<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 12 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number 000-28052
EN POINTE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
State or other jurisdiction of I.R.S. Employer I. D.
incorporation or organization: Delaware Number: 75-2467002
100 N. Sepulveda Blvd., 19th Floor
El Segundo, California 90245
(Address of principal executive offices) (ZIP CODE)
Registrant's telephone number, including area code: (310) 725-5200
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: YES X NO
----- -----
As of August 11, 1997, 5,705,073 shares of Common Stock of the Registrant were
issued and outstanding.
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<PAGE>
INDEX
EN POINTE TECHNOLOGIES, INC.
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Balance Sheets - June 30, 1997 and September 30, 1996 3
Condensed Statements of Operations - Three Months and Nine Months
Ended June 30, 1997 and 1996 4
Condensed Statements of Cash Flows - Nine Months Ended
June 30, 1997 and 1996 5
Notes to Condensed Financial Statements - June 30, 1997 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
PART II OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 11
<PAGE>
EN POINTE TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
June 30, September 30,
1997 1996
----------- -------------
(Unaudited)
ASSETS:
Current assets:
Cash $ 789 $ 3,158
Restricted cash 408 610
Accounts receivable, net 71,725 55,673
Inventories 7,158 1,806
Deferred tax asset 289 289
Prepaid expenses and other current assets 994 566
-------- --------
Total current assets 81,363 62,102
Property and equipment, net of accumulated
depreciation 3,366 2,821
-------- --------
Total assets $ 84,729 $ 64,923
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of notes payable $ 195 $ 164
Borrowings under lines of credit 43,952 36,504
Accounts payable 8,372 1,781
Accrued liabilities 3,308 2,425
Other current liabilities 2,727 2,890
-------- --------
Total current liabilities 58,554 43,764
Notes payable 513 284
-------- --------
Total liabilities 59,067 44,048
Stockholders' equity:
Common stock 6 6
Additional paid-in capital 17,485 16,670
Retained earnings 8,171 4,199
-------- --------
Total stockholders' equity: 25,662 20,875
-------- --------
Total liabilities and stockholders' equity $ 84,729 $ 64,923
-------- --------
-------- --------
See Notes to Condensed Financial Statements
3
<PAGE>
EN POINTE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 128,400 $ 88,937 $ 356,661 $ 245,846
Cost of sales 116,671 81,465 325,456 225,674
--------- -------- --------- ---------
Gross profit 11,729 7,472 31,205 20,172
Selling and marketing expenses 5,737 4,032 15,898 10,636
General and administrative expenses 3,193 1,730 7,673 3,734
Litigation defense -- 576 -- 1,169
--------- -------- --------- ---------
Operating income 2,799 1,134 7,634 4,633
Interest expense 312 350 927 1,491
Other income, net (44) (33) (172) (82)
--------- -------- --------- ---------
Income before income taxes 2,531 817 6,879 3,224
Provision for income taxes 1,070 358 2,907 1,381
--------- -------- --------- ---------
Net income $ 1,461 $ 459 $ 3,972 $ 1,843
--------- -------- --------- ---------
--------- -------- --------- ---------
Net income per share, primary
and fully diluted $ 0.25 $ 0.10 $ 0.68 $ 0.48
--------- -------- --------- ---------
--------- -------- --------- ---------
Weighted average shares outstanding 5,785 4,756 5,832 3,822
--------- -------- --------- ---------
--------- -------- --------- ---------
</TABLE>
See Notes to Condensed Financial Statements
4
<PAGE>
EN POINTE TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Nine Months Ended
June 30,
------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 3,972 $ 1,843
Adjustments to reconcile net income to
net cash used by operations:
Depreciation and amortization 880 388
Deferred compensation 80 --
Allowance for doubtful accounts 437 270
Allowance for returns 150 180
Net changes in operating assets and
liabilities (14,906) (15,353)
--------- ---------
Net cash used by operating activities (9,387) (12,672)
Cash flows from investing activities:
Software development -- (396)
Purchase of property and equipment (1,425) (1,004)
--------- ---------
Net cash used by investing activities (1,425) (1,400)
Cash flows from financing activities:
Book overdraft -- --
Net borrowings under lines of credit 7,448 2,249
Payment on notes payable to stockholders -- (150)
Proceeds from lease obligation 402 --
Payment on long-term debt (141) (3,312)
Proceeds from sales of stock 734 15,730
--------- ---------
Net cash provided by financing activities 8,443 14,517
--------- ---------
Decrease in cash $ (2,369) $ 445
--------- ---------
--------- ---------
Supplemental disclosures of cash flow
information:
Interest paid $ 911 $ 1,528
--------- ---------
--------- ---------
Income taxes paid $ 3,868 $ 2,310
--------- ---------
--------- ---------
See Notes to Condensed Financial Statements
5
<PAGE>
EN POINTE TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation and General Information
The accompanying condensed unaudited financial statements of En Pointe
Technologies, Inc. (the "Company" or "En Pointe") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine months ended
June 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended September 30, 1997. For further information,
refer to the financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1996.
Note 2 - Commitments
The Company has established compensation plans with two key executives that
include bonus payments based on a percentage of pretax income. The bonuses are
conditioned upon reaching certain minimum targets of pretax income. One
executive bonus became effective April 1, 1997 and was set at 3 1/2% of pretax
income. The other commences July 1 and is set at 2 1/2% of pretax income. For
the fourth quarter of the 1997 fiscal year, the combined bonuses will amount to
6% of pretax income.
Note 3 - Stock Option Plan
On May 27, 1997 the Company amended its 1996 Stock Incentive Plan to increase
the number of shares which can be issued under the plan from 360,000 shares to
960,000 shares. Of the 600,000 increase in options, 231,600 were issued as of
June 30, 1997.
Note 4 - Recently Issued Accounting Standards
In June 1997, the FASB issued SFAS No. 130, Comprehensive Income. SFAS No. 130
becomes effective for fiscal years beginning after December 15, 1997 and
requires reclassification of earlier financial statements for comparative
purposes. SFAS No. 130 requires that changes in the amounts of certain items,
including foreign currency translation adjustments and gains and losses on
certain securities be shown in the financial statements. SFAS No. 130 does not
require a specific format for the financial statement in which comprehensive
income is reported, but does require that an amount representing total
comprehensive income be reported in that statement. Management has not yet
determined the effect, if any, of SFAS No. 130 on the financial statements.
Also in June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. This Statement will change the way
public companies report information about segments of their business in their
annual financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders. It also requires
entity-wide disclosures about the products and services an entity provides, the
material countries in which it holds assets and reports revenues, and its major
customers. The Statement is effective for fiscal years beginning after
December 15, 1997. Management has not yet determined the effect, if any, of
SFAS 131 on the financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The forward-looking statements included in Management's Discussion and Analysis
of Financial Condition and Results of Operations, which reflect management's
best judgment based on factors currently known, involve risks and uncertainties.
Actual results could differ materially from those anticipated in these forward-
looking statements as a result of a number of factors, including but not limited
to those discussed below. Forward-looking information provided by En Pointe
pursuant to the safe harbor established by recent securities legislation should
be evaluated in the context of these factors.
The following table sets forth certain financial data as a percentage of net
sales for the periods indicated:
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of sales. . . . . . . . . . . . . . . . 90.9 91.6 91.3 91.8
------ ------ ------ ------
Gross profit . . . . . . . . . . . . . . . 9.1 8.4 8.7 8.2
Selling and marketing expenses . . . . . . . 4.4 4.6 4.4 4.3
General and administrative expenses. . . . . 2.5 1.9 2.2 1.5
Litigation defense . . . . . . . . . . . . . -- 0.6 -- 0.5
------ ------ ------ ------
Operating income . . . . . . . . . . . . . 2.2 1.3 2.1 1.9
Interest expense . . . . . . . . . . . . . . 0.2 0.4 0.2 0.6
Other income, net. . . . . . . . . . . . . . 0.0 -- 0.0 --
------ ------ ------ ------
Income before income taxes . . . . . . . . 2.0 0.9 1.9 1.3
Provision for income taxes . . . . . . . . . 0.9 0.4 0.8 0.7
------ ------ ------ ------
Net income . . . . . . . . . . . . . . . . 1.1% 0.5% 1.1% 0.6%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
COMPARISON OF THE QUARTER AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
All comparisons within the following discussion are related to the same periods
of the previous year.
NET SALES. Revenues increased 44.4% to $128.4 million in the third fiscal
quarter of 1997 and 45.1% to $356.7 in the first nine months of fiscal 1997,
from $89.9 and $245.8 million in the corresponding periods of 1996. Of the $39.5
million increase in sales for the quarter, a majority was from increased sales
activity in the Southern California region, chiefly from sales to the public and
energy sector. The remainder was from sales to IBM and related customers of IBM
global services.
GROSS PROFIT. Gross profit as a percentage of sales improved to 9.1% for the
quarter compared with 8.3% in the prior quarter and 8.4% a year ago.
Contributing to the margin improvement from the prior quarter was a combination
of factors including leveraged purchasing power on certain products, a reduction
in lower margin sales under the IBM sales contract and an increase in service
sales to $1.9 million (from $1.3) with a 30% margin. Margin improvement from
the 1996 quarter was largely due to improved purchasing terms and the initiation
of the higher margin service business.
SELLING AND MARKETING EXPENSES. Selling and marketing expenses increased 42.3%
to $5.7 million in the third fiscal quarter of 1997 and 49.5% to $15.9 million
in the first nine months of fiscal 1997, from $4.0 and $10.6 million in the
corresponding periods of 1996. Selling and marketing expenses as a percentage
of sales declined from 4.6% in the prior quarter to 4.4% in the current, but
remained consistant with the year-to-date for the current and prior year.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 84.6% to $3.2 million million in the third fiscal quarter of 1997 and
105.5% to $7.7 million in the first nine months of fiscal 1997, from the $1.7
and $3.7 million in the corresponding periods of 1996. Of the $1.5 million
increase for the third quarter, $0.7 million was from investment in the
Company's information systems resources that was not a factor in the 1996
quarter. The remainder was due to increased staff and other administrative
functions necessary to support the Company's growth. For the nine month period,
$1.7 million of the $3.9 million increase was again represented by increased
costs for information systems, with the remainder due to increased staff and
other administrative functions necessary to support the increase in sales.
INTEREST EXPENSE. Interest expense for the quarter ended June 30, 1997
decreased 10.9% to $0.3 million, and for the nine month period decreased 37.8%
to $0.9 million. The decrease in interest expense was primarily due to more
favorable financing terms as well as the paydown of debt from the proceeds of
the public offering.
NET INCOME. As a result of the factors discussed above, net income for the
quarter ended June 30, 1997 was $1.5 million, an increase of $1.0 million, or
218.3%, compared with $0.5 million for the prior year's quarter. For the nine
months net income was $4.0 million, an increase of $2.1 million, or 115.5%,
compared with the $1.8 million for the prior year. Net income increased
primarily as a result of the increase in sales and a decline in operating
expenses as a percentage of sales due to the fixed expenses being spread over a
higher volume of sales.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash totaling $9.4 million during the nine months
ended June 30, 1997. Net cash used in operating activities has been significant
due to the working capital requirements resulting from the rapid growth of the
Company and, more specifically, the financing of increasing accounts receivable
balances that are a direct result of increased sales.
7
<PAGE>
Accounts receivable increased $16.6 million, as a result of continuing sales
growth and inventories increased $5.4 million as of June 30, 1997. The Company's
accounts receivable balance at June 30, 1997 and September 30, 1996 was $73.2
and $56.7 million. The number of days' sales outstanding in accounts receivable
was 52 and 59 days as of June 30, 1997 and September 30, 1996, respectively. The
reduction in days' sales outstanding was a result of the continued focus on
collection activities.
Investing activities used cash totaling $1.4 million during the nine months
ended June 30, 1997. The investing activities related to the purchase of
computer equipment and office furniture and equipment.
Financing activities provided net cash totaling $8.4 million during the nine
months ended June 30, 1997. The primary source of cash was from net borrowings
under lines of credit of $8.4 million. Additionally, $.7 million was provided
by employee purchases of stock under the Company's Employee Stock Purchase Plan
and $.4 million was provided by proceeds from lease financing.
As of June 30, 1997, the Company had approximately $.8 million in cash, $0.4
million in restricted cash, and $22.8 million in working capital. The Company
has several revolving credit facilities collateralized by accounts receivable
and all other assets of the Company, including a $70 million line with IBM
Credit Corporation ("IBM Credit"). As of June 30, 1997, such lines of credit
provided for maximum aggregate borrowings of approximately $81 million, of which
$44.0 million was outstanding. Because the lines of credit are primarily
collateralized by accounts receivable, the available credit and credit limit are
dependent upon the amount of accounts receivable at any given point in time.
Outstanding borrowings on the lines of credit bear interest at the prime rate.
The lines of credit are automatically renewable on an annual basis unless
notification of an election not to renew is made by either the Company or
creditor on or prior to the annual renewal date. Borrowings are collateralized
by substantially all of the Company's assets. In addition, the lines of credit
contain certain financing and operating covenants relating to net worth,
liquidity, profitability, repurchase of indebtedness and prohibition on payment
of dividends.
Management believes that existing cash, cash equivalents, available line of
credit and anticipated cash generated from operations will be sufficient to
satisfy the Company's currently anticipated cash requirements.
FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION OF THE COMPANY
The Company in its operations faces many risks and uncertainties that could
adversely impact its future profitability. A few, but not all, are listed
below:
SUCCESS OF OPENING NEW BRANCHES
The Company has opened three new sales branches and is in the process of opening
one additional branch. Typically sales branches do not become profitable for
the first six months of operations. Continuation of the current levels of net
income will be dependent on successfully managing new branch offices, the
successful expansion of services based revenue, developing competitive
information systems responsive to customer needs, and the ability to maintain
margins while remaining competitive in the marketplace.
INTENSE COMPETITION AND THIN MARGINS
The Company faces intense competition in the reseller industry as it tries to
compete on price, product availability, credit terms, delivery time, services,
and specific solutions to customer needs. The competition also extends to
attracting and retaining qualified sales and technical personnel in the
workforce. There can be no assurance that the Company will not in the future
lose sales, reduce price margins, or be forced to take other competitive action
in response to the marketplace. Furthermore, there can be no assurance that the
Company will be able to attract and retain the talented sales and technical
staff necessary to compete in the industry.
DEPENDENCE ON KEY SUPPLIERS AND AVAILABLE PRODUCT SUPPLY
The computer reseller industry regularly experiences product supply shortages as
new products are introduced by manufacturers into the marketplace that often are
under allocation to large volume buyers. To further affect product
availability, manufacturers are free to change their method of allocation of
product by going outside the regular channel of distribution that the Company
depends upon. The Company buys most of its product from a few key suppliers
with whom it has established purchasing agreements. While in the past the
Company has been successful in obtaining product and maintaining favorable
relationships with key suppliers, there can be no assurance that the Company
will be able to do so in the future. Any adverse change could have an material
impact on the profitability of the Company.
DEPENDENCE ON SUPPLIER INCENTIVE REBATES
Currently the Company depends on incentive rebates earned from suppliers for
meeting certain goals or objectives as determined by the supplier. There can be
no assurance that these rebates will be continued in the future and any
reduction or discontinuance would have an adverse effect on the Company.
8
<PAGE>
DEPENDENCE ON INFORMATION SYSTEMS
Several information systems are relied upon in the Company's day-to-day
operations, particularly its EPIC system that is key in providing the sales
force with vital product information and in executing and processing sales
orders. While in the past the Company has not suffered any significant failure
or down time from its systems, any future failure of the system could have a
severe and adverse affect on operations. There can be no assurance that the
Company's information system will not fail or that the Company will be able to
expand and improve its system.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
Quarterly results may fluctuate because of a number of factors including demand
for product and services, availability, competitive conditions, new product
introductions, and general economic conditions. Acquisitions or discontinuance
of selling branches or product or service lines could also significantly impact
quarterly results. While the Company attempts to manage its operating expense
levels, the levels are premised on anticipated revenues and may not be subject
to a quick enough adjustment in the event of a change in revenues to avoid
impacting quarterly results. As a result of these various factors, quarterly
results or comparisons of the Company's financial operations may not be
meaningful or representative of future performance.
NO ASSURANCE OF SUCCESSFUL ACQUISITIONS
The Company may in the future seek acquisitions or purchases of businesses.
Numerous risks are involved in acquisitions including but not limited to the
potential dilution to present stockholders, should securities be issued, the
possible incurrence of debt or goodwill and the effect on earnings of the
amortization of any acquired goodwill, the diversion of management from daily
business concerns, the integration of new management and their operating
systems, the loss of key employees or customers, and possible
misrepresentations from the seller. All of these factors could have a
material adverse effect on the Company's operations.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims and legal actions pending against the
Company. In the opinion of management, the outcome of such claims and
litigation will not have a material adverse effect upon the Company's
financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Description
------- -----------
10.30 Office Lease Agreement dated May 27, 1997 between 505
Waterford Park Limited Partnership and the Registrant
for the property located at 505 North U.S. Highway 169,
Plymouth, Minnesota.
