<PAGE> 1
As filed with the Securities and Exchange Commission on November 19, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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SPR INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 7370 36-3932665
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code No.) No.)
</TABLE>
2015 SPRING ROAD, SUITE 750, OAK BROOK, ILLINOIS 60521 (630) 990-2040
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROBERT M. FIGLIULO
PRESIDENT
SPR INC.
2015 SPRING ROAD, SUITE 750, OAK BROOK, ILLINOIS 60521 (630) 990-2040
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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<S> <C>
DONALD E. FIGLIULO CHARLES EVANS GERBER
JOHN E. MCGOVERN, JR. WILLIAM M. HOLZMAN
WILDMAN, HARROLD, ALLEN & DIXON NEAL, GERBER & EISENBERG
225 WEST WACKER DRIVE TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS 60606-1229 CHICAGO, ILLINOIS 60602
(312) 201-2000 (312) 269-8000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE OFFERING AMOUNT OF REGISTRATION
TO BE REGISTERED PRICE(1)(2) FEE(2)
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<S> <C> <C>
Common Stock, $.01 par value.................................................. $49,680,000 $15,055
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(1) Includes shares of Common Stock that may be purchased by the Underwriters
pursuant to an over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) since no public market is currently available for this
security.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1996
PROSPECTUS
2,700,000 SHARES
[LOGO]
SPR INC.
COMMON STOCK
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Of the 2,700,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering"), 1,666,666 shares are being
offered by SPR Inc. ("SPR" or the "Company") and 1,033,334 shares are being
offered by certain stockholders (the "Selling Stockholders"). See "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from the
sale of shares of Common Stock by the Selling Stockholders.
Prior to the Offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
will be between $14.00 and $16.00 per share. See "Underwriting" for information
relating to the factors to be considered in determining the initial public
offering price. Application has been made to have the Common Stock listed on the
Nasdaq National Market under the symbol "SPRI."
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SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
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<S> <C> <C> <C> <C>
Per Share $ $ $ $
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Total(3) $ $ $ $
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</TABLE>
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses estimated at $700,000, all of which are payable by
the Company.
(3) Certain Selling Stockholders have granted the Underwriters a 30-day option
to purchase up to 405,000 additional shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions,
Proceeds to Company and Proceeds to Selling Stockholders will be $ ,
$ , $ and $ , respectively. See "Underwriting" and "Principal
and Selling Stockholders."
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The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about
January , 1997 at the office of Smith Barney Inc., 333 West 34th Street, New
York, New York 10001.
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SMITH BARNEY INC. ROBERT W. BAIRD & CO.
INCORPORATED
, 1997
<PAGE> 3
[SPR SERVICES FLOW CHART]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements
and related notes thereto appearing elsewhere in this Prospectus. SPR Inc.
("SPR" or the "Company") is a Delaware corporation recently organized in
connection with the mergers into it of SPR Chicago Inc., an Illinois corporation
("SPR Chicago"), Systems & Programming Resources of Tulsa, Inc., an Oklahoma
corporation ("SPR Tulsa"), SPR-Wisconsin, Inc., a Wisconsin corporation ("SPR
Wisconsin"), Systems and Programming Resources, Inc., an Illinois corporation
("Systems Inc."), and Consulting Acquisition, Inc., an Illinois corporation
("Data Flex"). Such mergers are each individually referred to in this Prospectus
as a "Merger" and collectively as the "Mergers." Unless indicated otherwise, the
information contained in this Prospectus: (i) gives retroactive effect to the
Mergers and (ii) assumes that the Underwriters' over-allotment option is not
exercised. Unless otherwise indicated, all references to "SPR" or the "Company"
refer to SPR Inc. after the Mergers or to the constituent corporations in the
Mergers or their respective predecessors, as appropriate. See "Certain
Transactions."
THE COMPANY
SPR has over 23 years of experience in providing information technology
("IT") services to clients in a variety of industries, including financial
services, healthcare, insurance, manufacturing, oil and gas, transportation and
utilities. The Company focuses its marketing efforts on Fortune 1000 companies
and other large organizations which have complex IT operations and significant
IT budgets. Over the past several years, the Company has shifted its focus from
contract programming to strategic planning and project management engagements.
SPR currently provides the following service offerings: (i) General Consulting,
(ii) Systems Re-engineering, (iii) Century Date Compliance, (iv) Systems
Maintenance and Support and (v) Information Delivery Services ("IDS"). Within
each of these service offerings, the Company provides three levels of consulting
support which are distinguished by the degree of responsibility the Company
assumes: strategic planning, project management and implementation. The Company
believes that this breadth of service and support fosters long-term client
relationships, promotes cross-selling opportunities and minimizes the Company's
dependence upon any particular service offering or client.
The Company's proprietary service methodologies, Renovation(SM) and
Renovation2000(SM), and its software analysis tool, CodeVu(SM), provide SPR with
a disciplined approach to fulfill its engagements. Renovation(SM) and
Renovation2000(SM) enable the Company to deliver its service offerings through a
tested and repeatable format. CodeVu(SM) quickly and accurately provides
information concerning client software portfolios. These service methodologies
coupled with this software analysis tool facilitate the development of
well-defined tasks and timetables for each phase of an engagement from strategic
planning through implementation.
Due to the complex nature of information technology, the rapidly changing
technological environment and the year 2000 problem (the software glitch that
will prevent computers from properly recognizing dates after the year 1999),
many organizations are outsourcing their IT needs. The Company believes this
outsourcing trend will continue to grow because: (i) organizations desire to
focus their energies on their core business functions; (ii) organizations must
address and resolve the year 2000 problem; (iii) IT solutions are becoming
increasingly complex; and (iv) organizations often lack the IT skills necessary
to address their IT needs.
Total expenditures for professional IT services in the United States are
estimated to be $54.1 billion in 1996. The professional IT services market,
consisting of consulting and education, systems integration and development and
systems management services, is expected to grow at a compound annual growth
rate of approximately 14% over the next three years, reaching $79.6 billion by
1999. Large organizations, which make up the Company's primary target market,
are expected to constitute approximately 46% of total expenditures in this
market in 1996. The estimated cost in the United States to correct the year 2000
problem associated with software and databases is expected to be approximately
$130 billion.
3
<PAGE> 5
The Company's objective is to become the leading IT service provider to
both new and existing clients. To achieve this objective, the Company has
pursued, and intends to continue to pursue, the following business and growth
strategies:
- Focus on Project Management. The Company will continue to focus on
increasing its mix of project management and strategic planning
engagements. The Company believes that by providing these value-added
services, it gains a competitive advantage in assessing its clients' needs
and anticipating opportunities to provide additional IT services.
- Attract, Develop and Retain Qualified Technical Consultants. The Company
has implemented a comprehensive entry-level training program for college
graduates to address the industry-wide shortage of qualified technical
consultants. In addition, the Company is developing several other training
programs to further enhance its consultants' careers and improve their
technical skills. SPR believes that these training programs and its
recently established stock option and stock purchase plans will help it to
attract, develop and retain consultants.
- Capitalize on Century Date Compliance Expertise. SPR was an early entrant
in the year 2000 segment of the market, completing its first Century Date
Compliance engagement in 1993. The Company believes that its expertise in
addressing the year 2000 problem will not only result in additional
engagements, but that such engagements also will provide SPR with insight
into its clients' IT environments, resulting in a competitive advantage in
cross-selling additional IT services.
- Deliver Unbiased Service Offerings. The Company uses Renovation(SM),
Renovation2000(SM) and CodeVu(SM) in conjunction with the best available
third-party application software and productivity tools without regard to
specific third-party vendor relationships. The ability to assess client
systems objectively enables the Company to provide its clients with
technologies that are best suited to their individual needs.
- Focus on Leading Technologies. The Company maintains and continues to
build expertise not only in mainframe applications but also in other high
demand technologies, such as Internet/intranet applications, open
computing systems, object oriented solutions and relational database
management systems. The Company's expertise in these areas, together with
its relationships with software product developers and research
institutions, allow SPR to remain on the leading edge of technological
development.
- Leverage Existing Client Base and Expand Client Services. The Company
intends to continue building long-term client relationships by developing
and expanding the services it provides to existing clients. For example,
the Company began the development of its IDS service offering in 1995 and
established its first Virtual Insourcing Center, which enables the Company
to provide the full range of its service offerings in a Company facility
rather than at its clients' facilities, in 1996 in response to its clients
changing IT service needs.
SPR's growth strategies have allowed it to capitalize on the growing demand
for IT services. The Company's revenues have increased at a compound annual
growth rate of approximately 36% from 1992 through 1995. For the ten months
ended October 31, 1996, the Company's revenues increased 44% compared with the
same period in the prior year. More than 71% of the Company's revenues for the
ten months ended October 31, 1996 were attributable to 37 companies which have
been clients for three consecutive years or longer. During 1996, the Company has
made significant infrastructure investments, which adversely affected the
Company's gross profit and operating income, in order to satisfy anticipated
future demand for the Company's service offerings. These investments included
(i) the development and implementation of the Company's entry-level training
program, (ii) the hiring of 235 IT consultants, 20 project managers, seven
recruiters, a Chief Financial Officer, a General Manager for the Company's Texas
branch office and a Director of Human Resources, (iii) the establishment of, and
initial staffing to support, the IDS service offering, (iv) the leasing of new
office space in Chicago and Wisconsin and (v) the enhancement of the Company's
proprietary methodologies and software analysis tool.
4
<PAGE> 6
THE OFFERING
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Common Stock Offered Hereby by:
The Company............................. 1,666,666 shares
The Selling Stockholders................ 1,033,334 shares
Common Stock to Be Outstanding After the
Offering................................ 8,000,000 shares(1)
Use of Proceeds........................... Pay dividends to enable the existing
stockholders to pay income taxes due on S
corporation income through the closing date of
the Offering, pay certain indebtedness, fund
build-out and equipping of an additional Virtual
Insourcing Center, open a Texas branch office,
expand the Company's entry-level recruiting and
training program and for general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market Symbol.... SPRI
</TABLE>
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(1) Excludes (i) 800,000 shares of Common Stock reserved for issuance upon
exercise of options that may be granted in the future pursuant to the
Company's Combined Incentive and Non-statutory Stock Option Plan (of which
options to purchase 442,000 shares of Common Stock are expected to be
outstanding upon closing of the Offering at an exercise price equal to the
initial public offering price); and (ii) 500,000 shares reserved for
issuance under the Company's Employee Stock Purchase Plan. See "Management
-- Stock Plans," "Description of Capital Stock" and Note 11 of Notes to
Financial Statements.
5
<PAGE> 7
SUMMARY FINANCIAL DATA
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<CAPTION>
TEN MONTHS ENDED
YEARS ENDED DECEMBER 31, OCTOBER 31,
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1991 1992 1993 1994 1995 1995 1996
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(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues...................... $7,914 $9,122 $11,731 $14,797 $ 22,908 $ 18,478 $ 26,575
Gross profit.................. 2,079 2,218 3,393 4,373 7,383 6,110 7,839
Selling expenses............ 607 743 1,012 1,165 2,141 1,668 2,447
Recruiting expenses......... 234 290 341 410 777 613 1,090
Stock-based compensation.... -- -- -- 6,510(2) 27,987(2) 23,322(2) 15,885(2)
General and administrative
expenses.................. 1,157 1,015 1,230 1,334 1,642 1,170 2,798
------ ------ ------- ------- -------- -------- --------
Total costs and expenses...... 1,998 2,048 2,583 9,419 32,547 26,773 22,220
------ ------ ------- ------- -------- -------- --------
Operating income (loss)....... 81 170 810 (5,046)(2) (25,164)(2) (20,663)(2) (14,381)(2)
Other income (expense)........ (162) 27 6 (57) (109) (89) (52)
------ ------ ------- ------- -------- -------- --------
Income (loss) before income
taxes....................... (81) 197 816 (5,103)(2) (25,273)(2) (20,752)(2) (14,433)(2)
Provision for income taxes.... -- 15 4 75 21 -- --
------ ------ ------- ------- -------- -------- --------
Net income (loss)............. $ (81) $ 182 $ 812 $(5,178)(2) $(25,294)(2) $(20,752)(2) $(14,433)(2)
====== ====== ======= ======= ======== ======== ========
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<TABLE>
<CAPTION>
OCTOBER 31,
1996
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<S> <C>
BALANCE SHEET DATA(1):
Cash.................................................................................... $ 633
Working capital......................................................................... 1,743
Total assets............................................................................ 6,787
Long-term debt, less current portion.................................................... 189
Total stockholders' equity.............................................................. 2,926(2)
</TABLE>
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(1) In October 1996, Systems Inc., SPR Chicago, SPR Tulsa, SPR Wisconsin and
Data Flex merged into SPR and, in connection therewith, the stockholders of
such companies received an aggregate of 6,333,134 shares of Common Stock of
SPR. The financial data above has been restated to include the financial
position and results of operations of the respective companies for all
periods presented.
(2) In 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago and SPR Wisconsin. Inasmuch as such 1994 transactions were among
family members within a control group, such transactions have been recorded
in the Company's financial statements as if the stockholders of SPR Chicago
and SPR Wisconsin received non-cash, stock-based compensation during 1994,
1995 and 1996 in an amount equal to the increase in the estimated value of
such companies since 1994. This expense is non-recurring subsequent to
October 31, 1996. Such compensation expense is recorded as stock-based
compensation with the corresponding credit included in additional paid-in
capital. Upon conversion of the Company to a C corporation upon closing of
the Offering, the retained deficit of the Company, which includes the
aggregate stock-based compensation expense, will be reclassified and netted
against additional paid-in capital. Excluding such compensation expense, net
income for 1995 and the ten months ended October 31, 1995 and 1996 on a pro
forma basis would have been $1.6 million, $1.5 million and $0.9 million,
respectively. See "-- Summary Unaudited Pro Forma Financial Data" and Note
10 of Notes to Financial Statements.
6
<PAGE> 8
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The Summary Unaudited Pro Forma Financial Data are based on the historical
financial statements of the Company, giving effect to the Offering and to the
pro forma adjustments described in the accompanying notes as if the Offering
occurred as of January 1, 1995 in the case of the Statement of Operations Data
and October 31, 1996 in the case of the Balance Sheet Data. The Unaudited Pro
Forma Financial Data are not necessarily indicative of the results of operations
which would have been achieved had the Offering occurred on January 1, 1995 nor
are they necessarily indicative of the results of future operations. The
Unaudited Pro Forma Financial Data should be read in conjunction with the
financial statements of the Company included elsewhere in this Prospectus.
<TABLE>
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PRO FORMA
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YEAR ENDED TEN MONTHS ENDED TEN MONTHS ENDED
DECEMBER 31, 1995 OCTOBER 31, 1995 OCTOBER 31, 1996
----------------- ---------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $22,908 $18,478 $26,575
Operating income............................. 2,823(1) 2,659(1) 1,504(1)
Net income................................... 1,628(2) 1,542(2) 871(2)
Earnings per share........................... 0.20 0.19 0.11
Weighted average number of shares
outstanding................................ 8,000 8,000 8,000
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31, 1996
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ACTUAL AS ADJUSTED(3)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash.............................................................. $ 633(4) $ 19,056(4)
Working capital................................................... 1,743(4) 21,328(4)
Total assets...................................................... 6,787 25,210
Long-term debt, less current portion.............................. 189 6
Total stockholders' equity........................................ 2,926(4)(5) 22,376(4)(5)
</TABLE>
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(1) In 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago and SPR Wisconsin. Inasmuch as such transactions were among family
members within a control group, such transactions have been recorded in the
Company's financial statements as if the stockholders of SPR Chicago and SPR
Wisconsin received non-cash, stock-based compensation during 1994, 1995 and
1996, in an amount equal to the increase in the estimated value of such
companies since 1994. This expense is non-recurring subsequent to October
31, 1996. The Summary Unaudited Pro Forma Financial Data eliminates such
expense from operating income for the year ended December 31, 1995 and for
the ten months ended October 31, 1995 and October 31, 1996; accordingly,
operating income for such periods was increased by $28.0 million, $23.3
million and $15.9 million, respectively. See Note 10 of Notes to Financial
Statements.
(2) Prior to the Offering, the Company was an S corporation and was not subject
to Federal and certain state corporate income taxes. The Statement of
Operations Data reflects a pro forma provision for income taxes as if the
Company had been subject to Federal and state corporate income taxes for all
periods. The pro forma provision for income taxes represents a combined
Federal and state effective tax rate of 40%.
(3) Adjusted to reflect the application of the estimated net proceeds from the
Offering, estimated to be $22.6 million (assuming an initial public offering
price of $15 per share). The proceeds from the Offering will be used to pay
the Dividend (see note 4), pay a stockholder note, borrowings under a line
of credit and a term note and for general corporate purposes.
(4) Immediately prior to consummation of the Offering, the Company intends to
declare a dividend (the "Dividend") to enable the stockholders of record
prior to the Offering to pay income taxes related to S corporation income
prior to the Offering. The Company currently estimates (based in part on the
Company's estimate of its 1996 earnings) that the Dividend will be $2.5
million.
(5) Upon conversion of the Company to a C corporation at the closing of the
Offering, the Company will record $0.6 million in estimated deferred income
tax liabilities which will reduce retained earnings and increase
liabilities. Retained deficit of the Company (including the stock-based
compensation expense), after recording the estimated Dividend and deferred
income taxes, will be reclassified and netted against additional paid-in
capital.
7
<PAGE> 9
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should consider
carefully the risks associated with investing in the Common Stock, including the
principal risk factors set forth below, as well as other information set forth
in this Prospectus.
NEED TO ATTRACT AND RETAIN QUALIFIED TECHNICAL CONSULTANTS
The Company's business involves the delivery of professional services and
is very labor-intensive. The Company's success depends in large part upon its
ability to attract, develop, motivate and retain qualified technical
consultants, particularly project managers and other senior technical personnel.
Qualified technical consultants are in great demand and are likely to remain a
limited resource for the foreseeable future. This demand may enable qualified
technical consultants to command significantly greater compensation than is
currently paid by the Company. There can be no assurance that the Company will
be able to continue to attract and retain a sufficient number of qualified
technical consultants in the future. Historically, the Company has experienced
turnover rates which it believes are consistent with industry norms. As
competition for qualified technical consultants increases, there can be no
assurance that the turnover rate experienced by the Company will not increase.
The Company's inability to hire sufficient qualified technical consultants, or a
significant increase in the Company's consultant turnover rate, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Business Strategies."
MANAGEMENT OF GROWTH
The Company's rapid revenue and employee growth has placed, and could
continue to place, significant demands upon its management and other resources.
To manage its growth effectively, the Company will be required to continue to
develop and improve its operational, financial and other internal systems, as
well as its business development capabilities. In addition, the Company's future
success will depend in large part upon its ability to maintain high rates of
consultant utilization and maintain the quality of its services. Moreover, none
of the Company's senior management has any experience managing a public company.
The Company's inability to manage its growth and engagements effectively could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "-- Need to Attract and Retain Qualified
Technical Consultants" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RELIANCE ON CENTURY DATE COMPLIANCE ENGAGEMENTS
Over the next few years, the Company expects to derive a majority of its
revenues from Century Date Compliance engagements. Market demand for Century
Date Compliance services will likely decrease substantially, and eventually
cease, during and after the year 2000. In addition, the Company's growth
strategy is substantially dependent upon leveraging its Century Date Compliance
experience to obtain other consulting engagements from its Century Date
Compliance clients. The Company's inability to consistently complete Century
Date Compliance engagements to its clients' satisfaction or to procure
additional consulting engagements from such clients could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, there can be no assurance that a fully-automated
solution to the year 2000 problem (a "silver bullet") will not be developed. The
development of such a solution would have a material adverse effect on the
Company's business, financial condition and results of operations.
COMPETITION
The highly competitive market for IT services includes a large number of
competitors and is subject to rapid change. The Company believes its primary
competitors include "Big Six" accounting firms, systems consulting and
implementation firms, application software firms, service groups of computer
equipment companies, general management consulting firms and programming
companies. Many of these competitors have significantly greater financial,
technical and marketing resources and greater name recognition than the Company.
In addition, the Company competes with its clients' internal IT personnel who
typically represent a
8
<PAGE> 10
fixed cost to the client. Such competition may impose additional pricing
pressures on the Company. There can be no assurance that the Company can compete
successfully with its existing competitors or with any new competitors. See
"Business -- Competition."
ENGAGEMENT AND CONTRACT RISKS
Many of the Company's engagements involve projects that are critical to the
operations of its clients' businesses. The Company's failure or inability to
complete engagements to its clients' satisfaction could have a material adverse
effect on its clients' operations and could consequently subject the Company to
litigation or damage the Company's reputation, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Substantially all of the Company's contracts are terminable by the client
on relatively short notice, with or without cause and without penalty. The
unexpected termination by a client of a significant contract could have a
material adverse effect on the Company's consultant utilization rate which, in
turn, could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company principally bills for its
services on a "time and materials basis;" however, some of the Company's
contracts contain a cap on the amount of fees the Company can charge. In
addition, the Company currently is performing services for several of its
significant clients pursuant to oral agreements or written contracts that are no
longer in effect. In the event of a dispute, the absence of a written and
binding agreement limiting the Company's liability to the client could have a
material adverse effect on the Company's business, financial condition and
results of operations. Some of the Company's contracts give its clients the
right in certain circumstances to hire consultants employed or retained by the
Company, and several clients have, in fact, hired Company consultants in the
past. The loss of one or more project managers or a significant number of
qualified technical consultants to the Company's clients could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
CUSTOMER CONCENTRATION
The Company has derived, and believes that it will continue to derive, a
significant portion of its revenues from a limited number of large clients. In
1995 and for the ten months ended October 31, 1996, the Company's largest client
accounted for approximately 11% and 16% of its revenues, respectively, and its
ten largest clients accounted for approximately 51% and 52% of its revenues,
respectively. The volume of work performed for specific clients varies from year
to year. There can be no assurance that a large client in one year will continue
to use the Company's services in a subsequent year. Furthermore, the Company
rarely is the exclusive provider of IT consulting services to its clients. The
loss of any large client could have a material adverse effect on the Company's
business, financial condition and results of operations.
RISKS OF BRANCH EXPANSION
The Company anticipates future growth through branch expansion, which is
dependent upon a number of factors, including, but not limited to: (i) the
ability to cultivate additional business from existing clients and obtain new
clients; (ii) the ability to identify and hire qualified IT consultants within
both new and existing markets; and (iii) the continued identification and
training of corporate personnel to open and staff additional branch offices. The
Company has not opened a new branch office since 1979; however, the Company has
hired a general manager for the Texas region and is planning to open a branch
office in Texas in early 1997. There can be no assurance that new branch offices
will be profitable. See "-- Need to Attract and Retain Qualified Technical
Consultants."
INTELLECTUAL PROPERTY RIGHTS
Software developed by SPR in connection with a client engagement typically
becomes the exclusive property of the client. Although the Company believes that
its services and the software it develops for its clients do not infringe upon
the intellectual property rights of others and that it has all rights necessary
to
9
<PAGE> 11
utilize the intellectual property employed in its business, the Company is
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. The Company typically agrees to indemnify its
clients against such claims. Any such claims could require the Company to spend
significant sums in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses to the intellectual property which is the subject
of asserted infringement.
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its rights, the rights of third parties from whom the Company licenses
intellectual property and the proprietary rights of its clients. The Company
requires all consultants to sign confidentiality agreements and limits
distribution of proprietary information. There can be no assurance, however,
that the steps taken by the Company will be adequate to deter misappropriation
of proprietary information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual property
rights. See "Business -- Intellectual Property Rights."
RELIANCE UPON EXECUTIVE OFFICERS AND KEY EMPLOYEES
The success of the Company is highly dependent upon the efforts and
abilities of its executive officers, particularly Mr. Robert Figliulo, the
Company's President. Although all of its executive officers and certain key
employees have entered into employment agreements with the Company which contain
noncompetition, nondisclosure and nonsolicitation covenants, such agreements do
not guarantee that these individuals will continue their employment with the
Company. The loss of the services of any of these executive officers or key
employees for any reason could have a material adverse effect upon the Company's
business, financial condition and results of operations. See "Management --
Employment Agreements."
CONTROL BY PRINCIPAL STOCKHOLDERS
After giving effect to the Offering, members of the Figliulo family, in the
aggregate, Michael Fletcher and Rene Potter will beneficially own approximately
50.5%, 8.1% and 7.7%, respectively, of the outstanding shares of Common Stock.
As a result, such persons collectively will be able to control the outcome of
matters requiring a stockholder vote, including the election of directors. Such
control could preclude any unsolicited acquisition of the Company and,
consequently, adversely affect the market price of the Common Stock. See
"Principal and Selling Stockholders" and "Description of Capital Stock --
Delaware Law and Certain Certificate of Incorporation and By-law Provisions;
Antitakeover Effects."
VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company's revenues and earnings have fluctuated and, in the future, may
fluctuate from quarter to quarter based on such factors as the number, size and
scope of projects in which the Company is engaged, the contractual terms and
degree of completion of such engagements, any delays incurred in connection with
an engagement, employee utilization rates, the adequacy of provisions for
losses, the accuracy of estimates of resources required to complete ongoing
engagements, and general economic conditions. Unanticipated variations in the
number, or progress toward completion, of the Company's engagements or in
consultant utilization rates may cause significant variations in operating
results in any particular quarter and could result in losses for such quarter.
An unanticipated termination of a major engagement, a client's decision not to
proceed to the stage of the engagement anticipated by the Company or the
completion during a quarter of several major client engagements, could leave the
Company with underutilized consultants which could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
EMPLOYMENT LIABILITY RISKS
The Company generally places its consultants in the workplaces of other
businesses. Risks of such placement include possible claims of errors and
omissions, misuse of client proprietary information, misappropriation of funds,
discrimination and harassment, theft of client property, other criminal activity
or torts and other claims. Although historically the Company has not experienced
any material claims of these
10
<PAGE> 12
types, there can be no assurance that the Company will not experience such
claims in the future. To reduce its exposure, the Company maintains insurance
covering general liability, workers' compensation claims, errors and omissions
and employer practices liability. There can be no assurance, however, that the
Company's insurance will cover all such claims, or that such insurance coverage
will continue to be available economically in amounts adequate to cover any such
liability or that such coverage will adequately compensate the Company for such
liabilities.
RISKS OF LICENSING CENTURY DATE COMPLIANCE METHODOLOGY
The Company has entered into a non-exclusive agreement to license its
Century Date Compliance methodology, Renovation2000(SM), and its software
analysis tool, CodeVu(SM), to an unaffiliated technical services company
operating in New York and other markets where the Company is not currently doing
business. The Company may in the future enter into similar licensing agreements
with other third parties in specific geographic regions in which it does not
presently conduct business. There can be no assurance that such licensees will
properly utilize the Company's methodology or software analysis tool. The
failure by licensees to adhere strictly to SPR's standards in utilizing the
Renovation2000(SM) methodology or CodeVu(SM) in Century Date Compliance
engagements could subject SPR to litigation and harm SPR's reputation thereby
resulting in a material adverse effect on the Company's business, financial
condition and results of operations.
ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has not been a public market for the Common
Stock and there can be no assurance that an active trading market will develop
or be sustained after the Offering. The initial public offering price for the
Common Stock offered hereby will be determined by negotiations between the
Company and the representatives of the Underwriters, and may not be indicative
of the market price for the Common Stock after the Offering. See "Underwriting"
for a discussion of factors to be considered in determining the initial public
offering price. There can be no assurance that the market price of the Common
Stock will not decline below the initial public offering price. The Company
believes that variations in the Company's results of operations and other
factors, including general economic conditions, may cause the market price of
the Common Stock to fluctuate significantly. The market price for the Common
Stock may also be affected by the Company's ability to meet analysts'
expectations, and any failure to meet such expectations, even if minor, could
have a material adverse effect on the market price of the Common Stock. In
addition, from time to time in recent years, the securities markets have
experienced significant price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of particular
companies. Following the Offering, sales or the expectation of sales of
substantial amounts of Common Stock in the public market by the Company or its
stockholders also could adversely affect the prevailing market prices for the
Common Stock. See "Underwriting."
IMMEDIATE AND SUBSTANTIAL DILUTION
The assumed initial public offering price is substantially higher than the
pro forma net tangible book value per share of Common Stock. Investors
purchasing shares of Common Stock in the Offering will therefore incur immediate
and substantial dilution of $12.20 per share of Common Stock based on an assumed
initial public offering price of $15.00 per share. To the extent options to
purchase Common Stock that are expected to be outstanding upon closing of the
Offering are exercised, there will be further dilution. See "Dilution."
SIGNIFICANT UNALLOCATED NET PROCEEDS
The only specific allocations of the Company's anticipated net proceeds
from the Offering is the payment to existing stockholders of the Dividend,
repayment of certain indebtedness, including a note payable to Eugene Figliulo,
the founder of the Company's predecessor, and bank loans, funding of additional
consultant training and costs associated with the development and expansion of
off-site service centers (the "Virtual Insourcing Centers"). See "Business --
Growth Strategies -- Further Develop Virtual Insourcing Centers." Accordingly, a
substantial majority of the Company's anticipated net proceeds of the Offering
has not been
11
<PAGE> 13
designated for specific uses. The Board of Directors of the Company will have
broad discretion with respect to the use of such unallocated net proceeds. See
"Use of Proceeds."
ANTI-TAKEOVER PROVISIONS
The Company's Certificate of Incorporation and By-laws and the Delaware
General Corporation Law contain certain provisions that could have the effect of
discouraging or making more difficult the acquisition of the Company by means of
a tender offer, a proxy contest or otherwise, even though such an acquisition
might be economically beneficial to the Company's stockholders. These include
provisions under which (i) only the Chairman of the Board or the President may
call meetings of stockholders, and (ii) stockholders must comply with certain
advance notice procedures to nominate candidates for election as directors of
the Company and to submit proposals for consideration at stockholders' meetings.
The ability of the Board of Directors to issue up to 3,000,000 shares of
preferred stock, in one or more classes or series, and with such powers,
designations, preferences and relative, participating, optional or special
rights, qualifications, limitations or restrictions as may be determined by the
Board of Directors of the Company, also could make an acquisition of the Company
more difficult. In addition, these provisions may make the removal of management
more difficult, even in cases where such removal would be favorable to the
interests of the Company's stockholders. See "-- Control by Principal
Stockholders," "Management -- Directors and Executive Officers" and "Description
of Capital Stock -- Delaware Law and Certain Certificate of Incorporation and
By-law Provisions; Anti-Takeover Effects."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 8,000,000 shares of
Common Stock outstanding, of which the 2,700,000 shares sold pursuant to the
Offering will be freely transferable without restriction or further registration
under the Securities Act of 1933, as amended (the "Securities Act") (other than
by an "affiliate" of the Company, as defined in the Securities Act), and the
remaining 5,300,000 shares will be "restricted securities" under Rule 144 ("Rule
144") promulgated under the Securities Act. Holders of the restricted shares
will be eligible to sell such shares pursuant to Rule 144 at prescribed times
and subject to the manner of sale, volume, notice and information restrictions
of Rule 144. The Company has granted Messrs. Robert Figliulo, David Figliulo,
John Figliulo and Michael Fletcher an unlimited number of demand and piggyback
registration rights covering an aggregate of 532,184 shares of Common Stock. In
addition, 800,000 shares of Common Stock are reserved for issuance under the
Company's Combined Incentive and Non-statutory Stock Option Plan (the "Option
Plan") and 500,000 shares of Common Stock are reserved for issuance under the
Company's Employee Stock Purchase Plan. The Company intends to register under
the Securities Act all of the shares covered by the Option Plan and the Employee
Stock Purchase Plan, which shares upon issuance would become freely tradeable
without restriction. Each of (i) the Company, (ii) all of the Company's
executive officers and directors, and (iii) all stockholders of the Company
owning Common Stock immediately prior to the Offering have agreed not to offer,
sell, contract to sell or otherwise dispose of, any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
or grant any options or warrants to purchase Common Stock, except in certain
circumstances, for 180 days after the date of this Prospectus without the prior
consent of Smith Barney Inc., which agreements may be waived by Smith Barney
Inc. in its discretion. None of the 5,300,000 shares of Common Stock which are
restricted securities will be eligible for sale after the expiration of such
lock-up agreements until the applicable holding period under Rule 144 (currently
two years) has expired. Thereafter, all 5,300,000 shares of Common Stock which
are restricted securities will be eligible for sale subject to the provisions of
Rule 144. Following the Offering, sales or the expectation of sales of
substantial amounts of Common Stock in the public market could adversely affect
the prevailing market price for the Common Stock and the Company's ability to
raise additional capital at a price favorable to the Company. See "Shares
Eligible for Future Sale" and "Underwriting."
12
<PAGE> 14
THE COMPANY
The Company's business was founded in 1973 by Eugene Figliulo as Systems
Inc. During 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago, SPR Tulsa, and SPR Wisconsin, respectively. These entities were
organized as S corporations and owned by the executives primarily responsible
for the operations in each of these locations. SPR Chicago, SPR Tulsa, SPR
Wisconsin, Systems Inc. and Data Flex (an affiliated IT services company in a
complementary business) were merged into the Company upon the Company's
formation in October 1996. See "Certain Transactions."
The Company maintains its principal executive offices at 2015 Spring Road,
Oak Brook, Illinois 60521. Its telephone number is (630) 990-2040. The Company's
World Wide Web address is www.sprinc.com.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,666,666 shares of
Common Stock offered by it hereby (after deducting estimated underwriting
discounts and commissions and estimated offering expenses) are estimated to be
approximately $22.6 million, based upon an assumed initial public offering price
of $15.00 per share of Common Stock.
The principal purposes of the Offering are to increase the Company's equity
capital and financial flexibility, create a public market for the Common Stock,
facilitate future access by the Company to the public equity markets, enhance
the Company's ability to use Common Stock as a means of attracting and retaining
key employees and technical staff, and provide working capital to fund the
Company's growth strategies. See "Business -- Growth Strategies" and "Business
- -- Recruiting and Training."
The Company intends to use a portion of its net proceeds from the Offering
to pay existing stockholders of the Company the Dividend in an aggregate amount
of $2.5 million to enable such stockholders to pay Federal and state income
taxes due on S corporation taxable income through the closing date of the
Offering. See "Certain Transactions." In addition, the Company intends to use
approximately $0.8 million of its net proceeds to pay outstanding indebtedness
to Eugene Figliulo and approximately $0.8 million of such proceeds to pay
outstanding indebtedness under a line of credit and term note. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" for information regarding interest rates,
maturities and use of proceeds of indebtedness.
Approximately $1.4 million of the net proceeds will be used to build-out
and equip an additional Virtual Insourcing Center and open a Texas branch
office. See "Business -- Growth Strategies -- Further Develop Virtual Insourcing
Centers" and "Business -- Growth Strategies -- Expand Geographic Presence." As
of October 31, 1996, the Company had not incurred, or made any commitments to
incur, significant capital expenditures with respect to either the additional
Virtual Insourcing Center or the Texas branch office.
The Company intends to use the remaining net proceeds for general corporate
purposes, including the expansion of its entry-level recruiting and training
program. Pending any of the foregoing uses, the Company intends to invest the
net proceeds in short-term, investment grade securities, certificates of deposit
or direct or guaranteed obligations of the United States government. The Company
will not receive any proceeds from shares of Common Stock sold by the Selling
Stockholders.
DIVIDEND POLICY
Except for distributions to stockholders to fund their payments of taxes
due on prior year S corporation income, the Company has not declared or paid any
cash dividends on the Common Stock. After the Offering, except for the Dividend,
the Company expects to retain any future earnings to finance the operation and
expansion of its business and does not anticipate paying any cash dividends on
its Common Stock in the foreseeable future. Any future determination as to the
payment of dividends will depend upon the results of operations, financial
condition, capital expenditure plans and other obligations of the Company and
will be at the sole discretion of the Company's Board of Directors.
13
<PAGE> 15
CAPITALIZATION
The following table sets forth the Company's long-term indebtedness and
capitalization as of October 31, 1996 and as adjusted to give effect to the sale
of 1,666,666 shares of Common Stock offered by the Company (at an assumed
initial public offering price of $15.00 per share) and the application of the
estimated net proceeds therefrom. The information set forth below should be read
in conjunction with the Financial Statements and related Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED
-------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Current debt...................................................... $ 1,508 $ 62
======== =======
Long-term debt, less current maturities........................... 189 6
Stockholders' equity:
Preferred Stock, $.01 par value; 3,000,000 shares authorized; no
shares issued and outstanding................................ -- --
Common Stock, $.01 par value; 13,000,000 shares authorized;
6,333,334 shares issued and outstanding actual; 8,000,000
shares issued and outstanding as adjusted.................... 63(1) 80(1)
Additional paid-in capital........................................ 50,390(2) 22,296(2)
-------- -------
Retained deficit.................................................. (47,527)(2) --(2)
-------- -------
Total stockholders' equity........................................ 2,926 22,376
-------- -------
Total capitalization............................................ $ 3,115 $22,382
======== =======
</TABLE>
- -------------------------
(1) Excludes 800,000 shares of Common Stock reserved for issuance upon exercise
of options that may be granted in the future pursuant to the Option Plan and
500,000 shares of Common Stock reserved for issuance pursuant to the
Employee Stock Purchase Plan. See "Management -- Stock Plans," "Description
of Capital Stock" and Note 11 of Notes to Financial Statements.
(2) Immediately prior to closing of the Offering, the Company intends to declare
the Dividend. The Company currently estimates (based in part on the
Company's estimate of its 1996 earnings) that the Dividend will be $2.5
million. Upon conversion of the Company to a C corporation at the closing of
the Offering, the Company will record approximately $0.6 million in deferred
income taxes which will reduce retained earnings and increase liabilities.
Retained deficit of the Company (including the stock-based compensation
expense), after recording the estimated Dividend and deferred income tax
liabilities, will be reclassified and netted against additional paid-in
capital in connection with the termination of the Company's S corporation
election.
14
<PAGE> 16
DILUTION
As of October 31, 1996, the Company's net tangible book value was
$2,925,800 or $.46 per share of Common Stock. Net tangible book value per share
represents the Company's total net tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. Without taking into
account any other changes in net tangible book value after October 31, 1996,
other than to give effect to the Company's receipt of its portion of the
estimated net proceeds of the Offering, at an assumed initial public offering
price of $15.00 per share, the payment of the Dividend and the recording of
deferred taxes of approximately $600,000, the pro forma net tangible book value
of the Company on October 31, 1996 would have been $22,375,790 or $2.80 per
share. This represents an immediate increase in net tangible book value to the
existing stockholders of approximately $2.83 per share and an immediate dilution
to purchasers of shares of Common Stock in the Offering of $12.20 per share, as
illustrated by the following:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $15.00
Net tangible book value per share as of October 31, 1996................... $ .46
Decrease per share attributable to the Dividend and deferred taxes(1)...... (.49)
Increase per share attributable to new investors........................... 2.83
Pro forma net tangible book value per share after the Offering(2)............ 2.80
------
Net tangible book value per share dilution to new investors.................. $12.20
======
</TABLE>
- -------------------------
(1) Includes the Dividend of $2.5 million and deferred taxes of $600,000, to be
recorded upon conversion of the Company from an S corporation to a C
corporation.
(2) Does not reflect 800,000 shares of Common Stock reserved for issuance upon
exercise of options that may be granted in the future pursuant to the Option
Plan (of which options to purchase 442,000 shares of Common Stock are
expected to be outstanding upon closing of the Offering). The exercise price
for the options expected to be outstanding upon closing of the Offering will
be equal to the initial public offering price.
The following table sets forth, at October 31, 1996, after giving effect to
the Offering, the differences between existing stockholders and new investors
who purchase Common Stock in the Offering at the assumed initial public offering
price of $15.00 per share, with respect to the number of shares purchased from
the Company, the total consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED(1)(2) TOTAL CONSIDERATION
---------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.............. 6,333,334 79.2% $50,452,915(3) 66.9% $ 7.97
New investors...................... 1,666,666 20.8 24,999,990 33.1 15.00
---------- ----- ------------ -----
Total......................... 8,000,000 100.0% $75,452,905 100%
========== ===== ============ =====
</TABLE>
- -------------------------
(1) Excludes 800,000 shares of Common Stock reserved for issuance upon exercise
of options that may be granted in the future pursuant to the Option Plan (of
which options to purchase 442,000 shares of Common Stock are expected to be
outstanding upon closing of the Offering at an exercise price equal to the
initial public offering price). To the extent such options are exercised,
there will be further dilution to new investors.
(2) The above table is based on ownership as of October 31, 1996. Sales by
Selling Stockholders in the Offering will reduce the number of shares held
by existing stockholders to 5,300,000 shares or 66.3% of the total number of
shares of Common Stock outstanding after the Offering (61.2% if the
Underwriters' over-allotment option is exercised in full), and will increase
the number of shares held by new investors to 2,700,000 shares or 33.7% of
the total number of shares of Common Stock outstanding after the Offering
(38.8% if the Underwriters' over-allotment option is exercised in full). See
"Principal and Selling Stockholders."
(3) Represents the sum of stated capital and additional paid-in capital, which
includes an aggregate of $50.4 million of non-cash, stock-based compensation
for 1994, 1995 and 1996.
15
<PAGE> 17
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the Financial Statements of the Company and notes thereto. The Statement of
Operations Data and Balance Sheet Data for, and as of, the end of each of the
years in the three year period ended December 31, 1995 are derived from the
audited Financial Statements of the Company. The Statement of Operations Data
and Balance Sheet Data for, and as of, the years ending December 31, 1991 and
December 31, 1992, and for, and as of, the end of each of the ten months ended
October 31, 1995 and October 31, 1996, have been derived from the unaudited
financial statements of the Company and in the opinion of management include all
adjustments (consisting of normal and recurring adjustments) which are necessary
to present fairly the results of operations and financial position of the
Company for the periods and at the dates presented. The selected financial data
for the ten months ended October 31, 1996 are not necessarily indicative of the
results expected for the full year.
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEARS ENDED DECEMBER 31, OCTOBER 31,
----------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
------ ------ ------- ------- -------- -------- --------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:(1)
Revenues.................... $7,914 $9,122 $11,731 $14,797 $ 22,908 $ 18,478 $ 26,575
Cost of services............ 5,835 6,904 8,338 10,424 15,525 12,368 18,736
------ ------ ------- ------- -------- -------- --------
Gross profit................ 2,079 2,218 3,393 4,373 7,383 6,110 7,839
Costs and expenses:
Selling................... 607 743 1,012 1,165 2,141 1,668 2,447
Recruiting................ 234 290 341 410 777 613 1,090
Stock-based
compensation............ -- -- -- 6,510(2) 27,987(2) 23,322(2) 15,885(2)
General and
administrative.......... 1,157 1,015 1,230 1,334 1,642 1,170 2,798
------ ------ ------- ------- -------- -------- --------
Total costs and expenses.... 1,998 2,048 2,583 9,419 32,547 26,773 22,220
------ ------ ------- ------- -------- -------- --------
Operating income (loss)..... 81 170 810 (5,046)(2) (25,164)(2) (20,663)(2) (14,381)(2)
Other income (expense)...... (162) 27 6 (57) (109) (89) (52)
------ ------ ------- ------- -------- -------- --------
Income (loss) before income
taxes..................... (81) 197 816 (5,103)(2) (25,273)(2) (20,752)(2) (14,433)(2)
Provision for income
taxes..................... -- 15 4 75 21 -- --
------ ------ ------- ------- -------- -------- --------
Net income (loss)........... $ (81) $ 182 $ 812 $(5,178)(2) $(25,294)(2) $(20,752)(2) $(14,433)(2)
====== ====== ======= ======= ======== ======== ========
BALANCE SHEET DATA (AT END OF
PERIOD)(1):
Cash........................ $ 151 $ 298 $ 289 $ 1,083 $ 1,109 $ 1,388 $ 633
Working capital............. 852 1,098 1,771 1,674 2,370 2,670 1,743
Total assets................ 1,785 1,670 2,418 3,573 5,584 5,258 6,787
Long-term debt, less current
portion................... -- -- -- 1,841 704 801 189
Total stockholders'
equity.................... 957 1,149 1,954 326 2,275 2,151 2,926(2)
</TABLE>
- ---------------
(1) In October 1996, Systems Inc., SPR Chicago, SPR Tulsa, SPR Wisconsin and
Data Flex merged into SPR and, in connection therewith, the stockholders of
such companies received an aggregate of 6,333,134 shares of Common Stock of
SPR. The financial data above has been restated to include the financial
position and results of operations of the respective companies for all
periods presented.
(2) In 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago and SPR Wisconsin. Inasmuch as such 1994 transactions were among
family members within a control group, such transactions have been recorded
in the Company's financial statements as if the stockholders of SPR Chicago
and SPR Wisconsin received non-cash, stock-based compensation during 1994,
1995 and 1996 in an amount equal to the increase in the estimated value of
such companies since 1994. This expense is non-recurring subsequent to
October 31, 1996. Such compensation expense is recorded as stock-based
compensation with the corresponding credit included in additional paid-in
capital. Upon conversion of the Company to a C corporation upon closing of
the Offering, the retained deficit of the Company, which includes the
aggregate stock-based compensation expense, will be reclassified and netted
against additional paid-in capital. Excluding such compensation expense, net
income for 1995 and the ten months ended October 31, 1995 and 1996 on a pro
forma basis would have been $1.6 million, $1.5 million and $0.9 million,
respectively. See "Prospectus Summary -- Summary Unaudited Pro Forma
Financial Data" and Note 10 of Notes to Financial Statements.
16
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The following section of the Prospectus, Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains certain
forward-looking statements that involve substantial risks and uncertainties.
"Expect" and similar expressions, as they relate to the Company or its
management, are intended to identify such forward-looking statements. The
Company's actual results, performance or achievements could differ materially
from the results, performance or achievements expressed in, or implied by, these
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed in "Risk Factors."
COMPANY OVERVIEW
The Company was founded in 1973 and derives its revenues from providing IT
consulting services. SPR principally bills its clients on a "time and materials
basis" and revenues are recognized as services are provided. Typically, the
Company bills for its services on a biweekly basis to monitor client
satisfaction and to manage its outstanding accounts receivable balances. The
Company's cost of services consists primarily of consultant compensation and
related expenses. Accordingly, the Company's financial performance is
substantially affected by billing margins (billable hourly rate less consultant
hourly cost) and consultant utilization rates (the ratio of hours billed to
total available hours).
Historically, SPR has maintained its billing margins by increasing its
hourly rates to offset increases in its consulting staff costs. The Company
manages its billing margins by establishing a target billing rate for each
consultant; however, actual billing rates may be higher or lower than the target
billing rates depending upon competitive pressures and market conditions. Hourly
billing rate increases are generally implemented by the Company based upon
market conditions, consultant skill levels and the terms of its engagements.
To date, the Company believes that it has effectively managed its
consultant utilization rates. Fluctuations in consultant utilization rates
result from variations in the amount of unassigned time, which historically has
consisted of training, vacation, sick and holiday time and time spent on
administrative support activities while between engagements. In order to reduce
unassigned time, the Company actively manages the terms of its engagements and
matches available consultants based upon client requirements. In addition, the
number of new consultant training programs and the amount of time it takes to
assign the newly trained consultants vary, thereby affecting the Company's
consultant utilization rates from period to period.
The Company believes that its business and growth strategies are primarily
dependent upon the availability of qualified technical consultants. To address
the shortage of qualified technical consultants, the Company has developed a
three-year training program targeted at college graduates with degrees other
than computer science. This program begins with a six- to eight-week entry-level
course specifically geared to Century Date Compliance. Advanced course modules
are under development and will concentrate on the Company's other service
offerings. The individuals enrolled in the training program are paid a salary
commensurate with computer science graduates. Since the commencement of the
entry-level training program on February 15, 1996, 46 individuals have entered
and successfully completed entry-level training. The Company has incurred
approximately $969,000 in expenses attributable to such training program through
October 31, 1996, all of which have been expensed as incurred. These expenses,
which have adversely affected gross profit and operating income for the ten
months ended October 31, 1996, include approximately $223,000 of salaries and
benefits attributable to trainees during the period in which they were enrolled
in the training program, $365,000 of salaries and benefits attributable to these
individuals pending their assignment to billable engagements, $321,000 of other
training related expenses and $60,000 of recruiting expenses. As of October 31,
1996, 33 entry-level trainees have been assigned to client engagements, seven
will commence assignments prior to December 31, 1996 and six are expected to be
assigned in the near future. On November 4, 1996 the Company began an additional
entry-level training class of 14 individuals, and it intends to conduct
additional training classes on a regular basis in 1997. Since the costs of those
consultants completing the entry-level training program in 1996 have been fully
expensed in 1996, the Company believes
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<PAGE> 19
its operating profit should improve, in part, as a result of this investment.
The delay between the time consultants complete the entry-level training course
and the time they are assigned to billable engagements is expected to
significantly decrease as the demand for Century Date Compliance services and
the acceptance of entry-level consultants by the Company's clients grow.
In 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago and SPR Wisconsin. Inasmuch as such 1994 transactions were among family
members within a control group, such transactions have been recorded in the
Company's financial statements as if the stockholders of SPR Chicago and SPR
Wisconsin received noncash, stock-based compensation during 1994, 1995 and 1996.
This compensation expense was allocated to each such period based upon the
increase in the estimated fair market value of SPR Chicago and SPR Wisconsin
during the respective periods. This expense is non-recurring subsequent to
October 31, 1996. The pro forma financial data eliminates such expense from
operating income for 1995 and for the ten months ended October 31, 1995 and
October 31, 1996; accordingly, pro forma operating income reflects additional
income of $28.0 million and $23.3 million and $15.9 million, respectively. Upon
the conversion of the Company to a C corporation at closing of the Offering, the
retained deficit of the Company, which includes the aggregate stock-based
compensation expense, will be reclassified and netted against additional paid-in
capital.
RESULTS OF OPERATIONS
The following table sets forth selected statements of operations data as a
percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEAR ENDED DECEMBER 31, OCTOBER 31,
------------------------------ -----------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues................................ 100% 100% 100% 100% 100%
Cost of services........................ 71 70 68 67 71
--- --- ---- ---- ---
Gross profit....................... 29 30 32 33 29
Costs and expenses:
Selling............................... 9 8 9 9 9
Recruiting............................ 3 3 3 3 4
Stock-based compensation.............. -- 44(1) 122(1) 126(1) 60(1)
General and administrative............ 10 9 7 6 11
--- --- ---- ---- ---
Total costs and expenses........... 22 64 141 144 84
--- --- ---- ---- ---
Operating income (loss)................. 7 (34)(1) (109)(1) (111)(1) (55)(1)
Provision for income taxes.............. -- 1 -- -- --
--- --- ---- ---- ---
Net income (loss)....................... 7% (35)%(1) (109)%(1) (111)%(1) (55%(1)
=== === ==== ==== ===
</TABLE>
- -------------------------
(1) In 1994, Systems Inc. transferred certain assets and liabilities to SPR
Chicago and SPR Wisconsin. Inasmuch as such transactions were among family
members within a control group, such transactions have been recorded in the
Company's financial statements as if the stockholders of SPR Chicago and SPR
Wisconsin received non-cash, stock-based compensation during 1994, 1995 and
1996, in an amount equal to the increase in the estimated value of such
companies since 1994. This expense is non-recurring subsequent to October
31, 1996. The Summary Unaudited Pro Forma Financial Data eliminates such
expense from operating income for the year ended December 31, 1995 and for
the ten months ended October 31, 1995 and October 31, 1996; accordingly,
operating income for such periods was increased by $28.0 million, $23.3
million and $15.9 million, respectively. See Note 10 of Notes to Financial
Statements.
TEN MONTHS ENDED OCTOBER 31, 1996 COMPARED TO TEN MONTHS ENDED OCTOBER 31, 1995
Revenues. Revenues increased 44% to $26.6 million in the first ten months
of 1996 from $18.5 million in the comparable 1995 period. This increase was
primarily the result of an increased number of engagements for
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<PAGE> 20
both new and existing clients. A higher proportion of these engagements were for
strategic planning and assessment for Century Date Compliance engagements, which
yield higher billing rates.
Gross Profit. Gross profit consists of revenues less cost of services,
which includes consultant salaries and benefits. Gross profit increased 28% to
$7.8 million in the first ten months of 1996 from $6.1 million in the comparable
1995 period. Gross profit as a percentage of revenues decreased to 29% in the
first ten months of 1996 from 33% in the comparable 1995 period. The decrease in
gross margin was primarily attributable to costs relating to trainees enrolled
in the entry-level training program, and the subsequent delay in the assignment
of these individuals to billable engagements. This resulted in an increase in
expenses of approximately $0.6 million without any increase in revenues. In
addition, the Company hired 20 project managers (an increase of 200% from the
comparable 1995 period) to satisfy anticipated demand for the Company's
services. The Company's operating income for the ten months ended October 31,
1996 was adversely affected by the large number of project managers hired during
such period and the amount of time these project managers devoted to enhancing
the Company's proprietary methodologies and performing marketing and
administrative activities. The Company believes that operating income should
improve as these project managers devote more time to billable engagements.
Selling Expenses. Selling expenses include the salaries, benefits,
commissions, bonuses, travel, entertainment and other direct costs associated
with the Company's direct sales force. Selling expenses increased 47% to $2.4
million in the first ten months of 1996 from $1.7 million in the comparable 1995
period. This increase was primarily the result of increased commissions
attributable to the 44% increase in sales over the comparable period. The
Company also had three more salespeople on October 31, 1996 than it had on
October 31, 1995. The Company's selling expenses, as a percentage of revenues,
were 9% in the first ten months of 1996 and 1995.
Recruiting Expenses. Recruiting expenses consist of costs related to hiring
new personnel, which include the salaries, benefits, bonuses and other direct
costs of the in-house recruiters, consultant relocation fees, and advertising
costs. The Company hired 255 consultants during the first ten months of 1996
compared to 232 in the first ten months of 1995. Recruiting expenses increased
78% to $1.1 million in the first ten months of 1996 from $0.6 million in the
comparable 1995 period. This increase was the result of hiring seven additional
recruiters to manage the expanded hiring activity. As a result of such
additions, total recruiting costs per hire increased to approximately $4,300 in
the first ten months of 1996 from approximately $2,600 in the comparable 1995
period.
General and Administrative Expenses. General and administrative expenses
include salaries and benefits of management and support staff, leased facilities
costs, training, non-billable travel, outside professional fees, depreciation
and all other corporate costs. General and administrative expenses increased
139% to $2.8 million in the first ten months of 1996 from $1.2 million in the
comparable 1995 period. This increase was primarily attributable to hiring six
additional employees, including a Chief Financial Officer, a General Manager for
the Company's Texas branch office, a Director of Human Resources, increased rent
relating to new office space in Chicago and Wisconsin, increased depreciation,
training costs associated primarily with outside instructors, and initial
staffing of the IDS business unit, including the reclassification of certain
employee salaries from cost of services and selling expenses to reflect the
change in responsibilities of these employees.
1995 COMPARED TO 1994
Revenues. Revenues increased 55% to $22.9 million in 1995 from $14.8
million in 1994. The increase was primarily the result of an increased demand
for the Company's services from both new and existing clients and a continuing
shift from contract programming to project management engagements yielding
higher billing rates.
Gross Profit. Gross profit increased 69% to $7.4 million in 1995 from $4.4
million in 1994. Gross profit as a percentage of revenues increased to 32% of
revenues in 1995 from 30% in 1994, resulting primarily from higher billing rates
without commensurate increases in consultant hourly costs resulting from the
shift from contract programming to project management and the completion of two
out-of-town engagements in 1994 in which per diem expenses were paid to
consultants but not passed through to clients. Out-of-town expenses,
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<PAGE> 21
such as travel expenses, generally are passed through to the Company's clients;
however, in the case of these two engagements, the Company agreed to bear such
expenses.
Selling Expenses. Selling expenses increased 84% to $2.1 million in 1995
from $1.2 million in 1994. This increase was primarily the result of increased
commissions due to a 55% increase in sales in 1995 over 1994. In addition, the
Company hired four additional salespersons in 1995.
Recruiting Expenses. Recruiting expenses increased 89% to $0.8 million in
1995 from $0.4 million in 1994. This increase was the result of hiring seven
additional recruiters to expand hiring activity required by the increased demand
for the Company's service offerings. The Company hired 254 consultants in 1995
compared to 168 in 1994. As a result of hiring the additional recruiters, total
recruiting costs per hire increased to approximately $3,100 in 1995 from
approximately $2,400 in 1994.
General and Administrative Expenses. General and administrative expenses
increased 23% to $1.6 million in 1995 from $1.3 million in 1994. This increase
was primarily due to management salary and bonus increases, the hiring of a
Director of Human Resources, four general office staff employees and an increase
in depreciation. General and administrative expenses as a percentage of revenues
decreased to 7% in 1995 from 9% in 1994 as a result of the rapid growth in
revenues.
1994 COMPARED TO 1993
Revenues. Revenues increased 26% to $14.8 million in 1994 from $11.7
million in 1993. The increase was primarily the result of an increased number of
engagements for both new and existing clients and a shift from contract
programming to project management engagements yielding higher billing rates.
Gross Profit. Gross profit increased 29% to $4.4 million in 1994 from $3.4
million in 1993. Gross profit as a percentage of revenues increased to 30% of
revenues in 1994 from 29% in 1993. This percentage of revenues increase in 1994
over 1993 was attributable to higher billing rates without commensurate
increases in consultant hourly costs resulting from the shift from contract
programming to project management.
Selling Expenses. Selling expenses increased 15% in 1994 to $1.2 million
from $1.0 million in 1993. This increase was primarily the result of increased
commissions due to the 26% increase in sales in 1994 over 1993. In addition, the
Company also hired a salesperson in 1994.
Recruiting Expenses. Recruiting expenses increased 20% to $0.4 million in
1994 from $0.3 million in 1993. The Company hired 168 consultants in 1994
compared to 145 in 1993. Total recruiting costs per hire stayed approximately
the same at $2,400 in both periods.
General and Administrative Expenses. General and administrative expenses
increased 9% to $1.3 million in 1994 from $1.2 million in 1993. This increase is
primarily due to increases in management bonuses resulting from increased sales.
General and administrative expenses as a percentage of revenues decreased to 9%
in 1994 from 10% in 1993, attributable to leveraging the rapid growth in
revenues.
