifying directors, officers, employees
and agents of the Corporation and providing for advancement of expenses in
connection therewith.
FOURTH: To accomplish the foregoing amendments, new articles SIXTH,
SEVENTH, EIGHTH and NINTH, relating to (i) preemptive rights, (ii) the Board of
Directors, (iii) the limitation of directors' and officers' liability, and (iv)
indemnification of directors, officers, employees and agents, respectively, are
hereby added as set forth in the same numbered articles of the certificate of
incorporation as hereinafter restated.
<PAGE>
<PAGE>
FIFTH: The restatement of the certificate of incorporation of the
Corporation herein provided was authorized by the consent in writing of the
holders of all of the outstanding shares of the Corporation entitled to vote
thereon in accordance with Section 615 of the Business Corporation Law, and by
the consent in writing of all the members of the Board of Directors of the
Corporation.
SIXTH: The text of the certificate of incorporation of the Corporation
is hereby restated as further amended or changed herein to read as follows:
FIRST: The name of the corporation is Nichi Capital, LTD. (the
"Corporation").
SECOND: The purpose or purposes for which the Corporation is formed is
to engage in any lawful act or activity for which corporations may be organized
pursuant to the Business Corporation Law provided that the Corporation is not
formed to engage in any act or activity requiring the consent or approval of any
state official, department, board, agency or other body without such consent or
approval first being obtained.
THIRD: The aggregate number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is fifteen million
(15,000,000) shares of Common Stock, par value $.01 per share ("Common Stock"),
and no shares of preferred stock.
FOURTH: The office of the Corporation is to be located in the County of
New York, State of New York.
FIFTH: The Secretary of State of the State of New York is hereby
designated as the agent of the Corporation upon whom process in any action or
proceeding may be served. The address to which the Secretary of State shall mail
a copy of any process in any action or proceeding against the Corporation which
may be served upon him is:
150 Nassau Street, 10th floor New York, New York 10038
SIXTH: No holder of any of the shares of any class of the Corporation
shall be entitled as of right to subscribe for, purchase, or otherwise acquire
any shares of any class of the Corporation which the Corporation proposes to
issue or any rights or options which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights to subscribe
for, purchase or otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities, or obligations of the
Corporation, whether now or hereafter authorized or created, may be issued, or
may be reissued or transferred if the same have been reacquired and have
treasury status, and any and all such rights and options may be granted by the
Board of Directors to such persons, firms, corporations and associations, and
for such lawful consideration, and on such terms, as the Board of Directors in
its discretion may determine, without first offering the same, or any thereof,
to any said holder. Without limiting the generality of the foregoing stated
denial of any and all preemptive rights, no holder of shares of any class of the
Corporation shall have any preemptive rights in respect of the matters,
proceedings, or transactions specified in subparagraphs (1) to (6), inclusive,
of paragraph (e) of Section 622 of the
<PAGE>
<PAGE>
Business Corporation Law of the State of New York.
SEVENTH: The number of Directors of the Corporation constituting the
entire Board of Directors shall be not less than two nor more than fifteen. The
Board of Directors shall determine from time to time the number of Directors who
shall constitute the entire Board of Directors. Any such determination made by
the Board of Directors shall continue in effect unless and until changed by the
Board of Directors, but no such changes shall affect the term of any directors
then in office. Directors need not be shareholders of the Corporation.
Any vacancy on the Board of Directors that results from an increase in
the number of directors and any other vacancy on the Board may be filled by vote
of the shareholders or by the Board provided that a quorum is then in office and
present, or by a majority of the Directors then in office, if less than a quorum
is then in office, or by a sole remaining director. A director elected to fill a
newly created directorship or other vacancy, unless elected by the shareholders,
shall hold office until the next meeting of shareholders at which the election
of directors is in the regular course of business, and until his successor has
been elected and qualified.
The directors of the Corporation may not be removed prior to the
expiration date of their terms of office except for cause, either by action of
the Board of Directors or by vote of the shareholders at the Annual Meeting of
Shareholders or at any Special Meeting of Shareholders called by the Board of
Directors or by the Chairman of the Board or by the President for this purpose.
EIGHTH: To the fullest extent now or hereafter permitted under the New
York Business Corporation Law, no person serving as a director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for monetary damages for any breach of fiduciary duty in such capacity. No
amendment or repeal of this Article Eighth shall adversely affect any right or
protection of any director or officer of the Corporation existing at the time of
such amendment or repeal with respect to acts or omissions occurring prior to
such amendment or repeal.
NINTH: The Corporation shall, to the fullest extent permitted by Article
7 of the Business Corporation Law of the State of New York, as the same may be
amended and supplemented, or by any successor thereto, indemnify all persons
whom it shall have power to indemnify under said Article from and against any
and all of the expenses, liabilities or other matters referred to in or covered
by said Article. The Corporation shall advance expenses to the fullest extent
permitted by said Article. Such right of indemnification and advancement or
expenses provided for herein shall continue as to a person who has ceased to be
a director, officer, employee or agent of the Corporation and shall inure to the
benefit of the heirs, executors and administrators of such a person. The
indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
shareholders, vote of disinterested directors, or otherwise, as permitted by
said Article. Neither the amendment or repeal of this Article Ninth, nor the
adoption of any provision of this Certificate of Incorporation inconsistent with
this Article Ninth shall adversely affect any right or protection existing under
this Article Ninth at the time of such amendment or repeal.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned have subscribed this document on the
date set forth below and do hereby affirm, under the penalties of perjury, that
the statements contained therein have been examined by them and are true and
correct.
Dated: September 30, 1997
/s/ Olawande A. Agunloye
-------------------------------
Olawande A. Agunloye, President
/s/ Abrahan W. Tu
-------------------------------
Abraham W. Tu, Secretary
<PAGE>
<PAGE>
LOSELLE GREENAWALT KAPLAN & BLAIR
140 EAST 45TH STREET, 42TH FLOOR
NEW YORK, NEW YORK 10017
(212) 986-6850
September 30, 1997
To: The Board of Directors of
Nichi Capital Ltd.
New York, New York
Dear Sirs:
This firm and Leon B. Lipkin, Esq. have represented Nichi Capital Ltd. (The
"Company") in connection with the proposed public offering of not less than
600,000 or more than 1,800,000 shares of the Company's common stock par value
$.01 per share (the "Shares"). The Company has filed a Registration Statement as
amended by Amendment no. 1 with the Securities and Exchange Commission, file no.
333-25673 (the "Registration Statement").
We have examined the corporate records relative to the Company's
organization; its Restated Certificate of Incorporation and By-laws, in effect
on the date hereof and the corporate records of its Board of Directors
authorizing the issuance and delivery of the Shares; and such other proceedings,
documents and records as we have deemed necessary to enable us to render this
opinion.
Based upon the foregoing, it is our opinion that:
(1) The Company has been and now is legally incorporated under the laws of
the State of New York and has full power and authority to issue the Shares;
(2) All requisite corporate action has been taken by the Company to
authorize the issuance and delivery of the Shares;
(3) The Shares have been duly and validly authorized and will be validly
issued, fully paid and non-assessable when certificates for such Shares have
been duly executed by the officers of the Company and countersigned and
registered by the Transfer Agent and Registrar and delivered against payment
therefor in accordance with terms of the proposed public offering.
<PAGE>
<PAGE>
The Board of Directors of
Nichi Capital Ltd.
September 30, 1997
Page 2
We hereby consent to the filing of this opinion as part of the
above-mentioned Registration Statement with the Securities and Exchange
Commission and to the use of our names with respect thereto in such Registration
Statement and in the related Prospectus.
Very truly yours,
/s/ Loselle Greenawalt Kaplan & Blair
-------------------------------------
Loselle Greenawalt Kaplan & Blair
/s/ Leon B. Lipkin, Esq.
-------------------------------------
Leon B. Lipkin, Esq.
<PAGE>
<PAGE>
=======================================
MODIFIED FORM OF OFFICE LEASE
THE REAL ESTATE BOARD OF NEW YORK, INC.
=======================================
AGREEMENT OF LEASE, made as of this 8th day of Feb 1995 between Lancet 150
Nassau L.P., a New York partnership, having an office c/o Sylvan Lawrence
Company, Inc., 100 William Street, New York, NY 10038 party of the first part,
hereinafter referred to as LANDLORD, and Nichi Capital, Inc. having an office at
150 Nassau Street, New York, New York 10038 party of the second part,
hereinafter referred to as TENANT,
WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord Rooms 1009-1013
(Substantially as indicated on the attached plan)
in the building known as 150 Nassau Street (sometimes hereinafter called the
"Building") in the Borough of Manhattan, City of New York, for the term of five
(5) years and eight (8) months (or until such term shall sooner cease and expire
as hereinafter provided) to commence on the 1st day of April nineteen hundred
and ninety-five, and to end on the 31st day of December two thousand both dates
inclusive, at an annual rate of
(SEE RIDER #64)
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Landlord or such other place as
Landlord may designate, without any set off or deduction whatsoever, except that
Tenant shall pay the first monthly installment(s) on the execution hereof
(unless this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Landlord
pursuant to the terms of another lease with Landlord or with Landlord's
predecessor in interest, Landlord may at Landlord's option and without notice to
Tenant add the amount of such arrearages to any monthly installment of rent
payable hereunder and the same shall be payable to Landlord as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
RENT OCCUPANCY
1. Tenant shall pay the rent as above and as hereinafter provided,
2. Tenant shall use and occupy demised premises for general office use for
Tenant's investment business and for no other purpose.
ALTERATIONS:
3. Tenant shall make no changes in or to the demised premises of any nature
without Landlord's prior written consent. Subject to the prior written consent
of Landlord, and to the provisions of this article, Tenant at Tenant's expense,
may make alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Landlord. All fixtures and all
paneling, partitions, railings and like installations, installed in the premises
at any time, either by Tenant or by Landlord in Tenant's behalf, shall, upon
installation, become the property of Landlord and shall remain upon and be
surrendered with the demised premises unless Landlord, by notice to Tenant no
later than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Landlord's right thereto and to have them removed by
Tenant, in which event, the same shall be removed from the premises by Tenant
prior to the expiration of the lease, at Tenant's expense. Nothing in this
article shall be construed to give Landlord title to or to prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by Landlord, Tenant shall immediately and at its expense, repair
and restore the premises to the condition existing prior to installation and
repair any damage to the demised premises or the building due to such removal.
All property permitted or required to be removed by Tenant at the end of the
term remaining in the premises after Tenant's removal shall be deemed abandoned
and may, at the election of Landlord, either be retained as Landlord's property
or may be removed from the premises by Landlord at Tenant's expense. Tenant
shall, before making any alterations, additions, installations or improvements,
at its expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Landlord and Tenant agrees to carry and
will cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as
Landlord may require. If any mechanic's lien is filed against the demised
premises, or the building of which the same forms a part, for work claimed to
have been done for, or materials furnished to, Tenant, whether or not done
pursuant to this article, the same shall be discharged by Tenant within ten days
thereafter, at Tenant's expense, by filing the bond required by law.
<PAGE>
REPAIRS:
4. Landlord shall maintain and repair the public portions of the building,
both exterior and interior. Tenant shall, throughout the term of this lease,
take good care of the demised premises and the fixtures and appurtenances
therein and at Tenant's sole cost and expense, make all non-structural repairs
thereto as and when needed to preserve them in good working order and condition,
reasonable wear and tear, obsolescence and damage from the elements, fire or
other casualty, excepted. Notwithstanding the foregoing, all damage or injury to
the demised premises or to any other part of the building, or to its fixtures,
equipment and appurtenances, whether requiring structural or non-structural
repairs, caused by or resulting from carelessness, omission, neglect or
improper conduct of Tenant, Tenant's servants, employees, invitees or licensees,
shall be repaired promptly by Tenant at its sole cost and expense, to the
satisfaction of Landlord reasonably exercised. Tenant shall also repair all
damage to the building and the demised premises caused by the moving of Tenant's
fixtures, furniture or equipment. All the aforesaid repairs shall be of quality
or class equal to the original work or construction. If Tenant fails after ten
days notice to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Landlord at the expense of Tenant and the
expenses thereof incurred by Landlord shall be collectible as additional rent
after rendition of a bill or statement therefor. Tenant shall give Landlord
prompt notice of any defective condition in any plumbing, heating system or
electrical lines located in, servicing or passing through the demised premises
and following such notice, Landlord shall remedy the condition with due
diligence but at the expense of Tenant if repairs are necessitated by damage or
injury attributable to Tenant, Tenant's servants, agents, employees, invitees or
licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to Tenant for a diminution
of rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. The provisions of this
Article 4 with respect to the making of repairs shall not apply in the case of
fire or other casualty which are dealt with in Article 9 hereof.
WINDOW CLEANING:
5. Tenant will not clean, nor require, permit, suffer or allow any window
in the demised premises to be cleaned, from the outside in violation of Section
202 of the Labor Law or any other applicable law or of the rules of the Board of
Standards and Appeals, or of any other board or body having or asserting
jurisdiction.
REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS:
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commis-
<PAGE>
<PAGE>
sions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire Underwriters
or any similar body which shall impose any violation, order or duty upon
Landlord or Tenant with respect to the demised premises whether or not arising
out of Tenant's use or manner of use thereof, or with respect to the building if
arising out of Tenant's use or manner of use of the premises or the building
(including the use permitted under the lease). Nothing herein shall require
Tenant to make structural repairs or alterations unless Tenant has by his manner
of use of the demised premises or method of operation therein, violated any such
laws, ordinances, orders, rules, regulations or requirements with respect
thereto. Tenant may, after securing Landlord to Landlord's satisfaction against
all damages, interest, penalties and expenses, including, but not limited to,
reasonable attorneys' fees, by cash deposit or by surety bond in an amount and
in a company satisfactory to Landlord, contest and appeal any such laws,
ordinances, orders, rules, regulations or requirements provided same is done
with all reasonable promptness and provided such appeal shall not subject
Landlord to prosecution for a criminal offense or constitute a default under any
lease or mortgage under which Landlord may be obligated, or cause the demised
premises or any part thereof to be condemned or vacated. Tenant shall not do or
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Landlord with respect to the demised premises or the building of
which the demised premises form a part, or which shall or might subject Landlord
to any liability or responsibility to any person or for property damage, nor
shall Tenant keep anything in the demised premises except as now or hereafter
permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance
Rating Organization or other authority having jurisdiction, and then only in
such manner and such quantity so as not to increase the rate for fire insurance
applicable to the building, nor use the premises in a manner which will increase
the insurance rate for the building or any property located therein over that in
effect prior to the commencement of Tenant's occupancy. Tenant shall pay all
costs, expenses, fines, penalties, or damages, which may be imposed upon
Landlord by reason of Tenant's failure to comply with the provisions of this
article and if by reason of such failure the fire insurance rate shall, at the
beginning of this lease or at any time thereafter, be higher than it otherwise
would be, then Tenant shall reimburse Landlord, as additional rent hereunder,
for that portion of all fire insurance premiums thereafter paid by Landlord
which shall have been charged because of such failure by Tenant, and shall make
such reimbursement upon the first day of the month following such outlay by
Landlord. In any action or proceeding wherein Landlord and Tenant are parties a
schedule or "make-up" of rate for the building or demised premises issued by the
New York Fire Insurance Exchange, or other body making fire insurance rates
applicable to said premises shall be conclusive evidence of the facts therein
stated and of the several items and charges in the fire insurance rate then
applicable to said premises. Tenant shall not place a load upon any floor of the
demised premises exceeding the floor load per square foot area which it was
designed to carry and which is allowed by law. Landlord reserves the right to
prescribe the weight and position of all safes, business machines and mechanical
equipment. Such installations shall be placed and maintained by Tenant, at
Tenant's expense, in settings sufficient, in Landlord's judgment, to absorb and
prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessee or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Landlord may request.
