<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
Commission File No. 0-20947
ON-SITE SOURCING, INC.
(Name of Small Business Issuer in its Charter)
Delaware 54-1648470
(State of Other Jurisdiction of Incorporation
or Organization) (IRS Employer Identification No.)
1111 North 19th Street, Sixth Floor, Arlington, VA 22102
(Address of Principal Executive Offices) (Zip Code)
703-276-1123
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
Units comprised of two shares of NASDAQ (since 7/11/96)
Common Stock and one
Common Stock Purchase Warrant
Common Stock ($.01 par value) NASDAQ (since 8/19/96)
Common Stock Purchase Warrants NASDAQ (since 8/19/96)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
This report contains a total of 34 pages. The Exhibit Index appears on page 33.
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were $ 9,507,666
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of December 31, 1996 was $ 2.31.
The number of shares outstanding of the issuer's shares of common stock as of
December 31, 1996 was 4,794,021.
Transitional Small Business Disclosure Format Yes No X
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
On-Site Sourcing, Inc. (the "Company" or "On-Site") provides reprographic
and facilities management services to law firms, corporations, non-profit
organizations, accounting firms, financial institutions and other organizations
throughout the East Coast. In order to meet the highly specialized requirements
of each client, On-Site offers a variety of customized reprographic and
facilities management services. The Company's reprographic services include
copying, binding, labeling, collating and indexing in support of complex,
document-intensive litigation as well as higher volume productions of manuals,
brochures and other materials for corporations and non-profit organizations. In
addition, On-Site provides a variety of imaging and scanning services which
allow the transfer of information from paper documents into CD-ROM and other
electronic media. On-Site also provides on-premises management of the
customer's support services including mailroom operations, facsimile
transmission, records and supply room management and copying services. The
Company also services, refurbishes, leases and sells mid and high volume copy
machines thereby minimizing critical down time and increasing productivity at
the Company's reprographic centers and facilities management sites. On-Site
assumes complete responsibility for these operations by providing management,
highly-trained staff, specialized proprietary software, equipment, and supplies,
as well as copier repair and consulting services.
The Company targets the premium service segment of the market in which
speed, accuracy and quality are essential by providing high quality service at
economical prices. On-Site Sourcing, Inc. was founded in 1992 and currently
serves the greater Washington, Philadelphia, New York City and Atlanta
metropolitan areas through outsourcing locations in Arlington, Virginia;
Philadelphia, Pennsylvania; New York, New York; and Atlanta, Georgia, as well as
facilities management locations in Washington, DC; Baltimore, MD; Philadelphia,
PA; Atlanta, GA; and Mt. Laurel, NJ. The Arlington, Virginia outsourcing
location is one of the largest processing centers in the metropolitan Washington
area. Customers include a number of the large law firms, corporations and
non-profit entities operating in these cities. The Company was originally
incorporated in Virginia in December 1992 and changed its state of incorporation
to Delaware in January 1996.
Outsourcing Market. Traditionally, most organizations have provided all of
the services required to support their own operations. Increasingly, however,
organizations are contracting out certain functions to specialized independent
business service companies. These services include reprographic, security,
secretarial, cafeteria, computer and communications facilities management.
Outsourcing allows organizations to focus their management and resources on
their own business, while often improving support systems and more effectively
controlling costs. Users of facilities management services are relieved of the
responsibilities of selecting and maintaining equipment and hiring, training,
managing and motivating employees. Facilities management operators generally
achieve economies of scale in administration and the purchasing of equipment and
supplies.
Strategy. The Company's strategy for continued growth in the premium
service sector of the reprographic and facilities management business is to
attract new customers, retain existing clients and expand the range of services
while maintaining high quality and efficient operations. The Company has
developed several management strategies in order to continue to compete
successfully with larger companies including:
<TABLE>
<S> <C>
Training On-Site has developed intensive training programs for all
programs employees through the use of proprietary computer programs.
Training is based on qualification requirements for each
position and continues throughout the course of employment.
Quality control Strict quality control standards are also maintained
through the use of a Quality Assurance Team, Quality
Assurance Diary, intensive training programs and client
surveys. Because of the sensitivity of the materials
produced, each document is hand checked in a separate room
by a quality control team. Less than 1% of all documents
are rejected by clients due to poor quality.
Employee On-Site places a strong emphasis on employee relations
Relations through the use of employee empowerment practices, team
building, close relations between employees and management
and an employee incentive program that includes stock
option plans.
Economies of On-Site is able to provide efficient services to its
Scale clients because it achieves economies of scale in
administration, training, acquisition of equipment and
supplies, improved equipment utilization, servicing copiers
and higher employee productivity.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Broad Range of On-Site offers a broad range of services in order to
Services tailor its operations to the highly specialized
requirements of each client. In addition to customized
reprographic services, On-Site offers litigation support
such as binding, labeling, collating and indexing.
Facilities management services include copy and mailroom
operations, facsimile transmission, records and supply
room management, as well as copier repair and consulting
services.
</TABLE>
The Company receives the main part of its revenue by providing reprographic
and litigation support services to law firms and corporations. This accounts for
approximately 77 percent of the Company's revenue. Facilities management
accounts for approximately 20 percent of the revenue, while the servicing and
sales of copy machines provides 3 percent of the Company's revenue. Each
service, while independent to the client, share personnel and resources in order
to minimize costs and provide high quality services.
The Company's goal is to expand its reprographics and facilities management
business by taking advantage of opportunities presented by the large number of
organizations that still provide their own facilities management services
internally.
Operations. On-Site provides its services through regional offices in
metropolitan Washington, DC, Philadelphia, PA, New York, NY and Atlanta, GA.
These facilities maintain staff, equipment, supplies and training facilities in
order to provide reprographic, imaging, and litigation support services to a
variety of customers. The Company places professional management at each
regional office and provides employees with ongoing training in equipment
operation and maintenance, customer satisfaction, interpersonal skills, and
quality control. Equipment and supplies are provided by numerous regional and
national vendors.
On-Site's facilities management services provide reprographic services,
mailroom and facsimile services and other services required on the premises of
its customers. The Company conducts a comprehensive analysis of each client's
needs and tailors the services provided to these needs based on volume, time,
and quality requirements.
The Company's reprographic and litigation support services to law firms and
corporations include copying, binding, drilling, "Bates" stamping, labeling,
collating, indexing, assembling and quality review. The Company currently has
technology which allows customers to "telecommute" by sending documents
instantaneously via the Internet to computers at On-Site. The documents are then
transferred into the memory of a copy machine and reproduced. On-Site also
provides a variety of imaging and scanning services which allow the transfer of
information from paper documents into electronic media.
At facilities management locations, the Company provides on-site management
of the client's support services such as copy, mail, supply and records rooms.
Mailroom services include distributing all mail and interoffice correspondence;
processing, logging and billing outgoing mail, parcels and special courier
items; logging, billing, and tracking transmission of outgoing facsimiles and
distributing incoming facsimiles. In the supply room services, On-Site provides
all required materials through a "Just in Time" system designed to minimize the
costs of logging and tracking materials provided. Records room services include
utilization of bar code applications and state-of-the-art imaging and scanning
equipment to store documents and data base information for quick retrieval and
copying. Copy room management involves tracking, logging and billing all copies,
and providing repair services to copy machines. In addition, specialized
proprietary software generates operating data that allows the Company to analyze
vendor, copy and overtime costs, as well as copy volume, and to prepare profit
and loss statements that offer solutions to productivity problems.
In July 1995, On-Site purchased the net assets of SWR Associates, Inc.
("SWR"), doing business as Copy Rebuild Center, a copier refurbishment facility
in Frederick, MD, that services, refurbishes, leases and sells mid and high
volume copiers. On-Site now provides service technicians to all of the Company's
locations. The acquisition of an in-house repair service was a natural vertical
integration and has allowed On-Site to minimize critical down time and increase
productivity at the Company's reprographic centers and facilities management
sites.
The Company performs various services, one of which includes facilities
management, litigation copying, and related services at customer and company
locations, and a second which includes the purchase, refurbishment, lease, sale
and servicing of copy machines. The Company's operations are conducted entirely
in the United States.
Customers. On-Site's customers include law firms, non-profit
organizations, corporations, accounting firms, financial institutions and other
organizations throughout the East Coast. On-Site's customer base is the premium
service segment of the market in which speed, accuracy and quality are critical.
The Company's clients include many of the largest law firms and business
entities in the markets served.
<PAGE>
Employees. The Company continuously recruits, trains and offers benefits
and other incentives to personnel in order to develop and retain a qualified and
reliable staff. Under the Company's training program, all personnel receive
training covering the use and maintenance of equipment, interpersonal skills and
operating procedures. The Company places a strong emphasis on employee relations
and engages in team building, and employee empowerment practices, as well as
providing incentives, including a stock option plan, that are specifically
designed to encourage and reward employee performance. Additionally, all
employees are bonded, sign confidentiality agreements and agree to undergo drug
tests. The Company believes these programs result in higher employee
productivity and professionalism. As of December 31, 1996 ,the Company had
approximately 280 full-time employees, of which 4 are in executive positions.
None of the Company's employees are represented by a labor union and the Company
considers its employee relations to be satisfactory.
Competition. The reprographics and facilities management businesses are
highly competitive. The most significant competition is from prospective clients
themselves, which provide these services internally. The national competitors
providing facilities management services include Pitney Bowes Management
Services and Xerox Business Systems, while Merrill Corporation is a competitor
for reprographic services. Alco Standard Corporation and Donnelley Enterprise
Solutions, Inc. are national competitors providing both reprographic and
facilities management services, while Copy America, Balmar and Reliable are
regional competitors providing both of these services in the markets served by
On-Site.
Technology and Proprietary Information. The Company's proprietary
software, On-Site Sourcing, Inc. Automated Tracking System ("OATS"), was
conceptualized in early 1993 for use in facilities management contracts. It has
undergone continuous development up to the present and has evolved into
SiteTrax. SiteTrax tracks and produces reports for a variety of back office
operations, which enables On-Site to operate in the most efficient manner,
thereby increasing productivity. The program tracks the delivery of all
internal mail and packages, organizes file rooms, assists the client with cost
accounting by automating client billing information and purchase orders, tracks
office employee productivity, automates inventories and tracks incoming and
outgoing facsimiles. The program also employs icons which allow direct access to
other applications such as the UPS and Federal Express Tracking Systems. The
report function produces in-depth charts on all facets of the back office, which
allows On-Site employees to easily monitor activities and eliminate
inefficiencies. Finally, SiteTrax automates On-Site's billing of clients.
SiteTrax is installed via computer disk and is compatible with a variety of
operating systems.
The Company has also developed a proprietary automated cost recovery system
for copy machines, which became operational in the first quarter of 1997. The
system networks copy machines and tracks the number of copies made, the client
to be billed, the specific matter involved and the employee making the copies.
This system is designed to increase On-Site's appeal to potential facilities
management clients based on price and performance.
The Company relies on confidentiality and non-competition agreements with
its employees in order to protect its proprietary know-how and employs various
methods to protect the software, concepts, ideas and documentation of its
proprietary technology. However, such methods may not afford complete
protection, and there can be no assurance that others will not independently
develop similar know-how or obtain access to the Company's know-how or software,
concepts, ideas and documentation. Furthermore, although the Company has and
expects to have confidentiality and non-competition agreements with its
employees, consultants, and appropriate vendors, there can be no assurance that
such arrangements will adequately protect the Company's trade secrets.
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's executive offices and reprographic operations which service
the metropolitan Washington, DC area are located in approximately 31,000 square
feet of leased space in Arlington, Virginia. The lease expires in December 2002.
Rent for the premises is $37,500 per month.
The Company's leases approximately 8,000 square feet of office space in
Philadelphia, PA. The lease provides for a base annual rent of $110,500 and an
expiration date in October 2000. The Company also has offices located in
approximately 2,500 square feet of leased space in Frederick, MD. The lease
provides for a base annual rent of $15,000 with additional operating costs of
$2,000 per year and an expiration date in May 1997.
The Company has offices located in approximately 7,344 square feet of
leased space in Atlanta, GA. The lease provides for a base annual rent of
$86,292. The lease expiration date is February 28, 2002.
The Company has offices located in approximately 8,000 square feet of
leased space in New York, NY. The lease provides for a base annual rent of
$122,250 with annual increases on November 1 of each subsequent year as follows:
$125,350 in 1997, $129,058 in 1998, $132,878 in 1999, $136,811 in 2000, $140,863
in 2001, $145,036 in 2002, $149,335 in 2003, $153,763 in 2004, and $158,323 in
2005. The lease expiration date is October 31, 2006.
The Company believes that its current facilities are adequate for its
current and reasonably foreseeable future needs for the markets that each
facility serves and that additional physical capacity at its current facilities
is available to accommodate expansion, if required.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of the Company's management, there are no legal proceedings
pending to which the Company is a party or to which any of its properties is
subject, other than ordinary, routine litigation incidental to the business
which is not expected to have a material adverse effect on the results of
operations, financial condition or cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1996, covered by this report, no matters were
submitted to a vote of the Company's security holders.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDERS' MATTERS
Price Range of Common Stock
The following table shows the high and low closing bid prices for the
Common Stock in the over-the-counter market. The Common Stock, Warrants and
Units (comprised of two shares of common stock and one Common Stock Purchase
Warrant) of On-Site Sourcing, Inc. are listed on the Nasdaq SmallCap Market and
trade under the symbols "ONSS", "ONSSW" and "ONSSU", respectively. The table
below represents the quarterly high and low sales prices for each quarter since
the Company's initial public offering in July 1996.(1)
The quotations represent prices between dealers in securities, do not
include retail markup, markdowns or commissions and may not necessarily
represent the actual transactions.
<TABLE>
<CAPTION>
Common Stock Warrants Units
<S> <C> <C> <C> <C> <C> <C>
High Low High Low High Low
1996
Third Quarter $3.625 $2.125 $1.000 $0.375 $8.000 $4.500
Fourth Quarter $2.625 $2.125 $0.375 $0.250 $5.000 $4.500
</TABLE>
(1) The Company issued units comprised of two shares of Common Stock and one
Common Stock Purchase Warrant in connection with the initial public offering.
The Units began trading on the Nasdaq SmallCap Market on July 11, 1996 and the
Common Stock and Warrants began trading separately on August 19, 1996 with the
Units also continuing to trade.
Approximate Number of Equity Security Holders
As of December 31, 1996, there were 47 holders of record and approximately
1,100 beneficial owners of the Common Stock.
Dividends
The Company has never paid cash dividends on its common stock. Payment of
dividends will be within the discretion of the Company's Board of Directors and
will depend on, among other factors, earnings, capital requirements, and the
operating and financial condition of the Company. At the present time, the
Company anticipates retaining future earnings, if any, in order to finance the
development of its business activities.
Recent Issuances of Common Stock
On October 9, 1996, the Company issued 6,666 shares of its Common Stock to
two employees pursuant to employment agreements. The sales of securities
described above were made in reliance upon Section 4(2) of the 1933 Act, which
provides exemptions for transactions not involving a public offering, and the
certificates for the securities bear a legend accordingly.
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The Company began to provide reprographic and facilities management
services to the premium service segment of the Philadelphia, PA market in June
1993. The Company has subsequently expanded its geographic market to include
Washington, DC, New York, NY and Atlanta, GA. In July 1995, the Company expanded
the scope of its business through the purchase of the net assets of a copy
machine repair service center, and in November 1996, the Company expanded the
scope of its reprographic services to include imaging and scanning. Revenues
from reprographic and litigation support account for approximately 77% of total
revenues while facilities management accounts for 20% of total revenue and copy
machine refurbishment, repairs, sale and leases account for 3% of total revenue
as of December 31, 1996.
The revenue provided by the reprographic services vary depending on
the volume of work orders received, with the month of December historically
being a slow period. Revenues are collected on a monthly basis for facilities
management contracts with payment due on the first of the month, while
reprographic and service revenues are collected on a per job basis. The
Company's collection history of accounts receivable has been up to 90 days, with
facilities management accounts being collected within 30 days.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Revenues
The Company's revenues are derived from reprographics and litigation
support, facilities management, and copier repairs. Overall revenues increased
from $4,919,270 to $9,507,666, an increase of $4,588,396 or 93% from 1995 to
1996. The increase is primarily due to increased volume of work orders fulfilled
at the Arlington, VA, Philadelphia, PA and Atlanta, GA facilities. In addition,
there was a 19 % increase in revenue from facilities management sites, resulting
from the increased number of sites under contract from eight as of December 31,
1995 to eleven as of December 31, 1996.
The purchase of the net assets of SWR, d/b/a the Copy Rebuild Center in
Frederick, MD, in July 1995, which services, refurbishes, leases and sells mid
and high volume copiers, also provided approximately 3% of the Company's total
revenues in 1996. The acquisition of an in-house repair service was a natural
vertical integration and has allowed On-Site to minimize critical down time and
increase productivity at the Company's reprographic centers and facilities
management sites.
Costs and Expenses
Cost of Sales. Cost of sales increased by $3,116,173, or 80% ,to $7,003,882
in 1996 as compared to $3,887,709 for 1995. As a percentage of revenue, cost of
sales decreased from 79% in 1995 to 74% in 1996. Operating margins increased
142% to $2,503,784, a $1,472,223 increase over 1995. As a percent of revenue,
operating margins improved from 21% in 1995 to 26 % in 1996. In relation to
revenue, operating margins improved as production costs per unit decreased
due to an increase in the volume of work orders fulfilled, the operation of the
Company's reprographic centers at a higher percentage of capacity, the
acquisition of equipment previously leased, volume purchasing discounts and
increased production per labor hour.
Selling and shipping. Costs of selling and shipping increased $756,025 or
220% in 1996. As a percentage of revenue, selling and shipping increased from 7%
in 1995 to 12% in 1996. This increase is due to a larger marketing staff and
increased commissions paid associated with increased revenue and expansion into
new markets.
Administrative. Although administrative costs in 1996 increased $540,808 or
102% over the 1995 period, these costs remained constant as a percentage of
revenues at 11%. The increase can be attributed to professional fees, increases
in staffing and personnel costs, and travel associated with the expansion into
new markets.
In the fourth quarter of 1996, the Company incurred one-time costs of
approximately $200,000 associated with the start up of the Company's new digital
imaging services and the opening of the New York City production center.
Earnings from Operations. Earnings from operations increased 112% to
331,912 in 1996 versus $156,522 in 1995. The increase is due to increased
marketing efforts, higher margins, continued expansion into new markets and the
increased number of facility management sites from eight in 1995 to eleven in
1996.
Other Income (Expenses), Primarily Interest. Other expenses increased from
$80,894 to $103,770, an increase of $22,876 or 28% due mainly to an increase in
the amount of debt carried by the Company in order to meet the Company's working
capital needs and costs of expansion prior to the Company's initial public
offering. Other income, primarily interest on short-term treasury obligations,
was $92,098.
Net Earnings. Net earnings increased from $75,628 to $245,240, an increase
of $169,612 or 225% , and, as a result, the Company has provided for income tax
expense of $75,000 in 1996.
<PAGE>
Liquidity and Capital Resources at December 31, 1996 and Subsequent Activity
On July 9, 1996, the Company's registration statement was declared
effective. Approximately $1,500,000 of the net proceeds totaling $5,478,341 were
used to curtail the line of credit and other borrowings, bridge financing and
accounts payable. In 1996, the Company funded its expansion and growth by
utilizing the proceeds of the initial public offering and long term financing,
where appropriate, for significant capital outlays.
The Company anticipates that the remaining net proceeds from the initial
public offering, and cash flow from operations will be sufficient to meet the
Company's expected cash requirements for the next twelve months. There can be no
assurances that unforeseen events may not require more working capital than the
Company has at its disposal.
In order to finance working capital needs prior to the initial public
offering, the Company raised $310,700 through a private placement of 147,955
shares of Common stock in March 1996.
On March 29, 1996, an officer /director of the Company exercised options to
purchase 162,000 shares of common stock for $90,000. The options had been
granted pursuant to an employment agreement and fully vested during 1994. In
connection with the exercise of the options, the Company loaned the
officer/director $89,900. The loan bears interest at 6% per year and the
remaining principal and interest are due April 1, 1998. The balance of the note
at December 31, 1996 is $50,400.
On September 26, 1996, the Company loaned an officer $25,000 to purchase
Common Stock of the Company pursuant to an employment agreement. The loan is due
September 26, 1998, with interest accruing at the prime rate at the time of the
loan.
In order to assure additional working capital is available to the Company
to fund its future growth and expansion, on February 3, 1997, the Company
signed a commitment with a financial institution for a $2,500,000 working
capital line of credit. The working capital line of credit will be
collateralized by the accounts receivable and certain other assets as described
in the agreement. The working capital line of credit is subject to certain
financial covenants and bears interest at the bank's prime rate of interest or
the 30 day LIBOR rate plus 2.25%. The underlying loan will have a maturity date
of April 30, 1998. There have been no advances under this agreement.
On February 27, 1997, the Company signed a commitment with a financial
institution to provide $1,100,000 to refinance certain capitalized lease
obligations under a 48 month term loan at rates deemed favorable to the Company.
Under the terms of the agreement, the loan will be collateralized by specific
equipment and certain other assets. The term loan will be subject to certain
financial covenants and will bear interest at 9%.
Acquisition of SWR Associates, Inc.
On-Site expanded the scope of its business to include the servicing and
sales of refurbished copy machines by purchasing the net assets of SWR
Associates, Inc. ("SWR") of Frederick, Maryland, doing business as the Copy
Rebuild Center, for the nominal consideration of $10,000 on July 27, 1995. SWR's
location in Frederick, MD, is comprised of a copier rebuild center that
services, refurbishes, leases and sells mid and high volume copiers. The
acquisition of an in-house repair service was a vertical integration designed to
allow On-Site to minimize critical down time of equipment and increase
productivity at On-Site's reprographic centers and facilities management sites.
As a result of the acquisition, On-Site provides copier service technicians with
dispatch to all of On-Site's locations, thereby enhancing productivity.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITORS' REPORTS F-2
FINANCIAL STATEMENTS
BALANCE SHEETS F-4
STATEMENTS OF OPERATIONS F-5
STATEMENTS OF STOCKHOLDERS' EQUITY F-6
STATEMENTS OF CASH FLOWS F-7
NOTES TO FINANCIAL STATEMENTS F-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
On-Site Sourcing, Inc.
We have audited the accompanying balance sheet of On-Site Sourcing, Inc.,
as of December 31, 1996, and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of On-Site Sourcing, Inc., as
of December 31, 1996, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/S/ REZNICK FEDDER & SILVERMAN, P.C.
Bethesda, Maryland
February 14, 1997 (except for Note 12, as to
which the date is February 27, 1997)
F-2
<PAGE>
REPORT OFINDEPENDENT PUBLIC ACCOUNTANTS'
Board of Directors
On-Site Sourcing, Inc.
We have audited the accompanying balance sheet of On-Site Sourcing, Inc.,
as of December 31, 1995, and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of On-Site Sourcing, Inc., as
of December 31, 1995, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/S/ GRANT THORNTON, LLP
Vienna, Virginia
February 28, 1996
F-3
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<TABLE>
<CAPTION>
ON-SITE SOURCING, INC.
BALANCE SHEETS
December 31,
ASSETS
<S> <C> <C>
1996 1995
CURRENT ASSETS
Cash and cash equivalents $ 1,894,722 $ 38,116
Accounts receivable, net 2,697,248 800,077
Prepaid supplies 188,770 54,407
Prepaid expenses 85,967
-
Total current assets 4,866,707 892,600
Property and equipment, net 3,573,127 500,056
Note receivable - officer 25,000 -
Other assets 73,211 85,379
$ 8,538,045 $1,478,035
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 552,017 $ 506,695
Accrued and other liabilities 289,199 148,693
Line of credit - 260,000
Current portion of long-term debt 182,153 81,954
Deferred taxes
60,154 -
Total current liabilities 1,083,523 997,342
Long-term debt, net of current portion 990,683 125,384
Deferred rent 76,129 83,626
Deferred taxes 14,846 -
Commitments and Contingencies - -
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 20,000,000
shares authorized;
4,794,021 and 2,187,000 shares 47,940 21,870
issued and outstanding
Preferred stock, $.01 par value,
1,000,000 shares authorized; no shares
issued and outstanding - -
Subscription receivable (50,400) -
Additional paid-in capital 6,368,411 488,140
Common Stock options outstanding 16,500 -
Retained earnings (deficit) 6,913 (238,327)
6,372,864 271,683
$ 8,538,045 $1,478,035
</TABLE>
See notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
ON-SITE SOURCING, INC .
STATEMENTS OF OPERATIONS
Years ended December 31,
<S> <C> <C>
1996 1995
Revenue $ 9,507,666 $4,919,270
Costs and expenses
Cost of sales 7,003,882 3,887,709
Selling and shipping 1,099,037 343,012
Administrative 1,072,835 532,027
9,175,754 4,762,748
Earnings from operations 331,912 156,522
Other income (expense)
Other income, primarily interest 92,098 -
Other expense, primarily interest (103,770) (80,894)
Earnings before income taxes 320,240 75,628
Income tax expense 75,000 -
Net earnings $ 245,240 $ 75,628
Earnings per common share .07 .03
Weighted average number of common
shares and
common share equivalents outstanding 3,767,096 2,712,206
during the year
</TABLE>
See notes to financial statements
F-5
<PAGE>
[CAPTION]
ON-SITE SOURCING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1996 and 1995
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Common
Common Common Paid-in Stock
Shares Stock Capital Options Subtotal
Outs-
tanding
Balance at
December 31, 1994 2,187,000 $21,870 $ 488,140 $ - $510,010
Net Earnings - - - - -
Balance at
December 31, 1995 2,187,000 21,870 488,140 - 510,010
Sale of common stock 2,517,021 25,170 5,814,271 - 5,839,441
Warrants exercised 90,000 900 49,500 - 50,400
Stock options issued - - - 16,500 16,500
Payments received - - - - -
Net Earnings - - -
- -
Balance at
December 31, 1996 4,794,021 $47,940 $6,351,911 $ 16,500 $6,416,351
</TABLE>
STATEMENTS OF STOCKHOLDERS' EQUITY - continued
Years ended December 31, 1996 and 1995
<TABLE>
<S> <C> <C> <C> <C>
Retained
Subscrip- (Deficit)
Subtotal tion Earnings Total
Receivable
Balance at
December 31, 1994 $510,010 $ - $(313,955) $ 196,055
Net Earnings - - 75,628 75,628
Balance at
December 31, 1995 510,010 - (238,327) 271,683
Sale of common stock 5,839,441 (89,900) - 5,748,541
Warrants exercised 50,400 - - 50,400
Stock options issued 16,500 - - 16,500
Payments received - 39,500 - 39,500
Net Earnings - - 245,240 245,240
Balance at
December 31, 1996 $6,416,351 $(50,400) $ 6,913 $6,372,864
</TABLE>
See notes to financial statements
F-6
<PAGE>
<TABLE>
<CAPTION>
ON-SITE SOURCING, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31,
<S> <C> <C>
1996 1995
Cash flows from operating activities
Net earnings $ 245,240 $ 75,628
Adjustments to reconcile net earnings to
net cash (used in) provided by
operations
Depreciation 271,682 107,412
Gain on disposition of equipment (3,228) -
Compensation expense -stock options 16,500 -
Changes in assets and liabilities
Increase in accounts receivable (1,897,171) (346,128)
Increase in prepaid supplies (134,363) (36,327)
Increase in prepaid expenses (85,967) -
Increase in notes receivable-officer (25,000) -
Increase in other assets (53,417) (7,764)
Increase in accounts payable - trade 45,322 400,839
Increase in accrued liabilities 140,506 115,655
(Decrease) increase in deferred rent (7,497) 10,430
Increase in deferred taxes 75,000 -
Total adjustments (1,657,633) 144,117
Net cash (used in) provided by operating (1,412,393) 319,745
activities
Cash flows from investing activities
Capital expenditures (2,193,880) (224,287)
Purchase of SWR, net - (9,161)
Net cash used in investing activities (2,193,880) (233,488)
Cash flows from financing activities
Proceeds from sale of common stock
and exercise of warrants 6,156,461 -
Payments on subscription receivable 39,500 -
Proceeds of long-term debt agreements 445,034 164,188
Payments under long-term debt agreements (627,181) (264,783)
Net borrowings under line of credit
agreement - 110,034
Payments on line of credit agreement (260,000) -
Deferred offering costs (290,935) (65,585)
Net cash provided (used in) by financing 5,462,879 (56,146)
activities
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,856,606 30,151
Cash and cash equivalents, beginning 38,116 7,965
Cash and cash equivalents, ending $ 1,894,722 $ 38,116
</TABLE>
See notes to financial statements
F-7
<PAGE>
<TABLE>
<CAPTION>
ON-SITE SOURCING, INC .
STATEMENTS OF CASH FLOWS - CONTINUED
Year ended December 31,
<S> <C> <C>
1996 1995
Supplemental disclosure of cash
flow activities
Interest paid $ 94,155 $ 41,150
Noncash investing and financing
activities:
Fixed assets acquired under $ 1,147,645 $ 46,718
capital lease obligations
Fixed assets acquired in $ - $ 33,308
acquisition of SWR
Fixed asset basis reduction
related to capital lease
termination $ - $ 33,114
Capital lease obligation
retired resulting from early
lease termination $ - $ 150,236
</TABLE>
See notes to financial statements
F-8
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
1. Organization and Summary of Significant Accounting Policies
Nature of Business
On-Site Sourcing, Inc. (the Company) was originally incorporated in the
Commonwealth of Virginia in December 1992 and changed its state of
incorporation to Delaware in January 1996. The Company performs various
services, one of which includes facilities management, litigation copying, and
related services at customer and company locations, and a second, which
includes the purchase, refurbishment, lease, sale and servicing of copy
machines. The facilities management and litigation copying services are
performed in the metropolitan areas of Philadelphia, Pennsylvania; Washington,
DC; Atlanta, Georgia; and New York, New York. The servicing and refurbishment
of copy machines is conducted from the Metropolitan Washington, DC office.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue from reprographic services is recognized on a per copy basis upon
completion of the services. Revenue from facilities management is recognized
based on monthly fixed fees and, in certain cases, variable per copy fees, as
contained in facilities management agreements. Revenue from the sale of
refurbished copiers is recognized when the copiers are shipped and transfer of
title occurs.
Software development held for resale
The company capitalizes certain computer software costs which are amortized
utilizing the straight-line method over the economic lives of the related
projects not to exceed one year. All other software development costs are
expensed as incurred.
Deferred Offering Costs
Specific incremental costs totaling $356,520, directly attributable to the
initial public offering were deferred and charged against the gross proceeds
of the offering.