UNAUDITED QUARTERLY RESULTS
The following tables set forth certain unaudited quarterly data for the
periods shown:
<TABLE>
<CAPTION>
1994 QUARTER ENDED 1995 QUARTER ENDED 1996 QUARTER ENDED
------------------------------------- ------------------------------------- -----------------------------
MAR. 31 JUNE 30 SEP. 30 DEC. 31 MAR. 31 JUNE 30 SEP. 30 DEC. 31 MAR. 31 JUNE 30 SEP. 30
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues......... $3,513 $3,733 $3,828 $3,723 $4,474 $5,341 $6,302 $6,791 $7,443 $7,644 $8,360
Gross profit..... 990 1,090 1,225 1,068 1,390 1,678 2,104 2,211 2,273 2,159 2,603
</TABLE>
Operating results fluctuate based upon the timing of service offering
expansion activities, the hiring and training of consultants, the initiation and
completion of engagements, the timing of corporate expenditures and the number
of billable days in a quarter.
20
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its growth principally through cash flows from
operations. The Company's primary source of liquidity is the collection of its
accounts receivable. Accounts receivable have grown as the Company's operations
have grown. Receivables increased to 42 days of revenues at October 31, 1996
from 40 days of revenues at October 31, 1995. The Company's ability to reduce
significantly the aging of its outstanding receivables is limited because of a
continuing general trend by clients to slow their payment of invoices.
Cash flow provided by operating activities, primarily to fund the growth in
accounts receivable, totaled $1.3 million and $1.6 million for the ten months
ended October 31, 1996 and 1995, respectively and $1.6 million, $1.3 million and
$0.6 million for the years ended December 31, 1995, 1994, and 1993,
respectively. Cash provided by (used in) the Company's investing activities,
primarily to fund capital expenditures, totaled ($0.7) million and $0.1 million
for the ten months ended October 31, 1996 and 1995, respectively, and ($0.1
million), ($0.2 million) and ($0.5 million) for the years ended December 31,
1995, 1994, and 1993, respectively. Net cash (used in) financing activities
consisted primarily of payments on a note payable to Eugene Figliulo and
dividend distributions totaled ($1.1 million) for the ten months ended October
31, 1996 and ($1.5 million) for the ten months ended October 31, 1995 and ($1.5
million), ($0.4 million) and ($0.1 million) for the years ended December 31,
1995, 1994 and 1993, respectively.
The Company has supplemented cash generated by operations periodically with
short-term borrowings under lines of credit and a term loan. The proceeds from
the Company's $0.3 million term loan funded furniture and equipment purchases
for the Company's Chicago facility. The note matures on December 31, 2000, bears
interest at 9% per annum, with principal and interest payable monthly, and is
secured by certain accounts receivable and other assets. As of October 31, 1996,
the term note had an outstanding balance of $0.2 million. The Company intends to
pay the term note with part of the net proceeds from the Offering.
Due to the significant growth the Company has experienced, two lines of
credit were established in 1996. These lines of credit provide for maximum
borrowings of $1.5 million and are limited based upon a percentage of eligible
accounts receivable. On October 31, 1996 there was $0.6 million outstanding on
the lines. Interest rates on the lines of credit are at each of the respective
bank's prime rate and are collateralized by certain assets including accounts
receivable. One agreement, which provides for maximum borrowings of $1.0
million, expires in May 1997. The other agreement, which provides for maximum
borrowings of $0.5 million, has no expiration date.
The Company believes that cash flow from operations, the net proceeds of
the Offering and available borrowings will be sufficient to meet its operating
needs and capital expenditures for the foreseeable future.
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<PAGE> 23
BUSINESS
COMPANY OVERVIEW
SPR has over 23 years of experience in providing IT services to clients in
a variety of industries, including financial services, healthcare, insurance,
manufacturing, oil and gas, transportation and utilities. The Company focuses
its marketing efforts on Fortune 1000 companies and other large organizations
which have complex IT operations and significant IT budgets. SPR's objective is
to become the leading IT services provider to both new and existing clients.
Over the past several years, the Company has shifted its focus from contract
programming to strategic planning and project management engagements. SPR
currently provides the following service offerings: (i) General Consulting, (ii)
Systems Re-engineering, (iii) Century Date Compliance, (iv) Systems Maintenance
and Support and (v) Information Delivery Services. Within each of these service
offerings, the Company provides three levels of consulting support which are
distinguished by the degree of responsibility the Company assumes: strategic
planning, project management and implementation. The Company believes that this
breadth of service and support fosters long-term client relationships, promotes
cross-selling opportunities and minimizes the Company's dependence upon any
particular service offering or client.
The Company currently has three branch offices located in Chicago,
Milwaukee and Tulsa and approximately 400 IT consulting professionals, including
30 project managers and 36 independent contractors. The number of consultants
employed or retained by the Company as of October 31, 1996 was 35% greater than
at the end of 1995. The Company has made, and intends to continue to make,
significant investments in its systems infrastructure, recruiting organization,
training programs and marketing initiatives in an effort to sustain growth. SPR
intends to leverage these investments, as well as its operating expertise, by
opening additional branch offices. The Company recently hired a General Manager
to work with clients in Texas, where it plans to open a branch office in early
1997.
SPR has capitalized on the growing demand for IT services. The Company's
revenues have increased at a compound annual growth rate of approximately 36%
from 1992 through 1995. For the ten months ended October 31, 1996, the Company's
revenues increased 44% compared with the same period in the prior year. More
than 71% of the Company's revenues for the ten months ended October 31, 1996
were attributable to 37 companies which have been clients for three consecutive
years or longer.
INDUSTRY OVERVIEW
Dataquest Incorporated estimates total expenditures for professional IT
services in the United States to be $54.1 billion in 1996. The professional IT
services market, consisting of consulting and education, systems integration and
development and systems management services, is expected to grow at a compound
annual growth rate of approximately 14% over the next three years, reaching
$79.6 billion by 1999. According to International Data Corporation, large
organizations, which make up the Company's primary target market, are expected
to account for approximately 46% of total expenditures in this market in 1996.
The Company's experience is that many of these organizations are finding it
increasingly difficult and costly to internally maintain their existing systems.
Management believes that over 75% of existing mainframe and mid-range systems
will still be in operation seven to ten years from now as businesses will
continue to require massive data storage capabilities and tremendous processing
power, which are most efficiently provided by mainframe technology. As providers
of IT services focus more on the client/server segment of the market, however,
fewer professionals possess the skills necessary to support and maintain
existing mainframe and mid-range systems. The Company believes these factors
provide it with a substantial growth opportunity within the IT services
industry.
In addition, the Company believes that clients will continue to maintain
and improve their existing systems because: (i) existing systems represent an
enormous investment which may prove too risky and expensive to completely
replace; (ii) mainframe computing is increasingly being utilized in new ways as
Internet/intranet technologies develop; (iii) existing systems are critical to
the functioning of clients' businesses as they contain vital business knowledge
needed to build replacement systems; and (iv) regardless
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<PAGE> 24
of which front-end computing platform is utilized, clients still need to access
data resident in mainframe computers.
The Company also is capitalizing on the substantial growth opportunity
created by the year 2000 problem, the software glitch that will prevent
computers from properly recognizing dates after the year 1999. Coding 19YY as YY
eliminates two characters from each date reference thereby preserving
substantial amounts of disk storage and memory. A date shown as YY/MM/DD
provides many calculation options within a system, such as age, interest
computations, inventory, materials planning, shelf life, shipping dates and
billing. The problem with this programming format is that in the year 2000, when
YY=00, none of the calculations can work properly. If corrections are not made
prior to January 1, 2000, computer systems may fail which could cause businesses
to stop functioning properly. This abbreviated date-coding format is prevalent
in core, mission-critical systems, which comprise millions of lines of computer
code in existing systems. The data used and generated by these systems are
heavily integrated into multiple files and databases. This data integration
typically results in thousands of interfaces, each of which must be analyzed,
changed and tested to correct the problem, while minimizing the impact on
ongoing operations. Capers Jones estimates the cost in the United States to
correct the year 2000 problem associated with software and databases to be $130
billion. In addition, Gartner Group, Inc. projects that by the end of 1997 only
20% of all systems in the world will be year 2000 compliant, and only 50% of
such systems will be year 2000 compliant by the end of 1999.
BUSINESS STRATEGIES
The Company's objective is to become the leading IT service provider to
both new and existing clients. To achieve this objective, the Company has
pursued, and intends to continue to pursue, the following business strategies:
FOCUS ON PROJECT MANAGEMENT TO DELIVER VALUE-ADDED IT SOLUTIONS. In recent
years, the Company has shifted its focus from contract programming to project
management and strategic planning engagements, such as Century Date Compliance,
Systems Re-engineering and IDS. The Company believes that by providing such
value-added services it develops in-depth knowledge of its clients' existing
systems and gains a competitive advantage in assessing its clients' needs with
respect to emerging technologies and providing additional IT services.
ATTRACT, DEVELOP AND RETAIN QUALIFIED TECHNICAL CONSULTANTS. The Company
currently employs 14 full-time recruiters: six in Chicago, four in Tulsa and
four in Milwaukee. In addition, the Company employs one recruiting manager in
each location. Over the past 23 years, the Company has developed and refined an
internal recruiting database which facilitates rapid identification of
consultant candidates based upon skill and geographic location. To address the
shortage of qualified technical consultants, the Company is developing a
three-year training program. This program, targeted at college graduates with
degrees other than computer science, begins with a six- to eight-week
entry-level course specifically geared to Century Data Compliance. In addition,
the Company is developing several other training programs to enable its
consultants to enhance their careers and to improve their technical skills. See
"-- Recruiting and Training." To help retain experienced consultants, the
Company has established comprehensive employee welfare plans, and recently
implemented the Option Plan and the Employee Stock Purchase Plan. See
"Management -- Stock Plans."
DELIVER UNBIASED SERVICE OFFERINGS UTILIZING DISCIPLINED METHODOLOGIES. The
Company works closely with its clients' IT personnel from the strategic planning
phase through the completion of an engagement. To increase productivity and
efficiency, the Company has developed specific proprietary service
methodologies, Renovation(SM) and Renovation2000(SM), and a software analysis
tool, CodeVu(SM). See "-- Proprietary Service Methodologies." In implementing
its methodologies, the Company utilizes the best available third-party
application software and productivity tools without regard to specific
third-party vendor relationships, thereby avoiding the bias resulting from
promoting third-party products. The Company is capable, therefore, of offering
its clients an objective assessment of the advantages and disadvantages of the
latest packaged software applications, platforms, operating systems and
productivity tools.
FOCUS ON LEADING TECHNOLOGIES. The Company maintains and continues to build
expertise not only in mainframe applications but also in other high demand
technologies, such as Internet/intranet applications,
23
<PAGE> 25
open computing systems, object oriented solutions and relational database
management systems. SPR has developed, and intends to continue developing,
relationships with software product developers and research institutions to
remain on the leading edge of technological development and to provide its
clients with technologies that are best suited to their individual needs.
GROWTH STRATEGIES
Historically, the Company has grown by developing new service offerings and
expanding its client base. The Company may also pursue growth through selected
geographic branch expansion and strategic acquisitions. Management believes that
its strategies have positioned the Company to achieve continued growth in
revenues and earnings. Key elements of the Company's growth strategies include
the following:
CAPITALIZE ON CENTURY DATE COMPLIANCE EXPERTISE. SPR was an early entrant
into the year 2000 segment of the market, completing its first Century Date
Compliance engagement in 1993. The Company has either completed or is in the
process of completing 25 Century Date Compliance assessments. Based upon such
assessments, the Company has been retained to implement 15 of its proposed
Century Data Compliance solutions and has successfully completed implementation
of five such solutions. The Company expects that its expertise in this industry
segment will result in additional Century Date Compliance engagements as the
year 2000 approaches. To date, the Company has found that many of its clients
request the Company not only to evaluate their Century Date Compliance needs,
but also to assess functional and technical quality in their application
portfolios and develop strategies for improvement. As a result of its Century
Date Compliance engagements, SPR expects to be strategically positioned to
provide additional IT services to clients who have already entrusted their core,
mission-critical systems to SPR.
LEVERAGE EXISTING CLIENT BASE. The Company intends to continue building
long-term client relationships. Its record of customer satisfaction and expanded
service offerings have contributed to the Company's ability to increase the
revenues generated from existing clients. For the ten month's ended October 31,
1996, the Company derived more than 71% of its revenues from 37 clients to which
it had provided IT services in the prior three consecutive years. The Company
intends to further penetrate its existing client base by providing additional
service offerings.
DEVELOP AND EXPAND CLIENT SERVICES. The Company believes there are
substantial opportunities for increasing revenues by developing and expanding
services offered to existing and prospective clients. In response to client
needs, SPR implemented its IDS service offering in the third quarter of 1995 and
established its first Virtual Insourcing Center in the third quarter of 1996.
IDS was introduced to provide end-users access to data locked within existing
systems. By incorporating technologies such as data warehousing, on-line
analytical processing ("OLAP"), data mining and the Internet/intranet, IDS helps
bridge the gap between modern technologies and existing systems. The Company's
Virtual Insourcing Centers augment its Systems Maintenance and Support service
offering and are logical extensions of the Company's Systems Re-engineering,
Century Date Compliance and General Consulting service offerings. See "-- Growth
Strategies -- Further Develop Virtual Insourcing Centers" and "-- Service
Offerings."
EXPAND GEOGRAPHIC PRESENCE. Geographic expansion will be driven primarily
by the growing need to service existing clients' divisions or affiliates in new
geographic locations, such as Texas. The Company has hired a General Manager for
the Texas region and anticipates opening a Texas branch in early 1997. The
Company also may pursue strategic acquisitions either to expand its geographic
presence or to complement its existing service offerings.
FURTHER DEVELOP VIRTUAL INSOURCING CENTERS. In order to capitalize on the
corporate trend towards outsourcing, the Company intends to continue developing
Virtual Insourcing Centers. Equipped with a variety of computer hardware,
software and networking technologies and systems, these centers enable the
Company to provide the full range of its service offerings in a Company facility
rather than at its clients' facilities. The Virtual Insourcing Centers also
enable the Company to assume off-site project management responsibilities and to
complete Century Date Compliance and Systems Re-engineering and Systems
Maintenance and Support engagements without interrupting its clients'
businesses. In addition, Virtual Insourcing Centers allow
24
<PAGE> 26
the Company to implement the testing phases of its Renovation(SM) and
Renovation2000(SM) methodologies seven days a week, rather than only on weekends
when clients are not utilizing their systems.
SERVICE OFFERINGS
Since its inception, the Company has provided technical personnel to
augment its clients' internal IT departments. Over the past several years,
however, the Company has focused its efforts on providing higher-end service
offerings. The Company's current service offerings include: (i) General
Consulting; (ii) Systems Re-engineering; (iii) Century Date Compliance; (iv)
Systems Maintenance and Support; and (v) IDS. The Company offers each of its
five service offerings either independently or as part of a comprehensive
solution and performs these services on a "time and materials" basis. Within
each of its service offerings, the Company provides three levels of consulting
support which are distinguished by the degree of responsibility the Company
assumes: strategic planning, project management and implementation. The amount
of responsibility assumed by the Company generally depends upon a client's
in-house capabilities and desire to outsource IT functions. Based upon client
needs, SPR can provide strategic planning, project management or implementation
either at its clients' facilities or off-site at SPR's Virtual Insourcing
Centers. See "-- Growth Strategies -- Further Develop Virtual Insourcing
Centers." SPR employs proven proprietary service methodologies and software
analysis tools to deliver these services. See "-- Proprietary Service
Methodologies."
[GRAPHICS REGARDING THE COMPANY'S SERVICE OFFERINGS]
GENERAL CONSULTING. General Consulting consists of providing technical
personnel with expertise across numerous computing platforms to augment clients'
internal IT departments. These services are provided on an as-needed basis and
cover a broad range of assignments including contract programming,
client-managed software development and maintenance engagements.
SYSTEMS RE-ENGINEERING. Systems Re-engineering consists of software
portfolio analysis and assessment, code stabilization, code modularization,
language upgrades or conversions, business specification extraction and system
documentation. The Company re-engineers existing systems to create more
manageable and functional applications and transitions existing systems to
distributed client/server and networking systems. This service offering allows
the Company's clients to leverage their investments in existing systems through
analysis, improvement, redesign and reuse of applications.
CENTURY DATE COMPLIANCE. Century Date Compliance consists of retrofitting
existing systems to address the date change coding problem that will be caused
by the year 2000. Century Date Compliance services
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include high-level organizational assessment of a client's software portfolio
and organizational readiness, engagement planning and management and
implementation. See "-- Industry Overview."
SYSTEMS MAINTENANCE AND SUPPORT. Systems Maintenance and Support consists
of providing the management, systems maintenance and support of all or part of
clients' existing IT applications. Using proprietary service methodologies and
tools, the Company provides transition planning, engagement management, program
maintenance and testing, production support and system improvements.
INFORMATION DELIVERY SERVICES. IDS consists of accessing, analyzing and
managing data which currently resides in existing systems. The Company uses its
expertise with existing systems and emerging technologies to provide its clients
with the ability to retrieve and utilize data resident in existing systems which
would otherwise be inaccessible. Services provided within IDS include
information harvesting, information analysis and information publishing, which
incorporate technologies such as OLAP and the Internet/intranet.
PROPRIETARY SERVICE METHODOLOGIES
The Company's proprietary service methodologies, Renovation(SM) and
Renovation2000(SM), and its software analysis tool, CodeVu(SM), provide SPR with
a disciplined approach to fulfill its engagements. Renovation(SM) and
Renovation2000(SM) enable the Company to deliver its service offerings through a
tested and repeatable format. CodeVu(SM) quickly and accurately provides
information concerning client software portfolios. These service methodologies
coupled with the software analysis tool facilitate the development of
well-defined tasks and timetables for each phase of an engagement from strategic
planning through implementation.
RENOVATION(SM). Renovation(SM) was first used by the Company in 1988 for
Systems Re-engineering engagements. The methodology employs a four phase
approach: assessment, improvement, transformation and preservation. In the
assessment phase, the system is analyzed for architectural deficiencies and a
strategy is developed for correcting these deficiencies and transforming the
existing architecture. In the improvement phase, commercially available tools
and internally developed techniques are applied to implement the strategy
developed in the assessment phase. In the transformation phase, the newly
re-engineered system is transformed into a new architectural paradigm. In the
preservation phase, quality assurance procedures are developed. These procedures
are designed to help prevent the degradation of the system after the Systems Re-
engineering process is complete, thereby protecting the client's investment in
its existing systems.
RENOVATION2000(SM). Renovation2000(SM) is SPR's methodology for Century
Date Compliance engagements. This methodology employs a repeatable process
which, in conjunction with the best available third-party application software
and productivity tools, analyzes, locates and retrofits all programs and data
affected by the absence of a century date field to permit processing of dates
after 1999. This methodology enables the Company to capture information allowing
the refinement of the process and the preparation of estimates and schedules
throughout the engagement.
CODEVU(SM). CodeVu(SM), which runs on mainframe and personal computing
platforms, analyzes source code and provides quantitative information at the
program and system level. CodeVu(SM) provides insight regarding the technical
quality of the source code, identifies programs that are the most costly to
maintain and represent the highest risk and identifies and locates potential
problems hidden within the code. This tool has been used successfully by the
Company in a large number of engagements, including Systems Re-engineering,
Century Date Compliance and Systems Maintenance and Support. CodeVu(SM) is often
integrated into client environments to assist with the maintenance and
preservation of source code.
MARKETING AND SALES
SPR marketing representatives are assigned to a limited number of accounts
in order to develop an in-depth understanding of each client's individual needs
and to build long-term client relationships. These representatives are
responsible for providing highly responsive service and ensuring that the
Company's service offerings achieve client objectives. In many instances, a
portion of SPR's marketing activity is carried out by senior Company executives.
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The Company employs a variety of business development and marketing
techniques to communicate directly with current and prospective clients,
including (i) various print and direct mail advertisements, (ii) participation
in print and live interviews, roundtable discussions and seminars, and (iii) a
World Wide Web site (www.sprinc.com). In addition, the Company believes that its
President and Chairman is recognized as an expert concerning the year 2000
problem. He has participated, often with other service providers, research
organizations and productivity tool and hardware companies, in print, television
and live interviews and seminars concerning this problem. The Company believes
these activities promote greater client awareness and enhance the SPR brand
name.
CLIENT BASE
The Company serves clients in a diverse range of industries thereby
mitigating cyclical effects of any one industry or market. The Company derives
an additional level of diversification from certain of its clients. Different
operating divisions of a given client may utilize any one or several services
offered by SPR, which helps mitigate the risk of customer concentration. During
1995, SPR's ten largest clients accounted for approximately 51% of the Company's
revenues and Allstate Insurance Company accounted for approximately 11% of its
revenues.
The following table shows selected clients, categorized by industry group,
for which the Company provided services in the ten months ended October 31,
1996. Revenues derived from any particular client engagement vary from year to
year. The Company derived an aggregate of approximately $12.2 million of
revenues for the ten months ended October 31, 1996 from the clients listed
below, representing approximately 46% of the Company's total revenues for that
period and 40% and 35% for the years ended December 31, 1995 and December 31,
1994, respectively.
FINANCIAL SERVICES
Comdisco, Inc.
First Data Corporation Oil Card Services
Firstar Information Services Corporation
Stein Roe & Farnham Incorporated
Trans Union
INSURANCE
Allstate Insurance Company
Kemper National Insurance
The Lincoln National Life Insurance Company
Wausau Insurance
OIL & GAS
Chevron Information Technology Company
Citgo Petroleum Corporation
Oxy USA Inc.
HEALTHCARE
Baxter Healthcare Corporation
G E Medical Systems
MANUFACTURING
Case Corporation
Dowell Schlumberger Company
Nalco Chemical Company
Navistar International Transportation Corp.
The Williams Companies
Cessna Aircraft Company
TRANSPORTATION
Chicago Transit Authority
General Electric Railcar Services Corporation
OTHER INDUSTRIES
Kraft Foods
Manpower International Incorporated
The Peoples Gas, Light and Coke Company
Sears, Roebuck and Co.
Spiegel, Inc.
State of Wisconsin
Sun Company Inc.
United Video, Inc.
EMPLOYEES
As of October 31, 1996, the Company had approximately 400 IT consulting
professionals, of which 361 were employees and 36 were independent contractors.
Of these IT consulting professionals, 30 were project
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managers. As of such date, the Company had 412 employees: 203, 127 and 82 in
Chicago, Tulsa and Milwaukee, respectively.
The Company has three categories of IT consultants: salaried employees,
associate employees and independent contractors. Salaried employees are
full-time employees of the Company and are eligible for all benefits offered by
the Company. Associate employees are eligible for the same benefits offered to
salaried employees but are paid on an hourly basis and, as such, are not
entitled to paid time off in the form of sick days, personal days or vacation.
Approximately 76% of the Company's IT consultants are salaried employees and 15%
are associate employees. Independent contractors are not employees of the
Company, but are paid on an hourly basis and are not entitled to any benefits
offered to Company employees. Approximately 9% of the Company's IT consultants
are independent contractors.
The Company is not a party to any collective bargaining agreements and
considers its relationships with its employees to be good.
RECRUITING AND TRAINING
The Company employs 14 full time recruiters and 3 recruiting managers who
are responsible for recruiting and establishing relationships with qualified
technical personnel. Technical personnel meeting the Company's standards are
added to a computerized database. Recruiting managers maintain regular contact
with technical personnel, monitor their availability and changes in skill levels
and update the database, which has been maintained for over 23 years. See "Risk
Factors -- Need to Attract and Retain Qualified Technical Consultants."
In the first quarter of 1996, the Company implemented an entry-level
training program to address the current shortage of available technical
consultants for its Century Date Compliance engagements. The Company actively
recruits college graduates with degrees other than computer science, such as
music, mathematics and philosophy. Based upon its recent experience with the
training program, the Company believes such individuals have the aptitude to
develop the requisite systems and programming skills. The Company enrolls these
individuals in an intensive six- to eight-week entry-level training course. Upon
completion of training, the Company places these individuals on Century Date
Compliance engagements, where they work under the supervision of experienced
consultants. The Company enters into employment agreements with these
individuals, whereby the consultants agree to reimburse the Company for some or
all of the cost of their training if they leave the Company within four years.
Since the commencement of this entry-level training program on February 15,
1996, 46 individuals have entered and successfully completed training. The
Company is currently conducting an additional entry-level training class for 14
individuals and intends to conduct additional training classes on a regular
basis in 1997. Advanced course modules are under development and will
concentrate on the Company's other service offerings, such as Systems
Re-engineering and IDS.
COMPETITION
The market for IT professional services is intensely competitive on local
and national level, and the Company competes frequently with a variety of
companies for both the same clients and qualified technical consultants. These
companies include: "Big Six" accounting firms, systems consulting and
implementation firms, application software firms, service groups of computer
equipment companies, general management consulting firms and programming
companies. The Company considers large organizations with complex IT needs to be
among its primary clients. Within a given market, there are a limited number of
such potential clients, some of which have designated only certain IT
professional services companies as approved providers of IT professional
services. Primary competitive factors for obtaining and retaining clients
include: price, quality of services, technical expertise and responsiveness to
client needs. The primary competitive factors in attracting and retaining
qualified candidates as consultants are competitive compensation arrangements
and consistent exposure to high quality and varied engagements.
Several of the Company's competitors are substantially larger than the
Company and have greater financial and other resources. Many of such competitors
have also been in business longer than the Company
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and have significantly greater name recognition throughout the United States,
including the geographic areas in which the Company operates and into which it
may expand. In addition, such companies are able to meet a broader range of a
client's IT consulting needs and serve a broader geographic range than the
Company, which permits such companies to better serve national accounts.
Although the Company believes that it competes, and will continue to compete,
favorably with existing and future competitors, there can be no assurance that
the Company will continue to do so. See "Risk Factors -- Competition" and "Risk
Factors -- Need to Attract and Retain Qualified Technical Consultants."
INTELLECTUAL PROPERTY RIGHTS
Software developed by SPR in connection with a client engagement typically
becomes the exclusive property of the client. The Company relies upon a
combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect its proprietary rights, the
rights of third parties from whom the Company licenses intellectual property and
the proprietary rights of its clients. The Company enters into confidentiality
agreements with its consultants in an effort to prevent the distribution of
proprietary information. See "Risk Factors -- Intellectual Property Rights."
SPR(SM), Renovation(SM), Renovation2000(SM), CodeVu(SM) and the SPR logo
are service marks of the Company. The Company holds no patents or registered
copyrights, and has no present intention of registering any copyright or filing
any patent applications. See "-- Propriety Methodologies."
PROPERTY
SPR leases its principal executive offices, which are located at 2015
Spring Road, Oak Brook, Illinois 60521, and also leases facilities in Tulsa,
Oklahoma and Milwaukee, Wisconsin. These leases expire on January 21, 2002,
December 31, 2000 and May 31, 2001, respectively. The Company's principal
executive offices contain a Virtual Insourcing Center. The Company has recently
leased space in Oak Brook, Illinois to house an additional Virtual Insourcing
Center. The Company believes it has adequate space to conduct its current
business. The Company anticipates, however, that additional space will be
required as business expands but believes that it will be able to obtain
suitable space as needed. See Note 5 of Notes to Financial Statements.
LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors, executive officers and managers of the Company, and their
ages and positions as of November 1, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- ------------------------------------------
<S> <C> <C>
Executive Officers and
Directors
Robert M. Figliulo............ 42 President and Chairman of the Board of
Directors
Michael J. Fletcher........... 41 Executive Vice President, General Manager
-- Tulsa and Director
David A. Figliulo............. 35 Executive Vice President and Director
Stephen T. Gambill............ 46 Chief Financial Officer
Ronald L. Taylor(1)........... 53 Director
Sydnor W. Thrift, Jr.(2)...... 67 Director
David P. Yeager(1)(2)......... 43 Director
Managers
Rene M. Potter................ 40 Marketing Manager
Patrick D. Sloan.............. 36 General Manager -- Milwaukee
Vincent Chapa III............. 40 General Manager -- Texas
</TABLE>
- -------------------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
Directors hold office for one year and until their successors are elected
and qualified. Executive officers of the Company are appointed by, and serve at
the direction of, the Board of Directors. The directors, executive officers and
managers listed below have held their positions with SPR listed in the above
table since October 31, 1996 and have held the positions described below with
the Company's predecessors for the periods indicated.
Robert M. Figliulo served as President of SPR Chicago since January 1994.
Since joining the Company in May 1976, Mr. Figliulo has held numerous positions,
including Programmer, Analyst, Account Manager, General Manager of both the
Tulsa and Chicago offices and Vice President of Marketing. Mr. Figliulo received
a Masters in Business Administration from the University of Chicago in 1987. Mr.
Figliulo is the brother of David Figliulo and the son of Eugene Figliulo.
Michael J. Fletcher served as President of SPR Tulsa since September 1994.
Mr. Fletcher joined SPR in 1986 as a Recruiter in the Chicago office and since
that time has held a variety of positions in both the Tulsa and Chicago offices
including Branch Manager of the Tulsa office, Field Support Representative and
Technical Manager. Prior to joining SPR, Mr. Fletcher worked in the staffing
support and personnel recruiting industry.
David A. Figliulo served as Vice President of SPR Chicago since January
1994. Since joining the Company in July 1989, Mr. Figliulo has served as an
Account Manager and as the Vice President of Sales in the Company's Chicago
office. Prior to joining the Company, Mr. Figliulo worked as an Account Manager
for Baxter Healthcare, an international pharmaceutical company, in the Oxygen
Systems Division and was recognized as the division's top salesman in the United
States in 1987, 1988 and 1989. Mr. Figliulo is the brother of Robert Figliulo
and the son of Eugene Figliulo.
Stephen T. Gambill served as Chief Financial Officer of SPR Chicago since
July 1996. From 1982 through July 1996, Mr. Gambill, a certified public
accountant, held various financial management positions within Natural Gas
Pipeline Company of America, a large natural gas pipeline, and most recently
served as its Director of Accounting. Prior to 1982, Mr. Gambill held various
auditing positions with the public accounting
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firms of Coopers and Lybrand and Deloitte, Haskins & Sells. Mr. Gambill received
a Masters in Business Administration degree from the University of Chicago in
1987.
Ronald L. Taylor has served since 1987 as a director, President and Chief
Operating Officer of DeVry, Inc., one of the largest publicly-owned,
degree-granting, higher education companies in North America. Mr. Taylor
co-founded Keller Graduate School of Management and was, from 1973 to 1987, its
President and Chief Operating Officer. Mr. Taylor received a Masters in Business
Administration degree from Stanford University in 1971.
Sydnor W. Thrift, Jr. has served as Director of Player Development for the
Baltimore Orioles professional baseball team since November 1994. From November
1991 through October 1994, Mr. Thrift served as the Assistant General Manager
for the Chicago Cubs professional baseball team. From January 1991 through
October 1991, Mr. Thrift served as a consultant to three professional baseball
teams: the San Francisco Giants, the Los Angeles Dodgers and the New York Mets.
David P. Yeager has served as Vice Chairman of the Board of Directors of
Hub Group, Inc., the largest intermodal marketing company in the United States,
since January 1992. Mr. Yeager has also served as Chief Executive Officer of Hub
Group, Inc. since March 1995 and was President of Hub Group, Inc. from October
1985 through December 1991. Mr. Yeager received a Masters in Business
Administration degree from the University of Chicago in 1987.
Rene M. Potter served as Vice President of SPR Tulsa since September 1994.
Since joining the Company in June 1985, Ms. Potter has held numerous positions,
including Recruiter, Marketing Manager and Account Manager in the Company's
Tulsa office. Prior to joining the Company, Ms. Potter worked as a Senior
Recruiter for Computer Dynamics, a technical recruiting company, and as a Senior
Technical Recruiter for Management Recruiters, a technical and management
recruiting company, and managed her own contingency search firm in Houston,
Texas.
Patrick D. Sloan served as General Manager of SPR Wisconsin since November
1996. Since joining the Company in February 1986, Mr. Sloan has held numerous
positions in both the Chicago and Milwaukee offices, including Field Support
Representative, Account Manager, Manager of Central Resources, Manager of
Technology Services and Director of Technical Resources. Prior to joining SPR,
Mr. Sloan served as Assistant Branch Manager for TEC, a Chicago-based data
processing placement firm.
Vincent Chapa III was hired in September 1996 to serve as the General
Manager of the Texas branch office, which the Company plans to open in early
1997. From January 1995 through July 1996, Mr. Chapa served as Vice President of
Sales for Sterling Software, an international software development company. From
October 1992 through January 1995, Mr. Chapa served as Manager of Latin American
Sales for Uniface Corporation, a software development company. From February
1990 through October 1992, Mr. Chapa served as Regional Manager for Legent
Corporation, an international software development company.
BOARD COMMITTEES
In October 1996, the Board of Directors established a Compensation
Committee consisting of Messrs. Thrift and Yeager and an Audit Committee
consisting of Messrs. Taylor and Yeager. The Compensation Committee makes
recommendations to the Board of Directors concerning compensation of the
Company's directors, officers and employees. The Compensation Committee also
oversees and administers the Employee Stock Purchase Plan and the Option Plan.
The Audit Committee reviews the results and scope of audits and other services
provided by the Company's independent auditors and monitors and reviews the
Company's financial policies and internal control procedures.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Mergers, none of SPR Chicago, SPR Tulsa or SPR Wisconsin had a
compensation committee or any other committee of their respective boards of
directors performing similar functions. Decisions concerning compensation of
executive officers were made by the boards of directors of each of the
respective companies, subject to certain limitations, such as maximum
compensation thresholds, imposed by
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Systems Inc. See "Certain Transactions." Mr. Robert Figliulo and Mr. David
Figliulo, former executive officers and directors of SPR Chicago, determined
their 1995 compensation. Mr. Fletcher and Ms. Potter, former executive officers
and directors of SPR Tulsa, determined their 1995 compensation. Mr. John
Figliulo, the sole officer and director of SPR Wisconsin, determined his 1995
compensation.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,000 for each
board meeting attended and $500 for each committee meeting attended on a date
other than a date on which the board meets and are reimbursed for their
reasonable out-of-pocket expenses incurred in attending board and committee
meetings. These directors are also entitled to receive stock options under the
Option Plan for serving on the Board of Directors. See "Management -- Stock
Plans." Employee directors do not receive additional compensation for serving on
the Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's President and the other two
executive officers who earned in excess of $100,000 in salary and bonus for the
year ended December 31, 1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1)
- --------------------------------------------------------- -------- -------- ---------------
<S> <C> <C> <C>
Robert M. Figliulo....................................... $137,800 $102,318 $ 250
President and Chairman of the Board
of Directors
Michael J. Fletcher...................................... 110,300 84,775 $ 250
Executive Vice President, General Manager-Tulsa and
Director
David A. Figliulo........................................ 92,800 71,555 $ 250
Executive Vice President and Director
</TABLE>
- -------------------------
(1) Represents matching payments under the Company's 401(k) Plan.
Option Grants
There were no options or stock appreciation rights granted and no
restricted stock was issued during fiscal 1995 by the Company. The Company
intends to grant stock options to purchase 442,000 shares of Common Stock to
certain employees (other than the Named Executive Officers) and outside
directors prior to the closing of the Offering. The exercise price for the
options will be equal to the initial public offering price.
EMPLOYMENT AGREEMENTS
The Company intends to enter into substantially identical employment
contracts with Robert Figliulo, David Figliulo, Michael Fletcher, Rene Potter,
Stephen Gambill, Pat Sloan and Vincent Chapa. These agreements provide that upon
termination of employment by the Company, other than for Cause (as defined in
the agreements) or retirement, the Company shall pay the executive an amount
equal to the executive's annual base compensation in effect at the time of
termination. The agreements also provide that in the event of a Change in
Control (as defined in the agreements) and the occurrence of certain events, and
to the extent deductible under then applicable tax laws, the Company shall pay
the executive a payment equal to the sum of (i) the executive's most recent base
annual compensation in effect at the date of the Change in Control, plus (ii)
the cash value of the insurance protection (including dependent coverage) then
in effect with respect to the Company's health insurance plan, based upon the
cost of such insurance to the Company for a 12-month period following the Change
in Control date. Each of these executives is subject to a covenant not to
compete, a nonsolicitation covenant and a nondisclosure covenant.
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<PAGE> 34
STOCK PLANS
Employee Stock Purchase Plan. The Company has reserved an aggregate of
500,000 shares of Common Stock for issuance under the Company's Employee Stock
Purchase Plan (the "Purchase Plan"). The Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
and will permit eligible employees of the Company who have completed five full
calendar months of service to purchase Common Stock through payroll deductions
of up to 20% of their total cash compensation; provided that employees may be
prohibited from purchasing more than $20,000 worth of stock in any calendar
year. The Purchase Plan has two six-month offering periods, beginning on January
1 and July 1 of each year, with the first offering period commencing on the date
of this Prospectus. The purchase price of Common Stock purchased under the
Purchase Plan equals 85% of the fair market value of the Common Stock (as
calculated pursuant to the Purchase Plan) on the last day of an offering period.
The Purchase Plan is administered by the Compensation Committee of the Board of
Directors. The Board of Directors is authorized to amend or terminate the
Purchase Plan at any time. However, the Board of Directors may not, without
stockholder approval, modify the Purchase Plan if stockholder approval of the
amendment is required for the Purchase Plan to continue to comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or Section 423 of the Code.
Combined Incentive and Non-statutory Stock Option Plan. The Company has
reserved an aggregate of 800,000 shares of Common Stock for issuance under the
Option Plan, which may be granted to employees, officers and directors of the
Company. The Option Plan is administered by the Compensation Committee of the
Board of Directors. The Compensation Committee provides for awards of
Non-statutory Stock Options ("NQSOs") and Incentive Stock Options ("ISOs") to
purchase shares of Common Stock and stock appreciation rights ("SARs"), provided
that any director who is not an employee of the Company may not be awarded an
ISO. The Option Plan limits the aggregate fair market value of the shares of
Common Stock with respect to which ISOs are exercisable for the first time in
any calendar year to $100,000. No such annual limitation applies to NQSO grants
under the Option Plan.
The exercise price for options and SARs may be paid: (i) in cash; (ii) by
surrendering shares already owned by the optionee; or (iii) if the Compensation
Committee so determines by instructing a broker to sell enough of the optionee's
exercised shares to deliver to the Company sufficient sales proceeds to pay the
exercise price. The exercise price per share of Common Stock may not be less
than 85% (100% in the case of an ISO) of the fair market value of the Common
Stock (as calculated pursuant to the Option Plan) on the date the stock option
is granted. The base value of an SAR will equal not less than 85% of the market
value of a share of Common Stock on the grant date. Option agreements covering
options and SARs to be granted under the Option Plan will generally provide that
such options and SARs will be exercisable within fifteen years from the date of
grant (ten years in the case of ISOs) and will generally vest in annual
installments as determined by the Compensation Committee. In the case of any
eligible employee who owns or is deemed to own stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, the
exercise price of any ISOs granted under the Option Plan may not be less than
110% of the fair market value of the Common Stock on the date of grant and the
exercise period may not exceed five years from the date of grant.
The Board of Directors can terminate or amend the Option Plan at any time,
except that no such action generally will be able to adversely affect any right
or obligation regarding any awards previously made under the Option Plan without
the consent of the recipient. In addition, no amendment may be effective without
the prior approval of stockholders, if such approval is required for the Option
Plan to continue to comply with applicable regulations of the Code and the
Securities and Exchange Commission (the "Commission"). In the event of any
changes in the capital structure of the Company, such as a stock dividend or
stock split, the Board of Directors must make equitable adjustments to
outstanding unexercised awards and to the provisions of the Option Plan to
reflect any increase or decrease in the number of issued shares of Common Stock.
If the Company becomes a party to a merger, reorganization, liquidation or
similar transaction, the Board of Directors may make such arrangements it deems
advisable regarding outstanding awards, such as substituting new awards for
outstanding awards, assuming outstanding awards or terminating or paying for
outstanding awards.
Options to purchase 442,000 shares of Common Stock are expected to be
granted under the Option Plan prior to the consummation of the Offering.
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<PAGE> 35
CERTAIN TRANSACTIONS
The Company's business was started in 1973 by Systems Inc., which was
founded by Eugene Figliulo. By 1993, all the stock of Systems Inc. was owned by
Eugene Figliulo, his eight children and a nephew of Eugene Figliulo.
During 1993, 1994 and 1995, the Company made distributions of $80,955,
$744,559 and $800,663, respectively, to its stockholders to enable them to pay
income taxes attributable to S corporation income of the Company for such
periods.
In 1992 and 1993, Systems Inc. and Data Flex made loans to Eugene Figliulo
in the original principal amounts of $589,770 and $100,000, respectively. Such
loans are evidenced by separate unsecured promissory notes and bear interest at
6% per annum. As of October 31, 1996, the Systems Inc. note was paid in full and
the entire unpaid principal balance plus accrued interest due on the Data Flex
note was outstanding. The Data Flex note plus accrued interest is expected to be
paid with a portion of the proceeds of this Offering payable to Mr. Figliulo.
In 1994, SPR Chicago made an unsecured loan to Robert Figliulo in the
principal amount of $91,000. This loan is evidenced by a promissory note and
bears interest at 7% per annum. As of October 31, 1996, $46,479 plus accrued
interest was outstanding on this note.
During 1994, Systems Inc. transferred certain of its assets and liabilities
in Chicago, Tulsa and Milwaukee to three S corporations organized by the
respective executives primarily responsible for operations in each of those
locations. SPR Chicago, all of whose stock was owned by Robert Figliulo and
David Figliulo, acquired the Chicago operations. SPR Tulsa, all of whose stock
was owned by Michael Fletcher and Rene Potter (neither of whom is related to the
Figliulo family), acquired the Tulsa operations. SPR Wisconsin, all of whose
stock was owned by John Figliulo, acquired the Milwaukee operations. Systems
Inc. retained the trademark "SPR" and licensed it to each of these new
corporations for use in their respective geographic areas. Also in 1994, Systems
Inc. redeemed all of Eugene Figliulo's stock for an installment note in the
principal amount of $2,881,266, bearing interest at a rate of 6.75% per annum (
the "Redemption Note"). As of October 31, 1996, $801,266 was outstanding under
the Redemption Note, all of which is expected to be paid with a portion of the
net proceeds of the Offering received by the Company.
In connection with the transfers of assets and liabilities, SPR Chicago,
SPR Tulsa and SPR Wisconsin delivered to Systems Inc. notes in the principal
amounts of $1,350,133, $1,600,000 and $1,300,000, respectively. Each such note
was payable in monthly installments of principal and interest. In addition, each
corporation agreed to make an additional contingent payment to Systems Inc. in
the event certain "capital events" occurred prior to the one year anniversary
after the final payment is made on its respective note. The loan agreements
restricted borrowings, capital expenditures, amounts of compensation payable to
directors, officers and key employees, sales of assets, mergers, and certain
other business transactions; and the notes were collateralized by the stock of
the respective company and substantially all its assets.
SPR Chicago was reincorporated as a Delaware corporation upon the formation
of SPR and the Merger of SPR Chicago into SPR in October 1996. In the Merger,
Robert Figliulo and David Figliulo each received 1,476,914 shares of Common
Stock. Also in October 1996: (i) SPR Tulsa was merged into SPR and Michael
Fletcher and Rene Potter each received 647,571 shares of Common Stock in the
Merger; (ii) SPR Wisconsin was merged into SPR and John Figliulo received
462,197 shares of Common Stock in the Merger; and (iii) Systems Inc. and Data
Flex were merged into SPR. Each stockholder of Systems Inc. and Data Flex
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<PAGE> 36
received in the Mergers the aggregate number of shares of Common Stock set forth
opposite their respective names below:
<TABLE>
<CAPTION>
NAME SHARES
------------------------------------------------------------------- ---------
<S> <C>
Eugene Figliulo.................................................... 71,685
Robert Figliulo.................................................... 182,386
David Figliulo..................................................... 182,386
John Figliulo...................................................... 182,386
Stephen Figliulo................................................... 182,386
Donald Figliulo.................................................... 182,386
Mark Figliulo...................................................... 182,386
James Figliulo..................................................... 182,386
Jeanne Young....................................................... 182,386
Michael Cymbala.................................................... 91,194
---------
Total......................................................... 1,621,967
=========
</TABLE>
The following stockholders of the Company will receive cash from the
proceeds of the Offering as follows: Eugene Figliulo will receive $801,266 in
full payment of the Redemption Note. Each of the Company's present stockholders
will receive distributions to pay their Federal and state income taxes
attributable to taxable S Corporation income prior to the closing of the
Offering. Such distributions are estimated to be as follows:
<TABLE>
<CAPTION>
NAME AMOUNT
------------------------------------------------------------------ ----------
<S> <C>
Eugene Figliulo................................................... $ 309,230
Robert Figliulo................................................... 541,521
David Figliulo.................................................... 541,521
John Figliulo..................................................... 308,389
Stephen Figliulo.................................................. 80,655
Donald Figliulo................................................... 80,655
James Figliulo.................................................... 80,655
Mark Figliulo..................................................... 80,655
Jeanne Young...................................................... 80,655
Michael Cymbala................................................... 39,076
Michael Fletcher.................................................. 178,494
Rene Potter....................................................... 178,494
----------
Total........................................................ $2,500,000
==========
</TABLE>
The Company intends to enter into a Registration Rights Agreement with
Robert Figliulo, David Figliulo, John Figliulo and Michael Fletcher covering an
aggregate of 532,184 shares of Common Stock. Such Registration Rights Agreement
provides these individuals with demand and piggyback registration rights which
become exercisable one year after the closing of the Offering and continue until
all such shares have been sold. See "Description of Capital
Stock -- Registration Rights."
The Company intends to enter into a tax indemnity agreement with each of
its current stockholders which provides, among other things, that the Company
will indemnify such stockholders against additional income taxes resulting from
adjustments made (as a result of a final determination made by a competent tax
authority) to the taxable income reported by the Company as an S corporation for
periods prior to the Offering, but only to the extent those adjustments result
in a decrease in income taxes otherwise payable by the Company as a C
corporation for periods after the Offering.
35
<PAGE> 37
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of October 31, 1996, as adjusted to reflect the
sale of the shares offered hereby, by (i) each person known by the Company to
own beneficially more than 5% of the Common Stock, (ii) each of the Company's
Directors, (iii) each of the Named Executive Officers, (iv) each of the Selling
Stockholders, and (v) all Directors and Executive Officers of the Company as a
group. Each person or entity named below has an address in care of the Company's
principal executive offices. The Company believes that the beneficial owners of
the Common Stock listed below, based on information furnished by such owners,
have sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING NUMBER OF AFTER OFFERING(1)
-------------------- SHARES OFFERED --------------------
NAME SHARES PERCENT HEREBY SHARES PERCENT
- -------------------------------------------- --------- ------- -------------- --------- -------
<S> <C> <C> <C> <C> <C>
Robert M. Figliulo.......................... 1,659,400 26.2% 0 1,659,400 20.7%
David A. Figliulo........................... 1,659,400 26.2 0 1,659,400 20.7
Michael J. Fletcher......................... 647,571 10.2 0 647,571 8.1
Stephen T. Gambill.......................... 0 * 0 0 *
Ronald L. Taylor(2)......................... 10,000 * 0 10,000 *
Sydnor W. Thrift, Jr.(2).................... 10,000 * 0 10,000 *
David P. Yeager(2).......................... 10,000 * 0 10,000 *
John Figliulo(3)............................ 644,583 10.2 412,399 232,184 2.9
Rene M. Potter.............................. 647,571 10.2 35,000 612,571 7.7
James Figliulo.............................. 182,386 2.9 93,500 88,886 1.1
Stephen Figliulo............................ 182,386 2.9 93,500 88,886 1.1
Donald Figliulo............................. 182,386 2.9 93,500 88,886 1.1
Mark Figliulo............................... 182,386 2.9 93,500 88,886 1.1
Jeanne Young................................ 182,386 2.9 93,500 88,886 1.1
Michael Cymbala............................. 91,194 1.4 46,750 44,444 *
Eugene Figliulo............................. 71,685 1.1 71,685 0 *
All Directors and Executive Officers as a
Group (7 persons)(4)...................... 3,996,371 62.8 0 3,996,371 49.8
</TABLE>
- -------------------------
* Less than 1%.
(1) If the Underwriters' over-allotment option is exercised in full, the
following stockholders will sell pursuant to such option the number of
shares of Common Stock following their names and, after the Offering, will
beneficially own the number and percentage of shares of Common Stock
following their names:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AFTER OFFERING
---------------------
SHARES TO NUMBER OF
NAME BE SOLD SHARES PERCENT
- ----------------------------------------------------------------- --------- ---------- -------
<S> <C> <C> <C>
Rene M. Potter................................................... 260,834 351,737 4.4%
James Figliulo................................................... 26,212 62,674 *
Stephen Figliulo................................................. 26,212 62,674 *
Donald Figliulo.................................................. 26,212 62,674 *
Mark Figliulo.................................................... 26,212 62,674 *
Jeanne Young..................................................... 26,212 62,674 *
Michael Cymbala.................................................. 13,106 31,338 *
</TABLE>
(2) Consists of shares which will be subject to an option granted under the
Option Plan exercisable within 60 days.
(3) Mr. Figliulo was the President, sole stockholder and sole director of SPR
Wisconsin prior to the Mergers.
(4) Includes 30,000 shares which will be subject to options granted under the
Option Plan exercisable within 60 days.
36
<PAGE> 38
DESCRIPTION OF CAPITAL STOCK
GENERAL
The following brief description of the Company's capital stock does not
purport to be complete and is subject in all respects to applicable Delaware law
and to the provision of the Certificate of Incorporation and By-laws, copies of
which have been filed as exhibits to the Registration Statement on Form S-1 of
which this Prospectus is a part and to which exhibits reference is hereby made.
The authorized capital stock of the Company consists of 13,000,000 shares
of Common Stock, $.01 par value per share, and 3,000,000 shares of Preferred
Stock, $.01 par value per share. Immediately following consummation of the
Offering, there will be 8,000,000 shares of Common Stock outstanding, no shares
of Preferred Stock outstanding and 442,000 shares of Common Stock will be
issuable upon exercise of outstanding options (30,000 of which will be then
exercisable).
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by stockholders, including the election of directors. There are
no cumulative voting rights for the election of directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor after payment of dividends required to be paid on outstanding
Preferred Stock, if any. See "Dividend Policy." Holders of Common Stock are
entitled to share ratably in the net assets of the Company upon liquidation
after payment or provision for all liabilities and any preferential liquidation
rights of any preferred stock then outstanding.
Holders of Common Stock have no preemptive rights to purchase shares of
capital stock of the Company. Shares of Common Stock are not subject to any
redemption provisions and are not convertible into any other securities of the
Company. All outstanding shares of Common Stock are, and the shares of Common
Stock to be issued pursuant to the Offering will be, upon payment therefor, duly
authorized, validly issued, fully paid and non-assessable.
Prior to the Offering, there has been no public market for the Common
Stock. The Company has applied for listing of the Common Stock for quotation on
the Nasdaq National Market under the symbol "SPRI."
PREFERRED STOCK
The Board of Directors is authorized without stockholder action to adopt
resolutions to issue up to 3,000,000 shares of Preferred Stock, in one or more
series, with such powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions as
will be set forth in such resolutions. The holders of Preferred Stock will have
no preemptive rights (unless otherwise provided in the applicable certificate of
designation). Such Preferred Stock may have voting or other rights which could
adversely affect the rights of holders of the Common Stock. In addition, the
issuance of Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes, could, under certain
circumstances, make it more difficult for a third-party to gain control of the
Company, discourage bids for the Common Stock at a premium, or otherwise
adversely affect the market price of the Common Stock. The Company has no
current plans to issue any shares of Preferred Stock.
DELAWARE LAW AND CERTAIN CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS;
ANTI-TAKEOVER EFFECTS
The Company will be subject to the provisions of Section 203 of the
Delaware General Corporation Law (the "DGCL") upon consummation of this
Offering. Subject to certain exceptions, Section 203 prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the Board of
Directors or the business combination is approved in a prescribed manner, or
certain other conditions are satisfied. A
37
<PAGE> 39
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock.
The Company's By-laws provide that for nominations for the Board of
Directors or for other business to be properly brought by a stockholder before
an annual meeting of stockholders, the stockholder must first have given timely
notice thereof in writing to the Secretary of the Company. To be timely, a
notice must be delivered not less than 60 days nor more than 90 days prior to
the first anniversary of the preceding year's annual meeting. The notice must
contain, among other things, certain information about the stockholder
delivering the notice and, as applicable, background information about each
nominee or a description of the proposed business to be brought before the
meeting. The Company's By-laws provide that any director may be removed only for
cause upon the affirmative vote of at least 66% of the shares entitled to vote
for the election of directors.
The Company's By-laws provide that special meetings of stockholders may be
called only by the Chairman of the Board of Directors or the President of the
Company. These provisions could have the effect of delaying until the next
annual stockholders meeting stockholder actions which are favored by the holders
of a majority of the outstanding voting securities of the Company.
The existence of unissued Preferred Stock enables the Board of Directors to
render more difficult or to discourage an attempt to obtain control of the
Company by means of a tender offer, proxy contest, merger or otherwise, thereby
protecting the continuity of the Company's management. The issuance of Preferred
Stock pursuant to the Board of Directors' authority described above may
adversely affect the rights of the holders of Common Stock. For example,
Preferred Stock issued by the Company may rank prior to the Common Stock as to
dividend rights, liquidation preference or both, may have full or limited voting
rights and may be convertible into shares of Common Stock. Accordingly, the
issuance of Preferred Stock may discourage bids for the Common Stock or may
otherwise adversely affect the market price of the Common Stock.
The foregoing provisions could have the effect of making it more difficult
for a third-party to acquire, or of discouraging a third-party from acquiring
control of the Company.
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company's Certificate of Incorporation contains certain provisions
permitted under the DGCL, relating to the liability of directors. These
provisions eliminate a director's personal liability for monetary damages
resulting from a breach of fiduciary duty, except in certain circumstances
involving certain wrongful acts, such as: (i) for any breach of the director's
duty of loyalty to the Company or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the DGCL; or (iv) for any transaction from
which the director derives an improper personal benefit. These provisions do not
limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief, such as an injunction or rescission, in the event of a
breach of a director's fiduciary duty. These provisions will not alter a
director's liability under federal securities laws. The Company's Certificate of
Incorporation and By-laws also contain provisions indemnifying the directors and
officers of the Company to the fullest extent permitted by the DGCL. The Company
believes that these provisions will assist the Company in attracting and
retaining qualified individuals to serve as directors and officers.
REGISTRATION RIGHTS
Under the terms of a Registration Rights Agreement to be executed
immediately prior to the consummation of the Offering (the "Registration
Agreement"), Robert Figliulo, David Figliulo, John Figliulo and Michael Fletcher
will be granted certain demand and piggyback registration rights covering an
aggregate of 532,184 shares of Common Stock (the "Registrable Securities"). The
Registration Agreement will provide the holders of the Registrable Securities
with the right to require the Company to register any or all of the Registrable
Securities, subject to the conditions and limitations contained in the
Registration Agreement. Such registration rights become exercisable one year
subsequent to the closing of the Offering and continue
38
<PAGE> 40
until all shares of Registrable Securities are sold. In addition, if the Company
proposes to register under the Securities Act any of its securities for its own
account, such stockholders may require the Company to include in such
registration all or a part of such Registrable Securities. Pursuant to the
Registration Agreement and the conditions and limitations set forth therein, the
Company is required to: (i) pay all associated Registration Expenses (as defined
therein) in connection with certain registrations; (ii) use its best efforts to
effect such registrations; and (iii) indemnify Robert Figliulo, David Figliulo,
John Figliulo and Michael Fletcher and certain of their affiliates against
certain liabilities, including liabilities under the Securities Act, in
connection with the registration of their shares.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
39
<PAGE> 41
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 8,000,000 shares of
Common Stock outstanding, assuming no exercise of options expected to be
outstanding and exercisable. The shares sold in the Offering will be freely
tradeable without restriction or limitation under the Securities Act, except for
any such shares acquired by "affiliates" of the Company, as such term is defined
under the Securities Act ("Affiliates"), which shares may generally only be sold
in compliance with the limitations of Rule 144 described below.
The remaining 5,300,000 shares of Common Stock (the "Restricted Shares")
constitute restricted securities under Rule 144 and were issued or sold by the
Company in private transactions and may be publicly sold only if registered
under the Securities Act or sold in accordance with an applicable exemption from
registration, such as Rule 144. The Company and all executive officers,
directors and stockholders of the Company have agreed with the Representatives
not to offer, sell contract to sell or otherwise dispose, or contract to
dispose, of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or grant any options or warrants
to purchase Common Stock, except in certain circumstances, for a period of 180
days after the date of this Prospectus (the "Lock-up Period") without the prior
written consent of Smith Barney Inc. Upon the expiration of the Lock-up Period
(or earlier with the consent of Smith Barney Inc.), all of the Restricted Shares
will become eligible for sale subject to the restrictions of Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years, including a person who may be deemed an Affiliate of the
Company, is entitled to sell within any three-month period a number of shares of
Common Stock that does not exceed the greater of 1% of the then outstanding
shares of Common Stock (approximately 80,000 shares after giving effect to the
Offering) and the average weekly reported trading volume of the Common Stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the sale. Sales under Rule 144 are subject to certain restrictions
relating to manner of sale, notice and the availability of current public
information about the Company. In addition, under Rule 144(k), a person who has
not been an Affiliate of the Company at any time 90 days preceding a sale, and
who has beneficially owned shares for at least three years, would be entitled to
sell such shares immediately following the Offering without regard to the volume
limitations, manner of sale provisions or notice or other requirements of Rule
144.
Upon the closing of the Offering, options to purchase a total of 442,000
shares of Common Stock are expected to be outstanding, of which 30,000 are
expected to be then exercisable. An additional 358,000 shares of Common Stock
will be available for future options grants under the Option Plan. An additional
500,000 shares of Common Stock will be available for issuance under the Employee
Stock Purchase Plan. See "Management -- Stock Plans." Rule 701 under the
Securities Act provides that shares of Common Stock acquired on the exercise of
outstanding options may be resold by persons other than Affiliates, beginning 90
days after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and by Affiliates, beginning 90 days after the date of
this Prospectus, subject to all provisions of Rule 144, except its two-year
minimum holding period. The Company intends to register on a registration
statement or statements on Form S-8 the shares of Common Stock to be issued
under the Option Plan and the Purchase Plan.