Property -- Loss, Damage, Reimbursement, Indemnity:
8. Landlord or its agents shall not be liable for any damage to property of
Tenant or of others entrusted to employees of the building, nor for loss of or
damage to any property of Tenant by theft or otherwise, nor for any injury or
damage to persons or property resulting from any cause of whatsoever nature,
unless caused by or due to the negligence of Landlord, its agents, servants or
employees; nor shall Landlord or its agents be liable for any such damage caused
by other tenants or persons in, upon or about said building or caused by
operations in construction of any private, public or quasi public work. If at
any time any windows of the demised premises are temporarily closed, darkened or
bricked up (or permanently closed, darkened or bricked up, if required by law)
for any reason whatsoever including, but not limited to Landlord's own acts,
Landlord shall not be liable for any damage Tenant may sustain thereby and
Tenant shall not be entitled to any compensation therefor nor abatement or
diminution of rent nor shall the same release Tenant from its obligations
hereunder nor constitute an eviction. Tenant shall not move any safe, heavy
machinery, heavy equipment, bulky matter, or fixtures into or out of the
building without Landlord's prior written consent. If such safe, machinery,
equipment, bulky matter or fixtures requires special handling, all work in
connection therewith shall comply with the Administrative Code of the City of
New York and all other laws and regulations applicable thereto and shall be done
during such hours as Landlord may designate. Tenant shall indemnify and save
harmless Landlord against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Landlord shall not be reimbursed
by insurance, including reasonable attorneys' fees, paid, suffered or incurred
as a result of any breach by Tenant, Tenant's agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
carelessness, negligence or improper conduct of the Tenant, Tenant's agents,
contractors, employees, invitees or licensees. Tenant's liability under this
lease extends to the acts and omissions of any subtenant, and any agent,
contractor, employee, invitee or licensee of any subtenant. In case any action
or proceeding is brought against Landlord by reason of any such claim, Tenant,
upon written notice from Landlord, will, at Tenant's expense, resist or defend
such action or proceeding by counsel approved by Landlord in writing, such
approval not to be unreasonably withheld.
Rider to be added if necessary.
<PAGE>
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Landlord and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Landlord and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent shall be proportionately paid up to the time of the casualty and
thenceforth shall cease until the date when the premises shall have been
repaired and restored by Landlord, subject to Landlord's right to elect not to
restore the same as hereinafter provided. (d) If the demised premises are
rendered wholly unusable or (whether or not the demised premises are damaged in
whole or in part) if the building shall be so damaged that Landlord shall decide
to demolish it or to rebuild it, then, in any of such events, Landlord may elect
to terminate this lease by written notice to Tenant given within 90 days after
such fire or casualty specifying a date for the expiration of the lease, which
date shall not be more than 60 days after the giving of such notice, and upon
the date specified in such notice the term of this lease shall expire as fully
and completely as if such date were the date set forth above for the termination
of this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice however, to Landlord's rights and remedies against Tenant
under the lease provisions in effect prior to such termination, and any rent
owing shall be paid up to such date and any payments of rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant. Unless Landlord shall serve a termination notice as provided for herein,
Landlord shall make the repairs and restorations under the conditions of (b) and
(c) hereof, with all reasonable expedition subject to delays due to adjustments
of insurance claims, labor troubles and causes beyond Landlord's control. After
any such casualty, Tenant shall cooperate with Landlord's restoration by
removing from the premises as promptly as reasonably possible, all of Tenant's
salvageable inventory and movable equipment, furniture, and other property.
Tenant's liability for rent shall resume five (5) days after written notice from
Landlord that the premises are substantially ready for Tenant's occupancy. (e)
Nothing contained hereinabove shall relieve Tenant from liability that may exist
as a result of damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and Tenant
each hereby releases and waives all right of recovery against the other or any
one claiming through or under each of them by way of subrogation or otherwise.
The foregoing release and waiver shall be in force only if both releasors'
insurance policies contain a clause providing that such a release or waiver
shall not invalidate the insurance and also, provided that such a policy can be
obtained without additional premiums. Tenant acknowledges that Landlord will not
carry insurance on Tenant's furniture and/or furnishings or any fixtures or
equipment, improvements, or appurtenances removable by Tenant and agrees that
Landlord will not be obligated to repair any damage thereto or replace the same.
(f) Tenant hereby waives the provisions of Section 227 of the Real Property Law
and agrees that the provisions of this article shall govern and control in lieu
thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Landlord in each instance. If this lease be
assigned, or if the demised premises or any part thereof be underlet or occupied
by anybody other than Tenant, Landlord may, after default by Tenant, collect
rent from the assignee, under-tenant or occupant, and apply the net amount
collected to the rent herein reserved, but no such assignment, underletting,
occupancy or collection shall be deemed a waiver of this covenant, or the
acceptance of the assignee, under-tenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. The consent by Landlord to an assignment or underletting shall
not in any wise be construed to relieve Tenant from obtaining the express
consent in writing of Landlord to any further assignment or underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Landlord's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Landlord liable or responsible to
Tenant, for any loss, damages or expenses which Tenant may sustain.
Access to Premises:
13. Landlord or Landlord's agents shall have the right (but shall not be
obligated) to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Landlord may deem necessary and reasonably
desirable to the demised premises or to any other portion of the building or
which Landlord may elect to perform following Tenant's failure to make repairs
or perform any work which Tenant is obligated to perform under this lease, or
for the purpose of complying with laws, regulations and other directions of
governmental authorities. Tenant shall permit Landlord to use and maintain and
replace pipes and conduits in and through the demised premises and to erect new
pipes and conduits therein. Landlord may, during the progress of any work in the
demised premises, take necessary materials and equipment into said premises
without the same
[ ] [ ]
PLEASE INITIAL
Rider to be added if necessary.
<PAGE>
<PAGE>
constituting an eviction nor shall the Tenant be entitled to any abatement of
rent while such work is in progress nor to any damages by reason of loss or
interruption of business or otherwise. Throughout the term hereof Landlord shall
have the right to enter the demised premises at reasonable hours for the purpose
of showing the same to prospective purchasers or mortgagees of the building, and
during the last six months of the term for the purpose of showing the same to
prospective tenants and may, during said six months period, place upon the
premises the usual notices "To Let" and "For Sale" which notices Tenant shall
permit to remain thereon without molestation. If Tenant is not present to open
and permit an entry into the premises, Landlord or Landlord's agents may enter
the same whenever such entry may be necessary or permissible by master key or
forcibly and provided reasonable care is exercised to safeguard Tenant's
property and such entry shall not render Landlord or its agents liable therefor,
nor in any event shall the obligations of Tenant hereunder be affected. If
during the last month of the term Tenant shall have removed all or substantially
all of Tenant's property therefrom, Landlord may immediately enter, alter,
renovate or redecorate the demised premises without limitation or abatement of
rent, or incurring liability to Tenant for any compensation and such act shall
have no effect on this lease or Tenant's obligations hereunder. Landlord shall
have the right at any time, without the same constituting an eviction and
without incurring liability to Tenant therefor to change the arrangement and/or
location of public entrances, passageways, doors, doorways, corridors,
elevators, stairs, toilets, or other public parts of the building and to change
the name, number or designation by which the building may be known.
VAULT, VAULT SPACE, AREA:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan or anything contained
elsewhere in this lease to the contrary notwithstanding. Landlord makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Landlord shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authority for such vault or area shall be paid by Tenant.
OCCUPANCY:
15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Landlord's work, if
any. In any event, Landlord makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations whether or
not of record.
BANKRUPTCY:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding,
this lease may be cancelled by Landlord by the sending of a written notice to
Tenant within a reasonable time after the happening of any one or more of the
following events: (1) the commencement of a case in bankruptcy or under the laws
of any state naming Tenant as the debtor; or (2) the making by Tenant of an
assignment or any other arrangement for the benefit of creditors under any state
statute. Neither Tenant nor any person claiming through or under Tenant, or by
reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four per cent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re-letting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
<PAGE>
DEFAULT
17. (1) If Tenant defaults in fulfilling any of the covenants of
this lease including the covenants for the payment of rent or additional rent;
or if the demised premises become vacant or deserted; or if the demised
premises are damaged by reason of negligence or careless ness of Tenant, its
agents, employees or [illegible] against Tenant or any of Tenant's property
whereupon the demised premises shall be taken or occupied by someone other than
Tenant, or if Tenant'D' shall make default with respect to any other lease
between Landlord'DD'; or if Tenant shall fail to move into or take possession of
the premises within fifteen (15) days after the commencement of the term of this
lease, of which fact Landlord shall be the sole judge; then, in any one or more
of such events, upon Landlord serving a written five (5) days notice upon Tenant
specifying the nature of said default and upon the expiration of said five
(5) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said five (5) day period, and if
Tenant shall not have diligently commenced curing such default within such
five (5) day period, and shall not thereafter with reasonable diligence and in
good faith proceed to remedy or cure such default, then Landlord may serve a
written three (3) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said three (3) days, this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such three
(3) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Landlord but Tenant shall remain liable as hereinafter
provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any of such events Landlord may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Landlord may cancel and terminate such renewal or
extension agreement by written notice.
REMEDIES OF LANDLORD AND WAIVER OF REDEMPTION:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, together
with such expenses as Landlord may incur for legal expenses, attorneys' fees,
brokerage, and/or putting the demised premises in good order, or for preparing
the same for re-rental; (b) Landlord may re-let the premises or any part or
parts thereof, either in the name of Landlord or otherwise, for a term or terms,
which may at Landlord's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease,
and/or (c) Tenant or the legal representatives of Tenant shall also pay Landlord
as liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the lease or leases of the demised premises for each
month of the period which would otherwise have constituted the balance of the
term of this lease. The failure of Landlord to re-let the premises or any part
or parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Landlord may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Landlord
to collect the deficiency for any subsequent month by a similar proceeding.
Landlord, in putting the demised premises in good order or preparing the same
for re-rental may, at Landlord's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Landlord, in
Landlord's sole judgment, considers advisable and necessary for the purpose of
re-letting the demised premises, and the making of such alterations, repairs,
replacements, and/or decorations shall not operate or be construed to release
Tenant from Liability hereunder as aforesaid. Landlord shall in no event be
liable in any way whatsoever for failure to re-let the demised premises, or in
the event that the demised premises are re-let, for failure to collect the rent
thereof under such re-letting, and in no event shall Tenant be entitled to
receive any excess, if any, of such net rent collected over the sums payable by
Tenant to Landlord hereunder. In the event of a breach or threatened breach by
Tenant of any of the covenants or provisions hereof, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if re-entry, summary proceedings and other remedies were not herein
provided for. Mention in this lease of any particular remedy, shall not preclude
Landlord from any other remedy, in law or in equity. Tenant hereby expressly
waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant being evicted or dispossessed for any cause,
or in the event of Landlord obtaining possession of demised premises, by reason
of the violation by Tenant of any of the covenants and conditions of this lease,
or otherwise.
FEES AND EXPENSES:
19. If tenant shall default in the observance or performance of any term or
covenant on tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, landlord may immediately or at any time
thereafter and without notice perform the obligation of tenant thereunder, and
if landlord, in connection therewith or in connection with any default by tenant
in the covenant, to pay rent hereunder, makes any expenditures or incurs any
obligations for the payment of money, including but not limited to attorney's
fees, in instituting, prosecuting or defending any action or proceeding, such
sums so paid or obligations incurred with interest and costs shall be deemed to
be additional rent hereunder and shall be paid by tenant to landlord within five
(5) days of rendition of any bill or statement to tenant therefore, and if
tenant's lease term shall have expired at the time of making of such
expenditures or incurring of such obligations, such sums shall be recoverable by
landlord as damages.
[ ] [ ]
PLEASE INITIAL
Art. 17'D' (or any other entity having one or more of the same principals as
Tenant)
Art. 17'DD' (or any other landlord having one or more of the same principals as
Landlord or Sylvan Lawrence Company, Inc.) and Tenant or with respect to any
other lease covering space at a building which is managed by Sylvan Lawrence
Company, Inc.
<PAGE>
<PAGE>
REPRESENTATIONS BY LANDLORD:
20. Neither Landlord nor Landlord's agents have made any representations
or promises with respect to the physical condition of the building, the land
upon which it is erected or the demised premises, the rents, leases, expenses of
operations or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or expenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition, and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession is so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Landlord and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
PERIOD OF TERM:
21. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Landlord the demised premises, broom clean,
in good order and condition, ordinary wear excepted, and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
QUIET ENJOYMENT:
22. Landlord covenants and agrees with Tenant that upon Tenant paying
the rent and additional rent and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the premises hereby demised, subject,
nevertheless, to the terms and conditions of this lease including, but not
limited to, Article 30 hereof and to the ground leases, underlying leases and
mortgages hereinbefore mentioned.
FAILURE TO GIVE POSSESSION:
23. If Landlord is unable to give possession of the demised premises on
the date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants, or if the
premises are located in a building being constructed, because such building has
not been sufficiently completed to make the premises ready for occupancy or
because of the fact that a certificate of occupancy has not been procured or for
any other reason, Landlord shall not be subject to any liability for failure to
give possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for the inability to obtain possession) until after
Landlord shall have given Tenant written notice that the premises are
substantially ready for Tenant's occupancy. If permission is given to Tenant to
enter into the possession of the demised premises or to occupy premises other
than the demised premises prior to the date specified as the commencement of the
term of this lease, Tenant covenants and agrees that such occupancy shall be
deemed to be under all the terms, covenants, conditions and provisions of this
lease, except as to the covenant to pay rent. The provisions of this article are
intended to constitute "an express provision to the contrary" within the
meaning of Section 223-a of the New York Real Property Law.
NO WAIVERS:
24. The failure of Landlord to seek redress for violation of, or to
insist upon the strict performance of any covenant or condition of this lease or
of any of the Rules or Regulations set forth or hereafter adopted by Landlord,
shall not prevent a subsequent act which would have originally constituted a
violation from having all the force and effect of an original violation. The
receipt by Landlord of rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Landlord unless such waiver be in writing
signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly rent herein stipulated shall be deemed to be other than
on account of the earliest stipulated rent, nor shall any endorsement or
statement of any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this lease provided. No act or thing done by
Landlord or Landlord's agent during the term hereby demised shall be deemed an
acceptance of a surrender of said premises and no agreement to accept such
surrender shall be valid unless in writing signed by Landlord. No employee of
Landlord or Landlord's agent shall have any power to accept the keys of said
premises prior to the termination of the lease and the delivery of keys to any
such agent or employee shall not operate as a termination of the lease or a
surrender of the premises.
WAIVER OF TRIAL BY JURY:
25. It is mutually agreed by and between Landlord and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Landlord and Tenant, Tenant's use of or occupancy of said
premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Landlord commences any summary
proceeding for possession of the premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding.
<PAGE>
INABILITY TO PERFORM:
26. This lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no wise be affected, impaired or excused because Landlord
is unable to fulfill any [COPY ILLEGIBLE] layed in
supplying any service expressly or implied to be supplied or is unable to
make, or is delayed in making any repair, additions, alterations or decorations
or is unable to supply or is delayed in supply any equipment or fixtures if
Landlord is prevented or delayed from so doing by reason of strike or labor
troubles or any cause whatsoever including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
BILLS AND NOTICES:
27. Except as otherwise in this lease provided, a bill, statement, notice
or communication which Landlord may desire or be required to give to Tenant,
shall be deemed sufficiently given or rendered if, in writing, delivered to
Tenant personally or sent by registered or certified mail addressed to Tenant at
the building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premised addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Landlord must be served by
registered or certified mail addressed to Landlord at the address first
hereinabove given or at such other address as Landlord shall designate by
written notice.
SERVICES PROVIDED BY LANDLORD--WATER, ELEVATORS, HEAT, CLEANING, AIR
CONDITIONING:
28. As long as Tenant is not in default under any of the covenants of
this lease, Landlord shall provide: (a) elevator facilities, on business days*
from 8 a.m. to 6 p.m.; (b) heat to the demised premises when and as required by
law; on business days* from 8 a.m. to 6 p.m.; (c) water for ordinary lavatory
purposes, but if Tenant uses or consumes water for any other purposes or in
unusual quantities (of which fact Landlord shall be the sole judge), Landlord
may install a water meter at Tenant's expense which Tenant shall thereafter
maintain at Tenant's expense in good working order and repair to register such
water consumption and Tenant shall pay for water consumed as shown on said meter
as additional rent as and when bills are rendered, and on Tenant's default in
making such payment, Landlord may pay such charges and collect the same from
Tenant. Such a meter shall also be installed and maintained at Tenant's expense
if required by Law or Governmental Order. Tenant, if a water meter is so
installed, covenants and agrees to pay its proportionate share of the sewer rent
and all other rents and charges which are now or hereafter assessed, imposed or
may become a lien on the demised premises or the realty of which they are a
part; (d) cleaning service for the demised premises on business days at
Landlord's expense provided that the same are kept in order by Tenant. If,
however, said premises are to be kept clean by Tenant, it shall be done at
Tenant's sole expense, in a manner satisfactory to Landlord, and no one other
than persons approved by Landlord shall be permitted to enter said premises or
the building of which they are a part for such purpose. Tenant shall pay
Landlord the cost of removal of any of Tenant's refuse and rubbish from the
building; (e) RIDER to be added in respect to rates and conditions for air
conditioning cooling and ventilation if the entire building in which the demised
premises is located is serviced by a central air conditioning cooling and
ventilating system. If applicable, air conditioning/cooling will be furnished
from May 15th through September 30th on business days (Mondays through Fridays,
holidays excepted) from 8:00 a.m. to 6:00 p.m., and ventilation will be
furnished on business days during the aforesaid hours except when air
conditioning/cooling is being furnished as aforesaid. If Tenant requires[d]
air conditioning/cooling/ventilation z for more extended hours or on Saturdays,
Sundays or on holidays, as defined under Landlord's contract with Operating
Engineers Local 94-94A, Landlord+ to furnish the same at Tenant's expense.