10.31 Office Lease Agreement dated May 6, 1997 between Beacon
Properties, L.P., a Delaware limited partnership and
the Registrant for property located at 400 Perimeter
Center Terrace, Atlanta, Georgia.
10.32 Office Lease Agreement dated April 18, 1997 between ABT
Building Products Corporation and the Registrant for
property located at 8420 University Executive Park,
Charlotte, North Carolina.
11.2 Computation of Earnings Per Common Share
27 Financial Data Schedule for the Quarter Ended June 30,
1997
b. On May 27, 1997, a report on Form 8-K was filed to report the
stockholder approval of a 600,000 share increase in the number of
shares of stock issuable pursuant to the Company's 1996 Stock
Incentive Plan.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
En Pointe Technologies, Inc.
----------------------------
(REGISTRANT)
Date: August 8, 1997 By: /s/ Robert A. Mercer
-----------------------------------------
Robert A. Mercer, Chief Financial Officer
11
<PAGE>
LEASE
By and Between
505 WATERFORD PARK LIMITED PARTNERSHIP
("LANDLORD")
AND
EN POINTE TECHNOLOGIES, INC.
("TENANT")
Multi-Tenant Office Lease
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 2 - USE . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 3 - RENTALS . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 4 - CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 5 - POSSESSION. . . . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE 6 - TENANT'S PRO RATA SHARE OF REAL ESTATE TAXES AND
OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . -2-
ARTICLE 7 - UTILITIES AND SERVICE . . . . . . . . . . . . . . . . . . -3-
ARTICLE 8 - NON-LIABILITY OF LANDLORD . . . . . . . . . . . . . . . . -4-
ARTICLE 9 - CARE OF PREMISES. . . . . . . . . . . . . . . . . . . . . -4-
ARTICLE 10 - RESTRICTIONS CONCERNING USE . . . . . . . . . . . . . . . -5-
ARTICLE 11 - INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . -5-
ARTICLE 12 - ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . -5-
ARTICLE 13 - SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE 14 - COMMON AREAS. . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE 15 - ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . -7-
ARTICLE 16 - LOSS BY CASUALTY. . . . . . . . . . . . . . . . . . . . . -8-
ARTICLE 17 - WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . -8-
ARTICLE 18 - EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . -8-
ARTICLE 19 - SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . -9-
ARTICLE 20 - NON-PAYMENT OF RENT, DEFAULTS . . . . . . . . . . . . . . -9-
ARTICLE 21 - LANDLORD'S DEFAULT. . . . . . . . . . . . . . . . . . . . -10-
ARTICLE 22 - HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE 23 - SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE 24 - INDEMNITY, INSURANCE AND SECURITY . . . . . . . . . . . . -11-
<PAGE>
ARTICLE 25 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . -12-
ARTICLE 26 - APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . -12-
ARTICLE 27 - MECHANICS' LIEN . . . . . . . . . . . . . . . . . . . . . -12-
ARTICLE 28 - SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE 29 - BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE 30 - SUBSTITUTION. . . . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE 31 - ESTOPPEL CERTIFICATES . . . . . . . . . . . . . . . . . . -13-
ARTICLE 32 - GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . -14-
ARTICLE 33 - EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . -15-
<PAGE>
LEASE SUMMARY SHEET
1. LANDLORD: 505 Waterford Park Limited Partnership
c/o United Properties Corporation
3500 West 80th Street
Bloomington, MN 55431
2. TENANT: EN POINTE TECHNOLOGIES, INC., A DELAWARE CORPORATION
3. TENANT'S ADDRESS:
A. Prior to the commencement of the Term:
B. Subsequent to commencement of the Term if different
from the address of the Premises:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
4. PREMISES: SUITE 255, 3,013 RENTABLE SQUARE FEET
5. TERM OF LEASE: FIVE (5) YEARS
COMMENCEMENT DATE: JULY 1, 1997
EXPIRATION DATE: JUNE 30, 2002
6. RENT: JULY 1, 1997 - JUNE 30, 1998: $3,640.71 PER MONTH
JULY 1, 1998 - JUNE 30, 1999: $3,766.25 PER MONTH
JULY 1, 1999 - JUNE 30, 2000: $3,891.79 PER MONTH
JULY 1, 2000 - JUNE 30, 2001: $4,017.33 PER MONTH
JULY 1, 2001 - JUNE 30, 2002: $4,142.88 PER MONTH
7. SECURITY DEPOSIT: $6,297.17
This Lease Summary Sheet information is incorporated into and made a part
of the Lease Agreement attached hereto. In the event of any conflict between
any Summary Sheet information and the Lease Agreement, the Lease Agreement shall
control. This Lease Agreement includes the following Exhibits, all of which are
made a part of this Lease Agreement. Exhibits: Exhibit A-1 (Graphic Location of
the Premises); Exhibit A-2 (Legal Description for the Building); Exhibit A-3, if
attached (Plans and/or Description for Construction of Improvements to the
Premises); Exhibit B, if attached (Tenant Work Fundings);_______________________
__________________________________.
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MULTI-TENANT OFFICE LEASE AGREEMENT (NET)
THIS LEASE AGREEMENT (hereinafter called the "Lease Agreement") made as of the
28TH day of MAY, 1997, by and between 505 WATERFORD PARK LIMITED PARTNERSHIP
having offices at c/o United Properties Corporation, 3500 West 80th Street,
Bloomington, Minnesota, 55431 (hereinafter called the "Landlord"), and EN
POINTE TECHNOLOGIES, INC., A DELAWARE CORPORATION, (hereinafter called the
"Tenant").
WITNESSETH
FOR AND IN CONSIDERATION of the sum of One Dollar ($1.00) in hand paid by
each of the parties to the other, and other good and valuable consideration,
receipt and sufficiency of which is hereby acknowledged, Landlord does hereby
lease and let unto Tenant, and Tenant does hereby hire, lease and take from
Landlord, that area outlined in red on Exhibit A-1 attached hereto, and by this
reference incorporated herein, and described as Suite 255, containing
approximately 3,013 rentable square feet, (hereinafter called the "Premises") at
505 NORTH U.S. HIGHWAY 169 (hereinafter called the "Building") in the City of
PLYMOUTH, County of HENNEPIN, State of Minnesota. The term Building as it is
used herein shall consist of the land and building(s) set forth in Exhibit A-2
hereto.
ARTICLE 1 - TERM
To have and to hold said Premises for a term of FIVE (5) years, commencing
JULY 1, 1997 and terminating JUNE 30, 2002 (hereinafter called the "Term") upon
the rentals and subject to the conditions set forth in this Lease Agreement, and
the Exhibits attached hereto. The commencement and termination dates are
specifically subject to the provisions of Article 5 hereof.
ARTICLE 2 - USE
The Premises shall be used by the Tenant solely for the following purposes:
COMPUTER SOFTWARE AND RELATED SERVICES.
ARTICLE 3 - RENTALS
Tenant agrees to pay to Landlord as minimum rental (hereinafter called
"Minimum Rental") for the Premises, without notice set-off or demand, the sum of
SEE LEASE SUMMARY Dollars ($________) per month, said monthly installments to be
due and payable by Tenant in advance on the first day of each calendar month
during the Term of this Lease Agreement, or any extension or renewal thereof, at
the office of Landlord set forth in the preamble to this Lease Agreement or at
such other place as Landlord may designate. In the event of any fractional
calendar month, Tenant shall pay for each day in such partial month a rental
equal to 1/30 of the Minimum Rental. Tenant agrees to pay, as Additional Rent,
which shall be collectible to the same extent as Minimum Rental, all amounts
which may become due to Landlord hereunder and any tax, charge or fee that may
be levied, assessed or imposed upon or measured by the rents reserved hereunder
by any governmental authority acting under any present or future law before any
fine, penalty, interest or costs may be added thereto for non-payment. Pursuant
to Article 6 hereof, Landlord's estimated Operating Expenses for 1997, are $5.25
per square foot and estimated Real Estate Taxes payable in 1997 are $5.33 per
square foot.
ARTICLE 4 - CONSTRUCTION
If any improvements to the Premises ("Tenant Improvements") are to be made,
the provisions governing the planning, construction, scope of work and terms and
payment, shall be set forth in Exhibit B, which, if attached hereto, is
incorporated herein by this reference. If the parties have agreed to plans
and/or a description for said Tenant Improvements, the same will be attached
hereto as Exhibit A-3 and, if so attached, is incorporated herein by this
reference.
<PAGE>
ARTICLE 5 - POSSESSION
Except as otherwise provided, Landlord shall deliver possession of the
Premises on or before the date hereinabove specified for commencement of the
Term, but delivery of possession prior to such commencement date shall not
affect the expiration date of this Lease Agreement. Failure of Landlord, to
deliver possession of the Premises by the date hereinabove provided, due to a
holding over by a prior tenant, or any other cause beyond Landlord's control, or
time required for construction delays due to material shortages, strikes, or
acts of God, shall automatically postpone the date of commencement of the Term
of this Lease Agreement and shall extend the termination date by periods equal
to those which shall have elapsed between and including the date hereinabove
specified for commencement of the Term hereof and the date on which possession
of the Premises is delivered to the Tenant. The rentals herein reserved shall
commence on the first day of the Term, provided, however, in the event of any
occupancy by Tenant prior to the beginning of the Term, such occupancy shall in
all respects be the same as that of a tenant under this Lease Agreement, and the
rental shall commence as of the date that Tenant enters into such occupancy of
the Premises. Provided further, that if Landlord shall be delayed in delivery
of the Premises to Tenant due to Tenant's failure to agree to the Plans or delay
caused by a party employed by or the agent of Tenant, or by Tenant's failure to
pay for the costs of the Tenant Improvements, then in such case the rental shall
be accelerated by the number of days of such delay, and the rentals shall
commence the same as if occupancy had been taken by Tenant. Prior to the
commencement of the Term, Landlord shall have no responsibility or liability for
loss or damage to fixtures, facilities or equipment installed or left on the
Premises. By occupying the Premises as a Tenant, or to install fixtures,
facilities or equipment, or to perform finishing work, Tenant shall be
conclusively deemed to have accepted the same and to have acknowledged that the
Premises are in the condition required by this Lease Agreement. Should the
commencement of the rental obligations of Tenant under this Lease Agreement
occur for any reason on a day other than the first day of a calendar month, then
in that event solely for the purposes of computing the Term of this Lease
Agreement, the commencement date of the Term shall become and be the first day
of the first full calendar month following the date when Tenant's rental
obligation commences, or the first day of the first full calendar month
following the commencement date set out in Article 1 (if such is other than the
first date of a calendar month), whichever date is later, and the termination
date shall be adjusted accordingly; provided however, that the termination date
shall be the last day of a calendar month, which date shall in no event be
earlier than the termination date set out in Article 1. Immediately after
Tenant's occupancy of the Premises the Landlord and Tenant shall execute a
ratification agreement which shall set forth the final commencement and
termination dates for the Term and shall acknowledge the Minimum Rental, the
square footage of the Premises, and delivery of the Premises in the condition
required by this Lease Agreement. TENANT SHALL HAVE ACCESS TO THE PREMISES ONE
(1) WEEK PRIOR TO THE COMMENCEMENT DATE FOR THE SOLE PURPOSE OF INSTALLING
FURNITURE SYSTEMS AND PHONE AND DATA CABLING.
ARTICLE 6 - TENANT'S PRO RATA SHARE OF REAL ESTATE TAXES AND OPERATING EXPENSES
A. During each full or partial calendar year during the Term of this
Lease Agreement, Tenant shall pay to Landlord, as Additional Rental, an
amount equal to the Real Estate Taxes and Operating Expenses (both as
hereinafter defined) per square foot of rentable area in the Building
multiplied by the number of square feet of rentable area in the Premises
prorated for the period that Tenant occupied the Premises. Notwithstanding
the preceding sentence, Tenant's share of the following Operating Expenses
shall be computed on the basis of the cost of said expenses per rentable
square foot of area within the Building actually occupied: cleaning,
management, and energy expenses.
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B. Landlord shall, each year during the Term of this Lease
Agreement, give Tenant an estimate of Operating Expenses and Real Estate
Taxes payable per square foot of rentable area for the coming calendar
year. Tenant shall pay, as Additional Rental, along with its monthly
Minimum Rental payments required hereunder, one-twelfth (1/12) of such
estimated Operating Expenses and Real Estate Taxes and such Additional
Rental shall be payable until subsequently adjusted for the following year
pursuant to this Article.
C. As soon as possible after the expiration of each calendar year,
Landlord shall determine and certify to Tenant the actual Operating
Expenses and Real Estate Taxes for the previous year per square foot of
rentable area in the Building and the amount applicable to the Premises.
If such statement shows that Tenant's share of Operating Expenses and Real
Estate Taxes exceeds Tenant's estimated monthly payments for the previous
calendar year, then Tenant shall, within twenty (20) days after receiving
Landlord's certification, pay such deficiency to Landlord. In the event of
an overpayment by Tenant, such overpayments shall be refunded to Tenant, at
the time of certification, in the form of an adjustment in the Additional
Rental next coming due, or if at the end of the Term by a refund.
D. For the purposes of this Article, the term "Real Estate Taxes"
means the total of all taxes, fees, charges and assessments, general and
special, ordinary and extraordinary, foreseen or unforeseen, which become
due or payable upon the Building. All costs and expenses incurred by
Landlord during negotiations for or contests of the amount of Real Estate
Taxes shall be included within the term "Real Estate Taxes." For purposes
of this Article, the term "Operating Expenses" shall be deemed to mean all
costs and expenses directly related to the Building incurred by Landlord in
the repair, operation, management and maintenance of the Building including
interior and exterior and common area maintenance, management fees,
cleaning expenses, energy expenses, insurance premiums, and the
amortization of capital investments made to reduce operating costs or that
are necessary due to governmental requirements, all in accordance with
generally accepted accounting principles.
E. Landlord may at any time designate a fiscal year in lieu of a
calendar year and in such event, at the time of such a change, there may be
a billing for the fiscal year which is less than 12 calendar months.
F. Landlord reserves, and Tenant hereby assigns to Landlord, the
sole and exclusive right to contest, protest, petition for review, or
otherwise seek a reduction in the Real Estate Taxes.
ARTICLE 7 - UTILITIES AND SERVICE
A. Landlord agrees to furnish water, electricity, elevator service,
and janitorial service. In the event Tenant's requirements and/or usage of
such utilities and services is substantially greater than is customarily
supplied to a typical tenant in the Building, Landlord or Tenant may
request that the difference in such requirement and/or usage be determined
and that appropriate adjustments be made in the Minimum Rental provided for
in Article 3 of this Lease Agreement.
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B. Landlord agrees to furnish heat during the usual heating season
and air conditioning during the usual air conditioning season, all during
normal business hours as defined in this Lease Agreement.
C. No temporary interruption or failure of such services incidental
to the making of repairs, alterations or improvements, or due to accidents
or strike or conditions or events not under Landlord's control, shall be
deemed as an eviction of the Tenant or relieve the Tenant from any of the
Tenant's obligations hereunder.
D. For the purposes of this Article 7, normal business hours shall
be deemed to mean the period of time between 8:00 a.m. and 5:00 p.m.,
Monday through Friday, and specifically excluding Saturdays, Sundays and
legal holidays.
E. Tenant shall have no right of access to the roof of the Premises
or the Building and shall not install, repair or replace any aerial, fan,
air conditioner, or other device on the roof of the Premises or the
Building without the prior written consent of Landlord.
ARTICLE 8 - NON-LIABILITY OF LANDLORD
Except in the event of the gross negligence of Landlord, its agents,
employees or contractors, Landlord shall not be liable for any loss or damage
for failure to furnish heat, air conditioning, electricity, elevator service,
water, sprinkler system or janitorial service. Landlord shall not be liable for
personal injury, death or any damage from any cause about the Premises or the
Building except if caused by Landlord's gross negligence.
ARTICLE 9 - CARE OF PREMISES
A. Tenant agrees:
1. To keep the Premises in as good condition and repair as they
were in at the time Tenant took possession of same, reasonable wear
and tear and damage from fire and other casualty for which insurance
is normally procured excepted;
2. To keep the Premises in a clean and sanitary condition;
3. Not to commit any nuisance or waste on the Premises,
overload the Premises or the electrical, water and/or plumbing
facilities in the Premises or Building, throw foreign substances in
plumbing facilities, or waste any of the utilities furnished by
Landlord;
4. To abide by such rules and regulations as may from time to
time be reasonably promulgated by Landlord;
5. To preserve and protect all carpeted areas and to provide
and use carpet protector mats in all locations within the Premises
where chairs with castors are used; and
6. To obtain Landlord's prior approval of the interior design
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of any portion of the Premises visible from the common areas or from
the outside of the Building. "Interior design" as used in the
preceding sentence shall include but not be limited to floor and wall
coverings, furniture, office design, artwork and color scheme.