The Company intends to grant Robert Figliulo, David Figliulo, John Figliulo
and Michael Fletcher demand and piggyback registration rights covering an
aggregate of 532,184 shares of Common Stock. These registration rights will
become exercisable one year subsequent to the closing of the Offering and
continue until all shares of Registrable Securities are sold. To the extent
these rights are exercised, additional shares of Common Stock will become
available for sale upon the effectiveness of a registration statement filed
pursuant to exercise of such rights. See "Description of Capital Stock --
Registration Rights."
Prior to the Offering there has been no public market for the Common Stock
and any sale of substantial amounts of Common Stock in the open market may
adversely affect the market price of the Common Stock offered hereby.
40
<PAGE> 42
UNDERWRITING
Upon the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, each of the underwriters named below (the
"Underwriters"), for whom Smith Barney Inc. and Robert W. Baird & Co.
Incorporated are acting as representatives (the "Representatives"), has
severally agreed to purchase, and the Company and the Selling Stockholders have
agreed to sell to each such Underwriter, the number of Shares of Common Stock
set forth opposite the name of such Underwriter.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------- ---------
<S> <C>
Smith Barney Inc. .................................................
Robert W. Baird & Co. Incorporated.................................
---------
Total............................................................ 2,700,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken.
The Underwriters initially propose to offer a portion of the shares
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and a portion of the shares to certain dealers at
a price which represents a concession not in excess of $ per share below the
public offering price. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per Share to certain other dealers. After
the initial public offering of the shares to the public, the public offering
price and such concessions may be changed by the Underwriters. The
Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm the sale of any shares to any accounts
over which they exercise discretionary authority.
Certain of the Selling Stockholders have granted the Underwriters an
option, exercisable for 30 calendar days from the date of this Prospectus, to
purchase up to 405,000 additional shares of Common Stock at the initial offering
price set forth on the cover page of this Prospectus, less the underwriting
discounts and commissions. The Underwriters may exercise such option solely for
the purpose of covering over-allotments, if any, in connection with the
Offering. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
each Underwriter's name above bears to the total number of shares listed above.
The Underwriters have reserved up to 135,000 shares of the Common Stock
offered hereby for sale at the initial public offering price to certain
employees, consultants and other persons associated with the Company. The number
of shares of Common Stock available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same basis as the other shares offered hereby.
The Company and all of its directors, executive officers and stockholders
have agreed not to offer, sell, contract to sell or otherwise dispose, or
contract to dispose, of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or grant any options or
warrants to purchase Common Stock, except in certain circumstances, for a period
of 180 days after the date of this Prospectus without the prior written consent
of Smith Barney Inc.
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price of the shares will be negotiated among
the Company, the Selling Stockholders and the Representatives. Among the factors
expected to be considered in determining the initial public offering price are
the history of and prospects for the Company's business and the industry in
which it competes, an assessment of the Company's management and the present
state of the Company's development, the Company's past and present revenues and
earnings, the prospects for growth of the Company's revenues and earnings, the
current state of the U.S. economy and the current level of economic activity in
the industry in which the Company
41
<PAGE> 43
competes and in related or comparable industries, and currently prevailing
conditions in the securities markets, including current valuations of publicly
traded companies which are considered comparable to the Company.
The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Wildman, Harrold, Allen & Dixon, Chicago,
Illinois. Mr. Donald E. Figliulo, a partner of Wildman, Harrold, Allen & Dixon,
is the brother of Robert, David and John Figliulo, the owner of shares of Common
Stock and a Selling Stockholder. Certain legal matters will be passed upon for
the Underwriters by Neal, Gerber & Eisenberg, Chicago, Illinois.
EXPERTS
The Financial Statements and Schedule of the Company as of December 31,
1995 and 1994, and for each of the years in the three-year period ended December
31, 1995 included herein and elsewhere in the Registration Statement, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report thereto, and are included in reliance upon the authority of said
firm as experts in accounting and auditing.
CHANGE IN ACCOUNTANTS
Prior to September 9, 1996 Arthur Andersen LLP served as independent public
accountants for SPR Wisconsin, SPR Tulsa, Data Flex and Systems Inc. and Ernst &
Young LLP served as independent public accountants for SPR Chicago. In
connection with the Offering, the Board of Directors of the Company on September
9, 1996 dismissed Ernst & Young LLP and selected Arthur Andersen LLP to serve as
independent public accountants for the Company and to render an opinion on the
financial statements included in this Prospectus, including the financial
statements of SPR Chicago. The Company informed Ernst & Young LLP of its
dismissal on September 9, 1996. The former auditors' report on SPR Chicago's
financial statements for the period from January 14, 1994 to December 31, 1994
and for the year ended December 31, 1995 is not included in this Prospectus.
During the period from January 14, 1994 to December 31, 1994 and for the year
ended December 31, 1995, (i) Ernst & Young LLP's report on the financial
statements of SPR Chicago did not contain an adverse opinion, disclaimer of
opinion, qualification or modification as to uncertainty, audit scope or
accounting principles and (ii) there were no disagreements with Ernst & Young
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures at the time of change or with
respect to SPR Chicago's financial statements.
The Company has requested Ernst & Young LLP to furnish it a letter
addressed to the Commission stating whether it agrees with the above comments. A
copy of that letter dated November 19, 1996 is filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
The Company consulted Arthur Andersen LLP and did not consult Ernst & Young
LLP regarding the application of the Commission's accounting principles to the
transactions described under "The Company" and the type of audit opinion that
would be rendered on the Company's financial statements included in this
Prospectus, which consultations were the subject of written and oral advice.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information
42
<PAGE> 44
with respect to the Company and the Common Stock, reference is hereby made to
the Registration Statement, including the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract,
agreement or any other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract, agreement or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference. The Registration Statement,
including the exhibits and schedules thereto, may be inspected without charge at
the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices at Seven World Trade Center,
Suite 1300, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may be obtained from the
public reference section of the Commission at its Washington address upon
payment of the prescribed fee. In addition, the Commission maintains a World
Wide Web site on the Internet at www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and an opinion thereon expressed by
independent auditors and may furnish its shareholders with quarterly reports for
the first three quarters of each year containing unaudited summary financial
information.
43
<PAGE> 45
SPR INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Balance Sheets as of December 31, 1994 and 1995 and October 31, 1996 (unaudited) and
October 31, 1996 (unaudited pro forma).............................................. F-3
Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and for
the ten months ended October 31, 1995 and 1996 (unaudited).......................... F-4
Statements of Stockholders' Equity for the years ended December 31, 1993, 1994 and
1995 and for the ten months ended October 31, 1996 (unaudited)...................... F-5
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and for
the ten months ended October 31, 1995 and 1996 (unaudited).......................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 46
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of SPR Inc.:
We have audited the accompanying balance sheets of SPR INC. (a Delaware
corporation) as of December 31, 1994 and 1995, and the related statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SPR Inc. as of December 31,
1994 and 1995, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 28, 1996
F-2
<PAGE> 47
SPR INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, OCTOBER 31,
--------------------------- OCTOBER 31, 1996
1994 1995 1996 (NOTE 12)
----------- ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................................... $ 1,083,028 $ 1,108,506 $ 633,229 $ 633,229
Accounts receivable, net of allowance for doubtful
accounts of $89,153, $31,900 and $73,900 at
December 31, 1994, 1995, and October 31, 1996,
respectively..................................... 1,472,387 3,096,220 4,243,541 4,243,541
Notes receivable -- related parties, current
portion.......................................... 380,910 325,981 182,979 182,979
Notes receivable -- other.......................... -- 75,000 -- --
Prepaid expenses and other......................... 143,384 369,024 355,620 355,620
----------- ------------ ------------ ------------
Total current assets........................... 3,079,709 4,974,731 5,415,369 5,415,369
----------- ------------ ------------ ------------
Property and equipment:
Leasehold improvements............................. -- 8,278 98,999 98,999
Computer equipment and software.................... 60,084 391,204 911,653 911,653
Office furniture and equipment..................... 42,306 153,188 605,560 605,560
----------- ------------ ------------ ------------
102,390 552,670 1,616,212 1,616,212
Less -- accumulated depreciation and
amortization................................... (8,559) (59,818) (244,331) (244,331)
----------- ------------ ------------ ------------
Property and equipment, net.................... 93,831 492,852 1,371,881 1,371,881
----------- ------------ ------------ ------------
Notes receivable -- related parties, net of current
portion.......................................... 399,790 115,946 -- --
----------- ------------ ------------ ------------
Total assets................................... $ 3,573,330 $ 5,583,529 $ 6,787,250 $ 6,787,250
=========== ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit..................................... $ -- $ -- $ 600,000 $ 600,000
Current portion of term note....................... -- -- 43,804 43,804
Current portion of note payable -- related party... 720,000 1,200,000 801,266 801,266
Current portion of capital lease obligations....... -- 45,683 62,450 62,450
Accounts payable................................... 102,089 402,626 411,924 411,924
Dividends payable.................................. -- -- -- 2,500,000
Accrued expenses:
Salaries, commissions, and withholding taxes..... 281,472 554,796 1,303,310 1,303,310
Other............................................ 302,159 401,882 450,009 450,009
Deferred income taxes.............................. -- -- -- 282,500
----------- ------------ ------------ ------------
Total current liabilities...................... 1,405,720 2,604,987 3,672,763 6,455,263
----------- ------------ ------------ ------------
Long-term liabilities:
Term note, net of current portion.................. -- -- 182,586 182,586
Note payable -- related party, net of current
portion.......................................... 1,841,266 641,266 -- --
Capital lease obligations, net of current
portion.......................................... -- 62,693 6,101 6,101
Deferred income taxes.............................. -- -- -- 317,500
----------- ------------ ------------ ------------
Total long-term liabilities.................... 1,841,266 703,959 188,687 506,187
----------- ------------ ------------ ------------
Stockholders' equity:
Common stock, $.01 par, 13,000,000 shares
authorized, 6,333,334 shares issued and
outstanding...................................... 63,333 63,333 63,333 63,333
Preferred stock, $.01 par, 3,000,000 shares
authorized, no shares issued and outstanding..... -- -- -- --
Additional paid-in capital......................... 6,518,437 34,505,118 50,389,582 (237,533)
Retained deficit................................... (6,255,426) (32,293,868) (47,527,115) --
----------- ------------ ------------ ------------
Total stockholders' equity..................... 326,344 2,274,583 2,925,800 (174,200)
----------- ------------ ------------ ------------
Total liabilities and stockholders' equity..... $ 3,573,330 $ 5,583,529 $ 6,787,250 $ 6,787,250
=========== ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-3
<PAGE> 48
SPR INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TEN MONTHS ENDED
YEARS ENDED DECEMBER 31, OCTOBER 31,
------------------------------------------ ----------------------------
1993 1994 1995 1995 1996
----------- ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.................... $11,731,429 $14,797,259 $ 22,907,928 $ 18,478,249 $ 26,575,453
Cost of services............ 8,338,583 10,424,690 15,525,198 12,368,199 18,736,180
----------- ----------- ------------ ------------ ------------
Gross profit................ 3,392,846 4,372,569 7,382,730 6,110,050 7,839,273
Costs and expenses:
Selling................... 1,012,255 1,165,141 2,141,374 1,667,961 2,447,430
Recruiting................ 341,010 409,938 776,651 613,049 1,089,674
Stock-based
compensation........... -- 6,509,750 27,986,681 23,322,234 15,884,464
General and administrative
expenses............... 1,229,599 1,334,175 1,642,112 1,170,085 2,798,452
----------- ----------- ------------ ------------ ------------
Total costs and
expenses............. 2,582,864 9,419,004 32,546,818 26,773,329 22,220,020
----------- ----------- ------------ ------------ ------------
Operating income (loss)..... 809,982 (5,046,435) (25,164,088) (20,663,279) (14,380,747)
Other income (expense):
Interest expense.......... (5,145) (88,065) (160,484) (137,314) (98,109)
Interest income........... 12,017 55,520 51,477 48,041 32,547
Other, net................ (1,283) (24,136) -- -- 13,725
----------- ----------- ------------ ------------ ------------
Total other income
(expense)............ 5,589 (56,681) (109,007) (89,273) (51,837)
----------- ----------- ------------ ------------ ------------
Income (loss) before income
taxes..................... 815,571 (5,103,116) (25,273,095) (20,752,552) (14,432,584)
Income taxes................ 4,000 75,123 20,788 -- --
----------- ----------- ------------ ------------ ------------
Net income (loss)........... $ 811,571 $(5,178,239) $(25,293,883) $(20,752,552) $(14,432,584)
=========== =========== ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-4
<PAGE> 49
SPR INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TOTAL
------------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
--------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993.............. 6,733,334 $67,333 $ 41,917 $ 1,042,721 $ 1,151,971
Net income............................ -- -- -- 811,571 811,571
Distributions......................... -- -- -- (6,488) (6,488)
--------- ------- ----------- ------------ ------------
Balance at December 31, 1993............ 6,733,334 67,333 41,917 1,847,804 1,957,054
Net loss.............................. -- -- -- (5,178,239) (5,178,239)
Distributions......................... -- -- -- (80,955) (80,955)
Stock purchased and cancelled......... (400,000) (4,000) (33,230) (2,844,036) (2,881,266)
Stock-based compensation.............. -- -- 6,509,750 -- 6,509,750
--------- ------- ----------- ------------ ------------
Balance at December 31, 1994............ 6,333,334 63,333 6,518,437 (6,255,426) 326,344
Net loss.............................. -- -- -- (25,293,883) (25,293,883)
Distributions......................... -- -- -- (744,559) (744,559)
Stock-based compensation.............. -- -- 27,986,681 -- 27,986,681
--------- ------- ----------- ------------ ------------
Balance at December 31, 1995............ 6,333,334 63,333 34,505,118 (32,293,868) 2,274,583
Net loss.............................. -- -- -- (14,432,584) (14,432,584)
Distributions......................... -- -- -- (800,663) (800,663)
Stock-based compensation.............. -- -- 15,884,464 -- 15,884,464
--------- ------- ----------- ------------ ------------
Balance at October 31, 1996
(unaudited)........................... 6,333,334 $63,333 $50,389,582 $(47,527,115) $ 2,925,800
========= ======= =========== ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE> 50
SPR INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, TEN MONTHS ENDED OCTOBER 31,
---------------------------------------- ----------------------------
1993 1994 1995 1995 1996
--------- ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) for the period.... $ 811,571 $(5,178,239) $(25,293,883) $(20,752,552) $(14,432,584)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization..... 23,861 20,810 51,259 21,686 188,501
Stock-based compensation.......... -- 6,509,750 27,986,681 23,322,234 15,884,464
Loss on sale of property and
equipment....................... -- 27,409 -- -- 2,349
Increase in accounts receivable... (322,122) (106,315) (1,623,833) (1,454,838) (1,147,321)
Increase in prepaid expenses and
other........................... (22,945) (69,429) (225,640) (36,409) (33,075)
Increase (decrease) in accounts
payable......................... (66,443) 5,022 300,537 34,319 9,298
Increase in accrued expenses...... 138,463 137,729 373,047 504,664 796,641
--------- ----------- ------------ ------------ ------------
Net cash provided by operating
activities........................ 562,385 1,346,737 1,568,168 1,639,104 1,268,273
--------- ----------- ------------ ------------ ------------
Cash flows from investing activities:
Purchases of property and
equipment......................... (49,614) (62,467) (332,721) (191,519) (1,069,878)
(Increase) decrease in notes
receivable -- related parties..... (691,665) (89,035) 338,773 325,655 305,427
(Increase) decrease in notes
receivable -- other............... 225,000 -- (75,000) -- 75,000
--------- ----------- ------------ ------------ ------------
Net cash provided by (used in)
investing activities.............. (516,279) (151,502) (68,948) 134,136 (689,451)
--------- ----------- ------------ ------------ ------------
Cash flows from financing activities:
Payments on note payable -- related
party............................. (48,436) (320,000) (720,000) (720,000) (1,040,000)
Distributions....................... (6,488) (80,955) (744,559) (744,559) (800,663)
Payments on capital lease
obligations....................... -- -- (9,183) (3,980) (39,825)
Borrowings on term note payable..... -- -- -- -- 250,000
Payments on term note payable....... -- -- -- -- (23,611)
Borrowings on line of credit........ -- -- -- -- 600,000
--------- ----------- ------------ ------------ ------------
Net cash used in financing
activities........................ (54,924) (400,955) (1,473,742) (1,468,539) (1,054,099)
--------- ----------- ------------ ------------ ------------
Net increase (decrease) in cash..... (8,818) 794,280 25,478 304,701 (475,277)
Cash, beginning of period............. 297,566 288,748 1,083,028 1,083,028 1,108,506
--------- ----------- ------------ ------------ ------------
Cash, end of period................... $ 288,748 $ 1,083,028 $ 1,108,506 $ 1,387,729 $ 633,229
========= =========== ============ ============ ============
Supplemental disclosure of cash
payments made for:
Interest............................ $ 4,605 $ 68,677 $ 143,148 $ 123,724 $ 107,383
Income taxes........................ 1,233 964 72,087 71,058 13,912
========= =========== ============ ============ ============
Supplemental disclosure of noncash
investing and financing activities:
Investment in equipment through
issuance of capitalized lease
obligations....................... -- -- $ 117,559 $ 44,541 --
Stock purchased through issuance of
note payable...................... -- 2,881,266 -- -- --
========= =========== ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-6
<PAGE> 51
SPR INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(a) Business -- SPR Inc. (the Company) provides information technology
services to clients in a variety of industry groups including financial
services, healthcare, insurance, manufacturing, oil and gas, transportation and
utilities. The Company currently provides the following service offerings: (i)
general consulting, (ii) systems reengineering, (iii) century date compliance,
(iv) systems maintenance and support and (v) information delivery services.
Within each of these service offerings, the Company provides three levels of
consulting support which are distinguished by the degree of responsibility the
Company assumes: strategic planning, project management and implementation.
(b) Interim Financial Information -- The unaudited balance sheet as of
October 31, 1996, the unaudited statement of stockholders' equity for the ten
months ended October 31, 1996, and the unaudited statements of operations and
cash flows for the ten months ended October 31, 1995 and 1996, include, in the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the Company's financial position,
results of operations and cash flows. Operating results for the ten months ended
October 31, 1996, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. The information included in
these notes relating to the ten months ended October 31, 1995 and 1996, is
unaudited.
(c) Basis of Presentation -- SPR Inc. was formed on October 29, 1996.
During October, 1996, Systems and Programming Resources, Inc., Systems &
Programming Resources of Tulsa, Inc., SPR-Wisconsin, Inc., SPR Chicago Inc., and
Consulting Acquisition, Inc. (d.b.a. Data Flex) merged into SPR Inc. at which
time the stockholders of such companies received an aggregate of 6,333,134
shares of common stock of SPR Inc. Systems and Programming Resources, Inc.,
SPR-Wisconsin, Inc., SPR Chicago Inc., Consulting Acquisition, Inc. and SPR Inc.
are under common ownership and control and are accounted for at historical cost
as a reorganization of entities under common control (similar to the pooling of
interests method of accounting). The merger of Systems & Programing Resources of
Tulsa, Inc. into SPR Inc. was accounted for using the pooling of interests
method of accounting. All intercompany transactions and balances have been
eliminated. The accompanying financial statements of the Company have been
prepared to give retroactive effect to the merger.
(d) Revenue Recognition -- Revenues are recognized as the related services
are performed.
(e) Property and Equipment -- Property and equipment are stated at cost.
Expenditures for repair and maintenance are charged to expense as incurred.
Depreciation and amortization are computed using the straight-line method. The
estimated useful lives used in computing depreciation and amortization for
financial statement purposes are as follows:
<TABLE>
<CAPTION>
ASSET DESCRIPTION ASSET LIFE
---------------------------------------------- -----------------------------------
<S> <C>
Leasehold improvements........................ Shorter of lease term or estimated
useful life of the asset
Computer equipment and software............... 5 years
Office furniture and equipment................ 5 to 7 years
</TABLE>
(f) Distributions -- Distributions are recorded when declared by the Board
of Directors.
(g) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-7
<PAGE> 52
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(h) Income Taxes -- The Company elected to be taxed as an S corporation for
Federal and certain state income tax purposes. By this election, income of the
Company is taxable to the stockholders.
Upon completion of the Initial Public Offering (the Offering) and effective
termination of the S corporation election, deferred income tax liabilities and
income tax expense will be recorded for taxable temporary differences existing
at the time of change in tax status. Income for Federal income tax purposes was
recognized on the cash basis of accounting and, upon consummation of the
Offering, the Company will change to the accrual basis of accounting. If the
effective date of the Offering had been October 31, 1996, deferred income tax
liabilities and income tax expenses of approximately $600,000 would have been
recorded. Deferred income taxes will be recorded under the asset and liability
method of accounting for income taxes which requires the recognition of deferred
income taxes based upon the tax consequences of "temporary differences" by
applying enacted statutory tax rates applicable to future years to differences
between the financial statements carrying amounts and the tax basis of existing
assets and liabilities. As of October 31, 1996, deferred income tax liabilities
would have consisted of the following:
<TABLE>
<S> <C>
Change in tax accounting methods (cash to accrual)................. $565,000
Fixed Assets....................................................... 35,000
--------
Total deferred income tax liabilities......................... $600,000
========
</TABLE>
Additional paid-in capital and retained earnings (deficit) will be adjusted
to reflect the capitalization of retained earnings (deficit) to additional
paid-in capital upon the conversion of the Company to a C corporation.
The Company intends to enter into a tax indemnity agreement with each of
its current stockholders which provides, among other things, that the Company
will indemnify such stockholders against additional income taxes resulting from
adjustments made (as a result of a final determination made by a competent tax
authority) to the taxable income reported by the Company as an S corporation for
periods prior to the Offering, but only to the extent those adjustments result
in a decrease in income taxes otherwise payable by the Company as a C
corporation for periods after the Offering.
NOTE 2 -- CONCENTRATION OF CREDIT RISK
The Company's financial instruments that are exposed to concentrations of
credit risk consist of accounts receivable.
The Company's customers are predominantly in the Midwest, with the majority
of customers located in Chicago, Tulsa and Milwaukee. One customer in the retail
industry accounted for approximately 17% of revenues in 1993 and one customer in
the insurance industry accounted for approximately 11% of revenues in 1995. For
the ten months ended October 31, 1996, a customer in the insurance industry
accounted for approximately 16% of revenues. The Company reviews a customer's
credit history before extending credit. In addition, the Company routinely
assesses the financial strength of its customers and, as a consequence, believes
that its accounts receivable credit risk is limited. The Company has no off
balance sheet credit risk.
F-8
<PAGE> 53
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- NOTES RECEIVABLE FROM RELATED PARTIES
Notes receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31 OCTOBER 31,
---------------------- ------------
1994 1995 1996
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Stockholder notes receivable, unsecured, payable on
demand, interest at 7%................................ $ 91,000 $ 42,233 $ 46,479
Stockholder notes receivable, unsecured, payable on
demand, interest at 6%................................ 689,700 399,694 100,000
Stockholder note receivable, unsecured, payable on
demand, interest at prime plus 1%..................... -- -- 36,500
-------- -------- --------
Total notes receivable from related parties............. 780,700 441,927 182,979
Less--current portion................................... 380,910 325,981 182,979
-------- -------- --------
$399,790 $115,946 $ --
======== ======== ========
</TABLE>
NOTE 4 -- LINES OF CREDIT AND LONG-TERM DEBT
The Company has line of credit agreements that allow for maximum borrowings
of $1,500,000 and are limited based upon a percentage of eligible accounts
receivable, as defined. Interest is at the applicable bank's prime rate.
Borrowings are collateralized by certain assets including accounts receivable.
One agreement provides for maximum borrowings of $1,000,000 and expires in May,
1997. Another line of credit agreement which provides for maximum borrowings of
$500,000 has no expiration date. There were no borrowings outstanding as of
December 31, 1994 and 1995. At October 31, 1996, borrowings were $600,000.
Fair value of debt approximates book value at the balance sheet dates.
Long-term and related party debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31 OCTOBER 31,
---------------------- ------------
1994 1995 1996
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to stockholder, unsecured, due August, 1997,
payable in monthly installments of $80,000 plus
interest at 6.75%...................................... $2,561,266 $1,841,266 $ 801,266
Term note payable, due December 31, 2000, payable in
monthly installments of $5,190, including interest at
9%, collateralized by certain accounts receivable and
other assets........................................... -- -- 226,390
Capital lease obligations, collateralized by certain
equipment, personally guaranteed by a stockholder,
interest rates ranging from 7.75% to 8%................ -- 108,376 68,551
---------- ---------- ----------
Total long-term debt..................................... 2,561,266 1,949,642 1,096,207
Less--current maturities................................. 720,000 1,245,683 907,520
---------- ---------- ----------
$1,841,266 $ 703,959 $ 188,687
========== ========== ==========
</TABLE>
F-9
<PAGE> 54
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The aggregate maturities for long-term and related party debt are as
follows:
<TABLE>
<S> <C>
Remainder of 1996................................................. $ 172,990
1997.............................................................. 735,009
1998.............................................................. 57,936
1999.............................................................. 56,907
2000.............................................................. 73,365
----------
Total long term-debt.............................................. $1,096,207
=========
</TABLE>
NOTE 5 -- LEASE AGREEMENTS
The Company leases its office facilities under operating lease agreements
which expire at various times through 2002. In addition, the Company leases
certain equipment under operating lease agreements.
In addition to the minimum future rental payments, the Company is obligated
to pay certain operating expenses relating to leased properties which are
included in rent expense. Total rent expense under operating leases was
approximately $129,390, $89,594, $135,167, $104,398 and $301,213 for the years
ended December 31, 1993, 1994 and 1995, and the ten months ended October 31,
1995 and 1996, respectively.
The following is a schedule of minimum future rental payments required
under the operating leases:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1996....................................................... $ 241,546
1997....................................................... 382,461
1998....................................................... 394,285
1999....................................................... 403,987
2000....................................................... 403,054
2001....................................................... 310,043
2002....................................................... 13,460
----------
Total minimum payments required................................... $2,148,836
==========
</TABLE>
NOTE 6 -- 401(K) PROFIT-SHARING PLAN
The Company has a contributory 401(k) profit-sharing plan (the Plan)
covering substantially all full-time employees with a service period greater
than 90 days. The Plan allows participants to contribute up to 15% of their
total compensation on a pretax basis, up to a specified amount. The Company is
required to contribute annually one-fourth of the first $2,000 of the
participants' contribution, up to a maximum of $500 per participant. The total
Company contribution was approximately $11,525, $21,375, $27,202, $25,432 and
$56,181 for the years ended December 31, 1993, 1994, 1995, and the ten months
ended October 31, 1995 and 1996, respectively.
NOTE 7 -- LICENSE AGREEMENT
In October, 1995, the Company entered into a nonexclusive agreement with an
unaffiliated technical services company operating in New York and other markets
where the Company is not currently doing business, whereby the Company licenses
its Century Date Compliance methodology, Renovation 2000(SM), and its software
analysis tool, Code Vu(SM). In contracts involving Century Date Compliance in
which the unaffiliated company is the prime contractor and the engagement is not
handled as a joint venture the unaffiliated company is obligated to pay SPR Inc.
a license fee ranging from 4% to 9% of revenues. For the ten months ended
October 31, 1996, the Company has been paid approximately $18,000.
F-10
<PAGE> 55
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- COMMITMENTS AND CONTINGENCIES
Letter of Credit -- The Company has a letter of credit of $119,500 at
October 31, 1996 which is security for a lease agreement. The letter of credit
is renewable each year.
NOTE 9 -- BUSINESS COMBINATION
During October, 1996, SPR Inc. acquired by merger all the common stock of
Systems & Programming Resources of Tulsa, Inc. in exchange for 1,295,142 shares
of SPR Inc's common stock. These companies provide information technology
services to clients in a variety of industry groups. The transaction was
accounted for as a pooling of interests, and accordingly, the financial
statements for all periods presented have been restated to include the accounts
of these companies. Revenues and net income, net of intercompany eliminations of
the separate companies for the periods preceeding the acquisition were:
<TABLE>
<CAPTION>
SPR INC. INCLUDING
SYSTEMS AND PROGRAMMING
RESOURCES, INC., SPR-WISCONSIN, INC., SYSTEMS & PROGRAMMING
SPR CHICAGO INC. AND DATA FLEX RESOURCES OF TULSA, INC.
------------------------------------- ------------------------
<S> <C> <C>
Ten months ended October 31, 1996 (unaudited)
Revenues.................................... $ 18,447,117 $18,128,336
Net income (loss), net of intercompany
eliminations............................. (14,918,563) 541,651
Year ended December 31, 1995
Revenues.................................... 16,097,512 6,810,416
Net income (loss), net of intercompany
eliminations............................. (26,042,094) 748,211
Year ended December 31, 1994
Revenues.................................... 13,878,339 918,920
Net loss, net of intercompany
eliminations............................. (5,166,141) (12,098)
Year ended December 31, 1993
Revenues.................................... 11,731,429 --
Net income, net of intercompany
eliminations............................. 811,571 --
</TABLE>
NOTE 10 -- STOCK-BASED COMPENSATION
Systems and Programming Resources, Inc. entered into a series of
transactions with stockholders/ employees from January, 1994 through October,
1996. Certain assets and certain liabilities were transferred to SPR Chicago
Inc. and SPR-Wisconsin, Inc. during 1994 that were subsequently transferred to
SPR Inc. in 1996. Because the transactions were among family members within a
control group, the stockholders of SPR Chicago Inc. and SPR-Wisconsin, Inc. were
effectively granted a variable compensation arrangement that is measured by the
increase in the estimated value of these companies (as determined by management)
since 1994. The final measurement occurred when the relative ownership interests
in SPR Inc. were determined in October, 1996. Compensation expense relating to
this arrangement is recorded in the accompanying statements of operations as
stock-based compensation with the corresponding credit included in additional
paid-in-capital.
NOTE 11 -- STOCK PLANS -- SUBSEQUENT EVENT (UNAUDITED)
In November, 1996, the Company adopted an Employee Stock Purchase Plan and
a Combined Incentive and Non-statutory Stock Option Plan. 500,000 shares of
common stock are reserved for issuance under the Employee Stock Purchase Plan
and 800,000 shares of common stock are reserved for issuance under the
F-11
<PAGE> 56
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Combined Incentive and Non-statutory Stock Option Plan. The Employee Stock
Purchase Plan will permit eligible employees who have completed five full
calendar months of service to purchase common stock through payroll deductions
of up to 20% of their total cash compensation provided that no employee may
purchase more than $20,000 worth of stock in any calendar year. The purchase
price equals 85% of the market value of the common stock on the last day of the
offering period, as defined.
The Combined Incentive and Non-statutory Stock Option Plan provides that
awards may be granted to employees, officers and directors of the Company.
Awards may consist of non-statutory stock options and incentive stock options
(ISOs) to purchase shares of common stock and stock appreciation rights (SARs).
The exercise price per share of common stock is 100% of the fair market value of
the common stock on the date the option is granted. Options and SARs granted
under the option plan must be exercised within fifteen years from the date of
grant (ten years in the case of ISOs). In the case of any eligible employee who
owns stock possessing more than 10% of the voting power of stock, the exercise
price of any ISOs granted may not be less than 110% of the fair market value of
the common stock on the date of grant and the exercise period may not exceed
five years from the date of grant.
NOTE 12 -- SUBSEQUENT EVENTS AND PRO FORMA FINANCIAL DATA (UNAUDITED)
The Company will convert to a C corporation in connection with the
completion of the Offering resulting in the recording of approximately $600,000
in deferred income tax liabilities, as discussed in Note 1h. Prior to
consummation of the Offering, the Company intends to declare a dividend (the
"Dividend"). The Company currently estimates (based in part on the Company's
estimate of its 1996 earnings) that the Dividend will equal approximately
$2,500,000. Retained earnings (deficit) of the Company (which includes the
aggregate stock-based compensation expense), after recording the estimated
Dividend and deferred income taxes, will be reclassified to additional paid-in
capital in connection with the termination of the Company's S corporation
election. The unaudited pro forma Balance Sheet gives effect to these items. No
other contemplated transactions in connection with the Offering are included in
the unaudited pro forma Balance Sheet information.
F-12
<PAGE> 57
[SPR OFFICES MAP]
<PAGE> 58
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY OF THE SELLING STOCKHOLDERS OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT
IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 13
Use of Proceeds....................... 13
Dividend Policy....................... 13
Capitalization........................ 14
Dilution.............................. 15
Selected Financial Data............... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 22
Management............................ 30
Certain Transactions.................. 34
Principal and Selling Stockholders.... 36
Description of Capital Stock.......... 37
Shares Eligible for Future Sale....... 40
Underwriting.......................... 41
Legal Matters......................... 42
Experts............................... 42
Change in Accountants................. 42
Additional Information................ 42
Index to Financial Statements......... F-1
</TABLE>
------------------
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
2,700,000 SHARES
[LOGO]
SPR INC.
COMMON STOCK
------------------
PROSPECTUS
, 1997
------------------
SMITH BARNEY INC.
ROBERT W. BAIRD & CO.
INCORPORATED
------------------------------------------------------
------------------------------------------------------
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting commissions and discounts) payable by the
Company in connection with the issuance and distribution of the Common Stock
pursuant to the Prospectus contained in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 15,055
Legal fees and expenses............................................ 225,000
Accountants' fees and expenses..................................... 200,000
Printing expenses.................................................. 130,000
Nasdaq National Market listing fee................................. 37,500
Transfer Agent and Registrar fees and expenses..................... 15,000
NASD filing fee.................................................... 5,468
Blue Sky fees and expenses......................................... 5,000
Miscellaneous expenses............................................. 66,977
--------
Total......................................................... $700,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant, being incorporated under the General Corporation Law of the
State of Delaware (the "DGCL"), is empowered by Section 145 of the DGCL, subject
to the procedures and limitations stated therein, to indemnify any person
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
any threatened, pending or completed action, suit or proceeding to which such
person is made a party or threatened to be made a party by reason of the fact
that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Section 145 provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
The Company's Certificate of Incorporation and By-laws contain provisions
that require the Company to indemnify its Directors and officers to the fullest
extent permitted by Delaware law.
Article Ninth of the Registrant's Certificate of Incorporation eliminates,
to the fullest extent permitted by paragraph (7) of subsection (b) of Section
102 of the DGCL, as the same may be amended or supplemented, or any
corresponding provision of the DGCL, the personal liability of directors. That
paragraph allows corporations incorporated under the DGCL to eliminate the
personal liability of a director to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. However, that
paragraph does not allow corporations to limit the liability of a director: (i)
for any breach of his or her duty of loyalty to the corporation or its
stockholders, (ii) for acts or omission not in good faith or which involve
intentional misconduct or a knowing violations of law, (iii) for unlawful
payment of a dividend or unlawful stock purchase or redemption or (iv) for any
transaction for which the director derived an improper personal benefit.
The Company is in the process of procuring liability insurance for its
directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information as to securities of the Registrant and its
predecessors issued or sold by the Registrant and its predecessors since October
31, 1993 that were not registered under the Securities Act of 1933, as amended
(the "Securities Act"). No underwriters were involved, and there were no
underwriting discounts or commissions.
II-1
<PAGE> 60
On January 14, 1994, 500 shares of common stock of SPR Chicago Inc. ("SPR
Chicago") were issued to each of Robert Figliulo and David Figliulo in
connection with the incorporation of SPR Chicago, to which the Chicago
operations of Systems and Programming Resources, Inc. ("Systems Inc.") were
transferred. In connection with this transfer, SPR Chicago delivered to Systems
Inc. a $1.5 million promissory note. These issuances were made pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act.
On August 15, 1994, 1,000 shares of common stock of SPR-Wisconsin, Inc.
("SPR Wisconsin") were issued to John Figliulo in connection with the
incorporation of SPR Wisconsin, to which the Wisconsin operations of Systems
Inc. were transferred. In connection with this transfer, SPR Wisconsin delivered
to Systems Inc. a $1.3 million promissory note. These issuances were made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act.
On September 8, 1994, 500 shares of common stock of Systems and Programming
Resources of Tulsa, Inc. ("SPR Tulsa") were issued to each of Michael Fletcher
and Rene Potter in connection with the incorporation of SPR Tulsa, to which the
Tulsa operations of Systems Inc. were transferred. In connection with this
transfer, SPR Tulsa delivered to Systems Inc. a $1.6 million promissory note.
These issuances were made pursuant to the exemption from registration provided
by Section 4(2) of the Securities Act.
Upon the Registrant's formation on October 29, 1996, each of Robert
Figliulo and David Figliulo received 100 shares of the Registrant's Common Stock
for nominal consideration. These issuances were pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act.
On October 30, 1996, in connection with the Merger of SPR Chicago into the
Registrant as described in the Registration Statement, 1,476,914 shares of
Common Stock of the Registrant were issued to each of Robert Figliulo and David
Figliulo in exchange for all their shares of SPR Chicago common stock. On
October 31, 1996, in connection with the Mergers of Systems Inc., Consulting
Acquisition, Inc., SPR Wisconsin and SPR Tulsa as described in the Registration
Statement, 3,379,306 shares of Common Stock of the Registrant were issued to
nine members of the Figliulo family, Michael Cymbala, Michael Fletcher and Rene
Potter in exchange for all their shares of common stock of each of the merged
entities. All of these issuances were pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1 Agreement of Merger dated October 30, 1996 between the Registrant and SPR Chicago
Inc.
2.2 Agreement of Merger dated October 31, 1996 among the Registrant, Consulting
Acquisition, Inc. and Systems and Programming Resources, Inc.
2.3 Agreement of Merger dated October 31, 1996 between the Registrant and Systems and
Programming Resources of Tulsa, Inc.
2.4 Agreement of Merger dated October 31, 1996 between the Registrant and SPR-Wisconsin,
Inc.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-laws of the Registrant.
4.1 Specimen stock certificate representing Common Stock.*
5.1 Opinion of Wildman, Harrold, Allen & Dixon.
10.1 Form of Employment Agreement (Executive).*
10.2 Form of Employment Agreement (Manager).*
10.3 Form of Employment Agreement (Consultant).*
</TABLE>
II-2
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
10.4 Form of Combined Incentive and Non-statutory Stock Option Plan.
10.5 Form of Employee Stock Purchase Plan.
10.6 Lease for 2015 Spring Road, Oak Brook, Illinois.
10.7 Lease for 400 Mid-Continent Tower, Tulsa, Oklahoma.
10.8 Lease for 100 East Wisconsin Avenue, Milwaukee, Wisconsin.
10.9 Sublease for 815 Commerce Drive, Oak Brook, Illinois.
10.10 Form of Registration Rights Agreement.*
10.11 Form of Tax Indemnity Agreement.*
16.1 Letter of Ernst & Young LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Wildman, Harrold, Allen & Dixon (contained in its opinion filed as Exhibit
5.1 hereto).
24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- -------------------------
* To be filed by Amendment.
(b) Financial Statement Schedule:
Report of Independent Auditors
Schedule II: Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To provide to the Underwriters at the closing specified in the
Underwriting Agreement, certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(2) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter had been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(3) That, for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) of
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(4) That, for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Chicago, Illinois on November 19,
1996.
SPR INC.
By: /s/ ROBERT M. FIGLIULO
------------------------------------
Robert M. Figliulo
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed by the following persons in the
capacities indicated on November 19, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------- -----------------------------------------------------
<C> <S>
/s/ ROBERT M. FIGLIULO President and Chairman of the Board of Directors
- -------------------------------------
Robert M. Figliulo
/s/ STEVEN T. GAMBILL Chief Financial Officer
- ------------------------------------- (Principal Financial and Accounting Officer)
Steven T. Gambill
/s/ MICHAEL J. FLETCHER Executive Vice President, General Manager -- Tulsa
- ------------------------------------- and Director
Michael J. Fletcher
/s/ DAVID A. FIGLIULO Executive Vice President and Director
- -------------------------------------
David A. Figliulo
/s/ RONALD L. TAYLOR Director
- -------------------------------------
Ronald L. Taylor
/s/ SYDNOR W. THRIFT, JR. Director
- -------------------------------------
Sydnor W. Thrift, Jr.
/s/ DAVID P. YEAGER Director
- -------------------------------------
David P. Yeager
</TABLE>
II-4
<PAGE> 63
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE
To the Stockholders of SPR Inc.:
We have audited in accordance with generally accepted auditing standards,
the financial statements of SPR Inc. included in this registration statement and
have issued our report thereon dated October 28, 1996. Our audits were made for
the purpose of forming an opinion on the basic financial statements taken as a
whole. The schedule listed in the index in Item 16(b) is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 28, 1996
S-1
<PAGE> 64
SCHEDULE II
SPR INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION(1) OF YEAR EXPENSES DEDUCTIONS(1) YEAR
- -------------------------------------------------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
For the year ended December 31, 1993:
Allowance for doubtful accounts................. $ 49,577 $ 25,576 -- $ 75,153
For the year ended December 31, 1994:
Allowance for doubtful accounts................. $ 75,153 $ 20,000 $ 6,000 $ 89,153
For the year ended December 31, 1995:
Allowance for doubtful accounts................. $ 89,153 $(28,753) $28,500 $ 31,900
</TABLE>
- -------------------------
(1) Bad debts written off.
S-2
<PAGE> 65
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.
2.1 Agreement of Merger dated October 30, 1996 between the Registrant and SPR Chicago
Inc.
2.2 Agreement of Merger dated October 31, 1996 among the Registrant, Consulting
Acquisition, Inc. and Systems and Programming Resources, Inc.
2.3 Agreement of Merger dated October 31, 1996 between the Registrant and Systems and
Programming Resources of Tulsa, Inc.
2.4 Agreement of Merger dated October 31, 1996 between the Registrant and SPR-Wisconsin,
Inc.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-laws of the Registrant.
5.1 Opinion of Wildman, Harrold, Allen & Dixon.
10.4 Form of Combined Incentive and Non-statutory Stock Option Plan.
10.5 Form of Employee Stock Purchase Plan.
10.6 Lease for 2015 Spring Road, Oak Brook, Illinois.
10.7 Lease for 400 Mid-Continent Tower, Tulsa, Oklahoma.
10.8 Lease for 100 East Wisconsin Avenue, Milwaukee, Wisconsin.
10.9 Sublease for 815 Commerce Drive, Oak Brook, Illinois.
16.1 Letter of Ernst & Young LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Wildman, Harrold, Allen & Dixon (contained in its opinion filed as Exhibit
5.1 hereto).
24.1 Powers of Attorney.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1.1
2,700,000 Shares
SPR Inc.
Common Stock
FORM OF
UNDERWRITING AGREEMENT
----------------------
January , 1996
SMITH BARNEY INC.
ROBERT W. BAIRD & CO. INCORPORATED
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
SPR Inc., a Delaware corporation (the "Company"), proposes to issue
and sell an aggregate of 1,666,666 shares of its common stock, $0.01 par value
per share, to the several Underwriters named in Schedule II hereto (the
"Underwriters"), and the persons named in Part A of Schedule I hereto (the
"Selling Stockholders") propose to sell to the several Underwriters an
aggregate of 1,033,334 shares of common stock of the Company. The Company and
the Selling Stockholders are hereinafter sometimes referred to as the
"Sellers." The Company's common stock, $0.01 par value, is hereinafter
referred to as the "Common Stock" and the 1,666,666 shares of Common Stock to
be issued and sold to the Underwriters by the Company and the 1,033,334 shares
of Common Stock to be sold to the Underwriters by the Selling Stockholders are
hereinafter referred to as the "Firm Shares." The Company and the Selling
Stockholders listed in Part B of Schedule I hereto also propose to sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up
to an additional 405,000 shares (the "Additional Shares") of Common Stock. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "Shares." All references to the "Company" refer to SPR Inc., after the
Reorganizations described in Section 7(d) hereof have been effected, or to the
Constituent Corporations, as defined in Section 7(d) hereof, as appropriate.
The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you (the "Representatives") and the other
several Underwriters on whose behalf you are acting, in connection with the
several purchases of the Shares by the Underwriters.
<PAGE> 2
1. Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 under the Act (the "registration
statement"), including a prospectus subject to completion relating to the
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of this Agreement. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said
post-effective amendment. If an abbreviated registration statement is prepared
and filed with the Commission in accordance with Rule 462(b) under the Act (an
"Abbreviated Registration Statement"), the term "Registration Statement" as
used in this Agreement includes the Abbreviated Registration Statement. The
term "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information
contained in the prospectus filed with the Commission pursuant to Rule 424(b).
The term "Prepricing Prospectus" as used in this Agreement means the prospectus
subject to completion in the form included in the registration statement at the
time of the initial filing of the registration statement with the Commission,
and as such prospectus shall have been amended from time to time prior to the
date of the Prospectus.
2. Agreements to Sell and Purchase. Subject to such adjustments as
you may determine in order to avoid fractional shares, the Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to each Underwriter and, upon the basis of the representations, warranties
and agreements of the Company and the Selling Stockholders herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $_____ per Share (the "purchase price per share"), the number of Firm
Shares which bears the same proportion to the aggregate number of Firm Shares
to be issued and sold by the Company as the number of Firm Shares set
-2-
<PAGE> 3
forth opposite the name of such Underwriter in Schedule II hereto (or such
number of Firm Shares increased as set forth in Section 12 hereof) bears to the
aggregate number of Firm Shares to be sold by the Company and the Selling
Stockholders.
Subject to such adjustments as you may determine in order to avoid
fractional shares, each Selling Stockholder agrees, subject to all the terms
and conditions set forth herein, to sell to each Underwriter and, upon the
basis of the representations, warranties and agreements of the Company and the
Selling Stockholders herein contained and subject to all the terms and
conditions set forth herein, each Underwriter, severally and not jointly,
agrees to purchase from each Selling Stockholder at the purchase price per
share that number of Firm Shares which bears the same proportion to the number
of Firm Shares set forth opposite the name of such Selling Stockholder in
Schedule I hereto as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule II hereto (or such number of Firm Shares increased
as set forth in Section 12 hereof) bears to the aggregate number of Firm Shares
to be sold by the Company and the Selling Stockholders.
The Company and the Selling Stockholders listed in Part B of Schedule
I hereto also agree, subject to all the terms and conditions set forth herein,
to sell to the Underwriters, and, upon the basis of the representations,
warranties and agreements of the Company and the Selling Stockholders herein
contained and subject to all the terms and conditions set forth herein, the
Underwriters shall have the right to purchase from the Company and the Selling
Stockholders listed in Part B of Schedule I hereto, at the purchase price per
share, pursuant to a one-time option (the "over-allotment option") which may be
exercised at any time prior to 9:00 P.M., New York City time, on the 30th day
after the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading), up to an aggregate of _______ Additional
Shares from the Company and up to an aggregate of ________ shares from the
Selling Stockholders listed in Part B of Schedule I hereto (the maximum number
of Additional Shares which each of them agrees to sell upon the exercise by the
Underwriters of the over-allotment option is set forth opposite their
respective names in Part B of Schedule I). Additional Shares may be purchased
only for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. The number of Additional Shares which the
Underwriters elect to purchase upon exercise of the over-allotment option shall
be provided by the Company and by each Selling Stockholder who has agreed to
sell Additional Shares in proportion to the respective maximum numbers of
Additional Shares which the Company and each such Selling Stockholder has
agreed to sell. Upon exercise of the over-allotment option, each Underwriter,
severally and not jointly, agrees to purchase from the Company and
- 3 -
<PAGE> 4
each Selling Stockholder who has agreed to sell Additional Shares the number of
Additional Shares (subject to such adjustments as you may determine in order to
avoid fractional shares) which bears the same proportion to the number of
Additional Shares to be sold by the Company and each Selling Stockholder who
has agreed to sell Additional Shares as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto (or such number of
Firm Shares increased as set forth in Section 12 hereof) bears to the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholders.
Certificates in transferable form for the Shares (including any
Additional Shares) which each of the Selling Stockholders agrees, severally and
solely with respect to the Shares to be sold by such Selling Stockholder
hereunder, to sell pursuant to this Agreement have been placed in custody with
_______________ (the "Custodian") for delivery under this Agreement pursuant to
a Custody Agreement and Power of Attorney (the "Custody Agreement") executed by
each of the Selling Stockholders appointing ____________ and ____________ as
agents and attorneys-in-fact (the "Attorneys-in-Fact"). Each Selling
Stockholder so agrees that (i) the Shares represented by the certificates held
in custody pursuant to the Custody Agreement are subject to the interests of
the Underwriters, the Company and each other Selling Stockholder, (ii) the
arrangements made by the Selling Stockholders for such custody are, except as
specifically provided in the Custody Agreement, irrevocable, and (iii) the
obligations of the Selling Stockholders hereunder and under the Custody
Agreement shall not be terminated by any act of such Selling Stockholder or by
operation of law, whether by the death or incapacity of any Selling Stockholder
or the occurrence of any other event. If any Selling Stockholder shall die or
be incapacitated or if any other event shall occur before the delivery of the
Shares hereunder, certificates for the Shares of such Selling Stockholder shall
be delivered to the Underwriters by the Attorneys-in-Fact in accordance with
the terms and conditions of this Agreement and the Custody Agreement as if such
death or incapacity or other event had not occurred, regardless of whether or
not the Attorneys-in-Fact or any Underwriter shall have received notice of such
death, incapacity or other event. Each Attorney-in-Fact is authorized, on
behalf of each of the Selling Stockholders, to execute this Agreement and any
other documents necessary or desirable in connection with the sale of the
Shares to be sold hereunder by such Selling Stockholder, to make delivery of
the certificates for such Shares, to receive the proceeds of the sale of such
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Stockholder in connection with the sale and public
offering of such Shares, to distribute the balance thereof to such Selling
Stockholder, and to take such other action as may be necessary or desirable in
connection with the transactions contemplated by this
- 4 -
<PAGE> 5
Agreement. Each Attorney-in-Fact agrees to perform his duties under the
Custody Agreement.
3. Terms of Public Offering. The Sellers have been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the offices of
Wildman, Harrold, Allen & Dixon, 225 West Wacker Drive, Suite 3000, Chicago, IL
60606-1229, at 9:00 A.M., Chicago time, on January ___, 1996 (the "Closing
Date"). The place of closing for the Firm Shares and the Closing Date may be
varied by agreement among you, the Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Wildman, Harrold, Allen & Dixon at such time on such date (the "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than two nor later than ten
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf of the Underwriters to the
Company and the Attorneys-in-Fact of the Underwriters' determination to
purchase a number, specified in such notice, of Additional Shares. The place
of closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement among you, the Company and the
Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you in New York City on
the Closing Date or the Option Closing Date, as the case may be, against
payment of the purchase price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
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<PAGE> 6
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement, a post-effective amendment
thereto or any Abbreviated Registration Statement to be declared effective
before the offering of the Shares may commence, the Company will endeavor to
cause the Registration Statement, or such post-effective amendment or
Abbreviated Registration Statement, to become effective as soon as possible and
will advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement, or such post-effective amendment or
Abbreviated Registration Statement has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Shares
for offering or sale in any jurisdiction or the initiation of any proceeding
for such purpose; and (iii) within the period of time referred to in paragraph
(f) below, of any change, or any development involving a prospective change, in
the Company's condition (financial or other), business, properties, net worth
or results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge, six signed
copies of the registration statement as originally filed with the Commission
and of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which you shall not previously have been advised or to
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<PAGE> 7
which you shall reasonably object after being so advised or (ii) so long as, in
the opinion of counsel for the Underwriters, a Prospectus is required to be
delivered in connection with sales by any Underwriter or dealer, file any
information, documents or reports pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") without delivering a copy of such
information, documents or reports to you, as Representatives of the
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer, the Company
will expeditiously deliver to each Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto)
as you may request; provided, however, that in the event any Underwriter is
required to deliver a Prospectus in connection with sales of any of the Shares
at any time nine months or more after the date of the Prospectus, the Company
will expeditiously deliver to such Underwriter, upon request of such
Underwriter but at such Underwriter's expense, as many copies of the Prospectus
(and of any amendment or supplement thereto) as such Underwriter may request.
The Company consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by all dealers to whom Shares may be
sold, both in connection with the offering and sale of the Shares and for such
period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that, in the opinion of counsel for
the Underwriters and counsel for the Company, is required to be set forth in
the Prospectus (as then amended or supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to supplement
or amend the Prospectus to comply with the Act or any other law, the Company
will forthwith prepare and, subject to the provisions of paragraph (d) above,
file with the Commission an
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<PAGE> 8
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Underwriters and dealers a reasonable number of copies thereof, subject to
the proviso to the first sentence of this Section 5(f). In the event that the
Company and you, as Representatives of the several Underwriters, agree that the
Prospectus should be amended or supplemented, the Company, if requested by you,
will promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate and
will file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action which
would subject it to service of process in suits, other than those arising out
of the offering or sale of the Shares, in any jurisdiction where it is not now
so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section ll(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof), or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company or the Selling Stockholders to comply with
the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Representatives for all reasonable out-of-pocket
expenses (including fees and expenses of counsel for the Underwriters) incurred
by you in connection herewith. In no event following termination of this
Agreement for any reason will
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<PAGE> 9
the Underwriters seek to recover lost profits from the Sellers, or any of them.
(k) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not,
sell, contract to sell or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
grant any options, warrants or any other instrument convertible, exchangeable
or granting any right to purchase Common Stock, for a period of 180 days after
the date of the Prospectus, without the prior written consent of Smith Barney
Inc.; provided, however, that the Company may grant options under its Combined
Incentive and Non-Statutory Stock Option Plan (and may issue shares of Common
Stock, in accordance with the terms of such Plan and applicable option
agreements executed in connection therewith, upon exercise of any such options)
and sell shares of Common Stock under the Employee Stock Purchase Plan, in each
case as described in the Prospectus.
(n) The Company has furnished or will furnish to you "lock-up"
letters as described in Section 6(d) hereof, in the form previously delivered
by you (the "Lock-Up Letter"), signed by each of its current officers and
directors and each of its current stockholders.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the Common
Stock listed, subject to notice of issuance, on the Nasdaq National Market
concurrently with the effectiveness of the registration statement.
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<PAGE> 10
6. Agreements of the Selling Stockholders. Each of the Selling
Stockholders agrees, severally and solely with respect to such Selling
Stockholder and the Shares to be sold by such Selling Stockholder, with the
several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the extent
necessary to cause the Registration Statement or any post-effective amendment
thereto or any Abbreviated Registration Statement to become effective at the
earliest possible time.
(b) Such Selling Stockholder will pay all Federal and other
taxes, if any on the transfer or sale of the Shares being sold by the Selling
Stockholder to the Underwriters.
(c) Such Selling Stockholder will do or perform all things
required to be done or performed by the Selling Stockholder prior to the
Closing Date or any Option Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shares pursuant to this Agreement.
(d) Such Selling Stockholder has executed or will execute a
Lock-Up Letter agreeing not to sell, contract to sell or otherwise dispose of
any Common Stock, except for the sale of Shares to the Underwriters pursuant to
this Agreement, prior to the expiration of 180 days after the date of the
Prospectus, without the prior written consent of Smith Barney Inc.; provided,
however, that any sale or other disposition to a member of such Selling
Stockholder's immediate family, or to a trust for the benefit of a member of
such Selling Stockholder's immediate family, may be effected without the prior
written consent of Smith Barney Inc. so long as such Selling Stockholder
delivers to Smith Barney Inc., no later than three days prior to any such sale
or other disposition (i) written notice describing the terms of such sale or
disposition and (ii) the written agreement of the transferee to be bound by the
terms of the Lock-Up Letter executed by such Selling Stockholder. A Selling
Stockholder's "immediate family" consists of his or her spouse, parents,
children (including adoptive), grandchildren, siblings, mothers and
fathers-in-law, sons- and daughters-in-law and brothers- and sisters-in-law.
(e) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, such Selling Stockholder will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, within the period of
time referred to in Section 5(f) hereof, of (i) any
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<PAGE> 11
change, or any development involving a prospective change, in the Company's
condition (financial or other), business, properties, net worth or results of
operations, or in information contained in the Prospectus, or any amendment or
supplement thereto, relating to the Company, which comes to the attention of
such Selling Stockholder, or (ii) any new information relating to the Company,
or relating to any matter stated in the Prospectus or any amendment or
supplement thereto, which comes to the attention of such Selling Stockholder,
or (iii) any change in information contained in the Prospectus, or any
amendment or supplement thereto, under the heading "Principal and Selling
Stockholders" relating to such Selling Stockholder, any of which suggests that
any statement made in the Registration Statement or the Prospectus (as then
amended or supplemented, if amended or supplemented) is or may be untrue in any
material respect or that the Registration Statement or Prospectus (as then
amended or supplemented, if amended or supplemented) omits or may omit to state
a material fact or a fact necessary to be stated therein in order to make the
statements therein not misleading in any material respect, or of the necessity
to amend or supplement the Prospectus (as then amended or supplemented, if
amended or supplemented) in order to comply with the Act or any other law.
7. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act, except that
this representation and warranty does not apply to statements in or omissions
from the Prepricing Prospectus made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
or on behalf of any Underwriter through you expressly for use therein. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(b) The Registration Statement in the form in which it became
or becomes effective and also in such form as it may be when any post-effective
amendment thereto or any Abbreviated Registration Statement shall become
effective and the prospectus and any supplement or amendment thereto when filed
with the Commission under Rule 424(b) under the Act, complied or will comply in
all material respects with the provisions of the Act and did not or will not at
any such times contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except that this representation and warranty
does not apply to statements in or omissions from the registration statement or
the prospectus made in reliance upon and in conformity with information
relating to any
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<PAGE> 12
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein.
(c) All the outstanding shares of Common Stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Shares to be issued and
sold by the Company have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the capital stock of the Company conforms to the
description thereof in the registration statement and the prospectus.
(d) Each of (i) the Merger Agreement dated October 30, 1996
between the Company and SPR Chicago, Inc. (the "Chicago Merger Agreement") and
(ii) the Merger Agreements dated October 31, 1996 between the Company and each
of SPR-Wisconsin, Inc., Systems and Programming Resources, Inc. ("Systems
Inc."), Consulting Acquisition Corporation ("Data Flex") and SPR Tulsa, Inc.