(f) Landlord shall have no responsibility or liability for failure to supply
the services agreed to herein. Landlord reserves the right to stop services of
the heating, elevators, plumbing, air-conditioning, power systems or cleaning
or other services, if any, when necessary by reason of accident or for repairs,
alterations, replacements or improvements necessary or desirable in the judgment
of Landlord for as long as may be reasonably required by reason thereof or by
reason of strikes, accidents, laws, orders or regulations or any other reason
beyond the control of Landlord. If the building of which the demised premises
are a part supplies manually-operated elevator service, Landlord at any time may
substitute automatic-control elevator service and upon ten days' written notice
to Tenant, proceed with alterations necessary therefor without in any wise
affecting this lease or the obligations of Tenant hereunder. The same shall be
done with a minimum of inconvenience to Tenant and Landlord shall pursue the
alteration with due diligence.
CAPTIONS:
29. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provision thereof.
DEFINITIONS:
30. The term "office", or "offices", whenever used in this lease, shall
not be construed to mean premises used as a store or stores, for the sale or
transfer or display, at any time, of goods, wares, or merchandise, of any kind,
or as a restaurant, shop, booth, bootblack or other stand, barber shop, or for
other similar purposes or for manufacturing. The term "Landlord" as used in this
lease means only the owner, or the mortgagee in possession, for the time being
of the land and building (or the owner of a lease of the building or of the land
and building) of which the demised premises form a part, so that in the event of
any sale or sales* of said land and building or of said lease, or in the event
of a lease of said building, or of the land and building, the said Landlord
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder, and it shall be deemed and construed
without further agreement between the parties or their successors in interest
or between the parties and the purchaser,+ at any such sale,* or the said
lessee of the building, or of the land and building, that the purchaser to the
lessee of the building has assumed and agreed to carry out any and all
covenants and obligations of Landlord, hereunder. The words "re-enter" and
"re-entry" as used in this lease are not restricted to their technical meaning.
The term "business days" as used in this lease shall
[ ] [ ]
PLEASE INITIAL
Rider to be added if necessary.
Art. 28 * (i.e., Mondays through Fridays, Federal, State, City and Building
union holidays excepted)
[d] or uses
z or heating or elevator facilities
+ , in its sold discretion, may upon not less than 3 business days prior
written request by Tenant,
Art. 30 * or transfer
transferee
[illegible]
<PAGE>
<PAGE>
include Saturdays (except such portion thereof as is covered by specific
[illegible] in Article 28 hereof), Sundays and all days observed by the State
and Federal Government as legal holidays and those designated as holidays by
the applicable building service union employees service contract or by the
Applicable Operating Engineers contract with respect to HVAC service.
ADJACENT EXCAVATION OFFERING:
31. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Landlord, or diminution or abatement
of rent.
RULES AND REGULATIONS:
32. Tenant and Tenant's servants, employees, agents, visitors, and
licensees shall observe faithfully, and comply strictly with, the Rules and
Regulations and such other and further reasonable Rules and Regulations as
Landlord or Landlord's agents may from time to time adopt. Notice of any
additional rules or regulations shall be given in such manner as Landlord may
elect. In case Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter made or adopted by Landlord or Landlord's agents, the
parties hereto agree to submit the question of the reasonableness of such Rule
or Regulation for decision to the New York office of the American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Landlord within ten (10) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Landlord any duty or obligation to enforce the Rules
and Regulations or terms, covenants or conditions in any other lease, as against
any other tenant and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
SECURITY
33. Tenant has deposited with Landlord the sum of $700.00 as security for
the faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease: it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Landlord may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Landlord may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Landlord. In the event that Tenant shall fully and faithfully comply with all
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Landlord. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Landlord shall have the right to transfer the
security to the vendee or lessee and Landlord shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Landlord solely for the return of said security; and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Landlord. Tenant further covenants that it will
not assign or encumber or attempt to assign or encumber the monies deposited
herein as security and that neither Landlord nor its successors or assigns shall
be bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance. (See Article 35 hereof)
SUCCESSORS AND ASSIGNS:
34. The covenants, conditions and agreements contained in this lease shall
bind and inure to the benefit of Landlord and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
SECURITY:
35. The security deposited pursuant to Article 33 of the Lease shall be
placed in an interest bearing account in the EMIGRANT SAVINGS BANK, subject to
Landlord's sole right to change the depository at any time to any banking
organization having a place of business in the State of New York, interest
earned to become additional security. It is also understood and agreed that 1.0%
per annum of the security funds shall be retained by Landlord as an
administrative fee.
[ ] [ ]
PLEASE INITIAL
- ----------------------
Space to be filled in or deleted.
RIDERS CONTAINING ARTICLES "35" THROUGH "63" INCLUSIVE ARE ANNEXED HERETO AND
MADE A PART HEREOF.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Landlord: Lancet 150 Nassau L.P.
.............................. CORP.
SEAL
By [Signature]
..................................... ...............................[L.S.]
Title
Witness for Tenant: Nichi Capital, Inc.
.............................. [L.S.]
By Wande Agunloye CORP.
..................................... ............................... SEAL
Vice President Title
Federal I.D. No. ____________________
ACKNOWLEDGEMENTS
AGENT FOR LANDLORD
STATE OF NEW YORK )
COUNTY OF NEW YORK)
On this ____ day of January, 1995 before me personally came _______________
who executed the foregoing instrument and who, being duly sworn by me, did
depose and say that he is the __________ of Sylvan Lawrence Company, Inc., the
corporation which executed the foregoing instrument as agent for _______________
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation; and that he signed his name thereto by like
order.
-------------------------------
CORPORATE TENANT
STATE OF NEW YORK,)
COUNTY OF )
On this ____ day of January, 1995 before me personally came _______________
to me known, who being by me duly sworn, did depose and say that he resides in
_______________ that be is the _____________ of ______________ the corporation
described in and which executed the foregoing instrument, as TENANT; that he
knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the Board of
Directors of said corporation, and that he signed his name thereto by
like order.
-------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK,)
COUNTY OF )
On this ____ day of __________, before me personally came __________, to me
know and known to me to be the individual described in and who, as TENANT,
executed the foregoing instrument and acknowledged to me that he executed the
same.
-------------------------------
<PAGE>
<PAGE>
36. RELOCATION
(a) Notwithstanding anything to the contrary contained in this Lease,
Landlord, upon not less than thirty (30) days prior written notice to Tenant,
shall have the right and shall use all reasonable efforts to substitute, as of a
date specified in said notice (the "Effective Date"), other space in the
Building of which the demised premises forms a part as of the Effective Date
(the "Substitute Space") as the demised premises hereunder in lieu of the space
then constituting the demised premises hereunder immediately prior to the giving
of such notice (the "Prior Space"). In the event Landlord is unable to procure
Substitute Space for Tenant pursuant to the provisions contained herein as of
the Effective Date, Landlord may elect to terminate this Lease on a date (the
"Termination Date") by giving Tenant ten (10) days prior written notice of
Landlord's election to have the term of this Lease so cease and expire. Upon the
giving of such notice by Landlord, the term of this Lease shall cease and expire
on the Termination Date as if that date were the date originally provided in the
Lease as the expiration date of the term hereof, except for any obligations of
Tenant having accrued prior to the Termination Date.
(b) Prior to the Effective Date, Landlord, at its expense and with Tenant's
reasonable cooperation (but at no cost to Tenant), shall furnish necessary
moving labor to move Tenant and Tenant's equipment and personal property to the
Substitute Space, which Substitute Space shall be substantially equivalent in
area to the Prior Space and, further, Landlord shall reimburse Tenant for the
cost of transferring its telephone service to the Substitute Space.
(c) Automatically on the Effective Date, the Substitute Space shall
constitute the demised premises hereunder and all of the terms of this Lease
shall apply thereto (except that Landlord shall not be required to perform any
work or furnish any materials with respect to Tenant's installation in the
Substitute Space, other than as hereinabove specifically provided), and the
Prior Space shall automatically be deleted from the coverage of this Lease and
the term of the Lease insofar as the Prior Space only is concerned shall be
deemed to have ceased and expired with the same force and effect as if the
Effective Date were originally provided in the Lease as the expiration date
thereof (but the Lease shall continue in full force and effect for the full term
thereof with respect to the Substitute Space).
(d) Tenant covenants and agrees to quit and surrender vacant full
possession of the Prior Space to Landlord on the Effective Date free and clear
of any leases, tenancies and rights of occupancy of anyone claiming by or
through Tenant. In the event Tenant shall fail or refuse to surrender such
vacant full possession of the Prior Space to Landlord on or before the Effective
Date (for any reason other than Landlord's failure to furnish moving labor to
Tenant), then and in such event Tenant shall pay to Landlord for each day or
fraction thereof that Tenant shall fail to surrender such vacant full possession
of the Prior Space to Landlord (in addition to all rent and additional rent
provided to be paid under this Lease which is applicable from and after the
Effective Date to the Substitute Space) an agree-upon sum equal to three times
the quotient obtained by dividing (i) the sum of the monthly installment of
basic annual rent then payable under this Lease plus one-twelfth of all
additional rent then payable under this Lease; by (ii) 30; (the "Daily Rate" for
the Prior Space). Such Daily Rate for the Prior Space is in the nature of
liquidated damages to Landlord for Tenant's failure to surrender such vacant
full possession of the Prior Space to Landlord on or before the Effective Date.
The foregoing provision for payment by Tenant for the Daily Rate for the Prior
Space shall be without prejudice to Landlord's instituting Summary or such other
proceedings as Landlord may desire in order to obtain as promptly as possible
vacant full possession of the Prior Space. The foregoing provision for payment
by Tenant of the Daily Rate for the Prior Space relates solely and directly to
Landlord and Tenant's mutual agreement to the daily value of the Prior Space to
each of Landlord and Tenant taking into consideration Tenant's agreement to
comply with the terms of this Article and surrender vacant full possession of
the Prior Space to Landlord on or before the Effective Date time being deemed of
the essence; therefore, in addition to Tenant's agreement to make payment of the
Daily Rate for each subject day, Tenant agrees to pay Landlord the total amount
of any loss, damage, cost or injury (including attorneys' fees and
disbursements) suffered by Landlord with regard to any existing or potential
transaction which is adversely affected by Tenant's failure or refusal to timely
surrender the Prior Space.
PLEASE INITIAL
[ ] [ ]
LANDLORD TENANT
<PAGE>
<PAGE>
7. ELECTRICITY
(a) Landlord agrees to supply Tenant with such electric current as
Tenant shall reasonably require (consistent with the existing electrical
capacity contained in the demised premises) for Tenant's wiring facilities and
equipment within the demised premises as of the commencement of occupancy
thereof by Tenant, and in consideration thereof Tenant agrees that the basic
annual rent reserved in the lease within. Lease shall be increased by the agreed
upon sum of $1635 (the "Base Charge"), retroactive to the date of possession
which Base Charge increase to basic annual rent shall in no event be subject to
reduction but shall be subject to being increased as hereinafter provided.
Landlord shall not be liable in any way to Tenant for failure or defect in the
supply or character of electric energy furnished to the demised premises by
reason of any requirement, act or omission of the public utility serving the
Building with electricity or for any other reason not attributable to Landlord.
Tenant shall furnish and install all lighting tubes, lamps, bulbs and ballasts
required in demised premises, at Tenant's expense, or shall pay Landlord's
reasonable charges therefor on demand. Anything to the contrary contained in
this Lease notwithstanding, Tenant shall pay for the cost of electricity (or pay
the cost of any other utility separately) consumed (including central
air-conditioning) by any air conditioning equipment (including central
air-conditioning) located in the demised premises as well as any other air
conditioning equipment in conjunction with the operation of furnishing
conditioned air to the demised premises irrespective of whether any such
equipment is located in the demised premises or in any other portion of the
Building. The term "equipment" as used herein shall be deemed to include,
without limitation, all components and auxiliary equipment used in connection
with air conditioning equipment servicing the demised premises including
Tenant's pro rata share of the cost of the electricity (or other utility) for
the operation of the cooling tower(s) used in connection therewith if the air
conditioning equipment is water cooled. Landlord shall have the right from time
to time at Landlord's cost to replace lighting fixtures in the demised Premises
with substitute lighting fixtures reasonably equivalent in aggregate light
level.
(b) After Tenant shall have entered into possession of the demised
premises, or any portion thereof, Landlord, at any time and from time to time
during the term of this Lease, shall have the right to have surveys made by
Landlord's electrical consultant of the electrical consumption within the
demised premises and the determination of said electrical consultant shall
determine whether the Base Charge for electricity (as same may have been
increased by previous surveys and determinations made by Landlord's electrical
consultant) is less than the then electrical consumption charge determined by
Landlord's electrical consultant to be properly payable by Tenant as a result of
the then current survey determination made by said electrical consultant and if
the Base Charge shall be less than such electrical consumption charge so
determined by Landlord's consultant to be applicable to Tenant's consumption of
electricity then, effective as of the date of occupancy in the case of the first
survey and effective as of the date of the making of the second and subsequent
surveys the Base Charge increase to basic annual rent (as same may have been
previously increased pursuant to the provisions hereof) shall be further
increased by an amount equal to the difference between: (i) the Base Charge
increase (plus any previous increases to the Base Charge increase in accordance
with the provisions hereof); and (ii) the then electrical consumption charge
determined to be applicable by Landlord's consultant.
Surveys made by Landlord's electrical consultant shall be based upon the
use of such electric current between the hours of 8 A.M. to 6 P.M. on Monday
through Fridays, and 8 A.M. to 1 P.M. on Saturdays and such other days and hours
when Tenant uses electricity for lighting and for the operation of the
machinery, appliances and equipment used by Tenant in the demised premises. In
addition, if cleaning services are provided by Landlord, such survey shall
include Landlord's normal cleaning hours of up to five hours per day for
lighting within the demised premises and for electrical equipment normally used
in such cleaning.
The cost of the first survey made by Landlord's electrical consultant
shall be borne by Landlord. With respect to subsequent surveys, if Landlord's
consultant shall determine that there has been an increase in Tenant's use of
electrical current then, in addition to the other requirements and obligations
imposed on Tenant in this article, Tenant shall pay the fees of the electrical
consultant making such survey. The findings of such electrical consultant shall
be binding and conclusive on Landlord and Tenant.
<PAGE>
(c) Tenant's use of electric energy in the demised premises shall not at
any time exceed the capacity of any of the electrical conductors, machinery and
equipment in or otherwise serving the demised premises. In order to insure that
such capacity is not exceeded and to avert possible adverse effects upon the
Building electric service, Tenant shall not, without Landlord's prior written
consent in each instance, connect any additional fixtures, machinery, appliances
or equipment to the Building electric distribution system or make any alteration
or addition to Tenant's machinery, appliances or equipment, or the electric
system of the demised premises existing on the commencement date of the term
hereof. Should Landlord grant such consent, all additional risers or other
equipment required therefor shall be provided by Landlord and the cost thereof
shall be paid by Tenant upon Landlord's demand. As a condition to granting such
consent, Landlord may require Tenant to agree to an increase in the basic annual
rent by an amount which will reflect the value of the additional service to be
furnished by Landlord, that is, the potential additional electrical current to
be made available to Tenant based upon the estimated additional capacity of such
additional risers or other equipment. If Landlord and Tenant cannot agree
thereon, such amount shall be determined by an electrical engineer or consultant
to be selected by Landlord and paid by Tenant. When the amount of such increase
is so determined, the parties shall execute an agreement supplementary hereto to
reflect such increase in the amount of basic annual rent stated in this Lease
effective from the date such additional service is made available to Tenant; but
such increase shall be effective from such date even if such supplementary
agreement is not executed.
(d) If the public utility rate schedule for the supply of electric
current to the Building or the utility company fuel adjustment charge or demand
charge shall be increased at any time after the date hereof, or if there shall
be a change in taxes or if additional taxes shall be imposed upon the sale or
furnishing of such electric current, or if there shall be a change in the space
constituting the demised premises, or if Tenant's failure to maintain its
machinery and equipment in good order and repair causes greater consumption of
electrical current, or if Tenant uses electricity on days or hours other than
those specified in subparagraph (b) hereof, or if Tenant adds any machinery,
appliances or equipment, the basic annual rent herein reserved shall be
equitably adjusted to reflect any or all of the foregoing as may be applicable.