B. If Tenant shall fail to keep and preserve the Premises in
the state of condition required by the provisions of this Article 9,
the Landlord may at its option put or cause the same to be put into
the condition and state of repair agreed upon, and in such case the
Tenant, on demand, shall pay the cost thereof.
ARTICLE 10 - RESTRICTIONS CONCERNING USE
Tenant covenants not to introduce any hazardous or toxic materials onto the
Premises without complying with all applicable Federal, State and local laws or
ordinances pertaining to the transportation, storage, use or disposal of such
materials, including but not limited to obtaining proper permits. If Tenant's
transportation, storage, use or disposal of hazardous or toxic materials on the
Premises results in the contamination of the soil or surface or ground water or
loss or damage to person(s) or property, then Tenant agrees to:
i) Notify Landlord immediately of any contamination, claim or
contamination, loss or damage;
ii) After consultation with the Landlord, clean up the contamination
in full compliance with all applicable statutes, regulations and standards;
and
iii) Indemnify, defend and hold Landlord harmless from and against any
claims, suits, causes of action, costs and fees, including attorneys' fees
and costs, arising from or connected with any such contamination, claim of
contamination, loss or damage.
This provision shall survive termination, cancellation or expiration of this
Lease Agreement. For purposes of this Article, the terms "hazardous materials"
or "toxic materials" shall mean any substance or material which has been
determined by any state, federal or local governmental authority to be capable
of posing a risk of injury to health, safety or property, including all of those
materials and substances designated as hazardous or toxic by the city in which
the Premises are located, the U.S. Environmental Protection Agency, the Consumer
Product Safety Commission, the Food and Drug Administration, and any federal
agencies that have overlapping jurisdiction with such state agencies, or any
other governmental agency now or hereafter authorized to regulate materials and
substances in the environment.
ARTICLE 11 - INSPECTION
The Landlord or its employees or agents shall have the right without any
diminution of rent or other charges payable hereunder by Tenant to enter the
Premises at all reasonable times for the purpose of exhibiting the Premises to
prospective tenants or purchasers, inspection, cleaning, repairing, testing,
altering or improving the same or said Building, but nothing contained in this
Article shall be construed so as to impose any obligation on the Landlord to
make any repairs, alterations or improvements. LANDLORD SHALL USE REASONABLE
EFFORTS TO PROVIDE ADVANCED NOTICE EXCEPT IN CASES THAT ARE OF AN EMERGENCY
NATURE.
ARTICLE 12 - ALTERATIONS
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Tenant will not make any alterations, repairs, additions or improvements in
or to the Premises or add, disturb or in any way change any locks, plumbing or
wiring therein without the prior written consent of the Landlord as to the
character of the alterations, additions or improvements to be made, the manner
of doing the work, and the contractor doing the work. Such consent shall not be
unreasonably withheld or delayed, if such alterations, repairs, additions or
improvements are the obligations of Tenant pursuant to this Lease Agreement.
All such work shall comply with the applicable governmental laws, ordinances,
rules and regulations. The Landlord as a condition to said consent may require
a surety performance and/or payment bond from the Tenant for said actions.
Tenant agrees to indemnify and hold Landlord free and harmless from any
liability, loss, cost, damage or expense (including attorney's fees) by reasons
of any said alteration, repairs, additions or improvements.
ARTICLE 13 - SIGNS
Tenant agrees that no signs or other advertising materials shall be
erected, attached or affixed to any portion of the interior or exterior of the
Premises or the Building without the express prior written consent of Landlord.
ARTICLE 14 - COMMON AREAS
A. Tenant agrees that the use of all corridors, passageways,
elevators, toilet rooms, parking areas and landscaped area in and around
said Building, by the Tenant or Tenant's employees, visitors or invitees,
shall be subject to such rules and regulations as may from time to time be
made by Landlord for the safety, comfort and convenience of the owners,
occupants, tenants and invitees of said Building. Tenant agrees that no
awnings, curtains, drapes or shades shall be used upon the Premises except
as may be approved by Landlord.
B. In addition to the Premises, Tenant shall have the right of
non-exclusive use, in common with others, of: (a) all unrestricted
automobile parking areas (subject to the provisions set forth below),
driveways and walkways; and (b) loading facilities, freight elevators and
other facilities as may be constructed in the Building, all to be subject
to the terms and conditions of this Lease Agreement and to reasonable rules
and regulations for the use thereof as prescribed from time to time by
Landlord.
C. Landlord shall have the right to make changes or revisions in the
site plan and in the Building so as to provide additional leasing area.
Landlord shall also have the right to construct additional buildings on the
land described on Exhibit A-2 for such purposes as Landlord may deem
appropriate. Landlord also reserves all airspace rights above, below and
to all sides of the Premises, including the right to make changes,
alterations or provide additional leasing areas.
D. Landlord and Tenant agree that Landlord will not be responsible
for any loss, theft or damage to vehicles, or the contents thereof, parked
or left in the parking areas of the Building and Tenant agrees to so advise
its employees, visitors or invitees who may use such parking areas.
E. The parking areas shall include those areas designated by
Landlord, in its REASONABLE discretion, as either restricted or
unrestricted parking areas. Tenant, its
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employees and invitees shall have the right to park in the unrestricted
parking areas in common with other tenants of the Building upon such terms
and conditions adopted by Landlord from time to time, including the
imposition of a reasonable parking charge, if the same is established by
Landlord at any time during the Term. Tenant agrees not to overburden the
unrestricted parking areas and agrees to cooperate with Landlord and other
tenants in the use of the unrestricted parking areas. Landlord reserves
the right in its absolute discretion to determine whether the parking areas
are becoming overburdened and to allocate and assign parking spaces among
Tenant and other tenants, and to reconfigure the parking areas and modify
the existing ingress to and egress from the parking areas as Landlord shall
deem appropriate. Any restricted parking areas shall be leased only by
separate license agreement with Landlord. Tenant further agrees not to use
or permit its employees, visitors or invitees to use the parking areas for
overnight storage of vehicles.
ARTICLE 15 - ASSIGNMENT AND SUBLETTING
A. Tenant shall not assign this Lease Agreement, or sublease all or
any part of the Premises, or permit the use of the Premises by any party
other than Tenant, without the prior written consent of Landlord. When
Tenant requests Landlord's consent to such assignment or sublease, it shall
notify Landlord in writing of the name and address of the proposed assignee
or subtenant and the nature and character of the business of the proposed
assignee or subtenant and shall provide financial information, including
financial statements of the proposed assignee or subtenant. Tenant shall
also provide Landlord with a copy of the proposed sublet or assignment
agreement. Landlord shall have the option (to be exercised within thirty
days from the submission of Tenant's request) to cancel this Lease
Agreement as of the commencement date stated in the proposed sublease or
assignment. If Landlord shall not exercise its option within the time set
forth above, its consent to any proposed assignment or sublease shall not
be unreasonably withheld.
B. If Landlord approves an assignment or sublease as herein
provided, Tenant shall pay to Landlord, as additional rent due under this
Lease Agreement, fifty percent (50%) of the difference, if any, between the
Minimum Rent plus Additional Rent allocable to that part of the Premises
affected by such assignment or sublease pursuant to this Lease Agreement,
and the rent and any additional rent payable by the assignee or subtenant
to Tenant. No consent to any assignment or sublease shall constitute a
further waiver of the provisions of this Article, and all subsequent
assignments or subleases may be made only with the prior written consent of
Landlord. An assignee of Tenant, at the option of Landlord, shall become
directly liable to Landlord for all obligations of Tenant hereunder, but no
sublease or assignment by Tenant shall relieve Tenant of any liability
hereunder. Any assignment or sublease without Landlord's consent shall be
void, and shall, at the option of the Landlord, constitute a default under
this Lease Agreement. In the event that Landlord shall consent to a
sublease or assignment hereunder, Tenant shall pay Landlord's reasonable
fees, not to exceed Two Hundred Fifty and no/100ths Dollars ($250.00) per
transaction, incurred in connection with the processing of documents
necessary to the giving of such consent.
C. Landlord's right to assign this Lease Agreement is and shall
remain unqualified upon any sale or transfer of the Building and, providing
the purchaser succeeds
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to the interests of Landlord under this Lease Agreement, Landlord shall
thereupon be entirely freed of all obligations of the Landlord hereunder
and shall not be subject to any liability resulting from any act or
omission or event occurring after such conveyance. Tenant agrees to attorn
to any such assignee or transferee of Landlord's interest in this Lease
Agreement or the Building.
ARTICLE 16 - LOSS BY CASUALTY
A. If the Premises shall be destroyed or rendered untenantable,
either wholly or in part, by fire or other casualty, Landlord may, at its
option, (i) terminate this Lease Agreement effective as of the date of such
damage or destruction, or (ii) restore the Premises to their previous
condition, and in the meantime the rent shall be abated in the same
proportion as the untenantable portion of the Premises bears to the whole
thereof, and this Lease Agreement shall continue in full force and effect.
If the damage is due, directly or indirectly, to the fault or neglect of
Tenant, or its officers, contractors, licensees, agents, servants,
employees, guests, invitees or visitors, there shall be no abatement of
rent, except to the extent Landlord receives proceeds from any applicable
insurance policy of Tenant to compensate Landlord for loss of rent.
B. If the Building shall be destroyed or damaged by fire or other
casualty insured against under Landlord's fire and extended coverage
insurance policy to the extent that more than fifty percent (50%) thereof
is rendered untenantable, or if the Building shall be materially destroyed
or damaged by any other casualty other than those covered by such insurance
policy, notwithstanding that the Premises may be unaffected directly by
such destruction or damage, Landlord may, at its election, terminate this
Lease Agreement by notice in writing to Tenant within sixty (60) days after
such destruction or damage. Such notice shall be effective thirty (30) days
after receipt thereof by Tenant.
C. Other than rental abatement provided in paragraph A of this
Article, no damages, compensation or claim shall be payable by Landlord for
inconvenience or loss of business arising from interruption of business,
repair or restoration of the Building or Premises.
D. Landlord's obligations, should it elect to repair, shall be
limited to the base Building, common areas and the interior improvements
installed by Landlord. Anything herein to the contrary notwithstanding, if
the Premises are destroyed or damaged during the last twelve (12) months of
the Term of this Lease Agreement, then Landlord may, at its option, cancel
and terminate this Lease Agreement as of the date of the occurrence of such
damage.
ARTICLE 17 - WAIVER OF SUBROGATION
Whether any loss or damage occurring to the Premises or the Building is due
to the negligence of Landlord or Landlord's agents or employees, or any other
cause, Tenant hereby releases Landlord and Landlord's agents and employees from
responsibility for and waives its entire claim of recovery for (i) any loss or
damage to the personal property of Tenant located in the Building, including the
Building itself, arising out of any of the perils which are covered by Tenant's
property insurance policy, with extended coverage endorsements, or (ii) loss
resulting from business interruption or loss of rental income, at the
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Premises, arising out of any of the perils which may be covered by the business
interruption or by the loss of rental income insurance policy held by Tenant.
Tenant shall cause its insurance carrier(s) to consent to such waiver of all
rights of subrogation against Landlord.
ARTICLE 18 - EMINENT DOMAIN
If the entire Building is taken by eminent domain, this Lease Agreement
shall automatically terminate as of the date of taking. If a portion of the
Building is taken by eminent domain, the Landlord shall have the right to
terminate this Lease Agreement, provided it gives written notice thereof to the
Tenant within ninety (90) days after the date of taking. If a portion of the
Premises is taken by eminent domain and this Lease Agreement is not terminated
by Landlord, the Landlord shall, at its expense, restore the Premises to as near
the condition which existed immediately prior to the date of taking as
reasonably possible, and the rentals shall abate during such period of time as
the Premises are untenantable, in the proportion that the untenantable portion
of the Premises bears to the entire Premises. All damages awarded for such
taking under the power of eminent domain shall belong to and be the sole
property of Landlord, irrespective of the basis upon which they are awarded,
provided, however, that nothing contained herein shall prevent Tenant from
making a separate claim to the condemning authority for its moving expenses and
trade fixtures. For purposes of this Article, a taking by eminent domain shall
include Landlord's giving of a deed under threat of condemnation.
ARTICLE 19 - SURRENDER
On the last day of the Term of this Lease Agreement or on the sooner
termination thereof in accordance with the terms hereof, Tenant shall peaceably
surrender the Premises in good condition and repair consistent with Tenant's
duty to make repairs as provided in Article 9 hereof. On or before said last
day, Tenant shall at its expense remove all of its equipment from the Premises,
repairing any damage caused thereby, and any property not removed shall be
deemed abandoned. All alterations, additions and fixtures other than Tenant's
trade fixtures, which have been made or installed by either Landlord or Tenant
upon the Premises shall remain as Landlord's property and shall be surrendered
with the Premises as a part thereof, or shall be removed by Tenant, at the
option of Landlord, in which event Tenant shall at its expense repair any damage
caused thereby. It is specifically agreed that any and all telephonic, coaxial,
ethernet, or other computer, wordprocessing, facsimile, or electronic wiring
installed by Tenant within the Premises (hereafter "Wiring") shall be removed at
Tenant's cost at the expiration of the Term, unless Landlord has specifically
requested in writing that said Wiring shall remain, whereupon said Wiring shall
be surrendered with the Premises as Landlord's property. If the Premises are
not surrendered at the end of the Term or the sooner termination thereof, Tenant
shall indemnify Landlord against loss or liability resulting from delay by
Tenant in so surrendering the Premises, including, without limitation, claims
made by any succeeding tenant founded on such delay. Tenant shall promptly
surrender all keys for the Premises to Landlord at the place then fixed for
payment of rental and shall inform Landlord of combinations on any locks and
safes on the Premises.
ARTICLE 20 - NON-PAYMENT OF RENT, DEFAULTS
A. If any one or more of the following occurs:
1. A rent payment or any other payment due from Tenant to
Landlord shall be and remain unpaid in whole or in part for more than
ten (10) days after written notice that the same is due and payable;
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2. Tenant shall violate or default on any of the other
covenants, agreements, stipulations or conditions herein, or in any
parking agreement(s) or other agreements between Landlord and Tenant
relating to the Premises, and such violation or default shall continue
for a period of ten (10) days after written notice from Landlord of
such violation or default;
3. If Tenant shall commence or have commenced against Tenant
proceedings under a bankruptcy, receivership, insolvency or similar
type of action; or
4. If Tenant shall vacate any substantial portion of the
Premises for a period of more than 30 days;
then it shall be optional for Landlord, without further notice or demand,
to cure such default or to declare this Lease Agreement forfeited and the
said Term ended, or to terminate only Tenant's right to possession of the
Premises, and to re-enter the Premises, with or without process of law,
using such force as may be necessary to remove all persons or chattels
therefrom, and Landlord shall not be liable for damages by reason of such
re-entry or forfeiture; but notwithstanding re-entry by Landlord or
termination only of Tenant's right to possession of the Premises, the
liability of Tenant for the rent and all other sums provided herein shall
not be relinquished or extinguished for the balance of the Term of this
Lease Agreement and Landlord shall be entitled to periodically sue Tenant
for all sums due under this Lease Agreement or which become due prior to
judgment, but such suit shall not bar subsequent suits for any further
sums coming due thereafter. Tenant shall be responsible for, in addition
to the rentals and other sums agreed to be paid hereunder, the cost of any
necessary maintenance, repair, restoration, reletting (including related
cost of removal or modification of tenant improvements) or cure as well as
reasonable attorney's fees incurred or awarded in any suit or action
instituted by Landlord to enforce the provisions of this Lease Agreement,
regain possession of the Premises, or the collection of the rentals due
Landlord hereunder. Tenant agrees to pay interest at the highest
permissible rate of interest allowed under the usury statutes of the State
of Minnesota, or in case no such maximum rate of interest is provided, at
the rate of 12% per annum, on all rentals and other sums due Landlord
hereunder not paid within ten (10) days from the date same become due and
payable.
B. Tenant hereby acknowledges that late payment to Landlord of
Minimum Rent, Additional Rent or other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease Agreement, the exact
amount of which will be extremely difficult to ascertain. Tenant shall be
liable to Landlord for the payment of a late charge in the amount of 10% of
the rental installment or other sum due Landlord hereunder, plus any
attorneys' fees and costs incurred by Landlord by reason of Tenant's
failure to pay said amount, if said payment has not been received within
ten (10) days from the date said payment becomes due and payable, or
cleared by Landlord's bank within three (3) business days after deposit.