(the "Second Merger Agreements" and, collectively with the Chicago Merger
Agreement, the "Merger Agreements") has been duly and validly authorized,
executed and delivered by each of the parties thereto and constitutes the valid
and legally binding agreement of each party thereto, enforceable against such
party in accordance with its terms, except to the extent that enforceability
thereof may be limited by applicable bankruptcy, insolvency or other similar
laws relating to or affecting creditors' rights and remedies generally. All
necessary consents, approvals, assignments and other authorizations of (A)
governmental authorities and creditors and (B) material lessors, clients,
vendors and other third parties doing business with any of the parties to the
Merger Agreements that are necessary in order to effect the transactions
contemplated by the Merger Agreements (the "Reorganizations"), and for the
Company to assume and continue the businesses of each of SPR Chicago, Inc.,
SPR-Wisconsin, Inc., SPR Tulsa, Inc., Systems and Programming Resources, Inc.
and Data Flex, Inc. (collectively, the "Constituent Corporations"), without
interruption or delay, have been obtained. The Reorganization contemplated by
the Chicago Merger Agreement was consummated on October 30, 1996 and the
Reorganizations contemplated by the Second Merger Agreements were consummated
on October 31, 1996. Subject to the Company making the payments relating to
the Reorganizations described in the Prospectus under the heading "Certain
Transactions," in the amounts set forth therein, the Company has no liabilities
or obligations of any kind whatsoever to the former stockholders of the
Constituent Corporations in their capacities as former stockholders of such
corporations. Other than as described in the financial statements contained in
the Prospectus, the Company will not incur any material liability for the
payment of any taxes as a result of the Reorganizations.
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<PAGE> 13
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company. The Company
does not own or control, directly or indirectly, any subsidiary (as defined in
the rules and regulations promulgated under the Act).
(f) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened, against the Company or to which
the Company or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus but are not described
as required, and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Act.
(g) The Company is not (i) in violation of its certificate of
incorporation or by-laws, or other organizational documents, (ii) in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company, or of any decree of any court or governmental agency
or body having jurisdiction over the Company, except any such violation(s)
that, individually or in the aggregate, could not have a material adverse
effect on the condition (financial or other), business, net worth or results of
operations of the Company, or (iii) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which it is a party or by
which the Company or any of its properties may be bound.
(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby (A) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration
of the Shares under the Act and the Exchange Act and compliance with the
securities or Blue Sky laws of various jurisdictions) or conflicts or will
conflict with or constitutes or will constitute a breach of,
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<PAGE> 14
or a default under, the certificate of incorporation or bylaws, or other
organizational documents, of the Company or (B) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Company is a party
or by which its properties may be bound, or (C) violates or will violate any
statute, law, rule, regulation, judgment, injunction, order or decree
applicable to the Company or any of its properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any agreement or instrument to
which it is a party or by which it may be bound, or to which any of its
property or assets is subject, except any such violations that, individually or
in the aggregate, could not have a material adverse effect on the condition
(financial or other), business, net worth or results of operations of the
Company.
(i) The accountants, Arthur Andersen LLP, who have certified
the financial statements included in the Registration Statement and the
Prospectus (or any amendment or supplement thereto) are independent public
accountants as required by the Act.
(j) The financial statements, together with related schedules
and notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the financial position,
results of operations and changes in financial position of the Company on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(k) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and validly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency or other similar laws relating to or
affecting creditors' rights and remedies generally and except to the extent
that rights to indemnity and contribution under this Agreement may be limited
by federal or state securities laws.
(l) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent
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<PAGE> 15
to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), (i) the Company has not incurred any liability or obligation, direct
or contingent, or entered into any transaction, not in the ordinary course of
business, that in any of such cases is material, individually or in the
aggregate, to the Company, and (ii) there has not been any change in the
capital stock, or material increase in the short-term debt or long-term debt,
of the Company, or any material adverse change, or any development involving or
which may reasonably be expected to involve, a prospective material adverse
change, in the condition (financial or other), business, net worth or results
of operations of the Company.
(m) The Company owns no real property and has good and
marketable title to all personal property described in the Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances, except (i) liens for taxes not yet due and payable, (ii) such as
are described in the Registration Statement and the Prospectus or in a document
filed as an exhibit to the Registration Statement, or (iii) any liens, claims,
security interests or other encumbrances that, individually or in the
aggregate, could not have a material adverse effect on the condition (financial
or other), business, net worth or results of operations of the Company. All of
the property described in the Prospectus as being held under lease by the
Company is held by it under leases that are valid, subsisting and enforceable
against the Company, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency or other similar laws relating to
or affecting creditors' rights and remedies generally, and, to the best
knowledge of the Company, are valid, subsisting and enforceable against the
other parties thereto.
(n) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(o) The Company has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its respective properties and to conduct its business in the
manner described in the Prospectus, subject to such qualifications as may be
set forth in the Prospectus and except such permits the lack of which,
individually or in the aggregate, could not have a material adverse effect on
the condition (financial or other), business, net worth or results of
operations of the Company; the Company has fulfilled and performed all its
material obligations with respect to such permits and no event has
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<PAGE> 16
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the
rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as described
in the Prospectus, none of such permits contains any restriction that is
materially burdensome to the Company.
(p) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(q) To the Company's knowledge, neither the Company nor any of
its employees or agents has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation,
which payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus.
(r) The Company has filed all tax returns required to be filed,
which returns are complete and correct in all material respects, and the
Company is not in default in the payment of any taxes which were payable
pursuant to such returns or any assessments with respect thereto. Each of SPR
Chicago, Inc., SPR-Wisconsin, Inc., SPR Tulsa, Inc., Systems Inc. and Data Flex
validly elected to be an S corporation under federal income tax law and since
January 14, 1994, with respect to SPR Chicago, Inc., [OCTOBER __, 1994], with
respect to SPR-Wisconsin, Inc., September 15, 1994, with respect to SPR Tulsa,
Inc., [___________, 199_], with respect to Systems Inc., and October 29, 1990,
with respect to Data Flex, each such S corporation election has continued in
full force and effect without interruption through the date hereof. For
purposes of this Section 7(r), "S corporation" means a corporation with respect
to which a valid election has been made under Section 1362 of the Internal
Revenue Code of 1986, as amended, and any corresponding provision of state,
local or foreign law.
(s) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company (i) because of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement or (ii) subsequent to the
consummation of the transactions contemplated by this Agreement,
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<PAGE> 17
except for the rights to registration described in the Prospectus under the
heading "Description of Capital Stock--Registration Rights."
(t) The Company owns or possesses rights to use all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights (i)
described in the Prospectus as being owned or possessed by it or (ii) necessary
for the conduct of its business, except any of such rights the lack of which,
individually or in the aggregate, could not have a material adverse effect on
the condition (financial or other), business, net worth or results of
operations of the Company, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company with
respect to the foregoing.
(u) The Company is not now, and after sale of the Shares to be
sold by it hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(v) The Company has complied with all provisions of Section 1
of Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of Doing
Business with Cuba.
8. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each Underwriter, and
in each case solely with respect to such Selling Stockholder and the Shares to
be sold by such Selling Stockholder hereunder, that:
(a) Such Selling Stockholder now has, and on the Closing Date
and any Option Closing Date will have, valid and marketable title to the Shares
to be sold by such Selling Stockholder, free and clear of any lien, claim,
community property right, voting trust agreement, security interest or other
encumbrance, including, without limitation, any restriction on transfer.
(b) Such Selling Stockholder now has, and on the Closing Date
and any Option Closing Date will have, full legal right, power and
authorization, and any approval required by law, to sell, assign transfer and
deliver such Shares in the manner provided in this Agreement, and upon delivery
of and payment for such Shares hereunder, the several Underwriters will acquire
valid and marketable title to such Shares free and clear of any lien, claim,
community property right, voting trust agreement, security interest, or other
encumbrance.
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<PAGE> 18
(c) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and are the valid and binding agreements of such Selling Stockholder
enforceable against such Selling Stockholder in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights and remedies generally and except to the extent that rights
to indemnity and contribution under this Agreement may be limited by federal or
state securities laws.
(d) Neither the execution and delivery of this Agreement or the
Custody Agreement by or on behalf of such Selling Stockholder nor the
consummation of the transactions herein or therein contemplated by or on behalf
of such Selling Stockholder (i) requires any consent, approval, authorization
or order of, or filing or registration with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required under the Act or such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of the
Shares) or (ii) conflicts or will conflict with or constitutes or will
constitute a breach of, or default under, or violates or will violate (A) any
agreement, indenture or other instrument to which such Selling Stockholder is a
party, by which such Selling Stockholder is or may be bound or to which any of
such Selling Stockholder's property or assets is subject, or (B) any statute,
law, rule, regulation, ruling, judgment, injunction, order or decree applicable
to such Selling Stockholder or to any property or assets of such Selling
Stockholder, except any such statutes, laws, rules, regulations, rulings,
judgments, injunctions, orders or decrees the violation of which, individually
or in the aggregate, could not (1) have a material adverse effect on such
Selling Stockholder's ability to consummate the transactions contemplated in
this Agreement or in the Custody Agreement or (2) result in the breach by such
Selling Stockholder of any representation or warranty contained herein or
therein.
(e) The Registration Statement and the Prospectus, insofar as
they relate to such Selling Stockholder, do not and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(f) Although such Selling Stockholder has not undertaken (and
has no duty to undertake) to determine independently, and does not assume any
responsibility for information contained in the Registration Statement or the
Prospectus (except for information contained therein under the heading
"Principal and Selling Stockholders" relating to such Selling Stockholder),
nothing has
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<PAGE> 19
come to the attention of such Selling Stockholder that has caused such Selling
Stockholder to believe, and such Selling Stockholder does not have any
knowledge or any reason to believe, that the Registration Statement or the
Prospectus (or any amendment or supplement thereto) contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(g) The representations and warranties of such Selling
Stockholder in the Custody Agreement are, and on the Closing Date and any
Option Closing Date will be, true and correct in all material respects.
(h) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares, except for the lock-up
arrangements described in the Prospectus.
9. Indemnification and Contribution.
(a) The Company and each Selling Stockholder, jointly and
severally, agree to indemnify and hold harmless each of you and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable fees and
disbursements of counsel) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to such Underwriter furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the Act and the regulations thereunder, and the untrue
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<PAGE> 20
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Company has delivered the Prospectus to the
several Underwriters in requisite quantity on a timely basis to permit such
delivery or sending. The foregoing indemnity agreement shall be in addition to
any liability which the Company or any Selling Stockholder may otherwise have.
(b) If any action, suit or proceeding shall be brought against
any Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company or any Selling Stockholder, such
Underwriter or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Underwriter
or any such controlling person shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the indemnifying parties
have agreed in writing to pay such fees and expenses, (ii) the indemnifying
parties have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
indemnifying parties and such Underwriter or such controlling person shall have
been advised in writing by its counsel that representation of such indemnified
party and any indemnifying party by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Underwriter or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding, or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for all such Underwriters and controlling persons,
which firm shall be designated in writing by Smith Barney Inc., and that all
such reasonable fees and expenses shall be reimbursed as they are incurred.
The indemnifying parties shall not be liable for any settlement of any such
action, suit or proceeding effected without their written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying parties
agree to indemnify and hold harmless any Underwriter, to the extent
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<PAGE> 21
provided in the preceding paragraph, and any such controlling person from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) The aggregate liability of each Selling Stockholder under this
Agreement, including with respect to the indemnification and contribution
provisions contained in Section 9, shall be limited to the aggregate proceeds
received by such Selling Stockholder from the Underwriters for the sale of the
Shares sold by such Selling Stockholder hereunder.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, each Selling Stockholder, and any person who controls
the Company or any Selling Stockholder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
but only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, any
Selling Stockholder, or any such controlling person based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Underwriter pursuant to this paragraph (d), such Underwriter shall have the
rights and duties given to the Company by paragraph (b) above (except that if
the Company shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such Underwriter's expense), and the Company, its directors, any such officer,
the Selling Stockholder, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which any Underwriter
may otherwise have.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (d) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Stockholders on the one hand and the Underwriters
on the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is
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<PAGE> 22
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus; provided
that, in the event that the Underwriters shall have purchased any Additional
Shares hereunder, any determination of the relative benefits received by the
Company, the Selling Stockholders or the Underwriters from the offering of the
Shares shall include the net proceeds (before deducting expenses) received by
the Company and the Selling Stockholders, and the underwriting discounts and
commissions received by the Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Stockholders on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(f) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (e) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (e) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating any claim or defending
any such action, suit or proceeding. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price of the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to
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<PAGE> 23
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 9 are several in proportion
to the respective numbers of Firm Shares set forth opposite their names in
Schedule II hereto (or such numbers of Firm Shares increased as set forth in
Section 12 hereof) and not joint.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Stockholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or the Selling Stockholders or any person controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
9.
10. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective amendment
thereto (or an Abbreviated Registration Statement) to be declared effective
before the offering of the Shares may commence, the registration statement or
such post-effective amendment or Abbreviated Registration Statement shall have
become effective not later than 5:30 P.M., New York City time, on the date
hereof, or at such later date and time as shall be
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<PAGE> 24
consented to in writing by you; all filings, if any, required by Rules 424 and
430A under the Act shall have been timely made; no stop order suspending the
effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been complied
with to your reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company not
contemplated by the Prospectus, which in your reasonable opinion, as
Representatives of the several Underwriters, would materially, adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company or any Selling
Stockholder which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development, in your reasonable opinion, as Representatives of the several
Underwriters, would materially adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion of
Wildman, Harrold, Allen & Dixon, counsel for the Company and the Selling
Stockholders, dated the Closing Date and addressed to you, as Representatives
of the several Underwriters, to the effect that:
(i) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company. The Company does not own or control, directly or
indirectly, any subsidiary (as defined in Rule 405 promulgated under the Act).
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<PAGE> 25
(ii) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus;
and the authorized capital stock of the Company conforms in all material
respects as to legal matters to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock";
(iii) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares to be issued and sold by the
Company hereunder, have been duly authorized and validly issued, and are
fully paid and nonassessable;
(iv) The Shares to be issued and sold to the Underwriters
by the Company hereunder have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive, or to the best knowledge of such counsel, similar rights that
entitle or will entitle any person to acquire any Shares upon the issuance
thereof by the Company;
(v) The form of certificates for the Shares conforms to
the requirements of the Delaware General Corporation Law;
(vi) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(vii) The Company has corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Shares to be
sold by it to the Underwriters as provided herein, and this Agreement has been
duly authorized, executed and delivered by the Company and is a valid, legal
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement of rights to indemnity and
contribution hereunder may be limited by Federal or state securities laws or by
general equitable principles and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles;
(viii) The Company is not in violation of its
certificate of incorporation or bylaws, or other organizational documents, or
to the best knowledge of such counsel, is in default
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<PAGE> 26
in the performance of any material obligation, agreement or condition contained
in any bond, debenture, note or other evidence of indebtedness, except as may
be disclosed in the Prospectus;
(ix) None of the offer, sale or delivery of the Shares by
the Company, the execution, delivery or performance of this Agreement,
compliance by the Company with the provisions hereof, or consummation by the
Company of the transactions contemplated hereby (A) conflicts with or
constitutes a breach of, or a default under, the certificate of incorporation
or bylaws, or other organizational documents, of the Company, or any agreement,
indenture, lease or other instrument to which the Company is a party or by
which it or any of its properties is bound that is an exhibit to the
Registration Statement, or that is material and that is known to such counsel,
(B) will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company under any agreement,
indenture, lease or other instrument to which the Company is a party or by
which it or any of its properties is bound that is an exhibit to the
Registration Statement, or that is material and that is known to such counsel,
or (C) will result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky laws),
judgment, injunction, order or decree known to such counsel, applicable to the
Company or any of its properties, except for any violation which, individually
or in the aggregate, could not have a material adverse effect on the condition
(financial or other), business, net worth or results of operations of the
Company;
(x) No consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency, or official is required on the part
of the Company (except as have been obtained under the Act and the Exchange Act
or such as may be required under state securities or Blue Sky laws governing
the purchase and distribution of the Shares) for the valid issuance and sale of
the Shares by the Company to the Underwriters as contemplated by this
Agreement;
(xi) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and the
notes thereto and the schedules and other financial data included therein, as
to which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act;
(xii) To the best knowledge of such counsel, (A)
other than as described or contemplated in the Prospectus (or any supplement
thereto), there are no legal or governmental proceedings pending or threatened
against the Company, or to which the Company or any of its property, is
subject, which are required to be
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<PAGE> 27
described in the Registration Statement or Prospectus (or any amendment or
supplement thereto) and (B) there are no agreements, contracts, indentures,
leases or other instruments, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that are
not described or filed as required, as the case may be;
(xiii) To the best knowledge of such counsel, the Company
is not in violation of any law, ordinance, administrative or governmental rule
or regulation applicable to the Company or of any decree of any court or
governmental agency or body having jurisdiction over the Company, except for
any violation which, individually or in the aggregate, could not have a
material adverse effect on the condition (financial or other), business, net
worth or results of operations of the Company;
(xiv) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements or other
legal documents, or refer to statements of law or legal conclusions, are
accurate and present fairly the information required to be shown;
(xv) This Agreement and the Custody Agreement have each
been duly executed and delivered by or on behalf of each of the Selling
Stockholders and are valid and binding agreements of each Selling Stockholder
enforceable against each Selling Stockholder in accordance with their terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws relating to or affecting
creditors' rights and remedies generally and except as enforcement of rights to
indemnity and contribution hereunder may be limited by Federal or state
securities laws or by general equitable principles;
(xvi) Each Selling Stockholder has full legal right,
power and authorization, and any approval required by law, to sell, assign,
transfer and deliver valid and clear title to the Shares which such Selling
Stockholder has agreed to sell pursuant to this Agreement;
(xvii) The execution and delivery of this Agreement
and the Custody Agreement by the Selling Stockholders and the consummation of
the transactions contemplated hereby and thereby will not conflict with,
violate, result in a breach of or constitute a default under the terms or
provisions of any agreement, indenture, mortgage or other instrument known to
such counsel to which any Selling Stockholder is a party or by which any of
them or any of their assets or property is bound, or any court order or decree
known to such counsel, or any law, rule, or regulation applicable to
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<PAGE> 28
any Selling Stockholder or to any of the property or assets of any Selling
Stockholder;
(xviii) Assuming the Underwriters purchase such
Shares for value, in good faith and without notice of any adverse claim, upon
delivery of the Shares to be sold by the Selling Stockholders pursuant to this
Agreement against payment therefor as contemplated herein the Underwriters will
acquire valid title to such Shares free and clear of any lien, claim, community
property right, voting trust agreement, security interest, or other
encumbrance, restriction on transfer or other defect in title; and
(xix) Each of SPR Chicago, Inc., SPR-Wisconsin,
Inc., SPR Tulsa, Inc., Systems Inc. and Data Flex validly elected to be an S
corporation under Section 1362 of the Internal Revenue Code of 1986, as
amended, and any corresponding provision of state, local or foreign law and
since January 14, 1994, with respect to SPR Chicago, Inc., [OCTOBER __, 1994],
with respect to SPR-Wisconsin, Inc., September 15, 1994, with respect to SPR
Tulsa, Inc., [___________, 199_], with respect to Systems Inc., and October 29,
1990, with respect to Data Flex, each such S corporation election has continued
in full force and effect without interruption through the date hereof.
(xx) The Reorganizations have been consummated and the
Company possesses all necessary consents, approvals, assignments and other
authorizations of (i) any governmental authorities and creditors with
jurisdiction over any of the Constituent Corporations or the Company and (ii)
material lessors, clients, vendors and other third parties doing business with
any of the parties to the Merger Agreements that were and are necessary for the
Company to continue the businesses of each of the Constituent Corporations,
without interruption or delay. Other than as described in the financial
statements contained in the Prospectus, the Company will not incur any material
liability for the payment of any taxes as a result of the Reorganizations.
(xxi) Such counsel shall further state that, based
upon such counsel's participation in the preparation of the Registration
Statement and the Prospectus, and any amendment or supplement thereto, and upon
such counsel's review and discussion of the contents thereof, but without
independent check or verification or the accuracy or completeness thereof
except as specified, nothing has come to the attention of such counsel that has
caused them to believe that the Registration Statement at the time the
Registration Statement became effective, or the Prospectus, as of its date and
as of the Closing Date or the Option Closing Date, as the case may be (except
for financial statements and the notes thereto and the schedules and other
financial data included therein), contained an untrue statement of a material
fact or omitted to state a material
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<PAGE> 29
fact required to be stated therein or necessary to make the statements therein
not misleading or that any amendment or supplement to the Prospectus (except
for financial statements and the notes thereto and the schedules and other
financial data included therein), as of its respective date, and as of the
Closing Date or the Option Closing Date, as the case may be, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the States of Illinois or Delaware, provided that (1) each such local
counsel is acceptable to the Representatives, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Representatives and is, in form and substance, satisfactory to
them and their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of
Neal, Gerber & Eisenberg, counsel for the Underwriters, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (v), (vii), (viii), (xii) and
(xx) of the foregoing paragraph (c) and such other related matters as you may
request.
(e) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date, from Arthur Andersen LLP, independent certified public
accountants, substantially in the forms heretofore approved by you. If (i) the
letter from Arthur Andersen LLP dated the date hereof discloses any material
adverse decreases or increases, as the case may be, in the specified items that
are not disclosed in the Prospectus, or (ii) the letter from Arthur Andersen
LLP dated the Closing Date discloses any material adverse decreases or
increases, as the case may be, in the specified items from its letter dated the
date hereof or that are not disclosed in the Prospectus, then the Company shall
explain and substantiate such decreases or increases to the reasonable
satisfaction of the Underwriters. If, in the reasonable judgment of the
Underwriters, such increases or decreases make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares on the terms
and in the manner contemplated by the Prospectus, the Representatives may
terminate this Agreement.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
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<PAGE> 30
that purpose shall have been taken or, to the knowledge of the Company, shall
be contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
properties, net worth or results of operations of the Company; (iv) the Company
shall not have any liabilities or obligations, direct or contingent (whether or
not in the ordinary course of business), that are material to the Company,
other than those reflected in the Registration Statement or the Prospectus (or
any amendment or supplement thereto); and (v) all the representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on
and as of the Closing Date, and you shall have received a certificate, dated
the Closing Date and signed by the chief executive officer and the chief
financial officer of the Company (or such other officers as are acceptable to
you), to the effect set forth in this Section 10(f) and in Section 10(g)
hereof.
(g) The Reorganizations shall have been consummated and the
Company shall possesses all necessary consents, approvals, assignments and
other authorizations of (i) any governmental authorities and creditors with
jurisdiction over any of the Constituent Corporations or the Company and (ii)
material lessors, clients, vendors and other third parties doing business with
any of the parties to the Merger Agreements that were and are necessary for the
Reorganizations to become effective and for the Company to continue the
businesses of each of the Constituent Corporations, without interruption or
delay.
(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied, in all material respects, with any
of its agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date.
(i) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and you shall have received a certificate, dated the Closing Date
and signed by or on behalf of
- 30 -
<PAGE> 31
the Selling Stockholders to the effect set forth in this Section 10(i) and in
Section 10(j) hereof.
(j) The Selling Stockholders shall not have failed at or prior
to the Closing Date to have performed or complied, in all material respects,
with any of their agreements herein contained and required to be performed or
complied with by them hereunder at or prior to the Closing Date.
(k) The Shares shall have been listed or approved for listing
upon notice of issuance on the Nasdaq National Market.
(l) You shall have received a Lock-Up Letter executed by each
of the current officers and directors of the Company and by each of its current
stockholders.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or
any Attorney-in-Fact or any Selling Stockholder and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company, the Selling
Stockholders or the particular Selling Stockholder, as the case may be, to each
Underwriter as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 10, except that, if
any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (i) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c), (d) and (e) shall be revised to reflect the sale of Additional Shares.
11. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the registration statement, each
Prepricing Prospectus, the Prospectus, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Shares, subject to the nine month limitation set forth
- 31 -
<PAGE> 32
in the first sentence of Section 5(f) hereof; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the registration of the Shares under the Exchange Act and
the listing of the Shares on the Nasdaq National Market; (vi) the registration
or qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the several states as provided in Section 5(g) hereof (including
the reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of the
preliminary and supplemental Blue Sky Memoranda and such registration and
qualification); (vii) the filing fees and the fees and expenses of counsel for
the Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Shares; and (ix)
the fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company and the Selling
Stockholders. Except as otherwise provided elsewhere in this Agreement, the
Underwriters will pay their own costs and expenses in connection with the
offering contemplated hereby, including fees and disbursements of their
counsel, travel and entertainment expenses, stock transfer taxes payable on
resale of any of the Shares by them and any advertising expenses connected with
any offers they may make, including, but not limited to, the "tombstone"
advertisement and expenses associated with the preparation of prospectus
memorabilia, if any.
12. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto;
provided, however, that if, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post-effective
amendment thereto or an Abbreviated Registration Statement to be declared
effective before the offering of the Shares may commence, then the
effectiveness of this Agreement shall be delayed until notification of the
effectiveness of the registration statement or such post-effective amendment or
Abbreviated Registration Statement has been released by the Commission. Until
such time as this Agreement shall have become effective, it may be terminated
by the Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company and the Selling Stockholders.
- 32 -
<PAGE> 33
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters
are obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule II hereto bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as you may specify in accordance with
Section 20 of the Master Agreement Among Underwriters of Smith Barney Inc., to
purchase the Shares which such defaulting Underwriter or Underwriters are
obligated, but fail or refuse, to purchase. If any one or more of the
Underwriters shall fail or refuse to purchase Shares which it or they are
obligated to purchase on the Closing Date and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non- defaulting Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter, the Company or any Selling Stockholder. In
any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement. The term "Underwriter"
as used in this Agreement includes, for all purposes of this Agreement, any
party not listed in Schedule II hereto who, with your approval and the approval
of the Company, purchases Shares which a defaulting Underwriter is obligated,
but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any Selling Stockholder, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock
- 33 -
<PAGE> 34
Exchange, American Stock Exchange or the Nasdaq National Market shall have been
suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York or Illinois shall have been declared by either
federal or state authorities, or (iii) there shall have occurred any outbreak
or escalation of hostilities or other international or domestic calamity,
crisis or change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it, in
your reasonable judgment, impracticable or inadvisable to commence or continue
the offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
14. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside cover page, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 2015 Spring Road, Suite 750, Oak Brook, Illinois 60521,
Attention: Robert M. Figliulo, President; or (ii) if to the Selling
Stockholders, at ____________, Attention: [INSERT NAME AND TITLE], or (iii) if
to you, as Representatives of the several Underwriters, care of Smith Barney
Inc., 388 Greenwich Street, New York, New York 10013, Attention: Manager,
Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 9 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Shares
in his status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
- 34 -
<PAGE> 35
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
- 35 -
<PAGE> 36
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
SPR, INC.
By:__________________________________
Robert M. Figliulo,
President
Each of the Selling Stockholders
named in Schedule I hereto
By:__________________________________
[ATTORNEY-IN-FACT]
By:_________________________________
[ATTORNEY-IN-FACT]
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule II
hereto.
SMITH BARNEY INC.
ROBERT W. BAIRD & CO. INCORPORATED
As Representatives of the Several Underwriters
By: SMITH BARNEY INC.
By:____________________________
[MANAGING DIRECTOR]
- 36 -
<PAGE> 37
SCHEDULE I
SPR INC.
Part A - Firm Shares
<TABLE>
<CAPTION>
Number of
Selling Stockholders Firm Shares
-------------------- -----------
<S> <C>
Rene Potter 35,000
John Figliulo 412,399
James Figliulo 93,500
Stephen Figliulo 93,500
Joanne Marie Youny 93,500
Donald Figliulo 93,500
Mark Figliulo 93,500
Michael Cymbala 46,750
Eugene Figliulo 71,685
-----------------
Total........ 1,033,334
-----------------
Part B - Additional Shares
- --------------------------
Selling Stockholders Number of
-------------------- Additional Shares
-----------------
Rene Potter
John Figliulo
James Figliulo
Stephen Figliulo
Joanne Marie Youny
Donald Figliulo
Mark Figliulo
Michael Cymbala
Eugene Figliulo
-----------------
Total........ 405,000
-----------------
</TABLE>
- 37 -
<PAGE> 38
SCHEDULE II
SPR INC.
<TABLE>
<CAPTION>
Number of Number of
Underwriter Firm Shares Firm Shares
- ----------- ----------- -----------
<S> <C> <C>
Smith Barney Inc. ......
Robert W. Baird &
Co. Incorporated ....
Total.....
-----------
</TABLE>
- 38 -
<PAGE> 1
EXHIBIT 2.1
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated this 30th day of October, 1996, pursuant to
Section 252(c) of the General Corporation Law of Delaware, between SPR Chicago
Inc., an Illinois corporation, and SPR Inc., a Delaware corporation, which
corporations collectively are referred to herein as the "Constituent
Corporations."
WITNESSETH that:
WHEREAS, the Constituent Corporations desire to merge into a single
corporation solely for the purpose of reincorporating SPR Chicago Inc. as a
Delaware corporation;
WHEREAS, SPR Chicago Inc. is duly organized, existing and in good
standing under the laws of the State of Illinois and has 10,000 shares of
authorized common stock, 1,000 shares of which are issued and outstanding;
WHEREAS, SPR Inc. is duly organized, existing and in good standing
under the laws of the State of Delaware and has 16,000,000 shares of authorized
capital stock, consisting of 13,000,000 shares of common stock and 3,000,000
shares of preferred stock;
WHEREAS, the Boards of Directors of the Constituent Corporations have
determined that it is in the best interests of the Constituent Corporations and
their respective shareholders that SPR Chicago Inc. be merged into SPR Inc. and
the shareholders of the Constituent Corporations have approved the proposed
merger.
NOW THEREFORE, the Constituent Corporations, in consideration of the
mutual covenants, agreements and provisions hereinafter contained do hereby
prescribe the terms and conditions of said merger and the mode of carrying the
same into effect as follows:
FIRST: SPR Chicago Inc. shall be and hereby is merged into SPR Inc.
and SPR Inc. shall be the surviving corporation. Such transaction shall
hereinafter be referred to as the
<PAGE> 2
"Merger."
SECOND: The Certificate of Incorporation of SPR Inc. as in effect on
the date of the Merger, shall continue in full force and effect as the
Certificate of Incorporation of the surviving corporation.
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of SPR Inc. common stock which shall be issued and
outstanding on the effective date of this Agreement shall remain issued and
outstanding.
(b) Subject to the provisions of paragraph (c), each share of SPR
Chicago Inc. common stock which shall be outstanding immediately prior to the
Effective Date shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted as of the Effective Date into the
right to receive 2,953.828 shares of SPR Inc. common stock.
(c) No certificates for fractional shares shall be issuable. If
any fractional shares would otherwise be delivered but for the preceding
sentence, such shares in all circumstances will be rounded up or down to the
nearest whole number of SPR Inc. common shares.
(d) Each holder of SPR Chicago Inc. common stock on the Effective
Date shall be entitled, upon the surrender to SPR Inc. of the certificate or
certificates for his shares of SPR Chicago Inc. stock for cancellation, to
receive a certificate or certificates representing the number of shares of SPR
Inc. common stock into which the shares of SPR Chicago Inc. common stock shall
have been converted in the Merger under paragraphs (b) and (c) above. Until so
presented and surrendered in exchange for a certificate or certificates of SPR
Inc. common stock, each certificate which represents issued and outstanding
shares of SPR Chicago Inc. common stock
2
<PAGE> 3
shall be deemed for all corporate purposes to evidence the ownership of the
number of shares of SPR Inc. common stock into which the shares shall have been
converted in the Merger.
FOURTH: The terms and conditions of the Merger are as follows:
(a) The By-laws of SPR Inc. as they shall exist on the effective
date of the Merger shall be and remain the bylaws of the surviving corporation
until the same shall be altered, amended or repealed as therein provided.
(b) The directors and officers of SPR Inc. shall continue in
office until the next annual meetings of stockholders and directors and until
their successors shall have been elected and qualified.
(c) The effective date of the Merger (the "Effective Date") shall
be October 30, 1996, or the earliest date thereafter that the proper
Certificate of Merger is filed in the office of the Secretary of State.
(d) Upon the Merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of SPR Chicago Inc. shall be transferred
to, vested in, and devolve upon, SPR Inc. without further act or deed and all
property, rights, and every other interest of SPR Inc. and SPR Chicago Inc.
shall be as effectively the property of SPR Inc. as they were of SPR Inc. and
SPR Chicago Inc. respectively. SPR Chicago Inc. hereby agrees from time to
time, as and when requested by SPR Inc. or by its successors or assigns, to
execute and deliver or cause to be executed and delivered all such deeds and
instruments and to take or cause to be taken such further or other action as
SPR Inc. may deem necessary or desirable in order to vest in and confirm to SPR
Inc. title to and possession of any property of SPR Chicago Inc. acquired or to
be acquired by reason of or as a result of the Merger and otherwise to carry
out the interest and
3
<PAGE> 4
purposes hereof and the proper officers and directors of SPR Chicago Inc. and
the proper officers and directors of SPR Inc. are fully authorized in the name
of SPR Chicago Inc. or otherwise to take any and all such action.
FIFTH: The Constituent Corporations hereby represent and warrant as
follows:
(a) Authority; Enforceability. The execution, delivery and
performance of this Agreement, and the consummation of transactions
contemplated herein, have been duly and validly authorized by all necessary
corporate action by each of the Constituent Corporations. This Agreement
represents the legal, valid and binding obligation of each of the Constituent
Corporations and is enforceable against each of them in accordance with its
terms except, in all cases, as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
(b) No Violation. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein,
nor compliance with any of the provisions hereof will (i) violate or conflict
or result in a breach of any provision of each respective Constituent
Corporation's Articles of Incorporation or By-Laws, (ii) constitute or result
in the breach of, or default under, any material note, mortgage, indenture,
license, agreement, lease, security or other material instrument or obligation
to which each Constituent Corporation is a party or by which either of them or
any of their respective properties may be subject or (iii) result in a
violation of any statute or governmental regulation, or any judgment or decree
of any court or governmental authority, to which either of the Constituent
Corporations is subject.
4
<PAGE> 5
SIXTH: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one instrument.
SEVENTH: Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be amended or terminated and abandoned by
the Board of Directors of any Constituent Corporation at any time prior to the
date of filing the Certificate of Merger with the Secretary of State, provided
that an amendment made subsequent to the adoption of the Agreement by the
stockholders of any Constituent Corporation shall not (1) alter or change the
amount or kind of shares to be received in exchange for or on conversion of all
or any of the shares of such Constituent Corporation, (2) alter or change any
term of the Certificate of Incorporation of SPR, Inc. to be effected by the
Merger, or (3) alter or change any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the holders of
any shares of common stock of such Constituent Corporation.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors have caused these presents to be executed by the President
and Secretary of each party hereto as the respective act, deed and agreement of
each of said corporations, on this 30th day of October, 1996.
SPR INC.
By: /s/ Robert M. Figliulo
---------------------------
Robert M. Figliulo
Its: President
By: /s/ David A. Figliulo
----------------------------
David A. Figliulo
Its: Secretary
SPR CHICAGO INC.
By: /s/ Robert M. Figliulo
-----------------------------
Robert M. Figliulo
Its: President
By: /s/ David A. Figliulo
-----------------------------
David A. Figliulo
Its: Secretary
6
<PAGE> 1
EXHIBIT 2.2
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated this 31st day of October, 1996, pursuant to
Section 252(c) of the General Corporation Law of Delaware, between Systems and
Programming Resources, Inc., an Illinois corporation ("Systems, Inc."),
Consulting Acquisition, Inc., an Illinois corporation ("Data Flex"), and SPR
Inc., a Delaware corporation, which corporations collectively are referred to
herein as the "Constituent Corporations."
WITNESSETH that:
WHEREAS, the Constituent Corporations desire to merge into a single
corporation;
WHEREAS, Systems, Inc. is duly organized, existing and in good
standing under the laws of the State of Illinois and has 800,000 shares of
authorized common stock, 388,000 shares of which are issued and outstanding;
WHEREAS, Data Flex is duly organized, existing and in good standing
under the laws of the State of Illinois and has 3,000,000 shares of authorized
common stock, 10,000 shares of which are issued and outstanding;
WHEREAS, SPR Inc. is duly organized, existing and in good standing
under the laws of the State of Delaware and has 16,000,000 shares of authorized
capital stock, consisting of 13,000,000 shares of common stock and 3,000,000
shares of preferred stock;
WHEREAS, the Boards of Directors of the Constituent Corporations have
determined that it is in the best interests of the Constituent Corporations and
their respective shareholders that Systems, Inc. and Data Flex be merged into
SPR Inc. and the respective shareholders of the Constituent Corporations have
approved the proposed merger.
NOW THEREFORE, the Constituent Corporations, in consideration of the
mutual covenants, agreements and provisions hereinafter contained do hereby
prescribe the terms and conditions of said merger and the mode of carrying the
same into effect as follows:
FIRST: Systems, Inc. and Data Flex shall be and hereby are merged
into SPR Inc. and SPR Inc. shall be the surviving corporation. Such
transaction shall hereinafter be referred to as the "Merger."
<PAGE> 2
SECOND: The Certificate of Incorporation of SPR Inc. as in effect on
the date of the Merger shall continue in full force and effect as the
Certificate of Incorporation of the surviving corporation.
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of Systems, Inc. common stock issued and held in
treasury of Systems, Inc. immediately prior to the Effective Date shall be
canceled and retired, and no shares or other securities of SPR Inc. shall be
issuable with respect thereto.
(b) Each share of SPR Inc. common stock which shall be issued and
outstanding on the effective date of this Agreement shall remain issued and
outstanding.
(c) Subject to the provisions of paragraph (e), each share of
Systems, Inc. common stock which shall be outstanding immediately prior to the
Effective Date shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted as of the Effective Date into the
right to receive 3.81591 shares of SPR Inc. common stock.
(d) Subject to the provisions of paragraph (e), each share of Data
Flex common stock which shall be outstanding immediately prior to the Effective
Date shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted as of the Effective Date into the right to receive
14.1391 shares of SPR Inc. common stock.
(e) No certificates for fractional shares shall be issuable. If
any fractional shares would otherwise be delivered but for the preceding
sentence, such shares in all circumstances will be rounded up or down to the
nearest whole number of SPR Inc. common shares.
(f) Each holder of Systems, Inc. common stock and each holder of
Data Flex common stock on the Effective Date shall be entitled, upon the
surrender to SPR Inc. of the certificate or certificates for his shares of
Systems, Inc. or Data Flex stock for cancellation, to receive a certificate or
certificates representing the number of shares of SPR Inc. common stock
2
<PAGE> 3
into which the shares of Systems, Inc. or Data Flex common stock shall have
been converted in the Merger. Until so presented and surrendered in exchange
for a certificate or certificates of SPR Inc. common stock, each certificate
which represents issued and outstanding shares of Systems, Inc. or Data Flex
common stock shall be deemed for all corporate purposes to evidence the
ownership of the number of shares of SPR Inc. common stock into which the
shares shall have been converted in the Merger.
FOURTH: The terms and conditions of the Merger are as follows:
(a) The By-laws of SPR Inc. as they shall exist on the effective
date of the Merger shall be and remain the bylaws of the surviving corporation
until the same shall be altered, amended or repealed as therein provided.
(b) The directors and officers of SPR Inc. shall continue in
office until the next annual meetings of stockholders and directors and until
their successors shall have been elected and qualified.
(c) The effective date of the Merger (the "Effective Date") shall
be October 31, 1996, or the earliest date thereafter that the proper
Certificate of Merger is filed in the office of the Secretary of State.
(d) Upon the Merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of Systems, Inc. and Data Flex shall be
transferred to, vested in, and devolve upon, SPR Inc. without further act or
deed and all property, rights, and every other interest of SPR Inc. and
Systems, Inc. and Data Flex shall be as effectively the property of SPR Inc. as
they were of SPR Inc. and Systems, Inc. and Data Flex respectively. Systems,
Inc. and Data Flex hereby agree from time to time, as and when requested by SPR
Inc. or by its successors or assigns, to execute and deliver or cause to be
executed and delivered all such deeds and instruments and to take or cause to
be taken such further or other action as SPR Inc. may deem necessary or
desirable in order to vest in and confirm to SPR Inc. title to and possession
of any property of Systems, Inc. and Data Flex acquired or to be acquired by
reason of or as a result of the Merger
3
<PAGE> 4
herein provided for and otherwise to carry out the interest and purposes hereof
and the proper officers and directors of Systems, Inc. and Data Flex and the
proper officers and directors of SPR Inc. are fully authorized in the name of
Systems, Inc. and Data Flex or otherwise to take any and all such action.
FIFTH: The Constituent Corporations hereby represent and warrant as
follows:
(a) Authority; Enforceability. The execution, delivery and
performance of this Agreement, and the consummation of transactions
contemplated herein, have been duly and validly authorized by all necessary
corporate action by each of the Constituent Corporations. This Agreement
represents the legal, valid and binding obligation of each of the Constituent
Corporations and is enforceable against each of them in accordance with its
terms except, in all cases, as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
(b) No Violation. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein,
nor compliance with any of the provisions hereof will (i) violate or conflict
or result in a breach of any provision of each respective Constituent
Corporation's Articles of Incorporation or By-Laws, (ii) constitute or result
in the breach of, or default under, any material note, mortgage, indenture,
license, agreement, lease, security or other material instrument or obligation
to which each Constituent Corporation is a party or by which any of them or any
of their respective properties may be subject or (iii) result in a violation of
any statute or governmental regulation, or any judgment or decree of any court
or governmental authority, to which any of the Constituent Corporations is
subject.
SIXTH: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one instrument.
SEVENTH: Anything herein or elsewhere to the contrary
notwithstanding, this
4
<PAGE> 5
Agreement may be amended or terminated and abandoned by the Board of Directors
of any Constituent Corporation at any time prior to the date of filing the
Certificate of Merger with the Secretary of State, provided that an amendment
made subsequent to the adoption of the Agreement by the stockholders of any
Constituent Corporation shall not (1) alter or change the amount or kind of
shares to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (2)
alter or change any term of the Certificate of Incorporation of SPR Inc. to be
effected by the Merger, or (3) alter or change any of the terms and conditions
of the Agreement if such alteration or change would adversely affect the
holders of any shares of common stock of such Constituent Corporation.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors have caused these presents to be executed by the President
and Secretary of each party hereto as the respective act, deed and agreement of
each of said corporations, on this 31st day of October, 1996.
SPR INC.
By: /s/ Robert M. Figliulo
----------------------------
Robert M. Figliulo
Its: President
By: /s/ David A Figliulo
-------------------------------
David A Figliulo
Its: Secretary
CONSULTING ACQUISITION, INC. SYSTEMS AND PROGRAMMING
RESOURCES, INC.
By: /s/ Eugene Figliulo By: /s/ James Figliulo
-------------------- ----------------------
Eugene Figliulo James Figliulo
Its: President Its: President
By: /s/ James Figliulo By: /s/ James Figliulo
---------------------- -----------------------
James Figliulo James Figliulo
Its: Secretary Its: Secretary
6
<PAGE> 1
EXHIBIT 2.3
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated this 31st day of October, 1996, pursuant to
Section 252(c) of the General Corporation Law of Delaware, between Systems &
Programming Resources of Tulsa, Inc., an Oklahoma corporation ("SPR Tulsa"),
and SPR Inc., a Delaware corporation, which corporations collectively are
referred to herein as the "Constituent Corporations."
WITNESSETH that:
WHEREAS, the Constituent Corporations desire to merge into a single
corporation;
WHEREAS, SPR Tulsa is duly organized, existing and in good standing
under the laws of the State of Oklahoma and has 50,000 shares of authorized
common stock, 1,000 shares of which are issued and outstanding;
WHEREAS, SPR Inc. is duly organized, existing and in good standing
under the laws of the State of Delaware and has 16,000,000 shares of authorized
capital stock, consisting of 13,000,000 shares of common stock and 3,000,000
shares of preferred stock;
WHEREAS, the Boards of Directors of the Constituent Corporations have
determined that it is in the best interests of the Constituent Corporations and
their respective shareholders that SPR Tulsa be merged into SPR Inc. and the
shareholders of the Constituent Corporations have approved the proposed merger.
NOW THEREFORE, the Constituent Corporations, in consideration of the
mutual covenants, agreements and provisions hereinafter contained do hereby
prescribe the terms and conditions of said merger and the mode of carrying the
same into effect as follows:
FIRST: SPR Tulsa shall be and hereby is merged into SPR Inc. and SPR
Inc. shall be the surviving corporation. Such transaction shall hereinafter be
referred to as the "Merger."
SECOND: The Certificate of Incorporation of the surviving corporation
as in effect on the date of the Merger shall continue in full force and effect
as the Certificate of Incorporation of the surviving corporation.
<PAGE> 2
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of SPR Inc. common stock which shall be issued and
outstanding on the effective date of this Agreement shall remain issued and
outstanding.
(b) Subject to the provisions of paragraph (c), each share of SPR
Tulsa common stock which shall be outstanding immediately prior to the Effective
Date shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted as of the Effective Date into the right to receive
1,295.142 shares of SPR Inc. common stock.
(c) No certificates for fractional shares shall be issuable. If
any fractional shares would otherwise be delivered but for the preceding
sentence, such shares in all circumstances will be rounded up or down to the
nearest whole number of SPR Inc. common shares.
(d) Each holder of SPR Tulsa common stock on the Effective Date
shall be entitled, upon the surrender to SPR Inc. of the certificate or
certificates for his shares of SPR Tulsa stock for cancellation, to receive a
certificate or certificates representing the number of shares of SPR Inc. common
stock into which the shares of SPR Tulsa common stock shall have been converted
in the Merger under paragraphs (b) and (c) above. Until so presented and
surrendered in exchange for a certificate or certificates of SPR Inc. common
stock, each certificate which represents issued and outstanding shares of SPR
Tulsa common stock shall be deemed for all corporate purposes to evidence the
ownership of the number of shares of SPR Inc. common stock into which the shares
of SPR Tulsa shall have been converted in the Merger.
FOURTH: The terms and conditions of the Merger are as follows:
(a) The By-laws of SPR Inc. as they shall exist on the Effective
Date of the Merger shall be and remain the bylaws of SPR Inc. until the same
shall be altered, amended or repealed as therein provided.
2
<PAGE> 3
(b) The directors and officers of SPR Inc. shall continue in
office until the next annual meetings of stockholders and directors and until
their successors shall have been elected and qualified.
(c) The effective date of the Merger (the "Effective Date") shall
be October 31, 1996, or the earliest date thereafter that the proper
Certificate of Merger is filed in the office of the Secretary of State of
Delaware.
(d) Upon the Merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of SPR Tulsa shall be transferred to,
vested in, and devolve upon, SPR Inc. without further act or deed and all
property, rights, and every other interest of SPR Inc. and SPR Tulsa shall be
as effectively the property of SPR Inc. as they were of SPR Inc. and SPR Tulsa
respectively. SPR Tulsa hereby agrees from time to time, as and when requested
by SPR Inc. or by its successors or assigns, to execute and deliver or cause
to be executed and delivered all such deeds and instruments and to take or
cause to be taken such further or other action as SPR Inc. may deem necessary
or desirable in order to vest in and confirm to SPR Inc. title to and
possession of any property of SPR Tulsa acquired or to be acquired by reason of
or as a result of the Merger herein provided for and otherwise to carry out the
interest and purposes hereof and the proper officers and directors of SPR Tulsa
and the proper officers and directors of SPR Inc. are fully authorized in the
name of SPR Tulsa or otherwise to take any and all such action.
FIFTH: The Constituent Corporations hereby represent and warrant as
follows:
(a) Authority; Enforceability. The execution, delivery and
performance of this Agreement, and the consummation of transactions
contemplated herein, have been duly and validly authorized by all necessary
corporate action by each of the Constituent Corporations. This Agreement
represents the legal, valid and binding obligation of each of the Constituent
Corporations and is enforceable against each of them in accordance with its
terms except, in all
3
<PAGE> 4
cases, as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(b) No Violation. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein,
nor compliance with any of the provisions hereof will (i) violate or conflict
or result in a breach of any provision of each respective Constituent
Corporation's Articles of Incorporation or By-Laws, (ii) constitute or result
in the breach of, or default under, any material note, mortgage, indenture,
license, agreement, lease, security or other material instrument or obligation
to which each Constituent Corporation is a party or by which either of them or
any of their respective properties may be subject or (iii) result in a
violation of any statute or governmental regulation, or any judgment or decree
of any court or governmental authority, to which either of the Constituent
Corporations is subject.
SIXTH: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one instrument.
SEVENTH: Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be amended or terminated and abandoned by
the Board of Directors of any Constituent Corporation at any time prior to the
date of filing the Certificate of Merger with the Secretary of State, provided
that an amendment made subsequent to the adoption of the Agreement by the
stockholders of any Constituent Corporation shall not (1) alter or change the
amount or kind of shares to be received in exchange for or on conversion of all
or any of the shares of such Constituent Corporation, (2) alter or change any
term of the Certificate of Incorporation of SPR Inc. to be effected by the
Merger, or (3) alter or change any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the holders of
any Shares of common stock of such Constituent Corporation.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors have caused these presents to be executed by the President
and Secretary of each party hereto as the respective act, deed and agreement of
each of said corporations, on this 31st day of October, 1996.
SPR INC.
By: /s/ Robert M. Figliulo
------------------------------------
Robert M. Figliulo
Its: President
By: /s/ David A. Figliulo
-------------------------------------
David A. Figliulo
Its: Secretary
SYSTEMS & PROGRAMMING RESOURCES
OF TULSA, INC.
By: /s/ Michael J. Fletcher
-------------------------------------
Michael J. Fletcher
Its: President
By: /s/ Rene M. Potter
---------------------------------------
Rene M. Potter
Its: Secretary
5
<PAGE> 1
EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
AGREEMENT OF MERGER, dated this 31st day of October, 1996, pursuant to
Section 252(c) of the General Corporation Law of Delaware, between
SPR-Wisconsin, Inc., a Wisconsin corporation, and SPR Inc., a Delaware
corporation, which corporations collectively are referred to herein as the
"Constituent Corporations."
WITNESSETH that:
WHEREAS, the Constituent Corporations desire to merge into a single
corporation;
WHEREAS, SPR-Wisconsin, Inc. is duly organized, existing and in good
standing under the laws of the State of Wisconsin and has 5,000 shares of
authorized common stock, 1,000 shares of which are issued and outstanding;
WHEREAS, SPR Inc. is duly organized, existing and in good standing
under the laws of the State of Delaware and has 16,000,000 shares of authorized
capital stock, consisting of 13,000,000 shares of common stock and 3,000,000
shares of preferred stock;
WHEREAS, the Boards of Directors of the Constituent Corporations have
determined that it is in the best interests of the Constituent Corporations and
their respective shareholders that SPR-Wisconsin, Inc. be merged into SPR Inc.
and the shareholders of the Constituent Corporations have approved the proposed
merger.
NOW THEREFORE, the Constituent Corporations, in consideration of the
mutual covenants, agreements and provisions hereinafter contained do hereby
prescribe the terms and conditions of said merger and the mode of carrying the
same into effect as follows:
FIRST: SPR-Wisconsin, Inc. shall be and hereby is merged into SPR
Inc. and SPR Inc. shall be the surviving corporation. Such transaction shall
hereinafter be referred to as the "Merger."
SECOND: The Certificate of Incorporation of SPR Inc. as in effect on
the date of the Merger, shall continue in full force and effect as the
Certificate of Incorporation of the surviving corporation.
<PAGE> 2
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of common stock of the surviving corporation, which
shall be issued and outstanding on the effective date of this Agreement, shall
remain issued and outstanding.
(b) Subject to the provisions of paragraph (c), each share of
SPR-Wisconsin, Inc. common stock which shall be outstanding immediately prior
to the Effective Date shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted as of the Effective Date into the
right to receive 462.197 shares of SPR Inc. common stock.
(c) No certificates for fractional shares shall be issuable. If
any fractional shares would otherwise be delivered but for the preceding
sentence, such shares in all circumstances will be rounded up or down to the
nearest whole number of SPR Inc. common shares.
(d) Each holder of SPR-Wisconsin Inc. common stock on the
Effective Date shall be entitled, upon the surrender to SPR Inc. of the
certificate or certificates for his shares of SPR-Wisconsin Inc. stock for
cancellation, to receive a certificate or certificates representing the number
of shares of SPR Inc. common stock into which the shares of SPR-Wisconsin Inc.
common stock shall have been converted in the Merger under paragraphs (b) and
(c) above. Until so presented and surrendered in exchange for a certificate or
certificates of SPR Inc. common stock, each certificate which represents issued
and outstanding shares of SPR-Wisconsin Inc. common stock shall be deemed for
all corporate purposes to evidence the ownership of the number of shares of SPR
Inc. common stock into which the shares shall have been converted in the
Merger.
FOURTH: The terms and conditions of the Merger are as follows:
(a) The By-laws of SPR Inc. as they shall exist on the Effective
Date of the Merger shall be and remain the bylaws of SPR Inc. until the same
shall be altered, amended or repealed
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<PAGE> 3
as therein provided.
(b) The directors and officers of SPR Inc. shall continue in
office until the next annual meetings of stockholders and directors and until
their successors shall have been elected and qualified.
(c) The effective date of the Merger (the "Effective Date") shall
be October 31, 1996, or the earliest date thereafter that the proper
Certificate of Merger is filed in the office of the Secretary of State of
Delaware and the Department of Financial Institutions of Wisconsin.
(d) Upon the Merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of SPR-Wisconsin shall be transferred to,
vested in, and devolve upon, SPR Inc. without further act or deed and all
property, rights, and every other interest of SPR Inc. and SPR-Wisconsin shall
be as effectively the property of SPR Inc. as they were of SPR Inc. and
SPR-Wisconsin respectively. SPR-Wisconsin hereby agrees from time to time, as
and when requested by SPR Inc. or by its successors or assigns, to execute and
deliver or cause to be executed and delivered all such deeds and instruments
and to take or cause to be taken such further or other action as SPR Inc. may
deem necessary or desirable in order to vest in and confirm to SPR Inc. title
to and possession of any property of SPR-Wisconsin acquired or to be acquired
by reason of or as a result of the Merger herein provided for and otherwise to
carry out the interest and purposes hereof and the proper officers and
directors of SPR-Wisconsin and the proper officers and directors of SPR Inc.
are fully authorized in the name of SPR-Wisconsin or otherwise to take any and
all such action.
FIFTH: The Constituent Corporations hereby represent and warrant as
follows:
(a) Authority; Enforceability. The execution, delivery and
performance of this Agreement, and the consummation of transactions
contemplated herein, have been duly and validly authorized by all necessary
corporate action by each of the Constituent Corporations.
-3-
<PAGE> 4
This Agreement represents the legal, valid and binding obligation of each of
the Constituent Corporations and is enforceable against each of them in
accordance with its terms except, in all cases, as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(b) No Violation. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated herein,
nor compliance with any of the provisions hereof will (i) violate or conflict
or result in a breach of any provision of each respective Constituent
Corporation's Articles of Incorporation or By-Laws, (ii) constitute or result
in the breach of, or default under, any material note, mortgage, indenture,
license, agreement, lease, security or other material instrument or obligation
to which each Constituent Corporation is a party or by which either of them or
any of their respective properties may be subject or (iii) result in a
violation of any statute or governmental regulation, or any judgment or decree
of any court or governmental authority, to which either of the Constituent
Corporations is subject.
SIXTH: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one instrument.
SEVENTH: Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be amended or terminated and abandoned by
the Board of Directors of any Constituent Corporation at any time prior to the
date of filing the Articles of Merger and Certificate of Merger with the
Department of Financial Institutions and Secretary of State, provided that an
amendment made subsequent to the adoption of the Agreement by the stockholders
of any Constituent Corporation shall not (1) alter or change the amount or kind
of shares to be received in exchange for or on conversion of all or any of the
shares of such Constituent Corporation, (2) alter or change any term of the
Certificate of Incorporation of SPR
-4-
<PAGE> 5
Inc. to be effected by the merger, or (3) alter or change any of the terms and
conditions of the Agreement if such alteration or change would adversely affect
the holders of any shares of common stock of such Constituent Corporation.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Boards of Directors have caused these presents to be executed by the President
and Secretary of each party hereto as the respective act, deed and agreement of
each of said corporations, on this 31st day of October, 1996.
SPR INC.
By: /s/ Robert M. Figliulo
--------------------------
Robert M. Figliulo
Its: President
By: /s/ David A. Figliulo
------------------------------
David A. Figliulo
Its: Secretary
SPR-WISCONSIN, INC.
By: /s/ John Figliulo
-----------------------------
John Figliulo
Its: President and Secretary
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<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
SPR INC.
FIRST: The name of the Corporation is SPR INC.
SECOND: The registered office of the Corporation in the State of Delaware
shall be located at Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of its registered agent shall be
The Corporation Trust Company.
THIRD: The Corporation shall engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: A. Authorized Shares. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is Sixteen Million
(16,000,000), consisting of Thirteen Million (13,000,000) shares of Common
Stock, $.01 par value per share (the "COMMON STOCK"), and Three Million
(3,000,000) shares of Preferred stock, $.01 par value per share (the "PREFERRED
STOCK").
B. Preferred Stock. The Board of Directors is
authorized, subject to any limitations prescribed by law, to provide for the
issuance of shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware (such certificate being
hereinafter referred to as a "PREFERRED STOCK DESIGNATION"), to establish from
time to time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof. The number
of authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock, without a vote of the holders of
the Preferred Stock, or of any series thereof, unless a vote of any such
holders is required pursuant to the terms of any Preferred Stock Designation.
C. Common Stock. Except as otherwise provided by the
General Corporation Law of the State of Delaware, by this Certificate of
Incorporation or any amendments hereto or by a Preferred Stock Designation, all
of the voting power of the Corporation shall be vested in the holders of the
Common Stock, and each holder of Common Stock shall have one (1) vote for each
share of Common Stock held by such holder on all matters voted upon by the
stockholders.