If Landlord and Tenant cannot agree thereon, the amounts of such adjustment(s)
shall be determined, based on standard practices, by any electrical engineer or
consultant, to be selected by Landlord and paid by Tenant and the findings of
said electrical engineer or consultant shall be binding and conclusive upon the
parties. When the amounts of such adjustment are so determined, the parties
shall execute an agreement supplementary hereto to reflect such adjustment in
the amount of the basic annual rent stated in the Lease effective from the date
of the increase of such usage as determined by such electrical engineer, or
consultant, or as the case may be, from the effective date of such increase in
the public utility rate schedule; but such adjustments shall be effective from
such date whether or not such a supplementary agreement is executed.
(e) Landlord reserves the right to discontinue furnishing electric
current to Tenant in the demised premises at any time upon not less than thirty
(30) days' notice to Tenant. If Landlord exercises such right of termination,
this Lease shall continue in full force and effect and shall be unaffected
thereby, except only that, from and after the effective date of such
termination, Landlord shall not be obligated to furnish electric energy to
Tenant and the basic annual rent payable under this Lease shall be reduced by
the amount of any previous increases thereto on account of electricity supplied
pursuant to the provisions of this Article. Landlord, upon the expiration of the
aforesaid notice to Tenant, may discontinue furnishing the electric current;
but, if, for any reasons, the supply of electric current by Landlord to the
Tenant shall thereafter continue for any period of time, this shall be without
waiver of the right of Landlord thereafter to terminate the same without further
notice, and the Tenant shall continue to pay the basic annual rent as increased
pursuant to this Article as herein provided until such time as the supply of
current shall in fact be discontinued. If Landlord so discontinues furnishing
electric energy to Tenant, Tenant shall arrange to obtain electric energy
directly from the public utility company furnishing electric service to the
Building. Tenant will at its sole cost and expense, without diminishing
Landlord's existing or potential electric capacity and in compliance with all
laws and all applicable provisions of this Lease including but not limited to
Articles 3 and 6 hereof and having first obtained Landlord's prior written
consent, furnish and install all risers, service wiring , switches, meter
equipment and meters that may be necessary for such installation.
In addition and notwithstanding anything to the contrary contained in
this article, Landlord at anytime during the term of this Lease on not less than
thirty (30) days' prior written notice to Tenant may require Tenant to purchase
electricity from Landlord or from a meter company designated by Landlord upon
the terms of such submetering clause that may then be currently used by Landlord
in the Building or which the demised premises form a part. If Landlord shall
elect to have Tenant purchase electricity directly from Landlord or Landlord's
designated meter company as aforesaid, then Landlord at Tenant's sole cost and
expense (but with Tenant's reasonable cooperation) shall perform all wiring as
may be necessary to have Tenant's electrical consumption measured by submeters
provided by Landlord at Tenant's sole cost and expense.
(f) If any tax is imposed upon Landlord with respect to electrical
energy furnished as a service to Tenant by any federal, state, municipal or
other authority, Tenant covenants and agrees that where permitted by law or
applicable regulations, Tenant's pro rata share of such taxes, shall be
reimbursed by Tenant to Landlord within ten (10) days after being billed
therefore.
PLEASE INITIAL
[ ] [ ]
Landlord Tenant
<PAGE>
<PAGE>
38. REAL ESTATE ESCALATION
In addition to basic annual rent, Tenant agrees to pay Landlord as
additional rent sums computed in accordance with this Article.
"Taxes" shall mean any real estate tax, assessment, governmental levy,
school or county tax or any other governmental or quasi-governmental charge,
general or special, ordinary or extraordinary, foreseen or unforeseen, of any
kind or nature whatsoever, which is or may be assessed or imposed upon the
Building in which the demised premises are located, the land underlying the
Building, and the sidewalks, plazas, vaults, streets and alleys in front of or
adjacent to the Building, including without limitation any tax, excise or fee
measured by or payable with respect to any rent or mortgage levied against
Landlord and/or said land and/or Building and/or against the holder of any
mortgage affecting said land or Building under the laws of the United States,
the State of New York, the City of New York, or any political subdivision
thereof, as a substitute for or in addition to taxes presently or hereafter
imposed on said land and/or Building or resulting from or due to any change in
the method of taxation, provided that any such substitute or additional tax on
rent shall be considered as if rent were the only income of Landlord, but
excluding any income, franchise, corporate, estate, inheritance, succession,
capital stock or transfer tax levied on Landlord.
"Basic Tax" shall mean Taxes for fiscal year July 1, 1995 to June 30, 1996.
"Tenant's Proportionate Share" shall be deemed to be .015%.
"Tax Year" shall mean every twelve month consecutive period commencing each
first day of the real estate tax fiscal year (presently July 1st) during the
term of this Lease.
If Taxes for any Tax Year shall be greater than Basic Tax, then Tenant
shall pay Landlord as additional rent an amount (the "Real Estate Tax
Escalation") equal to Tenant's Proportionate Share of the amount by which Taxes
for the subject Tax Year are greater than Basic Tax. Real Estate Tax Escalation
shall be payable by Tenant to Landlord in installments in the same manner that
Taxes are payable by Landlord pursuant to law, or at Landlord's option in
advance by monthly installments due on the first day of each calendar month,
commencing July 1, 1996.
If Basic Tax shall subsequently be adjusted, corrected or reduced, whether
as the result of protest of an existing or a tentative assessment, by agreement,
as the result of legal proceedings, or otherwise, Basic Tax for the purpose of
computing Real Estate Tax Escalation shall be Basic Tax as so adjusted,
corrected or reduced. Until Basic Tax is so adjusted, corrected or reduced, if
ever, Tenant shall pay Real Estate Tax Escalation based upon the unadjusted,
uncorrected or unreduced Basic Tax, and upon such adjustment, correction or
reduction occurring any Real Estate Tax Escalation paid by Tenant prior to such
occurrence shall be recomputed and Tenant shall pay Landlord any additional Real
Estate Tax Escalation found due by such recomputation within ten (10) days of
Landlord's billing Tenant therefor (which bill shall set forth the pertinent
data comprising such recomputation).
If Taxes for any Tax Year shall be so adjusted as the result of protest of
any assessment, by means of agreement or as the result of legal proceedings,
Real Estate Tax Escalation for said Tax Year shall be determined on the basis of
said adjusted Taxes. If Tenant shall have paid the subject Real Estate Tax
Escalation prior to said adjustment, upon Tenant's written request Landlord
shall credit Tenant against future Real Estate Tax Escalation any excess in
Tenant's payment resulting from the subject recomputation of Real Estate Tax
Escalation less Tenant's Proportionate Share of any cost, expense or fees
(including experts' and attorneys' fees and disbursements) incurred by Landlord
in obtaining said adjustment to Taxes. If an adjustment to Taxes occurs but no
corresponding Real Estate Tax Escalation has been paid, Tenant shall pay as
additional rent Tenant's Proportionate Share of any cost, expenses or fees
(including experts' and attorneys' fees and disbursements) incurred by Landlord
in obtaining said adjustment to Taxes within ten (10) days of Landlord's billing
Tenant therefor.
Except for adjustments, corrections or reductions to Basic Tax or Taxes for
any Tax Year as specifically provided for above in this Article, the bill
furnished to Tenant for Real Estate Tax Escalation shall constitute a final
determination between Landlord and Tenant as to Real Estate Tax Escalation for
the period represented thereby unless Tenant, within twenty (20) days after
delivery of said bill by Landlord to Tenant time being deemed of the essence,
gives Landlord written notice that Tenant disputes the accuracy of said bill
which Tenant's notice must specify the particular respects in which the bill is
claimed by Tenant to be incorrect and set forth any and all relevant additional
information Tenant may reasonably request of Landlord. Tenant's right set forth
in the immediately preceding sentence to give Landlord notice of Tenant's
dispute with the accuracy of the above-described bill or to reasonably request
relevant additional information is subject to and contingent upon Tenant's (i)
timely paying in full Landlord's bill in question, (ii) paying all Landlord's
reasonable expenses incurred in connection with Tenant's dispute and/or request
for information including without limitation out-of-pocket expenses, and wages
and benefits of Landlord's and Landlord's agent's employees for said employees'
hours of work directly relating to Tenant's dispute and/or request for
information, and (iii) being represented in connection with Tenant's dispute
only by Tenant's principals, officers and employees, and outside parties, if
any, compensated only by hourly fee or flat rate and not by a percentage of
Tenant's related recovery. Tenant acknowledges that Landlord's books and records
are confidential and are not available for examination. Tenant shall pay Real
Estate Tax Escalation as computed by Landlord pending resolution of any related
dispute, subject to adjustment upon resolution.
Amounts due hereunder shall be equitably prorated to reflect any period of
less than a full Tax Year at the commencement or end of the term of this Lease
or any change in the area of the demised premises. If the fiscal tax year or the
method of tax payment shall hereafter be changed, appropriate adjustment to the
provisions of this Article shall be made accordingly to reflect any such change;
it being the intention of Landlord and Tenant that sufficient factors shall
always exist to determine Real Estate Tax Escalation. Tenant shall pay Landlord
as additional rent upon demand any occupancy tax, rent tax and other tax of
similar nature or intent now or hereafter in effect if the taxing authority
shall enact a law making same payable by Landlord. No computation under this
Article shall result in a reduction to the basic annual rent in effect at the
time of the subject computation. Tenant's liability under this Article shall
survive the termination of this Lease.
PLEASE INITIAL
[ ] [ ]
LANDLORD TENANT
<PAGE>
<PAGE>
There are no Articles numbered "39," "40" and "41" hereof.
42. INSURANCE
Tenant, throughout the term of this Lease, shall maintain in full force
and effect for the benefit of and naming Tenant as insured (i) commercial
general liability insurance including products/completed operations coverage and
blanket contractual liability coverage against claims for personal injury,
bodily injury and death to persons, and damage to property, occurring in, on, or
about the demised premises, naming Landlord, Landlord's principals and
Landlord's agent as additional insureds, providing primary plus umbrella
coverage with limits of not less than five million dollars ($5,000,000) per
occurrence without deduction, (ii) customary "all-risks" property insurance
covering the demised premises in an amount sufficient, as determined by Landlord
from time to time, to cover the replacement costs for all Tenant's alterations,
improvements, fixtures and personal property located in or on the demised
premises, with a deductible amount not to exceed one thousand dollars ($1,000),
(iii) statutory worker's compensation and employers liability insurance, and
(iv) any other insurance Landlord reasonably requires with respect to risks
relating to Tenant's use or manner of use of the Premises.
Prior to Tenant's occupying the demised premises, Tenant shall deliver
to Landlord, for each insurance policy (the "Insurance Policy") required under
this Article, a certificate of insurance (the "Certificate of Insurance")
setting forth the subject amount of coverage and other material terms of the
Insurance Policy together with proof of payment of the subject premium. On a
date no later than thirty (30) days prior to the expiration date of each
Insurance Policy, Tenant shall deliver to Landlord the Certificate of Insurance
for the renewal of or substitute for the subject Insurance Policy together with
proof of payment of the subject premium. Each Insurance Policy and renewal
thereof or substitution therefor shall (i) contain a provision requiring the
subject insurer (the "Insurance Carrier") to notify Landlord in writing by
certified mail return receipt requested not less than thirty (30) days prior to
the cancellation of the subject Insurance Policy (Tenant is responsible to have
deleted from the subject Certificate of Insurance any disclaimer to Insurance
Carrier's obligation to give Landlord prior written notice of cancellation of
the Insurance Policy), and (ii) be issued by an Insurance Carrier licensed to do
business in the State of New York having a Best's rating of at least A/VII.
Each of Landlord and Tenant (i) waives the right to recover damages from
the other party to this Lease regarding any damage to or loss of property, and
(ii) agrees that said party's subject Insurance Policy shall include a waiver by
said party and the subject Insurance Carrier of said party's right to transfer
to the subject Insurance Carrier said party's right to recover damages from the
other party to this Lease regarding damage to or loss of property, provided (a)
said waiver of subrogation is generally available in insurance policies covering
property in New York city, and (b) if either Landlord or Tenant's subject
Insurance Policy requires payment of an additional premium for said waiver of
subrogation, the party to this Lease obtaining the benefit of said waiver of
subrogation shall be obligated to pay said additional premium.
Tenant shall indemnify and hold harmless (including attorneys' fees and
disbursements) Landlord, Landlord's principals and Landlord's agent from and
against any liability to, or claim by or on behalf, of any person, entity,
governmental or quasi-governmental authority or any other party for injury,
death, or damage arising from or relating to (i) Tenant or Tenant's agents,
representatives, employees, invitees, licensees, contractors or customers use of
the Premises, the common areas of the Building, or the plazas, sidewalks, curbs,
or vaults adjacent to the Building and the land on which the Building is
located, (ii) any work or thing done or omitted to be done by Tenant or Tenant's
agents, representatives, employees, invitees, licensees, contractors or
customers, or (iii) any default by Tenant under the terms and conditions of this
Lease. In the event any action or proceeding shall be brought against Landlord,
Landlord's principals and/or Landlord's agent in connection with any claim
described in the immediately preceding sentence, Tenant shall defend such party
in said action or proceeding, at Tenant's sole cost and expense, with legal
counsel satisfactory to Landlord (Tenant's subject Insurance Carrier's legal
counsel shall be deemed to be satisfactory).
43. ATTORNMENT
At the option of Landlord or any successor landlord or any ground lessor
or holder of any mortgage affecting the Building, Tenant agrees that neither the
cancellation nor termination of any ground or underlying lease to which this
Lease is now or may hereafter become subject or subordinate, nor any foreclosure
of a mortgage affecting the Building, nor the institution of any suit, action,
summary or other proceeding against Landlord or any successor landlord, or any
foreclosure proceedings brought by the holder of any such mortgage to recover
possession of the Building, shall by operation of law or otherwise result in
cancellation or termination of this Lease or the obligations of Tenant under
this Lease, and upon the request of any Landlord, successor landlord, ground
lessor or the holder of such mortgage, Tenant covenants and agrees to attorn to
the Landlord or to any successor to the Landlord's interest in the Building, or
to such holder of such mortgage or to the purchaser of the mortgaged premises in
foreclosure. If in connection with obtaining financing for the Building, a bank,
insurance company or other lending institution or individual requests reasonable
modification to the terms of this Lease as a condition to such financing, Tenant
will not unreasonably withhold, delay or defer its consent and agreement
thereto, provided such modification does not materially adversely affect
Tenant's leasehold interest under this Lease.
<PAGE>
44. ADDITIONAL RENT
All costs, charges and expenses which Tenant agrees or is obligated to
pay or assumes under the terms of this Lease shall be deemed to be additional
rent, and in the event of non-payment thereof Landlord shall have all of the
rights and remedies with respect thereto as are provided for in this Lease in
the case of non-payment of rent, in addition to all rights and remedies
otherwise available to Landlord at law and in equity.
45. MERCHANDISE, REFUSE, ETC.
Tenant shall at no time leave any merchandise, supplies, materials or
refuse in the hallways or other common areas of the Building or in any other
area of the Building other than the demised premises. Tenant covenants that all
garbage and refuse shall be kept in proper containers, securely covered, until
removed from the Building so as to prevent the escape of objectionable fumes and
odors and the spread of vermin, and Tenant further covenants that no refuse
and/or garbage shall be permitted to remain on the sidewalks adjacent to the
Building.
46. AIR CONDITIONING PERMITS
Anything to the contrary contained in this Lease notwithstanding, Tenant
agrees to pay the cost of any and all permits required by any branch or
department of the borough, county, city, state or federal government in
connection with any air conditioning now or hereafter located in the demised
premises whether or not installed by Landlord or Tenant.
47. MECHANICS LIENS
Anything to the contrary contained in this Lease notwithstanding, Tenant
agrees that if any mechanic's lien shall be filed against the Building for work
claimed to have been done for or materials claimed to have been furnished to the
demised premises and/or Tenant, said mechanic's lien shall be discharged by
Tenant, by payment or by bond, at Tenant's sole cost and expense, within ten
(10) days following the filing of said mechanic's lien. In the event any such
mechanic's lien is not timely discharged as provided for in the immediately
preceding sentence, Landlord, upon (10) days prior notice given to Tenant, shall
have the right to elect to discharge same on behalf of and at the expense of
Tenant and Tenant shall promptly reimburse Landlord, as additional rent, for all
costs, disbursements, fees and expenses, including without limitation attorneys'
fees and disbursements, incurred in connection with discharging said mechanic's
lien.