The parties agree that such late charges represent a fair and reasonable
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estimate of the costs that Landlord will incur by reason of Tenant's late
payment. Landlord's acceptance of such late charges shall not constitute a
waiver of Landlord's default with respect to such overdue amount or stop
Landlord from exercising any of the other rights and remedies granted
hereunder. Each right or remedy of Landlord provided for in this Lease
Agreement shall be cumulative and shall be in addition to every other right
or remedy provided for in this Lease Agreement now or hereafter existing at
law or in equity or by statute or otherwise.
ARTICLE 21 - LANDLORD'S DEFAULT
Landlord shall not be deemed to be in default under this Lease Agreement
until Tenant has given Landlord written notice specifying the nature of the
default and Landlord does not cure such default within thirty (30) days after
receipt of such notice or within such reasonable time thereafter as may be
necessary to cure such default where such default is of such a character as to
reasonably require more than thirty (30) days to cure.
ARTICLE 22 - HOLDING OVER
Tenant will, at the expiration of this Lease Agreement, whether by lapse of
time or termination, give up immediate possession to Landlord. If Tenant fails
to give up possession the Landlord may, at its option, serve written notice upon
Tenant that such holdover constitutes any one of (i) renewal of this Lease
Agreement for one year, and from year to year thereafter, or (ii) creation of a
month-to-month tenancy, or (ii) creation of a tenancy at sufferance. If
Landlord does not give said notice, Tenant's holdover shall create a tenancy at
sufferance. In any such event the tenancy shall be upon the terms and
conditions of this Lease Agreement, except that the Minimum Rental shall be
double the Minimum Rental Tenant was obligated to pay Landlord under this Lease
Agreement immediately prior to termination (in the case of tenancy at sufferance
such Minimum Rental shall be prorated on the basis of a 365 day year for each
day Tenant remains in possession); excepting further that in the case of a
tenancy at sufferance, no notices shall be required prior to commencement of any
legal action to gain repossession of the Premises. In the case of a tenancy at
sufferance, Tenant shall also pay to Landlord all damages sustained by Landlord
resulting from retention of possession by Tenant. The provisions of this
paragraph shall not constitute a waiver by Landlord of any right of re-entry as
otherwise available to Landlord; nor shall receipt of any rent or any other act
in apparent affirmance of the tenancy operate as a waiver of the right to
terminate this Lease Agreement for a breach by Tenant hereof.
ARTICLE 23 - SUBORDINATION
Tenant agrees that this Lease Agreement shall be subordinate to any
mortgage(s) that may now or hereafter be placed upon the Building or any part
thereof, and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements, and extensions thereof, provided the
mortgagee named in such mortgage(s) shall agree to recognize this Lease
Agreement or Tenant in the event of foreclosure provided the Tenant is not in
default. In confirmation of such subordination, Tenant shall promptly execute
and deliver any instrument, in recordable form, as required by Landlord's
mortgagee. In the event of any mortgagee electing to have the Lease Agreement a
prior incumbrance to its mortgage, then and in such event upon such mortgagee
notifying Tenant to that effect, this Lease Agreement shall be deemed prior in
incumbrance to the said mortgage, whether this Lease Agreement is dated prior to
or
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<PAGE>
subsequent to the date of said mortgage.
ARTICLE 24 - INDEMNITY, INSURANCE AND SECURITY
A. Tenant will keep in force at its own expense for so long as this
Lease Agreement remains in effect public liability insurance with respect
to the Premises in which Landlord shall be named as an additional insured,
in companies and in form acceptable to Landlord with a minimum combined
limit of liability of Two Million Dollars ($2,000,000.00). This limit
shall apply per location. Said insurance shall also provide for
contractual liability coverage by endorsement. Tenant shall further
provide for business interruption insurance to cover a period of not less
than six (6) months. Tenant will further deposit with Landlord the policy
or policies of such insurance or certificates thereof, or other acceptable
evidence that such insurance is in effect, which evidence shall provide
that Landlord shall be notified in writing thirty (30) days prior to
cancellation, material change, or failure to renew the insurance. If
Tenant shall not comply with its covenants made in this Article 24,
Landlord may, at its option, cause insurance as aforesaid to be issued and
in such event Tenant agrees to pay the premium for such insurance promptly
upon Landlord's demand.
B. Tenant further covenants and agrees to indemnify and hold
Landlord and Landlord's manager of the Building harmless for any claim,
loss or damage, including reasonable attorney's fees, suffered by Landlord,
Landlord's manager or Landlord's other tenants caused by: i) any act or
omission by Tenant, Tenant's employees or anyone claiming through or by
Tenant in, at, or around the Premises or the Building; ii) the conduct or
management of any work or thing whatsoever done by Tenant in or about the
Premises or from transactions of the Tenant concerning the Premises; or
iii) Tenant's failure to comply with any and all governmental laws, rules,
ordinances or regulations applicable to the use of the Premises and its
occupancy.
C. Tenant shall be responsible for the security and safeguarding of
the Premises and all property kept, stored or maintained in the Premises.
Landlord will make available to Tenant, at Tenant's request, the plans and
specifications for construction of the Building and the Premises. Tenant
represents that it is satisfied that the construction of the Building and
the Premises, including the floors, walls, windows, doors and means of
access thereto are suitable for the particular needs of Tenant's business.
Tenant further represents that it is satisfied with the security of said
Building and Premises for the protection of any property which may be
owned, held, stored or otherwise caused or permitted by Tenant to be
present upon the Premises. The placement and sufficiency of all safes,
vaults, cash or security drawers, cabinets or the like placed upon the
Premises by Tenant shall be at the sole responsibility and risk of Tenant.
Tenant shall maintain in force throughout the Term, insurance upon all
contents of the Premises, including that owned by others and Tenant's
equipment and any alterations, additions, fixtures, or improvements in the
Premises acknowledged by Landlord to be the Tenant's.
D. Landlord shall carry and cause to be in full force and effect a
fire and extended coverage insurance policy on the Building, but not
contents owned, leased or otherwise in possession of Tenant. The cost of
such insurance shall be an Operating
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Expense.
ARTICLE 25 - NOTICES
All notices from Tenant to Landlord required or permitted by any provisions
of this Lease Agreement shall be directed to Landlord postage prepaid, certified
or registered mail, at the address provided for Landlord in the preamble to this
Lease Agreement or at such other address as Tenant shall be advised to use by
Landlord. All notices from Landlord to Tenant required or permitted by any
provision of this Lease Agreement shall be directed to Tenant, postage prepaid,
certified or registered mail, at the Premises and at the address, if any, set
forth prior to Tenant's signature line of this Lease Agreement. Landlord and
Tenant shall each have the right at any time and from time to time to designate
one (1) additional party to whom copies of any notice shall be sent.
ARTICLE 26 - APPLICABLE LAW
This Lease Agreement shall be construed under the laws of the State of
Minnesota.
ARTICLE 27 - MECHANICS' LIEN
In the event any mechanic's lien shall at any time be filed against the
Premises or any part of the Building by reason of work, labor, services or
materials performed or furnished to Tenant or to anyone holding the Premises
through or under Tenant, Tenant shall forthwith cause the same to be discharged
of record. If Tenant shall fail to cause such lien forthwith to be discharged
within five (5) days after being notified of the filing thereof, then, in
addition to any other right or remedy of Landlord, Landlord may, but shall not
be obligated to, discharge the same by paying the amount claimed to be due, or
by bonding, and the amount so paid by Landlord and all costs and expenses,
including reasonable attorney's fees incurred by Landlord in procuring the
discharge of such lien, shall be due and payable in full by Tenant to Landlord
on demand.
ARTICLE 28 - SECURITY INTEREST
ARTICLE 29 - BROKERAGE
Tenant represents and warrants to Landlord that neither it nor its officers
or agents, nor any one acting on its behalf has dealt with any real estate
broker other than TOWLE REAL ESTATE ("Tenant's Broker") in the negotiating or
making of this Lease Agreement. Tenant agrees to indemnify and hold Landlord,
its agents, employees, partners, directors, shareholders and independent
contractors harmless from all liabilities, costs, demands, judgments,
settlements, claims and losses, including reasonable attorneys' fees and costs,
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<PAGE>
incurred by Landlord in conjunction with any such claim or claims of any other
broker or brokers claiming to have interested Tenant in the Building or the
Premises, or to have caused Tenant to enter into this Lease Agreement. Landlord
represents and warrants to Tenant that neither it nor its officers or agents,
nor anyone acting on its behalf, has dealt with any real estate broker other
than United Properties Brokerage Company ("UPBC") in the negotiating or making
of this Lease Agreement. The brokers' commission and/or finders' fees arising
out of this Lease Agreement on behalf of Tenant's Broker and UPC shall be paid
as follows: $2.25 PER RENTABLE SQUARE FOOT TO TOWLE REAL ESTATE AND $2.25 PER
RENTABLE SQUARE FOOT TO UPBC, ONE-HALF UPON EXECUTION OF THIS LEASE AGREEMENT
AND ONE-HALF UPON OCCUPANCY BY TENANT.
ARTICLE 30 - SUBSTITUTION
Landlord reserves the right, on thirty (30) days written notice to Tenant,
to substitute other premises within the Building for the Premises hereunder. The
substituted premises shall contain substantially the same square footage as the
Premises, shall contain comparable improvements, and the Minimum Rental shall
not exceed the Minimum Rental specified in Article 3 hereof. IF LANDLORD
EXERCISES ITS RIGHT TO SUBSTITUTE OTHER PREMISES FOR THE PREMISES, LANDLORD
SHALL PAY THE REASONABLE COSTS AND EXPENSES INCURRED BY TENANT FOR PHYSICALLY
RELOCATING TO THE SUBSTITUTED PREMISES TENANT'S FURNITURE, EQUIPMENT AND OTHER
PERSONAL PROPERTY INCLUDING TELECOMMUNICATION AND COMPUTER CABLING, AND (IF
TENANT'S SUITE NUMBER CHANGES AS A RESULT OF SUCH RELOCATION) UP TO ONE (1)
MONTHS SUPPLY OF TENANT'S STATIONERY.
ARTICLE 31 - ESTOPPEL CERTIFICATES
A. Each party hereto agrees that at any time, and from time to time
during the Term of this Lease Agreement (but not more often than twice in
each calendar year), within ten (10) days after request by the other party
hereto, it will execute, acknowledge and deliver to such other party or to
any prospective purchaser, assignee or mortgagee designated by such other
party, an estoppel certificate in a form acceptable to Landlord. If Tenant
fails to respond within ten (10) days of receipt by Tenant of a written
request by Landlord as herein provided, Tenant shall be deemed to have
given such estoppel certificate as above provided, without modification and
shall be deemed to have admitted the accuracy of any information supplied
by Landlord to any prospective purchaser, mortgagee, assignee or ground
lessor of the Building.
B. Tenant agrees to provide Landlord (but not more often than twice
in any calendar year), within ten (10) days of request, the then most
current financial statements of Tenant and any guarantors of this Lease
Agreement, which shall be certified by Tenant, and if available, shall be
audited and certified by a certified public accountant. Landlord shall
keep such financial statements confidential, except Landlord shall, in
confidence, be entitled to disclose such financial statements to existing
or prospective mortgagees or purchasers of the Building.
ARTICLE 32 - GENERAL
This Lease Agreement does not create the relationship of principal and
agent or of partnership or of joint venture or of any association between
Landlord and Tenant, the sole relationship between Landlord and Tenant being
that of landlord and tenant. No waiver of any default of Tenant hereunder shall
be implied from any omission by Landlord to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect any default other than the default specified in the express waiver and
that only for the time and to the extent therein stated. The covenants of
Tenant to pay the Minimum
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Rental and the Additional Rental are each independent of any other covenant,
condition, or provision contained in this Lease Agreement. The marginal or
topical headings of the several Articles, paragraphs and clauses are for
convenience only and do not define, limit or construe the contents of such
Articles, paragraphs or clauses. All preliminary negotiations are merged into
and incorporated in this Lease Agreement. This Lease Agreement can only be
modified or amended by an agreement in writing signed by the parties hereto.
All provisions hereof shall be binding upon the heirs, successors and assigns of
each party hereto. If any term or provision of this Lease Agreement shall to
any extent be held invalid or unenforceable, the remainder shall not be affected
thereby, and each other term and provision of this Lease Agreement shall be
valid and be enforced to the fullest extent permitted by law. If Tenant is a
corporation, each individual executing this Lease Agreement on behalf of said
corporation represents and warrants that he is duly authorized to execute and
deliver this Lease Agreement on behalf of said corporation in accordance with a
duly adopted resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, and that this Lease Agreement is
binding upon said corporation in accordance with its terms. No receipt or
acceptance by Landlord from Tenant of less than the monthly rent herein
stipulated shall be deemed to be other than a partial payment on account for any
due and unpaid stipulated rent; no endorsement or statement of any check or any
letter or other writing accompanying any check or payment of rent to Landlord
shall be deemed an accord and satisfaction, and Landlord may accept and
negotiate such check or payment without prejudice to Landlord's rights to (i)
recover the remaining balance of such unpaid rent or (ii) pursue any other
remedy provided in this Lease Agreement. (Neither party shall record this Lease
Agreement or any memorandum thereof, and any such recordation shall be a breach
of this Lease Agreement void, and without effect.) Time is of the essence with
respect to the due performance of the terms, covenants and conditions herein
contained. Submission of this instrument for examination does not constitute a
reservation of or option for the Premises, and this Lease Agreement shall become
effective only upon execution and delivery thereof by Landlord and Tenant.
ARTICLE 33 - EXCULPATION
Notwithstanding anything in this Lease Agreement to the contrary, the
covenants, undertakings and agreements herein made on the part of Landlord are
made and intended not for the purpose of binding Landlord personally, or the
assets of Landlord, but are made and intended to bind only the Landlord's
interest in the Premises and the Building, as the same may, from time to time,
be encumbered, and no personal liability shall at any time be asserted or
enforced against Landlord or its stockholders, officers, or partners, or their
respective heirs, legal representatives, successors and assigns, on account of
this Lease Agreement or on account of any covenant, undertaking or agreement of
Landlord in this Lease Agreement.
IN WITNESS WHEREOF, this Lease Agreement has been duly executed by the
parties hereto as of the day and year indicated above.
Address for Notices, if other than the Premises:
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
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TENANT: EN POINTE TECHNOLOGIES, INC. LANDLORD: 505 Waterford Park Limited
A CALIFORNIA CORPORATION Partnership
By: By:
----------------------------------- -------------------------------------
Robert Mercer Ronald J. Leoni (P.A.)
Its: Chief Financial Officer Its: Attorney-in-fact under a power
--------------------------------- of Attorney
-----------------------------------
Date: Date:
--------------------------------- -----------------------------------
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EXHIBIT A-2
LEGAL DESCRIPTION
Lot 2, Block 1, GROVES OFFICE PARK ANNEX, together with the appurtenant
easement(s) contained in Document Nos. 5513371 and 5513372, according to the
recorded plat thereof, and situated in Hennepin County, Minnesota.
<PAGE>
EXHIBIT B
TENANT WORK FUNDINGS
Plans and/or a description for permanent improvements to the Premises are
attached as Exhibit A-3 and by this reference incorporated herein (hereafter
called the "Plans"). The Plans have been approved by each of Landlord and
Tenant. The parties acknowledge that the plans are to modify the Premises to
accommodate Tenant's intended use. Landlord shall be responsible for
constructing the improvements as shown on the Plans (hereafter called "Tenant
Improvements") for and on behalf of Tenant. Landlord and Tenant have agreed
that the costs of such Tenant Improvements shall be paid by Tenant, although
Landlord shall provide Tenant an allowance of up to $30,130.00 to be utilized
toward the cost of the Tenant Improvements (hereafter called the "T.I.
Allowance"). The T.I. Allowance shall be used only for payment of costs
relating to construction of the Tenant Improvements (including the costs of
preparing the Plans, demolition of any existing improvements and construction
supervision), which costs Landlord shall pay directly out of the T.I. Allowance,
for the credit of Tenant, and in no event shall any part of the T.I. Allowance
be paid to or payable to Tenant. Any costs of the Tenant improvements which
exceed the T.I. Allowance shall be paid by Tenant to Landlord without demand
within fifteen (15) days of the day of submission by Landlord to Tenant of a
statement of said costs. Any improvements to the Premises, other than as shown
on the Plans, and the furnishing of the Premises, shall be made by Tenant at the
sole cost and expense of Tenant, subject to all other provisions of this Lease
Agreement, including compliance with all applicable governmental laws,
ordinances and regulations.
<PAGE>
LEASE AGREEMENT
This Lease Agreement (the "LEASE") is made this 6th day of May, 1997, by
and among BEACON PROPERTIES, LP., a Delaware limited partnership (the
"LANDLORD"); and EN POINTE TECHNOLOGIES, INC, (the "TENANT").
W I T N E S S E T H:
1. PREMISES.
Landlord does hereby rent and lease to Tenant the following described
space in the office complex know as Perimeter Center (the "PARK") in the office
building situated at 400 PERIMETER CENTER TERRACE, Atlanta, Georgia (the
"BUILDING"): office space on the GARDEN Level, east wing, known as Suite 45 as
shown on EXHIBIT A, attached hereto and incorporated herein (the "PREMISES").