FIFTH: The name and mailing address of the sole incorporator is as follows:
Mark W. Hianik 225 West Wacker Drive
Suite 2800
Chicago, Illinois 60606-1229
<PAGE> 2
SIXTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
and empowered, in the manner provided in the By-Laws of the Corporation, to
make, alter, amend and repeal the By-Laws of the Corporation in any respect not
inconsistent with the laws of the State of Delaware or with this Certificate of
Incorporation.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such
powers and do all such acts as may be done by the Corporation, subject,
nevertheless, to the provisions of the laws of the State of Delaware, this
Certificate of Incorporation and the By-Laws of the Corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them, and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
Section 291 of Title 8 of the Delaware Code, or on the application of trustees
in dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of Section 279 of Title 8 of the Delaware Code, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: The books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
the By-Laws of the Corporation. Election of directors need not be by ballot
unless the By-Laws of the Corporation shall so provide. Meetings of
stockholders may be held within or outside of the State of Delaware, as the
By-Laws of the Corporation may provide.
NINTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 3
If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of directors shall be eliminated or limited to the full
extent authorized by the General Corporation Law of the State of Delaware, as
so amended.
Any repeal or modification of this Article shall not adversely affect
any right or protection of a director of the Corporation existing at the time
of such repeal or modification.
TENTH: A. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, the number
of directors shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Whole Board.
For purposes of this Certificate of Incorporation, the term "WHOLE BOARD" shall
mean the total number of authorized directors whether or not there exist any
vacancies in previously authorized directorships.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall, unless otherwise
provided by law or by resolution of the Board of Directors, be filled only by a
majority vote of the directors then in office, though less than a quorum, and
directors so chosen shall hold office until the next annual meeting of
stockholders and until their successors shall be duly elected and qualified.
No decrease in the authorized number of directors shall shorten the term of any
incumbent director.
C. Advance notice of stockholder nominations for the
election of directors and of business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the By-laws of the Corporation.
D. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least sixty-six percent (66%) of
the voting power of all of the then-outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
ELEVENTH: Indemnification of Directors and Officers.
A. Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "PROCEEDING"), by reason of the fact that he or
she is or was a director or an officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with
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<PAGE> 4
respect to an employee benefit plan (hereinafter an "INDEMNITEE"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than such law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided, however, that,
except as provided in Section C of this ARTICLE ELEVENTH with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
B. Right to Advancement of Expenses. The right to
indemnification conferred in Section A of this ARTICLE ELEVENTH shall include
the right to be paid by the Corporation the expenses (including attorneys'
fees) incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "ADVANCEMENT OF EXPENSES"); provided, however,
that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "UNDERTAKING"), by or on behalf of such indemnitee, to repay
all amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "FINAL
ADJUDICATION") that such indemnitee is not entitled to be indemnified for such
expenses under this Section B or otherwise. The rights to indemnification and
to the advancement of expenses conferred in Sections A and B of this ARTICLE
ELEVENTH shall be contract rights and such rights shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators.
C. Right of Indemnitee to Bring Suit. If a claim under
Section A or B of this ARTICLE ELEVENTH is not paid in full by the corporation
within sixty (60) days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In (i) any suit
brought by the indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover
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<PAGE> 5
such expenses upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the indemnitee, be a defense to such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Article ELEVENTH or
otherwise shall be on the Corporation.
D. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in this ARTICLE
ELEVENTH shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, this Certificate of Incorporation, the
Corporation's By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise.
E. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
F. Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this ARTICLE ELEVENTH with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.
TWELFTH: No amendment or repeal of Article NINTH or ELEVENTH of this
Certificate of Incorporation shall apply to or have any effect on the right of
any individual referred to in Article NINTH or ELEVENTH for or with respect to
acts or omissions of such individual occurring prior to such amendment or
repeal.
THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
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<PAGE> 6
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that the facts stated are true, and accordingly, have hereunto set
my hand and seal this 29th day of October, 1996.
__________________________________________
Mark W. Hianik
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<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
SPR INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Time of Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Notice of Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Voting Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Notice of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Business to be Transacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 8. Quorum and Adjournments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 11. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Number and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3. General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 8. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 9. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 10. Informal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 11. Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 12. Appointment and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 13. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1. Manner of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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<PAGE> 3
PAGE
<TABLE>
<S> <C>
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1. Number and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2. Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3. Other Officers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. The Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. The President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 8. The Vice-President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 9. The Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 10. The Assistant Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11. The Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12. The Assistant Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI - CERTIFICATES OF STOCK, TRANSFERS, AND RECORD DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. Form of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2. Facsimile Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Transfers of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VII - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Stock in Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. Right to Advancement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3. Right of Indemnitee to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4. Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Indemnification of Employees and Agents of the Corporation . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<PAGE> 4
BY-LAWS OF
SPR INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be in
the City of Wilmington, State of Delaware.
SECTION 2. OTHER OFFICES. The corporation may also have an
office in the City of Oak Brook, Illinois, and also offices at such other
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETING. All meetings of the stockholders
for the election of directors shall be held at such place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. TIME OF ANNUAL MEETING. Annual meetings of
stockholders shall be held on the second Wednesday in June if not a legal
holiday, and if a legal holiday, then on the next business day following, at
10:00 a.m., or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting, at
which the stockholders shall elect directors to succeed those whose terms then
expire and transact such other business as may properly be brought before the
meeting. No stockholder shall have cumulative voting rights.
SECTION 3. NOTICE OF ANNUAL MEETINGS. Written or printed notice
of the annual meeting stating the place, date and hour of the meeting shall be
given to each stockholder entitled to vote at such meeting not less than ten or
more than sixty days before the date of the meeting.
SECTION 4. VOTING LISTS. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order,
<PAGE> 5
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or if not so specified at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 5. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the certificate of incorporation, may be called by the chairman
of the board or the president.
SECTION 6. NOTICE OF SPECIAL MEETINGS. Written or printed
notice of a special meeting stating the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called, shall be given not
less than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
SECTION 7. BUSINESS TO BE TRANSACTED.
(a) Nominations of persons for election to the board of
directors of the corporation and the proposal of business to be transacted by
the stockholders may be made at an annual meeting of stockholders (i) pursuant
to the corporation's notice with respect to such meeting, (ii) by or at the
direction of the board of directors or (iii) by any stockholder of the
corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 7, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this Section 7.
(b) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to clause (iii) of
paragraph (a) of this Section 7, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation and such business must
be a proper matter for stockholder action under the General Corporation Law of
the State of Delaware. To be timely, a stockholder's notice shall be delivered
to the Secretary at the principal executive offices of the corporation not less
than sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting of stockholders; provided,
however, that if the date of the annual meeting is advanced more than thirty
(30) days prior to or delayed by more than sixty (60) days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the 90th day prior to such annual meeting and not later than
the close of business on the later of the 60th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. Such stockholder's notice shall set forth (i) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including
such person's
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<PAGE> 6
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (A) the name and address of such
stockholder, as they appear on the corporation's books, and of such beneficial
owner and (B) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
(c) Notwithstanding anything in the second sentence of
paragraph (B) of this by-law to the contrary, in the event that the number of
directors to be elected to the board of directors of the corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board of directors made by the
corporation at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this by-law
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary
at the principal executive offices of the corporation not later than the close
of business on the 10th day following the day on which such public announcement
is first made by the corporation.
(d) Only persons nominated in accordance with the
procedures set forth in this Section 7 shall be eligible to serve as directors
and only such business shall be conducted at an annual meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 7. The chair of the meeting shall have the power and
the duty to determine whether a nomination or any business proposed to be
brought before the meeting has been made in accordance with the procedures set
forth in these by-laws and, if any proposed nomination or business is not in
compliance with these by-laws to declare that such defective proposed business
or nomination shall not be presented for stockholder action at the meeting and
shall be disregarded.
(e) For purposes of this section, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or a comparable national news service or in a
document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(f) Notwithstanding the foregoing provisions of this
by-law, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to matters
set forth in this by-law. Nothing in this Section 7 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 8. QUORUM AND ADJOURNMENTS. A majority of the shares
entitled to vote, present in person and represented by proxy, shall constitute
a quorum at all meetings of the
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<PAGE> 7
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation; provided, however, that with
respect to any matter on which any class of stock is entitled to vote
separately as a class, the holders of a majority of the voting power
represented by the issued and outstanding shares of such class, present in
person and represented by proxy, shall constitute a quorum for purposes of such
matter. If, however, such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 9. VOTE REQUIRED. When a quorum is present at any
meeting, the vote of the holders of a majority of the voting power present in
person or represented by proxy shall decide any question brought before such
meeting, except for (i) the election of directors as provided for in Article
III hereof, and (ii) any question upon which, by express provision of a statute
or of the certificate of incorporation, a different vote is required in which
case such express provision shall govern and control the decision of such
question.
SECTION 10. VOTING RIGHTS. Except to the extent required by
statute or the certificate of incorporation or any amendments thereto, each
holder of Common Stock shall at every meeting of the stockholders be entitled
to one vote in person or by proxy for each share of Common Stock held by such
stockholder.
SECTION 11. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE. The number of directors
shall be established from time to time by resolution of the board. The
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article III. Each director elected shall hold office until a successor is
elected and qualified or until his earlier death, resignation or removal, as
hereinafter provided. Directors need not be stockholders.
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<PAGE> 8
SECTION 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors shall be duly elected and
qualified. If there are no directors in office, then an election of directors
may be held in the manner provided by statute.
SECTION 3. GENERAL POWERS. The business of the corporation
shall be managed by its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or these by- laws directed or required
to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. PLACE OF MEETINGS. The board of directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
SECTION 5. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without other notice than this by-law, immediately
after, and at the same place as, the annual meeting of stockholders. At least
one regular meeting shall be held in each period of two calendar months.
Regular meetings may be called by the board of directors or by any two members
of the board of directors. The board of directors may provide, by resolution,
the time and place, either within or without the State of Delaware, for the
holding of additional regular meetings without other notice than such
resolution.
SECTION 6. SPECIAL MEETINGS. Special meetings of the board may
be called by the chairman of the board or the president on three days' notice
to each director, either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of any two or more directors.
SECTION 7. QUORUM. Except as otherwise provided herein, a
quorum at any meeting of the board of directors shall consist of a majority of
the number of members of the board of directors then serving. A quorum shall
be required for any action to be taken at a meeting of the board of directors.
Except as otherwise provided in this Article, the affirmative vote of a
majority of the members of the board of directors at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
SECTION 8. RESIGNATIONS. Any director of the corporation may
resign at any time by giving written notice to the board of directors, the
chairman of the board, the president, or the secretary of the corporation.
Such resignation shall take effect at the time specified therein; and,
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<PAGE> 9
unless tendered to become effective only upon acceptance thereof, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 9. REMOVAL. At any meeting of the stockholders any
director or directors may be removed from office for cause by a majority of the
voting power entitled to vote in elections of directors.
SECTION 10. INFORMAL ACTION. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee
thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation
who is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
COMMITTEES OF DIRECTORS
SECTION 12. APPOINTMENT AND POWERS. The board of directors may,
by resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation, including a Compensation Committee and an Audit Committee. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
a committee, to act at the meeting in the place of any such absent or
disqualified member. Two (2) members of a committee must be present to
constitute a quorum for any committee meeting and the unanimous vote of all
committee members present shall be required to approve any matter presented to
a committee. Any such committee, to the extent provided in the resolution of
the board of directors, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending
the by-laws of the corporation; and, unless the resolution so provided, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
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COMPENSATION OF DIRECTORS
SECTION 13. COMPENSATION. The Compensation Committee of the
board of directors shall have the authority to fix the compensation of
directors. The directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as a
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for
attending committee meetings.
ARTICLE IV
NOTICES
SECTION 1. MANNER OF NOTICE. Whenever, under the provisions of
a statute or of the certificate of incorporation or of these by- laws, notice
is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears
on the records of the corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be deposited
in the United States mail. Notice to directors may also be given by telegram
or facsimile transmission.
SECTION 2. WAIVER. Whenever any notice is required to be given
under the provisions of a statute or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the
corporation shall be chosen by the board of directors and shall be a chairman
of the board, a president, a vice-president, a secretary and a treasurer. The
board of directors may also choose additional vice- presidents, and one or more
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
SECTION 2. ELECTION. The board of directors, at its first
meeting after each annual meeting of stockholders shall choose a chairman of
the board, a president, one or more vice-presidents, a secretary, and a
treasurer.
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SECTION 3. OTHER OFFICERS AND AGENTS. The board of directors
may appoint such other officers and agents as it shall deem necessary who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.
SECTION 4. SALARIES. The salaries of all officers and agents of
the corporation shall be fixed by the board of directors or a duly authorized
committee of the board.
SECTION 5. TERM OF OFFICE. The officers of the corporation
shall hold office until their successors are chosen and qualify. Any officer
elected or appointed by the board of directors may be removed at any time by
the affirmative vote of a majority of the directors then in office. Any
vacancy occurring in any office of the corporation shall be filled by the board
of directors.
SECTION 6. THE CHAIRMAN OF THE BOARD. The chairman of the board
shall preside at all meetings of the shareholders and of the board of
directors, and in general shall perform all duties incident to the office of
the chairman of the board and such other duties as from time to time may be
assigned to the chairman of the board by the board of directors.
SECTION 7. THE PRESIDENT. The president shall be the chief
executive officer of the corporation. The president shall have executive
authority to see that all orders and resolutions of the board of directors are
carried into effect and, subject to the control vested in the board of
directors by statute, by the certificate of incorporation or by these by-laws,
shall administer and be responsible for the overall management of the business
and affairs of the corporation. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
SECTION 8. THE VICE-PRESIDENT. In the absence of the president
or in the event of the president's inability or refusal to act, the
vice-president (or in the event there be more than one vice-president, the
executive vice-president and then the other vice-president or vice-presidents
in the order designated, or in the absence of any designation, then in the
order of their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice-presidents shall perform such other duties and
have such other powers as the chief executive officer or the board of directors
may from time to time prescribe.
SECTION 9. THE SECRETARY. The secretary shall attend all
meetings of the board of directors and all meetings of the stockholders and
record all the proceedings of the meetings of the corporation and of the board
of directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of
the board of directors, and shall perform such other duties as may be
prescribed by the board of directors or the chief
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executive officer, under whose supervision he shall be. He shall have custody
of the corporate seal of the corporation and he, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by his signature or by the signature of an
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing
by his signature.
SECTION 10. THE ASSISTANT SECRETARY. The assistant secretary, or
if there be more than one, the assistant secretaries in the order determined by
the board of directors (or if there be no such determination, then in the order
of their election), shall, in the absence of the secretary or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the secretary and shall perform such other duties and have such other powers as
the chief executive officer or the board of directors may from time to time
prescribe.
SECTION 11. THE TREASURER. The treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the board of directors, taking proper vouchers for such disbursements, and
shall render to the chairman of the board, the president and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in the sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in the case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
SECTION 12. THE ASSISTANT TREASURER. The assistant treasurer, or
if there shall be more than one, the assistant treasurers in the order
determined by the board of directors (or if there be no such determination,
then in the order of their election), shall, in the absence of the treasurer or
in the event of his inability or refusal to act, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the chief executive officer or the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFERS, AND RECORD DATES
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the board of directors, or the chairman of the board or
the president or a vice-president and the treasurer or an assistant treasurer,
or the secretary or an assistant secretary of the corporation, certifying the
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number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more than one series of any
class, the powers, designation, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, provided that, except as otherwise provided in Section 202 of the
Delaware General Corporation Law, in lieu of the foregoing requirements, there
may be set forth in full or summarized on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish without charge to each stockholder
who so requests a statement of the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
SECTION 2. FACSIMILE SIGNATURES. Where a certificate is
countersigned (1) by a transfer agent other than the corporation or its
employee, or (2) by a registrar other than the corporation or its employee, any
other signature on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The board of directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representatives, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sums
it may direct to indemnify against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
SECTION 4. TRANSFERS OF STOCK. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
SECTION 5. FIXING RECORD DATE. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect or any change, conversion or exchange of stock
or for the purpose
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of any other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.
SECTION 6. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the Delaware General Corporation Law.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the corporation's capital stock, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors, in their absolute discretion, think
proper, and the directors may modify or abolish any such reserve in the manner
in which it was created.
SECTION 2. CHECKS. All checks or demands for money and notes
of the corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the corporation,
unless otherwise provided by resolution of the board of directors, shall begin
on the first day of January in each year and end on the last day of December in
each year.
SECTION 4. SEAL. The corporate seal shall be inscribed thereon
with the name of the corporation and the words "Corporate Seal, Delaware." The
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
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SECTION 5. STOCK IN OTHER CORPORATIONS. Shares of any other
corporation which may from time to time be held by this corporation may be
represented and voted at any meeting of shareholders of such corporation by the
chairman of the board, president or vice-president, or by any proxy appointed
in writing by the chairman of the board, president or a vice-president of the
corporation, or by any other person or persons thereunto authorized by the
board of directors. Shares represented by certificates standing in the name of
the corporation may be endorsed for sale or transfer in the name of the
corporation by the chairman of the board, president or any vice-president or by
any other officer or officers thereunto authorized by the board of directors.
Shares belonging to the corporation need not stand in the name of the
corporation, but may be held for the benefit of the corporation in the
individual name of the treasurer or of any other nominee designated for that
purpose by the board of directors.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is
made a party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director or an officer of the corporation or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than such law permitted the corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as provided in Section 3
of this Article VIII with respect to proceedings to enforce rights to
indemnification, the corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the board of
directors of the corporation.
SECTION 2. RIGHT TO ADVANCEMENT OF EXPENSES. The right to
indemnification conferred in Section 1 of this Article VIII shall include the
right to be paid by the corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in
any other capacity in which
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service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
corporation of an undertaking (hereinafter an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Section 2 or otherwise.
The rights to indemnification and to the advancement of expenses conferred in
Sections 1 and 2 of this Article VIII shall be contract rights and such rights
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
SECTION 3. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under
Section 1 or 2 of this Article VIII is not paid in full by the corporation
within sixty (60) days after a written claim has been received by the
corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in
a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In (a) any suit
brought by the indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (b) in any suit brought by the
corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the corporation (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or brought by the corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article VIII or otherwise shall be on the corporation.
SECTION 4. NON-EXCLUSIVITY OF RIGHTS. The rights to
indemnification and to the advancement of expenses conferred in this Article
VIII shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, the corporation's certificate of
incorporation, by-laws, agreement, vote of stockholders or disinterested
directors or otherwise.
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SECTION 5. INSURANCE. The corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the corporation or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SECTION 6. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION. The corporation may, to the extent authorized from time to time
by the board of directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the corporation to the
fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of the
corporation.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may
be adopted by the stockholders or by the board of directors at any regular
meeting of the board of directors or of the stockholders or at any special
meeting of the board of directors or of the stockholders, if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting of the stockholders.
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EXHIBIT 5.1
[LETTERHEAD OF WILDMAN, HARROLD, ALLEN & DIXON]
November 19, 1996
SPR Inc.
2015 Spring Road
Suite 750
Oak Brook, Illinois 60521
Re: REGISTRATION OF 3,105,000 SHARES OF COMMON STOCK
$.01 PAR VALUE PER SHARE
Ladies & Gentlemen:
We have acted as counsel to SPR Inc., a Delaware corporation (the
"Company"), in connection with the preparation of a Registration Statement on
Form S-1, filed by the Company with the Securities and Exchange Commission (the
"Commission") on November 19, 1996, (the "Registration Statement"). The
Registration Statement relates to the proposed sale of up to 3,105,000 shares
of the Company's Common Stock, $.01 par value per share (the "Shares"),
pursuant to an underwriting agreement (the "Underwriting Agreement") to be
entered into among the Company, certain selling stockholders and the
underwriters as described in the Registration Statement.
We have examined such documents and corporate and other records as we
deemed necessary for the purpose of rendering this opinion, including the
Company's Certificate of Incorporation, the Company's By-Laws, the Registration
Statement pursuant to which the Shares are to be registered under the
Securities Act of 1933, as amended (the "Act"), and records of corporate
proceedings.
Based upon the foregoing, it is our opinion that upon the execution and
delivery of the Underwriting Agreement by the Company and the selling
stockholders, (i) the 1,666,666 Shares to be offered and sold by the Company,
when sold and delivered against payment as provided in the Underwriting
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable, and (ii) the 1,438,334 Shares to be offered and sold by
certain selling stockholders of the Company pursuant to the Underwriting
Agreement have been duly authorized and validly issued, and are fully paid and
non-assessable.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. We also consent to the reference to our
firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Wildman, Harrold, Allen & Dixon
<PAGE> 1
EXHIBIT 10.4
SPR INC.
COMBINED INCENTIVE AND
NON-STATUTORY STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Plan is to provide additional incentive to certain
Employees and Directors who are making and continue to make substantial
contributions to the success of the Company and its subsidiaries by providing
them with an opportunity to acquire a proprietary or ownership interest in the
Company through the grant and exercise of options to purchase shares of the
Common Stock of the Company. It is the judgment of the Board of Directors of
the Company that the acquisition of a proprietary or ownership interest in the
Company by certain Employees will increase their personal interest in its
growth and progress, thereby promoting the interests of the Company and all its
stockholders. The Company intends that the options granted pursuant to the
Plan may either qualify as "incentive stock options" within the meaning of
Section 422 of the Code, or may not qualify as incentive stock options, to the
extent provided in Sections 4.2(h) and 7.8 hereof.
ARTICLE II
DEFINITIONS
The following words and terms used herein shall have that meaning set
forth in this Article, unless a different meaning is clearly required by the
context. Whenever appropriate, words used in the singular shall be deemed to
include the plural and vice versa, and the masculine gender shall be deemed to
include the feminine gender.
2.1 BOARD shall mean the Board of Directors of the Company.
2.2 CODE shall mean the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.
2.3 COMMITTEE shall mean the Compensation Committee, if any,
appointed by the Board in accordance with the provisions of Article IV to
administer the Plan.
2.4 COMMON STOCK shall mean the common stock, $0.01 par value, of
the Company, and any other securities of the Company to the extent provided in
Article X.
2.5 COMPANY shall mean SPR INC., a Delaware corporation and any
successor to it.
<PAGE> 2
2.6 DIRECTOR shall mean a member of the Board of Directors of the
Company.
2.7 EMPLOYEE shall mean any individual employed by and receiving
compensation from the Company or any Subsidiary.
2.8 FAIR MARKET VALUE OF COMMON STOCK shall mean an amount equal
to the fair market value of the Common Stock as determined by the Board in its
judgment, or, if there is at sometime hereafter a public market for the Common
Stock, the mean of the closing bid and asked quotations for a share of Common
Stock in the over-the-counter market as of the date for which such value is
being determined, as reported by the National Association of Securities
Dealers, Inc. or, in the event that the Common Stock is listed on The Nasdaq
National Market or any exchange, the closing price on such exchange on that
date or, if there were no sales on that date, the mean of the bid and asked
prices for Common Stock on that exchange at the close of business on that date.
2.9 GRANTEE shall mean an Employee who is granted an Option by the
Board under the Plan.
2.10 INCENTIVE STOCK OPTION shall mean an option to purchase a
specific number of shares of the Common Stock granted by the Board pursuant to
Section 4.2(h) of the Plan.
2.11 NON-EMPLOYEE DIRECTOR shall mean a "Non-Employee Director" as
that term is defined in Rule 16b-3 under Section 16 of the Securities Exchange
Act of 1934, as now in effect or as hereafter amended.
2.12 NON-STATUTORY STOCK OPTION shall mean an option to purchase a
specific number of shares of the Common Stock granted by the Board pursuant to
Section 4.2(h) of the Plan.
2.13 OPTION shall mean both an Incentive Stock Option and a
Non-Statutory Stock Option.
2.14 OPTION AGREEMENT shall mean a written agreement evidencing the
right to purchase Common Stock pursuant to the terms of this Plan and the
right, if any, to receive Stock Appreciation Rights, which agreement shall be
in the form described in Article VII.
2.15 PLAN shall mean the SPR Inc. Combined Incentive and
Non-Statutory Stock Option Plan, as set forth herein, as amended from time to
time.
2.16 REFERENCE OPTION shall mean an Option with respect to which
the Company has granted a Stock Appreciation Right.
2.17 STOCK APPRECIATION RIGHT shall mean the right granted by the
Board pursuant to Article VII of the Plan as a part of the Reference Option
which right shall permit a Grantee to elect to receive cash, in lieu of the
shares subject to the Reference Option, from the Company
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<PAGE> 3
in an amount equal to the excess, if any, of the Fair Market Value per share of
the Common Stock, determined on the date the Stock Appreciation Right is
exercised, over the exercise price per share of such Reference Option.
2.18 SUBSIDIARY shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code, as that section may be
amended from time to time.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 SHARES AVAILABLE: The total number of shares of Common Stock
which are available for granting Options hereunder shall be Eight Hundred
Thousand (800,000) (subject to adjustment as provided below in Section 3.3
and Article X).
3.2 SOURCE OF SHARES: The shares of Common Stock issued upon the
exercise of an Option shall be made available, in the discretion of the Board,
either from authorized but unissued Common Stock or from any issued but not
outstanding Common Stock which has been reacquired by the Company.
3.3 EFFECT OF TERMINATION: Except as provided in Section 8.2, in
the event that any Option terminates for any reason, other than the exercise of
a Stock Appreciation Right by the Grantee (whether such Option is vested or
non-vested at the time of termination), without having been exercised in full,
the unpurchased shares of Common Stock subject to that Option shall once again
become available for the granting of Options.
ARTICLE IV
ADMINISTRATION
4.1 ADMINISTRATION: The Board may, in its sole discretion, either
retain the exclusive control and management of the operation and administration
of the Plan or may delegate such control and management to a Committee
consisting solely of two or more Non-Employee Directors of the Board. In the
event that the Board does delegate such authority to a Committee, it may also
at any time terminate that authority and resume the exclusive control and
management of the Plan. For so long as the Board retains the control and
management over the Plan, members of the Board shall not be eligible to
participate in or be granted Options or Stock Appreciation Rights either under
the Plan or any other plan maintained by the Company.
In the event that the Board appoints a Committee, (a) the Committee
must consist solely of Non-Employee Directors, (b) all vacancies occurring on
the Committee shall be filled by
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<PAGE> 4
appointment of the Board, (c) the members of the Committee shall serve at the
pleasure of the Board, (d) the Committee shall maintain written minutes of its
proceedings, and (e) a majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present or acts approved in writing by all the members shall be the acts of
the Committee.
In the event that and for so long as this Plan is controlled and
managed by a Committee, the terms and provisions of this Plan, other than the
two immediately preceding paragraphs of this Article IV and Sections 2.1 and
2.3, shall be applied by substituting the term "Committee" for "Board."
4.2 GRANT: Subject to the provisions of this Plan, the Board
shall determine (a) the Grantees, (b) the number of shares of Common Stock
subject to an Option, (c) the dates upon which Options and/or Stock
Appreciation Rights are granted, (d) the date or dates upon which an Option
and/or a Stock Appreciation Right may be exercised, (e) the manner in which an
Option and/or Stock Appreciation Right may be exercised, (f) such other terms
to which an Option and/or Stock Appreciation Right is subject (including the
manner in which it vests), (g) the form of any Option Agreements, (h) whether
the Option is an Incentive Stock Option or a Non-Statutory Stock Option, and
(i) whether the Grantee shall receive a Stock Appreciation Right.
4.3 INTERPRETATION: The Board shall interpret the Plan and from
time to time may adopt such rules and regulations for carrying out the terms
and purposes of the Plan and may take such other actions in the administration
of the Plan as it deems advisable. The interpretation and construction by the
Board of any provisions of the Plan or any Option Agreement and the
determination of any question arising under the Plan, any such rule or
regulation, or any Option Agreement shall be final and binding.
4.4 EXCULPATION: No member of the Board shall be liable for any
action or determination made in good faith with respect to the Plan.
4.5 NO GUARANTEE OF EMPLOYMENT: The grant of an Option or Stock
Appreciation Right under the Plan shall not be deemed or construed to
constitute a contract of employment between the Company (or any subsidiary) and
the Employee and shall not affect the right of the Company to terminate the
employment of the Employee.
ARTICLE V
ELIGIBILITY
Each Employee who is considered to be an administrative, managerial or
executive Employee, as determined in the sole discretion of the Board, shall be
eligible to be granted an Option and/or Stock Appreciation Right under the
Plan. Each Director, as determined in the sole
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discretion of the Board, shall be eligible to be granted a Non-Statutory Stock
Option and/or Stock Appreciation right under the Plan. Anything to the
contrary notwithstanding, no Incentive Stock Option shall be granted to any
Director who is not an Employee, and no Incentive Stock Option shall be granted
to any Employee who, at the time the Incentive Stock Option is granted owns, or
is deemed to own pursuant to the provisions of Code Section 424(d), shares of
Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, unless the purchase price
per share is at least 110% of the Fair Market Value of Common Stock on the day
such Option is granted and such Option by its terms is not exercisable after
the date which is five years from the date such Option is granted.
ARTICLE VI
ANNUAL LIMITATION ON VALUE OF INCENTIVE STOCK OPTIONS GRANTED
For all Incentive Stock Options granted under this Plan, the aggregate
Fair Market Value of the Common Stock (determined at the time the Incentive
Stock Option is granted) with respect to which Incentive Stock Options are
exercisable for the first time in any calendar year (together with options
granted under all other incentive stock option plans of the Company and any
parent corporation (as defined in Code Section 424(e)) or Subsidiary) shall not
exceed One Hundred Thousand Dollars ($100,000) for any one Grantee. No such
annual limitation shall apply to the grant of Non-Statutory Stock Options
hereunder.
ARTICLE VII
TERMS AND CONDITIONS OF OPTIONS AND STOCK APPRECIATION RIGHTS
All Options and Stock Appreciation Rights granted under the Plan shall
be evidenced by an Option Agreement which shall be in such form as the Board
may from time to time approve and shall be executed on behalf of the Company by
one or more of the officers of the Company. Each such Option Agreement shall
be subject to the terms and conditions of the Plan as well as such other terms
and conditions as the Board may deem desirable and shall provide in substance
as follows:
7.1 NUMBER OF SHARES AND OPTION PRICE: Each Option Agreement
shall specify the number of shares of Common Stock covered by such Option and
the purchase price per share. The purchase price per share of Common Stock
subject to a Non-Statutory Stock Option and the base value of a Stock
Appreciation Right shall not be less than 85% of the Fair Market Value of a
share of Common Stock on the date such Non- Statutory Stock Option or Stock
Appreciation Right is granted. The purchase price per share of Common Stock
subject to an Incentive Stock Option shall not be less than the Fair Market
Value of a share of Common Stock on the date
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such Incentive Stock Option is granted. The number shares and the purchase
price per share shall be subject to adjustment as provided in Article X.
7.2 NON-TRANSFERABILITY OF OPTIONS: Each Option Agreement shall
provide that the Option and Stock Appreciation Rights, if any, granted therein
shall be non-transferable and non-assignable by the Grantee other than upon
death as provided in Section 7.5 below and that during the lifetime of the
Grantee such Option and Stock Appreciation Rights may be exercised only by the
Grantee or such Grantee's legal representative.
7.3 EXERCISE OF OPTIONS: Each Option Agreement shall set forth
the period during which it may be exercised; provided, however, subject to
Article V, Incentive Stock Options granted pursuant to this Plan shall expire
not more than 10 years from the date that the Incentive Stock Option is
granted.
7.4 EXERCISE OF OPTIONS UPON TERMINATION OF EMPLOYMENT: Except as
otherwise specifically determined by the Board, the Option Agreement shall
provide that when a Grantee ceases to be an Employee, any unexercised vested
Option or any non-vested Option granted to that Grantee shall terminate
immediately; provided, however, that (a) if the cessation of employment is due
to death, any unexercised vested Option (but not any non-vested Option) may be
exercised in the manner hereinafter described in Section 7.5 below or (b) if
the cessation of employment is for any reason other than death, any unexercised
vested Option (but not any non-vested Option) may be exercised until three
months after cessation (or 12 months if the Grantee is disabled within the
meaning of Section 105(d)(4) of the Code), but not later than the date that
such Option would otherwise terminate under the Plan.
In the event that the Grantee dies within such time period, any
unexercised vested Option which has not terminated prior to death may be
exercised in the manner hereinafter provided in Section 7.5 below.
A transfer of employment from the Company to a Subsidiary or vice
versa or between two such Subsidiaries shall not be deemed a termination of
employment.
7.5 EXERCISE OF OPTIONS UPON DEATH: Except as otherwise
determined by the Board, the Option Agreement shall provide that upon the death
of a Grantee while still an Employee, or within three months after the
cessation of employment for any reason other than death (or 12 months in the
case of a disabled Grantee), any unexercised vested Option (but not any
non-vested Option) may be exercised by the Grantee's estate, the person
designated in the Grantee's last will and testament or his or her heirs at law
before the date that such Option would otherwise terminate; provided, however,
that an Option may be exercised only if and to the extent that the Grantee was
entitled to exercise it as of the date of death.
7.6 METHOD OF EXERCISE OF OPTIONS: Each Option Agreement shall
provide that Options shall be exercised by delivering a written notice of
exercise to the Company. Each such notice shall state the number of shares of
Common Stock in respect of which the Option is being
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<PAGE> 7
exercised and shall be signed by the person (or persons) exercising the Option
and, in the event the Option is being exercised by any person other than the
Grantee, shall be accompanied by proof, satisfactory to counsel for the
Company, of the right of such person to exercise the Option. A certified or
cashier's check in full payment of the purchase price for the number of shares
of Common Stock specified in the notice must accompany such notice. In
addition, except to the extent provided at Section 7.9(h) below, in the event
that the Option being exercised is a Non-Statutory Stock Option, the notice
must be accompanied by a certified or cashier's check in full payment of the
aggregate amount of any federal, state or local withholding taxes determined by
the Company (the "Withholding Taxes"), if any, attributable to the transfer of
stock pursuant to the exercise of the Option.
7.7 FORFEITURE: The Option Agreement may provide for such
conditions on the right of exercise as the Board, in its sole discretion, deems
appropriate, which conditions may, without limitation, include conditions based
upon completion of a further period of continued employment, or the performance
of the Company, a subsidiary, a division thereof, or the Grantee. Without
limiting the foregoing, an Option Agreement may provide that the Board, in its
sole discretion, may terminate in whole or in part any portion of the Option
which has not yet become vested if it determines that the Grantee is not
satisfactorily performing his or her duties as an Employee.
7.8 CHARACTER OF OPTION GRANTED: Each Option Agreement shall
specifically provide whether the Option granted thereby is an Incentive Stock
Option or a Non-Statutory Stock Option: provided, however, that an Option shall
be a Non-Statutory Stock Option only if it fails to qualify as an "incentive
stock option" as defined in Section 422(b) of the Code.
7.9 PROVISIONS RELATING TO STOCK APPRECIATION RIGHTS: In the
event that the Board grants Stock Appreciation Rights to the Grantee pursuant
to Section 4.2(i) hereof, then in addition to the provisions described above,
the Option Agreement shall include the following provisions:
(a) No Stock Appreciation Right shall be exercisable
during the first six months of its term, except in the event
that the physical disability of the holder thereof occurs
prior to the expiration of such six-month period.
(b) No Stock Appreciation Right shall at any time be
exercisable with respect to the Reference Option or any
portion thereof unless (i) such Option or such portion shall
itself be exercisable at that time, and (ii) such other
conditions, if any, imposed by the Board shall have been
satisfied.
(c) No Stock Appreciation Right granted to a Grantee
shall be transferable by him other than by will or the laws of
descent and distribution, and such right shall be exercisable,
during his lifetime, only by the Grantee or his legal
representative.
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<PAGE> 8
(d) The Stock Appreciation Right shall be transferable
only when the Reference Option is transferable, and under the
same conditions.
(e) The Stock Appreciation Right shall expire no later
than the time at which the Reference Option expires.
(f) The Stock Appreciation Right may be exercised only at
such time as the market price of the stock subject to the
Reference Option exceeds the exercise price of such Reference
Option.
(g) Any exercise by an officer of the Company (as defined
for this purpose by the regulations of the Securities and
Exchange Commission) of a Stock Appreciation Right shall be
made during the period beginning in the third business day
following the date of release for publication of quarterly and
annual summary statements of sales and earnings of the Company
and its subsidiaries, and ending on the twelfth business day
following such date.
(h) Upon the exercise of a Stock Appreciation Right, the
Company shall withhold from the cash to be distributed to the
Grantee an amount equal to the aggregate amount of the
Withholding Taxes, if any, attributable to the exercise of
such Stock Appreciation Right and may, in its sole discretion,
also withhold an amount equal to the Withholding Taxes
attributable to the exercise of any Non-Statutory Stock Option
exercised by the Grantee at the same time of the exercise of
such Stock Appreciation Right, in which case such Grantee
shall not be required to tender payment of such Withholding
Taxes in order to exercise such Non-Statutory Stock Option.
7.10 ADDITIONAL TERMS: The Option Agreement may include such other
terms and conditions, not inconsistent with this Plan, as the Board in its sole
discretion shall determine.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 GRANT: The Board may grant Stock Appreciation Rights to any
Grantee at any time and from time to time during the term of the Option to
which it relates. Each Stock Appreciation Right shall be subject to terms and
conditions which are at least as restrictive as those which govern the Option
to which it relates and may, in the sole discretion of the Board, be subject to
additional restrictions.
8.2 SHARE REDUCTION: Upon the exercise of any Stock Appreciation
Right, the number of shares of Common Stock which were available for purchase
under the Reference Option shall be reduced by a corresponding number and the
Reference Option shall be cancelled
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<PAGE> 9
to that extent. Notwithstanding anything contained in Section 3.3 hereof to
the contrary, for purposes of determining the number of shares of Common Stock
available for purchase under the Plan, in the event and to the extent that a
Reference Option is cancelled as a result of the exercise of a Stock
Appreciation Right, such Reference Option shall be deemed to have been
exercised and the shares which would have been issued had the Reference Option
been exercised shall not be available for future grants under the Plan.
8.3 USE: Stock Appreciation Rights shall be used solely as a
device for the measurement and determination of the amount to be paid to the
Grantee. Stock Appreciation Rights shall not constitute or be treated as
property or as a trust fund of any kind. All amounts which are at any time
attributable to the Stock Appreciation Rights shall be and remain the sole
property of the Company and the Grantee's rights hereunder are limited to the
right to receive cash as provided in this Plan.
ARTICLE IX
EXERCISE OF OPTIONS
For all purposes the date of exercise of the Option shall be the date
on which the notice specified in Section 7.6 shall have been delivered to the
Company, but the exercise of that Option shall not be effective until the
person (or persons) exercising the Option has complied with all the provisions
of the Option Agreement governing the exercise of the Option. The Company
shall promptly deliver certificates for the shares of the Common Stock subject
to the Option, provided that the Company shall not be required, upon the
exercise of any Option, to issue or deliver any shares of Common Stock prior to
the completion of such registration or other qualification of the Common Stock
under any state or federal law, rule or regulation as the Company shall
determine to be necessary and in such event the date of delivery shall be
extended for the period necessary and further provided, that in the event that
the amount of withholding taxes attributable to the transfer of the Common
Stock cannot be determined on the date on which the Option is exercised,
whether due to the fact that the Common Stock transferred upon such exercise is
"non-transferable" by him or her, "subject to a substantial risk of forfeiture"
(as those terms are defined in Section 83 of the Code) or otherwise, the
Company shall issue and transfer the shares to the person (or persons)
exercising such Option but may require such person (or persons) to pledge the
shares to the Company as security for the payment of the applicable withholding
taxes until such time as such payment is made. No one shall be or be deemed to
be the holders of any Common Stock subject to an Option unless and until
certificates for the shares of such Common Stock are issued to that person.
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ARTICLE X
EFFECT OF CERTAIN CHANGES
10.1 ADJUSTMENTS: If there is any change in the number of shares
of Common Stock through the declaration of stock dividends or through a
recapitalization which results in stock splits or reverse stock splits, the
number of shares of Common Stock available for Options as well as the number of
such shares covered by outstanding Options, and the price per share of such
Options, shall be proportionately adjusted by the Board to reflect any increase
or decrease in the number of issued shares of Common Stock; provided, however,
that any fractional shares resulting from such adjustment shall be eliminated.
10.2 PAR VALUE: In the event of a change in the Common Stock of
the Company, as presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any such
change shall be deemed to be the Common Stock within the meaning of the Plan.
10.3 MAJOR TRANSACTIONS: In the event of any future merger,
consolidation, liquidation, or other reorganization of the Company, or any
transaction which would cause the Common Stock, if at sometime hereafter it
shall be publicly traded, to cease to be publicly traded, the Board may provide
for all outstanding options to be either amended to apply to an appropriate
number of securities of the entity resulting from such transaction (and such
entity shall thereafter be considered the Company), or for all such Options to
be cancelled immediately prior to such transaction, on such terms as it deems
equitable: provided, however, no vested Option shall be cancelled unless the
Grantee is given an opportunity to exercise such Option during a period of not
fewer than 30 days prior to such transaction.
10.4 BOARD DETERMINATION: To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive.
10.5 EFFECT: Except as hereinbefore expressly provided in this
Article X, the Grantee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made with respect to the number or price of shares of
Common Stock subject to the Option. The grant of an Option shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structures or to merge or to consolidate or to dissolve, liquidate or sell or
transfer all or part of its business or assets.
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ARTICLE XI
AMENDMENT AND TERMINATION
The Board shall have the right to amend or suspend, or terminate the
Plan at any time, provided that, to the extent required by law, unless first
approved by the stockholders of the Company, no amendment shall be made to the
Plan (except to conform the Plan and the Option Agreements thereunder to
changes in the Code or governing law) which (a) materially modifies the
eligibility requirements of Article V, (b) increases the total number of shares
of Common Stock which may be issued under the Plan, (c) changes the option
price specified in Article VII, or (d) changes the term of the Plan as set
forth in Article XIV. No amendment to the Plan shall be made by the Board that
materially changes the terms of the Plan so as to impair or adversely alter the
rights of a Grantee or other Option holder without such person's consent.
ARTICLE XII
APPLICATION OF FUNDS
Any proceeds received by the Company as a result of the exercise of
Options granted under the Plan may be used for any valid corporate purpose.
ARTICLE XIII
NOTICE
Any notice to the Company required under this Plan shall be in writing
and shall either be delivered in person or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Company at its
principal executive offices, Attention: Benefits Plan Administrator.
ARTICLE XIV
TERM OF PLAN
The Plan shall terminate 10 years from the date upon which it is
approved by the stockholders of the Company or on such earlier date as may be
determined by the Board. In any event, termination shall be deemed to be
effective as of the close of business on the day of termination. No Options
may be granted after such termination. Termination of the Plan, however, shall
not affect the rights of Grantees under Options previously granted to them, and
all unexpired Options shall continue in force and operation after termination
of the Plan until they lapse or terminate by their own terms and conditions.
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ARTICLE XV
EFFECTIVE DATE
This Plan shall be effective on the day upon which it is approved by
the stockholders of the Company.
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EXHIBIT 10.5
SPR INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. SPR INC. (the "Company") hereby establishes the SPR
Inc. Employee Stock Purchase Plan (the "Plan") to provide employees of the
Company and its subsidiaries an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions
of the Plan shall, accordingly, be construed in a manner consistent with the
requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "COMMITTEE" shall mean the Compensation Committee of
the Board.
(d) "COMMON STOCK" shall mean the Common Stock of the
Company.
(e) "COMPANY" shall mean SPR Inc., a Delaware
Corporation.
(f) "COMPENSATION" shall mean all gross earnings,
including earnings from commissions, bonuses and overtime.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean
continued employment without any interruption or termination of service as an
Employee. Continuous Status as an Employee shall not be considered interrupted
in the case of a leave of absence agreed to in writing by the Company, provided
that such leave is for a period not exceeding 90 days, or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(h) "EMPLOYEE" shall mean any person, including an
officer, whose customary employment with the Company or any subsidiary is at
least twenty (20) hours per week and more than five (5) months in any calendar
year.
(i) "ENROLLMENT DATE" shall mean the first day of each
Offering Period.
(j) "EXERCISE DATE" shall mean the last working day of
the Exercise Period.
(k) "EXERCISE PERIOD" shall mean each six month period
commencing January 1 and July 1.
<PAGE> 2
(l) "FAIR MARKET VALUE" shall mean an amount equal to the
fair market value of the Common Stock as determined by the Board in its
judgment, or, if there is at sometime hereafter a public market for the Common
Stock, the mean of the closing bid and asked quotations for a share of Common
Stock in the over-the-counter market as of the date for which such value is
being determined, as reported by the National Association of Securities
Dealers, Inc. or, in the event that the Common Stock is listed on The Nasdaq
National Market or any exchange, the closing price on such exchange on that
date or, if there were no sales on that date, the mean of the bid and asked
prices for Common Stock on that exchange at the close of business on that date.
(m) "OFFERING PERIOD" shall mean a period of six (6)
months during which Options are granted pursuant to the Plan.
(n) "OPTION" shall mean an option granted under the Plan
which entitles an Employee to purchase shares of Common Stock.
(o) "PARTICIPANT" shall mean an Employee who elects to
participate in the Plan.
(p) "PLAN" shall mean this Employee Stock Purchase Plan.
(q) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, of which not less than 80% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) Any Employee who is employed by the Company or a
Subsidiary on a given Enrollment Date shall be eligible to participate in the
Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an Option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or any Subsidiary, or (ii) which permits his or
her rights to purchase stock under all employee stock purchase plans of the
Company and its subsidiaries to accrue at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) worth of stock (determined at the fair market value
of the shares at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by
consecutive Offering Periods with a new Offering Period commencing on the first
day of each January 1 and July 1
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and ending on the last working day of such Offering Period, the first Offering
Period shall begin on _____________ and shall end on ________________. Subject
to the stockholder approval requirements of Section 22, the Committee shall
have the power to change the duration of Offering Periods with respect to
future offerings without stockholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected.
5. PARTICIPATION.
(a) An eligible Employee may become a Participant in the
Plan by completing a payroll deduction authorization form and filing it with
the Company's payroll office at least five (5) business days prior to the
applicable Enrollment Date, unless a later time for filing the subscription
agreement is set by the Committee for all eligible Employees with respect to a
given Offering Period.
(b) Payroll deductions for a Participant shall commence
on the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is applicable,
unless sooner terminated as provided in Section 10.
6. PAYROLL DEDUCTIONS.
(a) At the time a Participant files his or her payroll
deduction authorization form, he or she shall elect to have payroll deductions
made on each payday during the Offering Period, subject to such dollar or
percentage limitations during an Offering Period as the Company shall determine
prior to such Offering Period as described in the applicable payroll deduction
authorization form, provided, however, that the aggregate of such payroll
deductions during the Offering Period shall not exceed twenty percent (20%) of
the Participant's aggregate Compensation during said Offering Period and not be
less than Fifty Dollars ($50.00) per payroll period.
(b) All payroll deductions made for a Participant shall
be credited to his or her account under the Plan. A Participant may not make
any additional payments into such account.
(c) A Participant may discontinue participation in the
Plan as provided in Section 10 but may not decrease or increase the rate or
amount of his or her payroll deductions during an Offering Period. A
Participant may change the rate or amount of his or her payroll deductions
before the Enrollment Date for any Offering Period by completing or filing with
the Company a payroll authorization form changing the rate or amount of payroll
deductions. The change in rate or amount shall be effective with the first
full payroll period to occur during such Offering Period. Subject to the
limitations of Section 6(a), a Participant's payroll authorization form shall
remain in effect for successive Offering Periods unless revised as provided
herein or terminated as provided in Section 10.
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<PAGE> 4
(d) Notwithstanding the foregoing, to the extent
necessary to comply with Section 423(b)(3) of the Code and Section 3(b) herein,
a Participant's payroll deductions may be decreased or ended, during any
calendar year in which the total of accumulated payroll deductions equal Twenty
Thousand Dollars ($20,000). Payroll deductions shall recommence at the rate
provided in such Participant's payroll deduction authorization form at the
beginning of the first Offering Period which is scheduled to end in the
following calendar year, unless terminated by the Participant as provided in
Section 10.
7. GRANT OF OPTION. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an Option to purchase on each Exercise Date during such Offering Period
up to a number of shares of Common Stock determined by dividing such Employee's
payroll deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by eighty-five percent (85%) of
the Fair Market Value of a share of the Common Stock on the Exercise Date;
provided that in no event shall an Employee be permitted to purchase during
each Offering Period more than a number of shares determined by dividing
$20,000 by the fair market value of a share of the Common Stock on the
Enrollment Date, and provided further that such purchase shall be subject to
the limitations set forth in Section 3(b) and 12 hereof. Exercise of the
Option shall occur as provided in Section 8, unless the Participant has
withdrawn pursuant to Section 10, and shall expire on the last day of the
Offering Period.
8. EXERCISE OF OPTION. The Company will give each Participant
notice of each Exercise Date thirty (30) days prior to such Exercise Date.
Unless a Participant withdraws from the Plan as provided in Section 10 his or
her Option for the purchase of shares will be exercised automatically on the
last working day of the Offering Period, and the maximum number of full shares
subject to Option shall be purchased for such Participant at the applicable
Option price with the accumulated payroll deductions in his or her account.
Any amount remaining in the Participant's account after an Exercise Date shall
be held in the account until the next Exercise Date of the Offering Period,
unless the Offering Period has been oversubscribed or has terminated with such
Exercise Date, in which case such amount shall be refunded to the Participant.
During a Participant's lifetime, a Participant's Option to purchase shares
hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each Participant, as appropriate, of a certificate representing the Common
Stock purchased upon exercise of his or her Option.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all but not less than all
the payroll deductions credited to his or her account and not yet used to
exercise his or her Option under the Plan at any time by giving written notice
to the Company. All of the Participant's payroll deductions credited to his or
her account will be paid to such Participant promptly after receipt of notice
-4-
<PAGE> 5
of withdrawal and such Participant's Option for the Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period. If a Participant withdraws
from an Offering Period, payroll deductions will not resume at the beginning of
the succeeding Offering Period unless the Participant delivers to the Company a
new payroll deduction authorization form.
(b) Upon termination of the Participant's Continuous
Status as an Employee prior to the Exercise Date for any reason, including
retirement or death, the payroll deductions credited to such Participant's
account during the Offering Period but not yet used to exercise the Option will
be returned to such Participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and such Participant's
Option will be automatically terminated, provided however, that, in the event
of the Participant's death, the Option may be exercised by his or her
beneficiary designated under Section 14.
(c) In the event an Employee fails to remain in
Continuous Status as Employee of the Company for at least twenty (20) hours per
week during an Offering Period in which the Employee is a Participant, he or
she will be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to his or her account will be returned to such Participant
and such Participant's Option terminated.
(d) A Participant's withdrawal from an Offering Period
will not have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in succeeding
Offering Periods which commence after the termination of the Offering Period
from which the Participant withdraws.
11. INTEREST. No interest shall accrue on the payroll deductions
of a Participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be Five
Hundred Thousand (500,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18. If on a given
Exercise Date the number of shares with respect to which Options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The Participant will have no interest or voting right
in shares covered by his Option until such Option has been exercised and the
applicable shares of Common Stock are issued to him or her.
(c) Shares to be delivered to a Participant under the
Plan will be registered in the name of the Participant or in the name of the
Participant and his or her spouse.
-5-
<PAGE> 6
13. ADMINISTRATION. The Plan shall be administered by the
Committee. The administration, interpretation or application of the Committee
shall be final, conclusive and binding upon all Participants. Notwithstanding
the provisions of Subsection (a) of this Section 13, in the event that Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor provision ("Rule 16b-3") provides specific
requirements for the Administrators of plans of this type, the Plan shall only
be administered by such body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan shall be afforded to any
person other than a "Non-Employee Director" as that term is defined in Rule
16b-3.
14. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan if such Participant dies after an Exercise
Date on which the Option is exercised but before receiving his or her Common
Stock and cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account under the
Plan or exercise the Option on behalf of the Participant in the event of such
Participant's death prior to exercise of the Option.
(b) Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of the death of a
Participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the Participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such share and/or cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other persons as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account, nor any rights regarding an Option under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than
by will, the laws of descent and distribution or as provided in Section 14
hereof) by the Participant. Any such attempt at assignment, transfer, pledge
or other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds from an Offering Period in accordance
with Section 10. An Option may be exercised only by the Participant during his
or her lifetime, or, in the event of the Participant's death, by his or her
estate or the person who acquires the right to exercise such Option by bequest
or inheritance, pursuant to Sections 10(b) and 14.
16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
-6-
<PAGE> 7
17. REPORTS. Individual accounts will be maintained for each
Participant in the Plan. Statements of account will be given to participating
Employees as soon as practical following the Exercise Date, which statements
will set forth the amounts of payroll deductions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number of shares of Common Stock with respect to which Options may be granted,
the aggregate number of shares of Common Stock subject to each outstanding
Option, and the Option Price per share of each Option may be appropriately
adjusted as the Committee may determine for any increase or decrease in the
number of shares of issued Common Stock resulting from a subdivision or
consolidation of shares, whether through reorganization, recapitalization,
stock split-up, stock distribution or combination of shares, or the payment of
a share dividend or other increase or decrease in the number of such shares
outstanding effected without receipt of consideration by the Company.
Adjustments under this Section 18 shall be made according to the sole
discretion of the Committee, and its decision shall be binding and conclusive.
19. DISSOLUTION, MERGER AND CONSOLIDATION. Upon the dissolution
or liquidation of the Company, or upon a merger or consolidation of the Company
in which the Company is not the surviving corporation, each Option granted
hereunder shall expire as of the effective date of such transaction; provided,
however, that the Committee shall give at least 30 days' prior written notice
of such event to each Participant during which time he or she shall have a
right to exercise his or her wholly or partially unexercised Option and,
subject to prior expiration pursuant to Section 6(b) or (c), each Option shall
be exercisable after receipt of such written notice and prior to the effective
date of such transaction.
20. AMENDMENT OR TERMINATION. The Board may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 18, no
such termination can affect Options previously granted, provided that an
Offering Period may be terminated by the Board on any Exercise Date if the
Board determines that the termination of the Plan is in the best interests of
the Company and its stockholders. Except as provided in Section 18, no
amendment or termination shall be made which would impair the rights of any
Participant under any outstanding Option, without his or her consent. In
addition to the extent necessary to comply with Rule 16b-3 or under Section 423
of the Code (or any other successor rule or provision or any other applicable
law or regulation), the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required.
21. NOTICES. Every direction, revocation or notice authorized or
required by the Plan shall be deemed delivered (a) to the Company on the date
it is personally delivered to the Secretary of the Company at its principal
executive offices or three business days after it is sent by registered or
certified mail, postage prepaid, addressed to the Secretary at such offices;
and (b) to an optionee on the date it is personally delivered to him or her or
three business days after it is sent by registered or certified mail, postage
prepaid, addressed to him or her at the last address shown for him or her on
the records of the Company or of any Subsidiary.
-7-
<PAGE> 8
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval
by the stockholders of the Company. Such stockholder approval shall be
obtained in the degree and manner required under the Delaware General
Corporation Law.
23. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be
issued with respect to an Option unless the exercise of such Option and the
issuance and delivery of such shares complies with all applicable provisions of
law, domestic or foreign, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares
may then be listed, and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
24. TERM OF PLAN. The Plan shall become effective upon its
approval by the stockholders of the Company as described in Section 22. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 20.
25. MISCELLANEOUS.
(a) Legal and Other Requirements. The obligations of the
Company to sell and deliver Common Stock under the Plan shall be subject to all
applicable laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933. Certificates for shares of Common Stock issued hereunder may be
legended as the Committee shall deem appropriate.
(b) Withholding Taxes. Upon the exercise of any Option
under the Plan, the Company shall have the right to require the Participant to
remit to the Company an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery of any certificate or
certificates for shares of Common Stock.
(c) Right to Terminate Employment. Nothing in the Plan
or any agreement entered into pursuant to the Plan shall confer upon any
employee the right to continue in the employment of the Company or any
Subsidiary or affect any right which the Company or any Subsidiary may have to
terminate the employment of such employee.
(d) Applicable Law. All questions pertaining to the
validity, construction and administration of the Plan and Options granted
hereunder shall be determined in conformity with the laws of the State of
Delaware, to the extent not inconsistent with Section 423 of the Code and
regulations thereunder.
-8-
<PAGE> 9
(e) Elimination of Fractional Shares. If under any
provision of the Plan which requires a computation of the number of shares of
Common Stock subject to an Option, the number so computed is not a whole number
of shares of Common Stock, such number of shares of Common Stock shall be
rounded down to the next whole number and remaining paid in cash.
-9-
<PAGE> 1
EXHIBIT 10.6
FIRST LEASE AMENDMENT
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
This First Amendment to Lease is made as of June 3rd, 1996,
between Metropolitan Life Insurance Company, a New York corporation
("Landlord") and SPR CHICAGO, INC., an Illinois corporation ("Tenant").
RECITALS:
Landlord and Tenant entered into a certain Lease dated November 29,
1995 (the "Lease") pursuant to which Tenant leased 7,966 square feet of
rentable area, Suite 750, (the "Leased Premises") located on the seventh floor
of the building at 2015 Spring Road, commonly known as Commerce Plaza, (the
"Building") located in Oak Brook, Illinois, the Leased Premises being more
particularly described in the Lease;
Landlord and Tenant have agreed to modify the Lease and expand the
Leased Premises by adding a parcel of space containing 741 square feet of
rentable area (the "Expansion Space"), subject to the terms and conditions as
hereinafter set forth;
NOW, THEREFORE, in consideration of these presents and the mutual
covenants herein contained, the receipt and adequacy of which consideration is
acknowledged by both parties, Landlord and Tenant agree that the Lease shall be
and same is hereby amended as follows:
Landlord and Tenant desire to make certain other changes to the Lease
as set forth herein.
NOW, THEREFORE, to reflect the expansion of the Leased Premises and
the other agreements of the parties, the parties amend the Lease as follows:
1. Definitions. Unless otherwise defined herein, all capitalized
terms shall have the same meaning ascribed to them in the Lease.
2. Commencement Date. The Commencement Date of the Lease as shown
on the Schedule is hereby changed to January 22, 1996, being that same date as
Landlord's delivery to Tenant of a final Certificate of Occupancy issued by the
Village of Oak Brook.