48. LIMITATION OF LANDLORD LIABILITY
Tenant shall look solely to the estate and property of Landlord or any
successor-in-interest to Landlord, as applicable, in the Building and the land
on which the Building is located for the satisfaction of Tenant's remedies for
the collection of any judgment (or other judicial process or determination)
against the subject Landlord in the event of any default by Landlord under this
Lease, and no other property or assets of such Landlord shall be subject to
levy, execution or other enforcement procedure for the satisfaction of Tenant's
remedies.
49. ESTOPPEL CERTIFICATE
Tenant agrees, at any time, and from time to time, upon not less than
seven (7) days prior written notice from Landlord, to execute, acknowledge, and
deliver to Landlord, a notarized statement in writing addressed to Landlord
and/or any other party designated by Landlord certifying (a) that this Lease is
unmodified (or if this Lease has been modified specifying any such modification)
and in full force and effect, (b) the dates to which rent, additional rent, and
other charges have been paid, (c) whether or not there exists any default by
Landlord or Tenant in the performance of any term or condition of this Lease and
if so specifying the nature of each such default, and (d) such other information
as Landlord may require; it being intended that any such statement delivered
pursuant to this Article may be relied upon by Landlord, and by any mortgagee or
prospective mortgagee under any mortgage affecting the Building and/or the land
on which the Building is located, and by any purchaser, prospective purchaser,
net lessee or prospective net lessee of the Building and/or the land on which
the Building is located. Time shall be deemed of the essence with regard to
Tenant's material obligations set forth in this Article and Tenant's failure to
timely fulfill the requirements contained in this Article shall be deemed a
material default under the terms of this Lease giving rise to all of Landlord's
rights, including but not limited to Landlord's right to terminate this Lease,
and in addition Tenant shall be liable for all damages, including but not
limited to consequential damages which may be substantial, sustained by Landlord
due, in whole or in part, to Tenant's failure to timely provide Landlord with
the Tenant's statement described in this Article. Tenant agrees, at any time,
upon demand of Landlord, to immediately deliver to Landlord an original
execution counterpart of this Lease (including all modifications and relevant
correspondence) or an exact copy of this Lease (including all modifications and
relevant correspondence) certified by Tenant to be a true and complete copy of
this Lease.
3/94
PLEASE INITIAL
[ ] [ ]
LANDLORD TENANT
<PAGE>
<PAGE>
There is no Article "50" hereof.
51. LATE PAYMENTS
If Tenant shall fail to pay any installment of basic annual rent or
additional rent when first due hereunder (irrespective of any grace period as
may be applicable thereto) and such failure to pay shall continue for more than
ten (10) days after such payment was first due, then interest at the maximum
legal interest rate that then may be charged to parties of the same legal
capacity as Tenant shall accrue from and after the date on which any such sum
was first due and payable hereunder and such interest shall be deemed to accrue
as additional rent hereunder and shall be paid to Landlord upon demand made from
time to time, but in any event no later than the time of payment of the
delinquent sum.
52. HOLDOVER
If Tenant shall hold possession of the demised premises after the
expiration of the term of this Lease or the prior termination of this Lease, and
the Lease is not renewed or a new lease is not entered into between the parties,
the parties hereby agree that Tenant's occupancy of the demised premises after
the expiration of the term or prior termination of this Lease shall be deemed
that of a trespasser commencing on the first day after the expiration of the
term or prior termination of this Lease. Notwithstanding the fact that Tenant
shall be deemed to be a trespasser, after the expiration of the term or prior
termination of this Lease, Tenant shall continue to be fully responsible for
the faithful performance by Tenant of all of the terms set forth in this Lease,
except Tenant shall pay on the first day of each month after the expiration or
sooner termination of this Lease for use and occupancy of the demised premises
an amount equal to the higher of (i) an amount equal to three times the sum
of (a) the monthly installment of basic annual rent payable by Tenant during
the last year of the original term of this Lease (i.e., the year immediately
prior to the holdover period) and (b) all monthly installments of additional
rent payable by Tenant pursuant to the terms of this Lease that would have
been billable monthly by Landlord had the term of the Lease not expired;
or (ii) an amount equal to the then market rental value of the demised premises
as shall be established by Landlord giving notice to Tenant of Landlord's good
faith estimate of such market rental value.
Tenant shall occupy the demised premises during the holdover period in its
"as is" condition as of the expiration of the term or prior termination of this
Lease and Landlord shall not be required to perform any work, furnish any
materials or make any repairs within the demised premises during the holdover
period. Nothing contained in this Lease shall be construed as a consent by
Landlord to the possession by Tenant of the demised premises beyond the
expiration of the term or prior termination of this Lease, and Landlord, upon
said expiration of the term or prior termination of this Lease shall be entitled
to the benefits of all legal remedies that may now be in force or may hereafter
be enacted relating to immediate repossession of the demised premises by
Landlord and in addition Landlord shall be entitled to recover any and all
damages, direct and/or consequential, sustained by Landlord (including but not
limited to special damages) as a result of Tenant's holdover, which recovery of
damages shall be distinguished from and not be offset by any payment made by
Tenant for the use and occupancy of the demised premises.
53. NO EMPLOYMENT AGENCY, MESSENGER SERVICE, RETAIL OR RESIDENTIAL USE OF
DEMISED PREMISES
It is an express condition of this Lease that the demised premises be used
for commercial purposes only in accordance with the provisions herein contained.
In no event may the demised premises be used for Employment Agency, Messenger
Service, Retail or Residential purposes and Tenant covenants and agrees to use
the demised premises only for commercial purposes specified in Article 2 hereof.
Accordingly, it is expressly agreed that any violation by Tenant of its
agreements, representations and obligations pursuant to this Article shall
constitute a material default by Tenant under the terms of this Lease entitling
Landlord to exercise any and all rights granted Landlord pursuant to Articles 17
and 18 of this Lease, including without limitation, the right to terminate this
Lease and recover possession of the demised premises by reason of Tenant's
default.
54. WAIVER OF COUNTERCLAIM
Tenant shall and hereby does waive its right and agrees not to interpose
any counterclaim or offset of whatever nature or description in any proceeding
or action which may be instituted by Landlord against Tenant to recover
possession of the demised premises, for the collection of rent, additional
rent, other charges, or for damages, or in connection with any matters or
claims, whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, or Tenant's use or occupancy of said
premises. This clause, as well as the "waiver of jury trial" provision of this
Lease, shall survive the termination or any cancellation of this Lease, or the
term hereof (nothing, however, contained in this clause shall preclude Tenant
from instituting a separate action against Landlord with respect to any claim
that Tenant may have against Landlord or from moving to consolidate such action
with any action or proceeding which may have been instituted by Landlord; it
being understood, however, that Landlord may oppose any motion of
consolidation.)
55. ATTORNEY'S FEES
In case it shall be necessary for Landlord to institute any action or
proceeding against Tenant for the non-payment of rent or for the violation of
any of the covenants or provisions of this Lease or for the recovery of
possessions of the demised premises or should Landlord be compelled to intervene
in any action or proceeding wherein Tenant is a party in order to enforce or
protect Landlord's interest or rights hereunder, then and in any of such events,
if Landlord shall be successful in such action or proceeding, Tenant shall be
obligated to pay to Landlord reasonable attorneys' fees, costs and disbursements
incurred for the institution and prosecution of any such action, proceeding or
intervention.
PLEASE INITIAL
[ ] [ ]
LANDLORD TENANT
2/86
<PAGE>
<PAGE>
56. APPLICATION OF SECURITY
If Landlord shall apply all or a portion of the Tenant's security deposit
under this Lease towards the curing of a default by Tenant, Tenant shall, within
ten (10) days of Landlord's giving Tenant written notice of such application of
Tenant's security deposit, deposit with Landlord an amount equal to the sum so
applied by Landlord so as to restore the security deposit to the amount held by
Landlord prior to such application; Tenant's failure to timely deposit such
amount with Landlord in full shall constitute a material default on the part of
Tenant under this Lease.
57. BROKER
Tenant covenants and represents that Tenant has dealt with no broker in
connection with this Lease or the demised premises other than Sylvan Lawrence
Company, Inc. and none. Tenant agrees to indemnify and hold harmless Landlord
and Landlord's agent, Sylvan Lawrence Company, Inc., from responsibility, loss,
costs and damages in connection with any claim for commission or other fees made
by any broker, other than the broker(s) named in the immediately preceding
sentence, claiming to have dealt with Tenant in connection with this Lease or
the demised premises. Tenant shall have no obligation to pay a commission or
other fee regarding this Lease to the broker(s) named in the first sentence of
this Article unless Tenant has undertaken to do so by separate agreement.
58. RIDER PORTIONS PREVAIL
The rider portions of this Lease shall be read in conjunction with the
printed standard form of lease to which the rider portions are annexed. If there
is any inconsistency or ambiquity between the terms of the rider portions of
this Lease and the standard form of lease, the rider portions of this Lease
shall prevail.
59. NO OTHER REPRESENTATIONS,
CONSTRUCTION, GOVERNING LAW
Tenant expressly acknowledges and agrees that Landlord and Landlord's
agents have not made and are not making, and Tenant is not relying upon, any
warranty, representation, promise or statement, except to the extent the same
are expressly set forth in this Lease or in a written agreement between Landlord
and Tenant entered into simultaneously with the execution and delivery of this
Lease and which expressly refers to this Lease. This Lease shall be governed in
all respects by the laws of the State of New York.
60. ELEVATOR AND BUILDING
SYSTEM INSTALLATIONS
Throughout the term of this Lease, including renewals and extensions,
Tenant agrees that Landlord shall have the right, upon Landlord's giving Tenant
not less than thirty (30) days prior written notice, to reclaim a portion or
portions of the demised premises solely for the purpose of (i) installing
additional elevator(s) in the Building and/or (ii) improving Building system(s),
provided the amount of such reclaimed space shall be limited to such space as is
required for the proper installation, access and operation of (i) said
elevator(s) and space which is required for public purposes relating to said
elevator(s) and/or (ii) the subject improvement(s) to Building system(s).
Landlord shall be permitted access to the demised premises to perform the work
to install and maintain said elevator(s) and/or improvement(s) to Building
system(s), including the right to take all necessary materials and equipment
into the demised premises without the same constituting an eviction, and Tenant
shall not be entitled to any abatement of rent while such work is in progress or
any damages by reason of loss or interruption of business or otherwise. Landlord
agrees to use Landlord's reasonable efforts to perform such installation in a
manner which minimizes interference with Tenant's use of the demised premises
and Landlord shall be responsible to make repairs and restoration reasonably
required as a direct result of such installation. Except as otherwise
specifically set forth in this Article, the terms and conditions of this Lease
shall not be modified by reason of the installation(s) and maintenance thereto.
61. PROVISIONS SEVERABLE
If any term or provision of this Lease or the application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.
62. EXECUTION AND DELIVERY OF LEASE
Landlord's submission of this Lease to Tenant for review and execution
shall confer no rights nor impose any obligations on either Landlord or Tenant
unless and until both Landlord and Tenant shall have executed this Lease and
fully executed duplicate originals of this Lease shall have been delivered to
each of Landlord and Tenant.
63. UNCOLLECTABLE CHECKS
If Landlord receives a check from Tenant for the payment of basic annual
rent, additional rent and/or any other charges due under this Lease which is
uncollectable by Landlord due to insufficient funds in Tenant's account or for
any other reason, Tenant shall pay Landlord, or at Landlord's option Tenant
shall pay Landlord's agent, a service charge in the sum of one hundred dollars
($100) as additional rent representing Landlord's time and expense in processing
such uncollectable check. Landlord shall have the right at any time and from
time to time during the term of this Lease to require that Tenant's checks in
payment of basic annual rent, additional rent and/or any other charges due under
this Lease be drawn on a member bank of the New York Clearing House Association.
The provisions of this Article shall not limit Landlord form enforcing any other
rights Landlord may have under this Lease in the event of Landlord's receipt of
any uncollectable check, and Landlord's right to collect a service charge
provided for above shall be in addition to all other rights of Landlord
contained in this Lease.
5/94
PLEASE INITIAL
[ ] [ ]
LANDLORD TENANT
<PAGE>
<PAGE>
64. RENT PAYMENT
Thirteen thousand, nine hundred sixty five dollars and ninety six cents
($13,965.96) per annum from 4/1/95 to and including 12/31/95; Fourteen thousand,
six hundred sixty four dollars and twenty nine cents ($14,664.29) per annum from
1/1/96 to and including 12/31,/96; Fifteen thousand, three hundred ninety seven
dollars and fifty cents ($15,397.50) per annum form 1/1/97 to and including
12/31/97; Sixteen thousand, one hundred sixty seven dollars and thirty eight
cents ($16,167.38) per annum from 1/1/98 to and including 12/31/98; Sixteen
thousand, nine hundred seventy five dollars and seventy five cents ($16,975.75)
from 1/1/99 to and including 12/31/99; Seventeen thousand, eight hundred twenty
four dollars and fifty four cents ($17,824.54) from 1/1/00 to and including
12/31/00.
<PAGE>
<PAGE>
[illegible] information reporting. Only payees described in items (2) through
(6) are exempt from backup withholding for barter exchange transactions,
patronage dividends, and payments by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan (IRA), or a custodial account under 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
Payments to nonresident aliens subject to withholding under section 1441.
Payments to partnerships not engaged in a trade or business in the U.S. and
that have at least one nonresident partner.
Payments of patronage dividends not paid in money.
Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided your
correct TIN to the payer.
Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
Payments described in section 6049(b)(5) to nonresident aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and the regulations under such sections.
PENALTIES
Failure To Furnish TIN.--If you fail to furnish your correct TIN to a requester,
you are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
Failure To Include Certain Items on Your Tax Return.--If you fail to properly
include on your tax return certain items reported to IRS, such failure will be
treated as being due to negligence, and you will be subject to a penalty of 5%
on any part of an underpayment of tax attributable to that failure unless there
is clear and convincing evidence to the contrary.
Civil Penalty for False Information With Respect to Withholding.--If you make a
false statement with no reasonable basis that results in no imposition of backup
withholding, you are subject to a penalty of $500.
Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
<PAGE>
SPECIFIC INSTRUCTIONS
Name.--If you are an individual, generally provide the name shown on your social
security card. However, if you have changed your last name, for instance, due to
marriage, without informing the Social Security Administration of the name
change, please enter your first name and both the last name shown on your social
security card and your new last name.
Signing the Certification.--
(1) Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts That Were Considered Active During 1983.--You are not required
to sign the certification; however, you may do so. You are required to provide
your correct TIN.
(2) Interest, Dividend, Broker and Barter Exchange Accounts Opened After 1983
and Broker Accounts That Were Considered Inactive During 1983.--You must sign
the certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) Real Estate Transactions.--You must sign the certification. You may cross
out item (2) of the certification if you wish.
(4) Other Payments.--You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions.--You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) Exempt Payees and Payments.--If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part I, write "EXEMPT" in the block in Part II, sign and
date the form. If you are a nonresident alien or foreign entity not subject to
backup withholding, give the requester a completed Form W-8, Certificate of
Foreign Status.
(7) TIN "Applied For."--Follow the instructions under How To Obtain a TIN, on
page 1, sign and date this form.
Signature.--For a joint account, only the person whose TIN is shown in Part I
should sign the form.
Privacy Act Notice.--Section 6109 requires you to furnish your correct taxpayer
identification number (TIN) to persons who must file information returns with
IRS to report interest, dividends, and certain other income paid to you,
mortgage interest you paid, the acquisition or abandonment of secured property,
or contributions you made to an individual retirement arrangement (IRA). IRS
uses the numbers for identification purposes and to help verify the accuracy of
your tax return. You must provide your TIN whether or not you are required to
file a tax return. Payers must generally withhold 20% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a TIN to a
payer. Certain penalties may also apply.
<PAGE>
What Name and Number To Give the Requester
- --------------------------------------------------------------------------------
For this type of account: Give the name and SOCIAL SECURITY number of:
- --------------------------------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, the first individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(3)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Give the name and EMPLOYER IDENTIFICATION
For this type of account: number of:
- --------------------------------------------------------------------------------
6. A valid trust, estate, or Legal entity (Do not furnish the
pension trust identification number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title.)(4)
7. Corporate The corporation
8. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a state or local government,
school district, or prison)
that receives agricultural
program payments
- --------------------------------------------------------------------------------
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Show the name of the owner.