Income Taxes
Deferred taxes arise from temporary differences, primarily attributable to
differences between reporting, for tax purposes, on the cash basis, and for
financial statements, on the accrual basis.
Depreciation
Property and equipment are stated at cost. Depreciation on property and
equipment is computed on a straight-line basis over the estimated useful
lives of the assets ranging from two to ten years for financial reporting
purposes. Accelerated methods are used for tax purposes.
F-9
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
1. Organization and Summary of Significant Accounting Policies (Continued)
Earnings per Common Share
The Company's common stock was split 100-for-one and 18-for-one in March 1995
and February 1996, respectively. All earnings per share amounts in the
financial statements have been restated to give effect to the stock splits.
Earnings per common share is based on the weighted average number of common
shares and, if dilutive, common equivalent shares outstanding during each
year. Such average shares include the weighted average number of common
shares outstanding (3,767,096 in 1996, and 2,712,206 in 1995) plus the shares
issuable upon exercise of stock options and warrants after the assumed
repurchase of common shares with the related proceeds (99,584 in 1996 and
125,251 in 1995). Options and warrants granted, as well as certain shares
issued during the one-year period prior to the initial public offering, are
treated as outstanding in calculating earnings per share for all periods
presented.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share" and SFAS No. 129, "Disclosure of Information about Capital Structure",
which is effective for the financial statements for the year ended December
31, 1997. SFAS No. 128 provides guidance for the computation of basic and
dilutive earnings per share which will be required to be presented for all
entities with complex capital structures. Common stock equivalents will not
be included in the computation of basic earnings per share, in contrast to
Accounting Principles Board Opinion No. 15 (APB 15) which includes common
stock equivalents in the computation of primary earnings per share. SFAS No.
129 requires disclosures of rights and privileges of various securities
outstanding. The Company has made no assessment of the potential impact of
adopting SFAS No. 128 and No. 129 at this time.
Deferred Rent
Deferred rent is recorded and amortized to the extent the total minimum rental
payments allocated to the current period on a straight-line basis exceed or
are less than the cash payments required.
Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of SFAS No. 107, "Disclosure about
Fair Value of Financial Instruments". The estimated fair value amounts have
been determined using available market information, assumptions and valuation
methodologies.
Cash and Cash Equivalents
The carrying amounts approximate fair value.
F-10
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
1. Organization and Summary of Significant Accounting Policies (Continued)
Subscription Receivable and Note Receivable-Officer
Management believes that it is not practicable to estimate the fair value of
notes because notes with similar characteristics are not available from the
Company.
Line of Credit and Long-term Debt
The carrying amounts approximate fair value.
2. Composition of Certain Financial
Statement Captions
Accounts Receivable
<TABLE>
<CAPTION>
Accounts receivable consist of the following:
<S <C> <C> <C>
>
1996 1995
Trade $ 2,797,248 $830,077
Allowance for (100,000) (30,000)
uncollectible accounts
$ 2,697,248 $ 800,077
</TABLE>
Other Assets
<TABLE>
<CAPTION>
Other assets consist of the following:
<S <C> <C> <C>
>
1996 1995
Deferred offering costs $ - $65,585
Deposits 20,859 9,944
Employee Advances 23,715 9,850
Software costs 28,637 -
$73,211 $85,379
</TABLE>
F-11
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
Property and Equipment
<TABLE>
<CAPTION>
Property and equipment consist of the following :
<S <C> <C> <C>
>
1996 1995
Copiers $2,933,203 $467,269
Computers, equipment and other 932,655 134,692
Vehicles 148,153 70,525
4,014,011 672,486
Accumulated depreciation (440,884) (172,430)
$3,573,127 $500,056
</TABLE>
Depreciation expense charged to operations was $271,682, and $107,412 for the
years 1996, and 1995, respectively.
<TABLE>
Accrued and Other Liabilities
Accrued and other liabilities consist of the following:
1996 1995
<S> <C> <C>
Accrued salaries, commissions, taxes $ 235,197 $ 70,750
and fringe benefits
Accrued sales tax payable 54,002 42,943
Other accrued liabilities 35,000
-
$ 289,199 $ 148,693
</TABLE>
3. Line of Credit
At December 31, 1995, the Company had available a $300,000 working capital
line of credit at the bank's prime rate plus 2%. In January 1996, the Company
amended the credit facility to $450,000 with all other terms remaining
unchanged. The credit facility is collateralized by the assets of the Company
and guaranteed by the Company's Chairman, and the Company's President and his
spouse. The credit facility expires on April 1, 1997. At December 31, 1996
and 1995 outstanding obligations under this line of credit was $ 0 and
$260,000, respectively.
F-12
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
4. Long-term Debt
<TABLE>
<CAPTION>
Long- term debt includes the following:
<S> <C> <C>
1996 1995
Equipment note at a 10.5% variable rate (prime plus
2%),
collateralized by all assets of the Company,
payable in equal monthly
installments of $3,194, maturing in November 1998 - $111,800
Equipment note at a 10.5% variable rate (prime plus
2%), collateralized
by the equipment, payable in equal monthly
installments
of approximately $736, maturing in September 1997 - 16,194
Vehicle notes at rates ranging from 7.2% to 9%,
collateralized by the
respective vehicles, payable in various equal
monthly installments, including
interest and principal, maturing at various dates - 54,153
through December 1999
Capital leases obligations (See Note 5) 1,172,836 25,191
1,172,836 207,338
Less current maturities included in current (182,153) 81,954)
liabilities
$ $125,384
990,683
</TABLE>
Aggregate maturities for long-term debt are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1997 $ 182,153
1998 198,020
1999 221,180
2000 258,542
2001 275,174
Thereafter 37,767
$1,172,836
</TABLE>
On January 30, 1996, the Company borrowed $182,000 from a bank. The notes
were payable in equal annual installments plus 10.5% variable interest (prime
plus 2%) maturing at various dates through October 1998. The notes were
repaid during 1996.
F-13
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
5. Leases
The Company leases its office facilities, copiers and office equipment under
various operating and capital leases. Lease terms range from one to
approximately six years.
<TABLE>
<CAPTION>
Minimum annual rental and lease commitments for leases with a remaining term
of one year or more at December 31, 1996, are as follows:
<S> <C> <C> <C>
Capital Operating
Year ending December 31, Leases Leases
1997 $ 303,613 $ 287,407
1998 298,524 144,697
1999 298,524 129,664
2000 309,657 85,256
2001 298,991 65,500
Thereafter 39,337 164,980
Total minimum lease payments 1,548,646 $ 877,504
Less: interest 375,810
Present value of net minimum lease $1,172,836
payments
</TABLE>
Fixed assets recorded under capital leases as of December 31, 1996 and 1995,
total approximately $1,427,000 and $28,000, respectively, representing
reprographic machines. Interest expense on the outstanding obligations under
capital leases was approximately $50,000, and $15,000 for the years ended
December 31, 1996 and 1995, respectively.
Rent expense was $342,000 and $376,000 for the years ended December 31, 1996
and 1995, respectively.
6. Related Party Transactions
Transactions with an Officer/Shareholder
During the years ended December 31, 1996 and 1995, the Company recorded the
following transactions.
During 1994, the Company received a $15,000 noninterest-bearing working
capital advance which was repaid during 1995.
During 1996 and 1995, the Company billed the officer/shareholder
approximately $8,400 and $19,000, respectively, for reprographic services.
During 1996, and 1995, the Company incurred approximately $95,000 and
$20,000, respectively, for legal services rendered by an
officer/shareholder. Included in the amounts payable as of December 31,
1996 and 1995, is approximately $2,000 and $15,000, respectively, in legal
fees due to the officer/shareholder.
During 1996, the company entered into a note agreement with an
officer/shareholder in the amount of $25,000. The loan bears interest at
the prime rate of interest (8.25% at December 31, 1996). All unpaid
principal and accrued interest is repayable in September 1998.
Transactions with a Shareholder
During 1996, and 1995, the Company recorded revenue of approximately $328,000
and $340,000, respectively, for services provided to a shareholder under a
facilities management agreement. Additionally, during 1996, the Company
recorded revenue of approximately $173,000 for reprographic services.
Included in accounts receivable as of December 31, 1996 and 1995 is
approximately $112,500 and $86,000, respectively, in accounts receivable from
the shareholder.
F-14
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
7. Commitments & Contingencies
Employment Agreements
The Company has entered into employment agreements with its officers and
certain employees. The agreements provide for base salaries, non compete and
nondisclosure restrictions and, in certain cases, stock options which vest
over a period of time. The agreements are terminable at the discretion of the
Company.
Letter of Credit
The Company has an undrawn bank letter of credit, in the approximate amount of
$40,000, in connection with a operating lease. The letter of credit expires
October 31, 1997.
8. Incentive Stock Option Plan
The Company adopted incentive stock option plans for 1997, 1996 and 1995,
under which pools of 500,000, 242,000 and 510,000 shares of common stock have
been reserved. The plans are administered and terms of option grants are
established by the Board of Directors. Under the terms of the plans, options
may be granted to the Company's employees to purchase shares of common stock.
Options become exercisable ratably over a vesting period as determined by the
Board of Directors, and expire over terms not exceeding 10 years from the date
of grant, three months after termination of employment, or one year after the
death or permanent disability of the employee. The Board of Directors
determine the option price (not less than fair market value) at the date of
grant.
The Company applied APB Opinion No. 25 and related Interpretations in
accounting for its plans. The compensation cost that has been charged against
income under the Company's plan was $16,500 for the year ended December 31,
1996. Had compensation cost been determined in accordance with FASB Statement
No. 123, the Company's net income (loss) and net income (loss) per share would
have been the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Year Ended
<S> <C> <C>
Net income:
1996 1995
As reported $ 245,240 $ 75,628
Pro forma $ 227,836 $ 67,034
Net income per common share:
As reported $ .07 $ .03
Pro forma $ .06 $ .02
</TABLE>
All options granted during the year ended December 31, 1996 were issued
pursuant to the incentive stock option plans. The fair value of each option
grant under the plan is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend
yield of 0.0%, expected volatility of 34%, risk-free rate of 6.4 % and an
expected life of 4 years.
All options granted in 1994 and 1995 were issued pursuant to an incentive
stock option plan. During this period, the Company was privately held. The
fair market value of each option grant under the plan is estimated on the
grant date using the Black-Scholes option pricing model with the following
weighted-average assumptions: dividend yield of 0.0%; expected volatility of
1%; common stock fair value of $1,000 and $10 in 1994 and 1995, respectively;
and risk-free rates of 7.5% and 6.1% for 1994 and 1995, respectively.
F-15
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
8. Incentive Stock Option Plan (Continued)
At December 31, 1995 and 1994, pursuant to an employment agreement, the
Company had outstanding options to sell 162,000 shares of common stock to an
officer/director of the Company at an exercise price of $.56 per share. These
options vest upon the attainment of certain performance goals. As of
December 31, 1995, all options were vested. The options were exercised in
March 1996.
At December 31, 1995, the Company had outstanding options to sell 126,000
shares of common stock to an officer/director at an exercise price of $1.11
per share. As of December 31, 1995, options for 84,000 shares were vested
and, at December 31, 1996, all the options were vested. The options expire in
December 2000.
During 1995, the Company granted to employees options for 342,000 shares of
common stock at exercise prices ranging from $1.11 to $1.39 per share. The
grant price of $1.11 per share was determined by the Board of Directors to
represent fair value and the grant price of $1.39 per share was determined to
be in excess of fair value based upon independent sales of stock by a
shareholder in December 1995 at $1.11 per share. As of December 31, 1996,
options for 198,000 of the shares are vested. The options expire through
December 2000.
During 1996, the Company granted to employees and directors options for 395,000
at exercise prices ranging from $2.12 to $3.25 per share. The grant price was
equal or greater than the market price at grant date. As of December 31, 1996
employee options for 4,688 of the shares and director options of 15,000 of the
shares are vested, with the remiander scheduled to vest through October 2001.
The options expire through October 2006.
The following depicts activity in the plan for two years ended December 31,
1996:
<TABLE>
<CAPTION>
<S> <C> <C>
Per Share
Options Exercise
Outstanding Price
Outstanding, January 1, 1995 162,000 $
.56
Options granted 342,000 $1.11-1.39
Options exercised - -
Options expired - -
Outstanding, December 31, 1995 504,000 $ .56-1.39
Options granted 395,000 $2.12-3.25
Options exercised - -
Options expired (144,000) $1.10-1.39
Outstanding, December 31, 1996 755,000 $1.10-3.25
</TABLE>
9. Stock Warrants
At December 31, 1995 and 1994, in connection with issuance of stock, the
Company had outstanding warrants for a total of 90,000 shares of its common
stock exclusively to an investor with an exercise price of $.56 per share
The warrants were exercised during 1996.
F-16
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
10. Income Taxes
<TABLE>
<CAPTION>
The amounts and sources of the provision for deferred income tax expense
(benefit) were as follows:
<S> <C> <C>
1996 1995
Current $ - $ -
Deferred 75,000 30,206
75,000 30,206
Change in valuation allowance - (30,026)
Deferred tax liability $75,000 $ -
</TABLE>
<TABLE>
<S> <C> <C>
Deferred tax assets
(liabilities) consist of the
following:
1996 1995
Excess of tax over
financial accounting depreciation $ (38,522) $(45,293)
Operating accruals (828,611) (24,389)
Loss carryforwards 775,385 145,340
Other 16,748 14,549
Gross deferred tax asset (liability) (75,000) 90,207
Deferred tax asset valuation - (90,207)
allowance
Deferred tax Liability $ 75,000 $ -
</TABLE>
<TABLE>
<CAPTION>
The differences between the total income tax expense (benefit) and the
income tax expense (benefit) computed using the federal income tax rate
were as follows:
<S> <C> <C>
1996 1995
Pretax earnings $320,240 $75,628
Computed federal income taxes 56,355 25,714
Computed state income
taxes, net of federal benefit 18,645 4,492
Deferred tax expense 75,000 30,206
Benefit arising from change in
deferred tax asset valuation allowance - (30,206)
Income tax expense $ 75,000 $ -
</TABLE>
The Company has available at December 31, 1996, unused operating loss
carryforwards of approximately $1,850,000 that may be applied against
future taxable income and expire through 2009.
F-17
<PAGE>
ON-SITE SOURCING, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
December 31, 1996 and 1995
11. Acquisition of SWR Associates, Inc.
On July 27, 1995, the Company acquired the net assets of SWR Associates,
Inc., in a business combination accounted for as a purchase. CRC is
primarily engaged in the refurbishment, sales and service of photocopy
machines. The results of operations of CRC are included in the accompanying
financial statements since the date of acquisition. The total cost of the
acquisition was $10,000, which was less than the value of the net assets of
SWR by approximately $23,000. The excess was utilized to reduce fixed
assets based on fair market values.
At the time of the acquisition, the Company also entered into an employment
agreement with CRC's former owner to manage the acquired company. The
employment agreement was terminated in 1996.
12. Subsequent Events
On February 3, 1997, the Company entered into a commitment with a financial
institution for a $2,500,000 working capital line of credit. The line of
credit bears interest on advances at the financial institution's prime rate
or the 30 day LIBOR rate plus 2.25% . The advances are repayable in monthly
payments of accrued interest with all remaining principal and interest due
at maturity date of April 30, 1998. The line of credit is secured by
certain assets of the Company, including accounts receivable and certain
fixed assets.
On February 27, 1997, the Company entered into a commitment with a financial
institution to provide $1,100,000 to refinance certain capitalized lease
obligations. The loan bears interest at the rate of 9% and has a term of
48 months. The loan will collateralized by specific equipment and other
assets and is subject to certain financial covenants.
F-18
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The former independent auditor for the Company, Grant Thornton, LLP ("Grant
Thornton") was dismissed on November 21, 1996. Grant Thornton communicated
certain internal control matters to the Company which meet the definition of
reportable events. Grant Thornton's communication of certain internal
control matters and the Company's decision to change accountants was
reported on in the Company's Current Report on Form 8-K dated November 29,
1996, as amended on December 7, 1996.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following individuals are the Directors and Officers of the Company.
All Directors are elected annually by the shareholders to serve until the
next annual meeting of shareholders and until their successors are duly
elected and qualified. Officers are elected annually by the Board of
Directors to serve at the pleasure of the Board.
<TABLE>
<S> <C> <C>
Name Age Position
Christopher J. Weiler 33 President,
Chief Executive Officer and Director
John S. Stoppelman 52 Chairman of the Board and Director
Allen C. Outlaw 30 Vice President - Sales
and Marketing and Director
Anthony A. Kopsidas 26 Vice President - Operations
and Director
Joseph Sciacca 43 Chief Financial Officer
Charles B. Millar 36 Director
Jorge R. Forgues 41 Director
Arnold J. Wasserman 59 Director
</TABLE>
Christopher J. Weiler founded the Company with Mr. Stoppelman in December
1992 and has been President, Chief Executive Officer and a director of the
Company since that time. Mr. Weiler graduated from the United States Naval
Academy in 1985 and served in the United States Navy as a surface warfare
officer and as a Navy Senate Liaison Officer on Capitol Hill, Washington,
D.C. Joining Pitney Bowes Management Services (PBMS) in 1991, Mr. Weiler
took the reins of PBMS Washington's most volatile account and refined it into
one of the largest and most profitable national accounts.
John S. Stoppelman founded the Company with Mr. Weiler in December 1992 and
has been Chairman of the Board of Directors since inception. Mr. Stoppelman
has also served as Secretary and Treasurer. Mr. Stoppelman has been a
practicing attorney for twenty five years. After working as an attorney at a
government agency for four years, Mr. Stoppelman entered private practice in
1976, specializing in securities, corporate, and other investment-related law
and litigation. Mr. Stoppelman has also been the Chairman of Justin Asset
Management, Inc., a registered investment advisory firm (1985-1994). He has
served on the American Bar Association Committee on Federal Regulation of
Securities (1976-present) and as Vice-Chairman of the Subcommittee on SEC
Practice and Enforcement Matters of the ABA Federal Regulation of Securities
Committee (1979-1991). Mr. Stoppelman has published several articles relating
to the areas of his practice and has appeared at various times on national
television to comment on various securities-related issues.
Allen C. Outlaw has been Vice President of Sales and Marketing since joining
the Company in March 1994. Mr. Outlaw has also served on the Board of
Directors since March 1994. Prior to joining the Company, he held various
positions in the investment industry, including owner and Director of
Marketing of Justin Asset Management, a successful investment management firm
from January 1991 until joining the Company.
Anthony A. Kopsidas has been the Vice President of Operations since December
1994. Prior thereto, Mr. Kopsidas served as a supervisor since joining the
Company in March 1994. Mr. Kopsidas served as president of Corporate Lawn and
Landscaping, a Maryland corporation, for three years before joining the
Company. Mr. Kopsidas has also served on the Board of Directors since
December 1994.
Joseph Sciacca has served as Chief Financial Officer since October 1996.
From 1991 to 1994, Mr. Sciacca served as Vice President of Finance of Q-Star
Technology Inc. and, from 1994 until joining the Company in October 1996, Mr.
Sciacca was self-employed with a private practice that specialized in
business planning, business combinations and taxation. He has been a
practicing accountant for twenty-one years. He is a graduate of Georgetown
University and earned his Masters of Science in Taxation from The American
University.
Charles B. Millar has served as a Senior Vice President of the Washington
D.C. investment banking firm of Johnston, Lemon & Co., Inc. since 1991. Mr.
Millar joined the Board of Directors, Compensation and Audit Committees in
August 1996.
<PAGE>
Jorge R. Forgues has the positions of Senior Vice President of Finance and
Administration, Chief Financial Officer and Treasurer of Network Imaging
Corporation since April 1996, a Herndon-based publicly traded software
developer. From October 1993 until assuming his current position, Mr. Forgues
was Vice President of Finance and Administration, Chief Financial Officer and
Treasurer of Globalink, a Fairfax-based, publicly-traded, machine translation
software company. From 1992 to 1993, Mr. Forgues was the Director of
Accounting for Spirit Cruises, a $50 million harbor cruise line with
operations in nine states. Prior thereto, from 1987 to 1992, Mr. Forgues was
Vice President of Finance at Best Programs, Inc., a computer software
developer. Mr. Forgues joined the Board of Directors, Compensation and Audit
Committees in July 1996.
Arnold J. Wasserman is a graduate electrical engineer, graduating from New
York University College of Engineering in 1962. For the past five years Mr.
Wasserman has been the president of the Wasserman Companies. Mr. Wasserman
has in excess of forty years of business experience as an Engineer,
Sales/Marketing Executive, Leasing Executive/Consultant and Consultant to
High Tech Companies in Due-Diligence, Planning, and Product Marketing. Mr.
Wasserman is also a director and Chairman of the Audit Committee of Stratus,
Inc., a High Tech public company that specializes in Rapid Prototyping
technology. Mr. Wasserman joined the Company's Board of Directors in
September 1996.
Messrs. John Stoppelman, Charles Millar and Jorge Forgues are the members of
the Audit Committee of the Board of Directors. Messrs. Christopher Weiler,
Charles Millar and Jorge Forgues are the members of the Compensation
Committee of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best of the Company's knowledge, in 1996, all Officers, Directors and
10% shareholders have filed, on a timely basis, all forms required by Section
16(a) of the Exchange Act of 1934.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Annual Compensation
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Other
Annual
Name and Principal Compen-
Position Salary Bonus sation
Year $ $ $
Christopher Weiler 1996 92,000 - -
President and CEO 1995 85,000 - -
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
Awards Payouts
<S> <C> <C> <C> <C>
(a) (f) (g) (h) (i)
All
Restricted Other
Name and Principal Stock Options/ LTIP Compen-
Position Awards SAR's Payouts sation
$ (#) $ $
Christopher Weiler - - - -
President and CEO - - - -
</TABLE>
Director Compensation
Directors currently receive no cash compensation for serving on the Board of
Directors other than reimbursement of reasonable expenses incurred in
attending meetings. Three outside directors, have each received options to
purchase 20,000 shares of Common Stock vesting over a period of one year in
equal portions at the end of each quarter. The options were granted at the
market price at the time of grant.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table enumerates, as of December 31, 1996, the name and
ownership, both by numerical holding and percentage interest, of the
Company's common stock by (1) each person or group, known to the Company, who
beneficially owns more than 5 percent of the Company's outstanding common
stock; (2) the Directors and Executive Officers of the Company,
individually;, and (3) the Directors and Executive Officers as a group.
In preparing the following tables, the Company has relied upon statements
filed with the Securities and Exchange Commission by beneficial owners of
more than 5 percent of the Company's outstanding common stock pursuant to
Section 13(d) or 13(g) of the Securities Act of 1934, unless the Company knew
or had reason to believe that the information contained in such statements
was not complete or accurate, in which case the Company relied upon
information which it considered to be accurate and complete.
<TABLE>
<S> <C> <C>
Name # of Shares Approximate % of Beneficial
Beneficially Owned Ownership (1)
John S. Stoppelman (2) 641,100 13.4%
The Stoppelman Law Firm
1749 Old Meadow Road
Suite 610
McLean, VA 22102
Christopher J. Weiler 360,000 7.5%
c/o the Company
Allen C. Outlaw (3) 207,000 4.3%
c/o the Company
Anthony A. Kopsidas (4) 126,000 2.6%
c/o the Company
Joseph Sciacca (5) 32,065 *
c/o the Company
Jorge R. Forgues (6) 10,000 *
500 Huntmar Park Drive
Herndon, VA 20170
Charles B. Millar (6) 10,000 *
1101 Vermont Ave., N.W.
Washington, D.C. 20005
Arnold J. Wasserman (6) 10,000 *
1 Brookwood Drive
West Caldwell, NJ 07006
All Officers and Directors as a 1,366,165 30%
group
</TABLE>
<PAGE>
___________
* Less than 1%
(1) Based on 4,794,021 shares of Common Stock outstanding as of December 31,
1996.
(2) Assumes exercise of 3,700 Warrants to purchase Common Stock at $6.00 per
share.
(3) 162,000 shares are held by escrow agent pursuant to the Promissory Note and
Escrow Agreement. See "Interest of Management and others in Certain
Transactions - Loans and Guarantees".
(4) Assumes exercise of vested stock option to purchase 126,000 shares of
common stock at $1.11 per share.
(5) Assumes exercise of stock options that are currently vested or will vest
within 60 days of December 31, 1996 to purchase 9,374 shares of common
stock at $2.125 per share.
(6) Assumes exercise of stock options that are currently vested or will vest
within 60 days of December 31, 1996 to purchase 10,000 shares of common
stock at $2.50 per share.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1994, the Company granted options to purchase 162,000 shares of
common stock at an adjusted price of $0.56 per share to an officer and
director of the Company pursuant to his original employment agreement as an
incentive to join the Company. The options were subject to a vesting schedule
based on sales goals that were met and exceeded during 1994. At the date of
grant, these options were granted on terms no less favorable to the Company
than those available to unaffiliated parties purchasing shares of the
Company's Common Stock. The options were exercised in March 1996.
In December 1995, the Company granted options to purchase 126,000 shares of
common stock at $1.11 per share to an officer and a director of the Company.
All of the Options are currently vested. At the date of grant, these options
were granted on terms no less favorable to the Company than those available
to unaffiliated parties purchasing shares of the Company's Common Stock.
In July 1996, the Company entered into agreements with certain Selling
Securityholders named below whereby the Selling Securityholders exchanged
shares of the Company's common stock acquired in private placements for Units
issued by the Company. Manhattan Group Funding exchanged 90,000 shares for
45,000 Units; Paul Sozansky exchanged 30,000 shares for 15,000 Units, Ronnee
Medow exchanged 45,000 shares for 22,500 Units, Sagax Fund II Ltd. exchanged
23,810 shares for 11,905 Units, Sabine Devilloutreys exchanged 23,810 shares
for 11,905 Units and Leonard and Roslyn Parker exchanged 5,626 shares for
2,813 Units.
In September 1996, the Company granted options to purchase 75,000 shares of
the Company's common stock at $2.125 per share to an officer of the Company.
The options vest in equal quarterly installments over a four year period. At
the date of grant, these options were granted on terms no less favorable to
the Company than those available to unaffiliated parties purchasing shares of
the Company's common stock.
In September 1996, the Company granted options to purchase 20,000 shares of
the Company's common stock at $2.50 per share to each of the Company's three
outside directors. The options vest in equal quarterly installments over a
period of one year. At the date of the grant, these options were granted on
terms no less favorable to the Company than those available to unaffiliated
parties purchasing Shares of the Company's common stock.
Loans and Guarantees
At various times in 1995 and 1996, the President of the Company, his wife,
and the Chairman of the Board of Directors of the Company personally
guaranteed term notes with a commercial bank with an aggregate principal
amount of $323,500 and interest at 2% over the prime rate per year. The term
notes were executed by the Company for business purposes and was paid in full
in August 1996.
The President of the Company, his wife, and the Chairman of the Board of
Directors of the Company personally guaranteed a revolving line of credit
with a commercial bank with a principal amount of $300,000 and interest at 2%
over the prime rate per year. The line was executed by the Company for
business purposes including the financing of receivables. In January 1996,
the Company increased the line of credit to $450,000. In April 1996, the line
was renewed through April 1, 1997 and the interest rate was modified to prime
rate plus 1%.
In March 1996, the Company loaned $89,900 to an officer/director. The loan
bears interest at 6% per year with a balance of $50,400 principal and
interest due April 1, 1998.
In September 1996, the Company loaned $25,000 to an officer, pursuant to an
employment agreement. The loan bears interest at the prime rate at the date
of the loan and is due September 26, 1998.
Revenues and Expenses
During 1996 and 1995, the Company billed the Chairman of the Board of
Directors approximately $8,400 and $19,000, respectively, for reprographic
services and the sale of a photocopier. These transactions occurred at the
same prices available to non-related third parties.
During 1996 and 1995, the Company was billed approximately $208,000 and
$20,000, respectively, for legal services rendered by the Stoppelman Law
Firm, P.C., of which the Chairman of the Board of Directors, is a principal.
The Company believes that the fees charged were at least as favorable as
those obtainable from an uninterested third party. In October 1996, the
Company entered into an arrangement with The Stoppelman Law Firm whereby the
Company pays a retainer of $5,000 per month for legal services.
Future transactions with interested parties will continue to be handled on an
arms' length basis, upon terms no less favorable to the Company than those
available from unaffiliated third parties.
<PAGE>
ITEM 13. EXHIBITS, REPORTS ON FORM 8-K
(a) Exhibits
Exhibit # Description of Document
3.01(1) Certificate of Incorporation: Delaware
3.02(1) Restated By-Laws: Delaware
4.01(1) Form of Common Stock Certificate
4.02(1) Form of Warrant Certificate
4.03(1) Form of Warrant Agreement between On-Site Sourcing, Inc. and
the Continental Stock Transfer and Trust Company
4.04(1) Registrant's Articles of Incorporation are incorporated by
reference to exhibit 3.01
4.05(1) Registrant's Restated Bylaws pages 1-5 are incorporated by
reference to exhibit 3.02
10.01(1) Employment Agreement between the Company and Christopher
Weiler
10.02(1) Employment Agreement between the Company and Allen Outlaw
10.03(1) Employment Agreement between the Company and Anthony Kopsidas
10.04(1) Employment Agreement between the Company and Jack Krutsick
10.05(2) Employment Agreement between the Company and Larry F. Morris
10.05(3) Employment Agreement between the Company and Joseph Sciacca
10.06(1) Lease with Rubin Strouse Realty for Philadelphia, PA
10.07(1) Amendment 1 to Lease with Rubin Strouse Realty
10.08(1) Amendment 2 to Lease with Rubin Strouse Realty
10.09(1) Amendment 3 to Lease with Rubin Strouse Realty
10.10(1) Lease with JRG/Lynn Associates, 9/12/95, for Arlington, VA
10.11(1) First Addendum to Lease with JRG/Lynn Associates, 3/30/94
10.12(1) Second Addendum to Lease with JRG/Lynn Associates, 7/6/94
10.13(1) Third Addendum to Lease with JRG/Lynn Associates, 6/29/95
10.14(1) Fourth Addendum to Lease with JRG/Lynn Associates, 1/25/96
10.15(1) Lease Agreement between Oak Crest Ltd. and SWR 1/31/92 for
Frederick, MD assumed by On-Site
10.16(1) Assumption of Lease Agreement between the Company and Oak Crest
Ltd.