3. Termination Date. The termination date of the Lease as shown
on the Schedule is hereby changed to January 21, 2002.
1
<PAGE> 2
4. Description of Leased Premises. As of July 21, 1996 (the
"Effective Date"), the Leased Premises as set forth in the Lease and in the
Schedule of the Lease is hereby changed from 7,966 rentable square feet to
8,707 rentable square feet and Appendix B is hereby deleted and replaced with
the attached Appendix B.
5. Base Rent Schedule and Base Rent. As of the Effective Date,
the Base Rent of $824,401.34 as set forth respectively in the Schedule, the
Lease and Appendix C - Rent Schedule to the Lease is hereby deleted and
replaced with $895,159.44 and Appendix C - Base Rent Schedule of the Lease is
hereby deleted and replaced with the amended Appendix C (attached hereto and
made a part hereof as Exhibit A) to include the Base Rent for the Expansion
Space for the period commencing July 21, 1996 and ending on the Termination
Date.
6. Tenant's Operating Proportionate Share and Tenant's Tax
Operating Proportionate Share. Effective as of July 21, 1996, Tenant's
Operating Proportionate Share and Tenant's Tax Operating Proportionate Share as
set forth respectively in the Lease and in the Schedule of the Lease is hereby
changed from 4.909% to 5.366%.
7. Annual Electricity Costs. Effective as of July 21, 1996,
Tenant's annual electricity costs as set forth in the Schedule shall be changed
to be Seven Thousand Six Hundred Sixty-Two and 16/100 Dollars ($7,662.16).
8. Improvement Allowance. Landlord agrees to provide an allowance
not to exceed Ten Thousand Three Hundred Seventy-Four and No/100 Dollars
($10,374.00) to be used toward the construction of Tenant's interior tenant
improvements and an allowance not to exceed Three Hundred Seventy and 50/100
Dollars ($370.50) to be used toward space planning services.
9. Tenant to Perform Certain Work. Tenant shall construct and
install tenant improvements in the Expansion Space pursuant to the terms and
conditions of Appendix D - Tenant Improvement Work Agreement (collectively, the
"Tenant Improvements") at Tenant's sole cost, except for the Landlord's
Contribution (as hereinafter defined). Landlord shall pay the cost of the
Tenant Improvements up to, but not more than, the amount of the Improvement
Allowance as stated in Section 8 above ("Landlord's Contribution"). Tenant
agrees to be fully responsible for the safety of Tenant's employees, contractors
and agents during the construction of the tenant improvements. Tenant
acknowledges that the construction of the tenant improvements may not be
completed as of the Effective Date, and Tenant waives any claim
2
<PAGE> 3
against Landlord for any interruption of Tenant's business operations or
disturbance of Tenant's quiet enjoyment of the Premises, or any damage or
injury to persons or property arising directly or indirectly out of the
construction of the tenant improvements.
10. Liability of Landlord. The second sentence of Section 27.00 is
hereby deleted and replaced with the following:
"Tenant agrees, on its behalf and on behalf of its successors and
assigns, that any liability of Landlord with respect to this Lease
shall never exceed the amount of $5,000,000 and Tenant shall not be
entitled to any judgment in excess of such amount."
11. Broker. Tenant represents to Landlord that no broker or real
estate agent was retained by Tenant or otherwise involved in or instrumental to
the transaction reflected by this First Amendment other than Mr. Harold Stahnke
of Strobeck Real Estate, Inc. In the event of a claim for broker's fee,
finder's fee, commission or other similar compensation in connection herewith
other than by MS Management Services and Strobeck Real Estate, Tenant hereby
agrees to protect, defend and indemnify Landlord against and hold Landlord
harmless from any and all damages, liabilities, costs, expenses and losses
(including, without limitation, reasonable attorneys' fees and costs) which
Landlord may sustain or incur by reason of such claim. The provisions of this
Section 11 shall survive the termination of the Lease.
12. Tenant's Representation and Acknowledgement. Tenant hereby
acknowledges that Landlord has performed all of its obligations with respect to
the Leased Premises. Tenant further acknowledges that as of the date hereof
Landlord is not in default under any of the terms of the Lease.
13. Authority. This First Amendment shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs, legal
representatives, successors and assigns. Each party hereto and the persons
signing below warrant that the person signing below on such party's behalf is
authorized to do so and to bind such party to the terms of this First Amendment.
3
<PAGE> 4
14. Continuation. Except as specifically herein amended, all
terms and conditions contained in the Lease with respect to the Premises shall
remain in full force and effect. In the event that any provisions of this
First Amendment shall conflict with the Lease, this First Amendment shall
govern.
IN WITNESS WHEREOF, this First Amendment has been executed as of the date first
above written.
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE SPR CHICAGO, INC., an Illinois
COMPANY, a New York corporation corporation
By: [SIGNATURE] By: [SIGNATURE]
----------------------------- -----------------------------
Its: Assistant Vice President Its: President
------------------------- -------------------------
4
<PAGE> 5
EXHIBIT A
APPENDIX C
BASE RENT SCHEDULE
<TABLE>
<CAPTION>
Monthly Period
Period Base Rent Base Rent
------ --------- -----------
<S> <C> <C>
01/22/96 - 07/21/96 $10,621.33 $ 63,727.98
07/22/96 - 01/21/97 $11,609.33 $ 69,655.98
01/22/97 - 01/21/98 $11,957.61 $143,491.32
01/22/98 - 01/21/99 $12,313.15 $147,757.80
01/22/99 - 01/21/00 $12,683.20 $152,198.40
01/22/00 - 01/21/01 $13,067.76 $156,813.12
01/22/01 - 01/21/02 $13,459.57 $161,514.84
-----------
TOTAL $895,159.44
</TABLE>
<PAGE> 6
COMMERECE PLAZA
APPENDIX B
[GRAPHIC FLOOR PLAN]
<PAGE> 7
APPENDIX C
BASE RENT SCHEDULE
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
<TABLE>
<CAPTION>
MONTHLY PERIOD
PERIOD BASE RENT BASE RENT
------ -------- ---------
<S> <C> <C>
01/01/96 - 12/31/96 $10,621.33 $127,456.00
01/01/97 - 12/31/97 $10,939.97 $131,279.68
01/01/98 - 12/31/98 $11,265.25 $135,183.02
01/01/99 - 12/31/99 $11,603.81 $139,245.68
01/01/00 - 12/31/00 $11,955.64 $143,467.66
01/01/01 - 12/31/01 $12,314.11 $147,769.30
</TABLE>
C-1
<PAGE> 8
APPENDIX D
TENANT IMPROVEMENT WORK AGREEMENT
FOR COMMERCE PLAZA OAK BROOK ILLINOIS
1.00 SCHEDULE. For purposes of this Tenant Improvement Work Agreement, the
terms used herein shall have the following meanings.
1.01 Architect: Robin + Hanson
1.02 Space Planner: Robin + Hanson
1.03 Mechanical Engineer: N/A
1.04 Allowance for Preliminary Architectural Plans: N/A
1.05 Allowance for Final Architectural Plans - See 1.09 below
1.06 Date of Preliminary Architectural Plans: September 28, 1995
1.07 Date of Final Architectural Plans: November 15, 1995
1.08 Date of Working Drawings; N/A
1.09 Landlord Contribution to Work: One Hundred Twenty Thousand Four
Hundred Seventy-Three and No/100 Dollars ($123,473.00)
1.10 General Contractor: To Be Determined by Tenant, subject to
Landlord's reasonable approval.
2.00 BUILDINGS STANDARD WORK. Architect has prepared Preliminary Architectural
Plans as dated in Section 1.06 above for the Leased Premises (the "Preliminary
Architectural Plans") and Tenant agrees to cause the Architect to devote such
time in consultation with Tenant to enable the Architect to complete on or
before the date in Section 1.07 above final architectural plans and
specifications (the "Final Architectural Plans") with the type and amount of
work and materials described on Exhibit D-1 attached hereto for obtaining a
building permit from the Village of Oak Brook, Illinois and improving the Lease
Premises in accordance with applicable codes and ordinances (the "Work").
Tenant shall reimburse Architect for its work and may utilize a
portion of Landlord's Contribution to Work subject to Article 38 of the Lease
less amounts previously paid by Landlord for the Preliminary Architectural Plans
and Final Architectural Plans. All costs and expenses relating to the
preparation and completion of Preliminary and Final
D-1
<PAGE> 9
Architectural Plans for the Leased Premises shall be borne by Tenant and paid
by Tenant when billed. The information to be furnished by Tenant and the Space
Planner to the Architect shall include but not be limited to:
2.01 Any requirements of the Tenant for the Leased Premises which are
in excess of, or otherwise vary in any respect from the Work
2.02 Special floor loading, such as the location of file cabinets or
special equipment
2.03 Openings in the walls or floors
2.04 Special electrical, air conditioning or plumbing work
2.05 Location and dimensions of telephone equipment rooms, and
telephone and electrical outlets
2.06 Partitions - locations and type, including doors and hardware
2.07 Special cabinet work or other millwork items
2.08 Variations to standard ceiling heights
2.09 Color selection of painted areas
2.10 Selection of floor covering and any special wall covering
Landlord and Tenant hereby approve the Preliminary Architectural
Plans cited in 1.06 above. Within the time period provided for in Section 1.07
above, Architect shall prepare the Final Architectural Plans for submission to
Tenant. Within five (5) days after the completed Final Architectural Plans
have been submitted to Tenant, Tenant agrees to provide the Architect with
Tenant's written approval of such Final Architectural Plans and to redeliver the
final Architectural Plans to the Architect for submission to Landlord for
Landlord's final approval or objection. Approval or objection to be provided
by Landlord within five (5) days after submission of said plans by Architect.
Immediately upon approval of the Final Architectural Plans by
Landlord and the acquisition of the appropriate Building Permit from the
Village of Oak Brook, Illinois, Tenant and its contractors, subject to the
limitations set forth in Section 1.09 above, shall do the work required
by Tenant as aforesaid, and, subject to the other terms and conditions of this
Tenant Improvement Work Agreement, and the Lease, shall proceed diligently to
cause such Work to be substantially completed at or before the Commencement
Date, it being expressly understood that all work to be done in the Leased
Premises, including, without limitation, the Work, shall be subject to the
reasonable approval of Landlord and that no work shall be undertaken in the
Leased
D-2
<PAGE> 10
Premises until such approval is given in writing.
Landlord agrees to pay up to the amount set forth in Section 1.09 for
the Work including, subject to the limitation cited in Article 38 of the Lease,
preparation of the Preliminary Architectural Plans and the Final Architectural
Plans. Tenant shall be responsible for all costs and expenses in excess of
Landlord's contribution which shall be due and payable to Contractor by Tenant
which billed upon substantial completion of the Work.
3.00 ADDITIONAL WORK. Except to the extent described herein, Landlord has no
obligation to do or pay for any work to the Leased Premises (or any plans or
specifications relating thereto).
If Tenant shall require other work or materials ("Additional Work")
in the Leased Premises in addition to or in substitution for the work, Tenant
shall deliver to Landlord for its approval Final Architectural Plans for such
Additional Work at or before the time Tenant is required pursuant to Paragraph
2.00 hereof to delivery Tenant's written approval of the final Architectural
Plans for the Work. If Landlord does not approve of the Final Architectural
Plans for the Additional Work, as delivered by Tenant, Landlord shall advise
Tenant of the changes required in such Final Architectural Plans for the
Additional Work so that they will meet with Landlord's approval, within five
(5) days after Tenant's submission of the Final Architectural Plans for
the Additional Work. Tenant shall cause the Final Architectural Plans for the
Additional Work to be revised and delivered to Landlord for its final review
and approval within five (5) business days after Tenant's receipt of such advise
or Tenant shall be deemed to have abandoned its request for such additional
work.
At any time as Landlord may reasonably request, Tenant shall
acknowledge in writing any such Additional Work, including Tenant's obligation
with respect to the costs and expense related thereto.
Tenant shall furnish Landlord with estimates of the cost of the
additional work as provided by Tenant's Contractor(s) within five (5) business
days after receipt by Landlord of the Final Architectural Plans, approved by
Landlord, for the Additional Work. Within five (5) day period thereafter,
Tenant shall pay Contractor the actual cost of such Additional Work as follows:
(a) An amount equal to fifty (50%) percent of the estimated total
cost of such additional work shall be paid to Contractor for
payment of Additional Work.
(b) An amount equal to the unpaid balance of the total actual cost
(without regard to whether such costs exceed the approved
estimates) of the Additional Work shall be paid to Contractor
upon substantial completion
D-3
<PAGE> 11
of such Additional Work, but in no case later than Possession
Date by Tenant,
and, provided Tenant has made all payments and borne all costs when required
herein, Tenant agrees to cause the Additional Work to be performed by Tenant's
contractors. All sums due hereunder from Tenant shall be deemed to be Rent for
any and all purposes of the Lease.
If Tenant requires Additional Work pursuant to and in accordance with
the foregoing provisions of this Paragraph 3.00, the alterations and
improvements to be made to the Leased Premises prior to the Commencement Date
shall be limited to the Work, and any additional alterations and improvements
to the Leased Premises desired by Tenant shall be made after the Commencement
Date and shall be subject to the provisions of the Lease.
All designs for public ares must conform to Landlord's standards and
be approved by the Landlord.
4.00 COMMENCEMENT OF RENT. Tenant's obligation to pay Rent under the Lease
shall not commence until Tenant's Contractor shall have substantially completed
all the work on February 1, 1996, whichever is earlier, provided, however, that
if Landlord shall be delayed in substantially completing such Work as a result
of any one or more of the following:
4.01 Tenant's or the Architect's failure to devote the time or
furnish the information required under Paragraph 2.00 hereof in
connection with the Final Architectural Plans for the Work or
Tenant's failure to furnish the Final Architectural Plans for
the Additional Work, or revisions thereto, as required hereby,
or
4.02 Tenant's failure to approve cost estimates for the Additional
Work within the time period specified in Paragraph 3.00 hereof,
or
4.03 Tenant's changes in the Work, in the Final Architectural Plans
relating thereto, or in the Architectural Plans for the
Additional Work (notwithstanding Landlord's approval of any such
changes);
then, and in any such event, Tenant's obligation to commence the payment of Rent
under the Lease on the Commencement Date shall not be affected or deferred on
account of such delay.
5.00 ACCESS BY TENANT PRIOR TO THE COMMENCEMENT DATE. Landlord, at Landlord's
discretion, may permit Tenant and Tenant's agents to enter the Leased Premises
prior to the date specified as the Commencement Date in the Lease in order
D-4
<PAGE> 12
that Tenant may make the Leased Premises ready for Tenant's use and occupancy
("Specified Work"). If Landlord permits such entry prior to the commencement
Date, such permission shall constitute a license only and not a lease and such
license shall be conditioned upon; (a) Tenant working in harmony and not
interfering with Landlord and Landlord's agents, contractors, workmen,
mechanics and suppliers in doing the Work, Specified Work or Additional Work,
if any, or Landlord's work in the Building or with other Tenants and occupants
of the Building; (b) Tenant obtaining in advance Landlord's approval of the
contractors proposed to be used by Tenant obtaining in advance Landlord's
approval of the contractors proposed to be used by Tenant and depositing with
Landlord in advance of any work (i) security reasonably satisfactory to
Landlord for the completion thereof, (ii) general contractor's affidavit for
proposed work and waiver of lien rights from general contractor, all
subcontractors and suppliers of material; (c) Tenant or its contractors
furnishing Landlord with such insurance and other security as Landlord may
require against liabilities which may arise out of such entry. Landlord shall
have the right to withdraw such license for cause upon twenty-four (24) hours'
written notice to Tenant. Tenant agrees that Landlord shall not be liable in
any way for any injury, loss or damage which may occur to any of Tenant's
property placed or installations made in the Leased Premises prior to the
Commencement Date of the Lease, the same being at Tenant's sole risk and Tenant
agrees to protect, defend, indemnify and save harmless Landlord, manager, and
Landlord's agents from all liabilities, costs, damages, fees and expenses
arising out of or connected with the activities of Tenant or its agents,
contractors, suppliers or workmen in or about the Leased Premises, the
Building or the Property. Tenant further agrees that any entry and occupation
permitted under this paragraph shall be governed by the terms of the lease.
6.00 MISCELLANEOUS.
6.01 Except to the extent otherwise indicated herein, the initially
capitalized terms used in this Tenant Improvement Work Agreement
shall have the meanings assigned to them in the Lease.
6.02 The terms and provisions of this Tenant Improvement Work Agreement
are intended to supplement and are specifically subject to all the
terms and provisions of the Lease. In addition, to complying with
the terms and conditions of the Lease, Tenant agrees that it shall
comply with the Rules and Regulations set forth on Exhibit D-2.
6.03 This Tenant Improvement Work Agreement may not be amended or modified
other than by supplemental written agreement executed by authorized
representations of the parties hereto.
6.04 All payments due from Tenant pursuant to this Tenant Improvement Work
Agreement shall be deemed Additional Rent.
D-5
<PAGE> 13
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York Corporation
By: [SIG] By: [SIG]
-------------------------------- ------------------------------
Title: Assistant Vice President Title: President
----------------------------- ----------------------------
D-6
<PAGE> 14
APPENDIX G
LEGAL DESCRIPTION
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
PARCEL 1:
LOT 3 IN OAK BROOK DEVELOPMENT COMPANY'S COMMERCE PLAZA SUBDIVISION UNIT ONE,
BEING A SUBDIVISION OF PART OF LOT 2 AND ALL OF LOT 3 IN OAK BROOK INVESTMENT
COMPANY ASSESSMENT PLAT NO. 4 AND PART OF LOT 1 AND ALL OF LOT 3 IN BUTLER
COMPANY M-1 INC. ASSESSMENT PLAT NO. 1 ALL IN THE SOUTHEAST 1/4 OF SECTION 23,
TOWNSHIP 39 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPLE MERIDIAN, ACCORDING TO
THE PLAT THEREOF RECORDED JULY 12, 1968 AS DOCUMENT R68-30335 (EXCEPT THAT PART
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 3, THENCE NORTH 0 DEGREES 17
MINUTES 20 SECOND EAST ALONG THE WEST LINE THEREOF, A DISTANCE OF 185 FEET;
THENCE SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST AT RIGHT ANGLES TO THE LAST
DESCRIBED LINE, A DISTANCE OF 311 FEET; THENCE NORTH 0 DEGREES 17 MINUTES 20
SECONDS EAST, A DISTANCE OF 25 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40
SECONDS EAST, A DISTANCE OF 185 FEET; THENCE NORTH 0 DEGREES 17 MINUTES 20
SECONDS EAST, A DISTANCE OF 170 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40
SECONDS EAST, A DISTANCE OF 463.93 FEET TO THE EAST LINE OF SAID LOT 3, THENCE
SOUTH 0 DEGREES 17 MINUTES 20 SECONDS WEST ALONG SAID EAST LINE, A DISTANCE OF
368.91 FEET TO THE SOUTHEAST CORNER THEREOF; THENCE SOUTH 89 DEGREES 37 MINUTES
38 SECONDS WEST ALONG THE SOUTH LINE OF SAID LOT 3, A DISTANCE OF 960 FEET TO
THE POINT OF BEGINNING AND (EXCEPT THAT PART THEREOF DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 3, THENCE NORTH 0 DEGREES 17
MINUTES 20 SECONDS EAST ALONG THE WEST LINE THEREOF, A DISTANCE OF 185.0 FEET;
THENCE SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST AT RIGHT ANGLES TO THE LAST
DESCRIBED LINE, A DISTANCE OF 311 FEET, THENCE NORTH 0 DEGREES 17 MINUTES 20
SECOND EAST A DISTANCE OF 25 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40
SECONDS EAST, A DISTANCE OF 185 FEET; THENCE NORTH 0 DEGREES 17 MINUTES 20
SECONDS EAST, A DISTANCE OF 170 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40
SECONDS EAST, A DISTANCE OF 195.93 FEET TO THE PLACE OF BEGINNING; THENCE
CONTINUING SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 268 FEET
TO A POINT ON THE EAST LINE OF SAID LOT 3; THENCE NORTH 0 DEGREES 17 MINUTES 20
SECONDS EAST ALONG SAID EAST LINE OF LOT 3, A DISTANCE OF 100.75 FEET; THENCE
NORTH 89 DEGREES 42 MINUTES 40 SECONDS WEST, A DISTANCE OF 75 FEET; THENCE
SOUTH 0 DEGREES 17 MINUTES 20 SECONDS WEST, A DISTANCE OF 100.75 FEET TO THE
PLACE OF BEGINNING), IN DUPAGE COUNTY, ILLINOIS.
P.I.N.# 06-23-404-029
G-1
<PAGE> 15
PARCEL 2:
THAT PART OF LOT 3 IN OAK BROOK DEVELOPMENT COMPANY'S COMMERCE PLAZA SUBDIVISION
UNIT ONE, BEING A SUBDIVISION OF PART OF LOT 2 AND ALL OF LOT 3 IN OAK BROOK
INVESTMENT COMPANY ASSESSMENT PLAT NO. 4 AND PART OF LOT 1 AND ALL OF LOT 3 IN
BUTLER COMPANY M-1, INC., ASSESSMENT PLAT NO. 1, ALL IN THE SOUTHEAST 1/4 OF
SECTION 23, TOWNSHIP 39 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN,
DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT 3, THENCE
NORTH 0 DEGREES 17 MINUTES 20 SECONDS EAST ALONG THE WEST LINE THEREOF, A
DISTANCE OF 185 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST AT
RIGHT ANGLES TO THE LAST DESCRIBED LINE, A DISTANCE OF 311 FEET; THENCE NORTH 0
DEGREES 17 MINUTES 20 SECONDS EAST, A DISTANCE OF 25 FEET; THENCE SOUTH 90
DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 185 FEET; THENCE NORTH 0
DEGREES 17 MINUTES 20 SECONDS EAST, A DISTANCE OF 170 FEET; THENCE SOUTH 89
DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 463.93 FEET TO THE EAST LINE
OF SAID LOT 3; THENCE SOUTH 0 DEGREES 17 MINUTES 20 SECONDS WEST ALONG SAID EAST
LINE, A DISTANCE OF 368.91 FEET TO THE SOUTH EAST CORNER THEREOF; THENCE SOUTH
89 DEGREES 37 MINUTES 38 SECONDS WEST ALONG THE SOUTH LINE OF SAID LOT 3, A
DISTANCE OF 960 FEET TO THE PLACE OF BEGINNING, IN DUPAGE COUNTY, ILLINOIS.
P.I.N.# 06-23-404-030
PARCEL 3:
THAT PART OF LOT 3 IN OAK BROOK DEVELOPMENT COMPANY'S COMMERCE PLAZA SUBDIVISION
UNIT ONE, BEING A SUBDIVISION OF PART OF LOT 2 AND ALL OF LOT 3 IN OAK BROOK
INVESTMENT COMPANY ASSESSMENT PLAT NO. 4 AND PART OF LOT 1 AND ALL OF LOT 3 IN
BUTLER COMPANY M-1, INC., ASSESSMENT PLAT NO. 1, ALL IN THE SOUTHEAST 1/4 OF
SECTION 23, TOWNSHIP 39 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN,
DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 3; THENCE
NORTH 0 DEGREES 17 MINUTES 20 SECONDS EAST ALONG THE WEST LINE THEREOF, A
DISTANCE OF 185.00 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST AT
RIGHT ANGLES TO THE LAST DESCRIBED LINE, A DISTANCE OF 311 FEET; THENCE NORTH 0
DEGREES 17 MINUTES 20 SECONDS EAST A DISTANCE OF 25 FEET; THENCE SOUTH 89
DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 185 FEET; THENCE NORTH 0
DEGREES 17 MINUTES 20 SECONDS EAST, A DISTANCE OF 170 FEET; THENCE SOUTH 89
DEGREES 42 MINUTES 40 SECONDS EAST, A DISTANCE OF 195.93 FEET TO THE PLACE OF
BEGINNING; THENCE CONTINUING SOUTH 89 DEGREES 42 MINUTES 40 SECONDS EAST, A
DISTANCE OF 268 FEET TO A POINT ON THE EAST LINE OF SAID LOT 3; THENCE NORTH 0
DEGREES 17 MINUTES 20 SECONDS EAST ALONG SAID EAST LINE OF LOT 3, A DISTANCE OF
100.75 FEET; THENCE NORTH 89 DEGREES 42 MINUTES 40 SECONDS WEST, A DISTANCE OF
268 FEET; THENCE SOUTH 0 DEGREES 17 MINUTES 20 SECONDS WEST, A DISTANCE OF
100.75 FEET TO THE PLACE OF BEGINNING, IN DUPAGE COUNTY, ILLINOIS.
P.I.N.# 06-23-404-031
G-2
<PAGE> 16
LEASE
FOR
COMMERCE PLAZA
OAK BROOK, ILLINOIS
<PAGE> 17
INDEX TO LEASE
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
INDEX i
APPENDICES iv
PREFACE
SCHEDULE 1
LEASE: 1
1.00 LEASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.00 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 KINDS OF RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) OPERATING ADJUSTMENT RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) TAX ADJUSTMENT RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) INDEX RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 PAYMENT OF ADJUSTMENT RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) PAYMENT OF ESTIMATED OPERATING ADJUSTMENT RENT AND TAX ADJUSTMENT RENT . . . . . . . . . . . . . 2
(b) CORRECTION OF OPERATING ADJUSTMENT RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) CORRECTION OF TAX ADJUSTMENT RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.03 RULES OF INTERPRETATION AND COMPUTATION OF BASE RENT AND RENT ADJUSTMENTS . . . . . . . . . . . . . . . . . . 4
(a) COMMENCEMENT AND END . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) RENT WITHOUT DEDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) NO REFUND IF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) CHANGES TO PROPORTIONATE SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) CERTIFICATION OF OPERATING COSTS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) SURVIVAL OF RENT OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) BASE RENT LIMITATION ON ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(h) LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) APPLICATION OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.00 SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.01 USE AND APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.02 TRANSFER OF LANDLORD'S INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.00 USE OF LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
- i -
<PAGE> 18
<TABLE>
<S> <C> <C>
5.00 BUILDING SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) HEAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) AIR CONDITIONING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) EXTRA HOURS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) WATER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) JANITORIAL SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) ELEVATOR SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) WINDOW COVERINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) ELECTRICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) INTERRUPTION OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.00 TENANT'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.01 REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.02 DOORS TO BE LOCKED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.03 HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.04 LAWS, RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.05 UNLAWFUL USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.06 HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.07 VARIOUS PROHIBITED USES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.08 SOUND DEVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.09 ADDITIONAL LOCKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.10 OVERLOAD ANY FLOOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.11 DEFACING LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.12 ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.00 RIGHTS RESERVED TO LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.01 CHANGE NAME OR ADDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.02 SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.03 DESIGNATE SOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.04 PASS KEYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.05 REDECORATE IF VACANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
- ii -
<PAGE> 19
<TABLE>
<S> <C> <C>
7.06 INSPECT AND EXHIBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.07 MAIL CHUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.08 ENTRY AND EXIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.09 LOCATION APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.10 REPAIRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.11 ADJACENT WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.12 EXCLUSIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.13 VENDING MACHINES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.14 RELOCATE TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.15 WINDOW TREATMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.16 DESIGNATE LOCK BOX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.17 EMERGENCY ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.18 EXERCISE ALL OTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.00 LANDLORD'S TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.00 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.00 WAIVER OF CERTAIN CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.00 PREPARATION AND CONDITION OF LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.00 LEASE TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.01 SURRENDER OF KEYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.02 RETURN OF LEASED PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.03 REMOVAL OF ADDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.04 ABANDONMENT AND REMOVAL OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.00 ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.00 CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.00 RIGHTS AND REMEDIES OF LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C> <C>
15.01 PETITION IN BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.02 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.03 TERMINATION OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.04 COLLECTION OF RENT UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.05 TENANT ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.06 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.07 LANDLORD'S COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.08 RESTRAINT OF VIOLATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.09 LIEN ON TENANT'S PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
16.00 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17.00 SUBORDINATION OR SUPERIORITY OF THIS LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
18.00 SPRINKLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
19.00 NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
20.00 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21.00 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
22.00 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.01 FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.02 PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.03 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.04 ORIGINALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.05 EXECUTION OF FURTHER DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.06 BROKER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.07 NO REINSTATEMENT OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.08 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
22.09 NO OPTION UPON SUBMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
- iv -
<PAGE> 21
<TABLE>
<S> <C> <C>
22.10 FEES FOR SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
23.00 ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
24.00 EXERCISE OF LANDLORD'S POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
25.00 NO CONSTRUCTION AGAINST DRAFTING PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
26.00 NO RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
27.00 LIMITATION ON RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
28.00 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
29.00 NO MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
30.00 WRITTEN AMENDMENT REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
31.00 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
32.00 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
33.00 GOVERNING LAW AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
34.00 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
35.00 ENERGY CONSERVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
36.00 MORTGAGE OR GROUND LEASE BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
37.00 OPTION TO RENEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
38.00 ALLOWANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
39.00 PARKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
40.00 RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
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<PAGE> 22
APPENDICES
<TABLE>
<CAPTION>
REFERENCE SECTION
-----------------
<S> <C> <C>
Appendix A Definitions Preface
Appendix B Plan of Leased Premises Schedule Item 3
Appendix C Rent Schedule Schedule Item 5
Appendix D Tenant Improvement Schedule Item 11.00 Work Agreement
Appendix E Cleaning Specifications Section 5.00 (e)
Appendix F Rules and Regulations Section 6.04
Appendix G Legal Description Appendix A Definitions -
"Property"
</TABLE>
- vi -
<PAGE> 23
LEASE FOR COMMERCE PLAZA
OAK BROOK, ILLINOIS
P R E F A C E
THIS LEASE made November 29, 1995, by and between Metropolitan Life
Insurance Company, a corporation organized and existing under the laws of the
State of New York, Landlord and the Tenant named in Item 1 of the Schedule. The
terms used herein refer to those set forth in Appendix A Definitions or the
following Schedule (the "Schedule").
S C H E D U L E
1. Tenant: SPR Chicago, Inc. Form of Business Organization: an
Illinois corporation
2. Building Address of Leased Premises: 2015 Spring Road
3. Description of Leased Premises: Suite 750 on the Seventh Floor
consisting of approximately 7,966 Rentable Square Feet. (See Appendix
B - Plan of Leased Premises.)
4. Tenant's Use of Leased Premises: Executive and General Administrative
Offices
5. Base Rent: $824,401.34 (See Appendix C - Rent Schedule)
6. Monthly Installments of Base Rent: (See Appendix C - Rent Schedule)
7. Tenant's Operating Proportionate Share: 4.909% *
8. Tenant's Tax Proportionate Share: 4.909% based upon Building square
footage of 162,272*
9. Base Costs: $0.00
10. Base Taxes: $0.00
11. Annual Electricity Costs: $7,010.08
12. Annual Base Rent for Index Rent Calculation: N/A
13. Security Deposit: $10,621.33
14. Tenant's Address for Notice Before Possession Date: 1301 West 22nd
Street, 7th floor, Oak Brook, Illinois 60521
15. Tenant's Real Estate Broker: Strobeck Real Estate, Inc.
16. Commencement Date: January 1, 1996
17. Termination Date: December 31, 2001
18. Possession Date: The date of the Commencement Date or the date the
work (the "Work") described in Appendix D is substantially completed
but in no event later than February 1, 1996. In the event that the
Possession Date is later than the Commencement Date, the Possession
Date shall become the Commencement Date (but no later than February 1,
1996) and the Termination Date shall be changed to reflect a six (6)
year Term from the Commencement Date.
19. Term: Six (6) Years
20. Additional Matters: 37.00 Option to Renew
38.00 Allowance
39.00 Parking
40.00 Right of First Offer
*1994 Operating Expenses were $5.10 a rentable square foot and estimated 1995
Operating Expenses are $5.48 a rentable square foot.
- 1 -
<PAGE> 24
1.00 LEASE AGREEMENT. Landlord leases to Tenant and Tenant leases
from Landlord the Leased Premises for the Term, and covenant and agree pursuant
to the terms and conditions as set forth in this Lease.
2.00 RENT.
2.01 KINDS OF RENT. Rent and all other payments due from Tenant
shall be made to Manager or to such other persons or at such places as Landlord
may direct from time to time by written notice to Tenant, in lawful money of
the United States of America. Tenant agrees to pay the aggregate of the
following each of which, unless otherwise noted shall be due separately without
deduction or offset against each other or other amounts due hereunder. Any
decrease in Operating Costs, Taxes or other amounts below those set forth in
the Base Costs shall not be recoverable by nor credited to Tenant.
(a) BASE RENT. Base Rent to be paid in monthly
installments in advance on or before the first day of each calendar
month during the Term without demand and without any set-off or
deduction whatsoever in the amount set forth in the Schedule. Tenant
shall pay an amount equal to one full monthly installment of Base Rent
at the time of execution of the Lease, which amount shall be credited
to the first full monthly installment of Base Rent payable hereunder.
If the Term commences other than on the first day of the month or ends
other than on the last day of the month, the Base Rent for such months
shall be prorated and the prorated Base Rent for the portion of the
month in which the Term commences shall also be paid at the time of
execution of the Lease. Unpaid Base Rent and other amounts due under
this Lease shall bear interest at the rates provided for in the Lease
from the date due until paid.
(b) OPERATING ADJUSTMENT RENT. Operating Adjustment Rent
to be paid monthly in advance in an estimated amount as adjusted by
Landlord from time to time to cover Tenant's Operating Proportionate
Share of the increase in any Comparison Year in Operating Costs for
said Comparison Year over Base Costs.
(c) TAX ADJUSTMENT RENT. Tax Adjustment Rent to be paid
monthly in advance in an estimated amount as adjusted by Landlord from
time to time to cover the Tenant's Tax Proportionate Share of the
increase in any Comparison Year in Taxes for said Comparison Year over
Base Taxes.
(d) INDEX RENT. [INTENTIONALLY DELETED]
(e) ADDITIONAL RENT. Additional Rent consisting of all
of the sums, liabilities, obligations and other amounts (excepting
Base Rent, Operating Adjustment Rent and Tax Adjustment Rent) which
Tenant is required to pay or discharge pursuant to this Lease, all as
hereafter provided. Additional Rent shall be due and payable within
ten (10) days after statement from Landlord. Without limitation on
other obligations of Tenant which shall survive the expiration of the
Term, the obligations of Tenant to pay the Additional Rent provided
for in this Section 2.00 shall survive the expiration of the Term.
2.02 PAYMENT OF ADJUSTMENT RENT.
(a) PAYMENT OF ESTIMATED OPERATING ADJUSTMENT RENT AND
TAX ADJUSTMENT RENT. Landlord shall estimate the Operating Costs and
Taxes each Year. Such estimates may be
- 2 -
<PAGE> 25
revised by Landlord one or more times during the Year as necessary to
make such estimates more accurate.
If Landlord's estimate of Operating Costs in any Year reflects
an increase in the Operating Costs beyond the Base Costs set forth in
the Schedule, upon notice from Landlord, Tenant shall pay Landlord one
twelfth (1/12th) of Tenant's Operating Proportionate Share of such
estimated increase in such costs for each month in such Year on the
first day of each calendar month during the Year. If at one or more
times during such Year Landlord revises its estimate of Operating
Costs for such Year, Landlord may notify Tenant of such revised
estimate and of the increase or decrease in Tenant's Operating
Proportionate share of such revised estimate payable monthly
thereafter during such Year necessary to cause the total monthly
payments during such Year to equal Landlord's then current estimate of
the Tenant's Operating Proportionate Share for such Year. Tenant shall
thereafter pay such revised monthly payment amount on the first day of
each calendar month thereafter during such Year.
If Landlord's estimate of Taxes in any Year reflects an
increase in the Taxes beyond the Base Taxes set forth in the Schedule,
upon notice from Landlord, Tenant shall pay Landlord one-twelfth
(1/12th) of Tenant's Tax Proportionate Share of such estimated
increase in such Taxes for each month in such Year on the first day of
each calendar month during the Year. If at one or more times during
such Year Landlord revises its estimate of Taxes for such Year,
Landlord may notify Tenant of such revised estimate and of the
increase or decrease in Tenant's Tax Proportionate Share thereafter
payable during such Year necessary to cause the total monthly payments
during such Year to equal Landlord's then current estimate of the
Tenant's Tax Proportionate Share for such Year. Tenant shall
thereafter pay such revised monthly payment amount on the first day of
each calendar month thereafter during such Year.
(b) CORRECTION OF OPERATING ADJUSTMENT RENT. Each Year
Landlord shall deliver to Tenant a report setting forth the actual
Operating Costs for the preceding Year and a statement of the amount
of Operating Adjustment Rent that Tenant has paid and is payable for
that preceding Year. Within thirty (30) days after receipt of such
report, Tenant shall pay to Landlord the amount of Operating
Adjustment Rent due for the preceding Year (or a portion thereof if
the Lease was not in effect for the entire Year) minus any estimated
payments made by Tenant or credits due Tenant for such previous Year.
If Tenant's estimated payments of Operating Adjustment Rent exceed the
amount due Landlord for the Comparison Year in question, Landlord, at
its option, shall either refund any such amount to Tenant or apply any
such amount as a credit against Tenant's other obligations under this
Lease.
(c) CORRECTION OF TAX ADJUSTMENT RENT. Each Year
Landlord shall deliver to Tenant a report setting forth the actual
Taxes for the preceding Year and a statement of the amount of Tax
Adjustment Rent that Tenant has paid and is payable for that preceding
Year. Within thirty (30) days after receipt of such report, Tenant
shall pay to Landlord the amount of Tax Adjustment Rent due for the
preceding Year (or a portion thereof if the Lease was not in effect
for the entire Year) minus any estimated payments made by Tenant or
credits due Tenant for such previous Year. If Tenant's estimated
payments of Tax Adjustment Rent exceed the amount due Landlord for the
Comparison Year in question, Landlord, at its option, shall either
refund any such amount to Tenant or apply any such amount as a credit
against Tenant's other obligations under this Lease.
- 3 -
<PAGE> 26
2.03 RULES OF INTERPRETATION AND COMPUTATION OF BASE RENT AND RENT
ADJUSTMENTS:
(a) COMMENCEMENT AND END. If this Lease commences or
ends on other than the first day or last day of a month, respectively,
the Rent for the month in which this Lease so begins or ends shall be
prorated. The Rent due for any such month shall be a sum equal to the
total of the Base Rent, Operating Adjustment Rent and Tax Adjustment
Rent payable for a full month multiplied by a fraction, the numerator
of which is the number of days in the month in which the Lease was in
effect and the denominator of which is the total number of days in the
month.
(b) RENT WITHOUT DEDUCTION. All Rent shall be paid to
Manager without deduction or offset at the office of Manager at the
Property or to such other person or place as Landlord may from time to
time designate in writing. The covenants to pay Rent shall be
independent of any other covenant.
(c) NO REFUND IF DEFAULT. If Tenant is in default of any
of its obligations under this Lease, Tenant shall not be entitled to
any refund of any sum which may otherwise be due it by application of
any provision of this Lease until any and all Tenant's defaults under
the Lease are cured by Tenant.
(d) CHANGES TO PROPORTIONATE SHARE. If any changes are
made to this Lease or to the Property changing the number of Rentable
Square Feet contained in the Leased Premises or significantly changing
the number of Rentable Square Feet in the Property, Tenant's Operating
Proportionate Share and Tenant's Tax Proportionate Share may be
appropriately adjusted.
(e) CERTIFICATION OF OPERATING COSTS AND TAXES. The
annual statement of actual Operating Costs and Taxes to be furnished
by Landlord under this Section shall be prepared in accordance with
generally accepted accounting principles. Failure by Landlord to
submit such a statement shall not prejudice Landlord's right to
collect any Rent or other sum that is due. In the event of any
dispute as to any Operating Adjustment Rent or Tax Adjustment Rent,
Tenant shall have the right to inspect Landlord's accounting records
relative to Operating Costs and Taxes at Landlord's accounting office
during normal business hours at any time within sixty (60) days
following the furnishing by Landlord to Tenant of such statement.
Unless Tenant shall take written exception to any item in any such
statement within such sixty (60) day period, such statement shall be
considered as final and accepted by Tenant. If Tenant makes such
timely written exception, a certification as to the proper amount of
Operating Adjustment Rent and Tax Adjustment Rent shall be made by
Landlord's independent certified public accountant which shall be
final and conclusive. Tenant agrees to pay the cost of such
certification unless it is determined that Landlord's original
determination of Taxes and Operating Costs was in error by more than
three percent (3%).
(f) SURVIVAL OF RENT OBLIGATIONS. In the event of the
termination of this Lease by expiration of the Term or for any other
cause or reason whatsoever prior to the determination of Operating
Adjustment Rent, Tax Adjustment Rent and Additional Rent, Tenant's
agreement to pay any such sums shall survive termination of the Lease.
Tenant shall pay any amount due to Landlord within fifteen (15) days
after being billed therefor. In the event of the termination of this
Lease by expiration of the Term or for any other cause or reason
whatsoever, except default by Tenant of any of the terms or provisions
of this Lease, prior to the determination of
- 4 -
<PAGE> 27
Operating Adjustment Rent or Tax Adjustment Rent, as hereinabove set
forth, Landlord's agreement to refund any excess Tenant's estimates
paid by Tenant over the Operating Adjustment Rent or Tax Adjustment
Rent up to the time of termination shall survive termination of the
Lease and Landlord shall pay the amount due to Tenant within fifteen
(15) days of Landlord's determination of such amount.
(g) BASE RENT LIMITATION ON ADJUSTMENT. No adjustment to
Operating Adjustment Rent or Tax Adjustment Rent shall result in the
payment by Tenant in any Comparison Year of less than the Base Rent
shown on the Schedule. All amounts owed to Landlord hereunder, for
which the date of payment is not expressly fixed herein, shall be paid
within thirty (30) days from the date Landlord renders statements of
account therefor and shall bear interest at the rate provided in
Section 15.06 from the date due until paid.
(h) LATE PAYMENTS. Any payment of Rent which is not
received within five (5) days after it is due will be subject to a
late charge equal to five percent (5%) of the unpaid payment, or
$100.00, whichever is greater. This amount is in compensation of
Landlord's additional cost of processing late payments.
(i) APPLICATION OF PAYMENTS. Landlord shall have the
right to apply payments received from Tenant pursuant to this Lease
(regardless of Tenant's designation of such payments) to satisfy any
obligations of Tenant hereunder, in such order and amounts as Landlord
in its sole discretion may elect.
3.00 SECURITY DEPOSIT. (See Schedule)
3.01 USE AND APPLICATION. As additional security for the full and
prompt performance of its obligations hereunder, Tenant has concurrently with
the execution of this Lease paid to Landlord the amount set forth on the
Schedule. Said Security Deposit need not be segregated and may be applied by
Landlord for the purpose of payment of Rent or other sums due from Tenant,
curing any default or defaults of Tenant hereunder, or for the payment of any
sum which Landlord may be required to expend by reason of Tenant's default or
to pay to Landlord any loss or damages Landlord may suffer by reason of
Tenant's default. Tenant shall replenish said deposit in full within five (5)
days after written demand therefor by paying to Landlord on demand the amount
so applied. Tenant's failure to do so shall be a material breach of this
Lease. Application of the Security Deposit, or any portion thereof, by
Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by law (it being intended that Landlord shall not
first be required to proceed against the Security Deposit) and shall not
operate as a limitation on any recovery to which Landlord may otherwise be
entitled. Landlord shall not pay any interest on said deposit except as
required by law. After the termination of this Lease and the vacation of the
Leased Premises by Tenant, any portion of said Security Deposit then being held
by Landlord which Landlord is not entitled to apply as aforesaid shall be
returned to Tenant. In the absence of evidence satisfactory to Landlord of any
permitted assignment of the right to receive the Security Deposit or the
remaining balance thereof, Landlord may return the same to the original Tenant,
regardless of one or more assignments of Tenant's interest in this Lease or the
Security Deposit. In such event Landlord shall be completely relieved of
liability under Section 3.00 or otherwise with respect to the Security Deposit.
Said Security Deposit shall not be deemed an advance payment of Rent, a payment
of Rent for the last month of the Term, a payment of liquidated damages, or a
measure of Landlord's damages for any default hereunder by Tenant. The use,
application or intention of the Security Deposit, or any portion thereof, by
Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by
- 5 -
<PAGE> 28
law, it being intended that Landlord shall not first be required to proceed
against the Security Deposit, and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled.
3.02 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that
Landlord has the right to transfer or mortgage its interests in the Property,
and this Lease, or any of them, and Tenant agrees that in the event of any such
transfer, Landlord shall have the right to transfer all its interests with
respect to the Property, including but not limited to, the Security Deposit to
the transferee. Upon the delivery by Landlord to such transferee of said
interests, including the Security Deposit, Landlord shall be released from all
liability or obligation for the return of, or otherwise with respect to said
interests, or the Security Deposit or interest thereon, and Tenant, for itself
and its successors and assigns, agrees to look solely to such transferee
thereafter, including, but not limited to the return of the Security Deposit
and interest thereon, if any.
4.00 USE OF LEASED PREMISES. The Leased Premises shall be occupied
and used by Tenant only for executive and general administrative offices
directly pertaining to the operation of Tenant's business for the use set forth
on the Schedule, and for no other purpose. Without limiting the generality of
the foregoing, no use shall be made of the Leased Premises nor acts done which
will increase the existing rate of insurance upon the Property or cause a
cancellation of any insurance policy covering the Property or any part thereof.
Tenant shall not permit to be kept, used or sold in or about the Leased
Premises any article which may be prohibited by Landlord's insurance policies.
Tenant will not in any way obstruct or interfere with the rights of other
tenants or injure or annoy them. Tenant shall not occupy or use the Leased
Premises or permit the Leased Premises to be occupied or used for any purpose,
act or thing which is in violation of any public law, ordinance or governmental
regulation which is now in effect or may be enacted after the date of this
Lease, or which may be dangerous to persons or property.
5.00 BUILDING SERVICES. Landlord agrees to furnish services to the
Tenant without charge except for electricity and as otherwise specifically
provided herein, as follows:
(a) HEAT. During reasonable hours (8:00 a.m. to 6:00
p.m. Monday through Friday and 9:00 a.m. to 1:00 p.m. on Saturdays) or
such hours as generally maintained by comparable office buildings in
the area, of generally recognized business days, as reasonably
determined by Landlord, for comfortable occupancy of the Leased
Premises by Tenant. Tenant agrees to keep and cause to be kept closed
all windows in the Leased Premises and shall keep closed doors
connecting the Leased Premises to public corridors and at all times to
cooperate fully with the Landlord in the operation of the heating
system and to abide by all reasonable regulations and requirements
which Landlord may prescribe to permit the proper functioning and
protection of the heating system. Landlord reserves the right to stop
the heating system when necessary by reason of accident or emergency
or for repairs, alterations, replacements or improvements, which in
the judgment of the Landlord are desirable or necessary, until said
repairs, alterations, replacements, or improvements shall have been
completed. Landlord shall have no responsibility or liability for
failure to supply heating during said period mentioned just above or
when prevented from so doing by any cause beyond Landlord's reasonable
control or by laws, orders or regulations of any Federal, State,
County or Municipal authorities and Tenant shall be entitled to no
diminution or abatement of Rent by reason of the stoppage of such
heating for any of the aforesaid reasons whatsoever nor shall the same
in any way affect the obligation of Tenant to perform and fulfill its
covenants under this Lease. Landlord agrees to make any repairs to
the heating system promptly and with due diligence.
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<PAGE> 29
(b) AIR CONDITIONING. Landlord shall operate an air
conditioning system in the Leased Premises on generally recognized
business days during generally recognized business hours (8:00 a.m. to
6:00 p.m. on Monday through Friday and 9:00 a.m. to 1:00 p.m. on
Saturdays) or such hours as generally maintained by comparable office
buildings in the area, in accordance with rules and regulations
promulgated by Landlord, as may, in Landlord's judgement, be
reasonably required for comfortable occupancy of the Leased Premises
by Tenant. Landlord's obligation for such service will be for normal
business use and with light office machinery and shall not be
applicable to any areas in the Leased Premises using heavy business
machinery or other use which adversely affects the temperature or
humidity which would otherwise be maintained in the Leased Premises.
Tenant agrees to keep and cause to be kept closed all windows in the
Leased Premises and shall keep closed doors connecting the Leased
Premises to public corridors and at all times to cooperate fully with
the Landlord in the operation of said system and to abide by all
reasonable regulations and requirements which Landlord may prescribe
to permit the proper functioning and protection of the air
conditioning systems. Landlord reserves the right to stop the air
conditioning systems when necessary by reason of accident or emergency
or for repairs, alterations, replacements or improvements, which in
the judgement of the Landlord are desirable or necessary, until said
repairs, alterations, replacements or improvements, shall have been
completed. Landlord shall have no responsibility or liability for
failure to supply air conditioning during said period mentioned just
above or when prevented from so doing by any cause beyond Landlord's
reasonable control or by laws, orders or regulations of any Federal,
State, County or Municipal authorities and Tenant shall be entitled to
no diminution or abatement of Rent by reason of the stoppage of such
air cooling or conditioning for any of the aforesaid reasons
whatsoever nor shall the same in any way affect the obligation of
Tenant to perform and fulfill its covenants under this Lease.
Landlord agrees to make any repairs to the air conditioning system
promptly and with due diligence.
Whenever heavy concentration of personnel, motors, machines or
equipment, including telephone equipment, used in the Leased Premises
adversely affect the temperature or humidity otherwise maintained by
the air conditioning system, Landlord reserves the right to install
supplementary air conditioning units in the Leased Premises and the
cost thereof, including the cost of installation and the cost of
operation and maintenance thereof, shall be paid by Tenant to Landlord
upon demand by Landlord.
(c) EXTRA HOURS. Landlord may also furnish heat and air
conditioning at such other times as are not provided for above on
condition that Tenant gives Landlord not less than two (2) business
days notice of Tenant's needs for such additional heating or air
conditioning and provided Tenant pays to Landlord its regular charges
for such additional heating or air conditioning at rates to be
established from time to time. Such charges will be prorated by
Landlord between requesting user-tenants if more than one tenant in
the Building requests such additional heating or air conditioning at
overlapping times and the proration shall be based on the area of the
Building leased to such tenants and their respective periods of use.
(d) WATER. Landlord shall furnish cold water from
regular Building outlets for drinking, lavatory and toilet purposes
drawn through fixtures installed by Landlord, and hot water for
lavatory purposes from the regular supply of the Building. Tenant
shall pay Landlord at rates fixed by Landlord for water furnished for
any other purpose as Additional Rent hereunder. Tenant shall not
waste or permit the waste of water. Landlord shall furnish water as
provided by the Village of Oak Brook without any additional treatment.
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(e) JANITORIAL SERVICE. Landlord shall furnish
janitorial and cleaning services as set forth in Appendix E - Cleaning
Specifications, which specifications may be amended from time to time
hereafter. Tenant shall not provide janitor services without the
prior written consent of Landlord and then only subject to the
supervision of Landlord (but not as agent or servant of Landlord) and
at Tenant's sole responsibility, cost and expense, by contractors or
employees satisfactory to Landlord.
(f) ELEVATOR SERVICE. Landlord shall furnish
operatorless passenger elevator service in common with Landlord and
other tenants. Freight elevator service shall be available in common
with Landlord and other tenants and any use of the freight elevator
service by Tenant and contractors or employees of Tenant shall be at
Tenant's sole responsibility and expense and at times satisfactory to
and subject to scheduling by Landlord. Tenant shall abide by all
rules and regulations established by Landlord from time to time with
respect to the use of passenger elevator service and freight elevator
service.
(g) WINDOW COVERINGS. Landlord shall determine treatment
for exterior windows of standard type and color for the Building,
which Tenant agrees not to remove or alter.
(h) ELECTRICITY. Landlord will furnish all electricity
consumed in the Leased Premises. Tenant shall pay for all electricity
required during janitorial service and for alterations and repairs to
the Leased Premises. Tenant shall also pay for all electricity
required for the operation of any special air conditioning,
ventilating, office machinery, or equipment requiring extra
electricity.
Tenant covenants and agrees that Landlord shall in no event be liable
or responsible to Tenant for any loss, damage or expense which Tenant
may sustain or incur if either the quality or character of electrical
service is changed or is no longer suitable for Tenant's requirements.
Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to the
Building when reviewed in conjunction with electrical usage of other
tenants in the Building or in the Leased Premises or wiring or
installation; and also that it shall make no alterations or additions
to the electric equipment and/or appliances without obtaining the
prior written consent of Landlord in each instance.
(1) Separately metered electricity. In the event the
Leased Premises are separately metered, Tenant shall make
arrangements directly with the utility servicing the Building
and shall pay the entire cost of all electricity consumed
within the Leased Premises.
(2) Not separately metered electricity. In the event the
Leased Premises are not separately metered for electricity,
Tenant shall pay Landlord on a flat rate basis for the cost of
such electricity at the rate shown on the Schedule. Payment
of such annual rate shall be made in 12 monthly installments
of one-twelfth (1/12) of such annual rate on the first day of
each calendar month during the Term and shall be deemed to be
additional Rent hereunder. Landlord shall have the exclusive
right to adjust Tenant's annual rate for electricity at any
time to reflect any increase in the cost of electricity to
Landlord or any increase in use of electricity by Tenant.
At any time hereafter, and to the extent permitted or required
by law or regulation, Landlord shall have the option to
require Tenant to pay such electricity charges directly to the
utility supplying the electricity and to have Tenant reimburse
Landlord for the cost of separate
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meters serving the Leased Premises and for the cost of installation
thereof and in that event the monthly charge referred to in Section
5.00 (i)(2) above shall be discontinued.
(i) INTERRUPTION OF SERVICE. Landlord does not warrant
that any service or any equipment used in connection with the services
stated herein will be free from interruptions and Landlord reserves
the right to temporarily discontinue such service as may be necessary
by reason of repairs, renewals or improvements, by strike, lockout or
other labor controversies, accidents, inability to obtain fuel, steam,
water or supplies, governmental regulations, any accident or casualty
whatsoever, the act or default of Tenant or other persons or other
causes beyond the reasonable control of Landlord. No such
interruption of service shall be deemed an eviction or disturbance of
Tenant's use and possession of the Leased Premises or any part
thereof, or render Landlord liable to relieve Tenant from performance
of Tenant's obligations under this Lease, nor shall Tenant be entitled
to diminution or abatement of Rent by reason of the unavailability of
said service. Tenant hereby waives and releases all claims against
Landlord for damages for interruption or stoppage of service. Should
service to Tenant be interrupted due to Landlord's negligent or
willful act or failure to act for five (5) consecutive business days
or longer, Base Rent shall be abated on a per diem basis for the
period and to the extent that Tenant is unable to utilize the Leased
Premises due to the unavailability of air conditioning, water, heat or
electricity. Notwithstanding anything contained herein to the
contrary, except when Landlord is prevented from so delivering said
service by any cause beyond Landlord's reasonable control or by laws,
orders or regulations of any federal, state, county or municipal
authorities, should service to Tenant be interrupted for one hundred
eighty (180) consecutive days, Tenant may, upon thirty (30) days'
prior written notice to Landlord, terminate this Lease, provided that
Rent shall be paid through the date such service was interrupted.
Landlord shall not be obligated to provide any services other than
those expressly set forth above. The foregoing notwithstanding, if
Landlord provides any additional work or services requested by Tenant
or provides any unusual amount of the work or services provided
(including service furnished outside any stipulated hours), Tenant
shall pay Landlord, as Additional Rent hereunder, at rates as Landlord
may from time to time establish.
6.00 TENANT'S OBLIGATIONS.
6.01 REPAIRS. Except for ordinary wear and as otherwise provided
in this Lease, Tenant shall at all times during the Term hereof, at its sole
expense, keep the Leased Premises and every part thereof in good order, repair
and condition, and Tenant shall arrange with Landlord at Tenant's sole expense
for the prompt repair of all damages to the Leased Premises and the replacement
or repair of all damaged or broken glass (including signs thereon), fixtures
and appurtenances (including hardware and heating, cooling, ventilating,
electrical, plumbing and other mechanical facilities in the Leased Premises),
with materials equal in quality and class to the original materials damaged or
broken, all repairs and replacements to be made under the supervision and with
the prior written approval of Landlord, using contractors or persons designated
by Landlord. If Tenant does not promptly make such arrangements, Landlord may,
but need not, make such repairs and replacements and the amount paid by
Landlord for such repairs and replacements shall be deemed Additional Rent
reserved under this Lease due and payable forthwith. Landlord and its
designees may, but shall not be required to, enter the Leased Premises at all
reasonable times to make any repairs, alterations, improvements or additions,
including, but not limited to, ducts and all other facilities for heating and
air conditioning service, as Landlord shall desire or deem necessary for the
safety, preservation or improvement of the Property, or as Landlord may be
required to do by any governmental authority or court order or decree. The
cost of all repairs to the Property made necessary as a result of misuse or
neglect by Tenant or Tenant's employees, invitees or agents including a
percentage
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thereof sufficient to reimburse Landlord for overhead, general conditions, fees
and other costs arising from Landlord's involvement in said repairs, shall be
immediately paid as Additional Rent by Tenant to Landlord upon being billed for
same.
6.02 DOORS TO BE LOCKED. Before leaving the Leased Premises
unattended, Tenant shall close and securely lock all doors providing access to
the Leased Premises to the extent the controls for same are within the Leased
Premises, shut off all utilities in the Leased Premises. Any damage resulting
from failure to do so shall be paid by Tenant.
6.03 HOLDING OVER. Tenant shall pay to Landlord the monthly Rent
computed on a per month basis for each month or part thereof (without reduction
for any such partial month) Tenant retains possession of the Leased Premises or
any part thereof after the expiration of the Term, by lapse of time or
otherwise, at double the amount of the Rent then required by the terms hereof
for the last monthly period prior to the date of such expiration and also pay
all damages, direct or indirect, sustained by Landlord by reason of such
retention beyond a period of thirty (30) days, or, if Landlord gives notice in
writing to Tenant (and not otherwise), such holding over shall constitute
renewal of this Lease at Landlord's election for either (i) two hundred percent
(200%) of the then current Rent (including Additional Rent); or (ii) that
amount set forth in a written notice from Landlord to Tenant prior to the
holding over, but acceptance by Landlord of Rent after such expiration shall
not constitute a renewal or extension nor waive Landlord's right of re-entry or
any other right of Landlord.