4 List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
<PAGE>
GUARANTY
VALUE RECEIVED, and in consideration for, and as an inducement to making the
within lease with Tenant, the undersigned guarantees to Landlord's successors
and assigns, the full performance and observance covenants, conditions and
agreements, therein provided to be performed [illegible] by Tenant, including
the "Rules and Regulations" as therein provided without requiring any notice of
non-payment, non-performance, or non-[illegible], or proof, or notice, or
demand, whereby to charge the undersigned all of which the undersigned hereby
expressly waives and expressly [illegible] the validity of this agreement and
the obligations of the guarantor shall in no wise be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant of any of the
rights or remedies reserved to Landlord pursuant to the provisions of the within
lease. The undersigned further covenants and agrees that this guaranty shall
remain and continue in full force and effect as to any renewal, modification or
extension of this lease and during any period when Tenant is occupying the
premises as a "statutory tenant." As further inducement to Landlord to make this
lease and in consideration thereof Landlord and the undersigned covenant and
agree that in any action or proceeding brought by either Landlord or the
undersigned against the other on any matter whatsoever arising out of, under, or
by virtue of the terms of this lease or of this guaranty that Landlord and the
undersigned shall and do hereby waive trial by jury.
New York City __________________ 19__ ________________________________ [L.S.]
_______________________________________ Residence _____________________________
Business Address ______________________
Firm Name _____________________________
STATE OF NEW YORK )
County of ) ss:
[TEXT MISSING] this day of , 19 , before me
came ,
knows and known to me to be the individual described in, and who executed
the foregoing Guaranty and acknowledged to me that he executed the same.
___________________________
Notary
<PAGE>
IMPORTANT -- PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 32.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress to and egress from
the demised premises and delivery of merchandise and equipment in a prompt and
efficient manner using [illegible] and passageways designated for such delivery
by Landlord. There shall not [illegible] in any space, or in the public hall of
the building, either by any Tenant or [illegible] or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situate the ground floor of the building
Tenant thereof shall further, at Tenant's expense, keep the sidewalks and curb
in front of said premises clean and free from snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of breakage, stoppage, or damage resulting from the violation
of this rule shall be borne by the tenant who, or whose clerks, agents,
employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of
the building; and no Tenant shall sweep or throw or permit to be swept or thrown
from the demised premises any dirt or other substances into any of the
corridors, halls, elevators, or out of the doors or windows or stairways of the
building, and Tenant shall not use, keep or permit to be used or kept any foul
or noxious gas substance in the demised premises, or permit or suffer the
demised premises to be occupied or used in a manner offensive or objectionable
to Landlord or other occupants of the building by reason of noise, odors, and/or
vibrations, or interfere in any way with other Tenants or those having business
therein, nor shall any animals or birds be kept in or about the building.
Smoking or carrying lighted cigars or cigarettes in the elevators of the
building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of
the building without the prior written consent of Landlord.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Landlord, except that the name of Tenant may appear on the entrance
door of the premises. In the event of the violation of the foregoing by any
Tenant, Landlord may remove same without any liability, and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Landlord at the expense of such Tenant, and shall be
of a size, color and style acceptable to Landlord.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing or wires shall be permitted, except with the prior written consent
of Landlord, and as Landlord may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Landlord all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Landlord the cost
thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Landlord. Landlord reserves the right
to inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations or the
lease of which these Rules and Regulations are a part.
9. No Tenant shall obtain for use upon the demised premises ice, drinking water,
towel and other similar services, or accept barbering or bootblacking services
in the demised premises, except from persons authorized by Landlord, and at
hours and under regulations fixed by Landlord. Canvassing, soliciting and
peddling in the building is prohibited and each Tenant shall co-operate to
prevent the same.
10. Landlord reserves the right to exclude from the building between the hours
of 6 P.M. and 8 A.M. and at all hours on Sundays, and legal holidays all persons
who do not present a pass to the building signed by Landlord. Landlord will
furnish passes to persons for whom any Tenant requires same in writing. Each
Tenant shall be responsible for all persons for whom he requests such pass and
shall be liable to Landlord for all acts of such persons.
11. Landlord shall have the right to prohibit any advertising by any Tenant
which, in Landlord's opinion, tends to impair the reputation of the building or
its desirability as a building for offices, and upon written notice from
Landlord, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible or explosive fluid, material, chemical or
substance or cause or permit any odors of cooking or other processes, or any
unusual or other objectionable odors to permeate in or eminate from the demised
premises.
13. If the building contains central air conditioning and ventilation Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by the Landlord with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the building superintendent prior to 3:00 P.M. in the
case of services required on week days, and prior to 3:00 P.M. on the day prior
in the case of after hours service required on weekends or on holidays.
PLEASE INITIAL
Address 150 Nassau Street
Rooms 1009-1010
Premises
=============================================
Lancet 150 Nassau L.P.
TO
Nichi Capital, Inc.
==============================================
MODIFIED FORM OF
OFFICE
LEASE
The Real Estate Board of New York, Inc.
Copyright 1973. All Rights Reserved.
Reproduction in whole or in part prohibited.
==============================================
Dated January , 1995
Rent per Year $3,705.00 1/1/95 - 12/31/95
$3,890.25 1/1/96 - 12/31/96
$4,084.76 1/1/97 - 12/31/97
$4,289.00 1/1/98 - 12/31/98
$4,503.45 1/1/99 - 12/31/99
Term five (5) years
From January 1, 1995
To December 31, 1999
Drawn by RSS/ys Checked by____________
Entered by Moses/ Approved by __________
Candella
===================================================
<PAGE>
<PAGE>
MODIFICATION OF LEASE AGREEMENT
-------------------------------
MODIFICATION OF LEASE AGREEMENT (this "Agreement) dated January __, 1997 by
and between LANCET 150 NASSAU L.P. (the "Landlord") and NICHI CAPITAL, INC. (the
"Tenant") modifying an agreement of lease (the "Lease") dated February 8, 1995
by and between Landlord and Tenant covering premises (the "Premises") known as
Rooms 1009-1013 located in the building (the "Building") known as and located at
150 Nassau Street, New York, New York.
In consideration of ten dollars ($10.00) and other valuable consideration,
the receipt and sufficiency of which is acknowledged by each of Landlord and
Tenant, Landlord and Tenant agree as follows:
1. Anything to the contrary contained in the Lease notwithstanding, if for
any reason whatsoever Tenant shall not have paid in full each and every item of
rent, additional and any other charges due and payable under the Lease which
shall have accrued on or before February 28, 1997, the term of the Lease shall
end of February 28, 1997.
2. If the Lease is terminated under Paragraph 1 of this Agreement, Tenant
shall remain responsible for all obligations of Tenant accruing through and
including February 28, 1997, including but not limited to any arrears in the
payment of basic rent, additional rent and other charges.
3. If the Lease is terminated under Paragraph 1 of this Agreement, and
Tenant fails to vacate the demised premises in accordance with the terms and
conditions of the Lease and in broom clean condition on or before February 28,
1997, the terms and conditions of Article 52 (Holdover) of the Lease shall be in
effect as of March 1, 1997, except reference to "three times" on line fifteen of
the first paragraph of Article 52 shall be deleted and substituted therefor
shall be "two and one-half times."
LANCET 150 NASSAU L.P. (Landlord)
By: [signature illegible]
------------------------------
(Title)
NICHI CAPITAL, INC. (Tenant)
By:/s/ Wande Agunloye -- President
------------------------------
(Title)
WANDE AGUNLOYE (the "Guarantor"), having an address at 1710 Caton Avenue,
Apartment 42, Brooklyn, New York 11226, and having Social Security Number
###-##-####, represents that Guarantor has a personal interest in Tenant and the
Lease, and Guarantor hereby agrees to be responsible for all obligations of
Tenant under the Lease as modified by the Modification of Lease Agreement (the
"Modification Agreement") set forth immediately above this Guaranty, including
but not limited to Tenant's obligation to vacate the Premises on or before
February 28, 1997 as more particularly provided for in the Modification
Agreement and if Tenant fails to so timely vacate the Premises to pay rent in
accordance with Article 52 of the Lease (as modified by the Modification
Agreement) commencing on March 1, 1997, and Guarantor waives all rights to
notice with regard to landlord's enforcement of this Guaranty and Guarantor
agrees that landlord may exercise Landlord's rights against Guarantor without
first attempting to exercise any such rights against Tenant.
/s/ Wande Agunloye -- President
------------------------------
WANDE AGUNLOYE
<PAGE>
<PAGE>
ACKNOWLEDGEMENTS
----------------
CORPORATE TENANT
- ----------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this 24th day of January, 1997 before me personally came WANDE AGUNLOYE
who executed the foregoing instrument and who, being duly sworn by me, did
depose and say that he resides at 1710 Caton Avenue, Apt. 42, Brooklyn, New York
11226, that he is the president of NICHI CAPITAL, INC., the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that he signed his/her name thereto by like order.
/s/ Jean Gross
------------------------------------
JEAN GROSS
Notary Public, State of New York
No. 31-4511368
Qualified in New York County
Commission Expires September 30, 1997
INDIVIDUAL GUARANTOR
- --------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this 24th day of January, 1997 before me personally came WANDE AGUNLOYE
to me known to be the individual described in and who executed the above
instrument, and who, being by me duly sworn, did depose and say that he executed
said instrument.
/s/ Jean Gross
------------------------------------
JEAN GROSS
Notary Public, State of New York
No. 31-4511368
Qualified in New York County
Commission Expires September 30, 1997
<PAGE>
<PAGE>
THE
BANK OF
NEW
YORK
================================================================================
STOCK TRANSFER AGENCY AGREEMENT
between
____________________________________________________
and
THE BANK OF NEW YORK
Dated as of _____________________, 19__
ACCOUNT NUMBER(S)______________________________________
================================================================================
<PAGE>
<PAGE>
STOCK TRANSFER AGENCY AGREEMENT
AGREEMENT, made as of _________________________________, by and between
_______________________, a corporation organized and existing under the laws of
the State of __________________________ (hereinafter referred to as the
"Customer"), and THE BANK OF NEW YORK, a New York trust company (hereinafter
referred to as the "Bank").
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
1. "Business Day" shall be deemed to be each day on which the Bank is
open for business.
2. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Bank by the Customer which is signed by any Officer, as hereinafter defined,
and actually received by the Bank.
3. "Officer" shall be deemed to be the Customer's Chief Executive
Officer, President, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Treasurer, and any Assistant Secretary duly authorized
by the Board of Directors of the Customer to execute any Certificate,
instruction, notice or other instrument on behalf of the Customer and named in a
Certificate, as such Certificate may be amended from time to time.
4. "Shares" shall mean all or any part of each class of the shares of
capital stock of the Customer which from time to time are authorized and/or
issued by the Customer and identified in a Certificate of the Secretary of the
Customer under corporate seal, as such Certificate may be amended from time to
time, with respect to which the Bank is to act hereafter.
ARTICLE II
APPOINTMENT OF BANK
1. The Customer hereby constitutes and appoints the Bank as its agent
to perform the services described herein and as more particularly described in
Schedule I attached hereto (the "Services"), and the Bank hereby accepts
appointment as such agent and agrees to perform the Services in accordance with
the terms hereinafter set forth.
2. In connection with such appointment, the Customer shall deliver
the following documents to the Bank:
(a) A certified copy of the Certificate of Incorporation or other
document evidencing the Customer's form of organization (the
"Charter") and all amendments thereto:
(b) A certified copy of the By-Laws of the Customer:
<PAGE>
<PAGE>
-2-
(c) A certified copy of a resolution of the Board of Directors of the
Customer appointing the Bank to perform the Services and
authorizing the execution and delivery of the Agreement;
(d) A Certificate signed by the Secretary of the Customer specifying:
the number of authorized Shares, the number of such authorized
Shares issued and currently outstanding, and the names and
specimen signatures of all persons duly authorized by the Board
of Directors of the Customer to execute any Certificate on behalf
of the Customer, as such Certificate may be amended from time to
time;
(e) A Specimen Share certificate for each class of Shares in the
form approved by the Board of Directors of the Customer, together
with a Certificate signed by the Secretary of the Customer as to
such approval and covenanting to supply a new such Certificate
and specimen whenever such form shall change;
(f) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the authorized and
outstanding Shares, the obtaining of all necessary governmental
consents, whether such Shares are fully paid and non-assessable
and the status of such Shares under the Securities Act of 1933,
as amended, and any other applicable law or regulation (i.e., if
subject to registration, that they have been registered and that
the Registration Statement has become effective or, if exempt,
the specific grounds therefor);
(g) A list of the name, address, social security or taxpayer
identification number of each Shareholder, number of shares
owned, certificate numbers, and whether any "stops" have been
placed; and
(h) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the due authorization by the Customer
and the validity and effectiveness of the use of facsimile
signatures by the Bank in connection with the countersigning and
registering of Share certificates of the Customer.
3. The Customer shall furnish the Bank with a sufficient supply of
blank Share certificates and from time to time will renew such supply upon
request of the Bank. Such blank Share certificates shall be properly signed, by
facsimile or otherwise, by Officers of the Customer authorized by law or by the
By-Laws to sign Share certificates and, if required, shall bear the corporate
seal or a facsimile thereof.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Customer shall deliver to the Bank the following documents on
or before the effective date of any increase, decrease or other change in the
total number of Shares authorized to be issued:
(a) A certified copy of the amendment to the Charter giving effect to
such increase, decrease or change;
<PAGE>
<PAGE>
-3-
(b) An opinion of counsel for the Customer, in a form satisfactory to the
Bank, with respect to the validity of the Shares, the obtaining of all
necessary governmental consents, whether such Shares are fully paid
and non-assessable and the status of such Shares under the Securities
Act of 1933, as amended, and any other applicable federal law or
regulations (i.e., if subject to registration ,that they have been
registered and that the Registration Statement has become effective
or, if exempt, the specific grounds therefor); and
(c) In the case of an increase, if the appointment of the Bank was
theretofore expressly limited, a certified copy of a resolution of the
Board of Directors of the Customer increasing the authority of the
Bank.
2. Prior to the issuance of any additional Shares pursuant to stock
dividends, stock splits or otherwise, and prior to any reduction in the number
of Shares outstanding, the Customer shall deliver the following documents to the
Bank:
(a) A certified copy of the resolutions adopted by the Board of Directors
and/or the shareholders of the Customer authorizing such issuance of
additional Shares of the Customer or such reduction, as the case may
be;
(b) A certified copy of the order or consent of each governmental or
regulatory authority required by law as a prerequisite to the issuance
or reduction of such Shares, as the case may be, and an opinion of
counsel for the Customer that no other order or consent is required;
and
(c) An opinion of counsel for the Customer, in a form satisfactory to the
Bank, with respect to the validity of the Shares, the obtaining of all
necessary governmental consents, whether such Shares are fully paid
and non-assessable and the status of such Shares under the Securities
Act of 1933, as amended, and any other applicable law or regulation
(i.e., if subject to registration, that they have been registered and
that the Registration Statement has become effective, or, if exempt,
the specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or other
capital adjustment requiring a change in the form of Share certificates, the
Bank will issue Share certificates in the new form in exchange for, or upon
transfer of, outstanding Share certificates in the old form, upon receiving:
(a) A Certificate authorizing the issuance of Share certificates in
the new form;
(b) A certified copy of any amendment to the Charter with respect to
the change;
(c) Specimen Share certificates for each class of Shares in the new
form approved by the Board of Directors of the Customer, with a
Certificate signed by the Secretary of the Customer as to such
approval;
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(d) A certified copy of the order or consent of each governmental or
regulatory authority required by law as a prerequisite to the
issuance of the Shares in the new form, and an opinion of counsel
for the Customer that the order or consent of no other
governmental or regulatory authority is required; and
(e) An opinion of counsel for the Customer, in a form satisfactory to
the Bank, with respect to the validity of the Shares in the new
form, the obtaining of all necessary governmental consents,
whether such Shares are fully paid and non-assessable and the
status of such Shares under the Securities Act of 1933, as
amended, and any other applicable law or regulation (i.e., if
subject to registration, that the Shares have been registered and
that the Registration Statement has become effective or, if
exempt, the specific grounds therefore).
2. The Customer shall furnish the Bank with a sufficient supply of
blank Share certificates in the new form, and from time to time will replenish
such supply upon the request of the Bank. Such blank Share certificates shall be
properly signed, by facsimile or otherwise, by Officers of the Customer
authorized by law or by the By-Laws to sign Share certificates and, if required,
shall bear the corporate seal or a facsimile thereof.
ARTICLE V
ISSUANCE AND TRANSFER OF SHARES
1. The Bank will issue Share certificates upon receipt of a
Certificate from an Officer, but shall not be required to issue Share
certificates after it has received from an appropriate federal or state
authority written notification that the sale of Shares has been suspended or
discontinued, and the Bank shall be entitled to rely upon such written
notification. The Bank shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Customer in connection with the
issuance of any Shares.