10.17(1) Lease with Kingston Atlanta Partners, L.P. - 12/15/95 for
Atlanta, GA
10.18(1) Form of Management Services Contract
10.19 Lease with 443 Company/William Real Estate Co., Inc. for
New York, NY office
10.20 Lease with JRG/Lynn Associates 10/18/96
10.21 Lease with Frederick Park Limited Partnership
10.22 Fifth Amendment to Lease with Suburban Station Associates
10.23(2) Revised 1996 Stock Option Plan
10.24(2) 1997 Stock Option Plan
10.25 First Amendment to lease with Kingston Atlanta, Partners, LP
<PAGE>
16.01(4) Letter on change in certifying accountant
23.01 Consent of Reznick Fedder & Silverman PC, independent
auditors
23.02 Consent of Grant Thornton LLP, independent auditors
27.01 Financial Data Schedule
(1) Incorporated by reference to the Company's Registration Statement
on Form SB-2 file No. 333-3544.
(2) Incorporated by reference to the Company's Post Effective
Amendment to the Company's Registration Statement on Form SB-2
file No. 333-3544.
(3) Incorporated by reference to the Company's Quarterly Report on Form
10-QSB for the period ended September 30, 1996.
(4) Incorporated by reference to the Company's Current Report on Form 8-K
dated November 29, 1996 and amended December 9, 1996.
(b) Reports on Form 8-K
1. Current Report on Form 8-K dated November 29, 1996 and amended on
December 9, 1996 regarding the change in the Company's certifying
accountant.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized on this 31st day of March 1997.
ON-SITE SOURCING, INC.
BY:
Christopher J. Weiler, President
In accordance with the Exchange, this Report has been signed below by the
following persons on behalf of the Registrant, and in the capacities and on the
date indicated.
Signature Title Date
/S/ CHRISTOPHER J. WEILER President, Chief Executive
Christopher J. Weiler Officer and Director March 31,1997
/S/ JOHN S. STOPPELMAN Chairman of the
John S. Stoppelman Board of Directors March 31,1997
/S/ JOSEPH SCIACCA
Joseph Sciacca Chief Financial Officer March 31,1997
/S/ ANTHONY A. KOPSIDAS Vice President of
Anthony A. Kopsidas Operations and Director March 31,1997
/S/ ALLEN C. OUTLAW Vice President of Sales and
Allen C. Outlaw Marketing and Director March 31,1997
Exhibit 10.19
Lease with 443 Company/William Real Estate Co. Inc. for New York, NY
Agreement of Lease, made as of this day of
1996, between 443 COMPANY, c/o Williams Real Estate Co. Inc., 530 Fifth Avenue,
New York, New York 10036. Party of the first part, hereinafter referred to as
OWNER, and ON SITE SOURCING, INC., a Delaware corporation party of the second
part, hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
the entire rentable area of the ninth 9th) floor (the "demised premises") in the
building known as 443 Park Avenue South ("the building) in the Borough of
Manhattan, City of New York, for the term of ten (10) years (the "term") (or
until such term shall sooner cease and expire as hereinafter provided) to
commence on the lst day of November nineteen hundred and ninety-six, and to end
on the 31st day of October both dates inclusive, at an annual rental rate of AS
PROVIDED FOR IN ARTICLE 70 HEREOF which Tenant agrees to pay in lawful money of
the United State which shall be legal tender in payment of all debts and dues,
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or thereafter,
Tenant shall be in default in the payment of rent to Owner pursuant to the terms
of another lease with Owner or with Owner's predecessor in interest, Owner may
at Owner's option and without notice to Tenant add the amount of such arrears to
any monthly installment of rent payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Occupancy:1. Tenant shall pay the rent as above and as hereinafter provided.
2. Tenant shall use and occupy demised premises for executive copy service
provided such use is in accordance with the Certificate of Occupancy for the
building, if any, and for no other purpose.
Alterations: 3. Tenant shall make no changes in or to the demised premises of
any nature without Owner's prior written consent, subject to the prior written
consent or Owner, and to the provisions of this article, Tenant at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises using
contractors or mechanics first approved by Owner. Tenant shall, at its expense,
before making any alterations, additions, installments or improvements obtain
all permits,
<PAGE>
approval and certificates required by any governmental or quasi-governmental
bodies and (upon completion) certificates of final approval thereof and shall
deliver promptly duplicates of all such permits, approvals and certificates to
Owner. Tenant agrees to carry and will cause Tenant's contractors and sub-
contractors to carry such workman's compensation, general liability, personal
and property damage insurance as Owner may require. If any mechanic's lien is
filed against the demised premises, or the building of which the same forms a
part, for work claimed to have been done for, or materials furnished to Tenant,
whether or not done pursuant to this article, the same shall be discharged by
Tenant within thirty days thereafter, at Tenant's expense, by filing the bond
required by law or otherwise. All fixtures and all paneling, partitions,
railings and like installments, installed in the premises at any time, either by
Tenant or by Owner on Tenant's behalf, shall, upon installation, become the
property of Owner and shall remain upon and be surrendered with the demised
premises unless Owner, by notice to Tenant no later than twenty days prior to
the date fixed as the termination of this lease, elects to relinquish Owner's
right thereto and to have them removed from the demised premises by Tenant, in
which event the same shall be removed from the demised premises by Tenant prior
to the expiration of the lease, at Tenant's expense. Nothing in this Article
shall be construed to give Owner title to or to prevent Tenant's upon removal of
any such from the premises or upon removal of trade fixtures, moveable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner. Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation as may be required by Owner. Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation and repair any damage to the demised premises or
the building due to such removal. All property permitted or required to be
removed, by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or removed from the premises by Owner, at
Tenant's expense.
Repairs: 4. Owner shall maintain and repair the exterior of and the
public portions of the building. Tenant shall, throughout the term of this
lease, take good care of the demised premises including the bathrooms and
lavatory facilities (if the demised premises encompass the entire floor of the
building) and the windows frames and, the fixtures and appurtenances therein and
at Tenant's sole cost and expense promptly make all repairs thereto and to the
building, whether structural or non-structural in nature, caused by or resulting
from the carelessness, omission, neglect or improper conduct of Tenant, Tenant's
servants, employees, invitees, or licensed, and whether or not arising from such
Tenant conduct or omission, when required by other provisions of this lease,
including Article 6. Tenant shall also repair all damage to the building, and
the demised premises caused by the moving of Tenant's fixtures, furniture or
equipment. All the aforesaid repairs shall be of quality or class equal to the
original work or construction. If Tenant fails, after ten days notice, to
proceed with due diligence to make repairs required to be made by Tenant, the
same may be made by the Owner at the expense of Tenant, and the expense thereof
incurred by Owner shall
<PAGE>
be collectible, as additional rent, after rendition of a bill or statement
thereof. If the demised premises be or become infested with vermin, Tenant
shall, at its expense, cause the same to be exterminated. Tenant shall give
Owner prompt notice of any defective condition in any plumbing, heating system
or electrical lines located in the demised premises and following such notice,
Owner shall remedy the condition with due diligence, but at the expense of
Tenant, if repairs are necessitated by damage or injury attributable to Tenant,
if repairs are necessitated by damage or injury attributable to Tenant, Tenant's
servants, agents, employees, invitees or licensees as foresaid. Except as
specifically provided in Article 9 or elsewhere in this lease, there shall be no
allowance to the Tenant for a diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner. Tenant or others making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. The provisions of this Article 4 with respect to the making of repairs
shall not apply in the case of fire or other casualty with regard to which
Article 9 hereof shall apply.
5. Window Cleaning
Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to cleaned from the outside in violation of Section 202 of the
New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
6. Requirements of Law, Fire Insurance, Floor Loads
Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant shall, at Tenant's sole cost and expense,
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules and regulations of the New York Board of Fire Underwriters, or the
Insurance Services Office, or any similar body which shall impose any violation,
order to duty upon Owner or Tenant with respect to the demised premises, arising
out of Tenant's manner of use thereof, or, with respect to the building, if
arising out of Tenant's manner of use of the demised premises or the building
(including the use permitted under the lease). Excerpt as provided in Article
30 hereof, nothing herein shall require Tenant to make structural repairs or
alternations unless Tenant has, by its manner of use of the demised premises or
method of operations therein, violated any such laws, ordinances orders, rules,
regulations or requirements with respect thereto. Tenant shall not do or permit
any act or thing to be done in or to the demised premises which is contrary to
law, or which will invalidate or be in conflict with public liability, fire or
other policies of insurance at any time carried by or for the benefit of Owner.
Tenant shall not keep anything in the demised premises except as now or
hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire
Insurance Rating Organization and other authority having jurisdiction, and then
only in such manner and such quantity so as not to increase the rate for fire
insurance applicable to the building, nor use
<PAGE>
the premises in a manner which will increase the insurance rate for the
building, or any property located therein over that in effect prior to the
commencement of Tenant's occupancy. If by reason of failure to comply with the
foregoing the fire insurance rate shall, at the beginning of this lease or at
any time thereafter, be higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that portion of all fire
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. In any action or proceeding wherein Owner
and Tenant are parties, a schedule or "make-up" or rate for the building or
demised premises issues by a body making fire insurance rates applicable to said
premises. Tenant shall not place a load upon any floor it was designed to carry
and which is allowed by law. Owner reserves the right to prescribe the weight
and position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant, at Tenant's expense, in
settings sufficient, in Owner's judgment, to absorb and prevent vibration, noise
and annoyance.
7. Subordination
This lease is subject and subordinate to all ground or underlying leases and to
all mortgages which may now or hereafter affect such leases or the real property
of which demised premises are a part and to all renewals, modifications,
consolidations, replacements and extensions of any such underlying leases and
mortgages. This clause shall be self-operative and no further instrument0 or
subordination shall be required by any ground or underlying lessor or by any
mortgagee, affecting any lease or the real property of which the demised
premises are a part. In confirmation of such subordination, Tenant shall
execute promptly any certificate that Owner may request.
8. Property-Loss, Damage, Reimbursement, Indemnity
Owner or its agents shall not be liable for any damage to property of Tenant or
of others entrusted to employees of the building, nor for loss or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons property resulting from any cause of whatsoever nature, unless caused by
or due to the negligence of Owner, its agents, servants or employees; Owner or
its agents shall not be liable for any damage caused by operations in connection
of any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but no limited to Owner's own acts. Owner shall not e liable for any
damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation thereof nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction.
Tenant shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant.
Tenant's agents, contractors, employees, invitees <PAGE>
or licensees. Tenant's liability under this lease extends to the acts and
omissions of any sub-tenant, and any agent, contractor, employee, invitees or
licensee of any sub-tenant. In case any action or proceeding is brought against
Owner by reason of any such claim, Tenant, upon written notice from Owner, will,
at Tenant's expense, resist or defend such action or proceeding by counsel
approved by Owner in writing, such approval not to be unreasonably withheld.
9. Destruction, Fire and Other Casualty
(a) if the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter setforth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent, until such repaid shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. c If the demised premises are totally
damaged or rendered wholly unusable by fire or other casualty, then the rent
shall be proportionately paid up to the time of the casualty and thenceforth
shall cease until the date when the premises shall have been repaired and
restored by Owner, subject to Owner's rights to elect not to restore the same as
hereinafter provided. (d) If the demised premises are damaged in whole or in
part) if the building shall be so damaged that Owner shall decide to demolish it
or to rebuild it, then, in any of such events, Owners may elect to terminate
this lease by written notice to Tenant, given within 90 days after such fire or
casualty, specifying a date for the expiration of the lease, which date shall
not be more than 60 days after the giving of such notice, and upon the date
specified in such notice the term of this lease shall expire as fully and
completely as if such date were the date set forth above for the termination of
this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice however, to Owner's rights and remedies against Tenant under
the lease provisions in effect prior to such termination, and any rent owing
shall be paid up to such date and any payments of rent made by Tenant which were
on account of any period subsequent to such date shall be returned to Tenant.
Unless Owner shall serve a termination notice as provided for herein, Owner
shall make the repairs and restorations under the conditions of (b) and ( c )
thereof, with all reasonable expedition, subject to delays due to adjustments of
insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's control. After any such
casualty, Tenant shall cooperate with Owner's restoration by removing from the
premises as promptly as reasonable possible, all of Tenant's salvageable
inventory and moveable equipment, furniture, and other property. Tenant's
liability for rent shall resume five (5) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieves Tenant from liability that may exist as a
result of damages from fire or other casualty. Notwithstanding the foregoing,
each party shall look first to any insurance in its favor or damage resulting
from fire or <PAGE>
other causality, and to the extent that such insurance is in force and
collectible and to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The foregoing
release and waiver, shall be in force only if both releasors' insurance policies
contain a claim providing? that such a release or waiver shall not invalidate
the insurance. If, and to the extent, that such waiver can be obtained only by
the payment of additional premiums, then the party benefiting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on
Tenant's furniture and or furnishings or any fixtures or equipment,
improvements, or appurtenance removable by Tenant and agrees that Owner will not
be obligated to repair any damage thereto or replace the same. (f) Tenant
hereby waives the provisions of Section 227 of the Real Property Law and agrees
that the provisions of this article shall govern and control in lieu thereof
See Article 74.
10. Eminent Domain
If the whole or any part of the demised premises shall be acquired or condemned
by Eminent Domain for any public or quasi public use or purpose, then and in
that event, the term of this lease shall cease and terminate from the date of
title vesting in such proceeding and Tenant shall have no claim for the value of
any unexpired term of said lease.
11. Assignment, Mortgage, Etc.
Tenant, for itself, its heirs, distributes, executors, administrators, legal
representatives, successors and assigns, expressly covenants that it shall not
assign, mortgage or encumber this agreement, nor underlet, or suffer or permit
the demised premises or any part thereof to be used by others, without the prior
written consent of Owner in each instance. Transfer of the majority of the
stock of a corporate Tenant shall be deemed an assignment. If this lease be
assigned, or if the demised premises or any part thereof by underlet or occupied
by anybody other than Tenant. Owner may, after default by Tenant, collect rent
from the assignee, under-tenant or occupant, and apply the net amount collected
to the rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be constructed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
<PAGE>
12. Electric Current
Rates and conditions in respect to submetering or rent inclusion, s the case
may be, to be added in RIDER attached hereto. Tenant covenants and agrees that
at all times it use of electric current shall not exceed the capacity of
existing leeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages or expenses which Tenant may sustain.
13. Access to Premises
Owner or Owner's agents have the right (but shall not be obligated) to enter the
demised premises in any emergency at any time, and, at other reasonable times
after reasonable notice thereof to Tenant to examine the same and to make such
repairs, replacements and improvements as Owner may deem necessary and
reasonably desirable to any portion of the building or which Owner may elect to
perform in the premises after Tenant's failure to make repairs or perform any
work which Tenants is obligated to perform under this lease, or for the purpose
of complying with laws, regulations and other directions of governmental
authorities. (2) All entries made by Owner pursuant to this article shall be
after reasonable prior notice (except in emergency) and conducted to the extent
practicable (but without the necessity of the incurring overtime wages or other
additional costs) in such manner so as to minimize interference with Tenant's
use of the demised premises. Tenant shall permit Owner to use and maintain and
replace pipes and conduits in and through the demised premises and to erect new
pipes and conduits therein provided, wherever possible, they are within walls or
otherwise concealed. Owner may, during the progress of any work in the demised
premises, take all necessary materials and equipment into said premises without
the same constituting an eviction nor shall the Tenant be entitled to any
abatement of rent while such work is in progress nor to any damages by reason of
loss or interruption of business or otherwise. Throughout the term hereof Owner
shall have the right to enter the demised premises at reasonable hours for the
purpose of showing the same to prospective* purchasers or mortgagees of the
building, and during the last six months of the term place upon the premises the
usual notices "To Let" and "For Sale" which notices Tenant shall permit to
remain thereon without molestation. If Tenants is not present to open and
permit any entry into the premises, Owner or Owner's agents may enter the same
whenever such entry may be necessary or permissible by master key or forcibly
and provided reasonable care is exercised to safeguard Tenant's property, such
entry shall not render Owner or its agents liable therefore, nor in any event
shall the obligations of Tenant hereunder be affected. If during the last month
of the term Tenant shall have removed all or substantially all of Tenant's
property therefrom. Owner may immediately enter alter, renovate or redecorate
the demised premises without limitation or abatement of rent, or incurring
liability to Tenant for any compensation and such act shall have no effect on
this lease or Tenant's obligations hereunder.
<PAGE>
14. Vault, Vault Space, Area
No Vaults, vault space or area, whether or not enclosed or covered, not within
the property line of the building is leased hereunder, anything contained in or
indicated on any sketch, blue print or plan, or anything contained elsewhere in
this lease to the contrary notwithstanding. Owner makes no representation as to
the location of the property line of the building. All vaults and vault space
and all such areas not within the property line of the building, which Tenant
may be permitted to use and/or occupied under a revocable license, and if any
such license be revoked, or if the amount of such space or area be diminished or
required by any federal, state or municipal authority or public utility, Owner
shall not be subject to any liability nor shall Tenant be entitled to any
compensation or diminution or abatement of rent nor shall such renovation,
diminution or requisition be deemed constructive or actual eviction. Any tax,
fee or charge of municipal authorities for such vault or area shall be paid by
Tenant, if used by Tenant, whether or not specifically leased hereunder.
15. Occupancy
Tenant will not at any time use of occupy the demised premises in violation of
the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and aspects them as is,
subject to the riders annexed hereto with respect to Owner's work, if any, in
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business. Tenant shall be responsible for and
shall procure and maintain such license or permit. Anything contained herein to
the contrary notwithstanding, Tenant shall not be responsible for any violations
of record covering the demised premises pre-existing the Possession Date of this
lease.
16. Bankruptcy
(a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be canceled by Owner by sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the
following events:
(1) the commencement of a case in bankruptcy or under the laws of any state
naming Tenant as the debtor; or (2) the making by Tenant of an assignment
or any other arrangement for the benefit of creditors under any state
statute or order of court, shall thereafter be entitled to possession of
the premises demised but shall forthwith quit and surrender the premises.
If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party them
owning Tenant's interest in the lease.
<PAGE>
(b) It is stipulated and agreed that in the event of the termination of this
lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover
from Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the unexpired portion
of the term demised and the fair and reasonable rental value of the
demised premises for the same period. In the computation of such damages
the difference between any installation of rent becoming due hereunder
after the date of termination and the fair and reasonable rental value of
the demised premises for the period for such installment was payable shall
be discounted to the date of termination at the rate of four percent (4%)
per annum. If such premises or any part thereof be relet by the Owner for
the unexpired term of said lease, or any part thereof, before presentation
of proof of such liquidated damages to any court, commission or tribunal,
the amount of rent reserved upon such releting shall be deemed to be the
fair and reasonable Rider to be added if necessary. * tenants, rental
value for the part or the whole of the premises so relet during the term
of the releting. Nothing herein contained shall limit or prejudice the
right of the Owner to prove for and obtain as liquidated damages by reason
of such termination, an amount equal to the maximum allowed by any stature
or rule of law in effect at the time when, and governing the proceedings
in which, such damages are to be proved, whether or not such amount be
greater, equal to, or less than the amount of the difference referred to
above.
17. Default
If Tenant defaults in fulfilling any of the covenants of this including, but
not limited to, the covenants for the payment of rent or additional rent; or if
the demised premises becomes vacant or deserted or if this lease be rejected
under S 235 of Title 11 of the U.S. Code (bankruptcy code); of if any execution
or attachment shall be issued against Tenant or any of Tenant's property
whereupon the demised premises shall be taken or occupied by someone other than
Tenant; or if Tenant shall make default with respect to any other lease between
Owner and Tenant; or if Tenant shall have failed, after ten (10) days written
notice, to redeposit with Owner any portion of the security deposited hereunder
which Owner has applied to the payment of any rent and additional rent due and
payable hereunder or failed to move into or take possession of the premises
within fifteen (15) days after the commencement of the term of this lease, of
which fact Owner shall be the sole judge; them in any one or more of such
events, upon Owner serving a written ten (10) day notice upon Tenant specifying
the nature of said default and upon the expiration of said ten (10) days, if
Tenant shall have failed to comply with or remedy such default, or if the said
default or omission complained of shall be of a nature that the same cannot be
completely cured or remedied with said ten (10) days period, and if Tenant shall
not have diligently commenced during such default within such ten (10) day
period, and shall not thereafter with reasonable diligence and in good faith,
proceed to <PAGE>
remedy or cure such default, then Owner may serve a written three (3) days'
notice of cancellation of this lease and the term thereunder shall end and
expire as fully and completely as if the expiration of such three (3) day period
were the day herein definitely fixed for the end and expiration of this lease
and the term thereof and Tenant shall then quite and surrender the demised
premises to Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid: or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required: then and in
any of such events Owner may without notice, re0-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to re-
enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreements by written notice.
18. Remedies of Owner and Waiver of Redemption
In case of any such default, re-entry expiration and/or dispossess by summary
proceedings or otherwise, (a) the rent, and additional rent, shall become due
thereupon and be paid up the time of such re-entry, dispossess and/or
expiration, (b) Owner may relet the premises or any part or parts thereof,
either in the name of Owner or otherwise, for a term or terms, which may at
Owner's option be less than or exceed the period which would otherwise have
constituted the balance of the term of this lease and may grant concessions or
free rent or charge a higher rental than that in this lease, c Tenant or the
legal representatives of Tenant shall also pay Owner as liquidated damages for
the failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
subsequent lease or leases of the demised premises for each month of the period
which would otherwise have constituted the balance of the term of this lease.
The failure of Owner to relet the premises or any part or parts thereof shall
not release or affect Tenant's liability for damages. In computing such
liquidated damages there shall be added to the said deficiency such expenses as
Owner may incur in connection with releting, such as legal expenses, attorneys'
fees, brokerage, advertising and for keeping the demised premises in good order
or for preparing the same for releting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in the lease
and any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the <PAGE>
demised premises in good order or preparing the same for re-rental may, at
Owner's option, make such alterations, repairs, replacements, and/or decorations
in the demised premises as Owner, in Owner's sole judgment, considers advisable
and necessary for the purpose of releting the demised premises, and the making
of such alterations, repairs, replacement, and/or decorations shall not operate
or be construed to release Tenant from liability hereunder as aforesaid. Owner
shall in no event be liable in any way whatsoever for failure to relet the
demised premises, or in the event that the demised premises are relet, for
failure to collect the rent thereof under such releting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws.
19. Fees and Expenses
If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder. If
Owner in connection with the foregoing or in connection with any default by
Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but no limited to attorney's
fees, in instituting, prosecuting or defending any action or proceedings, then
Tenant will reimburse Owner for such sums so paid or obligations incurred with
interest and costs. The foregoing expenses incurred by reason of Tenant's
default shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Owner within five (5) days of rendition of any bill or statement to
Tenant therefor. If Tenant's lease term shall have expired at the time of
making of such expenditures or incurring of such obligations, such sums shall be
recoverable by Owner as damages.
20. Building Alterations and Management
Owner shall have the right at any time without the same constituting an eviction
and without incurring liability to Tenant therefor to change the arrangement and
or location of public entrances, passageways, doors, doorways, corridors,
elevators, stairs, toilets or other public parts of the building and to change
the name, number or designation by which the building may be known. There shall
be no allowance to Tenant for diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner or other Tenant making any repairs in the building or any
such alterations, additions and improvements. Furthermore, Tenant shall not
have any claim against Owner by reason of Owner's imposition of any <PAGE>
controls of the manner of access to the building by Tenant's social or business
visitors as the Owner may deem necessary for the security of the building and
its occupants.
21. No Representations by Owner
Neither Owner nor Owner's agents have made any representations or promises with
respect to the physical condition of the building, the land upon which it is
erected or the demised premises, the rents, leases, expenses of operation or any
other matter or thing affecting or related to the demised premises or the
building except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building
and the demised premises and is thoroughly acquainted with their condition and
agrees to take the same "as is" on the date possession is tendered and
acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was to taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter, made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
22. End of Term
Upon the expiration or other termination of the term of this lease. Tenant
shall quite and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property from the demised premises. Tenant's obligations to observe or
perform this covenant shall survive the expiration or other termination of this
lease. If the last day of the term of this Lease or any renewal thereof, falls
on Sunday, this lease shall expire at noon on the proceeding Saturday until it
be a legal holiday in which case it shall expire at noon on the proceeding
business day.
23. Quiet Enjoyment
Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to Article 34
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
<PAGE>
24. Failure to Give Possession
If Owner is unable to give possession of the demised premises on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, under-tenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or if Owner has
not completed any work required to be performed by Owner, or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
any work required) until after Owner shall have given Tenant notice that the
premises are substantially ready for Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified as the
commencement of the term of this lease. Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this article are intended to constitute "an express provision to
the contrary" within the meaning of Section 223-a of the New York Real Property
Law.
25. No Waiver
The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
with knowledge of the breach of any covenant of this lease shall be deemed to
have been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this lease provided. All checks tendered to Owner as and for the rent of the
demised premises shall be deemed payments for the account of Tenant. Acceptance
by Owner of rent from anyone other than Tenant shall not be deemed to operate as
an attornment to Owner by the payor of such rent or as a consent by Owner to an
assignment or subletting by Tenant of the demised premises to such payor, or as
a modification of the provisions of this lease. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed an acceptance
of a surrender of said premises and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the lease and the <PAGE>
delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises.
26. Waiver of Trial by Jury
It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceedings or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually
agreed that in the event Owner commences any summary proceeding for possession
of the premises, Tenant will not interpose any counterclaim of whatever nature
or description in any such proceeding.
27. Inability to Perform
This Lease and the obligation of Tenant to pay rent hereunder and perform all of
the other covenants and agreements hereunder on part of Tenant to be performed
shall in no wise be affected, impaired or excused because Owner is unable to
fulfill any of its obligations under this lease or to supplying any service
expressly or implied to be supplied or is unable to make, or is delayed in
making any repair, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixture if Owner is prevented or
delayed from so doing by reasons of strike or labor troubles or any cause
whatsoever beyond Owner's sole control including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
28. Bids and Notices
Except at otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered it, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designated by written notice.
<PAGE>
29. Water Charges
If Tenant requires, uses or consumes water for any purpose in addition to
ordinary lavatory purposes (of which fact Tenant constitutes Owner to be the
sole judge) Owner may install a water meter and thereby measure Tenant's water
consumption for all purposes. Tenant shall pay Owner for the cost of the meter
and the cost of the installation, thereof and throughout the duration of
Tenant's occupancy Tenant shall keep said meter and installation equipment in
good working order and repair at Tenant's own cost and expense in default of
which Owner may cause such meter and equipment to be replaced or repaired and
collect the cost thereof from Tenant, as additional rent. Tenant agrees to pay
for water consumed, as shown on said meter as and when bills are rendered, and
on default in making such payment Owner may pay such charges and collect the
same from Tenant, as additional rent. Tenant covenants and agrees to pay, as
additional rent, the sewer rent, charge or any other tax, rent, levy or charge
which now or hereafter is assessed, imposed or a lien upon the demised premises
or the realty of which they are part pursuant to law, order or regulation made
or issues in connection with the use, consumption, maintenance or supply of
water, water system or sewage or sewage connection or system. If the building
or the demised premises or any part thereof is supplied with water. Tenant
shall pay to Owner, as additional rent, on the first day of each month, $40.00
for the use of such water. Independently of an in addition to any of the
remedies reserved to Owner hereinabove or elsewhere in this lease. Owner may
sue for and collect any monies to be paid by Tenant or paid by Owner for any of
the reasons or purposes hereinabove set forth. Supplementing the provisions of
Article 29, Tenant may elect to install, at its sole cost and expense, a water
meter to measure Tenant's water consumption provided that Tenant (I) is not with
all appropriate provisions of articles 3 and 44 including without limitation,
the submission of plans and specification to Landlord for Landlord's approval.
Upon the completion of the installation of such water meter, to the reasonable
satisfaction of Landlord, Tenant shall not be obligated thereafter to pay the
$40.00 per month additional rent charge as set forth under article 29.
30. Sprinklers
Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters of the New York Fire Insurance Exchange or any
bureau, department of official of the federal, state or city government
recommend or require the installation of a sprinkler system or that any changes,
modifications, alterations, or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of Tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or for any other reason, or if any such sprinkler system
installations, modifications, alterations, additional sprinkler heads or other
such equipment, become necessary to prevent the imposition of a penalty or
charge against the full allowance for a sprinkler system in the fire insurance
rate set by any said Exchange or by any fire insurance company. <PAGE>
Tenant shall, at Tenant's expense, promptly make such sprinkler system
installations, changes, modifications, alterations, and supply additional
sprinkler heads or other equipment as required whether the work involved shall
be structural or non-structural in nature. Tenant shall pay to Owner as
additional rent the sum of $40.00 on the first day of each month during the term
of this lease, as Tenant's portion of the contract price for sprinkler
supervisory service.
31. Elevators, Heat, Cleaning
As long as Tenant is not in default under any of the covenants of this lease
Owner shall: (a) provide necessary passenger elevator facilities on business
days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m.; (b) if
freight elevator service is provided, same shall be provided only on regulator
business days Monday through Friday inclusive, and on those days only between
the hours of 9 a.m. and 12 noon and between 1 p.m. and 5 p.m.; ( c) furnish
heat, water and other services supplied by Owner to the demised premises, when
and as required by law, on business days from 8 a.m. to 6 p.m. and on Saturdays
from 8 a.m. to 1 p.m. ; (d) clean the public halls and public portions of the
building which are used in common by all tenants. Tenant shall, at Tenant's
expense, keep the demised premises, including the windows, clean and in order,
to the satisfaction of Owner, and for that purpose shall employ the person or
persons, or corporation approved by Owner. Tenant shall pay to Owner the cost
of removal of any of Tenant's refuse and rubbish from the building. Bills for
the same shall be rendered by Owner to Tenant at such time as Owner may elect
and shall be due and payable hereunder, and the amount of such bills shall be
deemed to be, and be paid as, additional rent. Tenant shall however, have the
option of independently contracting for the removal of such rubbish and refuse
in the event that Tenant does not wish to have same done by employees of Owner.
Under such circumstances, however, the removal of such refuse and rubbish by
others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator , plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner desirable or
necessary to be made, until said repairs, alterations, replacements or
improvements shall have been completed. If the building of which the demised
premises are a part supplies manually operated elevator service. Owner may
proceed with alternations necessary to substitute automatic control elevator
service upon ten (10) written notice to Tenant without in any way affecting the
obligations of Tenant hereunder, provided that the same shall be done with the
minimum amount of inconvenience to Tenant, and Owner pursues with due diligence
the completion of the alterations.
SEE RIDER ARTICLES 71 and 76
<PAGE>
32. Security
Tenant has deposited with Owner the sum of $40,320.00 as security for the
faithful performance and observance by Tenant of the terms, provision s and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including
, but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which tenant is in default or for any sum which Owner may expend or may be
required to expend reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the releting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
demised premises form a part. Owner shall have the right to transfer the
security to the vendee or lease and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall thereupon be transfer the security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made of
the security to a new Owner. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
an such assignment, encumbrance, attempted assignment or attempted encumbrances.