6.04 LAWS, RULES AND REGULATIONS. With respect to the Leased
Premises and the use and occupancy thereof, Tenant agrees that it and its
employees, agents, clients, customers, invitees, visitors and guests will
comply with all rules and regulations ("Rules and Regulations") Landlord may
adopt from time to time for the use, safety, cleanliness and care of the
Property and its tenants and occupants, and to comply with all laws,
ordinances, orders, Rules and Regulations, and all decrees of court and with
the directions of any governmental department or agency. Present Rules and
Regulations of Landlord are contained in Appendix F. The violation of the
Rules and Regulations governing Tenant's use of the Leased Premises shall be a
default under this Lease allowing Landlord all remedies for default provided
under this Lease and any remedies available at law or in equity, including the
right to enjoin any breach of such Rules and Regulations. Landlord shall not
be responsible to Tenant for violation of Rules and Regulations or terms of
this Lease by another tenant nor shall failure to obey the same by others or
lack of enforcement relieve Tenant from its obligations to comply therewith.
Modifications or additions to the Rules and Regulations will be effective upon
notice to Tenant from Landlord and in the event of any conflict between the
provisions of this Lease and the Rules and Regulations, the provisions of this
Lease will govern. Landlord shall use reasonable efforts to enforce the rules
and regulations of the Building in a uniform and non-discriminatory manner.
6.05 UNLAWFUL USE. Tenant shall not make or permit any use of the
Leased Premises which, directly or indirectly, is forbidden by law, ordinance,
governmental or municipal regulations or order, or which may be dangerous to
life, limb or property.
6.06 HAZARDOUS MATERIALS. Tenant shall not use or permit to be
brought into or kept in the Leased Premises or on the Property any inflammable
oils or fluids, or any explosive or other articles deemed hazardous to person
or property; or do or permit to be done any act or thing which will invalidate
or be in conflict with fire or other insurance policies covering the Property
or its operation, or the Leased Premises, or part of either, or do or permit to
be done anything in or upon the Leased Premises, which shall not comply with
all rules, orders, regulations or requirements of the Illinois Inspection and
Rating Bureau, the Fire Insurance Rating Organization, the Board of Fire
Underwriters, or any similar organization
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(and Tenant shall at all times comply with all such rules, regulations or
requirements), or which shall increase the rate of insurance on the Property,
its appurtenances or contents. If by reason of the failure of Tenant to comply
with the provisions of this paragraph, including, but not limited to, the use
to which Tenant shall put the Leased Premises, any insurance coverage is
jeopardized or insurance premiums are at any time increased above what they
otherwise would be, Landlord shall have the option, in addition to its other
rights and remedies, either to terminate this Lease or to require Tenant to
make immediate payment of the increased insurance premium as Additional Rent.
6.07 VARIOUS PROHIBITED USES. Tenant shall not install or operate
any refrigerating, heating or air conditioning apparatus or carry on any
mechanical business without the prior written consent of Landlord; use the
Leased Premises for housing, lodging or sleeping purposes or for any immoral or
illegal purposes; permit preparation or warming of food in the Leased Premises
(warming of coffee and individual meals of employees excepted); permit food to
be brought into the Leased Premises for sale or consumption therein except
coffee and individual meals of employees, without the prior written consent of
Landlord, or permit the manufacture, sale, purchase, use or gift of any
alcoholic liquors in the Leased Premises or on the Property. Landlord may in
its sole discretion refuse permission or impose any conditions in granting it,
and revoke it at will.
6.08 SOUND DEVICES. Tenant shall not place any radio or television
antenna aerial wires or other equipment on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises;
operate or permit to be operated any musical or sound producing instrument or
device inside or outside the Leased Premises which may be heard outside the
Leased Premises; or operate any electrical device which may interfere with or
impair radio or television broadcasting or reception from or in the Property or
elsewhere.
6.09 ADDITIONAL LOCKS. Tenant shall not attach or permit to be
attached additional locks or similar devices to any door, transom or window;
change existing locks or the mechanism thereof; or make or permit to be made
any keys for any door other than those provided by Landlord. (If more than two
(2) keys for one (1) lock are desired, Landlord will provide them upon payment
therefor by Tenant.)
6.10 OVERLOAD ANY FLOOR. Tenant shall not overload any floor.
6.11 DEFACING LEASED PREMISES. Except for Decoration (as
hereinafter defined), Tenant shall not do any painting or decorating in the
Leased Premises; or mark, paint, cut or drill into, drive nails or screws into,
or in any way deface any part of the Leased Premises or the Building, outside
or inside, without the prior written consent of Landlord. (If Tenant desires
signal, communication, alarm or other utility security or alarm systems, or
service connections installed or changed, the same shall be made by and at the
expense of Tenant, with the written approval and under direction of Landlord.)
For purposes of this Section 6.11 and Section 6.12 of this Lease, "Decoration"
shall be deemed to mean any alteration, improvement, addition, installation or
construction (for example, painting the interior walls, installing carpeting or
picture hanging) in or to the Leased Premises or any Building systems serving
the Leased Premises by the Tenant which does not require a building permit and
which does not involve any of the structural elements of the Building, or any
of the Building's systems, including, without limitation, its electrical,
mechanical, plumbing and security and life/safety systems. Subject to all
other requirements of this Section 6.11 and Section 6.12, Tenant may undertake
Decoration work without Landlord's prior written consent.
6.12 ALTERATIONS. Except for Decoration, Tenant shall not do any
painting or decorating, erect any partitions, make any installations,
alterations, improvements or additions in or to the
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Leased Premises without submitting plans and specifications to Landlord and
securing the prior written consent of Landlord in each instance. Landlord need
not give its consent, but if Landlord does, it may impose such conditions with
respect thereto as Landlord deems appropriate, including, without limitation,
requiring Tenant to furnish Landlord with security for the payment of all costs
to be incurred in connection with such work and insurance against liabilities
that may arise out of such work. Such work shall be done at the sole cost and
expense of Tenant by employees of or contractors employed by Landlord, or with
Landlord's consent in writing given prior to letting of contract, by
contractors employed by Tenant, but in each case, only under written contract
previously approved in writing by Landlord. All installations, alterations,
improvements and additions shall be constructed in a good and workmanlike
manner and only new and good grades of material shall be used, with quality at
least equal to that used in the Building and shall comply with all insurance
requirements, and with all applicable laws, ordinances, rules and regulations
of governmental departments or agencies. Tenant shall promptly pay when due
the cost of all such work and of decoration required by reason thereof and
reimburse Landlord for its cost, including reasonable compensation for
Landlord's general conditions, fees and other costs and expenses arising from
the involvement of Landlord or Manager in such work. Tenant shall permit
Landlord to supervise all construction operations within the Leased Premises.
If alterations are made by Tenant's contractors, Tenant shall furnish to
Landlord prior to commencement thereof building permits, bonds and certificates
of appropriate insurance, title insurance or bond for mechanics' liens, and
each shall name Landlord as an additional insured party, and upon completion of
any installation, alteration, improvement or addition, Contractor's Affidavits
and full and final Waivers of Lien covering all labor and material expended and
used. Tenant shall hold Landlord harmless from all claims, costs, damages,
liens and expenses which may arise out of or be connected in any way with said
installations, alterations, improvements or additions. All alterations,
additions, fixtures and improvements, whether temporary or permanent in
character, made in or upon the Leased Premises either by Tenant or Landlord
will immediately become Landlord's property and at the end of the Term remain
in the Leased Premises without compensation to Tenant unless Landlord notifies
Tenant at the time such alterations, additions, fixtures or improvements are
approved that such alterations, additions, fixtures or improvements must be
removed by Tenant on or before the end of the Term in compliance with the
requirements of this Section 6.12.
Any work permitted to be undertaken by Tenant shall be performed in
such a fashion and by such means as necessary to maintain peace and harmony
among the other contractors including, but not limited to, collective
bargaining agreements and organizations serving the Property and the other
tenants and so as not to cause interference with the continuance of work to be
performed or services to be rendered to the Property or the other tenants.
Tenant agrees to protect, defend and indemnify Landlord, its officers,
agents and employees, the Leased Premises and the Property from and against any
and all liabilities of every kind and description which may arise out of or be
connected in any way with said alterations, improvements or repairs or the like
whether performed by or under the direction of Landlord and at the cost of
Tenant or performed by Tenant. Any mechanics' lien filed against the Leased
Premises or the Property or any notice which is received by either Landlord or
Tenant for work or materials furnished or claimed to be furnished to Tenant or
the Leased Premises shall be released and discharged by Tenant; and, if such
lien or notice is filed, it shall be released and discharged of record by
Tenant, in either case, within ten (10) days after such filing or receipt,
whichever is applicable, at Tenant's expense. If Tenant chooses to contest
such claim, notice or lien, Tenant may do so in place of causing the release
and discharge thereof provided Tenant, within said ten (10) day period,
delivers to Landlord security reasonably required by Landlord to guarantee over
such claim or lien. Upon completion of any of the above-mentioned work in this
Section 6.00 and its subdivisions, Tenant shall furnish Landlord with
contractors' affidavits and full and final waivers of lien, each conforming to
the applicable Illinois statutory requirements, and receipted bills covering
all labor and materials expended and used. Insofar as applicable to the work
or material for which payment is requested or notice or lien claim
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is made, Landlord in its sole discretion shall make available for partial or
final payment or release thereof such funds as may have been deposited with it
by Tenant for the estimated cost of such work. Landlord may require that
Tenant remove any or all alterations, additions, fixtures and improvements
which were made in or upon the Leased Premises after the initial improvements
to the Leased Premises, provided Landlord notifies Tenant at the time Landlord
is aware of and is asked to consent to such alteration, additions, fixtures and
improvement that Tenant will be required to remove same at the end of the Term.
In that event, Tenant shall remove such alterations, additions, fixtures and
improvements at Tenant's sole cost and will restore the Leased Premises to the
condition in which they were before such alterations, additions, fixtures,
improvements and additions were made, reasonable wear and tear excepted.
Tenant will have the right to install or relocate free standing work
station partitions either as part of the initial improvement of the Leased
Premises, or, after such initial improvement, without Landlord's prior written
consent, so long as no building or other governmental permit is required for
their installation or relocation; however, if a permit is required, Landlord
will not unreasonably withhold its consent to such relocation or installation.
Tenant acknowledges that any installation or relocation of such partition may
affect the heating, cooling, power and lighting required by the Leased Premises
and any increased costs attributable to such changes will be payable by Tenant
to Landlord as Additional Rent. The free standing work station partitions for
which Tenant pays will be part of Tenant's trade fixtures for all purposes
under this Lease. All other partitions which are installed in the Leased
Premises are and will be Landlord's property for all purposes under this Lease.
7.00 RIGHTS RESERVED TO LANDLORD. Landlord shall have the
following rights exercisable without notice and without liability to Tenant for
damage or injury to property, person or business (all claims against Landlord
for damage being hereby released), and the exercise thereof shall not be deemed
to effect an eviction or disturbance of Tenant's use or possession or give rise
to any claim for setoff, or abatement of Rent or any other claim or affect any
of Tenant's obligations hereunder:
7.01 CHANGE NAME OR ADDRESS. To change the name or street address
of the Building or Property;
7.02 SIGNS. To install and maintain signs on the exterior and
interior of the Building or anywhere on the Property;
7.03 DESIGNATE SOURCES. To designate all sources furnishing sign
painting and lettering, ice, mineral or drinking water, beverages, foods,
towels, vending machines, lamps or bulbs, or toilet supplies used or consumed
on the Property;
7.04 PASS KEYS. To retain at all times and to use passkeys to the
Leased Premises and keys to all locks within and into the Leased Premises. No
locks or bolts shall be altered, changed or added without the prior written
consent of Landlord;
7.05 REDECORATE IF VACANT. To decorate, remodel, repair, alter or
otherwise prepare the Leased Premises for reoccupancy any time after Tenant
vacates or abandons the Leased Premises. Such acts of Landlord shall not
relieve Tenant of its obligation to pay Rent to the Termination Date;
7.06 INSPECT AND EXHIBIT. To enter the Leased Premises at
reasonable hours to make inspections, or to exhibit the Leased Premises to
prospective tenants, lenders, purchasers or others, or for other reasonable
purposes;
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7.07 MAIL CHUTES. To have access to all mail chutes according to
the rules of the United States Post Office;
7.08 ENTRY AND EXIT. To require all persons entering or leaving
the Building or Property during such hours as Landlord may from time to time
reasonably determine to identify themselves to a watchman by registration or
otherwise and to establish their right to leave or enter, and to exclude or
expel any peddler, solicitor or beggar at any time from the Leased Premises or
the Property; and to require Tenant, its employees, agents, and visitors to
enter and exit the Property at locations and in such fashion as Landlord may
designate from time to time, and in all other respects to control the entrance
and access to the Property;
7.09 LOCATION APPROVAL. To approve the weight, size and location
of safes, filing cabinets or systems, computers, all other heavy articles in
and about the Leased Premises and the Building and to require all such items
and other office furniture and equipment to be moved in and out of the Property
and Leased Premises only at such time and in such manner as Landlord shall
direct and in all events at Tenant's sole risk and responsibility;
7.10 REPAIRS. At any time or times, to decorate and to make
repairs, alterations, additions and improvements, structural or otherwise, in
or to the Leased Premises, the Property or part thereof, to erect, use and
maintain pipes, ducts, wiring and conduits in and through the Leased Premises,
and to perform any acts related to the safety, protection or preservation
thereof, and during such operations to take into and through the Leased
Premises or any part of the Property all material and equipment required, to
close or temporarily suspend operation of entrances, doors, corridors,
elevators or other facilities, to change the arrangements and/or location of
entrances or passageways, doors, and doorways and corridors, stairs, elevators,
toilets or other public parts of the Building or Property and to close
entrances, doors, corridors or other facilities. The exercise of the foregoing
rights shall not diminish any of Tenant's obligations hereunder as long as the
Leased Premises are reasonably accessible. If any such action permanently
reduces the size of the Leased Premises, Rent shall be proportionately reduced.
Landlord may do such work during ordinary business hours and Tenant shall pay
Landlord for overtime and for any other expenses incurred if such work is done
during other hours at Tenant's request. Landlord shall not be liable to Tenant
for any expense, injury, loss or damage resulting from work done in or upon or
the use of any adjacent or nearby building, land, street or alley;
7.11 ADJACENT WORK. To do or permit to be done any work in or
about the Leased Premises or the Property or any adjacent or nearby building,
parking garage, parking deck, parking lot, land, street or alley;
7.12 EXCLUSIVE RIGHTS. To grant to anyone the exclusive right to
conduct any business or render any service on the Property, provided such
exclusive right shall not operate to exclude Tenant from the use expressly
permitted to Tenant pursuant to this Lease;
7.13 VENDING MACHINES. To prohibit the placing of vending or
dispensing machines of any kind in or about the Leased Premises;
7.14 RELOCATE TENANT. To require Tenant to move to "equivalent
space" on any floor (other than the first four floors) or Building in the
Property upon receipt of thirty (30) days' written notice from Landlord, in
which event Landlord shall pay all reasonable moving costs, and the Rent
provided for herein shall remain the same. For purposes of this Section 7.14,
"equivalent space" shall be deemed to mean a space on the fifth, sixth or
seventh floor of any Building in the Property which has approximately
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the same rentable square feet, approximately the same amount of window line as
in the original Leased Premises with similar views to the West of the Leased
Premises, and similar identification and visibility from the elevator lobby.
Upon the effective date of such relocation this Lease will be amended by
deleting the description of the original Leased Premises and substituting for
it a description of such comparable space;
7.15 WINDOW TREATMENTS. To designate and approve, prior to
installation, all types of window shades, blinds, drapes, awnings, window
ventilators and other similar equipment and to control all the internal
lighting that may be visible from the exterior of the Building or Property;
7.16 DESIGNATE LOCK BOX. Manager may from time to time designate a
lock box collection agent to act as Landlord's agent for the collection of
amounts due Landlord. In such event the date of payment of Rent or other sums
paid Landlord through such agent shall be the date of agent's receipt of such
payment (or the date of collection of any such sum if payment is made in the
form of a negotiable instrument thereafter dishonored upon presentment);
7.17 EMERGENCY ACCESS. To enter the Leased Premise in the event of
an emergency and undertake repairs and/or take such other actions as
appropriate under the circumstances;
7.18 EXERCISE ALL OTHER RIGHTS. To take any and all measures,
including inspections, repairs, remodeling, alterations, additions and
improvements to the Leased Premises or to the Property, as may be necessary or
desirable for the safety, protection or preservation of the Leased Premises or
the Property for the Landlord's interests, or as may be necessary or desirable
in the operation of the Property, and to take any acts related thereto, and
such acts and reasonable disruptions related thereto shall not be considered a
disturbance or a constructive eviction of Tenant.
8.00 LANDLORD'S TITLE. Landlord's title is and always shall be
paramount to the title of Tenant hereunder. Nothing herein contained shall
empower Tenant to do any act which can, shall or may encumber the title of
Landlord.
9.00 QUIET ENJOYMENT. Landlord covenants that Tenant, on paying
the Rent and other payments provided herein, all of which obligations of Tenant
are independent of Landlord's obligations under this Lease, and keeping,
observing and performing the covenants, conditions, provisions and agreements
of this Lease on its part to be kept, observed and performed, shall and may
peaceably and quietly have, hold and enjoy the Leased Premises for the Term of
this Lease, subject to the provisions of this Lease.
10.00 WAIVER OF CERTAIN CLAIMS. To the fullest extent now or
hereafter permitted by law, Tenant waives and releases all claims against
Landlord, and its respective officers, directors, agents, employees and
servants, in respect of, and they shall not be liable for, injury to person or
damage to property sustained by Tenant or by any occupant of the Leased
Premises or the Property or any other person occurring in or about the Property
resulting directly or indirectly from any existing or future condition, defect,
matter or thing in the Leased Premises, the Property or any part of it, or from
equipment or appurtenance therein, or from accident, or from any occurrence,
act, negligence or omission of any tenant or occupant of the Property, or of
any other person, including, without limitation, Landlord, its officers,
directors, agents, employees and servants. This Section shall apply
especially, but not exclusively, to damage caused by leaking roofs, flooding of
basements or other sub-surface areas or by refrigerators, sprinkling devices,
air conditioning or heating apparatus, water, snow, frost, steam, excessive
heat or cold, falling plaster, broken glass, sewage, sewer gas or odors, noise,
fire, water or the bursting or leaking of pipes or plumbing fixtures, and shall
apply equally whether any such damage results from the act or
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omission of other tenants, occupants or servants of the Property or of any other
persons, including Landlord, or any of its respective officers, directors,
agents, employees and servants, and whether such damage be caused or result from
any thing or circumstance above mentioned, or any other thing or circumstance
whether alike or wholly different in nature. If any such damage to the Leased
Premises or the Property or any equipment or appurtenance therein, or to tenants
thereof, results from any act or omission or negligence of Tenant, its agents,
employees or invitees, Landlord may, at Landlord's option, repair such damage
and Tenant shall, upon demand by Landlord, reimburse Landlord forthwith for all
costs of such repairs and damages both to the Property and to the tenants
thereof. All property on the Property, in the Leased Premises, or elsewhere
belonging to Tenant, its agents, employees, or invitees, or to any occupant of
the Leased Premises shall be there at the risk of Tenant or other person only,
and Landlord shall not be liable for damage thereto or theft, misappropriation
or loss thereof. Without limitation on any other provisions hereof, Tenant
agrees to protect, indemnify, defend, and hold Landlord harmless against
liability to Tenant, its employees and to third parties against claims,
liabilities and costs including, but not limited to, attorneys' fees and costs,
for injuries to all persons and for damage to, or the theft, misappropriation or
loss of any property occurring in or about the Leased Premises, or due to any
act or omission of Tenant, its agents or employees or invitees.
11.00 PREPARATION AND CONDITION OF LEASED PREMISES. Tenant
acknowledges that except to the extent indicated in the Tenant Improvement Work
Agreement and Building Standard Work set forth therein, Landlord is leasing the
Leased Premises "as is" without any representations or warranties. If so
indicated on the Schedule, Landlord shall cause the Leased Premises to be
completed in accordance with the plans, specifications, and agreements and on
the terms, conditions and provisions as provided in the Tenant Improvement Work
Agreement. Miscellaneous minor finishing items and adjustments ("Punch List
Items") shall be detailed on a list of such items developed during an inspection
of the Leased Premises by representatives of Tenant and Landlord and which items
shall be remedied within a reasonable time after Possession Date, subject to
availability of materials and labor. In no event shall Tenant be entitled to
any credit against, or abatement of, Rent due to the existence of any Punch List
Items.
12.00 LEASE TERMINATION. At the termination of this Lease or
Tenant's right to possession by lapse of time or otherwise:
12.01 SURRENDER OF KEYS. Tenant shall surrender to Landlord all
keys and passes for offices, rooms, storage areas, parking lot and toilet rooms
which shall have been furnished Tenant and make known to Landlord the
explanation of all combination locks remaining on the Leased Premises.
12.02 RETURN OF LEASED PREMISES. Tenant shall return to Landlord
the Leased Premises and all equipment and fixtures of Landlord and flooring,
attached carpeting and other floor covering in the Leased Premises in good
condition and state of repair, subject, however, to (a) the provisions of
Sections 12.03 and 12.04 (b) ordinary wear, and (c) loss or damage by fire or
other casualty covered in Section 14.00 hereof, failing which Landlord may
re-enter the Leased Premises and restore the Leased Premises, equipment and
fixtures to such condition and state of repair and Tenant shall, upon demand,
pay to Landlord the cost thereof.
12.03 REMOVAL OF ADDITIONS. All installations, alterations,
additions, hardware, non-trade fixtures and improvements, temporary or
permanent, except movable furniture and equipment belonging to Tenant, in or
upon the Leased Premises, whether placed there by Tenant or Landlord, shall be
Landlord's property and shall be relinquished to Landlord in good condition,
ordinary wear and tear excepted, at the termination of this Lease or Tenant's
right to possession by lapse of time or otherwise, all without compensation,
allowance or credit to Tenant; provided, however, that if prior to such
termination
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or within ten (10) days thereafter Landlord so directs by notice, Tenant shall
promptly remove the installations, alterations, additions, hardware, non-trade
fixtures and improvements placed in or upon the Leased Premises by Tenant and
designated in the notice, failing which Landlord may remove the same and Tenant
shall, upon demand, pay to Landlord the cost of such removal and of any
necessary restoration of the Leased Premises. Notwithstanding anything herein
to the contrary, Tenant shall not be required to remove at the termination or
expiration of this Lease or Tenant's right to possession hereunder, any
permanent partitions or other permanent installations in place as of the
Commencement Date, except for the pneumatic tube running through the ceiling of
the lower level of the Building. During the Term, Landlord shall upon request
of Tenant, provide Tenant in advance a determination regarding Tenant's
obligation to remove any proposed installations, additions, fixtures or
improvements which determination shall be binding on all parties. The
provisions of this Section shall survive the termination of this Lease.
12.04 ABANDONMENT AND REMOVAL OF PROPERTY. All fixtures,
installations, and personal property belonging to Tenant not removed from the
Leased Premises upon termination of this Lease or Tenant's right to possession
and not required by Landlord to have been removed as provided herein shall be
conclusively presumed to have been abandoned by Tenant and title thereto shall
pass to Landlord under this Lease as by a bill of sale without any cost,
whether by set-off, credit, allowance or otherwise, and Landlord may, at its
option, accept the title to such property or, at Tenant's expense, may (i)
remove the same or any part in any manner that Landlord shall choose and (ii)
store, destroy or otherwise dispose of the same without incurring liability to
Tenant or any other person. Any such property of Tenant not removed from the
Leased Premises or retaken from storage by Tenant within thirty (30) days after
the end of the Term, however, terminated or any extension thereof, at
Landlord's sole option, shall be conclusively deemed to have been forever
abandoned by Tenant. All property which may be removed from the Leased
Premises by Landlord, may be handled, removed or stored in a commercial
warehouse or otherwise by Landlord at the risk, cost and expense of Tenant, and
Landlord shall in no event be responsible for the value, preservation and
safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Landlord's possession or under Landlord's
control.
13.00 ASSIGNMENT AND SUBLETTING. Tenant shall not, without the
prior written consent of the Landlord in each instance; (1) assign, transfer,
mortgage, pledge, hypothecate or encumber, or subject to or permit to exist
upon or be subjected to any lien or charge, this Lease or any interest under
it; (ii) allow to exist or occur any transfer of or lien upon this Lease or the
Tenant's interest herein by operation of law; (iii) sublet the Leased Premises
or any part thereof; or (iv) permit the use or occupancy of the Leased Premises
or any part thereof for any purpose not provided for under Section 4.00 of this
Lease or by anyone other than Tenant and Tenant's employees. In no event shall
this Lease be assigned or assignable by voluntary or involuntary bankruptcy
proceedings or otherwise, and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings. Notwithstanding anything to the contrary contained
in this Section 13.00, Tenant shall have the right, without the prior written
consent of Landlord, to sublease the Leased Premises, or to assign this Lease
to an Affiliate (as hereinafter defined) provided said assignment or sublease
shall not release or discharge tenant of or from any liability, whether past,
present or future, under this Lease, and Tenant shall continue fully liable
hereunder. For purposes of this Section 13.00, "Affiliate" shall be deemed to
mean any corporation or other business entity which is currently owned or
controlled by, owns or controls, or is under common ownership or control with
Tenant or purchases 100% of Tenant's assets.
If Tenant shall, by notice in writing, advise Landlord that it
intends, on a stated date (which shall not be less than sixty (60) days after
the date Landlord receives Tenant's notice), to assign or transfer its interest
as Tenant under this Lease, or to sublet any part or all of the Leased Premises
for the balance
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or any part of the Term, Landlord shall have the right, but not the obligation,
to be exercised by giving written notice to Tenant within thirty (30) days
after Landlord's receipt of Tenant's notice, to terminate this Lease with
respect to the space therein described as of the date stated in Tenant's
notice. Tenant's said notice shall state the name and address of the proposed
assignee or subtenant and a true and complete copy of the proposed sublease or
assignment and of all related documents shall be delivered to Landlord with
said notice. If Tenant's notice shall cover all of the Leased Premises, and
Landlord shall give the aforesaid termination notice, the Term of this Lease
shall expire and end on the date stated in Tenant's notice as fully and
completely as if that date had been herein definitely fixed for the expiration
of the Term. If, however, this Lease be cancelled pursuant to the foregoing
with respect to less than the entire Leased Premises, the Rent herein reserved
shall be adjusted on the basis of the number of Rentable Square Feet retained
by Tenant in proportion to the number of Rentable Square Feet in the entire
Leased Premises, and this Lease, as so amended, shall continue thereafter in
full force and effect. If Landlord, upon receiving Tenant's said notice with
respect to any such space, shall not exercise its right to cancel as aforesaid,
Landlord will not unreasonably withhold its consent to Tenant's assignment as
aforesaid or subletting the space covered by its notice. If this Lease is
terminated in whole or in part as aforesaid, Landlord shall be free to deal
directly with any such proposed assignee or sublessee without any
responsibility or liability to Tenant on account thereof.
Any subletting or assignment and collection of Rent from said
subtenant or assignee hereunder shall not release or discharge Tenant of or
from any liability, whether past, present or future, under this Lease, and
Tenant shall continue fully liable hereunder. The subtenant or subtenants or
assignee shall agree to comply with and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease to the extent of
the space sublet or assigned, and Tenant shall deliver to Landlord promptly
after execution an executed copy of each such sublease or assignment and an
agreement of compliance by each such subtenant or assignee.
Notwithstanding anything to the contrary in this Section
13.00, if Tenant is a corporation whose shares of stock are not publicly traded
or a partnership and if during the Term of this Lease the ownership of the
shares of stock which constitutes control of Tenant or more than fifty percent
(50%) of all general partnership interests changes by reason of sale, transfer
by operation of law or otherwise, gift or death, whether in a single
transaction or in a series of related or unrelated transactions, Tenant shall
notify Landlord of such change within five (5) days thereof, and Landlord, at
its option, may at any time thereafter terminate this Lease by giving Tenant
written notice of said termination at least sixty (60) days prior to the date
of termination stated in the notice. The term "control" as used herein means
the power to directly or indirectly direct or cause the direction of the
management or policies of Tenant.
If Tenant shall assign or transfer its interest in this Lease
or sublet the Leased Premises having first obtained Landlord's consent at a
rental in excess of the Rent due and payable by Tenant under the provisions of
Section 2.00 and of this Lease, fifty percent (50%) of said Excess Rent shall
be paid to the Landlord. Tenant agrees that Landlord's failure to consent
shall be deemed reasonable if, (i) in Landlord's opinion, the nature of the
business of an assignee, sublessee or transferee (a) is inconsistent with any
other tenant leases containing provisions against Landlord's leasing space in
the Property for certain uses, or (b) may have an adverse impact upon the
first-class, high-grade manner, in which the Property is operated or with the
high reputation of the Property, or (ii) the assignee, sublessee or transferee
is a tenant in the Property, a governmental entity, or is a high traffic
tenant, or has an unusually high parking requirement, even though in any of the
foregoing circumstances the potential assignee, sublessee or transferee may
have a good credit rating.
Any sale, assignment, mortgage, transfer or subletting of this
Lease which is not in compliance with the provisions of this Section shall be
of no effect and void.
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14.00 CASUALTY. In the event (a) all or any portion of the Leased
Premises are made untenantable by fire or other casualty and Landlord shall
decide not to restore or repair same, or (b) the Property is so damaged by fire
or other casualty that Landlord shall decide to demolish or not rebuild the
same, then, in any of such events, Landlord shall have the right to terminate
this Lease by notice to Tenant within ninety (90) days after the date of such
fire or other casualty and the Rent shall be apportioned on a per diem basis
and paid to the date of such fire or other casualty and this Lease shall
terminate on the Notice Date (as hereinafter defined in Section 19.00). In the
event all or any portion of the Leased Premises are made untenantable by fire
or other casualty and Landlord shall decide to rebuild and restore the same,
this Lease shall not terminate and Landlord shall repair and restore the Leased
Premises at Landlord's expense and with due diligence, subject, however, to (i)
reasonable delays for insurance adjustments and (ii) delays caused by forces
beyond Landlord's control. Unless such damage is due to the fault or neglect
of Tenant, Base Rent shall abate on a per diem basis during the period of
reconstruction and repair, provided that in the event the Leased Premises are
partially damaged by fire or other casualty but are not made wholly
untenantable, Base Rent shall abate based on the proportion of the Leased
Premises that is untenantable. If the damage is the result of the fault or
neglect or omission of Tenant, Base Rent shall not abate during said period.
Notwithstanding anything to the contrary herein set forth,
Landlord shall have no duty pursuant to this Section 14.00 to repair or restore
any portion of the alterations, additions or improvements in the Leased
Premises or the decoration thereto except to the extent that such alterations,
additions, improvements and decoration are included within the definition of
"Building Standard Work" (but not "Additional Work") in Appendix D attached
hereto. If Tenant wants any other or additional repairs or restoration and if
Landlord consents thereto, the same shall be done at Tenant's expense subject
to all of the provisions of this Lease.
15.00 RIGHTS AND REMEDIES OF LANDLORD. All rights and remedies of
Landlord provided for in this Lease shall be cumulative and none shall exclude
any other right or remedy allowed by law or equity.
15.01 PETITION IN BANKRUPTCY. If any voluntary or involuntary
petition or similar pleading under any section or sections of any bankruptcy
act shall be filed by or against Tenant, or any voluntary or involuntary
proceeding in any court or tribunal shall be instituted to declare Tenant
insolvent or unable to pay Tenant's debts, or Tenant makes an assignment for
the benefit of its creditors, or a trustee or receiver is appointed for Tenant
or for any of Tenant's property, then and in any such event Landlord may, if
Landlord so elects but not otherwise, and with or without notice of such
election, and with or without entry or other action by Landlord, forthwith
terminate this Lease, and, notwithstanding any other provisions of this Lease,
Landlord shall forthwith upon such termination be entitled to recover damages
in an amount equal to the then present value of the Rent specified in Section
2.00 of this Lease for the residue of the Term hereof, less the fair rental
value of the Leased Premises for the residue of the Term.
15.02 DEFAULT. If Tenant defaults in the prompt payment of any Rent
and such default shall continue for five (5) or more days after the same
becomes due or in the performance or observance of any other provision of this
Lease and such other default shall continue for thirty (30) or more days after
notice thereof shall have been given to Tenant, or if a default involves a
hazardous condition and is not cured by Tenant immediately upon notice to
Tenant or if the leasehold interest of Tenant is levied upon under execution or
attached by process of law, or if Tenant vacates or abandons the Leased
Premises, then and in any such event Landlord, if it so elects, with or without
notice or demand, forthwith, or at any time thereafter while such default
continues, either may terminate Tenant's right to possession without
terminating this Lease, or may terminate this Lease. However, Tenant will not
be entitled to more than one (1) notice
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for monetary defaults during any twelve (12) month period, and if after such
notice any Rent is not paid when due, an event of default will be considered to
have occurred without further notice. If the term of any lease, other than this
Lease made by Tenant for any premises in the Property shall be terminated or if
Tenant`s right to possession thereunder is terminated, in either case because
of any default by Tenant under such other lease, Landlord may, at Landlord's
sole option, terminate Tenant's right to possession of the Leased Premises
without terminating this Lease, or terminate this Lease, by giving a notice to
such effect to Tenant.
15.03 TERMINATION OF LEASE. Upon termination of this Lease, whether
by lapse of time or otherwise, or upon any termination of Tenant's right to
possession without termination of this Lease, Tenant shall surrender possession
and vacate the Leased Premises immediately, and deliver possession thereof to
Landlord, and Tenant hereby grants to Landlord full and free license to enter
into and upon the Leased Premises in such event with or without process of law
and to repossess Landlord of the Leased Premises as of Landlord's former estate
and to expel or remove Tenant and any others who may be occupying or within the
Leased Premises and to remove any and all property therefrom, using such force
as may be necessary, without being deemed in any manner guilty of trespass,
eviction, forcible entry or detainer, or conversion of property, and without
relinquishing Landlord's right to Rent or any other right given to Landlord
hereunder or by operation of law. Tenant expressly waives the service of any
demand for payment of Rent or for possession and the service of any notice of
Landlord's election to terminate this Lease or to re-enter the Leased Premises,
including any and every form of demand and notice prescribed by any statute or
other law, and agrees that the breach of any covenant or provision of this
Lease by Tenant, which breach shall continue beyond the period, if any,
provided herein for the curing thereof, shall, of itself, without the service
of any further notice or demand whatsoever, constitute a forcible detainer by
Tenant of the Leased Premises within the meaning of the statutes of the State
of Illinois.
15.04 COLLECTION OF RENT UPON TERMINATION. If Landlord is entitled,
and so elects, to terminate this Lease and the Term created hereby, Landlord
shall be entitled to recover forthwith as damages a sum of money equal to the
then present value of the Rent specified in Section 2.00 of this Lease for the
residue of the Term hereof, less the fair market value of the Rent for the
Leased Premises for the residue of the Term both discounted at the lesser of
eight percent (8%) or the discount rate at the New York Federal Reserve Bank on
the date of default. Should the fair market value exceed the present value of
the Rent provided to be paid by Tenant for the balance of the Term hereof,
Landlord shall have no obligation to pay to Tenant the excess or any part
thereof. In addition, Landlord may recover the unamortized cost of the Tenant
Improvement Work performed.
15.05 TENANT ABANDONMENT. If Tenant:
(i)(a) vacates or abandons the Leased Premises; and
(i)(b) fails to pay Rent and fails to perform all of
Tenant's obligations set forth herein; or
(ii) otherwise entitles Landlord to elect, and if Landlord
so elects to terminate Tenant's right to possession
only, without terminating this Lease;
then Landlord may, at Landlord's option, enter upon the Leased Premises, remove
Tenant's signs and other evidences of tenancy, and take and hold possession
thereof as provided herein without such entry and possession terminating this
Lease, or releasing Tenant, in whole or in part, from Tenant's obligation to
pay the Rent hereunder for the Term, and in any such case Tenant shall pay
forthwith to Landlord a sum equal to the entire amount of the Rent specified in
Section 2.00 of this Lease for the residue of the Term plus any
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other sums then due hereunder. Upon and after entry into possession without
termination of this Lease, Landlord may, but need not, relet the Leased
Premises or any part thereof for the account of Tenant to any person, firm or
corporation other than Tenant for such Rent, for such time and upon such terms
as Landlord, in Landlord's sole discretion shall determine, and Landlord shall
not be required to accept any tenant offered by Tenant or to observe any
instructions given by Tenant about such reletting. In any such case, Landlord
may make repairs, alterations and additions in or to the Leased Premises and
redecorate the same to the extent deemed by Landlord necessary or desirable,
and Tenant shall, upon demand, pay the cost thereof together with Landlord's
expenses of the reletting. If the consideration collected by Landlord upon any
such reletting for Tenant's account is not sufficient to pay the full amount of
unpaid Rent reserved in this Lease, together with the cost of repairs,
alterations, redecorating and Landlord's expenses, Tenant shall pay to Landlord
the amount of any deficiency, upon demand. If, in connection with reletting,
the new lease term extended beyond the existing Term, or the premises covered
by such new lease include other premises not part of the Leased Premises,
Landlord may allocate a fair portion of the Rent received from such reletting
and the expenses incurred in connection with such reletting as provided in this
Section in determining the net proceeds from such reletting, and any Rent
concessions will be equally apportioned over the term of the new lease. With
respect to the provisions of the law of the State of Illinois, if any, which
requires that a Landlord mitigate the damages recoverable against a defaulting
lessee, Tenant agrees that Landlord shall have no obligation to relet the
Leased Premises to a potential substitute tenant (i) before Landlord rents
other vacant space in the Property; (ii) if the nature of the substitute
tenant's business is not consistent with any other tenant leases containing
provisions against Landlord leasing space in the Property for certain uses; or
(iii) if the nature of the substitute tenant's business may have an adverse
impact on the first-class high-grade manner in which the Property is operated
or with the high reputation of the Property, even though in each of the
aforesaid circumstances the potential substitute tenant may have a good credit
rating.
15.06 INTEREST. Any Rent or other sum due from Tenant to Landlord
not paid when due shall bear interest from the date due until the date paid at
a rate equal to three percent (3%) above the "Corporate Base Rate" as of the
first day of each applicable calendar month. The term "Corporate Base Rate"
means that rate of interest announced by The First National Bank of Chicago
("First") from time to time as its "Corporate Base Rate" or successor
comparable rate of interest, changing automatically and simultaneously with
each change in the Corporate Base Rate made by First from time to time. The
payment of such interest shall not excuse or cure any default of Tenant under
this Lease.
15.07 LANDLORD'S COSTS. Tenant shall pay on demand all Landlord's
reasonable costs, charges and expenses, including the fees of counsel, agents
and others retained by Landlord, incurred in enforcing Tenant's obligations
hereunder or incurred by Landlord in any litigation, negotiation or transaction
in which Tenant causes Landlord, without Landlord's fault, to become involved
or concerned.
15.08 RESTRAINT OF VIOLATIONS. If Tenant violates any of the terms
and provisions of this Lease, or defaults in any of its obligations hereunder,
other than the payment of Rent or other sums payable hereunder, such violations
may be restrained or such obligation enforced by injunction.
15.09 LIEN ON TENANT'S PERSONAL PROPERTY. Tenant hereby grants to
Landlord a first lien and security interest upon the interest of Tenant under
this Lease and a lien on the personal property of Tenant located in the Leased
Premises to secure the payment of Rent and other monies due under this Lease,
and Landlord shall have all rights of a secured party pursuant to the Uniform
Commercial Code of the State of Illinois or otherwise provided by law or
equity. Landlord's lien on the personal property of Tenant located in the
Leased Premises shall be secondary only to that of Tenant's secured creditor or
creditors who have a security interest and have provided financing with respect
to such personal property.
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16.00 EMINENT DOMAIN. If any part of the Property (other than minor
takings for streets) shall be taken or condemned by any competent authority for
any public use or purpose, the Term of this Lease, at the option of Landlord,
shall end upon, and not before, the date when the possession of the part so
taken shall be required for such use or purpose, and without apportionment of
the award. Rent shall be apportioned as of the date of such termination.
Tenant hereby expressly waives, releases and assigns to Landlord any right or
claim to any part of any award. No money or other consideration shall be
payable by Landlord to Tenant for the right of cancellation.
17.00 SUBORDINATION OR SUPERIORITY OF THIS LEASE. The rights and
interest of Tenant under this Lease shall be subject and subordinate to any
first mortgage or first trust deed that exists now or may hereafter be placed
upon the Property and Building and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals, replacements and
extensions thereof, if the mortgagee or trustee named in said mortgage or trust
deeds shall elect to subject and subordinate the rights and interest of Tenant
under this Lease to the lien of its mortgage or deed of trust. Landlord will
use its reasonable efforts to procure a non-disturbance agreement on any future
mortgagee or trustee's standard form reasonably acceptable to Tenant". Any
first mortgagee or first trustee may elect to give the rights and interest of
Tenant under this Lease priority over the lien of its mortgage or deed of
trust. In the event of either such election, and upon notification by such
mortgagee or trustee or Landlord to Tenant to that effect, the right and
interest of Tenant under this Lease shall be deemed to be subordinate to or to
have priority over, as the case may be, the lien of said mortgage or trust
deed, whether this Lease is dated prior to or subsequent to the date of said
mortgage or trust deed. Tenant shall promptly execute and promptly deliver
whatever instruments may be required for such purposes, and in the event Tenant
fails so to do within (10) days after demand in writing, and without limitation
of Tenant's liability for failing so to do, Tenant does hereby irrevocably
make, constitute and appoint Landlord, beneficiary of Landlord or the agent of
either, as its attorney in fact and in its name, place and stead so to do.
18.00 SPRINKLERS. If the sprinkler system installed on the Property
or any of its appliances shall be damaged or injured or not in proper working
order by reason of any act or omission or negligence of Tenant, Tenant's
agents, servants, employees, licensees or visitors, Tenant shall forthwith
restore the same to good working condition at its own expense; and if the Board
of Fire Underwriters or Fire Insurance Exchange or any bureau department or
official of the state or local government requires or recommends that any
changes, modifications, alterations or additional sprinkler heads or other
equipment be made or supplied by reason of Tenant's business or the location of
partitions, trade fixtures, or other contents of the Leased Premises, or for
any other reason, or if any such changes, modifications, alterations,
additional sprinkler heads or other 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 as fixed by said Exchange or by any fire
insurance company, Tenant shall, at Tenant's expense, promptly make and supply
such changes, modifications, alterations, additional sprinkler heads or other
equipment. If Tenant fails to perform such work, Landlord may do so on
Tenant's behalf and at Tenant's cost, and all of Landlord's costs therefore
shall be Additional Rent due hereunder on demand.
19.00 NOTICE. In every instance where it shall be necessary or
desirable for Tenant to serve any notice or demand upon Landlord, such notice
or demand shall be sent by United States Registered or Certified Mail, postage
prepaid, addressed to Landlord at the place where Rent under this Lease is then
being paid or such other place as Manager may direct from time to time. Any
notice or demand to be given by Landlord to Tenant shall be effective if mailed
or delivered by the United States Postal Service or Federal Express or similar
express carrier, postage or charges prepaid or by personal service, to the
Leased Premises, or to such other address as may appear on the records of
Landlord. Notice mailed as aforesaid shall be conclusively deemed to have been
served at the close of the second
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business date following the date said notice was mailed. Courier or personal
service shall be deemed given upon the date delivered. In the event of a
conflict in dates, the earlier date of the two above dates shall be considered
the "Notice Date."
20.00 SUCCESSORS AND ASSIGNS. Each provision hereof shall extend to
and shall, as the case may require, bind and inure to the benefit of Landlord
and Tenant and their respective heirs, legal representatives, successors and
assigns, provided that this Lease shall not inure to the benefit of any
assignee, heir, legal representative, transferee or successor of Tenant except
upon the prior written consent or election of Landlord, as provided for herein.
The term "Landlord" as used in this Lease means only the owner of
legal title, or the mortgagee in possession for the time being, of the Property
or of the Tenant's interest in a lease which includes the Property, so that in
the event of the creation of such lease or of any sale of the Property or of
the lessee's interest in said lease which includes the Property, the person or
entity that was Landlord immediately prior to such creation or sale shall be
entirely free and relieved of all covenants and obligations of Landlord
hereunder, and Tenant agrees to look solely to such purchaser or lessee for the
performance of Landlord's obligations hereunder.
21.00 INSURANCE. Tenant shall carry insurance during the entire
Term insuring Tenant, Landlord (and, if Landlord so requests, mortgagees of all
or any portion of the Property) and Manager as their interests may appear with
terms, coverages and limits and in companies satisfactory to Landlord, and with
such increases in coverages and limits as Landlord may from time to time
request, but initially Tenant shall maintain the following coverages in the
following amounts:
(a) In case of personal injury to or death of any person
or persons, and in case of property damage, not less than Three
Million Dollars ($3,000,000.00) for each occurrence; and
(b) In case of fire, sprinkler leakage, malicious
mischief, vandalism, and other extended coverage perils, for the full
insurable replacement value of all additions, improvements and
alterations to the Leased Premises which are beyond the "Building
Standard" tenant improvements provided by Landlord and of all office
furniture trade fixtures, office equipment, merchandise and all other
items of Tenant's property on the Leased Premises.
Tenant shall, prior to the commencement of the Term and thereafter during the
Term upon request by Landlord, furnish to Landlord certificates evidencing such
coverage, which certificates shall state that such insurance coverage may not
be changed or cancelled without at least thirty (30) days prior written notice
to Landlord and Tenant.
Landlord and Tenant each hereby waive any and every claim for recovery from the
other for any and all loss of or damage to the Property or to the contents
thereof, which loss or damage is covered by valid and collectible fire and
extended coverage insurance policies, to the extent that such loss or damage is
recoverable under said insurance policies. Inasmuch as this mutual waiver will
preclude the assignment of any such claim by subrogation (or otherwise) to an
insurance company (or any other person), Landlord and Tenant each agree to give
to each insurance company which has issued, or in the future may issue, its
policies of fire and extended coverage insurance, written notice of the terms
of this mutual waiver, and to have said insurance policies properly endorsed,
if necessary, to prevent the invalidation of said insurance coverage by reason
of said waiver.
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<PAGE> 46
22.00 MISCELLANEOUS.
22.01 FORCE MAJEURE. Wherever there is provided in this Lease
(including any Riders hereto) a time limitation for performance by Landlord or
Tenant for any construction, repair, maintenance or service, the time provided
for shall be extended for as long as and to the extent that delay in compliance
with such limitation is due to an act of God, strikes, governmental control or
other factors beyond the reasonable control of either Landlord or Tenant as the
case may be.
22.02 PARTIAL INVALIDITY. If any provision of this Lease or
application to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Lease or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
22.03 HEADINGS. The headings of sections are for convenience only
and do not define, limit or construe the contents of such sections or
subsections. References made in this Lease to numbered sections and
subsections shall refer to the numbered sections or subsections of this Lease
unless otherwise indicated.
22.04 ORIGINALS. The Lease is to be executed in copies, each of
which executed copy shall constitute an original. In the event of a conflict
between the provisions of any original Lease with the provisions of any other
original Lease, then in such event the provisions of Landlord's original Lease
will govern and control.
22.05 EXECUTION OF FURTHER DOCUMENTS. Tenant agrees at the request
of Landlord to execute such instruments or documents as Landlord may reasonably
request, acknowledging: the Completion Date; Possession Date; the date of
commencement of Rent; the Commencement Date; the Termination Date; the
Operating Costs and Consumer Price Index for any Year; compliance or
non-compliance by any party with any of the terms or provisions of this Lease;
and to evidence such other or further matters as may be so reasonably
requested.
22.06 BROKER. Tenant represents that, except for Manager and that
broker, if any, listed in the Schedule with respect to this Lease, it has not
dealt with any other broker, finder or consultant in connection with this Lease
and, to its knowledge, no broker, finder or consultant other than Manager
initiated or participated in the negotiation of this Lease, submitted or showed
the Leased Premises to Tenant or is entitled to any commission or fee in
connection with this Lease. Tenant hereby indemnifies, defends, and holds
Landlord and its officers, directors, agents, employees and servants, harmless
from and against any and all claims, liability, cost and expense resulting from
the inaccuracy or breach of the foregoing representations or which they would
not have incurred had the foregoing been true.
22.07 NO REINSTATEMENT OF LEASE. No receipt of money by Landlord
from Tenant after the termination of this Lease, the service of any notice, the
commencement of any suit or final judgment for possession shall reinstate,
continue or extend the term of this Lease or affect any such notice, demand,
suit or judgment.
22.08 NO WAIVER. No waiver by Landlord of default of Tenant shall
be implied, and no express waiver shall affect any default other than the
default specified in such waiver and that only for the time and to the extent
therein stated.
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<PAGE> 47
22.09 NO OPTION UPON SUBMISSION. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.
22.10 FEES FOR SERVICES. Nothing in this Lease shall be construed
to prevent Landlord from paying for services rendered or materials delivered
with respect to the Property, Building or to the Leased Premises (including,
without limitation, management services and contracting out capital
improvements or other capital repairs or construction items) by affiliates of
Landlord provided that the fees or costs of such services and materials are at
market rates in the Chicago metropolitan area. All such fees or costs paid by
Landlord to such affiliates shall be deemed to constitute fees and costs on the
same terms and conditions as if such fees and costs were paid to non-affiliates
of Landlord or its beneficiaries.
23.00 ESTOPPEL CERTIFICATE. Tenant agrees that, from time to time
within ten (10) days after request by Landlord, Tenant, or Tenant's duly
authorized representative having knowledge of the following facts, will deliver
to Landlord a statement in writing certifying: (i) that this Lease is
unmodified and in full force and effect (or if there have been modifications
that the Lease as modified is in full force and effect); (ii) the dates to
which Rent and other charges have been paid; and (iii) that Landlord is not in
default under any provision of this Lease, or, if in default, the nature
thereof in detail, it being intended that any such statement may be relied upon
by any prospective purchaser or tenant of the Property, any mortgagees or
prospective mortgagees thereof, or any prospective assignee of any mortgage
thereof and (iv) such other matters as may be reasonably requested by Landlord.
Tenant shall execute and deliver whatever instruments may be required for such
purposes and, without limitation of Landlord's other rights and remedies or
Tenant's liability for failure so to do, in the event Tenant fails so to do
within ten (10) days after demand in writing, Tenant shall be considered in
default under this Lease.
24.00 EXERCISE OF LANDLORD'S POWERS. All determinations which may
be made, actions which may be taken or rights which may be exercised by
Landlord hereunder may be made, taken or exercised by Manager or such other
person or entity specified by Landlord in a notice to Tenant.
25.00 NO CONSTRUCTION AGAINST DRAFTING PARTY. Landlord and Tenant
acknowledge that each of them and their counsel have had an opportunity to
review this Lease and that this Lease will not be construed against Landlord
merely because Landlord has prepared it.
26.00 NO RECORDING. Tenant's recordation of this Lease or any
memorandum or short form of it will be void and a default under this Lease.
27.00 LIMITATION ON RECOURSE. No shareholder or holder of any other
interest in Landlord or Manager shall be personally liable for the performance
of Landlord's obligations under this Lease. The liability of Landlord or
Manager (including an assignee or successor of Landlord) for Landlord's
obligations under this Lease shall be limited to Landlord's interest in the
Property and Tenant shall not look to any of Landlord's other assets including
Landlord's agent's other assets in seeking either to enforce Landlord's
obligations under this Lease or to satisfy a judgment for Landlord's failure to
perform such obligations. Neither Landlord nor its agents, directors,
officers, employees, or servants shall be personally liable under this Lease.
28.00 WAIVER OF JURY TRIAL. Landlord and Tenant by this section
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties to this Lease against the other on any matters whatsoever
arising out of or in any way connected with this Lease, the relationship of
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<PAGE> 48
Landlord and Tenant, Tenant's use or occupancy of the Leased Premises, or any
other claims (except claims for personal injury or property damage), and any
emergency statutory or any other statutory remedy.
29.00 NO MERGER. The voluntary or other surrender of this Lease by
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option, (a) terminate all or any
subleases and subtenancies, or (b) operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option under this Section will be
exercised by notice to Tenant and all known sublessees or subtenants of any
part of the Leased Premises.
30.00 WRITTEN AMENDMENT REQUIRED. No amendment, alteration,
modification of or addition to the Lease will be valid or binding unless
expressed in writing and signed by Landlord and Tenant.
31.00 ENTIRE AGREEMENT. This Lease, the Appendices, Exhibits and
Addenda, if any, contain the entire agreement between Landlord and Tenant and
may be amended only by subsequent written agreement. No promises or
representations, except as contained in this Lease, have been made to Tenant
respecting the condition of the Leased Premises or the manner of operating the
Building or the Property.
32.00 AUTHORITY. Tenant and the party executing this Lease on
behalf of Tenant represent to Landlord that such party is authorized to do so
by requisite action of the board of directors, or partners, as the case may be,
and agree upon request to deliver to Landlord a resolution or similar document
to that effect.
33.00 GOVERNING LAW AND VENUE. This Lease will be governed by and
construed pursuant to the laws of the State of Illinois. Venue in any action
arising out of this Lease will be proper only in the Circuit Court of DuPage
County, Illinois or the United States District Court for the Northern District
of Illinois.
34.00 BINDING EFFECT. The covenants, conditions and agreements
contained in this Lease will bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributees, executors, administrators,
successors, and, except as otherwise provided in this Lease, their assigns.
35.00 ENERGY CONSERVATION. Notwithstanding anything to the contrary
in this Lease, Landlord shall have the right to institute such policies,
programs and measures as may be necessary or desirable, in Landlord's
discretion, for the conservation and preservation of energy or energy related
services, or as may be required to comply with any applicable codes, rules and
requirements, whether mandatory or voluntary.
36.00 MORTGAGE OR GROUND LEASE BY LANDLORD. Tenant hereby agrees
this Lease shall automatically be subject and subordinate to (i) any mortgage
that may hereafter by placed upon the Property and to all amounts secured
thereby and (ii) to any ground lease of the Land and Property, or either, and
to all renewals, replacements and extensions of any of the foregoing, except to
the extent that any such mortgage or ground lease provides otherwise. Tenant
further agrees that, in the event of a foreclosure of any such mortgage or of a
conveyance in lieu thereof or of a termination of any such lease, it will
attorn to the mortgagee or to the purchaser at any foreclosure sale or to the
ground lessor, as the case may be, upon the condition that the mortgagee or
ground lessor, as the case may be, shall agree in writing delivered to Tenant
that such mortgagee or any purchaser at a foreclosure sale or such ground
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<PAGE> 49
lessor will recognize Tenant and this Lease in the event such party acquires
the Property, so long as Tenant is not then in default. Tenant shall at
Landlord's request execute such further instruments or assurances as the
mortgagee or ground lessor may reasonably request to evidence the subordination
of this Lease or to acknowledge the superiority of this Lease, as the case may
be, and Tenant's attornment agreement.
37.00 OPTION TO RENEW. Option to Renew. Provided that the Lease is
then in full force and effect and provided further that Tenant is then
occupying all the leased premises having been leased to the Tenant in Commerce
Plaza, the Landlord hereby grants to Tenant an option to renew the Lease (the
"Option to Renew"), on the same terms and conditions set forth in the Lease,
except as set forth below, for one (1) additional five (5) year term (the
"Option Period"). Tenant's right to exercise the Option to Renew shall be
conditioned upon (a) Landlord's receipt, no later than one hundred and twenty
(120) days prior to the termination date of the Lease of Tenant's then current
certified financial statements showing a creditworthiness satisfactory to
Landlord, and (b) Tenant's written certification to Landlord that at all times
during the term of the Lease and prior to Tenant's exercise of the Option to
Renew there have been no material adverse changes in the financial condition of
Tenant as reflected in said certified financial statements. The Option to
Renew shall be exercised, if at all, by written notice received by Landlord not
later than twelve (12) months prior to the termination date, time being of the
essence. If not so exercised, Tenant shall have no further Option to Renew the
Lease. The annual base rent for the year during the Option Period shall be the
market rate, at the time the Option to Renew is exercised, for the leasing of
comparable space in buildings comparable to Commerce Plaza in the Oak Brook,
Illinois area for a term equal to the Option Period and commencing at
approximately the date of the commencement of the Option Period, but in no
event shall the base rent for any year of the Option Period be less than the
base rent in effect for the last year of the term. Landlord shall have no
obligation to make improvements, decorations, repairs, alterations, or
additions to the leased premises as a condition to the Tenant's obligation to
pay base rent for the Option Period, and base rent quoted by Landlord for the
Option Period shall not be reduced (a) by reason of such fact, (b) to take into
account any rental concessions whatsoever (including, but not limited to rent
abatements, allowances for moving expenses, lease assumptions, or other
concessions), or (c) to take into account the absence of any cost or expense
which Landlord would have incurred had the leased premises been leased to a
person or entity other than Tenant. Landlord's good faith determination of the
base rent for the Option Period shall be conclusive, provided, however, Tenant
shall have the right to nullify its exercise of the Option to Renew, by notice
to Landlord, given within thirty (30) days of Landlord's notice to Tenant
(which Landlord's notice shall be given to Tenant not later than eleven (11)
months prior to the commencement of the Option Period) setting forth the
initial base rent for the Option Period, in which event Tenant's exercise of
the Option to Renew shall be null and void and neither Landlord nor Tenant
shall have any further rights or liabilities with respect thereto. Tenant's
failure to give the notice of nullification described above within such thirty
(30) day period shall constitute acceptance by tenant of, and Tenant's
agreement to pay, the base rent specified for the Option Period.
38.00 ALLOWANCE. Landlord and Tenant hereby agree that Landlord
shall provide to Tenant an allowance equal to One Hundred Twenty-Three Thousand
Four Hundred Seventy-Three and No/100 Dollars ($123,473.00), subject to the
terms and conditions as provided in Appendix D - Tenant Improvement Work
Agreement. Such allowance should be used toward the construction of Tenant's
interior tenant improvements. Any portion of the allowance not used by Tenant
for the Work to be performed under the terms and conditions as set forth in the
Tenant Improvement Work Agreement may be used by Tenant to pay the costs of
space planning and moving costs. Notwithstanding anything contained herein to
the contrary, the amount of the allowance described in this Section 38.00 which
may be used for space planning and moving shall be limited to an amount not to
exceed Eleven Thousand Nine Hundred Forty-Nine and No/100 Dollars ($11,949.00).