2. Shares will be transferred upon presentation to the Bank of Share
certificates in form deemed by the Bank properly endorsed for transfer,
accompanied by such documents as the Bank deems necessary to evidence the
authority of the person making such transfer, and bearing satisfactory evidence
of the payment of applicable stock transfer taxes. In the case of small estates
where no administration is contemplated, the Bank may, when furnished with an
appropriate surety bond, and without further approval of the Customer, transfer
Shares registered in the name of the decedents where the current market value of
the Shares being transferred does not exceed such amount as may from time to
time be prescribed by the various states. The Bank reserves the right to refuse
to transfer Shares until it is satisfied that the endorsement on Share
certificates are valid and genuine, and for that purpose it may require, unless
otherwise instructed by an Officer of the Customer, a guaranty of signature by
an "eligible guarantor institution" meeting the requirements of the Bank, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Bank in addition to,
or in substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended. The Bank also reserves the right to refuse to transfer
Shares until it is satisfied that the requested transfer is legally authorized,
and it shall incur no liability for the refusal in good faith to make transfers
which the Bank, in its judgment, deems improper or unauthorized, or until it is
satisfied that there is no basis to any claims adverse to such transfer. The
Bank may, in effecting transfers of Shares, rely upon those provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers or the
Uniform Commercial Code, as the same may be amended from time to time,
applicable to the transfer of securities, and the Customer shall indemnify the
Bank for any act done or omitted by it in good faith in reliance upon such laws.
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3. All certificates representing Shares that are subject to
restrictions on transfer (e.g., securities acquired pursuant to an investment
representation, securities held by controlling person, securities subject to
stockholders' agreement, etc.), shall be stamped with a legend describing the
extent and conditions of the restrictions or referring to the source of such
restrictions. The Bank assumes no responsibility with respect to the transfer of
restricted securities where counsel for the Customer advises that such transfer
may be properly effected.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Customer shall furnish to the Bank a copy of a resolution of
its Board of Directors, certified by the Secretary or any Assistant Secretary,
either (i) setting forth the date of the declaration of a dividend or
distribution, the date of accrual or payment, as the case may be, the record
date as of which shareholders entitled to payment, or accrual, as the case may
be shall be determined, the amount per Share of such dividend or distribution,
the payment date on which all previously accrued and unpaid dividends are to be
paid, and the total amount, if any, payable to the Bank on such payment date, or
(ii) authorizing the declaration of dividends and distributions on a periodic
basis and authorizing the Bank to rely on a Certificate setting forth the
information described in subsection (i) of this paragraph.
2. Prior to the payment date specified in such Certificate or
resolution, as the case may be, the Customer shall, in the case of a cash
dividend or distribution, pay to the Bank an amount of cash, sufficient for the
Bank to make the payment, specified in such Certificate or resolution, to the
shareholders of record as of such payment date. The Bank will, upon receipt of
any such cash, (i) in the case of shareholders who are participants in a
dividend reinvestment and/or cash purchase plan of the Customer, reinvest such
cash dividends or distributions in accordance with the terms of such plan, and
(ii) in the case of shareholders who are not participants in any such plan, make
payment of such cash dividends or distributions to the shareholders of record as
of the record date by mailing a check, payable to the registered shareholder, to
the address of record or dividend mailing address. The Bank shall not be liable
for any improper payment made in accordance with a Certificate or resolution
described in the preceding paragraph. If the Bank shall not receive sufficient
cash prior to the payment date to make payments of any cash dividend or
distribution pursuant to subsections (i) and (ii) above to all shareholders of
the Customer as of the record date, the Bank shall, upon notifying the Customer,
withhold payment to all shareholders of the Customer as of the record date until
sufficient cash is provided to the Bank.
3. It is understood that the Bank shall in no way be responsible for
the determination of the rate or form of dividends or distributions due to the
shareholders.
4. It is understood that the Bank shall file such appropriate
information returns concerning the payment of dividends and distributions with
the proper federal, state and local authorities as are required by law to be
filed by the Customer but shall in no way be responsible for the collection or
withholding of taxes due on such dividends or distributions due to shareholders,
except and only to the extent required of it by applicable law.
ARTICLE VII
CONCERNING THE CUSTOMER
1. The Customer shall promptly deliver to the Bank written notice of
any change in the Officers authorized to sign Share certificates, Certificates,
notifications or requests, together with a specimen signature of each new
Officer. In the event any Officer who shall have signed manually or whose
facsimile signature shall have been affixed to blank Share certificates shall
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die, resign or be removed prior to issuance of such Share certificates, the Bank
may issue such Share certificates as the Share certificates of the Customer
notwithstanding such death, resignation or removal, and the Customer shall
promptly deliver to the Bank such approvals, adoptions or ratifications as may
be required by law.
2. Each copy of the Charter of the Customer and copies of all
amendments thereto shall be certified by the Secretary of State (or other
appropriate official) of the state of incorporation, and if such Charter and/or
amendments are required by law also to be filed with a county or other officer
or official body, a certificate of such filing shall be filed with a certified
copy submitted to the Bank. Each copy of the By-Laws and copies of all
amendments thereto, and copies of resolutions of the Board of Directors of the
Customer, shall be certified by the Secretary or an Assistant Secretary of the
Customer under the corporate seal.
3. Customer hereby represents and warrants:
(a) It is a corporation duly organized and validly existing under the
laws of _____________________________.
(b) This Agreement has been duly authorized, executed and delivered
on its behalf and constitutes the legal, valid and binding
obligation of Customer. The execution, delivery and performance
of this Agreement by Customer do not and will not violate any
applicable law or regulation and do not require the consent of
any governmental or other regulatory body except for such
consents and approvals as have been obtained and are in full
force and effect.
ARTICLE VIII
CONCERNING THE BANK
1. The Bank shall not be liable and shall be fully protected in acting
upon any oral instruction, writing or document reasonably believed by it to be
genuine and to have been given, signed or made by the proper person or persons
and shall not be held to have any notice of any change of authority of any
person until receipt of written notice thereof from an Officer of the Customer.
It shall also be protected in processing Share certificates which it reasonably
believes to bear the proper manual or facsimile signatures of the duly
authorized Officer or Officers of the Customer and the proper countersignature
of the Bank.
2. The Bank may establish such additional procedures, rules and
regulations governing the transfer or registration of Share certificates as it
may deem advisable and consistent with such rules and regulations generally
adopted by bank transfer agents.
3. The Bank may keep such records as it deems advisable but not
inconsistent with resolutions adopted by the Board of Directors of the Customer.
The Bank may deliver to the Customer from time to time at its discretion, for
safekeeping or disposition by the Customer in accordance with law, such records,
papers, Share certificates which have been cancelled in transfer or exchange and
other documents accumulated in the execution of its duties hereunder as the Bank
may deem expedient, other than those which the Bank is itself required to
maintain pursuant to applicable laws and regulations, and the Customer shall
assume all responsibility for any failure thereafter to produce any record,
paper, cancelled Share certificate or other document so returned, if and when
required. The records maintained by the Bank pursuant to this paragraph which
have not been previously delivered to the Customer pursuant to the foregoing
provisions of this paragraph shall be considered to be the property of the
Customer, shall be considered to be the property of the
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Customer, shall be made available upon request for inspection by the Officers,
employees and auditors of the Customer, and shall be delivered to the Customer
upon request and in any event upon the date of termination of this Agreement, as
specified in Article IX of this Agreement, in the form and manner kept by the
Bank on such date of termination or such earlier date as may be requested by the
Customer.
4. The Bank may employ agents or attorneys-in-fact at the expense of
the Customer, and shall not be liable for any loss or expense arising out of, or
in connection with, the actions or omissions to act of its agents or
attorneys-in-fact, so long as the Bank acts in good faith and without negligence
or willful misconduct in connection with the selection of such agents or
attorneys-in-fact.
5. The Bank shall only be liable for any loss or damage arising out of
its own negligence or willful misconduct; provided, however, that the Bank shall
not be liable for any indirect, special, punitive or consequential damages.
6. The Customer shall indemnify and hold harmless the Bank from and
against any and all claims (whether with or without basis in fact or law),
costs, demands, expenses and liabilities, including reasonable attorney's fees,
which the Bank may sustain or incur or which may be asserted against the Bank
except for any liability which the Bank has assumed pursuant to the immediately
preceding section. The Bank shall be deemed not to have acted with negligence
and not to have engaged in willful misconduct by reason of or as a result of any
action taken or omitted to be taken by the Bank without its own negligence or
willful misconduct in reliance upon (i) any provision of this Agreement, (ii)
any instrument, order or Share certificate reasonably believed by it to be
genuine and to be signed, countersigned or executed by any duly authorized
Officer of the Customer, (iii) any Certificate or other instructions of an
Officer, (iv) any opinion of legal counsel for the Customer or the Bank, or (v)
any law, act, regulation or any interpretation of the same even though such law,
act, or regulation may thereafter have been altered, changed, amended or
repealed. Nothing contained herein shall limit or in any way impair the right of
the Bank to indemnification under any other provision of this Agreement.
7. Specifically, but not by way of limitation, the Customer shall
indemnify and hold harmless the Bank from and against any and all claims
(whether with or without basis in fact or law), costs, demands, expenses and
liabilities, including reasonable attorney's fees, of any and every nature which
the Bank may sustain or incur or which may be asserted against the Bank in
connection with the genuineness of a Share certificate, the Bank's due
authorization by the Customer to issue Shares and the form and amount of
authorized Shares.
8. At any time the Bank may apply to an Officer of the Customer for
written instructions with respect to any matter arising in connection with the
Bank's duties and obligations under this Agreement, and the Bank shall not be
liable for any action taken or omitted to be taken by the Bank in good faith in
accordance with such instructions. Such application by the Bank for instructions
from an Officer of the Customer may, at the option of the Bank, set forth in
writing any action proposed to be taken or omitted to be taken by the Bank with
respect to its duties or obligations under this Agreement and the date on and/or
after which such action shall be taken, and the Bank shall not be liable for any
action taken or omitted to be taken in accordance with a proposal included in
any such application on or after the date specified therein unless, prior to
taking or omitting to take any such action, the Bank has received written
instructions in response to such application specifying the action to be taken
or omitted. The Bank may consult counsel to the Customer or its own counsel, at
the expense of the Customer, and shall be fully protected with respect to
anything done or omitted by it in good faith in accordance with the advice or
opinion of such counsel.
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9. When mail is used for delivery of non-negotiable Share
certificates, the value of which does not exceed the limits of the Bank's
Blanket Bond, the Bank shall send such non-negotiable Share certificates by
first class mail, and such deliveries will be covered while in transit by the
Bank's Blanket Bond. Non-negotiable Share certificates, the value of which
exceed the limits of the Bank's Blanket Bond, will be sent by insured registered
mail. Negotiable Share certificates will be sent by insured registered mail. The
Bank shall advise the Customer of any Share certificates returned as
undeliverable after being mailed as herein provided for.
10. The Bank may issue new Share certificates in place of Share
certificates represented to have been lost, stolen or destroyed upon receiving
instructions in writing from an Officer and indemnity satisfactory to the Bank.
Such instructions from the Customer shall be in such form as approved by the
Board of Directors of the Customer in accordance with applicable law or the
By-Laws of the Customer governing such matters. If the Bank receives written
notification from the owner of the lost, stolen or destroyed Share certificate
within a reasonable time after he has notice of it, the Bank shall promptly
notify the Customer and shall act pursuant to written instructions signed by an
Officer. If the Customer receives such written notification from the owner of
the lost, stolen or destroyed Share certificate within a reasonable time after
he has notice of it, the Customer shall promptly notify the Bank and the Bank
shall act pursuant to written instructions signed by an Officer. The Bank shall
not be liable for any act done or omitted by it pursuant to the written
instructions described herein. The Bank may issue new Share certificates in
exchange for, and upon surrender of, mutilated Share certificates.
11. The Bank will issue and mail subscription warrants for Shares,
Shares representing stock dividends, exchanges or splits, or act as conversion
agent upon receiving written instructions from an Officer and such other
documents as the Bank may deem necessary.
12. The Bank will supply shareholder lists to the Customer from time
to time upon receiving a request therefor from an Officer of the Customer.
13. In case of any requests or demands for the inspection of the
shareholder records of the Customer, the Bank will notify the Customer and
endeavor to secure instructions from an Officer as to such inspection. The Bank
reserves the right, however, to exhibit the shareholder record to any person
whenever it is advised by its counsel that there is a reasonable likelihood that
the Bank will be held liable for the failure to exhibit the shareholder records
to such person.
14. At the request of an Officer, the Bank will address and mail such
appropriate notices to shareholders as the Customer may direct.
15. Notwithstanding any provisions of this Agreement to the contrary,
the Bank shall be under no duty or obligation to inquire into, and shall not be
liable for:
(a) The legality of the issue, sale or transfer of any Shares, the
sufficiency of the amount to be received in connection therewith,
or the authority of the Customer to request such issuance, sale
or transfer;
(b) The legality of the purchase of any Shares, the sufficiency of
the amount to be paid in connection therewith, or the authority
of the Customer to request such purchase;
(c) The legality of the declaration of any dividend by the Customer,
or the legality of the issue of any Shares in payment of any
stock dividend; or
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(d) The legality of any recapitalization or readjustment of the
Shares.
16. The Bank shall be entitled to receive and the Customer hereby
agrees to pay to the Bank for its performance hereunder (i) out-of-pocket
expenses (including legal expenses and attorneys' fees) incurred in connection
with this Agreement and its performance hereunder, and (ii) the compensation for
services as set forth in Schedule I.
17. The Bank shall not be responsible for any money, whether or not
represented by any check, draft or other instrument for the payment of money,
received by it on behalf of the Customer, until the Bank actually receives and
collects such funds.
18. The Bank shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against the Bank in
connection with this Agreement.
ARTICLE IX
TERMINATION
Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date of receipt of such notice.
In the event such notice is given by the Customer, it shall be accompanied by a
copy of a resolution of the Board of Directors of the Customer, certified by the
Secretary, electing to terminate this Agreement and designating a successor
transfer agent or transfer agents. In the event such notice is given by the
Bank, the Customer shall, on or before the termination date, deliver to the Bank
a copy of a resolution of its Board of Directors certified by the Secretary
designating a successor transfer agent or transfer agents. In the absence of
such designation by the Customer, the Bank may designate a successor transfer
agent. If the Customer fails to designate a successor Transfer agent and if the
Bank is unable to find a successor transfer agent, the Customer shall, upon the
date specified in the notice of termination of this Agreement and delivery of
the records maintained hereunder, be deemed to be its own transfer agent and the
Bank shall thereafter be relieved of all duties and responsibilities hereunder.
Upon termination hereof, the Customer shall pay to the Bank such compensation as
may be due to the Bank for any disbursements and expenses made or incurred by
the Bank and payable or reimbursable hereunder.
ARTICLE X
MISCELLANEOUS
1. The indemnities contained herein shall be continuing obligations of
the Customer, its successors and assigns, notwithstanding the termination of
this Agreement.
2. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Customer shall be sufficiently given if
addressed to the Customer and mailed or delivered to it at ________________, or
at such other place as the Customer may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Bank shall be sufficiently given if
addressed to the Bank and mailed or delivered to it at its office at 101 Barclay
Street (22W), New York, New York 10286 or at such other place as the Bank may
from time to time designate in writing.
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4. This Agreement may not be amended or modified in any manner except
by a written agreement duly authorized and executed by both parties. Any duly
authorized Officer may amend any Certificate naming Officers authorized to
execute and deliver Certificates, instructions, notices or other instruments,
and the Secretary or any Assistant Secretary may amend any Certificate listing
the shares of capital stock of the Customer for which the Bank performs Services
hereunder.
5. This Agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party without the prior written
consent of the other party, and provided, further, that any reorganization,
merger, consolidation, or sale of assets, by the Bank shall not be deemed to
constitute an assignment of this Agreement.
6. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
7. This Agreement may be executed in any number of counterparts each
of which shall be deemed to be an original; but such counterparts, together,
shall constitute only one instrument.
8. The provisions of this Agreement are intended to benefit only the
Bank and the Customer, and no rights shall be granted to any other person by
virtue of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective corporate officers, thereunder duly authorized
and their respective corporate seals to be hereunto affixed, as of the day and
year first above written.
Attest: ________________________________
__________________________ By: _____________________________
Name:________________________
Title: ______________________
Attest: THE BANK OF NEW YORK
__________________________ By: _____________________________
Name:________________________
Title: ______________________
<PAGE>
<PAGE>
NIPHIX SYSTEMS
TRADING PARTICIPANT AGREEMENT
TRADING PARTICIPANT AGREEMENT, dated as of August 30, 1997, by and between
NIPHIX INVESTMENTS INC., an Illinois corporation (the "Sponsor") and NICHI
CAPITAL LIMITED, a New York corporation (the "Customer").