33. Captions
The Captions are inserted only as a matter of convenience and for reference and
in no way define, limit or describe the scope of this lease nor the intent of
any provision thereof.
34. Definitions
The term "Owner) as used in this lease means only the owner of the fee or the
leasehold of the building, or the mortgagee in possession, for the time being of
the land and building (or the Owner of a lease of the building or of the land
and building) of which the demised premises form a part, so that in the event of
any sale of sales of said land and building or of said lease, or in the event of
any sale or sales of said land and building or of said lease, or in the event of
any sale or sales of said land and building or of said lease, or in the event of
a lease of said building, or the land and building, the said Owner shall be and
hereby is entirely freed and relieved of all covenants and obligations of Owner
hereunder, and it shall be deemed and construed without further agreement
between the parties or their successors in interest, or between the parties and
the purchasers, at any such sale, or the said leasee of <PAGE>
the building, or of the land and building, that the purchaser or the leasee of
the building, or the land and building, that the purchaser or the leasee of the
building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry") as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so-expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to new Owner from Tenant under this lease, in addition to the
annual rental rate. The term "business days" as used in this lease, shall
exclude Saturdays (except such portion thereof as is covered by specific hours
in Article 31 hereof), Sundays and all days observed by the State or Federal
Government as legal holidays and those designated as holidays by the applicable
building service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service.
35. Adjacent Excavation
If an excavation shall be made upon land adjacent to the demised premises, or
shall be authorized to be _______________________.
Shoring: made, Tenant shall afford to the person causing or authorized to
cause such excavation, license to enter upon the demised premises for the
purpose of doing such work as said person shall deem necessary to preserve the
wall or the building of which demised premises form a part from injury or damage
and to support the same by proper foundations without any claim for damages or
indemnity against Owner, or diminution or abatement of rent.
36. Rules and Regulations
Tenant and Tenant's servants, employees, agents, visitors, and licenses shall
observe faithfully, and comply strictly with, the Rules and Regulations annexed
hereto and such other and further reasonable Rules and Regulations as hereto and
such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulations hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right of dispute the
reasonableness of any additional Rule and Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Owner within ten (10) days after the giving of notice thereof.
Nothing is in this lease contained shall be construed to impose upon Owner any
duty or obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
<PAGE>
37. Glass
Owner shall replace at the expense of the Tenant, any and all plate and other
glass damaged or broken from any cause whatsoever in and about the demised
premises. Owner may insure, and keep insured, at Tenant's expense, all plate
and other glass in the demised premises for and in the name of the Owner. Bills
for the premiums therefore shall be rendered by Owner to Tenant at such times as
Owner may elect, and shall be due from, and payable by, Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid, as additional rent.
38. Estoppel Certificate
Tenant, at any time, and from time to time, upon at least 10 days' prior notice
by Owner, shall execute, acknowledge and deliver to Owner, and/or to any other
person, firm or corporation specified by Owner, a statement certifying that
this lease is unmodified in full force and effect (or, if there have been
modifications, that the same is in full fore and effect and modified and stating
the modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default.
39. Directory Board Listing
If, at the request of and as accommodation to Tenant, Owner shall place upon
the directory board in the lobby of the building, one or more names of persons
other than Tenant, such directory board listings shall not be construed as the
consent by Owner to an assignment of subletting by Tenants to such person or
persons.
40. Successors and Assigns
The covenants, conditions and agreements contained in this lease shall bind and
inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
<PAGE>
ANNEXED ARTICLES 71 AND 76 ARE HEREBY INCORPORATED INTO THIS LEASE.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year above written.
Witness for Owner: 443 COMPANY..............
................. BY:...................
Witness for Tenant: ON SITE SOURCING, INC.........
................ By:................(L.S.)
Christopher J. Weiler, President
111 19th Street
Suite 404
Arlington, VA 22209
<PAGE>
ADDITIONAL ARTICLES NOT PROVIDED IN STANDARD FORM OF LEASE, BUT FORMING A PART
HEREOF.
Intentionally Omitted
41. Rent Escalation-Tax Increases
The Tenant agrees to pay as additional rent annually during the terms of this
lease 9.091 per cent of any increase in the Real Estate Taxes (as such term is
hereinafter defined) above those for the fiscal year 1996/1997. Such additional
rent shall be paid when the tax becomes fixed and within ten (10) days after
demand therefore by the Landlord and shall be collectible as additional rent.
For the final year of the lease term the Tenant shall be obligated to pay only a
pro rata share of such percentage of any such increase in taxes. Tax bills
(except as hereinafter provided) shall be conclusive evidence of the amount of
such taxes and shall be used for the calculation of the amounts to be paid by
the Tenant.
The term "Real Estate Taxes" shall mean all the real estate taxes and
assessments, special or otherwise, levied, assessed or imposed by Federal, State
or Local Governments against or upon the building of which the demised premises
form a part and the land upon which it is erected. If due to a future change in
the method of taxation, any franchise, income, profit or other tax, or other
payment, shall be levied against Landlord in whole or in part in substitution
for or in lieu of any tax which would otherwise constitute a Real Estate Tax,
such franchise, income, profit, or other tax or payment shall be deemed to be a
Real Estate Tax for the purposes hereof. If Landlord should incur expense in
connection with Landlord's endeavor to reduce or prevent increase in assessed
valuation, Tenant shall be obligated to pay as additional rent the amount
computer by multiplying the percent set forth in line 2 hereof times such
expense of Landlord, and such amount shall be due and payable upon demand by
Landlord and collectible in the same manner as annual rent. The obligation to
make any payments of additional rent pursuant to this Article shall survive the
expiration or other termination of this lease.
42. Exculpatory Clause
In any action brought to enforce the obligations of Landlord under this lease,
any judgment or decree shall be enforceable against Landlord only to the extent
of Landlord's interest in the building of which the demised premises form a
part, and no such judgment shall be the basis of execution on, or be a lien on,
assets of Landlord or any assets of any party being a partner or stockholder in
Landlord, other than the interest in said building.
43. Assignment and Subletting (Article 11 continued)
Tenant may sublet all or a portion of the demised premises or assign this lease
with Landlord's prior written consent which shall not be unreasonably withheld,
provided that:
<PAGE>
(a) Tenant shall furnish Landlord with the name and business address of the
proposed subtenant or assignee, a counterpart of the proposed subleasing or
assignment agreement, and satisfactory information with respect to the nature
and character of the business of the proposed subtenant or assignee together
with current financial information and references reasonably satisfactory to
Landlord.
(b) In the reasonable judgment of the Landlord the proposed subtenant or
assignee is financially responsible with respect to its proposed obligations
under the proposed agreement and is of a character and engaged in a business
which is in keeping with the standards of the building and the floor or floors
on which the demised premises are located.
(c) An executed duplicate original in a form satisfactory to Landlord for
review by Landlord's counsel of such subleasing or assignment agreement shall be
delivered to Landlord at least five (5) days prior to the effective date
thereof. In the event of any assignment, Tenant will deliver to Landlord at
least (5) days prior to the effective date thereof an assumption agreement
wherein the assignee agrees to assume all of the terms, covenants and conditions
of this lease to be performed by Tenant hereunder and which provides that Tenant
named herein and such assignee shall after the effective date of such assignment
be jointly and severally liable for the performance of all of the terms
covenants and conditions of this lease.
(d) Tenant shall grant Williams Real Estate Co. Inc., ("Williams") the sole and
exclusive right for thirty (30 days) to effect any sublet, assignment, release
and other disposition of all or any part of the demised premised and any other
space Tenant has under lease elsewhere in the building, and Tenant shall pay
Williams upon execution of such sublease, assignment, release or other
disposition a commission computed in accordance with Williams' standard rates
and rule then in effect for the locality in which the demised premised are
located.
(e) Tenant, at Tenant's expense, shall provide and permit reasonably
appropriate means of ingress to and egress from space sublet by Tenant.
(f) Except for any subletting or assignment by Tenant to Landlord, each
subletting or assignment shall be subject to all the covenants, agreements,
terms, provisions and conditions contained in this lease on the part of the
Tenant to be performed.
(g) Tenant covenants and agrees that notwithstanding any subletting or
assignment to Landlord or to any other subtenant or assignee and/or acceptance
of rent or additional rent by Landlord from any subtenant or assignee. Tenant
shall and will remain fully liable for the payment of the annual rent and
additional rent due and to become due hereunder and for the performance of all
the covenants, agreements, terms, provisions and conditions contained in this
lease on the part of the Tenant to be performed.
<PAGE>
(h)
(i) Tenant further agrees that it shall not at any time publicly advertise at a
rental rate less than the fixed annual rate plus any additional rent than
payable hereunder, for assignment or sublease of all of the space demised
herein, or for sublease of any portion of the space demised herein, but nothing
herein contained shall be deemed to be Landlord's consent to any assignment or
subletting.
(j) Notwithstanding anything herein contained to the contrary, Tenant shall
have no right to assign this lease or to sublet the whole of the demised
premises prior to or during the first 6 months following the commencement date
hereof.
(j) Tenant shall have no rights to assign this lease or sublet the whole
or any part of the demised premises to any party who is dealing with or has
dealt with Landlord or Landlord's agent with respect to space then still
available for rent in the building within the 12 months immediately
preceding Landlord's receipt of Tenant's notice pursuant to item II of
this Article.
(k) Such subletting or assignment shall not cause Landlord any cost.
(l) Tenant shall have complied and shall comply with each of the provisions in
this Article and Landlord shall not have made any election as provided in item
II hereof.
II
If Tenant shall desire to sublet all or a portion of the demised premises or to
assign this lease. Tenants shall send to Landlord a written notice by
registered mail at least thirty (30) days prior to the date such assignment or
subletting is to commence stating (w) that the intention is to assign the lease,
(x) the portion of the premises that the Tenant desires to sublet, and if the
portion intended to be sublet shall be less than the entire demised premises and
other than an entire floor or multiple thereof, such notice shall be accompanied
by a reasonably accurate floor plan of the premises to be sublet. (y) the term
of such proposed subletting and (z) the proposed commencement date of such
subletting or assignment.
- -
(a) If Tenant desires to sublet all of the demised premises or to assign this
lease, than within thirty (30) days after receipt of the aforesaid notice
Landlord may notify Tenant that Landlord elects (1) to cancel this lease, in
which event, such cancellation shall become effective on the date set forth
pursuant to (z) above and this lease shall thereupon terminate on said date with
the same force and effect as if said date were the expiration date of this
lease; or (2) to require Tenant to assign this lease to Landlord effective from
the date set forth pursuant to (z) above. In either event Tenant shall be
obligated to surrender possession of the demised premises on the same condition
as Tenant is obliged to surrender possession at the end of the term as provided
in this lease. Such assignment to Landlord shall provide that the parties to
such assignment to Landlord shall provide
<PAGE>
that the parties to such assignment expressly negate any intention that any
estate created under such assignment be merged with any other estate held by
either of said parties.
(b) If Tenant desire to sublet less than all of the demised premises then
within thirty (30) days after receipt of the aforesaid notice Landlord may
notify Tenant that Landlord elects to require Tenant to sublease to Landlord as
subtenant of Tenant, the portion of the demised premises that Tenant had
specified in its notice to Landlord, for the term, and from the commencement
date specified in said notice. The annual rent and additional rent which
Landlord shall pay to Tenant shall be a pro rata apportionment of the annual and
additional rent payable hereunder and it is hereby expressly agreed that such
sublease to Landlord shall be upon all the covenants, agreements, terms,
provisions and conditions contained in this lease except for such thereof which
are inapplicable and such sublease shall give Landlord the unqualified and
unrestricted right without Tenant's permission to assign such sublease or any
part of parts of such space and to make or cause to have made or permit to be
made any and all changes, alterations, decorations, additions, and improvements
in the space covered by such sublease, and that such may be removed, in whole or
part, at Landlord's option, prior to or upon the expiration or other termination
of such sublease provided that any damage or injury caused by such removal shall
be repaired. Such sublease to Landlord shall also provide that the parties to
such sublease negate any intention that any estate ??? under such sublease be
merged with any other estate held by either of said parties.
( c) Tenant covenants and agrees that any such assignment or subletting to
Landlord or further assignment or subletting by Landlord or Landlord's assignee
or sublessee may be for any purpose or purposes that Landlord, in Landlord's
uncontrolled discretion, shall deem suitable or appropriate.
(d) If Landlord should fail to exercise any of the elections granted to it
pursuant to the provisions of sub-paragraphs "a" and "b" of Item II of this
Article and if Tenant should sublet all or a portion of the demised premises for
a rental arising hereunder, than Tenant shall pay to Landlord as additional rent
50% of such excess amount. In computing such excess amount appropriate pro rata
adjustments shall be made with respect to a subletting of less than all of the
demised premises.
(e) Tenant hereby waives any claim against Landlord for money damages which it
may have based upon any assertion that Landlord has unreasonably withheld or
unreasonably delayed any consent to an assignment or a subletting pursuant to
this Article. Tenant agrees that is sole remedy shall be an action or
proceeding to enforce such provision or for specific performance.
<PAGE>
III
If this lease is assigned and Landlord consents to such assignment, Tenant
covenants and agrees that the terms, covenants and conditions of this lease may
be changed, altered or modified in any manner whatsoever by Landlord and the
assignee without the prior written consent of Tenant and that no such change,
alteration or modification shall release Tenant from the performance by it of
any of the terms, covenants and conditions on its part to be performed under
this lease. Any such change, alteration or modification which would have the
effect of increasing or enlarging Tenant's obligations or liabilities under this
lease shall not, to the extent only of such increases or enlargement, be binding
upon Tenant.
IV
Tenant acknowledges that Williams from time to time may be obligated to endeavor
to rent competitive space available in the building on behalf of and pursuant to
the instructions of Landlord or another tenant of the building.
Tenant's Changes: 44. (a) Supplementing Article J. Landlord's consent
shall not be required for minor changes to the demised premises such as the
installation of furniture, furnishings, cabinets and shelves which are affixed
to the realty. All other renovations, decorations, additions, installations,
improvements and alterations of any kind or nature in or to the demised premises
whether performed by Tenant or by Landlord ("Tenant Changes") shall require the
prior written consent of Landlord which, in the case of non-structural interior
Tenant changes, Landlord agrees not to unreasonably withhold, provide Tenant
first complies with all applicable requirements of this lease including any
workletter attached to this lease and the building Rules and Regulations
Governing Tenant Alterations (herein called the "Alterations Rules"). In
granting its consent to any Tenant Changes, Landlord may impose such conditions
(as to guarantee of completion including, without limitation, requiring Tenant
to post a bond to insure the completion of Tenant Changes, payment for Tenant
Changes and other charges payable under this Article, restoration or otherwise),
as Landlord may reasonable require. In no event shall Landlord be required to
consent to any Tenant Changes which would affect the structure of the building,
the exterior thereof, any part of the building outside of the demised premises
or the mechanical, electrical, heating outside of the demised premises or the
mechanical, electrical, heating ventilation, air conditioning, sanitary,
plumbing or other service systems and facilities (including elevators) of the
building, and such Tenant Changes shall be performed only by contractors
designated or approved by Landlord. In connection with Landlord's agent's
review, modification, approval, supervision and/or coordination of plans and
specifications for Tenant Changes, agent shall endeavor to advise Tenant whether
the proposed Tenant's Changes are compatible with building systems and
facilities, in compliance with the requirements of this lease, in conformity
with applicable legal requirements or likely to result in excessive cost to
Tenant, but, notwithstanding the foregoing, Landlord's agent shall have no
liability <PAGE>
in connection with such advice. Tenant shall promptly upon demand, reimburse
Landlord's advice. Tenant shall, promptly upon demand, reimburse Landlord's
agent for any reasonable out-of-pocket fees, expenses and other charges incurred
by Landlord or its agent in connection with the review, modification and/or
approval of such plans and review, modification and/or approval of such plans
and specifications by Landlord's agent and other professional consultants of
Landlord and shall pay to Landlord's agent during the course of the work, as a
charge of Landlord's agent of any Tenant Changes for Landlord's benefit and
without waiver of any of the requirements of this lease, the workletter, if any,
or the Alterations Rules, a fee of five percent (5%) of the cost of such Tenant
Changes. Tenant shall promptly provide such evidence as Landlord or Landlord's
agent may request to substantiate any such costs incurred by Tenant. Tenant
shall, at its sole cost and expense, in making any Tenant Changes, comply with
all requirements of the Alternative Rules.
(b) Nothing in this lease is intended to constitute a consent by Landlord to
the subjection of Landlord's or Tenant's interest in the building or the land on
which the building is located to any lien or claim by any person which supplies
any work labor, material, service or equipment to Tenant in performing any
Tenant Changes. Landlord hereby notifies all such persons of such intent and
each such person agrees that by performing any Tenant Changes for Tenant it
accepts that Landlord has not granted such consent and that such person agrees
that by performing any Tenant Changes for Tenant it accepts that Landlord has
not granted such consent and that such person shall not have a right to file any
lien or claim against such interest of Landlord or Tenant in the building or
land upon which it is located. Tenant agrees to provide a copy of this Article
to all such persons prior to entering into any contract for or otherwise having
Tenant Changes performed. If Tenant's use of any contractor, subcontractor,
vendor, supplier or other party causes or threatens to cause disharmony, labor
disputes, strike or picketing or any kind whatsoever, such party shall be
dismissed, removed from the job site, and excluded from the building, and the
work of such party shall be continued by Tenant by others satisfactory to
Landlord.
( c) In performing any alternations or installations Tenant shall be responsible
or the cost or compliance with all applicable governmental rules and
regulations including without limitation The Americans With Disabilities Act of
1990, Public Law 101-336 42 U.S.C. Secs. 12101 et seq. together with all
amendments thereto which may be adopted from time to time, and all regulations
and rules promulgated thereunder.
Electric Current: 45. If electric current be supplied to Tenant by the public
utility corporation serving the part of the city where the building is located.
Tenant agrees to purchase same from building is located. Tenant agrees to
purchase same from such public utility corporation. If electric current be
supplied by Landlord, Tenant covenants and agrees to purchase the same from
Landlord or Landlord's designated agent at charges, terms and rates set, from
time to time, during the term of this lease by Landlord but not more than those
<PAGE>
specified in the service classification in effect on January 1, 1970 pursuant to
which Landlord then purchased electric current from the public utility
corporation serving the part of the city where the building is located. Said
charges may be revised by Landlord in order to maintain the return to Landlord
produced under the foregoing in the event that the Public Service Commission
approves changes in service classifications, terms, rates or charges for such
public utility during the term hereof. Where more than one meter measures the
service of Tenant in the building, the service rendered through each meter may
be computer and billed separately in accordance with the rates herein. Bills
therefore shall be rendered at such times as Landlord may elect. In the event
that such bills are not paid within five (5) days after the same are rendered.
Landlord may, without further notice, discontinue the service of electric
current to demised premises without releasing Tenant from any liability under
this lease and without Landlord or Landlord's agent incurring any liability for
any damage or loss sustained by Tenant from any liability under this lease and
without Landlord or Landlord's agent incurring any liability for any damage or
loss sustained by Tenant by such discontinuance of service. At the option of
Landlord, Tenant also agrees to purchase from Landlord or its agent all lamps or
bulbs used in the demised premises and to pay the cost of installation thereof.
Landlord shall not in any other wise be liable or responsible to Tenant for any
loss or damage or expense which Tenant may sustain or incur if either the
quantity or character of electric services is changed or is no longer available
or suitable for Tenant's requirements. Any riser of risers to supply Tenant's
electric requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if in Landlord's sole
judgment, the same are necessary and will not cause permanent damage or injury
to the building or demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or expense or
interfere with or disturb other tenants or occupants. In addition to the
installation of such riser or risers Landlord will also at the sole cost and
expense of Tenant, install all other equipment proper and necessary in
connection therewith subject to the aforesaid terms and conditions. Tenant
covenants and agrees that at all times its use of electric current shall never
exceed the capacity of existing feeders to the building or the risers or wiring
installations. It is further covenanted and agreed by Tenant that all the
aforesaid costs and expenses shall be paid by Tenant to landlord within five (5)
days after rendition of any bill or statement to Tenant therefor. Landlord may
discontinue any of the aforesaid services upon thirty (30) days notice to Tenant
without being liable to Tenant therefore or without in any way affecting this
lease or the liability of Tenant hereunder or causing a diminution of rent and
the same shall not be deemed to be a lessening or diminution of rent and the
same shall not be deemed to be a lessening or diminution of services within the
meaning of any law, rule or regulation now or hereafter enacted, promulgated or
issued. In the event Landlord gives such service direct from said public
utility corporation, in which event, the Tenant will at its own cost and
expense, furnish and install all risers, service wiring, and switches that may
be necessary for such installation and required by the public utility company,
and will at its own cost and expense, maintain and keep in good repair all such
risers, wiring and <PAGE>
switches. Tenant shall make no alternations or additions to the electric
equipment and/or appliances without the prior written consent of Landlord in
each instance. Rigid conduit only will be allowed. If any tax is imposed upon
Landlord's receipts from the sale or resale of electric energy or gas or
telephone service to Tenant by any Federal, State or Municipal Authority.
Tenant covenants and agrees that, where permitted by law, Tenant's pro-rata
share of such taxes shall be passed on to, and included in the bill of and paid
by Tenant to Landlord. Any sums due and payable to Landlord under this Article
shall be collectible as additional rent. Supplementing the terms of this
article it is contemplated by the parties that Tenant's electrical consumption
shall be measured by means of one (1) direct meter.
Deposit of Checks: 46. Landlords deposits of any checks delivered by Tenant
simultaneously with Tenant's execution of this lease shall not constitute
Landlord's execution and delivery of this lease.
Partial Payment: 47. If Landlord receives from Tenant any payment (Partial
Payment) less than the sum of the fixed annual rent, additional rent and other
charges then due and owning pursuant to the terms of this lease. Landlord in
its sole discretion may allocate such Partial Payment in whole or in part to any
fixed annual rent, any additional rent and/or any other charges or to any
combination thereof.
48. Whenever landlord is required or permitted to send any notice or demand to
Tenant under or pursuant to this lease, including, but not limited to any demand
for rent or notice of default it may be given by Landlord's Agent, attorney,
executor, trustee or personal representative, with the same force and effect as
if given by the Landlord. Landlord hereby advises Tenant that Landlord's
current agent is Williams Real Estate Co. Inc., 530 Fifth Avenue, New York, New
York 10036.
49. LEASE NOT BINDING UNLESS EXECUTED AND DELIVERED
It is specifically understood and agreed that this lease is offered to Tenant by
the managing agent of the building , solely in its capacity as such agent and
subject to Landlord's acceptance and approval and that Tenant has hereunto
affixed its signature with the understanding that the said lease shall not in
any way bind Landlord or its agent until such time as the same has been approved
and executed by Landlord and delivered to Tenant. The execution and delivery of
this lease by Tenant shall constitute an irrevocable offer to enter into this
lease on the part of Tenant and its representation that the Other Broker , if
any shall not seek compensation from landlord if Landlord and Tenant do not
approve , execute and deliver this lease.
50. CONFLICT BETWEEN RIDER AND PRINTED LEASE
If and the extent that any of the provisions of any rider to this lease conflict
or are otherwise inconsistent with any of the printed provisions of this lease ,
whether or not such inconsistency is expressly noted in the rider , the
provisions of the rider shall prevail. In the event the party of the first part
is referred to in this lease as "Owner" , the term "Landlord", as used herein,
shall be deemed synonymous with the term "Owner".
<PAGE>
51. SPECIAL SERVICES
Upon Tenant's request Landlord or its managing agent may, but , except as
otherwise expressly provide in this lease , shall not be obligated to , perform
or cause to be performed for Tenant from time to time various construction ,
repair and maintenance work , moving services and other types of work or
services in order in or about the demise premise and the building. If such
work or services shall be performed for Tenant , Tenant agrees to pay therefore
either the standard charges of Landlord or its managing agent in effect from
time to time, if any, or the amount agreed to be paid for such services.
Tenant agrees to pay all such charges within ten (10) days after Landlord or
Landlord's managing agent has submitted a bill therefore and unless otherwise
expressly provide in writing such charges shall be payable as addition rental
under this lease and in the event of a default by Tenant in the payment thereof
Landlord shall have done all of the remedies hereunder that Landlord would have
in the event of a default in the payment of annual rental
52. AS IS
Tenant acknowledges that it has inspected the building and the demised premises,
agrees to accept the demised premises in its "AS IS" physical condition as of
the date possession is tendered to Tenant and acknowledges that Landlord shall
not be obligated to make any improvements or alterations to the demised premises
whatsoever, except as may be provided on the Workletter annexed hereto as
Exhibit "A", if any.
53. ADDITIONAL ASSIGNMENT AND SUBLETING PROVISIONS
The Article to this lease captioned "Assignment and Subletting (Article 11
continued)" is hereby amended by adding to Subdivision I thereof the following
sub-paragraphs:
(m) The consent by Landlord to any assignment, subletting, or occupancy shall
not in any wise be construed to relieve Tenant from obtaining the express
consent, in writing, of Landlord to any further assignment, subletting, sub-
subletting, or occupancy, which consent Landlord shall have the right to
withhold for any reason.
(n) Tenant shall have no right to assign this lease or sublet the whole or any
part of the demised premises to any party which is then a tenant, subtenant,
licensee or occupancy of any part of the building in which the demised premised
are located.
(o) If Tenant hereunder shall be a corporation, the transfer of a majority of
the stock of Tenant shall be deemed an assignment of this lease, except as
provided under Article 75. The transfer of outstanding stock of Tenant for
purposes of this article shall not include the sale of such stock where such
sale is effected through an "over the counter market" or through any recognized
stock exchange, or on a basis exempt from applicable securities registration
requirement.
(p) Each sublease of the demised premises shall be deemed to contain the
following provisions, whether or not specifically included therein:
(1) "In the event of a default under any underlying lease of all or any portion
of the premises hereby which results in the termination of such lease, or if the
lessor under any such underlying lease shall
<PAGE>
(2) exercise any right to cancel or terminate such underlying lease, the
subtenant hereunder shall, at the option of the lessor under any such lease,
attorn to and recognize such lessor as Landlord hereunder and shall, promptly
upon such lessor's request, execute and deliver all instrument necessary or
appropriate to confirm such attornment and recognition. The subtenant hereunder
hereby waives all rights under present or future law to elect, by reason of the
termination of such underlying lease, to terminate this sublease or surrender
such underlying lease does not exercise the aforesaid option, the term of this
sublease shall terminate simultaneously with the term of the underlying lease
and subtenant hereby agrees to vacate the premises subleased on or before the
effective date of termination of the underlying lease."
54. HOLDING OVER
If Tenant holds over in possession after the expiration or sooner termination of
the original term or of any extended term of this lease, such holding over shall
not be deemed to extend the term or renew this lease, but such holding over
thereafter shall continue upon the covenants and conditions herein set forth
except that the charge for use and occupancy of such holding over for reach
calendar month or part thereof (even if such part shall be a small fraction of a
calendar month) shall be the sum of:
(a) 1/12 of the highest annual rent rate set forth on page one of this lease,
times 2.0, plus
(b) 1/12 of the net increase, if any, in annual fixed rental due solely to
increases in the cost of the value of electric service furnished to the premises
in effect on the last day of the term of this lease, plus
(c) 1/12 of all other items of annual additional rental, which annual
additional rental would have been payable pursuant to this lease had this lease
not expired, plus those other items of additional rent (not annual additional
rent) which would have been payable monthly pursuant to this lease, had this
lease not expired, which total sum Tenant agrees to pay to Landlord promptly
upon demand, in full, without set-off or deduction. Neither the billing nor the
collection of use and occupancy in the above amount shall be deemed a waiver of
any right of Landlord to collect damages for Tenant's failure to vacate the
demised premises after the expiration or sooner termination of this lease. The
aforesaid provisions of this Article shall survive the expiration or sooner
termination of this lease.
<PAGE>
55. LIMITATION ON RENT
If at the commencement of, or at any time during the term of this lease, the
rent reserved in this lease is not fully collectible by reason of any Federal,
State, County or City law, proclamation, order or regulation, or direction of a
pubic officer or body pursuant to law, Tenant agrees to take such steps and
landlord may request to permit Landlord to collect the maximum rents which may
be legally permissible from time t time during the continuance of such legal
rent restrictions (but not in excess of the amounts reserved therefore under
this lease). Upon the termination of such legal rent reduction, Tenant shall
pay to Landlord, to the extent permitted by law, an amount equal to (a) the
rents which would have been paid pursuant to this lease but for such legal rent
restriction less (b) the rents paid by Tenant to Landlord during the period such
legal rent restriction was in effect.
56. BROKERAGE
Tenant warrants and represents to Landlord that it has had no dealings with any
broker or agent except Williams Real Estate Co. Inc. and the broker listed
below, if any, in connection with this lease and covenants and agrees to hold
harmless and indemnify Landlord and Williams Real Estate Co., Inc. from and
against any and all costs, expenses or liability for any compensation,
commissions, fees and charges claimed by any other broker or agent with respect
to this lease or the negotiation thereof. The obligation of Tenant contained in
this Article shall survive the expiration or earlier termination of this lease.
Other Broker: Charles Greenthall
57. GOVERNMENTAL REGULATIONS
If, at any time during the term of this lease, landlord expends any sums for
alterations or improvements to the building which are required to be made
pursuant to any law, ordinance or governmental regulation, or any portion of
such law, ordinance or governmental regulation, which becomes effective after
the date hereof, Tenant shall pay to Landlord, as additional rent, the same
percentage of such cost as is set forth in the provision of this lease which
requires Tenant to pay increases in Real Estate Taxes, within ten (10) days
after demand therefore. If, however, the cost of such alteration or improvement
is one which is required to be amortized over a period of time pursuant to
applicable governmental regulations, Tenant shall pay to Landlord, as additional
rent, during each year in which occurs any part of this lease term, the above-
stated percentage of the reasonable annual amortization of the cost of the
alteration or improvement made. For the purposes of this Article, the cost of
any alteration or improvement made shall be deemed to include the cost of
preparing any necessary plans and the fees for filing such plans. Supplementing
the provisions of Article 57 Tenant's obligation to pay the cost of any
alteration or improvement required thereunder shall not exceed ( i ) in
aggregate $12,500.00 during the term of this lease; and (ii) $2,500.00 in any
"Lease Year".
<PAGE>
For purposes of this lease "Lease Year" shall be deemed to mean successive
twelve (12) calendar month periods commencing on November 1, 1996, and each
Lease thereafter shall begin on the anniversary of November 1, 1996.
58. BASEMENT SPACE
If any basement or sub-basement space is included in the premises demised
hereunder, Tenant agrees that, notwithstanding anything to the contrary
contained in this lease, such basement or sub-basement space
( i ) shall not be used for any purpose other than storage and ( ii ) shall
not be sublet or used by anyone other than Tenant without the prior written
consent of Landlord, which consent Landlord shall have the right to withhold for
any reason whatsoever.