For all purposes under this Lease, the Premises shall be deemed to include
approximately 4.661 rentable square feet (including both Tenant's exclusive
usable area and common areas attributable to Tenant's usable area).
2. TERM.
The term of this Lease shall be for a period commencing on the earlier
to occur of (i) the day Tenant occupies the Premises for the purpose of
conducting business therefrom, or (ii) the 1ST day of JULY, 1997, at 12:01 A.M.
and expiring on the 30th day of JUNE, 2000, at 11:59 P.M., unless sooner
terminated or extended as hereinafter provided (such term, being hereinafter
referred to as the "TERM").
3. COMPLETION OF IMPROVEMENT. SEE SPECIAL STIPULATION #1
Landlord agrees to proceed with due diligence to prepare the Premises
for Tenant's occupancy in accordance with the terms of the Lease.
4. POSSESSION.
If this lease is executed before the Premises become ready for
occupancy and Landlord cannot deliver possession of the Premises on or before
commencement of the Term for any reason other than an omission, delay or default
caused by Tenant, rent shall abate until Landlord can deliver possession, and
Tenant hereby accepts such abatement in full settlement of any and all claims
Tenant may have against Landlord arising from Landlord's inability to deliver
possession at the commencement of the Term. Any occupancy by Tenant prior to
the beginning of the Term, even if rent free, shall in all other respects be
pursuant to the terms and provisions of this Lease. By occupying the Premises
as tenant, Tenant shall be deemed to have accepted the same and acknowledged
that the Premises are in the condition required hereunder.
5. BASE MONTHLY RENTAL
(e) Tenant shall pay in advance to Landlord at Landlord's address for
rental payments set out in Paragraph 25 hereof, or at such other
place as Landlord shall designate in writing, promptly, without
demand, on the first day of each month during the Term a base
monthly rental (the "BASE MONTHLY RENTAL"), which originally
shall be NINE THOUSAND THREE HUNDRED TWENTY-TWO AND NO/100
DOLLARS ($9,322.00), and which shall be adjusted from time to
time as provided in Paragraph 6 hereof. If the Term commences on
a day other than the first day of a month, or terminates on a day
other than the last day of a month, the Base Monthly Rental for
the first and last partial month shall be prorated based upon the
actual number of days in such a month. The Base Monthly Rental
shall be due and payable in all events, without any setoff or
deduction whatsoever.
(f) Simultaneously with the execution of this Lease, Tenant has paid
to Landlord, and Landlord hereby acknowledges the receipt of NINE
THOUSAND THREE HUNDRED TWENTY-TWO AND NO/100 DOLLARS (9,322.00)
(the "INITIAL INSTALLMENT"). Such sum shall be applied by
Landlord to the first installment(s) of Base Monthly Rental as
they become due hereunder. In the event Tenant fails to take
possession of the Premises in accordance with all of the terms
hereof, the initial installment shall be retained by Landlord for
application in reduction, but not in satisfaction, of damages
suffered by Landlord as a result of such breach by Tenant.
1. BASE MONTHLY RENTAL ADJUSTMENT.
At the end of each and every Lease Year, as herein below defined,
during the Term, the Base Monthly Rental, as increased by previous rental
adjustments hereunder, shall be increased for the next succeeding Lease Year by
an amount equal to the product of (a) the Base Monthly Rental, as increased by
previous rental adjustments hereunder, at the end of the Lease Year immediately
preceding the Lease Year for which the increase is being calculated, multiplied
by (b) FIVE percent (5%). Each adjustment shall remain in effect until the next
such annual adjustment is made.
(c) Whenever the term "Additional Rent" appears as contained in this Lease,
such reference shall apply to rental adjustments as called for in Paragraph
6 herein.
"LEASE YEAR," as used herein, means a period of twelve (12) consecutive
calendar months, or a portion thereof falling within the Term, with the
first Lease Year commencing with the first day of the first calendar month
beginning on or
<PAGE>
after the commencement date of the Term and each subsequent Lease Year
commencing on each anniversary during the Term of the commencement date of
the first Lease Year. The period, if any, from the commencement date of
the Term to the beginning of the first Lease Year shall be treated as if it
were part of the first Lease Year under this Lease for all purposes.
7. (INTENTIONALLY OMITTED)
8. BROKERAGE DISCLOSURE.
Tenant represents that COLLIERS/CAUBLE & COMPANY has acted as broker
for Tenant in connection with this Lease, and shall be paid a commission by
Landlord pursuant to the terms of a separate agreement. Tenant warrants that
there are no other claims for brokers' commissions or finders' fees in
connection with its execution of this Lease. Tenant hereby indemnifies and
holds Landlord and Landlord's agent harmless from and against any and all loss,
cost, damage or expense, incurred by Landlord or Landlord's agent as a result of
or in conjunction with a claim of any real estate agent or broker, if made by,
through or under Tenant.
9. USE.
The Premises shall be used for business office and related ancillary
purposes and for no other purposes. The Premises shall not be used for any
illegal purposes, nor in violation of any regulation of any governmental body,
nor in any manner to create any nuisance or trespass, nor in any manner to
vitiate the insurance or increase the rate of insurance on the Premises or the
Building. Tenant shall, at its own expense, promptly comply with any and all
municipal, county, state and federal statutes, regulations and/or requirements
applicable or in any way relating to the use and occupancy of the Premises.
10. TENANT'S ACCEPTANCE.
Tenant acknowledges that it has bee afforded an opportunity to inspect
the Premises and accepts the Premises "as is" and as suited for Tenant's
intended use thereof, subject only to the provisions of Paragraph 3. Upon
completion of the improvements contemplated by Paragraph 3, or occupancy of the
Premises by Tenant, whichever first occurs, Tenant shall be deemed to have
accepted any improvements made since the date hereof.
11. ASSIGNMENT AND SUBLETTING.
(k) Tenant shall not voluntarily or involuntarily, whether by
operation of law or otherwise, assign, transfer, hypothecate or
otherwise encumber this Lease or any interest herein and shall
not sublet or permit the use by others of the Premises or any
portion thereof without obtaining in each instance Landlord's
prior written consent, which consent may not be unreasonably
withheld or delayed. Landlord's consent to one assignment,
sublease, transfer or hypothecation shall not be deemed as a
consent to any other or further assignment, sublease, transfer or
hypothecation. Any such assignment, sublease, transfer or
hypothecation with Landlord's prior written consent shall be void
and shall, at Landlord's option, constitute a default under this
Lease. No acceptance by Landlord of any rent or any other sum of
money from any assignee, sublessee or other category of
transferee shall release Tenant from any of its obligations
hereunder or be deemed to constitute Landlord's consent to any
assignment, sublease, transfer or hypothecation, and in any
event, Tenant shall remain primarily liable on this Lease for the
entire Term hereof and shall in no way be released from the full
complete performance of all the terms, conditions, covenants and
agreements contained herein.
(l) If Tenant should desire to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord prior
written notice, which notice shall specify (i) the name and
business of the proposed assignee or sublessee, (ii) the amount
and location of the space affected, (iii) the proposed effective
date and duration of the subletting or assignment, and (iv) the
proposed rental or other consideration to be paid to Tenant by
such sublessee or assignee. Landlord shall then have a period of
fifteen (15) days following receipt of such notice within which
to notify Tenant in writing that Landlord elects either (1) to
terminate this Lease as to the space so affected as of the date
so specified by Tenant, in which event Tenant will on that date
be relieved of all further obligations to pay rent hereunder as
to such space, or (2) to permit Tenant to assign or sublet such
space, in which event if the proposed rental between Tenant and
sublessee for the space affected is greater that the Base Monthly
Rental as adjusted under this Lease applicable to the space
affected, or if consideration other than rental is paid to Tenant
by such assignee or sublessee with respect to the affected space,
then fifty percent (50%) of such excess rental and other
consideration shall be deemed additional rent owned by Tenant to
Landlord under this Lease, and the amount of such excess shall be
paid by Tenant to Landlord in the same manner that Tenant pays
the Base Monthly Rental hereunder and in addition thereto, or (3)
to withhold consent to Tenant's assigning or subleasing such
space and to continue this Lease in full force and effect as to
the entire Premises. If Landlord should fail to notify Tenant in
writing of such election within said fifteen (15) day period,
Landlord shall be deemed to have elected option (3) above.
Tenant agrees to reimburse Landlord for Landlord's reasonable
attorneys' fees and costs incurred in connection with the
processing and documentation of any request made pursuant to this
Paragraph. Notwithstanding the giving by Landlord of its
<PAGE>
consent to any assignment or sublease with respect to the
Premises, no such assignee or sublessee may exercise any
expansion option, right of first refusal option, or renewal
option under this Lease except in accordance with a separate
written agreement entered into directly between such assignee or
sublessee and Landlord, and, absent Landlord's written agreement
to the contrary, all option rights of Tenant, and all lease
rights of Tenant created pursuant to the exercise of any option
rights, with respect to any space so assigned or subleased shall
be extinguished.
1. HOLDING OVER.
If Tenant remains in possession after the expiration of the Term, or
the termination of this Lease, it shall be a tenant at sufferance only and there
shall be no renewal hereof by operation of law. In such event, such occupancy
shall be at an amount equal to one hundred fifty percent (150%) of the Base
Monthly Rental in effect immediately prior to the expiration or termination of
this Lease and shall otherwise be subject to all of the covenants and provisions
of this Lease (including, without limitation, Paragraph 7) insofar as the same
are applicable to a month-to-month tenancy. Tenant shall be liable to Landlord
for all damages incurred by Landlord as a result, in whole or in part, of
Tenant's failure to deliver possession of the Premises to Landlord upon
expiration or termination of the Term.
13. ALTERATIONS AND IMPROVEMENTS.
(m) No alteration in, or addition to, the Premises will be made
without first obtaining Landlord's prior written consent, which
Landlord may grant or withhold for any reason or for no reason,
and any such work consented to, although paid for by Tenant, will
be done by Landlord.
(n) If Tenant's actions, omissions or occupancy of the Premises shall
cause the rate of fire or other insurance either on the Building
or the Premises to be increased, Tenant shall pay, as additional
rent, the amount of any such increase promptly upon demand by
Landlord.
(o) All erections, additions, fixtures and improvements, whether
temporary or permanent in character (except only the movable
office furniture of Tenant) made in or upon the Premises, shall
be and remain Landlord's property and shall remain upon the
Premises at the termination of this Lease by lapse of time or
otherwise, with no compensation to Tenant. Landlord reserves the
right to require Tenant to remove any such improvements or
additions at the termination hereof or within fifteen (15) days
thereafter. Landlord may, at its election, repair any damage to
the Premises caused by or in connection with the removal of any
articles of personal property, business or trade fixtures,
alterations, improvements and installations, and all costs for
such repairs shall be at Tenant's expense.
1. REPAIRS TO THE PREMISES.
Landlord shall not be required to make any repairs or improvements to
the Premises, except structural repairs necessary for safety and tenant ability.
Tenant shall, at its own cost and expense, keep in good repair all portions of
the Premises, including but not limited to windows, glass and plate glass,
doors, any special store front, interior walls and finish work, floors and floor
coverings, and supplemental or special heating and air conditioning systems, and
shall take good care of the Premises and its fixtures and permit no waste,
except normal wear and tear with due consideration for the purpose for which the
Premises are leased. Tenant shall maintain and replace, at its cost and
expense, all light bulbs and fixtures in the Premises that are not the
Building's standard 2-foot by 4-foot fluorescent light fixtures and bulbs
therefor. Any and all repairs required under this Paragraph, although paid for
by Tenant, will be performed by Landlord.
15. ENTRY BY LANDLORD.
Landlord or its agents may enter the Premises at reasonable hours to
exhibit same to prospective purchasers or tenants, to inspect the Premises to
see that Tenant is complying with all of its obligations hereunder, and to make
repairs, improvements, alterations or additions which Landlord shall deem
necessary for the safety, preservation or improvement of the Building or to make
repairs or modifications to any adjoining space. Landlord shall be allowed to
take all material into and upon the Premises that may be required to make such
repairs, improvements, alterations, alterations or additions for the benefit of
Tenant without in any way being deemed or held guilty of an eviction of Tenant,
and the Base Monthly Rental, Additional Rent and other charges hereunder shall
in no wise abate while said repairs, improvements, alterations or additions are
being made. All such repairs, improvements, alterations and additions shall be
done during ordinary business hours, or, if any such work is at the request of
Tenant shall pay for all overtime costs.
16. DEFAULT AND REMEDIES.
(p) In addition to the circumstances hereinbefore set forth, the
occurrence of any of the following shall constitute a material
breach an default of this Lease by Tenant:
(i) the filing of any voluntary petition or similar pleading
under any section or sections of any bankruptcy or
insolvency act by or against Tenant or the institution of
any voluntary or involuntary petition or proceeding, the
petition or proceeding is not dismissed within thirty (30)
days from the date it is filed, or
<PAGE>
the making of an assignment for the benefit of its creditors
by Tenant, or the appointment of a trustee or receiver for
Tenant or for the major part of Tenant's property;
(ii) Tenant's failure to pay the Base Monthly Rental, Additional
Rent or any other sum due hereunder, if such nonpayment
continues for ten (10) or more days after the same is due
and payable, or Tenant's default in the prompt and full
performance of any other provision of this Lease and Tenant
does not cure the default within thirty (30) days after
written demand by Landlord that the default be cured (unless
the default involves a hazardous condition, which shall be
cured forthwith upon Landlord's demand);
(iii)the levy, execution or attachment against assets of Tenant
located in the Premises; or
(iv) Tenant's failure to take possession or occupancy of, or
desertion or abandonment of, the Premises (or any
substantial portion thereof), or the Premises (or any
substantial portion thereof) otherwise becoming vacant.
(a) In the event of any default as aforesaid by Tenant, Landlord, in
addition to any and all other rights or remedies it may have at
law or in equity, shall have the option of pursuing any one or
more of the following remedies:
(ii) Landlord shall have the immediate right of reentry and may
remove all property from the Premises to a warehouse or
elsewhere at the cost of, and for the account of Tenant, all
without being deemed guilty of trespass or becoming liable
for any loss, damage or damages which may be occasioned
thereby;
(iii)Landlord may terminate this Lease by giving notice of
termination, in which event this Lease shall expire and
terminate on the date specified in such notice of
termination, with the same force and effect as though the
date so specified were the date herein originally fixed as
the termination date of the Term of this Lease, and all
rights of Tenant under this Lease arising up to the date of
such termination, and Tenant shall surrender the Premises to
Landlord on the date specified in such notice;
(iv) Landlord may terminate this Lease as provided in
subparagraph 16(b)(ii) hereof and recover from Tenant all
damages Landlord may incur by reason of Tenant's default,
including, without limitation, a sum which, at the date of
such termination, represents the then present value
(calculated at the rate of nine percent (9%) interest per
annum) of the excess, if any, of (A) the Base Monthly
Rental, Additional Rent, and all other sums which would have
been payable hereunder by Tenant for the period commencing
with the day following the date of such termination and
ending with the date hereinbefore set for the expiration of
the full term hereby granted, over (B) the aggregate
reasonable rental value of the Premises (less reasonable
brokerage commissions, attorneys' fees and other costs
relating to the reletting of the Premises) for the same
period, all of which excess sum shall be deemed immediately
due and payable;
(v) Landlord may, without terminating this Lease, declare
immediately due and payable all Base Monthly Rental,
Additional Rent, and other rents and amounts due and coming
due under this Lease for the entire remaining Term hereof,
together with all other amounts previously due, at once;
provided, however, that such payment shall not be deemed a
penalty or liquidated damages but shall merely constitute
payment in advance of rent for the remainder of said Term;
upon making such payment, Tenant shall be entitled to
receive from Landlord all rents received by Landlord from
other assignees, tenants and subtenants on account of said
Premises during the Term of this Lease, provided that the
monies to which Tenant shall so become entitled shall in no
event exceed the entire amount actually paid by Tenant to
Landlord pursuant to this clause (iv) less all costs,
expenses and attorneys' fees of Landlord incurred in
connection with the reletting of the Premises; or
(vi) Landlord may, from time to time without termination this
Lease, and without releasing Tenant in whole or in part from
Tenant's obligation to pay Base Monthly Rental, Additional
Rent and all other amounts due under this Lease and perform
all of the covenants, conditions and agreements to be
performed by Tenant as provided in this Lease, make such
alterations and repairs, Landlord may, but shall not be
obligated to, relet the Premises or any part thereof for
such term or terms (which may be for a term extending beyond
the Term of this Lease) at such rental or rentals and upon
such other terms and conditions as Landlord in its sole
discretion may deem advisable or acceptable; upon each
reletting, all rentals received by Landlord from such
reletting shall be applied first, to the payment of any
indebtedness other than rent due hereunder from Tenant to
Landlord, second, to the payment of any costs and expenses
of such reletting, including brokerage fees and attorneys'
fees, and of costs of such alterations and repairs, third to
the payment of the Base Monthly Rental, Additional Rent and
other charges due and unpaid hereunder, and the residue, if
any shall be held by Landlord and applied against payments
of future Base Monthly Rental, Additional Rent or other
charges as the same may become due and payable hereunder; in
no event shall Tenant be entitled to any excess rental
received by Landlord over and above charges that Tenant is
obligated to pay hereunder,
<PAGE>
including Base Monthly Rental, Additional Rent and all other
charges; if such rentals received from such reletting during
any month are less than those to be paid during the month by
Tenant hereunder, including Base Monthly Rental, Additional
Rent and all other charges, Tenant shall pay any such
deficiency to Landlord, which deficiency shall be calculated
and paid monthly; Tenant shall also pay Landlord as soon as
ascertained and upon demand all costs and expenses incurred
by Landlord in connection with such reletting and in making
any alterations and repairs which are not covered by the
rentals received from such reletting; notwithstanding any
such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for such previous
breach.