The Sponsor is a broker-dealer registered with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a member of the National Association of
Securities Dealers, Inc. ("NASD") and the Sponsor of Niphix Systems (the
"System").
The System is a proprietary electronic broker-dealer trading system
operated by the Sponsor and designed to facilitate trading of securities among
certain customers of the Sponsor, such as the Customer, and the purchase by such
customers of securities offered by issuers who have arranged with the Sponsor to
use the System in connection with offering their securities.
Customer wishes to use the System as a means to purchase and trade
securities offered through the System.
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
ARTICLE I
Definitions and Rules of Construction
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Business Day" shall mean any day (other than a Saturday or Sunday)
on which (i) the New York Stock Exchange is open and (ii) banks are
not authorized or required to close in the City of New York.
(b) "Business Hours" shall mean the hours during which the System is
operated, which, unless changed by the Sponsor upon prior written
notice to issuers and Trading Participants, shall be from 8:00 a.m.
to 5:00 p.m. Central Time each Business Day.
(c) "Clearing Broker" shall mean the clearing broker-dealer with which
the Sponsor has an agreement pursuant to which the clearing
broker-dealer carries and provides clearing services for the
accounts of Trading Participants.
(d) "DTC" shall mean the Depository Trust Company, a registered clearing
agency under Section 17A(b)(1) of the Exchange Act, or any successor
thereto.
(e) "Issuers" shall mean those business entities that have entered into
agreements with the Sponsor providing for the posting on the System
of Issuer Information in connection with the offering of securities
to the issued by the business entity.
(f) "Issuer Information" shall mean the Offering Documents and any Other
Issuer Information posted by Issuers on the System.
(g) "Offering Documents" shall mean such documents as are posted by
Issuers on the System and relate to the offering of securities by
Issuers through the System, including, without limitation,
registration statements and Regulation A offering circulars filed by
Issuers with the SEC under the Securities Act, and any prospectus,
offering circular, offering memorandum, purchase or sales agreement
or subscription agreement or related documents, and any amendments
or supplements thereto.
(h) "Other Issuer Information" shall mean such information other than
the Offering Documents as is posted by Issuers on the System,
including, without limitation, reports, statements or other
documents filed or required to be filed by Issuers with the SEC
under the Securities Act or the Exchange Act or the rules and
regulations of the SEC thereunder and amendments or supplements
thereto, press, news or media releases disseminated by the Issuer,
and annual, quarterly or other reports or other communications of
the Issuer to holders of its securities.
(i) "Securities Act" shall mean the Securities Act of 1933, as amended.
(j) "System Book" shall mean, at any time during the Sponsor's operation
of the System, the listing of every order for the purchase or sale
of a security entered by a Trading Participant and accepted into the
System for potential matching and execution.
(k) "System Handbook" shall mean the compilation of the policies and
procedures applicable to use of the System by Issuers and Trading
Participants, as adopted and modified by the Sponsor from time to
time.
(l) "Trading Participants" shall mean those customers of the Sponsor,
including the Customer, who have entered into Trading Participant or
other agreements with the Sponsor similar to this Agreement
providing for access to and use of the System to purchase and sell
securities.
1.2 Rules of Construction. For all purposes of this Agreement except as
otherwise expressly provided or unless the context otherwise requires:
(a) Each use in this Agreement of a singular pronoun shall be deemed to
include references to the plural and vice versa.
(b) Article and Section headings are for convenience of reference only
and shall not affect the construction of this Agreement.
[missing copy]
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limited to: (i) buying and selling securities comprising all or part
of the Customer's Account; (ii) receiving and transferring money,
securities and other property; (iii) making, giving and receiving
demands, statements, notices and other [illegible]
modifying, waiving and terminating this Agreement and other
agreements.
3.2 Purchase and Sale Orders.
(a) System Orders. All orders by the Customer for the purchase or sale
of securities shall be executed only through entry into and matching
[illegible] countervailing orders by the System. The Customer
acknowledges that the Sponsor provides no assurance that orders
entered into the System will be matched, executed or settled.
(b) Firm Orders. All orders entered by the Customer into the System
shall be firm orders with a set price and size and shall not be mere
indications of interest. The Customer may cancel or modify an order
previously placed in the System at any time before such order is
matched. The Customer may limit an order based on minimum trade
size, timed release and timed expiration; provided, however, all
orders must always have a set price and size. All unexecuted orders
will expire at the end of the seventh calendar day after the order
was accepted by the System.
(c) Order Entry and Acceptance. The Customer shall access the System and
enter all orders in compliance with the applicable provisions of the
System Handbook. No order will be accepted by the Sponsor for entry
into the System unless, at the time the order is entered, the
Customer's Account includes sufficient funds or securities to
immediately settle the purchase or sale transaction that would be
executed if the order is accepted into and matched through the
System.
(d) Order Execution. Orders of the Customer entered into and accepted by
the Sponsor through the System, will be accessible for viewing by
all Trading Participants as part of the System Book displayed by the
System during its operation. The Customer's orders included in the
System Book will be executed upon being matched by the entry into
and acceptance by the System of a countervailing order. Matching
orders that do not correspond as to the number of securities to be
purchased or sold will be executed to the extent of the greatest
number of securities possible (i.e., the order for the greater
number of securities will be partially filled). Matching orders will
not result in an executed transaction if, upon verification before
execution, the Customer's Account or the account of the counterparty
Trading Participant lacks sufficient funds or securities to
immediately settle the transaction.
(e) Confirmations. Upon matching and execution of an order, the Customer
will receive via electronic communication through the System an
anonymous confirmation of the transaction, disclosing, to the extent
required, the identity, price number of shares or units (or
principal amount) of the security purchase or sold and the date and
time of the transaction. If the transaction was a partial execution
of the Customer's Order, the confirmation will also describe the
Customer's order remaining in the System Book. The Sponsor shall
transmit to the Customer by facsimile a copy of the confirmation
delivered to the Customer electronically through the System.
3.3 Trade Settlement. Each transaction resulting from the execution of the
Customer's orders through the System shall be settled immediately
following confirmation of the transaction. The Customer agrees to have
sufficient funds available in the Customer's Account to settle all
purchase transactions by immediate payment for the securities purchased.
The Customer agrees to have sufficient securities available in the
Customer's Account to settle all sale transactions by immediate delivery
of the securities sold. Settlement will be effected by the Clearing
Broker through delivery of securities against payment of the purchase
price. Deliveries and payments will be effected through accounting
entries made in the Clearing Broker's records of the Customer's Account
and the account of the other Trading Participant who is the counterparty
to the transaction. The Customer acknowledges and agrees that any
failure by it to deliver securities in good, legal form or to make
timely payment in settlement of transactions executed through the System
may result in termination by the Sponsor of this Agreement and losses
for which the Customer shall be liable. The Customer shall receive
prompt notice by electronic delivery through the System of any nature in
the settlement of a transaction resulting from the execution by the
System of an order of the Customer. If the Sponsor is unable to settle a
purchase or sale transaction of the Customer by reason of the Customer's
failure to make payment or deliver securities in good form, the Customer
authorizes the Sponsor to take steps necessary to complete or cancel the
transaction to minimize any loss, and the Customer agrees to reimburse
the Sponsor for any and all costs, losses or liabilities incurred by the
Sponsor, including attorneys fees.
3.4 Ownership of Securities Through DTC Book Entry. The Customer
acknowledges and agrees that securities offered for purchase and sale
and purchased and sold through the System will be represented by global
securities in fully registered form, deposited with a custodian for and
registered in the name of nominee of DTC. Beneficial interests in these
securities will be shown on, and transfers thereof will be effected
through, records maintained by DTC and its participants, including the
Clearing Broker. The ownership interest and transfer of DTC are
recorded on the records of DTC's participants. All interests in
such securities will be subject to the procedures and requirements of
DTC. The laws of some states require that certain persons take physical
delivery in certificated form of securities that they own. Consequently,
the ability to transfer beneficial interests in global securities held
by or for DTC to such Persons will be limited to that extent. Because
DTC can only on behalf of its participants, which in turn act on behalf
of indirect participants and certain banks, the ability of a person
having beneficial interest in a global security to pledge such interests
to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by
the lack of a physical certificate evidencing such interests. The
Customer acknowledges and agrees that care of securities in the
Customer's Account will be the sole responsibility of the Clearing
Broker, DTC and the Issuer, as applicable, and that the Sponsor shall
have no responsibility in this regard.
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5.3 No Restricted Securities. The Customer shall not hold restricted
securities (as that term is defined in SEC Rule 144 under the Securities
Act) in the Customer's Account or offer to purchase or sell restricted
securities through the System.
[illegible] Notices to Sponsor. The Customer shall immediately notify the
Sponsor and shall immediately [illegible] through the System upon the
occurrence of any of the following:
(a) any administrative proceeding involving or investigation of the
Customer and relating to the Customer's use of the System (whether
public, private, formal or informal) is commenced or threatened; and
(b) Any representation or warranty made by the Customer in this
Agreement becomes untrue.
ARTICLE VI
Conditions to Sponsor's Obligations
The Obligations of the Sponsor under this Agreement are subject to the
following conditions:
6.1 Representation and Warranties. The Customer's representations and
warranties set forth in Article IV of this Agreement are and shall be true
and accurate at the time this Agreement is executed and during its entire
term.
6.2 No Adverse Regulatory Action. The Performance by the parties of their
respective obligations under this Agreement will not, in the reasonable
opinion of the Sponsor, result in any adverse action by any regulatory
authority with respect to the Sponsor.
6.3 Account with Clearing Broker. The Clearing Broker shall have approved the
Customer and agreed to carry the Customer's account.
6.4 No Breach of Covenants. The Customer shall not have breached any of its
covenants under this Agreement.
ARTICLE VII
Customer Acknowledgments
The Customer acknowledges and agrees with the Sponsor as follows:
7.1 Certain Information about the Sponsor and the System. Niphix Systems is
designed to facilitate the offering and sale of securities by Issuers and
the trading of securities among Trading Participants. Through its
agreements with Issuers, the Sponsor, as operator of the System, allows
Issuers to make available through the System information relating to them
and their securities [illegible] through the System. This information is
only that of the Issuer furnishing it. The Sponsor does not independently
verify the accuracy or adequacy of such information. Issuers and Trading
Participants are responsible for their own decisions to sell or purchase
or offer to sell or purchase securities through the System and for
compliance with applicable federal and state securities laws.
7.2 No Recommendation of Penny Stocks. The Sponsor is not required, by this
Agreement or otherwise, to recommend, and it [illegible] not make any
recommendation regarding, the purchase or sale of any security if the
security would, at the time of any such recommendation, constitute a
"penny stock" as defined in Section 3(51)(A) of the Exchange Act.
7.3 No Guarantee of Trades. The Sponsor does not guarantee or provide any
assurance of the development or liquidity of any market for securities
offered, sold or traded through the System or of the matching, execution
or settlement of any order for the purchase or sale of any security placed
through the System.
7.4 Suspension of Offering or Trading. The Sponsor may, in its discretion,
suspend the display of Issuer Information, the trading of securities among
Trading Participants, and/or any other aspect of operation of the System
if necessary or appropriate to comply with applicable laws and
regulations, to avoid potential liability of the Sponsor, to otherwise
preserve the integrity of the System or if such suspension is deemed
appropriate for any reason.
7.5 No Advice. The Sponsor does not provide the Customer with any tax, legal
or accounting advice.
7.6 Recorded Telephone Calls. The Customer consents to the Sponsor recording
telephone calls between the Customer and the Sponsor.
7.7 Receipt of Issuer Information. The Customer consents to the disclosure by
the Sponsor and the Clearing Broker of the Customer's name to issuers of
securities held in the Customer's account to facilitate the Customer's
direct receipt of information distributed by such issuers to their
security holders.
ARTICLE VIII
Representations and Warranties of the Sponsor
The Sponsor Represents and warrants to the Customer as follows:
8.1 Corporate Existence and Power. The Sponsor has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Illinois with the corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
8.2 Broker-Dealer Status. The Sponsor is a broker-dealer registered with the
SEC under the Exchange Act and with appropriate state securities
administrators under applicable state laws and is a member of the NASD.
8.3 Authorization and Enforceability. The execution, delivery and performance
by the Sponsor of this Agreement and the other agreements contemplated
hereby have been duly authorized by all requisite corporate action and
constitute the legal, valid and
[missing copy]
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of any filings or papers served upon the Customer in connection with such
proceedings, it being understood that the Indemnified Party shall bear its
own costs incurred in connection with any participation by the Indemnified
Party or its counsel in the contests [illegible] Section 10.3.
ARTICLE XI
Term and Termination
11.1 Term. This Agreement shall remain in effect until terminated (i) by the
written agreement between the Customer and the Sponsor, (ii) upon ten
Business Days' prior written notice by the Sponsor to the Customer, or
(iii) immediately upon the giving of notice by the Sponsor to the Customer
following an Event of Termination as defined in Section 11.2.
11.2 Event of Termination. "Event of Termination" shall mean the occurrence of
any of the following:
(a) any representation or warranty made or deemed made by the Customer
in connection with this Agreement has been determined by the Sponsor
to have been false, incorrect or misleading in any material respect
when delivered;
(b) any breach by the Customer of any covenant, agreement, condition,
term or other provision of this Agreement not cured by the tenth
Business Day following notice of such breach by the Sponsor to the
Customer; or
(c)(i)a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Customer in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
the Customer or for any substantial party of its property, or
ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of
90 consecutive days, or (ii) the customer shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Customer or of any substantial part of its
property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become
due.
ARTICLE XII
Miscellaneous
12.1 [illegible] Waiver; Modifications in Writing. No failure or delay on the
part of the Sponsor in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or future
exercise thereof for the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Sponsor, at law or in equity. No
amendment, modification, supplement, termination or waiver of this
Agreement, shall be effective unless the same shall be in writing and
signed by the Customer and the Sponsor. Any waiver of any provision of
this Agreement, and any consent to any departure by another party to this
Agreement from the terms of any provision of this Agreement, shall be
effective only in the specific instance
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1. Arbitration is final and binding on the parties.
2. The parties are waiving their right to seek remedies in court,
including the right to jury trial.
3. Prearbitration discovery is generally more limited than and different
from court procedures.
4. The arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek
modification of rulings by the arbitrators is strictly limited.
5. The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
No person shall bring a punitive or certified class to arbitration, nor
seek to enforce any predispute arbitration agreement against any person who has
initiated in court a punitive class action; or who is a member of a punitive
class who has not opted out of the class with respect to any claims encompassed
by the punitive class action until: (i) the class certification is denied; or
(ii) the class is decertified; or (iii) the customer is excluded from the class
by the court. Such forbearance to enforce an agreement to arbitrator shall not
constitute a waiver of any rights under this Agreement except to the extent
stated herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
NICHI CAPITAL LIMITED
------------------------------------
Customer
By: /s/ Wande Agunloye
------------------------------------
Its: President
------------------------------------
NIPHIX INVESTMENTS INC.
Sponsor
By: /s/ Nimish Gandhi
------------------------------------
Nimish Gandhi
Its: President
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APPENDIX A
Niphix Systems
INVESTOR PARTICIPATION CHARGES: Institutional $3,500/Individual $1,000
INVESTOR ANNUAL FEE: $50
COMMISSION SCHEDULE:
Initial Offering Transactions: $18 per trade
After Market Transaction:
(all charges are per trade)
$24 within 7 days
$33 between 8 and 15 days
$38 between 16 and 30 days
$41 between 31 and 60 days
$43 between 61 and 90 days
$44 after 90 days
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WEINICK, SANDERS & CO. LLP
CERTIFIED PUBLIC ACCOUNTANTS
1515 BROADWAY
NEW YORK, N.Y. 10036-5788
212-869-3333
FAX 212-764-3060
CONSENT OF WEINICK, SANDERS & CO. LLP
(Independent Certified Public Accountants)
We consent to the use in Registration Statement of Nichi Capital, Ltd. on Form
SB-2 under the Securities Act of 1933 of our report dated March 21, 1997,
except for Note 1, as to which the date was April 2, 1997, Note 5 as to which
the date is August 4, 1997, and Note 6 for which the dates are July 25, 1997 and
August 11, 1997, and to the reference to our firm under the heading "Experts"
in the Prospectus.
WEINICK, SANDERS & CO. LLP
WEINICK, SANDERS & CO. LLP
Certified Public Accountants
New York, N.Y.
October 2, 1997
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