59. LANDLORD'S MANAGING AGENT
Tenant agrees that all of the representations, warranties, waivers and
indemnities made in this lease by Tenant for the benefit of Landlord shall also
be deemed to inure to and be for the benefit of Williams Real Estate Co. Inc.,
its officers, directors, employees and independent contractors.
60. BUILDING DIRECTORY
At the written request of Tenant, Landlord shall list on the building's
directory the name of Tenant, any trade name under which Tenant has the right to
operate, any entity permitted to occupy any portion of the demised premises
under the terms of this lease, and the officers and employees of each of the
foregoing entities, provided the number of names so listed does not exceed the
same percentage of the capacity of such directory as is set forth in the
provision of this lease which requires Tenant to pay increases in Real Estate
Taxes. If requested by Tenant, Landlord may (but shall not be required to) list
the name of Tenant's subsidiaries and affiliates; however, the listing of any
name other than that of Tenant shall neither grant such party or entity any
right to interest in this lease or in the demised premises nor constitute
Landlord's consent to any assignment or sublease to, or occupancy of the demised
premises by, such party or entity. Except for the name of Tenant, any such
listing may be terminated by Landlord, at any time, without notice.
61. INTEREST ON SECURITY
Landlord agrees to deposit the security referred to in the Article of this lease
captioned "Security" in an interest bearing account in a bank located in New
York State. The extent not prohibited by law, Landlord shall be entitled to
receive and retain as an administrative expense that portion of the interest
received on such account which represents the maximum fee permitted under
applicable law, which fee Landlord shall have the right to withdraw from time to
time, as Landlord may determine. The balance of the interest shall be added to
and held as part of the security under this lease subject to an in accordance
with the provisions <PAGE>
of the foregoing Article. Landlord shall not be required to credit Tenant with
any interest for any period during which Landlord does not receive interest on
the security deposited.
62. ADDITIONAL RENT
All payments other than the annual rental to be made by Tenant pursuant to this
lease shall be deemed additional rent and, in the event of any nonpayment
thereof, Landlord shall have all rights and remedies provided for herein or by
law for nonpayment of rent. Tenant shall have fifteen (15 ) days from its
receipt of any additional rent statement to notify Landlord, by certified mail,
return receipt requested, that it disputes the correctness of such statement.
After the expiration of such fifteen 915) day period, such statement shall be
binding and conclusive upon Tenant. If Tenant disputes the correctness of such
statement, Tenant shall, as a condition precedent to its right to contest such
correctness, make payment of the additional rent billed, without prejudice to
its position. If such dispute is finally determined in Tenant's favor, Landlord
shall refund to Tenant the amount overpaid (without interest).
63. SUBMISSION TO JURDISDICTION, ETC.
This lease shall be deemed to have been made in New York County, New York, and
shall be construed in accordance with the laws of this State of New York. All
actions or proceedings relating, directly or indirectly, to this lease shall be
litigated only in courts located within the County or New York. Tenant, any
guarantor of the performance of its obligations hereunder ("Guarantor") and
their successors and assigns hereby subject themselves to the jurisdiction of
any state or federal court located within such county, waive the personal
service of any process upon them in any action or proceeding therein and consent
that such process be served by certified or registered mail, return receipt
request, directed to the Tenant and any successor at Tenant's address
hereinabove set forth, to Guarantor and any successor at the address set forth
in the instrument of guaranty and to any assignee at the address set forth in
the instrument of assignment. Such service shall be deemed made two (2) days
after such process is so mailed.
If (i) Landlord commences any action or proceeding against Tenant, or (ii )
Landlord is required to defend any action or proceeding commenced by Tenant, in
connection with this lease and such action or proceeding is disposed of, by
settlement, judgment or otherwise, favorably to Landlord, Landlord shall be
entitled to recover from Tenant in such action or proceeding, or a subsequently
commenced action or proceeding, landlord's reasonable attorneys' fees and
disbursements incurred in connection with such action or proceeding and all
prior and subsequent discussions and negotiations and correspondence relating
thereto.
If any monies owing by Tenant under this lease are paid more than fifteen (15)
days after the date such monies are payable pursuant to the provisions of this
lease, Tenant shall pay Landlord interest thereon, at the then maximum legal
rate, for the period from the date such monies were payable to the date such
monies are paid.
64. <PAGE>
65. CONDITIONAL LIMITATION
If Tenant shall default in the payment of the rent reserved herein, or any item
of additional rent herein mentioned, or any part of either, during any two
months, whether or not consecutive, in any twelve (12) month period, and ( i )
such default continued for more than five (5) days after written notice of such
default by Landlord to Tenant, and ( ii ) Landlord, after the expiration of such
five (5) day grace period, served upon Tenant petitions and notice of petition
to dispossess Tenant by summary proceedings in each such instance, then,
notwithstanding that such defaults may have been cured prior to the entry of a
judgment against Tenant, any further default in the payment of any money due
Landlord hereunder which shall continue for more than five (5) days after
Landlord shall give a written notice of such default shall be deemed to be
deliberate and Landlord may thereafter serve a written three (3) days' notice of
cancellation of this lease and the term expiration of such three (3) day period
were the day herein definitely fixed for the end and expiration of this lease
and the term thereof, and Tenant shall then quit and surrender the demised
premises to Landlord, but Tenant shall remain liable as elsewhere provided in
this lease.
In addition, if Tenant shall have defaulted in the performance of the same or a
substantially similar covenant hereunder, other than a covenant for the payment
of rent or additional rent, twice during any consecutive twelve (12) month
period and Landlord, in each case, shall have given a default notice in respect
of such default, then, regardless of whether Tenant shall have cured such
defaults within a twelve (12) month period after Landlord gave the second such
default notice, Landlord, at its option, and without further notice to Tenant or
opportunity for Tenant to cure such default, may elect to cancel this lease by
serving a written three (3) days' notice of cancellation of this lease and the
term hereunder shall end and expire as fully and completely as if the expiration
of such three (3) day period were the day herein definitely fixed for the end
and expiration of this lease and the term hereof, and Tenant shall then quit and
surrender the demised premises to Landlord, but Tenant shall remain liable as
elsewhere provided in this lease.
65. EXCULPATION
If Tenant shall request Landlord's consent or approval and Landlord shall fail
or refuse to give such consent or approval, Tenant shall not be entitled to any
damages for any withholding by Landlord of its consent or approval, it being
agreed that Tenant's sole remedy shall be an action for specific performance or
an injunction, and that such remedy shall be available only in those cases where
Landlord has expressly agreed in writing not to unreasonably withhold its
consent or approval or where as a matter of law, Landlord may not unreasonably
withhold its consent or approval.
<PAGE>
Tenant acknowledges and agrees that if Landlord shall be an individual, joint
venture, tenancy-in-common, firm or partnership, general or limited, there shall
be no personal liability on such individual or on the members of such joint
venture, tenancy-in-common, firm or partnership in respect of any of the
covenants or conditions of this lease. In addition, notwithstanding anything to
the contrary contained in this lease, it is agreed and understood that Tenant
shall look solely to the estate and property of Landlord in the Building for the
enforcement of any judgment (or other judicial decree) requiring the payment of
money by Landlord to Tenant by reason of any default or breach by Landlord in
the performance of its obligations under this lease, it being intended hereby
that no other assets of Landlord or its principals shall be subject to levy,
execution, attachment or other such legal process for the enforcement or
satisfaction of the remedies pursued by Tenant in the event of such default or
breach.
66. INSURANCE
Tenant shall obtain and keep in force, at its own expense, with respect to the
leased premises, a policy or policies of bodily injury and property damage
insurance with an insurance company or companies in a form reasonably
satisfactory to Landlord which shall be in the minimum amount of $1 million
combined single limit per occurrence for bodily injury and property damage.
Such policy or policies shall include Landlord's interest which Landlord named
as an additional insured. Tenant shall deliver to Landlord such policy or
policies or certificates evidencing such coverage, together with a receipt
thereon evidencing payment of premium or other satisfactory proof thereof.
Landlord shall have the right to require Tenant to reasonably increase the
amount of coverage under such policy or policies. In the event of the Tenant's
failure to comply in any respect herein, the Landlord may cause same to be done
to the Tenant's account and the cost thereof, shall be deemed to be additional
rent. During the term hereby demised the Landlord shall insure the building of
which the demised the Landlord shall insure the building of which the demised
premises are a part, and Tenant shall insure the demised premises and its
fixtures and contents for the full replacement value under an "ALL RISK" type
policy which shall include a waiver by the insurer of all right of subrogation
against Landlord or Tenant in connection with any loss or damage thereby insured
against. Neither party, nor its agents, employees or guest shall be liable to
the other for loss or damage caused by any risk covered by such insurance. Each
party shall deliver to the other satisfactory proof evidencing such coverage.
If the release by either Landlord or Tenant as herein set forth shall contravene
any law with respect to exculpatory agreements, the liability of the party in
question shall be deemed not released but secondary to the other's insurer.
<PAGE>
67. GUARD SERVICE
In the event Landlord now employs or hereafter employs a security guard or guard
service (hereinafter the "Guard") in the building, Tenant shall pay to Landlord,
as additional rent, in advance, together with each installment of the annual
rent provided for herein, a percentage of the cost of employing the Guard,
including, but not limited to, any employee benefits, social security taxes and
other expenses which are incurred by Landlord therefore, which percentage shall
be the same percentage as is now set forth in the provision of this lease which
provides for the payment by Tenant of increases in Real Estate Taxes. Landlord
reserves the right ( i ) initially set the days and hours the Guard is
employed, ( ii) to change, at will, such hours and days, and (iii) to
discontinue the employment of the Guard, all in its sole and absolute
discretion. The furnishing of the Guard by Landlord for the security of the
building, the demised premises or the contents of the demised premises, and
Tenant hereby unconditionally waives any rights or claims against Landlord and
Landlord's managing agent by reason of any acts or omissions of the Guard
employed. Supplementing the provisions of Article 67 Tenant's obligation to pay
the cost of any Guard related service required thereunder shall not exceed
$3,000.00 per "Lease Year".
FUEL AND UTILITY COST PAYMENTS
A. For the purposes of this Article only, the following words and terms shall
have the following meanings:
( i ) "Fuel Cost: shall mean Landlord's cost for all fuel (including but not
limited to, oil, steam and coal) delivered to the Building.
( ii ) "Electric Cost" shall mean Landlord's cost for all electricity used in
lighting all the public and service areas, and in operating all the service
facilities, of the Building. Landlord and Tenant agree that if the public
utility serving the Building submits bills for periods ending on other than the
last day of a calendar month, the 12 month period ending closest to the last day
of a calendar month shall be used for the purposes of computing the Electric
Cost. Since electric current is supplied to tenants of the Building by the
public utility corporation servicing the Building, Landlord and Tenant agree
that the Electric Cost shall be deemed, for the purposes of this Article, to
constitute 100% of Landlord's total cost for electricity consumed at the
Building.
(iii ) "Base Year" shall mean the twelve (12) month period ending on the last
day of the calendar month immediately preceding the month in which the term of
this lease commences.
( iv ) "Comparison Year" shall mean the twelve (12) month period commencing on
the first (lst) day of the calendar month immediately following the end of the
Base Year and each successive twelve (12) month period in which occurs any part
of the term of this lease.
<PAGE>
( v ) "Tenant's Share" shall mean 9.091%.
B. Tenant shall pay to Landlord, as additional rent, Tenant's share of the
Electric Cost, and if the Fuel Cost for any Comparison Year exceeds the Fuel
Cost for the Base Year, Tenant shall pay to Landlord, as additional rent,
Tenant's Share of the excess. Such additional rents shall be due and payable
within ten (10) days after Landlord shall have furnished Tenant with the
statement provided for in Paragraph C of this Article. Tenant's obligation to
pay the amount herein provided for shall survive the expiration or earlier
termination of this lease. The amounts due and payable by Tenant for any
partial Comparison Year shall be appropriately prorated.
C. After the Base Year, Landlord shall furnish Tenant with a statement of the
Base Year Electric Cost and the Base Year Fuel Cost. Thereafter, Landlord shall
furnish to Tenant a statement of the Electric Cost and the Fuel Cost (the
"Utility Statement") for each Comparison Year and a computation of the amounts
payable by Tenant pursuant to Paragraphs B and D and E of this article.
D. During the first Comparison Year, Tenant shall, on the first day of each
calendar month, pay to Landlord, on account of the amount due and payable by
Tenant pursuant to Paragraph B of this Article, one-twelfth (1/12) of Tenant's
Share of the total of ( i ) 110% of the Electric Cost and ( ii ) ten (10%)
percent of the Base Year Fuel Cost. Such payments shall be deferred until
Landlord furnishes Tenant with a statement of the Base Year Electric Cost and
the Base Year Fuel Cost, whereupon Tenant shall pay promptly all deferred
payments and commence such payments. During each succeeding Comparison Year,
Tenant shall pay to Landlord, on account of the amount due and payable by Tenant
pursuant to Paragraph B of this Article, one-twelfth (1/12) of Tenant's Share of
the total of ( i ) 110% of the Electric Cost, ( ii) ten (10%) percent of the
Fuel Cost for the prior Comparison Year. Notwithstanding the foregoing, until
Landlord furnishes Tenant with the applicable Utility Statement for the
preceding Comparison year, Tenant shall continue to pay Landlord the amount of
the monthly payment due and payable pursuant to this Paragraph D during the last
calendar month of the preceding Comparison Year, plus an additional ten (10%)
percent of such amount.
E. If the payments made by Tenant pursuant to Paragraph D of this Article for
a Comparison year exceed the amount payable to Landlord for such Comparison year
pursuant to Paragraph 3 of this Article, such excess shall, at the option of
Landlord, either be paid to Tenant or be credited (without interest) against the
next ensuring payments provided for in said Paragraph D, except that if no such
payments shall be due or becoming due, such excess shall be paid (without
interest) by Landlord to Tenant. If the amount payable by Tenant for such
Comparison year pursuant to Paragraph B of this Article exceeds the payments
made by Tenant pursuant to Paragraph D of this Article, Tenant shall pay the
difference within then (10) days after Landlord furnishes Tenant with a Utility
Statement for such Comparison Year.
<PAGE>
69. FREE POSSESSION
Provided that Tenant does not interfere with the completion of any work required
to be performed by Landlord hereunder, if any, Tenant may take possession of the
demised premises from the Possession Date stated below. Such possession shall
be subject to all terms, covenants and conditions contained in this lease,
except that Tenant shall not be required to pay any installment(s) of the annual
rent for the period prior to the Commencement Date stated below. Tenant shall,
however, pay the installment(s) of the annual rent due and payable by Tenant on
the execution and delivery of this lease to Landlord. Tenant on the execution
and delivery of this lease to Landlord. Tenant shall also pay, within ten (10)
days after receipt of Landlord's invoice therefore, all charges attributable to
electric service and all items of additional rent herein provided for from the
Possession Date.
POSSESSION DATE: Upon substantial completion of Landlord's work as set
forth on Exhibit A
COMMENCEMENT DATE: November 1, 1996 or ninety days after the Possession Date,
the later of which occurs.
70. THE ANNUAL RENTAL PAYABE HEREUNDER SHALL BE:
a) One Hundred Twenty Two Thousand Two Hundred Twenty Two $122,250.00 Dollars
per year from November 1, 1996 to and including October 31, 1997;
b) $125,350 Dollars per year from November 1, 1997 to and including October
31, 1998;
c) One Hundred Twenty Two Thousand Two Hundred Twenty Two ($122,250.00)
Dollars per year from November 1, 1998 to and including October 31, 1999;
d) One Hundred Thirty Two Thousand Eight Hundred Seventy Eight ($132,878.00)
Dollars per year from November 1, 1999 to and including October 31, 2000;
e) One Hundred Thirty Six Thousand Eight Hundred Eleven ($136,811.00) Dollars
per year from November 1, 2000 to and including October 31, 2001;
f) One Hundred Twenty Five Thousand Three Hundred Fifty ($125,350.00) Dollars
per year from November 1, 2001 to and including October 31, 2002;
g) One Hundred Forty Five Thousand Thirty Six ($145,036.00) Dollars per year
from November 1, 2002 to and including October 31, 2003;
h) One Hundred Forty Nine Thousand Three Hundred Thirty Five ($149,335.00)
Dollars per year from November 1, 2003 to and including October 31, 2004;
<PAGE>
i) One Hundred Fifty Three Thousand Seven Hundred Seventy Three ($153,773.00)
Dollars per year from November 1, 2004 to and including October 31, 2005; and
j ) One Hundred Fifty Eight Thousand Three Hundred Twenty Three
($158,323.00) Dollars per year from November 1 2005 to and including October 31,
2006,
(the foregoing is referred to as the "rent" or "annual rental rate" herein).
71. SECURITY REFUND
If Tenant is not in default under this lease, the security deposit shall be
reduced by $10,080.00 on February 1, 1998, and on February 1, 1999 respectively
with the amount of each such reduction to be refunded to Tenant in the form of a
rent credit to be issued by Landlord and applied by Landlord as a offset against
the first rents coming due under this lease after the respective date of each
such reduction.
72. RIGHT TO RELOCATE
Subject to the following conditions, Landlord may elect to relocate Tenant from
the demised premises to a specific unit of space in the building designated by
Landlord;
(a) Tenant shall have at least 60 days advance written notice from Landlord;
(b) Landlord shall, at Landlord's cost, remove and reinstall Tenant's personal
property, trade fixtures and equipment in the designated space and provide
building standard installations in the designated space which are equal to, or
better than those then existing in the demised premises. Tenant shall cooperate
with Landlord and give Landlord reasonable access to the demised premises to
facilitate the performance of Landlord's obligations hereunder. Tenant and
Landlord shall cooperate to minimize any disruption of Tenant's business.
c) The designated space shall be a unit with an area equal to or greater than
Tenant's present space.
73. AIR CONDITIONING MAINTENANCE
Throughout the term of this lease Tenant shall at its own cost and expense (i)
cause to be performed all maintenance of the air conditioning system, equipment
and facilities (hereinafter called the "A/C System"), if any, now or hereafter
located in or servicing the demised premises, including all repairs and
replacements thereto, and ( ii ) maintain in force an air conditioning service,
repair and maintenance contract and provide a copy of same to Landlord in form
satisfactory to Landlord with an air conditioning contractor or servicing
organization approved by Landlord at the time of (1) the installation of such
system by Tenant, or (2) in the event such system is installed by Landlord
thirty (30) days after Tenant takes possession of the demised premises for the
conduct of Tenant's business. The entire A/C System is and shall at all times
remain the property of Landlord, and at the expiration or sooner termination of
this lease Tenant shall surrender to Landlord the entire A/C System in good
working order and condition, reasonable wear and tear excepted.
Tenant shall not make any changes or additions to the A/C System until Tenant
shall have received Landlord's written consent thereto which shall not be
unreasonably withheld.
74. Supplementing Article 9, if the demised premises are damaged by fire or
other casualty and Owner shall not exercise its right to terminate this lease,
Owner shall, on or before the 60th day following the date of such fire or other
casualty, deliver to Tenant an estimate from Owner's contractor or architect
setting forth the time required for substantial completion of the restoration.
If the estimate of substantial completion exceeds 180 days from the date of the
fire or other casualty, than Tenant shall have the right to terminate this lease
either within thirty (30) days following receipt of the estimate which indicated
an estimated substantial completion date beyond 180 days from the date of the
casualty, or, in the event of the lack of said substantial completion by the
date set forth in Owner's notice, within thirty (30) days following the
expiration of the date contained in Owner notice, whichever is applicable. If
Tenant elects to terminate this lease, Tenant shall specify a date for the
expiration of this lease, in its notice, which date shall not be more than sixty
(60) days or less than thirty (30) days following the date of Tenant's notice.
In such event, this lease shall terminate on the date set forth in Tenant's
notice in the same manner as provided in this article in the event of Owner's
termination. If Tenant elects to terminate by reason of Owner's failure to
restore the demised premises by the date set forth in Owner's notice, Owner
shall have thirty (30) days from receipt of Tenant's notice to cancel to
complete such restoration and thereupon this lease shall continue in full fore
and effect. Notwithstanding anything to the contrary contained in this Article,
Owner shall have no obligation to restore the demised premises in the event the
fire or other casualty occurs during the last eighteen (18) months of the term
of this lease and this lease is terminated pursuant to the provisions of the
next succeeding sentences. However, both parties shall have the right to
terminate this lease if such fire or other casualty occurs during the last
eighteen (18) months thereof only in the event that there is substantial damage
to the demised premises or the building which prevents Tenant from conducting
its normal business operation.
75. If Tenant is not in default under this lease, the Tenant named herein may,
on prior written notice to Landlord, without Landlord's prior consent (A) assign
this lease, or sublet the entire demised premises to a "Successor" or (B) sublet
a portion of the demised premises, assign this lease, or sublet the entire
demised premises to a "Subsidiary" or "Affiliate".
<PAGE>
A "Successor" of Tenant shall mean:
( i ) a corporation in which or with which Tenant is merged or
consolidated, in accordance with applicable statutory provisions for merger or
consolidated of corporations, provided that by operation of law or by effective
provisions contained in the instruments of merger or consolidation, the
liabilities of the corporations participating in such merger or consolidation
are assumed by the corporation surviving such merger or created by such
consolidation, or
( ii ) a corporation or other entity acquiring this lease and the
other property and assets of Tenant.
A "Subsidiary" shall mean any corporation not less than fifty one percent (51%)
of whose outstanding stock shall, at all time, be owned by Tenant.
An "Affiliate" shall mean any corporation having as the owner of not less than
fifty one percent (51%) of its outstanding stock the same person or entity that
owns at least fifty one percent (51%) of the outstanding stock of Tenant at all
times.
Any other of further assignment or subleasing of all or part of the demised
premises shall be subject to all applicable provisions of this lease including,
without limitation, the requirement that Tenant obtain Landlord's prior written
consent in each instance as provided in this lease. If any Subsidiary, or
Affiliate shall cease to be a Subsidiary or Affiliate of Tenant, the sublease
must end or this lease must be reassigned, as the case may be, and Tenant shall
cause the subtenant or assignee to vacate the demised premises forthwith.
Acquisition by Tenant, of a substantial portion of the assets, together with the
assumption of all or substantially all of the obligations and liabilities of any
corporation, shall be deemed a merger of such corporation into Tenant for the
purposes hereof. However, upon the completion of any merger, consolidation,
acquisition or assumption described above, the Successor must have a net worth
(exclusive of "goodwill") no less than Tenant's net worth (exclusive of
goodwill") immediate prior to such merger, consolidation, acquisition or
assumption. Tenant must furnish Landlord with such documents and information as
Landlord may reasonably require to substantiate relationships, conditions and
transactions described herein prior to the commencement of the sublease term or
the effective date of the assignment, and, with respect to an assignment, the
executed assignment of Tenant and assumption of the assignee. The aforesaid
assignment and assumption must provide that the assignee agrees to pay, keep,
perform and observe all terms, provisions, covenants and conditions contained in
this lease on the Tenant's part to be paid, kept, performed and observed as if
it had executed the Lease as the initial Tenant without relieving the assignor
of joint and several liability to Landlord. The aforesaid sublease must provide
that it is subject and subordinate to the Lease in all respects.
<PAGE>
76. SECURITY - LETTER OF CREDIT
A. Upon execution and delivery of this agreement in lieu of the security
deposit provided for in Article 32 of the Lease, Tenant shall furnish Landlord
with an irrevocable standby letter to credit in the sum of $40,320.00 dollars
issued by a bank which is a member of the New York Clearinghouse Association
payable at sight to Landlord which conforms in all material respects to the form
set forth below which must provide for a final expiration date no sooner than
November 30, 2006 and which may be drawn upon under the circumstances set forth
in Article 32 of the Lease.
B. The Letter of Credit required hereunder shall be in the following form:
(NAME OF BANK)
No. _____________________ Irrevocable Letter of Credit
(Date)
(Address)
Dear Sirs:
We hereby authorize you to value on (name of bank), NEW YORK, NEW
YORK
FOR ACCOUNT OF
UP TO THE AGGREGATE OF
DOLLARS U.S. CURRENCY,
AVAILABLE BY YOUR DRAFTS AT SIGHT, accompanied by:
Your written statement that you are entitled to draw against the
Letter of Credit by reason of a default pursuant to a lease date as of
between , Landlord,
and Tenant.
It is a condition of this Letter of Credit that it shall be extended for an
additional period of one year from the present or future expiration date hereof
unless thirty days prior to such date we shall notify you in writing that we
elect not the renew this Letter of Credit for such additional period. Upon
receipt by you of such notice you may draw hereunder by means of your draft on
us at sight accompanied by your written statement that you have not received an
appropriate renewal of this Letter of Credit.
Drafts hereunder may be drawn not later than or any subsequent expiration
date pursuant hereto.
<PAGE>
All drafts drawn under this Credit must bear on their face the clause
`DRAWN UNDER (NAME OF BANK) CREDIT NO.".
This Credit is transferable in whole but not in part. However, no transfer
shall be effective unless advice of such transfer is received by us in the form
attached signed by you.
Except so far as otherwise expressly stated, this Credit is subject to the
Uniform Customs and Practice for Documentary Credits (1974 Revision)
International Chamber of Commerce, Publication No. 290.
We hereby agree with the Drawers of drafts drawn in compliance with the
terms of this Credit, that the same shall be duly honored on presentation to the
drawee.
Yours very truly,
Authorized Signature
New York
Date
<PAGE>
ACKNOWLEDGMENTS
Corporate Tenant State of New York, INDIVIDUAL TENANT
County of STATE OF NEW YORK,
County of
On this day of , 19 , On
this day of , 19 ,
before me personally carne before me personally carne
to me known, who bring by me duly sworn, did
depose and may that he resides to me known and known to me to
be the individual described in and
in who, as TENANT, executed the
foregoing instrument and acknowledged
that he is the of to me that
he
executed the same.
the corporation described in and which executed ..................
the foregoing instrument, as TENANT: that he
knows the said corporation; that the seal affixed
to said instrument is such corporate seal; that
it was so affixed by order of the Board of
Directors of said corporation, and that he
signed his name thereto by like order.
...................
IMPORTANT - PLEASE READ
Rules and Regulations Attached to an Made a Part of This Lease in Accordance
with Article 36.
1. The sidewalks, entrances, driveways passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by an Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designed for such delivery by
Owner. There shall not be used in any space, or into the pubic hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipment with rubber
tires and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expenses, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
<PAGE>
3. No carpet, rug or other article shall be hung or shaken out of any window
of the building; and no Tenant shall sweep or throw or permit to be swept or
thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit of suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any animals or birds he kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of
the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by an Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability and may charge the expense incurred
by such removal same without any liability and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, drill into, or in any way deface any part of the
demised premises or the building of which they form a part. No boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenants shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
<PAGE>
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part;
9. No Tenant shall obtain for use upon the demised premised ice, drinking
water, towel and other similar services, or accept barbering or bootlblacking
services in the demised premises, except from persons authorized by Owner, and
at hours and under regulations fixed by Owner. Canvassing, soliciting and
peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building between the hours of
6 p.m. and 8 a.m. on business days, after 1 p.m. on Saturdays, and at all hours
on Sundays and legal holidays all persons who do not present a pass to the
building signed by Owner. Owner will furnish passes to persons for whom any
Tenant requests same in writing. Each Tenant shall be responsible for all
persons for whom he requests such pass and shall be liable to Owner for all acts
of such persons. Notwithstanding the foregoing. Owner shall not be required to
allow Tenant or any person to enter or remain in the building, except on
business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to
1:00p.m.
11. Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a loft building, and upon written notice from Owner. Tenant
shall refrain from or discontinue such advertising.
12.Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or
emanate from the demise premises.
<PAGE>
13. Tenant shall not use the demised premises is an manner which disturbs or
interferes with other Tenants in the beneficial use of their premises.
Address
Premises
TO
STANDARD FORM OF
LOFT LEASE
The Real Estate Board of New York, Inc.
cCopyright 1982. All rights Reserved.
Reproduction in whole or in part prohibited.
Dated 19
Rent per Year
Rent per Month
Term
From
To
Drawn by ____________________Checked by______________
Entered by____________________ Approved by ____________
Williams REAL ESTATE CO. INC.,
530 Fifth Avenue, New York, NY 10036
(212) 704-3500
<PAGE>
Second Rider of Lease
between 443 Company, as Owner,
and On Site Sourcing, Inc., as Tenant
(keyed to marginal numbers)
1. Delaware
IA. See Article 74
IB. after reasonable notice thereof to Tenant
2. All entries made by Owner pursuant to this article shall be after
reasonable prior notice (except in emergency) and conducted to the extent
practicable (but without the necessity of the incurring overtime wages or other
additional costs) in such manner so s to minimize interference with Tenant's use
of the demised premises.
3. Anything contained herein to the contrary notwithstanding, Tenant shall not
be responsible for any violations of record covering the demised premises pre-
existing the Possession Date of this lease.
4. ten (10)
5. Supplementing the provisions of Article 29, Tenant may elect to install, at
its sole cost and expense, a water meter to measure Tenant's water consumption
provided that Tenant ( i ) is not then in default under the terms of the lease
and; ( ii) complies with all appropriate provisions o articles 3 and 44
including without limitation, the submission of plans and specification to
Landlord for Landlord's approval. Upon the completion of the installation of
such water meter, to the reasonable satisfaction of Landlord, Tenant shall not
be obligated thereafter to pay the $40.00 per month additional rent charge as
set forth under article 29.
6. for thirty (30 ) days
<PAGE>
7. thirty (30)
7A. Supplementing the terms of this article it is contemplated by the parties
that Tenant's electrical consumption shall e measured by means of one (1) direct
meter.
8. The transfer of outstanding stock of Tenant for purposes of this article
shall not include the sale of such stock where such sale is effected through an
"over the counter market" or through any recognized stock exchange, or on a
basis exempt from applicable securities registration requirement.
9. 2.0
10. Supplementing the provisions of Article 57 Tenant's obligation to pay the
cost of any alteration or improvement required thereunder shall not exceed ( i
in aggregate $12,500.00 during the term of this lease; and ( ii ) $2,500.00 in
any "Lease Year".
For purposes of this lease "Lease Year" shall be deemed to mean
successive twelve (12) calendar
month periods commencing on November 1, 1996, and each Lease Year
thereafter shall begin on the
anniversary of November 1, 1996.
11. Supplementing the provisions of Article 67 Tenant's obligation to pay the
cost of any Guard related service required thereunder shall not exceed $3,000.00
per "Lease Year".
11A. Upon substantial completion of Landlord's work as set forth on Exhibit A.