(c) Landlord's reentry, demand for possession, notice that the
tenancy hereby created will be terminated on the date therein
named, institution of an action of forcible detainer or ejectment
or the entering of a judgment for possession in such action or
any other act or acts resulting in the termination of Tenant's
right to possession of the Premises shall not relieve Tenant from
Tenant's obligation to pay all sums due hereunder, except as
herein expressly provided. Landlord may collect and receive any
Base Monthly Rental, Additional Rent or other charges due from
Tenant, and the payment thereof shall not constitute a waiver of
or affect any notice or demand given, suit instituted or judgment
obtained by Landlord, or be held to waive, affect, change, modify
or after the rights or remedies which Landlord has in equity or
at law or by virtue of this Lease.
(d) In the event Landlord commences any proceedings for nonpayment of
Base Monthly Rental, Additional Rent or other sums due hereunder,
Tenant will not interpose any counterclaim of whatever nature or
description which is not directly related to the Lease in any
such proceeding. This shall not, however, be construed as a
waiver of Tenant's right to assert such claims in any separate
action or actions brought by Tenant. Tenant hereby expressly and
voluntarily waives any right to jury trial with respect to any
action brought under or with respect to this Lease, and Landlord
and Tenant acknowledge and agree that any such action must be
brought in a court located in DeKalb County, Georgia, and having
jurisdiction therein.
(e) All sums past due under this Lease shall bear interest at
eighteen percent (18%) per annum, but in no event in excess of
the maximum lawful rate, from due date until paid-in-full.
(f) Except as expressly provided in this Lease, Tenant hereby waives
any and every form of demand and notice prescribed by statute or
other law, including without limitation the notice of any
election of remedies made by Landlord under this Paragraph,
demand for payment of any rent, or demand for possession.
(g) All rights and remedies of Landlord created or otherwise existing
at law are cumulative, and the exercise of one or more rights or
remedies shall not be taken to exclude or waive the right to
exercise any other.
(h) Tenant shall and hereby agrees to pay all costs and expenses
incurred by Landlord in enforcing any of the covenants and
agreements of this Lease, or as a result of an action brought by
Landlord against Tenant for an unlawful detainer of the Premises,
and all such costs, expenses and attorneys' fees shall, if paid
by Landlord, be paid by Tenant to Landlord within fifteen (15)
days of Landlord's written demand therefor, together with
interest at eighteen percent (18%) per annum, but in no event in
excess of the maximum lawful rate, from the date of Landlord's
payment thereof.
1. LANDLORD'S SERVICES.
(q) Landlord shall render services and supplies incidental to this
Lease in accordance with and as described in this Paragraph 17,
as follows:
(i) Landlord shall cause the Premises to be cleaned.
(ii) Landlord shall furnish electric current for Building
standard tenant lighting and small business machinery only
from electric circuits designated by Landlord for Tenant's
use. Such circuits will be fed into one or more of the
existing electrical panel(s) in the electrical closets
located on the same Building floor as the Premises.
Tenant's usage of said panels on any given floor shall not
exceed Tenant's pro rata share (based on rentable square
footage) of the panels' capacity. Tenant will not use any
electrical equipment which in Landlord's opinion will
overload the wiring installations or interfere with the
reasonable use thereof by other users in the Building.
Tenant will not, without Landlord's prior written consent in
each instance, connect any items such as non-Building
standard tenant lighting, vending equipment, printing or
duplicating machines, computers (other than desktop word
processors and personal computers), auxiliary air
conditioners, and other computer-related equipment to the
Building's electrical system, or make any alteration or
addition to the system. If Tenant desires any such items,
additional 208/120 volt electrical power beyond that
supplied by Landlord as provided above, electric current in
excess of 208/120 volts for purposes other than Building
standard tenant lighting, or other special power
requirements or circuits, then
<PAGE>
Tenant may request Landlord to provide such supplemental
power or circuits to the Premises, which request Landlord
may grant or withhold in its reasonable discretion. If
Landlord furnishes such power or circuits, Tenant shall pay
Landlord, on demand, the cost of the design, installation
and maintenance of the facilities required to provide such
additional or special electric power or circuits and the
cost of all electric current so provided at a rate not to
exceed that which would be charged by Georgia Power Company,
or its successor, if Tenant were a direct customer thereof.
Landlord may require separate electrical metering of such
supplemental electrical power or circuits to the Premises,
and Tenant shall pay, on demand, the cost of the design,
installation and maintenance of such metering facilities.
In no event shall Tenant have access to any electrical
closets in the Building, it being agreed that any electrical
engineering design or contract work shall be performed at
Tenant's expense by Landlord or an electrical engineer
and/or electrical contractor designated by Landlord. All
invoices respecting the design, installation and maintenance
of the facilities requested by Tenant shall be paid within
thirty (30) days of Tenant's receipt thereof. Landlord's
charge to Tenant for the cost of electric current so
provided shall be paid within thirty (30) days of receipt of
invoice by Tenant.
(iii)Landlord shall furnish seasonable air conditioning and
heating during normal business hours (8:00 A.M. to 6:00 P.M
Monday through Friday and 8:00 A.M. until 1:00 P.M.
Saturday), said heat or air conditioning not being furnished
Sunday or holidays observed by Landlord. Should Tenant
desire either heating or air conditioning at other times,
Landlord agrees to provide same upon reasonable advance
written request by Tenant, but at Tenant's expense at such
hourly rates as may be determined from time to time by
Landlord, which charge Tenant shall pay promptly upon being
billed therefor. If Tenant installs equipment which in
Landlord's opinion produces enough heat to cause comfort
problems in the Building or any part thereof, or if Tenant
desires a supplemental air conditioning system and Landlord
has approved same, then Landlord may, at its option, either
cause to be designed or permit Tenant to design a
supplemental air conditioning system, subject to Landlord's
approval, and Landlord shall install such system
substantially in accordance with such design. If Tenant has
requested such supplemental system, Tenant shall be
responsible for determining that the design of such system
is adequate for its needs. Tenant agrees to pay Landlord
for such equipment, design, installation, metering and
consumption of electricity for supplemental air conditioning
and to maintain such equipment at Tenant's expense. If such
supplemental air conditioning is installed at the request of
either Tenant or Landlord in a manner that utilizes the
Building condenser water loop, Tenant shall pay a one-time
tap fee, payable within thirty (30) days of invoicing from
Landlord, of THREE HUNDRED FIFTY AND NO/100 DOLLARS
($350.00) per ton of cooling equipment installed. Tenant
shall also pay for the necessary pump and piping to connect
the supplemental air conditioning equipment to the Building
condenser water risers. Regardless of whether such
supplemental air conditioning is tapped into the Building
condenser water loop, Tenant shall pay (in addition to the
one-time tap fee, if applicable) each calendar quarter in
advance, as additional rent, a usage charge based upon the
tonnage of the cooling equipment installed. At the
commencement of the Term, this usage charge shall be EIGHTY
AND NO/100 Dollars ($80.00) per ton per year of cooling
equipment. Such usage charge may be increased at any time
and from time to time by the same percentage increase from
the date of the last usage charge adjustment if any, in the
officially authorized rate schedule of Georgia Power
Company, or its successors, applicable to the Building;
provided, however, that in no event will such usage charge,
as increased hereunder, ever be decreased pursuant to any
adjustments hereunder, it being agreed that if such a
decrease would result, then no adjustment would be made
until the next adjustment hereunder. Each adjustment may be
made effective as of the effective date of such Georgia
Power Company rate schedule adjustment and shall effect
until the next adjustment is made hereunder.
(a) Landlord shall not be liable for any damages directly or
indirectly resulting from the installation, use or interruption
of use of any equipment in connection with the furnishing of
services referred to in this Paragraph, and particularly any
interruption in services by any cause beyond the immediate
control of Landlord, provided Landlord shall use reasonable
diligence in the restoration of such services.
2. DESTRUCTION OF PREMISES.
Should the Premises be so damaged by fire or other cause that
rebuilding or repairs cannot be completed within one hundred eighty (180) days
from the date of the fire, or other cause of damage, then either Landlord or
Tenant may terminate this Lease by written notice to the other given within
thirty (30) days of the date of such damage or destruction, in which event rent
shall be abated from the date of such damage or destruction. However, if the
damage or destruction is such that rebuilding or repairs can be completed within
one hundred eighty (180) days, Landlord covenants and agrees, subject to the
provisions of this
<PAGE>
Paragraph 18,to make such repairs with reasonable promptness and dispatch, and
to allow Tenant and abatement in the rent for such time as the Premises are
untenantable or proportionately for such portion of the Premises as shall be
untenantable, and Tenant covenants and agrees that the terms of this Lease shall
not be otherwise affected. Such repairs and restoration relating to Tenant's
initial leasehold improvements or otherwise made by or for Tenant shall be made
at Tenant's expense in accordance with plans and specifications approved by
Landlord and Tenant. Repairs and restoration to base Building improvements
required by this Lease to be furnished by Landlord at its expense (other than
Tenant's initial leasehold improvements) shall be made at Landlord's expense.
In no event shall Landlord be required to repair or replace any trade fixtures,
furniture, equipment or other property belonging to Tenant nor shall Landlord
have any obligation to incur any cost to repair, reconstruct or restore the
Premises or the Building in excess of insurance proceeds from the casualty
necessitating such work that are made available to Landlord, under its sole
control, for such work. Notwithstanding anything to the contrary contained in
this Paragraph, Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Premises when the damage resulting from any casualty
contained under this Paragraph occurs during the last twelve (12) months of the
Term of this Lease.
19. CONDEMNATION OF PREMISES.
(s) If any part of the Premises shall be taken or appropriated by any
public or quasi-public authority under the power of eminent
domain, Landlord shall have the right, at its option, to
terminate this Lease effective as of the date possession is take
by said authority (unless all of the Premises are so taken in
which case this Lease shall terminate), and shall be entitled to
any and all income, rent or award and any interest thereon
whatsoever which may be paid or made in connection with such
public or quasi-public use or purpose. Tenant hereby assigns to
Landlord its entire interest in any and all such awards, and
shall have no claim against Landlord for the value of any portion
of the unexpired Term. If a part of the Premises shall be so
taken or appropriated, and Landlord does not elect to terminate
this Lease, the Base Monthly Rental thereafter to be paid shall
be reduced by an amount bearing the same ratio to the total
amount of Base Monthly Rental as the rentable area of the
Premises so taken bears to the entire Premises.
(t) If any part of the Building other than the Premises shall be so
taken or appropriated, Landlord shall have the sole right, at its
option, to terminate this Lease and shall be entitled to the
entire award as above provided, and in such case Tenant shall
likewise have no claim against Landlord for the value of any
unexpired Term of this Lease.
(u) Nothing hereinbefore contained shall be deemed to deny to Tenant
its right to claim from the condemning authority compensation or
damages for its trade fixtures and personal property, provided
the condemning authority makes a separate award therefor.
1. INSURANCE.
Tenant shall carry "all risk" coverage insurance insuring Tenant's
interest in the improvements and betterments to the Premises, including initial
improvements installed by Landlord, and any and all furniture, equipment,
supplies and other property owned, leased, held or possessed by it and contained
therein, in an amount equal to the full replacement cost thereof, subject to
deductible amounts reasonably satisfactory to Landlord, plus business
interruption insurance respecting Tenant's operations from the Premises in an
amount reasonably satisfactory Landlord. Tenant shall also procure and maintain
throughout the Term a policy or policies of commercial general liability
insurance, including contractual liability, insuring Tenant, Landlord and any
other persons designated by Landlord, as additional insureds, against any and
all liabilities for injury to or death of a person or persons and for damage to
property occasioned by or arising out of any construction work being done on the
Premises, or arising out of the condition, use or occupancy of the Premises, or
in any way occasioned by or arising out of the activities of Tenant or its
agents, employees or licensees in the Premises, or other portions of the
Building, Building site and adjacent parking areas in amounts not less than
$1,000,000 with respect to any one casualty of occurrence and $100,000 with
respect to property damage, including fire legal liability. Landlord and Tenant
shall each have included in all policies of insurance respectively obtained by
them with respect to the Building. Building site and adjacent parking areas
and/or the Premises a waiver by the insurer of all rights of subrogation against
the other in connection with any loss or damage thereby insured against. So
long as both Landlord's and Tenant's policies then in force include such mutual
waiver of subrogation, Landlord and Tenant, to the fullest extent permitted by
law, each waive all right of recovery against the other for, and agree to
release the other from liability for, loss or damage to the extent such loss or
damage is covered or could be covered by valid and collectible insurance in
effect at the time of such loss or damage. If such waiver of subrogation shall
not be obtainable or shall be obtainable only at a premium over that chargeable
without such waiver, the party seeking such waiver shall notify the other
thereof in writing, and the latter shall have ten (10) days in which either (i)
to procure on behalf of the notifying party insurance with such waiver from a
company or companies reasonably satisfactory to the notifying party or (ii) to
agree to pay such additional premium (in Tenant's case, in the proportion which
the rentable square footage of the Premises bears to the total rentable square
footage of the area covered by the insurance policy of Landlord). All insurance
policies procured and maintained by Tenant pursuant to this Paragraph 20 shall
be carried with companies licensed to do business in the State of Georgia with
an A.M. Best rating of A-8 or better and shall be
<PAGE>
noncancellable except after thirty (30) days written notice to Landlord and any
designees of Landlord. Such policies or duly executed certificates of insurance
with respect thereto shall be delivered to Landlord prior to the date that
Tenant takes possession of the Premises, and renewals thereof as required shall
be delivered to Landlord at least thirty (30) days prior to the expiration of
each respective policy term.
21. USUFRUCT ONLY.
This contract shall create the relationship of landlord and tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has
only a asufruct, not subject to levy and sale.
22. WAIVER.
The waiver by Landlord of any breach of any term, covenant or
condition herein contained shall not be deemed to be a waiver of any other term,
covenant or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of Base Monthly Rental,
Additional Rent or other sums due hereunder by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant of any term, covenant or condition
of this Lease, other than the failure of Tenant to pay the particular payment so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such payment. No covenant, term or condition of this
Lease shall be deemed to have been waived by Landlord, unless such waiver is in
writing signed by Landlord.
23. ENTIRE AGREEMENT.
This Lease sets forth all the covenants, promises, agreements,
conditions and undertakings between Landlord and Tenant concerning the Premises,
and there are no covenants, promises, agreements, conditions or undertakings
other than as herein set forth. No subsequent alteration, amendment, change or
addition to this Lease, except as to changes or additions to the Rules and
Regulations described in Paragraph 34, shall be binding upon Landlord or Tenant
unless reduced to writing and signed by authorized representatives of each of
them.
24. LANDLORD'S CONSENT.
In every instance herein in which Landlord is called upon to give its
consent, such consent may be withheld for any reason or for no reason, subject
to the provisions of paragraph 11(a) above, or if granted, may be subject to
those conditions which Landlord deems appropriate. No such consent shall be
binding upon Landlord unless made expressly in writing signed by Landlord.
25. NOTICES.
(y) Every notice, demand or request hereunder shall be in writing,
and shall be deemed to have been property given if delivered
personally or by courier, with a signed receipt, or if deposited
with the United States Postal Service (or any official successor
thereto) designated certified mail, return receipt requested,
bearing adequate postage and addressed as follows:
If to Tenant: EN POINTE TECHNOLOGIES, INC.
400 Perimeter Center Terrace, Suite 45
Atlanta, Georgia 30346
*With copy to: ENPOINTE TECHNOLOGIES, INC.
100 South Sepulveda Boulevard, 19th Floor
El Segundo, California 90245
*Failure of Landlord to deliver copies to the
El Segundo, California address under this
Paragraph 25 shall not constitute a failure
by Landlord to have property delivered notice
under the terms of this Lease.