11AA. Or ninety days after the Possession Date, the later of which occurs.
11B. $122,250.00
11C. $125,350.00
11D. $129,058.00
11E. $132,878.00
11F. $136,811.00
11G. $140,863.00
11H. $145,036.00
11J. $153,763.00
11K. $158,323.00
11L. February 1, 1999
12. each such
12A. , reasonable wear and tear excepted.
12B. which shall not be unreasonably withheld or del
12C. both parties
12D. 32
12E. $40,320.00
12F. November 30, 2006
12G. two (2) coats
12H. by Tenant and approved
13. construct six (6)
13AA. The dimensions and as
13A. new
14. twenty (20) (unless Landlord's air conditioning consultant indicates
otherwise in which event an air conditioning unit in the tonnage determined by
said consultant shall be furnished by Landlord)
14A. In addition, Landlord agrees to assign to Tenant the five (5) year
manufacturer's warranty covering said air conditioning unit to the extent same
is assignable.
15. 400
16. 8. Furnish and install sixteen (16) building standard 220 volt receptacles
and twenty one (21) building standard 110 volt receptacles in locations designed
by Tenant and approved by Landlord.
9. Deliver in working order the building wide plumbing electric, heating and
ventilating system servicing the demised premises.
<PAGE>
WILLIAMS
Exhibit "A" (Workletter) annexed to and forming part of Lease dated _____1996
between 443 Company as Landlord and ON SITE SOURCING, INC. an Tenant for 9th
Floor in the building know as 443 Park Avenue South, New York, New York.
Provided the Tenant is not in default hereunder. Landlord agrees, at its own
cost and expense, to do the following work within the demised premises in
building standard manner.
1. Patch where necessary and paint the existing painted surfaces of the entire
premises with one finish coat in Tenant's choice of one of Landlord's building
standard latex color paints.
2. Patch where necessary, scrape and sand existing hardwood flooring and apply
two (2) coats polyurethane floor finish and one (1) coat of sealer.
3. Supply and install a maximum of thirty (30) building standard 2' x 4'
fluorescent light fixtures in locations as designated by Tenant and approved by
Landlord.
4. Perform the construction necessary to construct six (6) building standard
office spaces in the dimensions and as locations designated by Tenant and
approved by Landlord.
5. Supply and install one (1) building standard lock-out panel to disable the
freight elevator.
6. Furnish and install one (1) new building standard twenty (20) (unless
Landlord's air conditioning consultant indicates otherwise in which event an air
conditioning unit in the tonnage determined by said consultant shall be
furnished by Landlord.
7. Provide 400 amps 3 phase electric current to a designated point of the
demised premises as selected by Landlord.
8. Furnish and install sixteen (16) building standard 220 volt receptacles and
twenty one (21) building standard 110 volt receptacles in locations designated
by Tenant and approved by Landlord.
9. Deliver in working order the building wide plumbing, electrical heating and
ventilating systems servicing the demised premises.
Any request by Tenant for Landlord to make any changes in or to the work set
forth above must be made in writing to Landlord who may consent to or reject
such requests. To the extend such changes result in additional costs or delay
the completion of Landlord's work, Tenant shall be responsible for such
additional costs and delay.
In addition, Tenant shall be liable for any delays resulting from Tenant's
request regarding the scheduling of Landlord's work or from any other action of
Tenant which otherwise impacts landlord's ability to perform such work.
Except as provided in this Workletter, Landlord shall be under no obligation to
make any other improvements or alterations in the demised premises and Tenant
agrees to accept the demised premises "as is" in its present condition. Any
work conditioned upon Tenant's request is deemed waived unless requested in
writing more than six (6) months prior to expiration of the within term.
<PAGE>
Tenant shall, if required hereunder, make elections and deliver any plans and
specifications to Landlord for Landlord's approval on or before
_____________________ 19 ____. They shall incorporate all information which may
be needed by Landlord to let the contracts for the performance of the work, and
shall be fully dimensioned working drawings. Progress of the work shall not
affect the payment of rent.
Landlord ____________________________ Tenant________________________________
Exhibit 10.20
Lease with JRG/Lynn Associates 10/18/96
AGREEMENT OF LEASE
BETWEEN
LYNN ASSOCIATES
AND
ON-SITE SOURCING, INC.
-------------------------------------------------
JEROME GOULB REALTY
Waterview Building
1925 North Lynn Street
Arlington, Virginia 22309
Telephone: 703-243-0600
LEASE AGREEMENT INDEX
Article Page Article Page
1 Description of Premises 1 17 SUBORDINATION 8
2 TERM 1 18 TENANT HOLDING OVER 8
3 RENT BASIC RENT 1 19 WAIVER AND NOTICE 8
COST OF LIVING
ADJUSTMENT
4 ADDITIONAL RENT 3 20 MISCELLANEOUS 8
5 UTILITIES AND 4 23 ENTIRE AGREEMENT 9
6 ASSIGNMENT AND 4 23 NOTICE AND DEMAND 9
7 USE OF PREMISES 4 24 RULES & REGULATIONS 9
8 DEFAULTS 4 25 QUIET ENJOYMENT 9
9 MAINTENANCE AND 6 26 WAIVER OF TRAIL BY JURY 9
10 PRE-OCCUPANCY 6 27 GOVERNING LAW
11 SURRENDER & 6 28 MUTUAL WAIVER OF 9
RESTORATION
12 INSURANCE & 6 29 SECURITY DEPOST 9
INDEMNIFICATION
13 RELOCATION 7 30 ADDENDUM 10
14 LANDLORD'S RIGHT 7 SIGNATURES 10
OF ACCESS
15 FIRE CLAUSE 7 EXHIBIT "A"-Floor Plan
16 CONDEMNATION 8 EXHIBIT "B" - Schedule of
Construction
EXHIBIT "C" - Rules and
Regulations
<PAGE>
LEASE AGREEMENT
This Lease Agreement, made this 18 day of October, 1996, by and between LYNN
ASSOCIATES, hereinafter called "Landlord", and ON-SITE SOURCING, INC.,
hereinafter call "Tenant".
WITNESSETH
PREMISES 1.01 - In consideration of the rents, mutual covenants and agreements
hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby
leasee from Landlord, for a term and upon the conditions hereinafter provided,
approximately 31,000 square feet on the 6 & 7 floor of the ________ located at
1111 N. 19th Street, Arlington, VA such space being hereinafter called "the
Premises", and delineated on the plan attached hereto and made a part hereof as
Exhibit "A", reserving, however, to Landlord, space for necessary pipes and
wires leading to and from the portions of the Building not hereby leased, which
will not unreasonably interfere with Tenant's use of the Premises. Landlord
expressly reserves the right to change the name of the Building without notice
to or consent of Tenant.
Term 2.01 - The term of this Lease shall commence on the first to occur of the
following events, which shall hereinafter be called the "Commencement Date"
(A) The date Tenant or anyone claiming through or under Tenant, first
occupies the Premises for business, or
(B) The lst day of January, 1997.
2.02 --- The term of this Lease shall terminate at twelve o'clock (12:00 a.m.)
midnight, on the last day f the calendar month which completes FIVE (5 ) years
of tenancy hereunder, which shall hereinafter be called the "Expiration Date".
2.03 -- If delivery of possession of the Premises shall be delayed beyond the
date specified above for the commencement of the term of this Lease for any
cause whatsoever, Landlord shall not be liable to Tenant for any damage
resulting from such delay and Tenant's obligation to pay rent shall be suspended
and abated until possession of the Premises is delivered. In the event of such
a delay, it is understood and agreed that the Commencement Date shall also be
postponed until delivery of possession and the Expiration Date shall be
correspondingly extended if the term of this Lease shall not have commenced
within twelve (12) months after the date set forth in paragraph 2.01A, then this
lease shall become void and of no further force and effect and the parties
hereto shall be relieved of all obligations hereunder. Notwithstanding any
provision contained herein to the contrary, in no event shall there be any
abatement of rent or postponement of the Commencement Date in the event the
delivery of possession shall be delayed due to any act(s) of Tenants, its
agents, employees or contractors.
<PAGE>
2.04 - Landlord and Tenant mutually agree to do all things required of them by
the provisions of this Lease in order that the commencement of the term hereof
shall not be delayed, and to fully cooperate with each other for such purpose.
Time is of the essence in all matters hereunder.
2.05 - Within thirty (30) days after the Commencement Date has been determined,
Landlord and Tenant, will confirm such Commencement Date and the Expiration Date
hereof by an appropriate written agreement.
2.06 -- Tenant's initial occupancy of the Premises shall be deemed an
acknowledgment by Tenant that the Premises are then in good and tenantable
condition and that Landlord has performed all preoccupancy work in accordance
with Exhibit "B" of this Lease.
* 3.01 - BASIC RENT Tenant covenants and agrees to pay to Landlord throughout
the full term of this Lease, but subject to adjustments as hereinafter provided,
an annual guaranteed basic rent, hereinafter called "Basic Rent", initially in
the sum of FOUR HUNDRED AND FIFTY THOUSAND DOLLORS ($450,000), per annun,
payable in equal monthly installments of THIRTY SEVEN THOUSAND FIVE HUNDRED
DOLLARS $37,500.00), each, in advance, on the first day of each calendar month
during the term hereof. The rent installment for the first calendar month of
the term hereof shall be paid at the time of execution and delivery of this
Lease. The Basic Rent Includes an appointment for the "Core" for the "Corridor"
attributable to the Premises leased hereunder.
3.02 -- If the Commencement Date shall occur on a date other than the first day
of any calendar month, Tenant shall pay to Landlord on the first day of the
month next succeeding the month in which the Commencement Date shall occur, a
sum equal to $,1250.00 multiplied by the number of calendar days in the period
from and including the Commencement Date to and including the last days of the
month in which the Commencement Date shall occur. Such payment, together with
the sum paid by Tenant upon the execution of this Lease, shall constitute
payment of the rent for the period from and including the Commencement Date to
and including the last day of the next succeeding calendar month.
3.03 -- All payments of Basic Rent, additional rent (as hereinafter provided)
and other payments to Landlord required hereunder shall be made without demand,
deduction or off-set, in cash or by check payable to Landlord, or its designated
Agent, and shall be delivered to its office LYNN ASSOCIATES c/o J.G. REALTY,
INC., 1925 N. LYNN STREET, #1200 ARLINGTON, VA 22209 or to such other party
and place as may be designated by notice in writing from Landlord to Tenant,
from time to time.
3.8 -- Any monthly installations of Basic Rent not paid within ten (10) days of
the due date shall be subject each month to a late charge equal to five (5%) of
the sum then due. All other rent and all other payments becoming due hereunder
(including additional rent) shall bear interest at the rate of five (5%) percent
per month from and after the first calendar day of the month following the date
when the same first became due and payable.
<PAGE>
3.09 -- No payment by Tenant or receipt and acceptance by Landlord of a lesser
amount than the Basic Rent, additional rent or other payments to Landlord
required hereunder shall be deemed to be other than part payment of the full
amount then due and payable, nor shall any endorsement or statement on any check
or any letter accompanying any check for payment of rent or other payment, be
deemed an accord and satisfaction, and Landlord may accept such payment without
prejudice to Landlord's right to recover the balance due and payable, or pursue
any other remedy in this Lease provided.
UTILITIES AND SERVICE 5.01 - Landlord covenants and agrees that it will without
additional charge furnish:
(a) heat and air conditioning to maintain the Premises at a reasonably
comfortable temperature between the hours of 8:00 a.m. and 6:00 p.m. Monday
through Friday of each week and 8:00 a.m. and 1:00 p.m. on Saturday of each
week, except holidays recognized by the U.S. Government:
(b) electricity for lighting purposes and operation of ordinary office
appliances, including computers, large copiers and other equipment required
heavier than normal office use of electricity.
(c) full elevator service, for such hours on such days as set forth in
paragraph (a) preceding, and limited service at all other times;
* (d) janitor and char services, for executive offices only, Monday
through Friday of each week, except holidays recognized by the U.S. Government.
* No charge service for production areas.
5.02 -- Landlord reserves the right to interrupt, curtail, stop and suspend ( i
) the furnishing of heat and air conditioning, electrical service, elevator and
janitor and char services and (ii) the operation of the water and sewer systems,
when necessary by reason of accident or emergency, or for repairs, alterations,
replacements or improvement in the reasonable judgment of Landlord desirable or
necessary to be made, or of difficulty or inability in securing supplies of
labor, or of strikes, or of any other cause beyond the reasonable control of
Landlord, whether such other cause be similar or dissimilar to those hereinabove
specifically mentioned, until said cause has been removed. There shall be no
diminution or abatement or rent or other compensation due from Tenant to
Landlord hereunder, nor shall this Lease be affected or any of Tenant's
obligations hereunder be reduced, and Landlord shall have no responsibility or
liability for any such interruption, curtailment, stoppage, or suspension of
service or systems as in this Article 5 above provided, except that Landlord
shall exercise reasonable diligence to eliminate the cause of same.
<PAGE>
ASSIGNMENT AND SUBLETTING 6.01 - Tenant will not assign, transfer, mortgage or
encumber this Lease without obtaining the prior written consent of Landlord, nor
shall any assignment of transfer of this Lease be effectuated by operation of
law or otherwise without giving Landlord thirty (30) days written notice of
Tenant's bonafide proposed assignment or proposed subletting of all or any part
of the Premises. Within thirty (30) days from receipt of said notice, Landlord
shall have the right, at its option, to either release Tenant from its Lease for
such space, or to sublet all or any part of the Premises for Tenant at the same
rental Tenant is paying Landlord with the right to further sublease such space.
In the event Landlord does not exercise either its rights of release or its
right to sublet all or part of the Premise within thirty (30) days from receipt
of said notice, Tenant may proceed with such assignment or subleasing, subject
to Landlord's reasonable right of consent as provided above. The consent by
Landlord to any assignment, transferee, subtenant or occupancy constitute a
waiver of, or release of Tenant from, any covenant or obligation contained in
this Lease, nor shall any such assignment or subletting be construed to relieve
Tenant from giving Landlord said thirty (30) days notice or from obtaining the
consent in writing of Landlord to any further assignment or subletting. In the
event that Tenant defaults hereunder, Tenant hereby assigns to Landlord the rent
due from any subtenant of Tenant and hereby authorizes each such subtenant to
pay rent directly to Landlord. Any attempted assignment or subletting made by
Tenant without Landlord's prior written consent shall be null and void at the
option of Landlord.
USE OF PREMISES 7.01 - Tenant covenants to use the Premises only for general
office purposes for carrying on the business of general offices & copy center
and to permit Landlord to transmit heat, air conditioning, water and electric
current through the Premises at all time at the discretion of Landlord,
provided, however, that Landlord shall not exercise this right in such a way as
to unreasonably inconvenience Tenant, or unreasonably interfere with Tenant's
use of the Premises.
DEFAULTS 8.01 - Each of the following events (hereinafter called an "Event of
Default") shall be a default hereunder by Tenant and a breach of this Lease:
(a) If Tenant shall violate any covenant or agreement providing for the payment
or additional rent and such violation shall continue for five (5) days after
notice from Landlord to Tenant.
(b) If Tenant shall assign, transfer, encumber, sublet or permit the use of
the Premises by others, except in a manner permitted in Article 6.
(c) If the Premises are vacated or abandoned by Tenant, whether or not rent is
in default.
(d) If the estate of Tenant be transferred or passed to, or devolve upon, any
other person or corporation by operation of law.
<PAGE>
If Tenant shall (i) generally not pay Tenant's debts as such debts
become due, (ii) come insolvent (iii) make an assignment for the benefit of
creditors (iv) file, be the entity subject to, or acquiesce in a petition
in any court (whether or not filed by or against Tenant pursuant to any
statute of the Untied States or any State, and whether or not for a
trustee, custodian, receiver, agent, or other officer, for Tenant or for
any portion of Tenant's property) in any proceeding whether bankruptcy,
reorganization, composition, extension, arrangement, insolvency
proceedings, or otherwise.
(e) If Tenant shall be in default in fulfilling any of the other covenants and
conditions of this Lease and such default shall continue for fifteen (15) days
after written notice thereof from Landlord to Tenant.
8.02 - During the continuance of any such Event of Default, Landlord may, at its
option, refrain from eliminating Tenant's right of possession and enforce
against Tenant the provisions of this Lease for the full term thereof, or give
to Tenant a written notice of its intention to terminate this Lease, in which
latter event the term hereof shall expire at noon upon the fifth day following
the date upon which such notice is given as fully and completely as if that day
were the date fixed for the expiration of the term, without the necessity of any
legal process whatsoever and Tenant hereby waives any statutory or other notice
to quit; provided always, however, that Tenant shall remain liable to pay the
monthly deficiencies throughout the full stated term of this Lease, as
hereinafter provided. Tenant upon such a termination of this Lease shall
thereupon quit ad surrender the Premises to Landlord, its agents or
representatives may, immediately or at any time thereafter, either by summary
dispossession proceedings or by any suitable action or proceeding at law, or by
force or otherwise, without being liable to prosecution or damages therefore
(and no possession of the Premises). Tenant specifically acknowledges that,
without prejudice to any other right or remedy Landlord may have, Landlord may
after the giving of the notice hereinabove referred to, cease to supply any
services to be supplied by it hereunder and may interrupt electrical service to
the Premises.
8.03 -- In the event of such reentry or retaking by Landlord, Tenant shall
nevertheless remain in all events liable for the full rental to the date or
retaking or reentry, and Tenant shall also be and remain liable for damages for
the deficiency or less of rent as well as all related expenses which Landlord
may thereby sustain in respect of the balance of the term; and in such case
Landlord reserves full power, which is hereby acceded to by Tenant, to let the
Premises for the benefit of Tenant in liquidation and discharge, in whole or in
part, as the case may be, of the liability of Tenant under the terms and
provisions of this Lease, and such damages if ascertainable, and related
expenses at the option of Landlord, may be recovered by it at the time of the
retaking or reentry, or in separate actions, from time to time, as Tenant's
obligation to pay rent would have accrued if the term had continued, or from
time to time as said damages and related expenses shall have been made more
easily ascertainable by relettings of the Premises; or such action by Landlord
<PAGE>
may at the option of Landlord be deferred until the expiation of the term, in
which latter event the cause of action shall not be deemed to have accrued until
the date of the termination of said term. All rents received by Landlord in any
such reletting shall be applied first to the payment of such expenses as
Landlord may have incurred in recovering possession of the Premises and in
reletting the same, second to the payment of any costs and expenses incurred by
Landlord either for removing alterations, making necessary repairs to the
Premises or incurring any default on the part of Tenant in any covenant or
condition herein made binding upon Tenant and last any remaining rent shall be
applied toward the payment of rent due from Tenant under the terms of this
Lease, with interest at the maximum legal limit; and any consequential damages
and Tenant expressly agrees to pay any deficiency then remaining.
8.04 - The provisions of this Article are subject to the Bankruptcy Laws of the
United States which may, in certain cases, limit the rights of Landlord to
enforce some other provision of this Article in proceedings thereunder. To the
extent that no limitations exist by virtue thereof, the remaining provisions
hereof shall not be affected thereby, but shall remain in full force and effect.
No fiduciary by whatever name, in dominion or control of, or having custody of
or title to, any property of Tenant, or acting under the purported authority of
any law, may assume or assign this Lease without the prior written consent of
Landlord. Whenever any such fiduciary acts under the Bankruptcy Laws of the
United States which nullify, ignore, or do not require, consent of Landlord, the
provisions of such laws must be fully satisfied before assignment or assumption
hereof may become effective. If the property of Tenant is under administration
pursuant to the provisions of Bankruptcy Laws of the United States, then no
claim of Landlord for failure or refusal of Tenant to perform the covenants of
this Lease, shall exceed amounts allowable thereunder.
8.05- Landlord shall have a lien for payment of the rent aforesaid upon all of
the goods, wares, chattels, furniture and other personal property of Tenant
which, may be in or upon the Premises. Tenant hereby specifically waiving and
all exemptions allowed by law; and such lien may e enforced in any other lawful
manner at the option of Landlord.
MAINTENANCE AND REPAIRS 9.01 - Subject to reasons beyond its control,
Landlord agrees, at its expense to maintain and keep in repair the Premises and
replace florescent tubes in Building standard lighting fixtures during the term
of this Lease, except for damages caused by Tenant, its agents, employees,
visitors, licensees, contractors or suppliers, and except for items installed
for Tenant not of Building standard materials. There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Landlord
by reason of inconvenience annoyance or injury to business arising from the
making of any repairs in or to any portion of the Premises or the Building (or
in or to fixture, appurtenances or equipment thereof).
<PAGE>
9.02 - Tenant shall take good care of the Premises and the fixtures,
appurtenances and equipment therein and, at its sole cost and expense, make such
repairs thereto through Landlord or Landlord's contractors, unless Landlord
waives such requirement, necessitated by the negligence of Tenant, its agents',
employees, visitors, licensees, contractors or suppliers or by the use of the
Premises in a manner contrary to the purposes for which same are leased to
Tenant, as and when needed to preserve them in good order and condition, fair
wear and tear excepted. All damage or injury to the Premises (and to the
fixture, appurtenances and equipment therein) or to the Building caused by
Tenant, its agent, employees, visitors, licensees, contractors or suppliers,
moving, installing or removing furniture, equipment or other property in, within
or out of, the Premises or Building, shall be replaced, restored or replaced
promptly at Tenant's sole cost and expense, to the reasonable satisfaction of
Landlord, through Landlord or its contractors, unless waived by Landlord. All
aforesaid repairs, restorations and replacements shall conform to the standards
of the Building. In the event Tenant shall fail to order such repairs,
restorations and replacements, structural, non-structural, or otherwise, and pay
the same through Landlord or its contractors unless waived by Landlord, then
Landlord shall have the right to make such necessary repairs, restorations and
replacements and any change or cost so incurred by Landlord shall be paid by
Tenant to Landlord as additional net payable with the installation remedy
granted to Landlord and not in limitation of any other rights and remedies which
Landlord has or may here in said circumstance.
10.2 - Tenant will not paint the Premises or made or permit anyone to make any
alterations in or additions thereto not authorized under Exhibit "B" nor will
tenant subsequently install any equipment of any kind that will require any
alterations or additions to our the use of the Building's water system, heating
system, plumbing system, air conditioning system, or the electric system, nor
will Tenant install a television antenna on the roof without the prior written
consent of Landlord. If any such alterations or additions are made without such
consent, Landlord may correct or remove them and Tenant shall be liable for any
and all expenses incurred by Landlord in the performance of this work.
SURRENDER & RESTORATION 11.01 - Tenant agrees to remove from the Premises, at
the expiration or other termination of this Lease, all goods and effects not
belonging to Landlord, and to surrender possession of the Premises and all
fixtures and furnishings connected therewith in good repaid, order and condition
in all respects, have made any alterations, additions, installations or
modifications in or to the Premises, whether consented to be Landlord or not,
Tenant shall, if requested to do so by Landlord in writing prior to the
expiration of the term of this Lease, remove the same or such thereof as may be
specified in such notice, and repair any damage caused by such removal, all a
Tenant's expense. If Tenant shall fail to perform any of the foregoing
obligations, Landlord is authorized to do so in Tenant's behalf and to sell such
articles and effects left on the Premises as may be saleable. The proceeds of
any such sale shall be applied toward the expenses thus incurred, and Tenant
agrees to pay any balance promptly.
<PAGE>
INSURANCE & INDEMINIFICATION 12.01 - Tenant shall, at its cost and expense,
obtain and maintain during the term of this Lease, public liability insurance
respecting Tenant's use and occupancy of the Premises and approaches thereto
protecting Landlord and Tenant, with a combined single limit of not less than
$1,000.000.00 for bodily injury and property damage liability. Landlord shall
be named as additional insured on such liability insurance. Tenant shall
furnish Landlord with evidence of such insurance upon request. Landlord shall
maintain a policy or policies covering the parking and other pubic areas of the
Building providing a combined single limit of not less than $1,000.000.00 for
bodily and property liability.
12.02- Tenant hereby agrees to make no claim against Landlord and agrees to
assume the responsibility of defending, at Tenant's expense, any claim which
shall be made against Landlord by any agent, employees, licensee or invitee of
Tenant or by others claiming the right to be on or about the Premises through or
under Tenant for any injury, loss or damage to person or property occurring upon
the Premises or the facilities in or adjacent thereof from any cause other than
the negligence of Landlord. Tenant shall save Landlord, its agents and
employees harmless and indemnified from all loss, damage, liability or expense
(including without limitation, reasonable attorneys' fees and all court costs)
incurred, suffered or claimed by reason of Tenant's neglect or the use of the
Premises or facilities in or adjacent thereto, or by reason of any injury, loss
or damage to any person or property thereon not caused by the negligence of
Landlord, and to be answerable for all nuisances caused or suffered thereon.
12.03- In no event shall Landlord, including any successor or assignee of all or
any portion of Landlord's interest in the Building, be personally liable of
accountable with respect to any provision of this Lease. If Landlord shall be
in breach or default with respect to any obligation hereunder or otherwise,
Tenant agrees to look for satisfaction solely to the equity of Landlord in the
Building. The liability of Landlord, or other entity comprising Landlord, shall
in no event exceed the amount of such equity and no other assets of Landlord (or
any partners, stockholders or officers of Landlord) shall be subject to levy,
execution or other procedures for the satisfaction of Tenant's remedies. In the
event Landlord transfers this Lease, other than as security for a mortgage, the
Landlord (and, in the case of any subsequent transfers or conveyances, the than
grantor) shall, upon such transfer and acceptance by the transferee be relieved
from all liability and obligations hereunder arising after such transfer.
12.04 - All personal property of Tenant, its agents, employees, visitors,
licensees, contractors or suppliers, in and on the Premises, shall be and remain
at their sole risk, and Landlord shall not be liable to them for any damage to,
or loss of, such personal property arising from any act of negligence of any
other persons, or resulting from fire, explosion, failing plaster, rain or snow,
or from the leaking of the roof, or from the bursting, leaking or overflowing of
water, sewer or steam pipes, or from heating or plumbing fixtures or from
electrical wires or fixtures or from any other cause whatsoever.
<PAGE>
RELOCATION 13.01 - Landlord shall have the right, by giving sixty (60) days'
advance notice to Tenant, to require Tenant to relocate its office from the
Premises to substitute office space to be provided by Landlord as hereinafter
set forth. Such relocation shall be completed within thirty (3) days after the
date in which the substitute space is ready for occupancy or sixty (60) days
after such notice, whichever occurs later. If Landlord gives Tenant with
substitute office space with the Building, and Tenant agrees to accept the same,
and Landlord's further agrees that it will, at its expense, move Tenant and
Tenant's furniture, office equipment and other personal property to such
substitute office space. The substitute office space furnished by Landlord
shall be finished in substantially the same manner and to the same extent as the
finishing of the Premises required by Exhibit "B", and shall otherwise contain
the same or greater net leasable area as the Premises. Landlord and Tenant each
agree that from after the date on which Tenant assumes possession and occupancy
of the substitute office space the provisions of this Lease shall cease to apply
to the Premises (except for obligations under this Lease accrued prior to such
date) and shall thereafter apply to the substitute office space to the same
extend as if this Lease, as applied with respect to such substitute office
space, shall not be deemed to have been extended beyond the Expiration Date
specified in paragraph 2.02.
LANDLORD'S RIGHTS OF ACCESS 14.01 - Landlord may, at time during Tenant's
occupancy during reasonable business hours, enter, either to view the Premises
or to show the same to others, or to make repairs to the Building, or to
introduce, replace, repair, alter or make new or change existing connections
from any fixtures, pipes, wires, ducts, conduits or other construction therein
or remove, without being held responsible therefore, placards, signs, lettering,
window or door coverings and the like not expressly consented to by Landlord.
14.02- Landlord may, within one hundred eighty (180) days next preceding the
Expiration Date, enter to place and maintain notices for letting, free from
hindrance or control of Tenant, and to show the Premises to prospective tenants
thereof at times which will not unreasonably interfere with Tenant's business.
If Tenant shall vacate the Premises during the last month of the term of this
Lease, Landlord shall have the unrestricted right to enter the same after
Tenant's moving to commence preparations for the succeeding tenant or for any
other purpose whatever, without affecting Tenant's obligation to pay rent for
the full term.
FIRE CLAUSE 15.01 - This Lease is made on condition that, if the Premises or any
part thereof, or the elevators, hallways, stairways or other approaches thereof,
be damaged or destroyed by fire or other casualty from any cause so as to render
the Premises and/or approaches unfit for use and occupancy, a just and
proportionate part of the rent, according to the nature and extent of the injury
to the Premises and/or approaches, shall be suspended or abated until the
Premise and approaches have been put in as good condition for use and occupancy
as at the time immediately prior to such damage or destruction. Landlord will
proceed at its expense and as expeditiously as may be practicable to repair the
damage, unless, because of the substantial extent of the damage or destruction,
even though the Premises may not be damaged or destroyed, Landlord should decide
not to repair or restore the Premises or the Building, in which <PAGE>
event and at Landlord's sole option, Landlord may terminate this Lease
forthwith, by giving Tenant a written notice of its intention to terminate
within ninety (90) days after the date of the casualty. In no event shall
Landlord be required to expend any sums for the repair or replacement of any of
Tenant's personal property located within the Premises.
CONDEMNATION 16.01 - This Lease shall be terminated and the rental payable
hereunder shall be abated from the date of such termination in either of the two
following events, namely: ( i )the forceable leasing or condemnation of the
Premises or any part thereof by any competent authority under right of eminent
domain for any public or quasi-public use or purposes, or ( ii) the condemnation
by competent authority under right of eminent domain for any public or quasi-
public use or purpose of 25% of more of the Building. The forceable leasing by
any competent authority of any portion of the Building other than the Premises
will have no effect whatever upon this Lease. In case of any taking or
condemnation, whether or not the term of this Lease shall cease and terminate,
the entire award shall be the property of Landlord, and Tenant hereby assigns to
Landlord all its rights, title and interest, in and to any such award. Tenant,
however, shall be entitled (if permitted under applicable laws) to claim, prove
and receive in the condemnation proceedings such awards as may be allowed for
fixtures and other equipment installed by it, but only if such awards shall be
made by the Court in addition to the award made by it to Landlord for the land
and improvement or part hereof so taken and shall not reduce the award to which
the Landlord would otherwise be entitled.
NOTICES & DEMANDS 23.01 - All notices required or permitted hereunder shall be
deemed to have been given if mailed in the any United States Post Office be
certified or registered mail, postage prepaid, addressed to Landlord or Tenant,
respectively, at the following addresses or to such other addresses as the
parties may designate in writing from time to time.
LYNN ASSOCIATES ON-SITE SOURCING, INC.
c/o J. G. Realty Inc. 1111 North 19th Street, #600
1925 North Lynn Street, #1200 Arlington, Virginia 22209
23.02 - Tenant hereby elects domicile at the Premises for the purposes of
service of all notices, writs of summons, or other legal documents, or process,
in any suit, or proceeding which Landlord may undertake under this Lease.
RULES AND REGULATIONS 24.01 - Tenant, its agent, employees and invitees shall
comply with and observe all reasonable rules and regulations concerning the use,
management operation, safety and good order of the Building which may from time
to time be promulgate by Landlord. Initial rules and regulations, which shall
be effective until modified by Landlord are attached hereto as Exhibit "C".
<PAGE>
QUIET ENJOYMENT 25.01 - Landlord covenants and agrees with Tenant that upon
Tenant paying the rent and additional rent and observing and performing all the
terms, covenants and conditions, on Tenant's part to be observed and performed,
Tenant may peaceably and quietly enjoy the Premises hereby demised; subject,
nevertheless, to the terms and conditions of this Lease, and to the mortgages
and deeds of trust hereinbefore mentioned.
WAIVER OF TRIAL BY JURY 26.01 - Landlord and Tenant each agree to and they
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises and/or any claim
of injury or damage, and any statutory remedy.
GOVERNING LAW 27.01 - This Lease shall be constructed and governed by the laws
in the State in which the Building is located. Should any provision of this
Lease and/or its conditions be illegal or not enforceable under the laws of said
State, it or they shall be considered severable, and this Lease and its
conditions shall remain in force and be binding upon the parties as though the
said provisions had never been included.
MUTUAL WAIVER OF CLAIMS 28.01 - Anything herein contained to the contrary, to
the extend of the face amount of their respective insurance coverage, the
Landlord and Tenant do each hereby release the other from any and all liability
for any loss or damage to their respective properties cause by fire or any of
the other casualties covered by the risks included in "All Risk" coverage
notwithstanding that such fire or other casualty shall have resulted frame the
act, omission or negligence of Landlord, Tenant, or their respective agents,
employees, licensees or contractors. Landlord and Tenant agree to cause their
respective insurance policies covering the Building and/or the Premised and
contents thereof to contain an appropriate endorsement whereby the Insurer
agrees that the insurance policy and coverage will not be invalidated by reason
of the foregoing waiver of the right of recovery against Landlord or Tenant,
respectively, for loss occurring to the properties or to the persons thereof
covered by such policies, and whereby such insurers also waive any right of
subrogation against the Landlord and Tenant (as the case may be), and each party
will, upon request, deliver to the other a certificate evidencing such waiver of
subrogation by the insurer.
* SECURITY DEPOSIT 29.01 -- Landlord herewith acknowledges receipt from Tenant
of the total sum of ONE THOUSAND FIVE HUNDRED ($1,500.00) which sum shall be
applied by Landlord as follows:
(a) The sum of -0- ($ -0- ) towards the first monthly payment under this
Lease; and 00/100
LANDLORD ACKNOWLEDGES TRANSFER OF $1,500.00 FROM TENANTS ORIGINAL LEASE.
<PAGE>
(b) The sum of ONE THOUSAND FIVE HUNDRED ($ 1,500.00) which shall be held by
the Landlord as a security deposit for the faithful performance of all of the
covenants, conditions which shall be held by the Landlord as a security deposit
for the faithful performance of all of the covenants, conditions and agreements
of this Lease; but in no event shall Landlord be obligated to apply the same on
rents or other charges in arrears or on damages from Tenant's failure to perform
the said covenants, conditions and agreements. Landlord may so apply the
security at its option, and Landlord's right to the possession of the Premises
for nonpayment of rent or for any other reason shall not, in any event, be
affected by reason of the fact that the Landlord holds the security. The said
sum, if not applied towards the payment of rent in arrears or towards the
payment of damages suffered by Landlord by reason of Tenant's breach of
covenants, conditions and agreements of this Lease, is to be returned to Tenant
when this Lease is terminated, according to these terms, and in no event is the
said security to be returned until the Tenant has vacated the Premises and
delivered possession, pursuant to Article 11 hereof, to Landlord. In the event
that Landlord repossess the Premises because of Tenant's default or because of
Tenant's failure to carry out the covenants, conditions and agreements of this
Lease, Landlord may so apply the said security against damages as may be
suffered or which accrue thereafter by reason of Tenant's default or breach.
Said deposit shall not be deemed to limit the amount of any claim which Landlord
may have the right to recover against Tenant for any default under this Lease.
<PAGE>
ADDENDUM 30.01 -
30.01 LANDLORD TERMINATION: Landlord may terminate this lease anytime after
December 31, 1999 by giving the tenant six (6) months prior written notice.
30.02 CONDITION OF SPACE; Tenant has inspected premises and accepts the space
in "as in" condition. The tenant will at his sold cost and expense remodel the
space to mutually agreeable plans and specifications. All work done by Tenant
shall be according to local building codes and of building material consistent
with building standards.
30.03 EARLY POSSESSION: Tenant shall have access to space, immediately upon
signing the lease at no charge until January 1, 1997.
30.04 PREVIOUS LEASES: Tenant obligations on previous lease and all addendum's
shall be superseded by this lease on December 31, 1996.
30.05 PARKING: Tenant shall receive four (4) monthly parking permits and
parking/access for loading, four (4) vans, for the entire term of this lease.
IN WITNESS WHEREOF, Landlord and Tenant have hereunto executed this Lease
as of the date first above written.
WITNESS:
_____________________________ By: _______________________________ (Seal)
_____________________________ By: _______________________________ (Seal)
Landlord
WITNESS OR ATTEST:
____________________________ _____________________________________
____________________________ _____________________________________
Tenant
Exhibit 10.21
Lease with Frederick Park Limited Partnership
LEASE
1/1/96
LEASE
THIS LEASE, made this 30th day of MAY, 1996, by and between Frederick Park
Limited, Partnership of 5646 Buckeystown Pike, Frederick, Maryland 21701, party
of the first part, hereinafter referred to as "Landlord" and ON-SITE SOURCING,
INC., party of the second part, hereinafter referred to as "Tenant"
WITNESSETH;
1. LEASED PREMISES. The Landlord hereby leases to the Tenant and the Tenant
hereby leases from the Landlord certain "Leased Premises" (also sometimes called
"Premises"), which premises are to be used for Copier repair purposes, located
in Frederick County, Maryland, with the improvements thereon known as Frederick
Park containing approximately 2,500 square feet at 7311 Grove Road, Frederick,
Maryland, and designated and described as shown on the plat attached to this
Lease which outlines in red said lease premises to be used for the above
purpose, with said plat being marked EXHIBIT A and incorporated herein as a
part hereof. The Tenant shall further have the right, in common with other
tenants of the Landlord, to use the parking areas provided by the Landlord in
the vicinity of the premises which are not assigned to the exclusive use of any
particular tenant. (Parking plan to be attached).
2. TERM: This Lease shall be for a term of thirty six (36) months, commencing
on the 1st day of June, 1996 and ending on the 31st day of May, 1999 at and for
the rents, covenants and agreements hereinafter reserved and contained on the
part of the Tenant to be observed and performed.
3. MINIMUM RENT:
(a) Tenant covenants and agrees to pay to the Landlord at 5646 Buckeystown
Pike, Frederick, Maryland 21701, or at such other place as may be designated
by the Landlord, in writing, without any prior demand therefor and without any
deduction or set-off whatsoever as minimum rent the sum of ONE THOUSAND TWO
HUNDRED FIFTY ($1,250.00) in advance upon the first day of each calendar month
during the term hereof.
(b) Cost of Living Increase. The monthly minimum rent as set forth in
paragraph 3(a) above shall be increased for each twelve (12) month period within
the initial (3) year term based on:
<PAGE>
June 1, 1997. Rent is to be increased by the Consumer Price Index (CPI)
June 1, 1997 Rent is to be increased by CPI.
c Taxes and Assessments. Tenant further agrees to pay to the Landlord
Tenant's share of real estate taxes and assessment, including any
assessments that have been levied against the land and the improvements
thereon, apportioned as to the percentage of the space that the Tenant
occupies to the total of the entire space for the total premises so
assessed. That is to say, that the space leased under this Lease is
approximately 2500 square feet out of a total of 100,000 square feet.
Therefore, such taxes and assessments shall be apportioned to the Tenant on
the taxes and assessments shall be apportioned to the Tenant on the basis
of 2.5% on any such taxes or assessment. Such real estate taxes and/or
assessments are deemed to include any such tax assessment which may be
levied or assessed as a tax on rental income and shall also include front
foot benefit charges or assessments from special districting (such as
assessment for fire protection). The Tenant shall pay any tax assessed
against the additions or alterations made by the Tenant at its request.
The Tenant agrees that it will pay the annual installments for improvements
hereinafter constructed by the State or County authorities or any other
public authority apportioned on the basis of the front feet on the leased
premises subject to such assessment. All real estate taxes and assessments
due hereunder shall be payable on or before July 20th of each year. The
taxes for the first, and last year will be prorated.
(d) While the Landlord agrees throughout the term of this Lease to maintain the
Common Facilities (as hereinafter defined) in good order, condition and repair,
all expenses therefor shall be charged to the Tenant as additional rent and
Tenant shall pay its proportionate share thereof. Expenses for maintenance and
operation of the Common Facilities to be charged through to the Tenant shall
encompass and include all sums and expenses incurred by the Landlord for the
Common Facilities, such as, but not limited to, snow removal; resurfacing,
repainting and respiring, cleaning and sweeping of parking areas; replanting and
relandscaping; car stops; directional signs and markers; janitorial services,
security services, window cleaning, light bulbs and general maintenance for
common areas; security services and equipment providing for the security of the
warehouse complex at Grove Road or items useful to the Tenant in the reduction
of overall insurance costs; common area utilities, including, but not limited
to, parking lot lighting; the amortization of the costs of common water and
sewer facilities; the amortization of the costs of installation of capital
investment items which are primarily for reduction of the operating costs of the
warehouse complex at Grove Road where the Tenant shall share in a portion of
such costs; out-of-pocket expenses directly related to management and
supervision of the warehouse complex at Grove Road; and other
<PAGE>
things determined necessary in the Landlord's judgment for proper
maintenance in a good, sanitary and attractive condition of all the Common
Facilities. Common Facilities will not exceed Ten (10%) percent per year.
Common Facilities herein shall include, but not be limited to, all
facilities in the Landlord's warehouse complex at Grove Road that are
for the non-exclusive use of the Tenant and Tenant's employees, agents
and invitees in common with other authorized users, and they shall
include, but not be limited to, vehicular parking areas, roadways,
service areas, together with plants and plantings thereon, and areas
containing directional signs. The term Common Facilities will not
include any area in the warehouse complex at Grove Road leased
exclusively to any tenant.
(e) All taxes, insurance premiums, damages, costs, attorney fees and other
expenses, charges and sums of every nature that Tenant assumes or agrees to pay
under this Lease, together with all interest and penalties that may accrue
thereon, and all damages, costs, expenses, and sums (including attorney fees)
that Landlord may suffer or incur by reason of any default by Tenant in
performance of the terms hereof, shall all be deemed to be, and collectible as,
additional rent due under this Lease. In the event of nonpayment of any item
described in this paragraph 3(e) by Tenant, Landlord shall have all the rights
and remedies as provided in this Lease for failure to pay rent.
(f) Late Charge. In the event that any payment therein provided for shall
become overdue for a period in excess of five (5) days, a "late charge" of five
cents ( $0.05 ) c) for each dollar ($1.00) so overdue shall become
immediately due to the Landlord as liquidated damages for failure to make prompt
payment. Said charge shall be payable for each month or fraction of a month
that payment is overdue.
4. SECURITY DEPOSIT. As a security deposit under this Lease, the tenant has
adopted the sum of One Thousand Two Hundred Fifty 00\000 ($1,250.00) in cash
with the Landlord, which shall be retained by the Landlord for the full term of
this Lease as security and guaranty for the payment of the rent, and also for
the faithful performance by the Tenant of all the terms, conditions, covenants
and agreements contained in this Lease on the part of the Tenant to be kept and
performed.
With reference to said security deposit, the parties hereto expressly
covenant and agree as follows:
(a) If the Lease is canceled for default of the Tenant, then no part of the
security deposit shall be returned by the Landlord to the Tenant, nor shall the
Landlord be bound to account unto the Tenant, nor shall the Landlord be bound to
account unto the Tenant for any part of the security deposit.
(b) No interest shall be paid on any part of the security deposit and the
Landlord need not keep the said deposit separate in a segregated account.
<PAGE>
(c)
(d) The security deposit shall never be applied by the Tenant as rental, but
may be so treated by Landlord, in its sold discretion, as an element of damages
for breach by the Tenant.
(e) Upon the termination of this Lease by the Landlord as provided herein, or
upon the expiration of the term of the Lease, whichever may occur first, and if
at that time the Tenant is not in default of any of the terms, conditions,
covenants or agreements contained deposit within thirty (3) days after the
termination or expiration.
(f) The parties agree to make a joint inspection of the premises within five
(5) days after the Tenant has vacated; and if the Tenant is in default, the
security deposit shall be used to pay the cost of correcting any default, and
the balance, if any, refunded to the Tenant. If the security deposit is not
sufficient to correct all defaults, Tenant shall immediately pay to the Landlord
the additional sum necessary to correct all defaults.
(g) In the event at any time during the term of this Lease the Landlord shall
apply all or any portion of the security deposit to correct a breach of this
Lease by the Tenant (which the Landlord shall be free to do at any time during
the period hereof), then Tenant agrees upon demand from Landlord to restore the
amount of the security deposit back up to the original amount hereinabove
provided for, and it is agreed that the amount so required for restoration shall
be considered as additional rent hereunder.
5. GENERAL AGREEMENTS OF TENANT. The Tenant covenants and agrees as follows:
(a) To use the premises and the parking space leased hereunder only for the
uses described in paragraph 1, or related businesses and never to permit
overnight storage of goods or materials on the loading dock or parking areas.
(b) To pay all bills for electricity, gas, fuel, power, water, sewer, including
those charges of the Frederick County Department of Public Works, trash removal,
telephone, and all other utilities used or consumed by the Tenant as the same
shall become due. With respect to sewer and water charges (and any other
charges for any of the above that are not individually charged or metered)
payable in connection with the Building of which the leased premises are a part,
it is agreed that Tenant shall pay, as additional rent, its proportionate part
of any such charges experienced by Landlord, unless Landlord shall determine
that a proportionate part does not fairly represent the Tenant's fair share of
water and sewer use or use of any other charge because of the nature of its
business, in which event a greater share of such water and sewer charges and
other charges may be charged as against Tenant because of its disproportionate
use of such utilities or services. Tenant will pay its proportionate part, or
other sewer and water charges or charges for other services, no less often than
quarter-annually or as billed by Landlord and within thirty (30) days of the
mailing by landlord to Tenant of a statement therefor. Landlord reserves the
right to install submeters at Tenant's expense to monitor
<PAGE>
(c) Tenant's use of water or other mutable services and charge the Tenant for
use of water and sewer and such other service based on the readings thereof.
To do nothing and permit nothing to be done on the leased premises
which will contravene or void any insurance policy covering the leased
premises. If the Tenant's use of occupancy of the leased premises or
its act of omission permitted by it, its agents, servants, and
employees, increase the premium on any fire insurance policy covering
the leased premises, then the Tenant shall pay such increased premium.
(d) To insure any plate glass on the leased premises against breakage
furnishing the Landlord with a copy of said policy, and if possible, naming them
as parties insured, or Tenant may be self-insured as to this item if approved,
in writing, by a separate agreement signed by the Landlord.
(e) To hold the Landlord free and harmless from any and all loss, claims or
damage by reason of any accident, injury or damage to any person or to the
personal property of any person occurring on the leased premises or caused by
such premises or any occurrence thereon.
(f) To maintain and pay for public liability insurance with bodily injury
limits of One Million Dollars and One Million Dollars $1,000,000.00 -
$1,000,000.00), and property damage limits of Five Hundred Thousand Dollars
($500,000.00), protecting the Tenant and the Landlord against liability for any
accident, injury or damage to the premises or cause by the same. The Tenant
further agrees to name the Landlord as the party insured in said policies and to
furnish the Landlord with a copy of said insurance policy or memorandum thereof.
In addition, Tenant agrees to pay to the Landlord its proportionate share of any
insurance premiums of any kind leased premises constitute a part. Tenant's
share of such insurance cost shall be 2.5% of the total of any such insurance
cost and shall be paid by the Tenant on the next rent due day following written
demand by the Landlord.
(g) Not to make alterations or additions to the premises without the written
consent of the Landlord and to pay for all such alterations and additions. Upon
termination of the Lease, the Landlord shall have the option to require the
Tenant, at Tenant's cost, to restore any part or all of the premise to its
original condition. However, if the Landlord does not exercise this option,
such alternation and additions and additions.
(h) To comply with all applicable laws, ordinances, rules and regulations
whether Federal, State, County or Town.
<PAGE>
(i) To abide by all rules, regulations and stipulations by the Landlord which
are necessary or advisable for the safety, care, protection, appearance,
orderliness, uniformity or cleanliness of the leased premises and parking areas
for use by other cleanliness of the leased premises and parking areas for use by
other tenants or for persons on or in the vicinity thereof and of the complex of
Landlord at Grove Road of which the premises are a part. Any violation by
Tenant of such rules and regulations adopted hereunder by Landlord, after
expiration of ten (10) days following the mailing of written notice of such
rules and regulations to Tenant, shall be considered a default hereunder by
Tenant to the same extent as if such rules and regulations were an original part
of this Lease.
(j) To guarantee that Landlord, Tenant and other tenants of Landlords, and the
agents, guests and invitees of all of them shall at all times have access to
and/or through the loading platform, adjacent driveways and parking areas.
(k) To surrender the premises upon the expiration or termination of this Lease
in the same good order and clean condition in which they were received at the
inception of this Lease; at the same time, to surrender all equipment of the
Landlord in good, clean operating condition.
(l) Not to place any signs, advertisements, or notices on the exterior of
the building any signs, advertisement, or notices on the exterior of the
building without the Landlord's prior consent shall not be unreasonably
withheld but which Landlord may restrict in order to ensure proper signage
for all tenants, in order to promote, if Landlord wishes, uniformity, and
in order to comply with applicable regulations.
(m) To keep, at its cost and expense, in a good state of repair, maintenance
and cleanliness all parts of the leased premises; to keep in good, clean
operating conditions all doors, equipment and fixtures on or used in connection
with the premises; to provide for regular servicing and maintenance, including
change of filters, for all mechanical equipment on the premises; and if
necessary, to replace, at its cost, any mechanical equipment which becomes
defective. Tenant will maintain a comprehensive commercial service contract
(which includes replacement) on all HVAC equipment for the term of the lease.
Landlord will warrant the good working order of the HVAC equipment for the term
of the lease. Landlord will warrant the good working order of the HVAC
equipment at commencement and for 90 days from the commencement of this lease.
(n) To maintain and keep in good repair the parking area leased hereunder and
not to store any kind of property other than motor vehicles in operating
condition on the parking area. Tenant is only responsible for the damage to the
parking area caused by their employees, affiliates, vendors and quests.
<PAGE>
(o) Not to install or store in the leased premises any safe, machinery or heavy
equipment of any kind exceeding in weight 150 pounds per square foot.
(p) That the Landlord shall not be liable to the Tenant, its agents, servants,
employees, invitees or any other person or persons for any claims, damages or
injuries resulting from any acts of negligence of any Co-Tenant's employees,
agents, licensees, invitees or any other persons, in or about the leased
premises, the building, parking or common areas thereof.
(q) That all of Tenant's agreements, covenants, and promised set forth in this
Lease to be performed by Tenant shall survive termination of this Lease and the
Lease term hereunder, as well as any lease renewals and subsequent termination's
thereof.
6. INSOLVENCY. If Tenant makes any assignment or composition for the benefit
of creditors, or if any proceedings are commence to have the Tenant declared
insolvent, or if a receiver or trustee is appointed to take charge of the
Tenant's affairs, or if Tenant shall become insolvent or incapable of
discharging its debts as they become due, or if anything shall occur the
Landlord to deem itself insecure, then the Landlord may terminate this Lease
forthwith, and the Tenant shall remain liable for all damages to the leased
premises and rent as set forth in paragraph 10, below. This Lease shall not be
or become an asset of the insolvency state.
7. SUBORDINATION. This Lease is subject to all present and future mortgages
and deeds of trust affecting the leased premises, as well as covenants and
restrictions of record without need of further written agreement to such effect;
but Tenant agrees to execute on demand any and all appropriate documents or
papers to effectuate the provisions of this paragraph.
8. FIRE. If the leased premises shall be damaged or destroyed by fire or
other casualty, the Landlord shall have five (5) months, more or less, within
which to repair or restore the same. Until the premises are restored, the rent
shall be abated in an amount corresponding to the period and the extent to which
the premises are untenantable. If the Landlord shall fail to restore the
premises within five (5) months after such damage or destruction, at the option
of the Landlord, this Lease shall thereupon terminate.
9. EMINENT DOMAIN. In the event that the Federal, State, County or Town
authorities, or any branch or bureau of either or any of said authorities should
acquire the leased premises by eminent domain proceedings or under threat of
eminent domain proceedings by private purchase, the Landlord, its successes or
assigns, may recapture the lands and premises so condemned or acquired by
purchase by giving to the Tenant a ninety (90) days written notice to remove
from and quit the leased premises, and thereupon this Lease and the term created
by it shall fully cease and determine; but in no event shall the Landlord be
obligated to compensate the Tenant out of the purchase price, or
<PAGE>
10. award or otherwise, for any loss the Tenant may sustain by reasons of such
sale or condemnation to the goodwill, custom or patronage incident to the
Tenant's business which it may have been conducting in and upon the leased
premises, or for any claim that the Tenant may have for such sale or
condemnation. The Tenant shall be free to make any claim available to it from
such condemning authority.
10. DEFAULT AND REMEDIES. (a) In the event of any breach of any covenant or
condition of this Lease or if the premises are deserted or vacated by Tenant,
the Landlord shall have the right to enter, by force if necessary, as Tenant's
agent to relate the leased premises, on behalf of the Tenant and to apply there
income to the payment of rent due under this Lease and to hold Tenant liable and
to sue the Tenant for any deficiencies resulting therefrom, including rent not
yet due under this Lease for the unexpired balance of the term of this Lease and
including reasonable attorneys' fees and court costs.
(b) If the rent agreed to be paid, including all other sums of money which
under the provisions hereof may be considered as additional rent, shall be in
arrears in whole or in part for Thirty (30) or more days, Landlord may distrain
therefor (and in connection with distraint proceedings Tenant agrees that a
nominal bond not to exceed Five Hundred Dollars ( $500.00) shall be sufficient),
and the covenant to pay rent herein shall be considered breached by Tenant. If
enant shall be in breach of any of the covenants set forth in this Lease
Agreement, Landlord may at its option, after having given notice set forth
below, and if Tenant, after such notice, shall fail to remedy such breach as set
forth below, reenter the leased premises without the need for resort to judicial
proceedings, and declare this Lease and the tenancy hereunder terminated, and
Landlord shall be entitled to the benefit of all provisions of the law
respecting the speedy recovery of lands and tenements held over by tenants or
proceedings in forcible entry and detained. Tenant agrees that if Landlord
shall so reenter or if this Lease shall be terminated by Landlord because of
breach hereunder by Tenant:
(a) If the rent shall become due thereupon and be paid up to the time of
reentry, dispossession, expiration or termination, together with reasonable
express Landlord as hereinafter defined; and
(b) Landlord may relate the leased premises or any part thereof,
either in the name of Landlord or otherwise, for a term or terms which may,
at Landlord's option, be less than or exceed the period which would
otherwise have constituted the balance of the terms which may, at
Landlord's option, be less than or exceed the period which would otherwise
have constituted the balance of the term of this Lease and may grant
reasonable concessions; and
c Tenant shall also pay to Landlord as liquidated damages upon demand by
Landlord at any time following such reentry or termination for the failure of
Tenant to observe and perform the covenants of this Lease, any deficiency
between (a) the sum of ( i ) the minimum monthly rent as adjusted in this Lease
for changes in the cost of living for the month immediately preceding such
reentry or termination, plus ( ii ) the additional rent (adjusted to a monthly
payment) payable hereunder for the month immediately preceding such reentry or
termination times the number of months constituting the balance of the lease
term, and (b) the amount, if any, of rents actually collected up to the time of
Landlord's demand for liquidated damages on account of the leased premises for
any of the period following the date of reentry, dispossession, expiration, or
termination which would otherwise have constituted the balance of the term of
the Lease.
In computing such liquidated damages, which shall be payable to Landlord
upon demand as aforesaid, there shall be added to the said deficiency such
reasonable expenses as Landlord may incur in connection with reletting, such as
court costs, attorneys' fees, real estate brokerage commissions, and for keeping
the leased premises in good order or for preparing the same for reletting. All
liquidated damages hereinabove described shall be payable in full upon
termination of the Lease or reentry by Landlord as aforesaid.
In the event Landlord shall determine that Tenant shall be in breach in the
performance of any of the covenants on its part to be performed hereunder,
except for the payment of rent and/or additional rent, Landlord shall be
required to give written notice thereof to Tenant. Tenant shall have ten (10)
days following receipt of such written notice to cure the breaches described in
such notice, unless Landlord shall agree in writing to any extension of such
period; PROVIDED, HOWEVER, if Tenant shall proceed with due diligence to cure
said breaches after said notice, then such ten (10) day period shall be extended
to such a period of time as may be required, in the Landlord's reasonable
discretion, to cure such listed breaches while proceeding with due diligence.
The provisions herein dealing with notice and granting to the Tenant a grace
period for performance shall not be applicable to a Tenant's breach of this
Lease Agreement because of nonpayment of rent and/or additional rent. There
shall be no notice requirements required or grace periods allowed (other than
those specifically applicable to payment of rent or additional rent) in the
case of a breach of this Lease Agreement by Tenant for nonpayment of rent
(minimum and additional).
( c ) No mention in this Lease of any specific right or remedy shall
preclude landlord from exercising any other right or from having any other
remedy or from maintaining any action to which it may be otherwise entitled
either at law or in equity; and the failure of Landlord to insist in any one or
more instances upon a strict performance of any promise, covenant, condition or
agreement of this Lease or to exercise any option or right herein contained
shall not be construed as a waiver or relinquishment for the future of such
promise, covenant, condition, agreement, right of option, but the same shall
remain in full force and effect unless the contrary is expressed in writing by
Landlord.
<PAGE>
11. ASSIGNMENT. Tenant will not transfer or assign either the benefits of or
burdens under this Lease or make any sublease of the leased premises without the
written consent of the Landlord; and the Landlord agrees that such consent shall
not be unreasonably withheld in the case of a suitable, financially responsible
subtenant or assignee. "Transfer" or "assignment" shall include sale or
transfer of the majority stock of the Tenant. Landlord's consent to any
assignment, subletting, occupation, or use by another person shall not be deemed
to be a consent to any subsequent assignment, subletting, occupation, or use by
another person, and Landlord shall have the continuing right of approval set
forth.
12. RIGHT OF ENTRY. The Landlord shall have the right to enter the leased
premises at all reasonable hours to examine the same as well as to make any
necessary alterations and repairs to the premises or to contiguous premises
owned by the Landlord; and during the last six (6) months of the term of this
Lease, the Landlord shall have the right to enter the leased premises at
reasonable times and hours to exhibit the same for rental. Landlord may enter
to exhibit the premises for sale at any time during the term hereof. It is
understood and agreed that Landlord shall retain a master set of keys by which
it can gain access to the leased premises in case this may be required in the
event of needed repairs or emergency. If at any time Tenant shall change any of
the locks on doors in the leased premises, then Tenant shall immediately give
Landlord notice of such change, and a set of master keys allowing to the
Landlord total access to the leased premises.
13. HOLDING OVER. If Tenant shall hold over after the expiration of this
Lease, it shall be a Tenant from month to month at twice the monthly rate in
effect during the last month of the expiring term of this Lease.
14. COMMISSION:
Mackintosh, Inc. was the real estate agent who procured the Tenant, and
shall be entitled to a commission amounting to Five percent (5%) on the base
rents for procuring the Tenant under this Lease.
15. QUIET ENJOYMENT. Upon payment by the Tenant of the rents herein provided,
and upon the observance and performance of all the covenants, terms and
conditions on Tenant's part to be observed and performed, Tenant shall peaceably
and quietly hold and enjoy the leased premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitably claiming by, through or under the Landlord, subject,
nevertheless, to the terms and conditions of this Lease.
16. NO WAIVE. Any waiver of a default or breach of any covenant or condition
under this Lease shall not be deemed a waiver of any subsequent default or
breach.
<PAGE>
17. SUCCESSORS. The terms, covenants and conditions contained in this Lease
shall bind and inure to the benefit of the Landlord and Tenant, their respective
heirs, legal representatives, successors and assigns; but as to assigns of
Tenant, only if the assignment has been consented to by the Landlord.
18 NOTIFICATION. No change, waiver or modification of the terms hereon shall
be binding unless in writing and signed by both the Landlord and the Tenant.
19. MISCELLANEOUS. (a) Neither the shareholders, officers, directors,
trustees, individuals or partners comprising Landlord nor the shareholders (or
any of the partners comprising same), directors, trustees, officers, or partners
of any of the foregoing (collectively, the "Parties") shall be liable for the
performance of the Landlord's obligations under this Lease. Tenant shall not
seek any damages against any of the Parties. The liability of Landlord for
Landlord's obligations under this Lease shall not exceed and shall be limited to
the Landlord's interest in the leased premises and the land on which the leased
premises is situated, and Tenant shall not look to any other property or assets
of any of the Parties in seeking either to enforce Landlord's obligations under
his Lease or to satisfy a judgment for Landlord's failure to perform such
obligations.
(b) The parties hereto shall and they hereby do waive trail by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, Tenant's use
or occupancy of the leased premises and/or any claim of injury or damage. In
the event Landlord commences proceedings for nonpayment of rent, Tenant shall
not interpose any counterclaim of whatever nature or description in any such
proceedings except as such may be required by law to be interposed or forever
lost. This shall not, however, be construed in any way as a waiver of Tenant's
right to assert such claims in any separate action or actions brought by Tenant.
Tenant hereby expressly waives any and all rights of redemption granted by or
under dispossessed for any cause, or in the event of Landlord obtaining
possession of the leased premises by reason of the violation of Tenant of any of
the agreements of this Lease, or otherwise.