If to Landlord: BEACON PROPERTIES, L.P.
c/o Beacon Properties Corporation
50 Rowes Wharf
Boston, Massachusetts 02110
Attn: Chief Operating Officer
With copy to: Senior Asset Manager
<PAGE>
Landlord's address
for rental payments: BEACON PROPERTIES, L.P.
P.O. Box 102309
Atlanta, Georgia 30368-2309
The foregoing addresses may be changed by thirty (30) days prior
written notice from time to time.
(b) Tenant hereby appoints as his agent to receive the service of all
dispossessory or distraint proceedings and notices thereunder,
and all notices required under this Lease, the person in charge
of or occupying the Premises at the time; and if no person is in
charge or occupying same, then such service or notice may be made
by attaching the same on the main entrance to the Premises. A
copy of all notices under this Lease shall also be sent to
Tenant's last address of which notice was given to Landlord in
accordance with this Paragraph 25, if different from the
Premises.
2. TRANSFER OF TENANTS.
Landlord reserves the right, upon thirty (30) days written notice, to
transfer and remove Tenant from the Premises to any other space of substantially
equivalent size and area in the Park. Landlord shall bear the expense of said
removal as well as the expense of any renovations of alterations necessary to
make the new space conform in arrangement and layout with the original space
covered by this Lease.
27. SUCCESSORS AND ASSIGNS: ATTORNMENT.
The covenants, conditions and agreements herein contained shall inure
to the benefit of and be binding upon Landlord, its successors and assigns, and
shall be binding upon Tenant, its heirs, executors, administrators, successors
and assigns, and shall inure to the benefit of Tenant and only such assigns of
Tenant to whom the assignment by Tenant has been consented to by Landlord.
Nothing contained in this Lease shall in any manner restrict Landlord's right to
assign or encumber this Lease in its sole discretion. Should Landlord assign
this Lease as provided for above, or should Landlord enter into a security deed
or other mortgage affecting the Premises and should the holder of such deed or
mortgage succeed to the interest of Landlord, Tenant shall be bound to said
assignee or any such holder under all the terms, covenants and conditions of
this Lease for the balance of the Term hereof remaining after such succession,
and Tenant shall attorn to such succeeding party as its Landlord under this
Lease promptly under any such succession. Tenant agrees that should any party
so succeeding to the interest of Landlord require a separate agreement of
attornment regarding the matters covered by this Lease, then Tenant shall enter
into any such "attornment agreement," provided the same does not modify any of
the provisions of this Lease and has no adverse effect upon Tenant's continued
occupancy of the Premises.
28. TIME IS OF THE ESSENCE.
Time is of the essence with respect to the performance of each of the
covenants and agreements of this Lease; provided, however, that failure of
Landlord to provide Tenant with any notification regarding adjustments in Base
Monthly Rental, reimbursements for any Operating Expense Increase or Estimate
Operating Expense Increase, or any other charges provided for hereunder, within
the time periods prescribed in this Lease shall not relieve Tenant of its
obligation to make such payments, which payments shall be made by Tenant at such
time as notice is subsequently given.
29. CAPTIONS: GOVERNING LAW.
The captions of this Lease are for convenience of reference only and
in no way define, limit or describe the scope or intent of this Lease. The laws
of the State of Georgia shall govern the validity, performance and enforcement
of this Lease.
30. SEVERABILITY.
Landlord and Tenant intend and believe that each provision in this
Lease is in accordance with all applicable local, state and federal laws and
judicial decisions. However, if any provision or provisions, or if any
portion of any provision or provisions, in this Lease is ultimately
determined by a court of law to be in violation of any local, state or
federal ordinance, statute, law administrative or judicial decision, or
public policy, and if such court shall declare such portion, provision or
provisions of this Lease to be invalid, unlawful, void or unenforceable as
written, then it is the intent both of Landlord and Tenant that such portion,
provision or provisions shall be given force to the fullest possible extent
that they are legal, valid and enforceable, that the remainder of this Lease
shall be construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained herein, and
that the rights, obligations and interests of Landlord and Tenant under the
remainder of this Lease shall continue in full force and effect, unless the
amount of Base Monthly Rental, Additional Rent or other charges payable
hereunder is thereby decreased, in which event Landlord may terminate this
Lease.
31. SUBORDINATION.
At the option of Landlord, Tenant agrees that this Lease shall remain
subject and subordinate to all present and future mortgages, deed to secure debt
or other security instruments (the "Security Deeds") affecting the Building or
the Premises, and Tenant shall promptly execute and deliver to Landlord such
certificate or certificates in writing as Landlord may request, showing
<PAGE>
the subordination of the Lease to such Security Deeds, and in default of Tenant
so doing, Landlord shall be and is hereby authorized and empowered to execute
such certificate in the name of and as the act and deed of Tenant, this
authority being hereby declared to be coupled with an interest and to be
irrevocable. Tenant shall upon request from Landlord at any time and from time
to time execute, acknowledge and deliver to Landlord a written statement
certifying as follows: (i) that this Lease is unmodified and in full force and
effect (or if there has been modification thereof, that the same is in full
force and effect as modified and stating the nature thereof); (ii) that to the
best of its knowledge there are no uncured defaults on the part of Landlord (or
if any such default exists, the specific nature and extent thereof); (iii) the
date to which any rents and other charges have been paid in advance, if any; and
(iv) such other matters as Landlord may reasonably request. Tent irrevocably
appoints Landlord as its attorney-in-fact, coupled with an interest, to execute
and deliver, for and in the name of Tenant, any document or instrument provided
for in this Paragraph.
32. ATTORNEYS' FEES.
Tenant agrees to pay all attorneys' fees and expenses the Landlord
incurs in enforcing any of the obligations of Tenant under this Lease, or in any
litigation or negotiation in which Landlord shall, without his fault, become
involved though or on account of this Lease.
33. LIMITATION OF LIABILITY.
Landlord's obligations and liability to Tenant with respect to this
Lease shall be limited solely to Landlord's interest in the Building, and
neither Landlord nor any of the joint ventures of Landlord, nor any officer,
director, partner or shareholder of Landlord or any of the joint venturers of
Landlord, shall have any personal liability whatsoever with respect to this
Lease.
34. RULES AND REGULATION.
The rules and regulations (herein called the "Rules and Regulations")
printed upon this instrument on the attached Exhibit B shall be and are hereby
made a part of this Lease. Tenant, its employees and agents, will perform and
abide by said Rules and Regulations, and any amendments or additions to said
Rules and Regulations as may be made from time to time by Landlord.
35. PARKING.
At all times during the Term of this Lease, Landlord shall provide
Tenant's employees and visitors with unassigned parking at a ratio of 3 spaces
or 1,000 rentable square feet of office space leased, to include any expansion
space incorporated into the Premises after the commencement of the Term of this
Lease.
36. HAZARDOUS MATERIALS.
Tenant represents and warrants to Landlord that the Premises, or any
portion thereof, will not be used for the handling or storage of any "Hazardous
Materials" as such are generally defined with respect to current or future
environmental regulations and/or laws. Without limiting any other rights that
Landlord may have at law or in equity, Tenant hereby indemnifies Landlord and
agrees to hold Landlord harmless from and against all liens, demands, suits,
actions, proceedings, disbursements, liabilities, losses, litigation, damages,
judgments, obligations, penalties, injuries, costs, expenses (including, without
limitation, attorneys' and experts' fees) and claims of any and every kind
whatsoever paid, incurred, suffered by, or asserted against Landlord and/or the
Premises, Building and/or Building site for, with respect to, or as a direct or
indirect result of the failure by Tenant to comply with this Paragraph.
37. SPECIAL STIPULATIONS.
Insofar as the special stipulations, if any, set forth in the special
stipulations attachment to this Lease conflict with any of the foregoing
provisions, the special stipulations shall control. Such special stipulations
are expressly incorporated herein by this reference.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have herein set their hands and
seals, the day and year set forth opposite their respective signatures below,
effective as of the date first above written.
Signed, sealed and delivered by LANDLORD:
Landlord this_________day of
_______________,________in BEACON PROPERTIES, L.P.
the presence of: a Delaware limited partnership
By: Beacon Properties Corporation,
General Partner
By:
- ----------------------------------- -------------------------------
Unofficial Witness Douglas S. Mitchell,
Senior Vice President
- -----------------------------------
Notary Public
My Commission Expires:
------------------
(NOTARIAL SEAL)
Signed, sealed and delivered by TENANT:
Tenant this_______day of
_______________,________in EN POINTE TECHNOLOGIES, INC.
the presence of:
By: (SEAL)
- ----------------------------------- ----------------------
Unofficial Witness Name:
-------------------------
Title:
------------------------
Attest: (SEAL)
- ----------------------------------- ------------------
Notary Public Name:
-------------------------
Title:
------------------------
My Commission Expires:
-------------
<PAGE>
COMMERCIAL
B O A R D OF
REALTORS-C-
COMMERCIAL LEASE AGREEMENT
THIS LEASE, made this 18 day of April 1997, by
and between ABT Building Products Corporation (hereinafter called "Landlord"):
and
En Pointe Technologies (hereinafter called "Tenant"):
WITNESSETH:
PREMISES
1. Landlord for and in consideration of the rents, covenants, agreements,
and stipulations hereinafter mentioned provided for and contained to
be paid, kept and performed by Tenant, leases and rents unto Tenant,
and Tenant hereby leases and takes upon the terms and conditions which
hereinafter appear, the following described property (hereinafter
called the "Premises"), to wit:
(Address:) 8420 University Executive Park, Suite 835
-----------------------------------------------------------
(Legal Description:)
--------------------------------------------------
----------------------------------------------------------------------
- See attached Exhibit _____________ for legal description/description
of premises.
TERM
2. The Tenant shall have and hold the Premises for a term of fifteen
months beginning on the 1st day of May 1997 , and ending on the 31st
day of July 1998, at midnight, unless soon terminated as hereinafter
provided. The first Lease Year Anniversary shall be the date twelve
(12) calendar months from the first day of the first full month of the
term hereof and successive Lease Year Anniversaries shall be the date
twelve (12) calendar months from the previous Lease Year Anniversary.
RENTAL
3. Tenant agrees to Pay to Landlord or its Agent without demand,
deduction or set off, and annual rental of $ 36,000 payable in equal
monthly installments of $ 3,000 in advance on the first day of each
calendar month during the term hereof. Upon execution of this Lease,
Tenant shall pay to Landlord the first full month's rent due
hereunder. Rental for any period during the term hereof which is for
less than one month shall be a prorated portion of the monthly rental
due. On each Lease Year Anniversary the annual rental payable
hereunder (and accordingly the monthly installments shall be adjusted
by any change in the Consumer Price Index, Urban Wage Earners and
Clerical Workers, All Cities (CPI-W; 1982-1984 = 100) ("Index") by
multiplying the then effective e annual rental by the value of said
Index for the month two months prior to the previous Lease Year
Anniversary (in the instance of the first Lease Year Anniversary the
value of the Index for the month two months prior to the first full
month of the term hereof) and dividing the product by the value of
said Index for the month two months prior to the Lease Year
Anniversary. In the event the Index ceases to be published, there
shall be substituted for the Index the measure published by the US
Department of Labor which most nearly approximates the index.
- If this box is checked, Tenant shall pay all rental to
Landlord's Agent as designated in Paragraph 34 hereof.
<PAGE>
LATE CHARGES
4. If Landlord fails to receive any rent payment within 15 days after it
becomes due, Tenant shall pay Landlord, as additional rental, a late
charge equal to ten percent ( 10 %) of the overdue amount. The
parties agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of such late
payment.
SECURITY DEPOSIT
5. Tenant shall deposit with Landlord or its Agent upon execution of this
Lease $ 3,000 as a security deposit which shall be held as security
for the full and faithful performance by Tenant of each and every
term, covenant and condition of this Lease. If any of the rents or
other charges or sums payable by Tenant shall be over-due and unpaid
or should payments be made on behalf of Tenant, or should Tenant fail
to perform any of the terms of this Lease, then Landlord or its Agent
may, at its option, appropriate and apply the security deposit, or so
much thereof as may be necessary, to compensate toward the payment of
the rents, charges or other sums due from Tenant, or towards any loss,
damage or expense sustained by Landlord resulting from such default on
the part of Tenant; and in such event Tenant shall upon demand restore
the security deposit to the original sum deposited. In the event
Tenant furnishes Landlord with proof that all utility bills have been
paid through the date of Lease termination, and performs all of
Tenant's other obligations under this Lease, the security deposit
shall be returned in full to Tenant within thirty (30) days after the
date of the expiration or sooner termination of the term of this Lease
and the surrender of the Premises by Tenant in compliance with the
provisions of this Lease. THE SECURITY DEPOSIT MAY BE PLACED IN AN
INTEREST BEARING ACCOUNT AND ANY INTEREST THEREON SHALL BE THE
PROPERTY OF THE PARTY HOLDING SAME.
- If this box is checked, Agent shall hold the Security and
shall be entitled to the interest thereon.
UTILITY BILLS
6. (a) Tenant shall pay the following utilities: all utilities
(b) Landlord shall pay the following utilities: none
COMMON AREA COSTS; RULES AND REGULATIONS
7. If the Premises are part of a larger building or group of building,
Tenant shall pay as additional rental monthly, in advance, it pro rata
share of common area maintenance costs as hereinafter more
particularly set forth in the Special Stipulations. The Rules and
Regulations, if any, attached hereto are made a part of this Lease.
Tenant agrees to perform and abide by those Rules and Regulations, if
any, and such other Rules and Regulations, If any, as may be made from
time to time by Landlord.
USE OF PREMISES
8. The Premises shall be used for offices purposes only and no other.
The Premises shall not be used for any illegal purposes, nor in any
manner to create any nuisance or trespass, nor in any manner to
vitiate the insurance or increase the
<PAGE>
rate of insurance on the Premises. In the event Tenant's use of the
Premises results in an increase in the rate of insurance on the
Premises, Tenant shall pay to Landlord, upon demand and as additional
rental, the amount any such increase.
ABANDONMENT OF THE PREMISES
9. Tenant agrees not to abandon or vacate the Premises during the term of
this Lease and agrees to use the Premises for the purposes herein
stated until the expiration hereof.
TAX AND INSURANCE ESCALATION
10. Tenant shall pay upon demand as additional rental during the term of
this Lease, and any extension or renewal thereof, the amount by which
all taxes (including but not limited to, ad valorem taxes special
assessments and any other governmental charges) on the Premises for
each tax year exceed all taxes on the Premises for the tax year
19______. In the event the Premises shall be determined by proration
on the basis that the rentable floor area of the Premises bears to the
rentable floor area of the entire property assessed. If the final
year of the Lease term fails to coincide with the tax year, then any
excess for the tax year during which the term ends shall be reduced by
the pro rate part of such tax year beyond the Lease term. If such
taxes for the year in which the Lease terminates are not ascertainable
before payment of the last month's rental, then the amount of such
taxes assessed against the property for the previous tax year shall be
used as a basis for determining the pro rata share, if any, to be paid
by Tenant for that portion of the last Lease year. Tenant shall
further pay, upon demand as additional rental, its pro rata share of
excess cost of fire and extended coverage insurance including any all
public liability insurance on the building over the cost for the first
year of the Lease term for each subsequent year during the term of
this Lease. Tenant's pro rata portion of increased taxes or share of
excess cost of fire and extended coverage and liability insurance, as
provided herein shall be payable within fifteen 15 days after receipt
of notice from Landlord as to the amount due.
INDEMNITY; INSURANCE
11. Tenant agrees to and hereby does indemnify and save Landlord harmless
against all claims for damages to persons or property by reason of
Tenant's use or occupancy of the Premises, and all expenses incurred
by Landlord because thereof, including attorney's fees and court
costs. Supplementing the foregoing and in addition thereto, Tenant
shall during all times of this Lease and any extension or renewal
thereof, and at Tenant's expense, maintain in full force and effect
comprehensive general liability Insurance with limits of $ 100,000 per
person and $ 1,000,000 per accident, and property damage limits of $
500,000, which insurance shall contain a special endorsement
recognizing and insuring any liability accruing to Tenant under the
first sentence of this paragraph 11, and naming Landlord as additional
insured. Tenant shall provide evidence of such insurance to Landlord
prior to the commencement of the term of this Lease. Landlord and
Tenant each hereby release and relieve the other, and waive any right
of recovery, for loss or damage arising out of or incident to the
perils insured against which perils occur in, on or about the
Premises, whether due to the negligence of Landlord or Tenant of their
agents, employees, contractors and/or invitees, to the extent that
such loss or damage is within the policy limits of said comprehensive
general liability insurance. Landlord and Tenant shall, upon
obtaining the policies of insurance required, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
REPAIRS BY LANDLORD
12. Landlord agrees to keep in good repair the roof, foundations and
exterior walls of the Premises (exclusive of all glass and exclusive
of all exterior doors) and underground utility and sewer pipes outside
the exterior walls of the building, except repairs rendered necessary
by the negligence or intentional wrongful acts of Tenant, its agents,
employees or invitees. If the Premises are part of a larger building
or group of buildings, then to the extent that the grounds are common
areas, Landlord shall maintain the grounds surrounding the building,
including paving, the moving of grass, care of shrubs and general
landscaping. Tenant shall promptly report in writing to Landlord any
defective condition know to it which Landlord is required to repair
and failure so to report such conditions shall make Tenant responsible
to Landlord for any liability incurred by Landlord by reason of such
conditions.