( c ) The landlord has informed the Tenant, in advance, that it may
develop the property that it owns at Grove Road as a condominium regime and,
therefore, the Tenant does hereby consent, in advance, to subdivision and/or
development of the building and improvement and land of which the leased
premises area part into the formation of individual and separately salable units
(in the nature of condominium units, cooperative units or otherwise). Tenant
does hereby consent, in advance, to the creation of such organizations in
connection with such subdivision and./or development of all or part of the
Landlord property at Grove Road as the Landlord shall determine appropriate , as
long as the rights of <PAGE>
the Tenant pursuant to the terms of this Lease are not thereby adversely
affected ; and the Tenant further agrees to pay all or any portion of the
additional rents required to be paid under this Lease to such regime,
association or organization as may be directed by the Landlord , as long as such
additional rents shall not be increase over and above those required to be paid
hereunder by the Tenant. As long as the subdivision , condominium , cooperative
or similar development shall not adversely affect the rights of the Tenant under
this Lease Agreement , regardless of whether or not the Tenant may have a
sufficient interest in the real property under law to require its consent to
the documents involved in such law to require its consent to the document
involved in such matter, the Tenant ( i ) does hereby specifically waive such
rights, and if such rights cannot be waived, ( ii ) does hereby consent to such
matters in advance, and (iii ) does hereby further irrevocably appoint the
Landlord and/or Joseph S. Welty (jointly and/or severally) its attorney-in-fact
to execute any and all documents that may be needed to be executed by Tenant
regarding any such subdivision, condominium, cooperative or similar development.
Further, in the event the Landlord hereunder should so subdivide and/or
develop its property at Grove Road, or any part thereof, into separately
saleable and/or transferable units, the Tenant does hereby agree, in advance, to
attorn to any purchaser of any unit which shall consist of the leased premises
and recognizes such purchaser as Landlord under the terms and provisions of this
Lease and no further consent of the Tenant shall be required, as long as the
purchaser of any unit consisting of the leased premises agrees in writing with
the Tenant to honor the rights and privileges of the Tenant under this Lease.
Additionally, the Tenant does hereby agree in advance that should the Landlord's
property as a whole by sold by the Landlord, then without further consent being
necessary, it shall attorn to the purchaser as Landlord under this Lease, as
long as such purchaser shall agree in writing with the Tenant to honor the
rights and privileges of the Tenant under the terms and conditions of the Lease.
(d) Tenant agrees that at any time and from time to time during the term of
this Lease, and within ten (10) days after demand therefor by Landlord, to
execute and deliver to Landlord or to any proposed mortgagee, trustee,
beneficiary or purchaser, a certificate of recordable form certifying that this
Lease is in full force and effect, that the Lease is unmodified, or if modified
state any such modifications, and that there are not defenses or offsets
thereto, or stating such defenses or offsets as are claimed by Tenant, and the
dates to which all rentals have been paid. Upon delivery of such written
certificate, Tenant shall thereafter be estopped from claiming any modification,
defense, offset or added paid sums not claimed to have been paid, but Tenant
shall be bound by such certificate, the accuracy of which Landlord shall be
entitled to challenge if it determines such certificate to be at variance with
its records.
<PAGE>
(e) (After written notice), Landlord may relocate Tenant to other space that
is reasonably similar to the premises in the complex owned by Landlord at Grove
Road containing at least the same amount of square feet as contained in the
premises, provided that the costs of relocating Tenant and the costs of altering
the new space to make it comparable to the premises is borne by Landlord.
Landlord shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant or discontinuing the terms of
the Lease or in any manner changing the provisions in the Lease, to change the
arrangement and/or locations of any and all public entrances, passageways,
doors, doorways, corridors, elevators, stairs, toilets, parking facilities or
other parts of the aforesaid complex or structures associated therewith.
(f) Tenant shall not cause or permit any Hazardous Substance (hereinafter
defined) to be used, stored, generated or disposed of on or in the Leased
Premises by Tenant, Tenant's agents, employees, contractors or invitees, without
first obtaining Landlord's written consent. If Hazardous Substance are used,
stored, generated or disposed of on or in the Leased Premises except as
permitted above, of if the Leased Premises become contaminated in any manner for
which Tenant is legally liable, Tenant shall indemnify and hold harmless the
Landlord from any and all claims, damages, fines, judgments, penalties, costs,
liabilities or losses (including, without limitation, a decrease in value of the
Leased Premises, damages due to loss or restriction of rentable or usable space,
or any damages due to adverse impact on marketing of the space, and any and all
sums paid for settlement of claims, attorneys' fees, consultant and expert fees)
arising during or after the term hereof and arising as a result of such
contamination by Tenant. This indemnification includes, without limitation, any
and all costs incurred due to any investigation of the site or any cleanup,
removal or restoration mandated by a federal, state or local agency or political
subdivision. Without limitation of the foregoing, if Tenant causes or permits
the presence of any Hazardous Substance on the Leased Premises and such results
in contamination, Tenant shall promptly, at its sole expense, take any and all
necessary actions to return the Leased Premises to the condition existing prior
to the presence of any such remedial action. As used herein, "Hazardous
Substance" means any substance which is toxic, ignitable, reactive, or corrosive
and which is regulated by any local government, the State of Mary, or the United
States government. "Hazardous Substance" includes any and all material or
substance which are defined as "hazardous waste", "extremely hazardous waste",
or a "hazardous substance" pursuant to state, federal or local governmental law.
"Hazardous Substance" includes, but is not restricted to, asbestos,
polychlorobiphenyls ("PCB's") and petroleum. The indemnification provisions
herein shall survive termination of this Lease and the Lease herein term
created, and they shall also survive any lease renewals and subsequent
termination's thereof.
<PAGE>
(g) Tenant understand, before moving into the premises for the purpose of
establishing the activity described in paragraph 1. Above, that Tenant may be
required to obtain from appropriate governmental authorities various approvals
and permits for such activity, including, but not limited to, a use and
occupancy permit, depending on what jurisdiction or political subdivision in
which the premises are located. Tenant also understands that in some cases,
depending on the facts and circumstances of each cases, some alterations or
improvements may be required to the premises depending on the use proposed by
the Tenant. Tenant accepts full and total responsibility for applying for,
paying all fees in connection with, satisfying all conditions for, and obtaining
issuance of any permits as shall be required for Tenant's occupancy, all at the
cost and expenses of Tenant. Landlord has made no representations whatsoever as
to any of the above matters, including, but not limited to, what, if any,
permits and approvals are required, what conditions would have to be fulfilled
or what cost, if any, would be involved in obtaining such approvals or permits.
If issuance of appropriate governmental approval or permit would require any
alteration, improvement or modification to the premises, then Tenant must
receive prior written approval of Landlord, and must otherwise deal with such
matters (including, but not limited to, removal upon termination), in the same
manner as otherwise provided in paragraph 5.(g) above.
IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals
to this Lease as a specialty instrument; and in the event either is not an
individual, such signature has been affixed by the party's duly authorized
applicable officer, partner and/or agent.
FREDERICK PARK LIMITED PARTNERSHIP
GRANBERRY, INC. - GENERAL PARTNER
WITNESS: BY:
_____________________________ _______________________________________
LANDLORD
____________________________ _______________________________________
Anthony Kopsidas
TENANT
<PAGE>
ADDENDUM TO BASIC COMMERCIAL LEASE AGREEMENT
Addendum to Basic Commercial Lease Agreement dated the 28th day of May,
1996, by and between FREDERICK PARK LIMITED PARTNERSHIP, hereinafter called
Landlord, and ATLANTIC COPIER TECHNOLOGIES, INC. hereinafter called Tenant, is
incorporated and made an integral part of the basic Lease Agreement.
1. TEMPORARY SPACE: Tenant will lease for the first two (2) months of the
lease unit 7311-H, (2500sf) until the existing lease expires on 7311-B on July
31, 1996. The lease rate on the temporary space will be calculated at $4.50 sf
NNN. On August 1st, 1996 the tenant can move into 7311-B and all terms and
conditions in the lease will be effect.
_______________________________ _______________________________
LANDLORD TENANT
Exhibit 10.22
Fifth Amendment to Lease with Suburban Station Associates
FIFTH AMENDMENT TO OFFICE LEASE
THIS FIFTH AMENDENT TO OFFICE LEASE, made this 25th day of September, 1996,
by and between SUBURBAN STATION ASSOCIATES (hereinafter called "Landlord") and
ON-SITE SOURCING, INC., a Pennsylvania corporation, (hereinafter called
"Tenant").
WITNESSETH
WHEREAS, by lease dated October 22, 1993, Landlord leased to Tenant all
those certain portions of the Third (3rd) floor of a building known an "One Penn
Center at Suburban Station" located at 1617 JFK Boulevard, Philadelphia, PA, as
well as additional space as referenced in lease amendments one through four,
("Premises") for a term of year upon certain terms an conditions as more fully
set forth in the Lease; and
WHEREAS, as of October 15, 1996 (the "Effective Date"), the Tenant desires
to expand the Premises by adding thereto additional space on the Eighteenth
(18th) floor of the Building (hereinafter referred to as "additional premises")
and to accomplish such expansion by amending the Lease upon the terms and
conditions set forth herein; and
WHEREAS, the parties hereto desire to modify the provisions of the Lease,
upon the terms and conditions more fully hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto, intending to be legally bound hereby, covenant and agree as
follows:
1. Commencing as of the Effective Date and for the balance of the term of the
Lease:
(a) The Premises shall contain an area of Seven Thousand Nine Hundred Seventy
Nine (7,979) square feet including the additional premises which contain One
Thousand Nine Hundred Eighty One (1,981) square feet and are located as shown on
the plan attached hereto as Exhibit "A". The additional premises shall be used
and operated by Tenant for the same use Tenant is permitted to use and operate
the Premises originally demised by the Lease which use is permissible hereunder.
The premises and additional premises are hereinafter referred to collectively as
the "Premises".
2. The Minimum Rent shall be amended commencing October 15, 1996 (provided
construction of the additional premises is complete) and for the balance of the
lease term so that the same shall be as follows:
Year Monthly
10/15/96 - 10/31/00 $110,503.50 $9,208.63
<PAGE>
This rent represents the existing base rent plus the rent for the
additional premises of $16.00 per square foot annually. (See Exhibit B)
3. Commencing October 15, 1996, and (provided construction of the additional
premises is complete) for the balance of the term Real Estate Tax Percentage and
Operating Expense Percentage will be amended to 1.2695% and 1.2312%
respectively.
4. Landlord shall, prior to delivering possessions of the additional Tenant
premises to Tenant, perform a reasonable turn-key construction of the additional
premises, not to exceed $15.07 per square foot or $29,853.67 ("Landlord's
Work"). Landlord shall make reasonable efforts to complete Landlord's Work in a
timely manner.
If Tenant requests any changes to the Premises which result in an increase
in costs, (such excess costs hereinafter being referred to as the "Required
Excess Funds"), then Tenant shall pay Landlord any such Required Excess Funds
within fifteen (15) days after receipt of a bill(s).
5. Landlord agrees to provide Tenant with a Right of First Offer on the
contiguous space on the 18th floor, subject to rights of existing tenants, if
any. Prior to leasing the ROFO space to a third party, Landlord will provide
Tenant with the terms and conditions it would be willing to lease said space to
Tenant (the Offer Notice). The Offer Notice is applicable only to the entire
space, not a portion thereof. Tenant will have five (5) business days in which
to accept the Offer Notice. If said 5 day time period elapses, Tenant shall
have waived any further right to said space.
7. It is understood and agreed between the parties hereto that said Lease, as
hereby renewed and extended, shall have the same effect as through the period
for which said Lease is renewed and extend was included in and made part of the
original term, and all covenants, conditions, remedies, and terms of the Lease
including any warrant of attorney granted to Landlord and the security payment
provision, if any, shall remain in full force and effect, except as aforesaid.
8. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the day and year first above written.
<PAGE>
LANDLORD:
SUBURBAN STATION ASSOCIATES, a
Pennsylvania limited partnership
BY: EVSA ASSOCIATES, LP.
General Partner
BY: EVSA, INC.
General Partner
BY:______________________________
SCOTT JANZEN
VICE PRESIDENT
TENANT:
ON-SITE SOURCING, INC.
BY:____________________________
Title:___________________________
[CORPORATE SEAL] Attest:__________________________
Title:___________________________
EXHIBIT B
Rent Calculation:
Original Premises 4903 sf x 12.50 psf = $62,287.50
+Additional Premises 1095 sf x $16 psf = $17,520.00
4th Amendment
+ Additional Premises 1981 sf x $16 psf - $31,696.00
Annual $110,503.20
Monthly $ 9,208.63
Exhibit 10.25
First Amendment to Lease with Kingston Atlanta Partners, L.P.
FIRST AMENDMENT TO STANDARD FOR LEASE (OFFICE)
THIS FIRST AMENDMENT TO STANDARD LEASE FORM (OFFICE) ("First Amendment")
dated as of the ___day of June, 1996, by and between KINGSTON ATALANTA PARTNERS,
L.P., a Delaware limited partnership ("Landlord") and ON-SITE SOURCING, INC., a
Delaware corporation ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Pershing Point
Plaza Standard Form Lease (Office), dated December 15, 1995 (the "Lease") for
5.512 rentable square feet of space located on the second floor (as defined in
the Lease, the "Premises") at 1375 Peachtree Road, N.E., Atlanta, Georgia (as
defined in the Lease, "Building"); and
WHEREAS, in Paragraph 10 to the Special Stipulations in the Lease,
Landlord and Tenant agreed that Tenant would have the right of first opportunity
to lease additional space adjacent to the Premises (as defined in the Lease, the
"ROFO Space") for a period of two years following the Commencement Date of the
Lease (as defined in the Lease, the `ROFO");
WHEREAS, Pursuant to terms of the ROFO, Landlord has notified Tenant of
its intention to Lease the ROFO Space to an interested third party and Tenant
has notified Landlord of its election to exercise the ROFO with regard to the
ROFO space; and
WHEREAS, Pursuant to the Lease, Landlord and Tenant wish to enter into the
First Amendment to add the ROFO to the Premises governed by the Lease, and to
address certain other agreements between the parities;
NOW, THEREFORE, for and in consideration of the premises hereto, the
keeping and performance of the covenants and agreements hereinafter contained,
and for Ten and No/100 Dollars $10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant, intending to be legally bound, agree as follows:
1. Defined Terms. All terms used herein and denoted by their initial
capitalization shall have the meanings set forth in the Lease unless set forth
herein to the contrary.
2. Name of Tenant. All reference in the Lease to "On Site Sourcing" shall
hereby be replaced with "On-Site Sourcing, Inc." The parties hereto acknowledge
that the reference herein is being changed to correct a scrivener's error, and
each party, intending to be bound by the terms of the Lease, hereby ratifies and
confirms all provisions thereof, as amended by this First Amendment.
<PAGE>
3. Additional of ROFO Space to the Premises. The language "and effective July
1, 1996, the additional premises described on that certain floor plan attached
hereto as Exhibit "A-1" and incorporated herein by reference" shall be added to
the third line in Paragraph 1 of the Lease immediately following the phrase
"certain premises described on that certain floor plan attached hereto a
Exhibit "A" and incorporated herein by reference".
4. Area of ROFO Space. Landlord and Tenant hereby stipulate and agree that
the ROFO Space contains 1,832 rentable square feet and 1/593 useable square
feet.
5. Base Rent for ROFO Space. Exhibit "B" to the Lease is hereby deleted in
its entirety and the attached Exhibit "B" hereby substituted therefore.
6. Leasehold Improvement Allowance for ROFO Space.
(a) Subject to the provisions of this Paragraph 6, Landlord shall perform or
cause to be performed all work in and to the ROFO Space in accordance with the
construction documents dated June 7, 1996 prepared by Rabaut Design, Inc. and
approved by Landlord ("Construction Documents") (the "Work"). Tenant shall be
solely responsible for all costs and expenses of performing the Work, including
without limitation, the cost of obtaining all permits, except that Landlord
shall provide Tenant an allowance to be applied toward such costs in an amount
equal to Twenty One Thousand Six Hundred Sixty-Four and 80/100ths Dollars
($21,664.80) (the `ROFO Space Improvement Allowance"). Tenant hereby agrees
that the ROFO Space Improvement Allowance shall not be used for signs,
furniture, fixtures, equipment, moving costs, or similar items, and the ROFO
Space Improvement Allowance shall only be used for "hard" construction costs
associated with building of the Work and at any time thereafter, Tenant agrees
to pay to Landlord, in advance, any costs of performing any of the Work in
excess of the ROFO Space Improvement Allowance. Any portion of the ROFO Space
Improvement Allowance not utilized in connection with initial improvements of
the Premises in accordance with the provisions of the Construction Documents
shall be retained by Landlord for Landlord's benefit.
(b) If at Tenant's request and upon submission by Tenant of all necessary
drawing, plans and specifications, Landlord agrees to perform any other work in
addition to the work shown in the Construction Documents, or, if Tenant, subject
to Landlord's cost of performing the Work contemplated thereby, then, in either
case, the additional work so contemplated and additional costs therefrom (the
"Extra Work") will be done at Tenant's sole cost and expense and payment for
such Extra Work shall be evidenced by an agreement ("Work Request Agreement")
signed by an authorized officer of Tenant authorizing Landlord to perform such
Extra Work at Tenant's sole cost and expense. Prior to commencing any such
Extra Work request by Tenant, Landlord shall submit to Tenant written estimates
of the cost of such Extra Work. If Tenant shall fail to approve said estimates
within two (2) business days from the <PAGE>
(c) Agreement, the same shall be deemed disapproved in all respects by Tenant
and Landlord shall not be authorized to proceed thereon, in which case Landlord
shall proceed with construction based on the Constitution Documents and without
regard to the proposed change order, absent agreement of the parties to the
contrary. Landlord shall not be liable for any damages, nor shall the
Commencement Date be delayed, nor any Base Rent or Additional Rent abated, as a
result of the construction or performance of any Extra Work or of any delay in
such construction or performance.
( c) Failure by Tenant to pay in full any sums payable for the Work or
Extra Work in excess of the ROFO Space Improvement Allowance or the Design
Allowance pursuant to this paragraph 6 will constitute failure to pay Additional
Rent when due and an event of default under the Lease giving rise to all
remedies available to Landlord under the Lease and at law or in equity.
(d) Upon completion of the Work contemplated by the Construction Documents,
Tenant shall provide to Landlord upon Landlord's request, a written
certification that the Work has been done in compliance with this Lease.
(e) Tenant shall obtain complete plans, drawings and specifications ("Plan")
for work to be performed to prepare the ROFO Space for occupancy. The plans and
drawings shall be prepared by a party to be selected by Tenant, subject to
Landlord's approval and shall be paid by Tenant, in accordance with the
provisions of Paragraph 6(d) above. Notwithstanding the foregoing, Landlord
shall reimburse tenant in an amount up to $1,593.00 (the "Design Allowance") for
the actual costs incurred by Tenant in preparing the Plans. The Design
Allowance shall become payable by Landlord on the later of July 1, 1996 or the
date that
(f) Tenant occupies the ROFO Space, upon presentation of proof of payment to
the designer by Tenant, provided, however, that prior to the commencement of the
Work or at any time thereafter, Tenant agrees to pay to Landlord in advance, any
costs of performing any of the Work in excess of the Design Allowance. Any
portion of the Design Allowance not utilized in connection with Plans shall be
retained by Landlord for Landlord's benefit.
7. Right of First Offer. Paragraph 10 in the Special Stipulations to the
Lease is hereby deleted from the Lease and shall have no further force and
effect. The parties hereto acknowledge and agree that there are no other rights
of first offer, rights of first refusal or expansion options under the Lease.
8. Continued Validity. Except as hereinabove provided, all other terms and
conditions of the Lease shall remain unchanged and in full force and effect, and
are hereby ratified and confirmed by Landlord and Tenant. Tenant hereby
acknowledges and agrees that, as of the date hereof, the Lease is subject to no
offsets, claims, counterclaims or defenses of any nature whatsoever.
9. Modifications. This Agreement may not be changed, modified, discharged or
terminated orally in any manner other than by an
<PAGE>
agreement in writing signed by Landlord and Tenant or their respective
heirs, representatives, successors and permitted assigns.
10. Authority of Tenant. The person executing this Agreement on behalf of
nant does hereby personally represent and warrant that Tenant is a validly
existing corporation and is fully authorized and qualified to do business in the
State of Georgia, that the corporation has full right and authority to enter
into this Agreement, and that the undersigned, who is signing on behalf of the
corporation, is a duly authorized officer of the corporation and is authorized
to sign on behalf of the corporation.
11. Broker. Tenant hereby reaffirms the representation set forth in Paragraph
38 of the Lease as of the date hereof, and the indemnity set forth therein.
[REMAINDER OF PAGE INTENTIALLY LEFT BLACK]
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands and affixed their
seals to this Agreement to be effective as of the day and year first above
written.
"LANDLORD"
KINGSTON ATLANTA PARTNERS, L.P. a
Delaware limited partnership
` By: Pershing Properties, Inc., its sole partner
By: _____________________________
Name: _____________________________
Title: _____________________________
[AFFIX CORPORATE SEAL]
"TENANT":
ON-SITE SOURCING, INC., a Delaware corporation
By: __________________________________
Name: Anthony A. Kopsidas
Title: Vice President, Operations
[AFFIX CORPORATE SEAL]
<PAGE>
EXHIBIT "B"
Base Rent
Months Rent/Month Rent/Year
1 $0 N/A
2-6 ($5391.17) $64,766.04
7-73 ($7185.00) $86,292.00
<PAGE>
STORAGE AREA LEASE AGREEMENT
THIS STORAGE AREA LEASE AGREEMENT (the "Lease"), made this 22nd day of August,
1996, by and between KINGSTON ATLANTA PARTNERS, L.P. (Landlord) whose address is
1375 Peachtree Road, Suite 700, Atlanta, Georgia 30303; and ON-SITE SOURCING,
INC. ("Tenant"), whose address is 1375 Peachtree Road, Suite 210, Atlanta,
Georgia 30303.
WITNESSETH
1. PREMISES AND TERM
(a) Landlord hereby rents and leases to Tenant, and Tenant hereby rents and
leases from Landlord, space of 130 rentable square feet, more or less (the
"Premises") , being Suite 210A in the 1375 Building at Pershing Point Plazas
(the "Building"), 1375 Peachtree Road, Atlanta, Georgia 30303. The Premises are
more particularly shown and outlined on the space plans attached hereto as
Exhibit "A", and made a part hereof.
(b) The term of this Lease (the "Term") shall commence on the 1st day of
September, 1996, (the "Commencement Date") and end at midnight on the 28th day
of February, 2002 unless sooner terminated or extended as herein provided. This
lease shall be effective and enforcement upon its execution and delivery,
whether such execution and delivery occurs on, prior to, or after the
Commencement Date.
c All the windows and outside walls of the Premises, and any space in the
Premises used for shafts, pipes, conduits, ducts, telephone ducts and equipment,
electric or other utilities, sinks or other Building facilities, and the use
thereof and access thereto through the Premises for the purposes of operation,
maintenance, inspection, display and repairs are hereby reserved to Landlord.
2. RENTAL
(a) Tenant shall pay to Landlord at the address of Landlord indicated herein or
at such other place Landlord designates without demand, deduction or setoff, an
annual rental in the amount of $1,200.00 payable in equal monthly installments
of $100.00 each (the "Monthly Rental") in advance on the first day of each
calendar month during the Term. The term "Rent", as used herein, shall mean
Monthly Rental.
3. <PAGE>
4. USE
Tenant shall use an occupy the Premises as a storage area only. Tenant's
employees or agents shall have access as needed in conjunction with the
operation and maintenance of the Premises as a storage area, but in no event
shall Tenant provide office space in the Premises for its employees or agents or
permit its employees or agents to occupy said Premises on a full-time basis.
Tenant's use of the Premises shall not violate any ordinance, law or regulation
of any governmental body.
4. DELIVERY OF THE PREMISES
Landlord shall deliver possession of the Premises to Tenant, and Tenant
accepts the Premise from Landlord, in "AS IS/WHERE IS" condition, broom clean,
and Landlord shall have no obligation to install any tenant finishes to the
Premises.
5. SERVICES
Landlord shall provide only the following services to the Premises:
( i) Elevator service for delivery needs;
( ii) Janitorial service for all common areas; and
( iii) Electricity.
6. ASSIGNMENT AND SUBLETTING
Tenant shall not sublet any part of the Premises, nor assign this Lease or
any interest herein, without the prior consent of Landlord.
7. CONDEMNATON
(a) If all of the Premises are taken by virtue of eminent domain or are
conveyed in lieu of such taking, this Lease shall expire on the date when title
or right of possession vests, and Rent paid for any period beyond said date
shall be repaid to Tenant. In the event of a partial taking the Rent shall be
adjusted in proportion to the square feet of Premises taken. In either event
Tenant shall not be entitled to any part of the reward or any payment in lieu
thereof and expressly waives any right to make any claim which would reduce the
award otherwise payable t Landlord.
(b) Landlord shall have, in its discretion, the option of terminating this
Lease if such condemnation or conveyance in lieu thereof makes continuation of
Landlord's use of the Building as contemplated herein economically unfeasible.
<PAGE>
8. FORM LEASE
Attached hereto as Exhibit "B" and by this reference incorporated herein is
the form lease for space at Pershing Point Plaza (the "Form Lease"). Except as
may be inconsistent with the terms hereof, all the terms, covenants and
conditions contained in the Form Lease shall e applicable to this Lease with the
same force and effect as if Landlord were the "Landlord" under the Form Lease
and Tenant were the "Tenant" thereunder; and in case of any breach of this Lease
by Tenant, Landlord shall have all the rights against Tenant as would be
available to the "Landlord" against the "Tenant" under the Form Lease if such
breach were by the "Tenant" thereunder.
9. NOTICES
Any notice, request or consent by either party to the other hereunder shall
be valid only if in writing and shall be deemed to be duly given only if hand
delivered, or sent by certified mail or by a recognized national overnight
delivery service which as a receipt of notice as a part of its delivery
function. Such notices shall be addressed ( i ) if to Tenant, at the Premises
and (ii) if to Landlord, at Landlord's address set forth above, or at such other
address for either party a that party may designate by notice to the other.
Notice shall be deemed given, if delivered personally, upon delivery thereof,
and if mailed, upon the mailing thereof.
10. TERMINATION
Landlord or Tenant may terminate this Lease by providing the other not less
than ninety (90) days' prior written notice of their intent. Tenant agrees to
surrender the Premises in the same condition as it was delivered to Tenant,
normal wear and tear excepted, prior to the expiration of the ninety days'
notice period.
11. HEIRS, SUCCESSORS, AND ASSIGNS - PARTIES
The provision of this Lease shall bind and inure to the benefit of Landlord
and Tenant, and their respective successors, heirs, legal representatives and
assigns.
12. SECURITY DEPOSIT
Tenant has deposited with Landlord $ -0- as a security deposit for the
performance by Tenant of all the terms, covenants and conditions of this Lease
upon Tenant's part to be performed. Landlord shall have no obligation to
segregate such security deposit from any other funds of Landlord, and interest
earned on such security deposit, if any, shall belong to Landlord. The security
deposit shall be returned to Tenant within thirty (30) days after the expiration
of the Term hereof, if Tenant has fully performed its obligations hereunder.
Landlord shall have the right to apply any part of said security deposit to cure
any default of Tenant and if Landlord does so, Tenant shall upon have the full
security deposit on hand at all times during the Term of this lease. If there
is a sale or lease of the Building subject to this lease, Landlord shall be
released from all liability for the return of such security deposit. Tenant
shall look solely to the successor Landlord for the return of said security
deposit.
<PAGE>
13. RIGHT TO RELOCATE
At the time or from time to time during the term of this Lease or any
renewal thereof, Landlord shall have the unrestricted and unconditional right to
relocate Tenant to similar or higher quality space within the project currently
referred to as "Pershing Point Plaza" Should Landlord exercise its right to
relocate Tenant, any and all costs incident to such relocation shall be
determined prior to relocation of Tenant. If Tenant is not agreeable to
relocation, Landlord may terminate this Lease and Tenant shall vacate the
Premises within nineth (90) days of Landlord notice of termination.
14. BROKERAGE COMMISSION; INDEMNITY
FAISON & ASSOCIATES, INC. ("FAISON") HAS ACTED AS CONTRACT MANAGER FOR LANDLORD
IN THIS TRANSACTION. FAISON HAS NOT ACTED AS AGENT FOR TENANT IN THIS
TRANSACTION. FAISON IS TO BE PAID A COMMISSION BY LANDLORD. Tenant warrants
that there are no other claims for broker's commission or finder's fees in
connection with its execution of this Lease. Tenant hereby indemnifies Landlord
and holds Landlord harmless from and against all loss, cost, damage or expense,
including, but not limited to, attorney's fees and court costs, incurred by
Landlord as a result of or in conjunction with a claim of any real estate agent
or broker, if made by, through or under Tenant. Landlord hereby indemnifies
Tenant and holds Tenant harmless from and against all loss, cost, damage or
expense, including, but not limited to, attorney's fees and court costs,
incurred by Tenant as a result of or in conjunction with a claim of any real
estate agent or broker, if made by, through or under Landlord.
15. EXCULPATION OF LANDLORD
Landlord's obligation and liability to Tenant with respect to this Lease
shall be limited solely to Landlord's interest in the Building. Neither
Landlord, any of the partners of Landlord, any officer, director, or shareholder
of Landlord nor any of the partners of Landlord shall have any personal
liability whatsoever with respect to this Lease.
16. GEORGIA LAW
This Lease has been made under and shall be construed and interpreted under
and in accordance with the laws of the State of Georgia.
17. NO RECORDATION OF LEASE
Without the prior consent of Landlord, neither this Lease nor any
memorandum hereof shall be recorded or placed on public record.
18. SPECIAL STIPULATONS
The special stipulations attached hereto and made a part hereof, if any,
shall control if in conflict with any of the foregoing provisions of this Lease.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have cause this Lease to be
executed under seal and delivered, on the day and year first above written.
"LANDLORD"
Kingston ATLANTA PARTNERS, INC.
By:_____________________________
It's _____________________________
"TENANT"
ON-SITE SOURCING, INC.
By:_______________________________
It's _______________________________
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 1894722 38116
<SECURITIES> 0 0
<RECEIVABLES> 2697248 800077
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4866707 892600
<PP&E> 3573127 500056
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 8538045 1478035
<CURRENT-LIABILITIES> 1023369 997342
<BONDS> 0 0
0 0
0 0
<COMMON> 47940 21870
<OTHER-SE> 6324924 249813
<TOTAL-LIABILITY-AND-EQUITY> 8538045 1478035
<SALES> 9507666 4919270
<TOTAL-REVENUES> 9507666 4919270
<CGS> 7003882 3887709
<TOTAL-COSTS> 7003882 3887709
<OTHER-EXPENSES> 2171872 875039
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 103770 80894
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