<PAGE>
REPAIRS BY TENANT
13. Tenant accepts the Premises in their present condition and as suited
for the uses intended by Tenant. Tenant shall, throughout the initial
term of this Lease, and any extension or renewal thereof, at its
expense, maintain in good order and repair the Premises, including the
building, heating and air conditioning equipment (including but not
limited to replacement of parts, compressors, air handling units and
hearing units and other Improvements located thereon, except those
repairs expressly required to be made by Landlord hereunder. Unless
the grounds are common areas of a building(s) larger than the
Premises, Tenant further agrees to care for the grounds around the
building, including paving, the mowing of grass, care of shrubs and
general landscaping. Tenant agrees to return the Premises to Landlord
at the expiration, or prior to termination of this Lease, in as good
condition and repair as when first received, natural wear and tear,
damage by storm fire, lightning, earthquake or other casualty alone
excepted.
ALTERATIONS
14. Tenant shall not make any alterations, additions, or improvements to
the Premises without Landlord's prior written consent. Tenant shall
promptly remove any alterations, additions, or improvements
constructed in violation of this Paragraph 14 upon Landlord's written
request. All approved alterations, additions, and improvements will
be accomplished in a good and workmanlike manner, in conformity with
all applicable laws and regulations, and by a contractor approved by
Landlord, free of any liens or encumbrances. Landlord may require
Tenant to remove any alterations, additions or improvements (whether
or not make with Landlord's consent) at the termination of this Lease
and to restore the Premises to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which Landlord
has not required Tenant to remove shall become Landlord's property and
shall be surrendered to Landlord upon the termination of this Lease,
except that Tenant may remove any of Tenant's machinery or equipment
which can be removed without material damage to the Premises. Tenant
shall repair, at Tenant's expense, any damage to the Premises caused
by the removal of any such machinery or equipment.
REMOVAL OF FIXTURES
15. Tenant may (if not in default hereunder) prior to the expiration of
this Lease, or any extension or renewal thereof, remove all fixtures
and equipment which it has placed in the Premises, provided Tenant
repairs all damage to the Premises cause by such removal.
DESTRUCTION OF OR DAMAGE TO PREMISES
16. If the Premises are totally destroyed by storm, fire, lightning,
earthquake or other casualty, this Lease shall terminate as of the
date of such destruction and rental shall be accounted for as between
Landlord and Tenant and of that date. If the Premises are damaged but
not wholly destroyed by any such casualties, rental shall abate in
such proportion as use of the Premises has been destroyed and Landlord
shall restore Premises to substantially the same condition as before
damage as speedily as is practicable, whereupon full rental shall
recommence.
GOVERNMENTAL ORDERS
17. Tenant agrees, at its own expense, to comply promptly with all
requirements of any legally constituted public authority made
necessary by reason of Tenant's occupancy of the Premises. Landlord
agrees to comply promptly with any such requirements if not made
necessary by reason of Tenant's occupancy. It is mutually agreed,
however, between Landlord and Tenant, that if order to comply with
such requirements, the cost to Landlord or Tenant, as the case may be,
shall exceed a sum equal to one year's rent then Landlord or Tenant
who is obligated to comply with such requirements may terminate this
Lease by giving written notice of termination to the other party by
registered mail, which termination shall become effective sixty (60)
days after receipt of such notice and which notice shall eliminate the
necessity of compliance with such requirements by giving such notice
unless the party giving such notice of termination shall, before
termination becomes effective, pay to the party giving notice all cost
of compliance in excess of one year's rent, or secure payment of said
sum in manner satisfactory to the party giving notice.
CONDEMNATION
<PAGE>
18. If the whole of the Premises, or such portion thereof as will make the
Premises unusable for the purposes herein leased, are condemned by any
legally constituted authority for any public use or purpose, then in
either of said events the term hereby granted shall cease from the
date when possession thereof is taken by public authorities, and
rental shall be accounted for as between Landlord and Tenant as of
said date. Such termination, however, shall be without prejudice to
the rights of either Landlord or Tenant to recover compensation and
damage caused by condemnation from the condemnor. It is further
understood and agreed that Tenant shall not have any rights in any
award made to Landlord by any condemnation authority.
ASSIGNMENT AND SUBLETTING
19. Tenant shall not, without the prior written consent of Landlord, which
shall not be unreasonably withheld, assign this Lease or any interest
hereunder, or sublet the Premises or any part thereof, or permit the
use of the Premises by any party other than the Tenant. Consent to
any assignment or sublease shall not impair this provision and all
later assignments or subleases shall be made likewise only on the
prior written consent of Landlord. The Assignee of Tenant, at option
of Landlord, shall become directly liable to Landlord for all
obligations of Tenant hereunder, but no sublease or assignment by
Tenant shall relieve Tenant of any liability hereunder.
EVENTS OF DEFAULT
20. The happening of any one or more of the following events (hereinafter
any one of which may be referred to as an "Event of Default") during
the term of this Lease, or any renewal or extension thereof, shall
constitute a breach of this Lease on the part of the Tenant: (1)
Tenant fails to pay the rental as provided for herein; (2) Tenant
abandons or vacates the Premises; (3) Tenant fails to comply with or
abide by and perform any other obligation imposed upon Tenant under
this Lease; (4) Tenant is adjudicated bankrupt; (5) a permanent
receiver is appointed for Tenant's property and such receiver is not
removed within sixty (60) days after written notice from Landlord to
Tenant to obtain such removal; (6) Tenant, either voluntarily or
involuntarily, takes advantage of any debt or relief proceedings under
any present or future law, whereby the rent or any part thereof is, or
is proposed to be, reduced or payment therefore deferred; (7) Tenant
makes an assignment for benefit of creditors; or (8) Tenant's effects
are levied upon or attached under process against Tenant, which is not
satisfied or dissolved within thirty (30) days after written notice
from Landlord to Tenant to obtain satisfaction thereof.
REMEDIES UPON DEFAULT
21. Upon the occurrence of Event of Default, Landlord my pursue any one or
more of the following remedies separately or concurrently, without
prejudice to any other remedy herein provided or provided by law; (a)
if the Event of Default involves nonpayment of rental and Tenant fails
to such default within five (5) days after receipt of written notice
thereof from Landlord, or if the Event of Default involves a default
in performing any of the terms of provisions of this Lease other than
the payment of rental, and Tenant fails to cure such default within
fifteen (15) days after the receipt of written notice of default from
Landlord , Landlord may terminate this Lease by giving written notice
to Tenant and upon such termination shall be entitled to recover from
Tenant damages as may be permitted under applicable law; or (b) if the
Event of Default involves any matter other than those set forth in
item (a) of this paragraph 21, Landlord may terminate this Lease by
giving written notice to Tenant and, upon such termination, shall be
entitled to recover from the Tenant damages in an amount equal to all
rental which is then due and the present value (discounted at ten
percent (10%) per annum) of all rental which would otherwise have
become due throughout the remaining term of this Lease, or any renewal
or extension thereof (as if this Lease had not been terminated); or
(c) upon any Event of Default, Landlord, as Tenant's agent, without
terminating this Lease may enter upon and rent the Premises, in whole
or in part, at the best price obtainable by reasonable effort, without
advertisement and by private negotiations and for any term landlord
deems proper, with Tenant being liable to Landlord for the deficiency,
if any, between Tenant's rent hereunder and the price obtained by
Landlord on reletting, provided, however, that Landlord shall not be
considered to be under any duty by reason of this provision to take
any action to mitigate damages by reason of Tenant's default. In the
event Landlord hires an attorney to enforce its rights upon default,
Tenant shall in addition be liable for reasonable attorney's fees and
all costs of collection.
<PAGE>
EXTERIOR SIGNS
22. Tenant shall place no signs upon the outside walls or roof of the
Premises, except with the express written consent of the Landlord. Any
all signs placed on the Premises by Tenant shall be maintained in
compliance with governmental rules and regulations governing such
signs and Tenant shall be responsible to Landlord for any damage
caused by installation, use or maintenance of said signs, and all
damage incident to removal thereof.
LANDLORD"S ENTRY OF PREMISES
23. Landlord may advertise the Premises "For Rent" or "For Sale" sixty
(60) days before the termination of this Lease. Landlord may enter
the Premises at reasonable hours to exhibit same to prospective
purchasers of tenants and to make repairs required of Landlord under
the terms hereof or to make repairs to Landlord's adjoining property,
if any.
EFFECT OF TERMINATION OF LEASE
24. No termination of this Lease prior to the normal ending thereof, by
lapse of time or otherwise, shall affect Landlord's right to collect
rent for the period prior to termination thereof.
MORTGAGEE'S RIGHTS
25. Tenant's rights shall be subject to any bona fide mortgage, deed of
trust or other security interest which is now or may hereafter be
placed upon the Premises by Landlord. Tenant shall, if requested by
Landlord, execute a separate agreement reflecting such subordination.
QUIET ENJOYMENT
26. So long as Tenant observes and performs the covenants and agreements
contained herein, it shall at all times during the Lease term
peacefully and quietly have and enjoy possession of the Premises, but
always subject to the terms hereof. Provided, however, that in the
event Landlord shall sell or otherwise transfer its interest in the
Premises, Tenant agrees to attorn to any new owner or interest holder
and shall, if requested by Landlord, execute a separate agreement
reflecting such attornment, provided that said agreement requires the
new owner or interest holder to recognize its obligations and Tenant's
rights hereunder.
HOLDING OVER
27. If Tenant remains in possession of the Premises after expiration of
the term hereof, with Landlord's acquiescence and without any express
agreement of the parties, Tenant shall be a tenant at will at the
rental rate which is in effect at end of this Lease and there shall be
no renewal of this Lease by operation of law. If Tenant remains in
possession of the Premises after expiration of the term hereof without
Landlord's acquiescence, Tenant shall be a tenant at sufferance and
commencing on the date following the date of such expiration, the
monthly rental payable under Paragraph 3 above shall for each month,
or fraction thereof during which Tenant so remains in possession of
the premises, be twice the monthly rental otherwise payable under
Paragraph 3 above.
ATTORNEY'S FEES
28. In the event that any actin or proceeding is brought to enforce any
term, convenant or condition of this Lease on the part of Landlord or
Tenant, the prevailing party in such litigation shall be entitled to
recover reasonable attorneys' fees and costs.
RIGHTS CUMULATIVE
<PAGE>
29. All rights, powers and privileges conferred hereunder upon parties
hereto shall be cumulative and not restrictive of those given by law.
WAIVER OF RIGHTS
30. No failure of Landlord to exercise any power given Landlord hereunder
or to insist upon strict compliance by Tenant of its obligations
hereunder and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to
demand exact compliance with the terms hereof.
ENVIRONMENTAL LAWS
31. Landlord represents that to the best of its knowledge and belief, (1)
the Premises are in compliance with all applicable environmental laws,
and (2) there are not excessive levels (as defined by the
Environmental Protection Agency) of radon, toxic waste of hazardous
substances on the Premises. Tenant represent and warrants that Tenant
shall comply with all applicable environmental laws and Tenant shall
not permit any of his employees, agents, contractors or
subcontractors, or any person present on the Premises to generate,
manufacture, store, dispose or release on, about, or under the
Premises any hazardous substances which would result in the Premises
not complying with any applicable environmental laws.
TIME OF ESSENCE
32. Time is of the essence of this Lease.
DEFINITIONS
33. "Landlord" as used in this Lease shall include the undersigned, its
heirs, representatives, assigns and successors in title to the
Premises. "Agent" as used in this Lease shall mean the party
designated as same in Paragraph 34, its heirs, representatives,
assigns and successors. "Tenant" shall include the undersigned and
its heirs, representatives, assigns and successors, and if this Lease
shall be validly assigned or sublet, shall include also Tenant's
assignees or sublessees as to the Premises covered by such assignment
or sublease. "Landlord", "Tenant" and "Agent" include male and
female, singular and plural, corporation, partnership or individual,
as may fit the particular parties.
NOTICES
<PAGE>
34. All notices required or permitted under this Lease shall be in writing
shall be personally delivered or sent by U.S. Certified Mail, return
receipt requested, postage prepaid. Notices to Tenant shall be
delivered or sent to the address shown below, except that upon
Tenant's taking possession of the Premises, than Premises shall be
Tenant's address for such purposes. Notices to Landlord and Agent
shall be delivered or sent to the addresses hereinafter stated, to
wit:
Landlord: ABT Building Products
Exterior Products Group
10115 Kinley Ave.
Huntersville, NC 28078
Agent:
Tenant: En Pointe Technologies
100 N. Sepulveda Blvd.
El Segundo, CA 90045
310-725-5200
All notices shall be effective upon delivery. Any party may change its notice
address upon written notice to the other parties.
ENTIRE AGREEMENT
35. This Lease contains the entire agreement of the parties hereto, and no
representations, inducements, promises or agreements, oral or
otherwise, between the parties, not embodied herein shall be of any
force or effect. This Lease may not be modified except by a writing
signed by all of the parties hereto.
SPECIAL STIPULATIONS
36. Any special stipulations are set forth in the attached Exhibit
_______________. In so far as said Special Stipulations conflict with
any of the foregoing provisions, said Special Stipulations shall
control.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals,
the date and year first above written.
LANDLORD:
Individual Business Entity
(SEAL) -----------------------------------
- ------------------------------ (Name of Firm)
(SEAL) By: (SEAL)
- ------------------------------ ---------------------------
TENANT:
Individual Business Entity
(SEAL) -----------------------------------
- ------------------------------ (Name of Firm)
(SEAL) By: (SEAL)
- ------------------------------ ---------------------------
ADDENDUM:
<PAGE>
This lease is subject to all provisions of the attached lease agreement
dated June 5, 1995 and between ABT Building Products Corporation and Atapco Vep,
Inc., EnPointe Technologies agrees to all provisions of the lease between ABT
and Atapco.
- ----------------------------------- -----------------------------------
Initial Initial
<PAGE>
EN POINTE TECHNOLOGIES, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11.2
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
PRIMARY June 30 June 30
(in thousands, except per share data) ------------------ -----------------
1997 1996 1997 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income $ 1,461 $ 459 $ 3,972 $ 1,843
------- ------- ------- -------
------- ------- ------- -------
Basis for computation of primary earnings
per common and common equivalent share:
Weighted average number of shares
outstanding during period 5,693 4,617 5,669 3,683
Weighted average (incremental) common
share equivalents after considering the effects
of options and warrants, exercised and
canceled during the period and after assumed
repurchase of treasury shares 92 139 163 139
------- ------- ------- -------
Total weighted average shares 5,785 4,756 5,832 3,822
------- ------- ------- -------
------- ------- ------- -------
Earnings per share $ 0.25 $ 0.10 $ 0.68 $ 0.48
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
FULLY DILUTED June 30 June 30
(in thousands, except per share data) ------------------ -----------------
1997 1996 1997 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net income $ 1,461 $ 459 $ 3,972 $ 1,843
------- ------- ------- -------
------- ------- ------- -------
Basis for computation of primary earnings
per common and common equivalent share:
Weighted average number of shares
outstanding during period 5,693 4,617 5,669 3,683
Weighted average (incremental) common
share equivalents after considering the effects
of options and warrants, exercised and
canceled during the period and after assumed
repurchase of treasury shares 92 139 163 139
------- ------- ------- -------
Total weighted average shares 5,785 4,756 5,832 3,822
------- ------- ------- -------
------- ------- ------- -------
Earnings per share $ 0.25 $ 0.10 $ 0.68 $ 0.48
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 789
<SECURITIES> 0
<RECEIVABLES> 73,214
<ALLOWANCES> 1,489
<INVENTORY> 7,158
<CURRENT-ASSETS> 81,363
<PP&E> 5,375
<DEPRECIATION> 2,009
<TOTAL-ASSETS> 84,729
<CURRENT-LIABILITIES> 58,554
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 25,656
<TOTAL-LIABILITY-AND-EQUITY> 84,729
<SALES> 356,661
<TOTAL-REVENUES> 356,661
<CGS> 325,456
<TOTAL-COSTS> 23,571
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 587
<INTEREST-EXPENSE> 927
<INCOME-PRETAX> 6,879
<INCOME-TAX> 2,907
<INCOME-CONTINUING> 3,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,972
<EPS-PRIMARY> .68
<EPS-DILUTED> .68
</TABLE>