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<PAGE> 50
39.00 PARKING. Landlord agrees to furnish to Tenant during the term
of the Lease up to six (6) parking stalls in the Landlord's underground garage
area for the use of its employee(s). Three (3) of the underground stalls will
be at no charge to Tenant. The charge for the remaining three (3) underground
stalls will be at the rate charged other tenants which presently is $60.00 per
month per stall. Tenant agrees to abide by Landlord's normal rules and
regulations as they apply to the underground garage.
40.00 RIGHT OF FIRST OFFER. Providing Tenant is not in default, the
Lease is in full force and effect and Tenant is then occupying all the premises
having been leased to the Tenant in the Building, Tenant shall have the right
of first offer on up to an additional contiguous 5,000 rentable square feet to
the Leased Premises the first time that said space becomes vacant and
accordingly available for leasing to third parties during the period from the
Commencement Date until May 31, 1996 (the "Expansion Space"). The right of
first offer is subject and subordinate to the rights of existing tenants of the
Building under contracts in effect as of the date hereof, and to Landlord's
right to lease any portion of the Expansion Space one time to parties other
than Tenant, including Metropolitan Life Insurance Company or any of its
subsidiaries. Landlord shall deliver to Tenant promptly after Landlord learns
of the same, written notice specifying when the Expansion Space will become
available. Within five (5) days thereafter, Tenant shall give written notice
to Landlord of its intention to accept Landlord's offer to lease the Expansion
Space and, within thirty (30) days thereafter, Tenant shall enter into a Lease
Amendment acknowledging Tenant's acceptance of the Expansion Space on the same
terms and conditions set forth in this Lease except that the rental rate shall
be adjusted for escalations in effect for Tenant at the time of the
commencement of such Lease Amendment. The Expansion Space shall be accepted
"as is" and Tenant shall bear the cost of constructing any required demising
walls. In the event Tenant declines to accept Landlord's offer to lease the
Expansion Space, or does not provide written acceptance thereof or enter into
the Lease Amendment within the time limits set forth above, then the right of
first offer granted herein shall terminate, and Landlord shall be free to enter
into a new lease or leases with third parties for all or any portion of the
Expansion Space on such terms as Landlord shall deem appropriate in its sole
discretion.
IN WITNESS WHEREOF, this instrument has been duly executed by the
parties hereto as of the date the Lease was signed by Manager for Landlord as
listed below.
<TABLE>
<S> <C>
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York corporation
By: [SIGNATURE] By: [SIGNATURE]
---------------------------- -------------------------
Title: Assistant Vice-President Title: President
------------------------- ----------------------
Date: 11-29-95 Date: November 22, 1995
-------------------------- -----------------------
</TABLE>
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<PAGE> 51
APPENDIX A
DEFINITIONS FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
DEFINED TERMS FOR COMMERCE PLAZA LEASE
TERM DEFINITION
- ---- ----------
Additional Rent All sums, liabilities, obligations and
other amounts which Tenant is required to
pay or discharge Pursuant to this Lease,
together with interest for late payment.
Additional Work See Tenant Improvement Work Agreement -
Appendix D.
Annual Base Rent for
Index Rent Calculation Amount set forth on Schedule upon which
the Index Rent calculation is applied to
determine Index Rent.
Annual Electricity Costs Shown on Schedule.
Base Costs Shown on Schedule.
Base Rent Amount to be paid on or before the first
day of each month in monthly installments
in amount set forth on Schedule.
Base Taxes Shown on Schedule.
Base Year Year in which the Lease commences.
Building The building or buildings which are a
part of the Property that Tenant may
occupy from time to time during the Term
of this Lease. Shown on Schedule.
Building Standard See Tenant Improvement Work Agreement -
Work Appendix D.
Commencement Date Shown on Schedule.
Completion Date The date the Tenant Improvement Work, if
any, as Set forth in the Tenant
Improvement Work Agreement has been
substantially completed and the Landlord
advises Tenant the
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Leased Premises are suitable for
occupancy.
Comparison Year Each Year of the Lease through and
including the years in which the Term of
this Lease (including any extension or
renewals thereof) commences and ends.
The first and last Comparison Year may
contain less than twelve (12) calendar
months.
Consumer Price Index The Consumer Price index for Urban wage
Earners and Clerical Workers (Revised
Series) (CPI-W) All items, City of
Chicago (1982-1984 equals 100)of the
United States Bureau of Labor Statistics.
The Consumer Price index for any year
shall be the average of the indices for
all the months of that year. If the
manner in which the Consumer Price Index
is determined by the Department of Labor
shall be substantially revised, the
calculations hereunder shall be
appropriately adjusted to produce results
as nearly equivalent as possible to those
which would have been obtained if the
Consumer Price Index had not been so
revised. If the 1982-1984 average shall
no longer be used as an index of one
hundred (100), such change shall
constitute a substantial revision. If
the Consumer Price Index is discontinued
or is unavailable, Landlord has the right
to substitute a comparable index
reflecting changes in the cost of living
or purchasing power of the consumer
dollar published by any other
governmental agency, or if no such index
shall then be available, a comparable
index published by a major bank or other
financial institution or by a university
or recognized financial publication or
any other recognized authority.
Control The power to indirectly direct or cause
the direction of the
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<PAGE> 53
management or Policies of Tenant. See
Section 13.00.
Corporate Base Rent The rate of interest announced by the
First National Bank of Chicago ("First")
from time to time as its Corporate Base
Rate of interest or successor comparable
rate of interest, changing automatically
and simultaneously with each change in
the Corporate Base Rate made by the First
from time to time.
Excess Rent The excess of all amounts received or to
be received by Tenant from any assignee
or sublessee of Tenant over the Base Rent
payable to Landlord hereunder for the
applicable periods, all computed on a per
Rentable Square Foot basis. Tenant shall
furnish Landlord with a sworn statement,
certified by an independent certified
public accountant, setting forth in
detail the computation of Excess Rent,
and Landlord, or its representatives,
shall have access, at all times during
regular business hours to the books,
records and papers of Tenant in relation
thereto, and to make copies thereof. Any
monies or other consideration in excess
of the Base Rent due from Tenant
hereunder realized by or for the benefit
of Tenant by reason of such assignment or
sublease shall be deemed an item of such
Excess Rent. If a part of the
consideration for such assignment shall
be payable other than in cash, the
payment to Landlord shall be Payable in
accordance with the applicable percentage
of the cash and the cash equivalent of
all non-cash considerations. Such
percentage of Tenant's Excess Rent shall
be payable by Tenant at the same place as
Rent promptly upon Tenant's receipt from
time to time of periodic payments from
such assignee or subtenant or at such
other time as Tenant shall realize Excess
Rent
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<PAGE> 54
from such assignment or sublease. In no
event shall any such sublease create or
be construed to create a landlord/tenant
relationship between Landlord and such
subtenant, nor shall it release Tenant
from any of its obligations under this
Lease including the obligation to pay all
Rent when due even if Tenant does not
receive any rent from its sublessee or
assignee.
Index Rent An amount equal to thirty-five percent
(35%) of the Annual Base Rent times the
percentage, if any, by which the CPI for
the Comparison Year exceeds the CPI for
the year in which the Lease commences.
Land That portion of the Property consisting
of the real property underlying the
Building and any improvements located and
existing upon it.
Landlord Metropolitan Life insurance company, a
corporation organized and existing under
the laws of the State of New York.
Lease Agreement between Landlord and Tenant
with respect to Leased Premises as
provided for herein.
Leased Premises That part of the Building leased to
Tenant. See Appendix B - Plan of Leased
Premises.
Manager MS Management Services, L.P., Manager for
Landlord or such other entity as Landlord
may in its sole discretion name from time
to time.
Monthly Installments Shown on Schedule.
of Base Rent
Notice Date Is the earlier of the second business day
from the date a Notice is mailed, or in
the event of courier or personal service,
the date upon which notice is delivered.
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<PAGE> 55
Operating Adjustment Rent Rent to cover Tenant's Operating
Proportionate Share of increase in any
Comparison Year in Operating Costs over
Base Costs.
Operating Costs All costs, expenses, and disbursements of
every kind, nature or description
(including, but not limited to, a
reasonable management fee) incurred in
connection with the ownership,
management, operation, maintenance,
security, landscaping, repair and
replacement of the Property and its
common areas, facilities and easements
and of the personal property, fixtures,
machinery, equipment, systems and
apparatus located therein or used in
connection therewith, except the
following:
(a) Costs of alterations of any premises in
the Building for tenants of the Building;
(b) Costs of capital improvements to the
Property, except that operating Expenses
shall include (i) the cost during the
Term, as reasonably amortized by Landlord
with interest on the unamortized amount,
at a rate equal to Landlord's then
applicable borrowing rate as determined
in good faith by Landlord of any capital
improvement, completed after the
commencement of the Term which reduces
any component cost included within
Operating Costs, and (ii) the cost of any
capital improvements made to keep the
Property in compliance with applicable
governmental laws, ordinances, rules and
regulations;
(c) Depreciation, interest and principal
payments on mortgages and other debt
costs except that Operating Costs shall
include depreciation, interest and debt
costs with respect to machinery,
equipment, systems, or facilities
installed in or used in connection with
the Property if one
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<PAGE> 56
of the principal purposes of such
installation or use ties to reduce other
items of Operating Costs;
(d) Ground rental payments;
(e) Leasing commissions or fees; and
(f) The cost of any kind of service furnished
to any other occupant of the Property
which Landlord does not make available to
Tenant hereunder.
If the Property is not fully occupied
during all or any portion of any Year,
then at Landlord's election Operating
Costs for such Year shall be the amount
which Landlord in good faith determines
is the amount Operating Costs would have
been paid or incurred by Landlord had the
Property been fully rented and occupied
throughout the entire Year and the amount
so determined shall be deemed to have
been the Operating Costs for such Year.
Notwithstanding anything contained herein
to the contrary, the provisions of this
paragraph with respect to adjustment of
Operating Costs for vacancy shall apply
only to Operating Costs which are
variable and which increase as occupancy
in the Property increases and shall not
apply to any Operating Costs which do not
vary with the amount of occupancy in the
Property.
In the event Landlord does not purchase
for any Year insurance covering one or
more risks (or portions thereof) with
respect to the Property or Landlord's
property therein or operations thereat
which are customarily insured by owners
of similar office buildings in the
Chicago Metropolitan area, Landlord shall
estimate the amount of the Premium that
Landlord would have been required to pay
to obtain such insurance with a
recognized carrier for such year and such
estimated
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amount shall be deemed to be an addition
to Operating Costs for such year.
Operating Costs for a Comparison Year or
period shall mean those Operating Costs
reasonably allocable to such Comparison
Year or Period as determined by Landlord
in the reasonable exercise of its
Judgment without regard to when such
Operating Costs are incurred or paid.
Plan of Leased Premises See Appendix B.
Possession Date Shown on Schedule.
Property Buildings and Land commonly known as
Commerce Plaza, Oak Brook Illinois.
Property shall include the buildings,
improvements, common areas, enclosed
links, entrance ways, parking decks,
parking lot, parking garage, all
landscaped areas, and facilities commonly
available to tenants of the buildings.
The legal description for the Property is
attached hereto as Appendix G.
Punch List Items Miscellaneous, minor finishing items and
adjustments. See Section 13.00.
Rent Base Rent, Operating Adjustment Rent, Tax
Adjustment Rent, Index Rent, Additional
Rent.
Rentable Square Feet The square footage as shall be calculated
for Leased Premises using generally
accepted industry standards in effect
from time to time.
Rules and Regulations Rules and Regulations as Landlord may
adopt from time to time for the use,
safety, cleanliness and care of the
Property and its tenants and occupants.
See Appendix F.
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Schedule The terms and provisions applicable to
this Lease as set forth in the Schedule
appended to and incorporated in this
Lease.
Security Deposit Shown on Schedule.
Tax Adjustment Rent Rent to cover Tenant's Tax Proportionate
Rent Share of increase in any Comparison
Year in Taxes over Base Taxes.
Taxes All federal, state and local governmental
taxes assessments and charges (including
transit or transit district taxes or
assessments) of any kind or nature,
whether general, special, ordinary or
extraordinary, which Landlord or its
beneficiaries shall pay or become
obligated to pay because of or in
connection with ownership, leasing,
management, control or operation of the
Property or of the personal property,
fixtures, machinery, equipment and any
such taxes, assessments or charges
associated with parking or other
facilities which benefit the Property
whether located on or off the Property,
systems and apparatus located therein or
used in connection therewith, including,
without limitation, all ad valorem taxes
and the Illinois Replacement Tax. The
amount included in Taxes for any
Comparison Year or other annual period
shall be deemed to refer to Taxes paid
during such Year without regard to when
such taxes are assessed or levied, except
that if any special assessment payable in
installments is levied against the
Property, Taxes for any comparison Year or
annual period shall include only the
installments of such assessments and any
interest thereon payable in such year or
period (all without regard to any right to
pay or payment of any such special
assessment in a lump sum or single
payment). If the tax bills for a
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Comparison Year are not available at the
time any payment is required hereunder on
account of Taxes for such Comparison
Year, the amount of such taxes may be
estimated by Landlord. In determining
the amount of Taxes for any Comparison
Year, there shall be deducted the amount
of any refund of taxes received by
Landlord during such Comparison Year, but
only to the extent such refund relates to
Taxes for a period within the Term.
Taxes shall not include any federal or
state franchise, capital stock,
inheritance, income or estate taxes,
except that if a change occurs in the
method of taxation resulting in the
substitution of any such taxes for any
Taxes as hereinabove defined, such
substituted taxes shall be included in
Taxes. Taxes include legal fees, court
costs and expenses for the contest of or
protestor any Taxes or for seeking Or
Obtaining any refund or reduction of
assessment or Taxes, whether such protest
or reduction is ultimately successful or
not.
Tenant Shown on Schedule.
Tenant Improvement Work See Appendix D.
Agreement
Tenant's address for notice Shown on Schedule.
before Possession Date
Tenant's Real Estate Shown on Schedule.
Broker
Termination Date Shown on Schedule.
Tenant's operating Shown on Schedule.
Proportionate share
Tenant's Tax Proportionate Shown on Schedule.
Share
Term Shown on Schedule.
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Unamortized Cost of The cost to Landlord of purchasing,
fabricating and installing all
Leasehold improvements which were installed on the
Leased Premises by Landlord pursuant to
this Lease prior to the, beginning of the
Term of the Lease including interest
thereon calculated by amortizing such
cost over the Term with interest at the
rate specified herein for delinquent
payments and multiplying the total cost
and interest by a fraction, the numerator
of which is the number of months of the
Term not yet elapsed on the date the Term
is terminated or Tenant's right to
possession is terminated, as the case may
be, and the denominator of which is the
total number of months of the Term.
Year Any calendar or fiscal 12 month term
which Landlord may select as the fiscal
year of the Property for accounting
purposes.
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TENANT IMPROVEMENT WORK AGREEMENT
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
EXHIBIT D-1
TENANT STANDARD MATERIALS AND FINISHES
1.00 Partitions
1.01 Interior Partitions
Building standard interior partitions shall consist
of 2 1/2" steel Studs. 16" o.c., to suspended ceiling
at head with one layer 5/8" gypsum board each side
(total thickness of 3 3/4", taped and spackled, ready
for field applied finishes.
1.02 Corridor Partitions (multi-tenant floors)
Building standard corridor partitions shall be 2 1/2"
steel studs, 16" o.c. to underside of slab above with
one layer fire rated 5/8" gypsum board each side
(total thickness of 3 3/4" to slab above, taped and
spackled, ready for field applied finishes. Insulate
with 1 1/2" sound attenuation blanket
1.03 Demising Walls (multi-tenant floors)
Building standard demising partitions shall consist
of 2 1/2" steel studs, 16" o.c., to underside of slab
above with one layer fire-rated 5/8" gypsum board
each side (total thickness of 3 3/4) to slab above,
taped and spackled, ready for field applied finishes.
Insulate with 1 1/2" sound attenuation blanket
1.04 Interior Columns
All columns shall be enclosed with 5/8" drywall.
2.00 Wall Finishes
Building standard primer and one finish coat of latex
paint applied to all partitions and columns. Colors
to be selected by tenant from landlord's standard
color chart with one uniform color throughout.
Corridor side of corridor partition shall be
Designtex Stonewall III No. 6276-801 with 4"
Flex-Cove rubber straight base color No. 23 Brown-
Black
3.00 Doors and Frames
3.01 Entry Door
One 3'-0" x 9'0" (nominal) door per tenant in north,
east and south building. Doors to be solid core with
stained, varnished finish (No. 225 Minwax Red
Mahogany) quarter sliced African mahogany veneer with
Schlage "L" series lockset and lever handle (US-32D)
satin stainless steel finish). The door frame shall
be painted hollow metal. Color to match Pratt &
Lambert No B755A Deep Charcoal, semi-gloss.
3.02 Interior Doors
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3'0" x 9'0" (nominal) doors to be solid core with
stained, varnished finish (No. 225 Minwax Red
Mahogany) quarter sliced African Mahogany veneer with
Schlage "L" series passage latchset and lever handle
(US-32D satin stainless steel finish). The door
frame shall be painted hollow metal. Color to be
selected by tenant from Landlord's standard color
chart
3.03 Secondary Exit Doors
3'0" x 9'0" (nominal) door in north, east and south
building. Doors to be solid core with stained,
varnished finish (No. 225 Minwax Red Mahogany) with
Schlage "L" series lockset and lever handle (US-32D
satin stainless steel finish). The door frame shall
be painted hollow metal. Color to match Pratt &
Lambert No. B755A Deep Charcoal, semi-gloss.
3.04 Hardware
All hardware provided shall be US-32D satin stainless
steel finish
(a) Entry Doors
2 pair butts, 1 lockset 1 closer, 1 wall
bumper, 3 silencers
(b) Interior Doors
2 pair butts, 1 latchset, 1 wall bumper,
3 silencers
(c) Secondary Exit Doors
2 pair butts, 1 lockset, 1 closer, 1 wall
bumper, 3 silencers
Acceptable Hardware Design
Mortise Locks: Schlage
Butt Hinge: Stanley, Lawrence, Hager, McKinney, Soss
Wall Bumpers: Glynn-Johnson, H.B. Ives, P. & F. Corbin
Closers: Sargent
Silencers: Glynn-Johnson
4.00 Floor Covering
All floor covering shall be selected by tenant subject to Landlord's
reasonable approval.
4.01 Carpet Floor Selections
Tenant Carpet may be either on pad or a direct glue
down application subject to Landlord's reasonable
approval. A 2 1/2% coordinating straight vinyl base
will be provided for all partitions, columns and
outside walls.
4.02 Vinyl Floor Selections
A vinyl composition 1/8" thick, 12" square floor tile
for use in kitchens, wet areas, service areas, etc.
A 2 1/2% coordinating cove vinyl base will be
provided at vinyl floor installation.
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5.00 Ceiling
5.01 Acoustical Panels
24" x 24" cirrus tegular lay-in acoustical mineral
composition ceiling tile with beveled edge by
Armstrong World Industries.
5.02 Suspension System
Suspension system to be an exposed metal 9/16"
superfine, narrow profile with slotted reveal.
Acceptable Manufacturers:
Chicago Metallic Corporation
Donn Corporation
National Rolling Mills, Inc.
5.03 Ceiling Height
Finished ceiling height shall be 9'0".
6.00 Lighting
24"x 48"three lamp, recessed return air fluorescent light fixture
with 18 cell deep Parabolic louvers. (A 277 volt ballast is
required for fixtures in the north and east building and a 120
volt ballast is required In the South building).
Acceptable manufacturers:
Columbia
Globe
Lightolier
Daybrite
7.00 Supply Diffusers
Titus 2' x 2' white perforated drop face supply diffusers.
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TENANT IMPROVEMENT WORK AGREEMENT
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
EXHIBIT D-2
RULES AND REGULATIONS,
CONSTRUCTION OPERATIONS, MECHANIC LIEN
INDEMNITY AND LIFE SAFETY SYSTEMS
1.00 RULES AND REGULATIONS
1.01 A representative of the Office of the Property will
serve as Project Manager for the Landlord.
1.02 The Contractor is responsible prior to commencement
of work for submitting 1) a detailed work schedule
showing all critical dates, and 2) a listing of after
hours emergency phone numbers.
1.03 All building permits necessary for the completion of
the Work shall be secured and paid for by the
Contractor. Copies will be provided to the Project
Manager.
1.04 The Contractor must report to the Project Manager
prior to starting of the Work and meet with the
Project Manager on a regular basis as work
progresses.
1.05 The Contractor shall coordinate the keying of all
doors (if applicable) through the Project Manager.
1.06 The Landlord has provided and installed blinds; any
damage to them will be the responsibility of the
Contractor.
1.07 The Contractor is responsible for the removal of
construction debris. Any large dumpsters for the
removal of debris must be scheduled with the Project
Manager and placement prearranged with the Project
Manager.
1.08 The Contractor is responsible for removal and capping
of unused or abandoned conduit, cables, duct work or
other materials back to the source.
1.09 Contractor is responsible for balancing the HVAC
systems (unless stated otherwise) including the Base
Building systems to the satisfaction of the tenant
and the Landlord's reasonable approval and will
provide each with a written summary of the
adjustments made. If any HVAC parts are noted to be
defective during performance of work of the tenant
build-out, the Contractor must contact the Project
Manager before replacement parts are ordered. He
will verify the condition and direct the Contractor
as to what actions the Contractor should take.
Please note that an inventory and operational check
will have been completed by the Building Engineer
before the start of any work.
1.10 All tradesmen working on-site will be dues-paying
members of local
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construction unions.
1.11 All tradesmen are to use the freight elevator only
and restrooms on the lower level of the building.
1.12 The Contractor will provide and install the required
number of 5 lb. ABC fire extinguishers as part of
the Work.
1.13 All building materials used will be of the highest
quality and will be of the same manufacturer as
existing materials. Any variance is to be
preapproved by the Project Manager.
1.14 Contractor shall comply with any additional rules,
regulations, procedures or requirements as Landlord
may reasonable establish during the performance of
the Work.
2.00 CONSTRUCTION OPERATIONS
2.01 All delivery of materials to the site shall be to the
loading dock. No materials may be delivered through
the main entrance doors or through any building
lobbies.
The Contractor must have its own supervisor on-site
at any time material is delivered or moved.
2.02 Deliveries and movement of materials into and out of
the Property or Building must be done prior to 7:30
am. Monday through Friday unless otherwise approved
by Project Manager.
2.03 Any work which requires access to another tenant's
space e.g. floor coring. plumbing, etc., must be
scheduled with the Project Manager. This work will be
done during premium time hours, most likely on a
Saturday or Sunday.
2.04 The Contractor and all subcontractors will use rubber
wheeled carts when moving material through the
Property or the Building or removing trash from the
Property or the Building.
2.05 Protection of all public corridor surfaces and
elevator lobbies is the responsibility of the
Contractor. Masonite floor protection and cardboard
wall protection will be required throughout the period
of work.
2.06 The Contractor is responsible for having "walk-off"
mats at the exit(s) from the Tenant construction
area. If necessary, mats are to be wetted to reduce
the tracking of dust and debris outside the
construction area.
2.07 The Contractor is responsible for vacuuming public
corridors as necessary (at least daily). Contractor
is to provide vacuum.
2.08 Under no circumstances will construction debris be
allowed to remain in the Property or Building longer
than twenty-four (24) hours. The construction area
shall be kept clean and organized at all times.
2.09 Any construction worker caught stealing, drinking
alcohol, or using any
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illegal substance will be immediately banned from the
Property. Expected behavior in a fully-occupied
building is to be professional, especially in public.
2.10 While on-site, construction workers will be confined
to the construction area only and all personnel
involved in work shall park in the general parking
area of the Property or as the Property Manager may
from time to time designate.
2.11 Absolutely no food, beverages, or smoking will be
allowed on the construction site after painting or
installation of carpet has begun.
2.12 Electrical Contractor as part of his contractual
obligation will advise Manager of meter(s) number for
the Tenant improvement.
2.13 No cooking of any kind will be allowed on the
construction site or Property.
2.14 Radios will not be allowed.
2.15 Noisy operations e.g. the setting of anchors will be
done between 6:00 p.m. and 7:30 a.m. Monday through
Friday.
2.16 The Contractor will shut off all lights in the
construction area upon completion of the day's
activities.
2.17 The Contractor must schedule the exclusive use of an
elevator by requesting same through the Project
Manager twenty-four (24) hours in advance. The
Building does not provide an elevator operator. Any
costs associated with the use of or damage to the
freight elevator shall be the Contractors
responsibility.
2.18 A Building Engineer must be on-site during all
construction. There will be an additional charge to
the Contractor if Building Engineer(s) are utilized
on the job site beyond their normal working hours or
for unusually long periods of time which disrupt
their normal work responsibilities. Building
Engineers are on duty from: 6:00 a.m. - 6:00 p.m.
Monday through Friday and Saturday 6:00 a.m. - 2:00
p.m. No Building Engineer is scheduled Sunday or
Holidays.
2.19 The Contractor is responsible for delivering the site
at completion in a "broom-clean" condition. Final
cleaning before occupancy is the responsibility of
the Building.
3.00 MECHANIC LIEN INDEMNITY
3.01 Contractor shall at all times keep the Property free
and clear from any and all liens from its direct
subcontractors and will furnish the Landlord with
partial waivers of lien, satisfactory to Landlord,
with each application for payment. Contractor further
expressly undertakes to indemnify, defend and hold
harmless Landlord, at Contractor's sole expense,
against any actions, lawsuits, or proceedings brought
against Landlord as a result of
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<PAGE> 67
liens or claim of lien and agrees to pay any
judgement or lien against Landlord or Landlord's
property resulting from any such actions, lawsuits or
proceedings brought by its subcontractors.
3.02 Contractor agrees to comply with the requests of the
title insurance company insuring the Work in order
that Landlord may obtain any form of mechanic lien
coverage or protection Landlord deems desirable.
3.03 Landlord reserves the right to settle any disputed
mechanic lien claims by payment to the mechanic lien
claimant if Landlord in its sole discretion deems
such payment to be the most economical method of
sending the dispute, and Landlord may thereafter
deduct the payment from future amounts due Contractor
or require Contractor pay said amounts to Landlord
upon demand.
4.00 LIFE SAFETY SYSTEMS
4.01 Before any demolition and/or construction included in
the Work may begin, determine whether such work will
affect the fire alarm system. If it is determined
that such demolition and/or construction work may
trigger the fire alarm system, the Contractor shall
notify the Building Engineer.
Under no circumstances will the building allow the
fire alarm system for the Building be shut down
overnight, on weekends or on holidays. Twenty-four
hour written notice will be provided by Contractor
prior to removing the fire alarm system from service.
As part of any shift down of the fire alarm system,
Contractor will comply with any procedures or
requirements that the Building Engineer may
establish.
4.02 The Contractor will protect smoke detection devices
in the areas where activities involving the
production of dust will occur. Contractor shall
notify the Building Engineer when protection is in
place so they may be verified prior to undertaking
such activities.
4.03 The Contractor will refill the sprinkler system at
the end of the day when the work is done on a build
out and occupied floor. The Contractor will refill
the sprinkler system for the Base Building cores on
all vacant floors at the end of the day. The
Contractor will contact the Building Engineer before
refilling. After refilling the system the Contractor
will remain on-site to verify that no leaks occur
after the pressure is back to normal.
4.04 The Contractor will notify the Project Manager one
week before any electrical shutdowns which might
affect existing tenants, common areas, or other
portions of the Property.
4.05 The Contractor will provide an adequate number of
fire extinguishers in the work area throughout the
construction period.
4.06 All wall, floor, or sleeve penetrations shall be
adequately sealed to prevent the spread of smoke/fire
per applicable codes.
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APPENDIX E
CLEANING SPECIFICATIONS
FOR COMMERCE PLAZA, OAK BROOK, ILLINOIS
Building Public Areas
Daily:
- Clean entrance and lobby floors and carpet in a
manner consistent with maintaining a high luster on
the floor
- Clean all lobby walls of markings, gum, etc.
- Clean glass in building directly with a treated cloth
- Mop or dust sweep all non-carpeted public areas on
the lower and plaza levels
- Clean all public drinking fountains with a germicidal
solution
- Sweep entrance sidewalks and stairs
- Empty all waste containers and ash trays
- Clean interior of all passenger elevator cabs
Monthly:
- Shampoo elevator cab carpets
- Wash and polish all vertical lobby surfaces
General Office Areas
Daily:
- Empty all wastebaskets
- Remove trash
- Empty and damp wipe ashtrays
- Dust all horizontal surfaces that can be reached
without a ladder with a treated cloth, mitt or duster
- Dust mop all tile floor areas
- Light vacuum all carpeted areas with special emphasis
given entrance and traffic areas
- Spot clean lobby glass and lobby glass doors
Weekly:
- Damp clean and sanitize all phones
- Dust metal partitions
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Monthly:
- Dust all baseboards
- Vacuum all ceiling and wall air supply and exhaust
diffusers or grills
- Spot clean doors and frames
Quarterly:
- Dust exterior of light fixtures
- Damp wipe all wastebaskets
- Dry dust wood panelled walls
- High dust all horizontal and vertical services not
reached on daily cleaning
Washroom Sanitation
Daily:
- Clean with a detergent/disinfectant all sinks,
toilets and urinals
- Damp wipe all ledges, toilet stalls and doors
- Spot clean light switches, doors, partitions and
walls
- Sweep and wet mop all floor areas with a germicidal
solution
- Clean and polish all mirrors and bright work
Refill all toilet tissue, paper towel and sanitary
napkin disposal receptacles
- Remove any graffiti
- Clean all baseboards with clear water or cleaner
- Remove waste materials
- Dust lounge furniture
Monthly:
- Wash diffusers, vent grills, toilet stalls, doors,
and tile walls with germicidal detergent solution
- Scrub floor areas including baseboards using a
germicidal solution
- Clean and wash all partitions
- Machine scrub floors as necessary but not less than
once per month
- High dust each month areas not normally covered
including lights, walls and grills
Semi-Annually:
- Hand dust, clean and wash all tile walls twice each
year
- Wash lighting fixtures as often as necessary but not
less than once per year
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Machine Floor Work in Building Public Areas
Weekly:
- Machine polish open tile areas
- Spray scrub open tile areas
Monthly:
- Spray scrub open tile areas
As Needed - And At Tenant Cost:
- Professionally machine shampoo entire area (file
cabinets and bookcases will not be moved)
Window Cleaning
- Wash all windows, both interior and exterior, at
reasonable intervals to be determined by Landlord.
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APPENDIX F
RULES AND REGULATIONS
COMMERCE PLAZA, OAK BROOK, ILLINOIS
1. The Building directory shall be available to Tenant
solely to display Tenant's name and its location in the Building, which display
shall be as directed by Landlord.
2. The halls, passages, exits, entrances elevators,
stairways, balconies, roof, parking garage; parking deck, parking lot and
entrances thereto are not for the use of the general public and Landlord shall,
in all cases, retain the right to control and prevent access thereto by all
persons whose presence in the judgment of Landlord, reasonably exercised, shall
be prejudicial to the safety, character, reputation and interests of the
Building. Neither Tenant nor any employee or invitee of any tenant shall go
upon the roof of the Building.
3. The toilet room, urinals, wash bowls and other
apparatuses shall not be used for any purposes other than for which they were
constructed, and no foreign substance of any kind whatsoever shall be thrown
therein, and to the extent caused by Tenant or its employees or invitees, the
expense of any breakage, stoppage or damage resulting from the violation of
this rule shall be borne by Tenant.
4. Tenant shall not cause any unnecessary janitorial
labor or services by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness.
5. Landlord shall have the sole power to direct
electricians to where and how telephone and other wires are to be introduced.
No boring or cutting for wires is allowed without the consent of Landlord. The
location of telephones, call boxes and other office equipment affixed to the
Premises shall be subject to the approval of Landlord.
6. Tenant shall not install linoleum, tile, carpet or to
the floor covering so that the same shall be affixed to the floor of the Leased
Premises in any manner except as provided by Landlord.
7. Tenant shall cooperate fully with Landlord to assure
the most effective operation of the Leased Premises or the Building's heating
and air conditioning, and shall refrain from attempting to adjust any controls.
Tenant shall keep corridor doors closed.
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<PAGE> 72
8. Tenant shall not exhibit, sell or offer for sale,
use, rent or exchange in or from the Leased premises or on the Property any
articles, thing or service except those ordinarily embraced within the use of
the Leased Premises specified in the schedule without the prior written consent
of Landlord. Tenant shall report all peddlers, solicitors and beggars
immediately to the Office of the Property or as Landlord otherwise requests.
9. Tenant acknowledges that Building security problems,
may occur which may require the employment of extreme security measures in the
day-to-day operation of the Building. Tenant will cooperate with Landlord as
Landlord may require in response to such problems.
Accordingly:
(a) Landlord may, at any time, or from time to time, or
for regularly scheduled time periods, as deemed advisable by Landlord, Manager,
and/or its agents, in their sole discretion, require that Persons entering or
leaving the Building or the Property identify themselves to watchmen or other
employees designated by Landlord, by registration, identification or otherwise;
and to require Tenant, its employees, agents and visitors to enter and exit the
Property at locations and in such fashion as Landlord may designate from time
to time, and in all other respects to control the entrance and access to the
Property.
(b) Tenant agrees that it and its employees will
cooperate fully with Building employees in the implementation of any and all
security procedures.
(c) Such security measures shall be the sole
responsibility of Landlord, and Tenant shall have no liability for any action
taken by Landlord in connection therewith.
10. Tenant shall not disturb the quiet enjoyment of any
other tenant.
11. Tenant shall not Provide any Janitorial services or cleaning
without Landlord's written consent and then only subject to supervision of
Landlord and at Tenant's sole responsibility and by janitor or cleaning
contractor or employees at all times satisfactory to Landlord.
12. Tenant shall not paint, display, inscribe or affix
any sign, trademark, picture, advertising, notice, lettering or direction on any
part of the outside or inside of the property, or on the Leased Premises,
except on the public hallway doors of the Leased Premises, and then only such
name or names or matter and of such color, size, style, character and materials
as shall be first approved by Landlord in writing. Landlord reserves the right
to remove any other matter without notice to Tenant at the cost and expense of
Tenant.
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<PAGE> 73
13. Tenant shall not advertise the business, profession or
activities Of Tenant in any manner which violates the letter or spirit of any
code of ethics adopted by any recognized association or organization pertaining
thereto or use the name of the Property or "Commerce Plaza", or any other name
by which the Property may from time to time be known, on any letterhead,
envelops, circular, notice, advertisement, container or wrapping material,
without the prior written consent of Landlord.
14. Unless specifically provided for herein, nothing in
this Lease shall be construed as granting to Tenant or its customers, patrons,
invitees, visitors or employees a right to park any cars or other vehicles in
any parking facilities in and about the Property, except on such terms and
conditions as such parking facilities shall be available to the general public.
15. (A) Tenant shall make arrangements directly with the
telephone company servicing the Building or such telephone service in the
Leased Premises as may be desired by Tenant. Tenant shall pay the entire cost
of all telephone charges, electricity consumed within the Leased Premises,
maintenance or light fixtures and replacement of lamps, bulbs, tubes, ballasts
and starters.
(B) If Tenant desires telegraphic, telephonic,
burglar alarm, computer installations or signal service (which service shall
be at Tenant's sole expense. Landlord shall, upon request, direct where and
how all connections and wiring for such service shall be introduced and run.
In the absence of such directions, Tenant shall make no borings or cuttings or
install any wires or cables in or about the Leased Premises.
16. Tenant shall list all furniture, equipment and
similar articles, Tenant, its employees or agents desire to remove from the
Leased premises or the Property and deliver a copy to Manager authorizing
employees to permit such articles to be removed.
17. Tenant shall not sell or use alcoholic beverages in
the Leased Premises or on the Property without the prior written consent of
Landlord and then only upon compliance with all applicable ordinances and any
reasonable insurance or other requirements that Landlord may impose.
18. Tenant shall not bring or permit to be in the
Building any bicycle or other vehicle, or dog (except in the company of a blind
person) or other animal; make or permit any noise, vibration or odor to emanate
from the Leased Premises; do anything therein tending to create or maintain a
nuisance; disturb, solicit or canvass any occupant of the Property, or do any
act tending to injure the reputation of the Property.
19. Tenant shall not place anything or allow anything to
be placed near the glass of any door, partition, or window which may,
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<PAGE> 74
in Landlord's judgment, appear unsightly from outside the Leased Premises; take
or permit to be taken in or about other entrances of the Property, or take or
permit on elevators, any item normally taken in or out through the service
doors and then only between hours and in such fashion as shall be designated by
Landlord; or, place or store anything, or obstruct in any way, any passageway,
exit, stairway, elevator, or shipping platform. Tenant shall cooperate in
keeping such areas free from all obstruction and in a clean and sightly
condition and move all supplies, furniture and equipment when received to the
Leased Premises and move all such items and waste, other than waste customarily
removed by employees of the Property, directly to the shipping platform.
20. Landlord reserves the right to restrict access to the
Building after 6:00 p.m. or at such other reasonable time as Landlord may
determine, subject, however, to Tenant's right to admittance under Rules and
Regulations as shall be prescribed from time to time by Landlord.
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PARKING SPACE LEASE
COMMERCE PLAZA, OAK BROOK, ILLINOIS
-----------------------------------
THIS PARKING SPACE LEASE ("Parking Lease"), made and entered into this
_______ day of __________, 19__, by and between Metropolitan Life Insurance
Company, a corporation organized and existing under the laws of the State of New
York ("Landlord") and the Tenant named in Item 1 of the Schedule to this Parking
Lease ("Tenant").
WITNESSETH:
WHEREAS, Landlord is the owner of certain buildings and land commonly
known as Commerce Plaza at 2001-2015-2021 Spring Road, Oak Brook, Illinois (the
"Property");
WHEREAS, Tenant is desirous of Leasing from Landlord a certain Parking
Space, as described in Item 2 of the Schedule, located in the underground
parking garage of the Property.
NOW THEREFORE, it is mutually agreed by and between the parties, for and
in consideration of the agreements and promises of each party to the other and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by both parties, as follows:
SCHEDULE
1. Tenant: SPR CHICAGO, INC.
2. Description of Parking Space: Three (3) spaces for the term of the
lease at no charge. Spaces #13, #21, & #143
3. Commencement Date: January 1, 1995
4. Rental: No Charge
(subject to adjustment by Landlord pursuant to Section 7 of this Parking
Lease during the Term of the Parking Lease).
5. Date of Lease Between Landlord and Tenant: ____________________________
1.00 TERM. The Term of this Parking Lease shall commence on the
Commencement Date and terminate on the Termination Date as provided in
the Lease.
<PAGE> 76
2.00 ENTRY CONTROL UNIT. Tenant will be supplied with one (1) entry
control unit for garage doors. If the control unit is lost or misplaced by
Tenant, there shall be a $20.00 charge for its replacement.
3.00 USE. Tenant agrees to occupy said Parking Space for lawful purposes
as a parking space only and will comply with all public laws pertaining to said
occupancy.
4.00 INDEMNIFICATION. Tenant further agrees to indemnify and save
harmless Landlord from and against any and all loss, cost, damage and expense
in connection with any claims resulting from injuries to person or property or
from loss of life or property sustained by anyone whomsoever which may arise in
connection with the Tenant's use and enjoyment of the aforesaid Parking Space.
5.00 INSURANCE. Tenant further agrees upon demand to furnish
certificates of insurance certifying that any vehicle occupying the Parking
Space is protected by insurance covering public liability and property damage.
6.00 WAIVER. Tenant further agrees that Landlord shall not be liable for
any damage or injury to Tenant's property occasioned by Landlord's failure to
keep the Parking Space in repair and Landlord shall not be liable for injury
occasioned by casualty or from defects or appurtenances on leased or adjoining
premises, or claims for such damage or injured property herein expressly waived
by Tenant.
7.00 RULES AND REGULATIONS. Tenant agrees to comply with such Rules and
Regulations as Landlord may adopt from time to time with respect to the general
use and operation of the underground garage, which Rules and Regulations may
include increase in rental.
8.00 LIMITATION ON LIABILITY. Notwithstanding anything else contained
herein to the contrary, Tenant shall look solely to the assets of Landlord for
satisfaction of any liabilities or obligations of Landlord under this Parking
Lease, and no officer or director of Landlord shall be personally liable for
any such liabilities or obligations.
9.00 ADDRESSES FOR NOTICES. Except as otherwise provided herein, the
addresses and procedures with respect to notices as set forth in the Lease
between Landlord and Tenant shall apply to this Parking Lease.
- 2 -
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have executed this Parking Lease
by proper persons thereunto duly authorized so to do the day and year first
hereinabove written.
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York corporation
BY: /s/ [SIG] BY: /s/ [SIG]
---------------------------------- ------------------------------
TITLE: ASSISTANT VICE-PRESIDENT TITLE: PRESIDENT
---------------------------------- ------------------------------
- 3 -
<PAGE> 78
PARKING SPACE LEASE
COMMERCE PLAZA, OAK BROOK, ILLINOIS
-----------------------------------
THIS PARKING SPACE LEASE ("Parking Lease"), made and entered into this
_______ day of __________, 19__, by and between Metropolitan Life Insurance
Company, a corporation organized and existing under the laws of the State of New
York ("Landlord") and the Tenant named in Item 1 of the Schedule to this Parking
Lease ("Tenant").
WITNESSETH:
WHEREAS, Landlord is the owner of certain buildings and land commonly
known as Commerce Plaza at 2001-2015-2021 Spring Road, Oak Brook, Illinois (the
"Property");
WHEREAS, Tenant is desirous of Leasing from Landlord a certain Parking
Space, as described in Item 2 of the Schedule, located in the underground
parking garage of the Property.
NOW THEREFORE, it is mutually agreed by and between the parties, for and
in consideration of the agreements and promises of each party to the other and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by both parties, as follows:
SCHEDULE
1. Tenant: SPR CHICAGO, INC.
2. Description of Parking Space: #33
3. Commencement Date: January 1, 1995
4. Rental: $60.00 Per Month
(subject to adjustment by Landlord pursuant to Section 7 of this Parking
Lease during the Term of the Parking Lease).
5. Date of Lease Between Landlord and Tenant: ____________________________
1.00 TERM. The Term of this Parking Lease shall commence on the
Commencement Date and continue on a month-to-month basis thereafter until such
time as it may be terminated pursuant to the terms and conditions contained
herein.
<PAGE> 79
2.00 ENTRY CONTROL UNIT. Tenant will be supplied with one (1) entry
control unit for the garage doors. If the control unit is lost or misplaced by
Tenant, there shall be a $20.00 charge for its replacement.
3.00 USE. Tenant agrees to occupy said Parking Space for lawful
purposes as a parking space only and will comply with all public laws pertaining
to said occupancy.
4.00 INDEMNIFICATION. Tenant further agrees to indemnify and save
harmless Landlord from and against any and all loss, cost, damage and expense in
connection with any claims resulting from injuries to person or property or from
loss of life or property sustained by anyone whomsoever which may arise in
connection with the Tenant's use and enjoyment of the aforesaid Parking Space.
5.00 INSURANCE. Tenant further agrees upon demand to furnish
certificates of insurance certifying that any vehicle occupying the Parking
Space is protected by insurance covering public liability and property damage.
6.00 WAIVER. Tenant further agrees that Landlord shall not be liable
for any damage or injury to Tenant's property occasioned by Landlord's failure
to keep the Parking Space in repair and Landlord shall not be liable for injury
occasioned by casualty or from defects or appurtenances on leased or adjoining
premises, or claims for such damage or injured property herein expressly waived
by Tenant.
7.00 RULES AND REGULATIONS. Tenant agrees to comply with such Rules
and Regulations as Landlord may adopt from time to time with respect to the
general use and operation of the underground garage, which Rules and Regulations
may include increase in rental.
8.00 LIMITATION ON LIABILITY. Notwithstanding anything else contained
herein to the contrary, Tenant shall look solely to the assets of Landlord for
satisfaction of any liabilities or obligations of Landlord under this Parking
Lease, and no officer or director of Landlord shall be personally liable for any
such liabilities or obligations.
9.00 TERMINATION. The Landlord and the Tenant are hereby given the
right to terminate this Parking Lease on the last day of any calendar month
following the Commencement Date, provided they shall give notice in writing to
the other party not less than thirty (30) days prior to the date of such
termination.
10.00 ADDRESSES FOR NOTICES. Except as otherwise provided herein, the
addresses and procedures with respect to notices as set forth in the Lease
between Landlord and Tenant shall apply to this Parking Lease.
-2-
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have executed this Parking Lease
by proper persons thereunto duly authorized so to do the day and year first
hereinabove written.
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York corporation
BY: /s/ [SIG] BY: /s/ [SIG]
---------------------------------- ------------------------------
TITLE: ASSISTANT VICE-PRESIDENT TITLE: PRESIDENT
---------------------------------- ------------------------------
- 3 -
<PAGE> 81
PARKING SPACE LEASE
COMMERCE PLAZA, OAK BROOK, ILLINOIS
-----------------------------------
THIS PARKING SPACE LEASE ("Parking Lease"), made and entered into this
_______ day of __________, 19__, by and between Metropolitan Life Insurance
Company, a corporation organized and existing under the laws of the State of New
York ("Landlord") and the Tenant named in Item 1 of the Schedule to this Parking
Lease ("Tenant").
WITNESSETH:
WHEREAS, Landlord is the owner of certain buildings and land commonly
known as Commerce Plaza at 2001-2015-2021 Spring Road, Oak Brook, Illinois (the
"Property");
WHEREAS, Tenant is desirous of Leasing from Landlord a certain Parking
Space, as described in Item 2 of the Schedule, located in the underground
parking garage of the Property.
NOW THEREFORE, it is mutually agreed by and between the parties, for and
in consideration of the agreements and promises of each party to the other and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by both parties, as follows:
SCHEDULE
1. Tenant: SPR CHICAGO, INC.
2. Description of Parking Space: #139
3. Commencement Date: January 1, 1995
4. Rental: $60.00 Per Month
(subject to adjustment by Landlord pursuant to Section 7 of this Parking
Lease during the Term of the Parking Lease).
5. Date of Lease Between Landlord and Tenant: ____________________________
1.00 TERM. The Term of this Parking Lease shall commence on the
Commencement Date and continue on a month-to-month basis thereafter until such
time as it may be terminated pursuant to the terms and conditions contained
herein.
<PAGE> 82
2.00 ENTRY CONTROL UNIT. Tenant will be supplied with one (1) entry
control unit for the garage doors. If the control unit is lost or misplaced by
Tenant, there shall be a $20.00 charge for its replacement.
3.00 USE. Tenant agrees to occupy said Parking Space for lawful
purposes as a parking space only and will comply with all public laws pertaining
to said occupancy.
4.00 INDEMNIFICATION. Tenant further agrees to indemnify and save
harmless Landlord from and against any and all loss, cost, damage and expense in
connection with any claims resulting from injuries to person or property or from
loss of life or property sustained by anyone whomsoever which may arise in
connection with the Tenant's use and enjoyment of the aforesaid Parking Space.
5.00 INSURANCE. Tenant further agrees upon demand to furnish
certificates of insurance certifying that any vehicle occupying the Parking
Space is protected by insurance covering public liability and property damage.
6.00 WAIVER. Tenant further agrees that Landlord shall not be liable
for any damage or injury to Tenant's property occasioned by Landlord's failure
to keep the Parking Space in repair and Landlord shall not be liable for injury
occasioned by casualty or from defects or appurtenances on leased or adjoining
premises, or claims for such damage or injured property herein expressly waived
by Tenant.
7.00 RULES AND REGULATIONS. Tenant agrees to comply with such Rules
and Regulations as Landlord may adopt from time to time with respect to the
general use and operation of the underground garage, which Rules and Regulations
may include increase in rental.
8.00 LIMITATION ON LIABILITY. Notwithstanding anything else contained
herein to the contrary, Tenant shall look solely to the assets of Landlord for
satisfaction of any liabilities or obligations of Landlord under this Parking
Lease, and no officer or director of Landlord shall be personally liable for any
such liabilities or obligations.
9.00 TERMINATION. The Landlord and the Tenant are hereby given the
right to terminate this Parking Lease on the last day of any calendar month
following the Commencement Date, provided they shall give notice in writing to
the other party not less than thirty (30) days prior to the date of such
termination.
10.00 ADDRESSES FOR NOTICES. Except as otherwise provided herein, the
addresses and procedures with respect to notices as set forth in the Lease
between Landlord and Tenant shall apply to this Parking Lease.
-2-
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have executed this Parking Lease
by proper persons thereunto duly authorized so to do the day and year first
hereinabove written.
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York corporation
BY: /s/ [SIG] BY: /s/ [SIG]
---------------------------------- ------------------------------
TITLE: ASSISTANT VICE-PRESIDENT TITLE: PRESIDENT
---------------------------------- ------------------------------
- 3 -
<PAGE> 84
PARKING SPACE LEASE
COMMERCE PLAZA, OAK BROOK, ILLINOIS
-----------------------------------
THIS PARKING SPACE LEASE ("Parking Lease"), made and entered into this
_______ day of __________, 19__, by and between Metropolitan Life Insurance
Company, a corporation organized and existing under the laws of the State of New
York ("Landlord") and the Tenant named in Item 1 of the Schedule to this Parking
Lease ("Tenant").
WITNESSETH:
WHEREAS, Landlord is the owner of certain buildings and land commonly
known as Commerce Plaza at 2001-2015-2021 Spring Road, Oak Brook, Illinois (the
"Property");
WHEREAS, Tenant is desirous of Leasing from Landlord a certain Parking
Space, as described in Item 2 of the Schedule, located in the underground
parking garage of the Property.
NOW THEREFORE, it is mutually agreed by and between the parties, for and
in consideration of the agreements and promises of each party to the other and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged by both parties, as follows:
SCHEDULE
1. Tenant: SPR CHICAGO, INC.
2. Description of Parking Space: #140
3. Commencement Date: January 1, 1995
4. Rental: $60.00 Per Month
(subject to adjustment by Landlord pursuant to Section 7 of this Parking
Lease during the Term of the Parking Lease).
5. Date of Lease Between Landlord and Tenant: ____________________________
1.00 TERM. The Term of this Parking Lease shall commence on the
Commencement Date and continue on a month-to-month basis thereafter until such
time as it may be terminated pursuant to the terms and conditions contained
herein.
<PAGE> 85
2.00 ENTRY CONTROL UNIT. Tenant will be supplied with one (1) entry
control unit for the garage doors. If the control unit is lost or misplaced by
Tenant, there shall be a $20.00 charge for its replacement.
3.00 USE. Tenant agrees to occupy said Parking Space for lawful
purposes as a parking space only and will comply with all public laws pertaining
to said occupancy.
4.00 INDEMNIFICATION. Tenant further agrees to indemnify and save
harmless Landlord from and against any and all loss, cost, damage and expense in
connection with any claims resulting from injuries to person or property or from
loss of life or property sustained by anyone whomsoever which may arise in
connection with the Tenant's use and enjoyment of the aforesaid Parking Space.
5.00 INSURANCE. Tenant further agrees upon demand to furnish
certificates of insurance certifying that any vehicle occupying the Parking
Space is protected by insurance covering public liability and property damage.
6.00 WAIVER. Tenant further agrees that Landlord shall not be liable
for any damage or injury to Tenant's property occasioned by Landlord's failure
to keep the Parking Space in repair and Landlord shall not be liable for injury
occasioned by casualty or from defects or appurtenances on leased or adjoining
premises, or claims for such damage or injured property herein expressly waived
by Tenant.
7.00 RULES AND REGULATIONS. Tenant agrees to comply with such Rules
and Regulations as Landlord may adopt from time to time with respect to the
general use and operation of the underground garage, which Rules and Regulations
may include increase in rental.
8.00 LIMITATION ON LIABILITY. Notwithstanding anything else contained
herein to the contrary, Tenant shall look solely to the assets of Landlord for
satisfaction of any liabilities or obligations of Landlord under this Parking
Lease, and no officer or director of Landlord shall be personally liable for any
such liabilities or obligations.
9.00 TERMINATION. The Landlord and the Tenant are hereby given the
right to terminate this Parking Lease on the last day of any calendar month
following the Commencement Date, provided they shall give notice in writing to
the other party not less than thirty (30) days prior to the date of such
termination.
10.00 ADDRESSES FOR NOTICES. Except as otherwise provided herein, the
addresses and procedures with respect to notices as set forth in the Lease
between Landlord and Tenant shall apply to this Parking Lease.
-2-
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have executed this Parking Lease
by proper persons thereunto duly authorized so to do the day and year first
hereinabove written.
LANDLORD: TENANT:
METROPOLITAN LIFE INSURANCE COMPANY, SPR CHICAGO, INC.
a New York corporation
BY: /s/ [SIG] BY: /s/ [SIG]
---------------------------------- ------------------------------
TITLE: ASSISTANT VICE-PRESIDENT TITLE: PRESIDENT
---------------------------------- ------------------------------
- 3 -
<PAGE> 1
Exhibit 10.7
MID-CONTINENT TOWER LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), is made and entered into on this 29
day of August, 1994, between RMM Corporation ("Landlord") and System &
Programming Resources of Tulsa, Inc., d/b/a SPR ("Tenant").
W I T N E S S E T H :
1. Definitions.
(a) "Project" shall mean the real property described in Exhibit "A"
attached hereto and made a part hereof and the improvements constructed
thereon.
(b) "Building" shall mean the Mid-Continent Tower, located on the
real property described in Exhibit "At" attached hereto and made a part hereof
which has a street address of 401 South Boston, Tulsa, Oklahoma 74103.
(c) "Premises" shall mean the suite of offices known as Suite 400 on
the 4th floor of the Building and outlined on the floor plan attached to this
Lease as Exhibit "B" and made a part hereof. The Premises are stipulated for
all purposes to contain approximately 2871 square feet of "Net Rentable Area"
(as hereafter defined); provided, however, that Landlord may, at any time
during the term of this Lease, cause precise measurements of the Building
(including Common Areas and Service Areas, as hereafter defined) and the
Premises to be made, and the Net Rentable Area of the Building and of the
Premises, as well as the Base Rental (as hereafter defined) shall be adjusted
upward or downward accordingly, effective as of the Commencement Date. The
Premises are located in the Building.
(d) "Base Rental" shall mean the sum of $156,271.50 as described on
the Base Rental Schedule attached hereto and made a part hereof as adjusted
under Paragraph 6 hereof and under any other provision of this Lease. The Base
Rental due for the first month of the Lease Term (as hereafter defined) has
been deposited with Landlord by Tenant contemporaneously with the execution
hereof.
(e) "Commencement Date" shall mean October 1, 1994.
(f) "Lease Term" shall mean the term commencing on the Commencement
Date and continuing until sixty-three (63) months after the first day of the
first full calendar month following the Commencement Date.
(g) "Security Deposit" shall mean the sum of $2,131.00. The Security
Deposit has been deposited with Landlord by Tenant contemporaneously with the
execution hereof.
(h) "Building Common Areas" shall mean those areas devoted to lobbies
and entryways."
(i) "Common Areas" shall mean the Building Common Areas and
corridors, elevator foyers, restrooms, mechanical rooms, janitorial closets,
electrical and telephone closets, vending areas and other similar facilities
provided for the common use or benefit of tenants generally and/or the public.
(j) "Single Floor Common Areas" shall mean that part of the Common
Areas located on a designated floor.
(k) "Service Areas" shall mean those areas within the outside walls
of the Building used for elevator mechanical rooms, building stairs, fire
towers, elevator shafts, flues, vents, stacks, pipe shafts and vertical ducts
(but shall not include any such areas for the exclusive use of a particular
Tenant).
<PAGE> 2
(l) "Net Rentable Area" of one floor of the Building shall mean the
gross area within the inside surface of the outer glass or other material
comprising the exterior walls of the Building to the Common Areas or Service
Areas side of walls separating the Common Areas and Service Areas from any
other areas of the floor.
(m) "Net Rentable Area of the Building" shall mean the total of the
Net Rentable Area of all floors of the Building.
(n) "Net Rentable Area of the Premises" shall mean the gross area
within the inside surface of the outer glass or other material comprising the
exterior walls of the Premises to the mid point of any walls separating
portions of the Premises from those of adjacent tenants and to the Common Areas
or Service Areas side of walls separating the Premises from Common Areas and
Service Areas, subject to the following:
(1) Net Rentable Area of the Premises shall not include any
Service Areas.
(2) Net Rentable Area of the Premises shall include a pro rata
part of the Building Common Areas plus a pro rata part of the Single Floor
Common Areas on the floor on whith the Premises are located, such prorations
based upon an allocation to each floor of the Building of Building Common Areas
(based upon the Net Rentable Area of each floor and the Net Rentable Area of
the Building, exclusive of Building Common Areas) and upon the ratio of the Net
Rentable Area of the Premises to the total Net Rentable Area of such floor. The
Single Floor Common Areas on floor(s) upon which the Premises are located may
be adjusted as determined by Landlord from time to time to conform such
allocation to changes in the configuration of rented spaces and Common Areas
upon such floor.
(3) Net Rentable Area of the Premises shall include any columns
and/or projection(s) which protrude into the Premises and/or the Common Areas.
(o) "Basic Costs" shall mean all direct and indirect costs and
expenses in each calendar year of operating, maintaining, repairing, managing
and owning the Building and the Exterior Common Areas (as hereafter defined).
Basic Costs shall not include the cost of any capital improvements,
depreciation, interest, and principal payments on mortgage and other
non-operating debts of Landlord. Basic Costs shall, however, include the
amortization of capital improvements which are primarily for the purpose of
reducing Basic Costs, or which are required by governmental authorities.
(p) "Exterior Common Areas" shall mean those areas of the Project
which are not located within the Building and which are provided and maintained
for the common use and benefit of Landlord and Tenants of the Building
generally and the employees, invitees and licensees of Landlord and such
Tenants; including without limitation all parking areas, enclosed or otherwise,
all streets, sidewalks and landscaped areas located within the Project.
(q) "Tenant Improvements", when used herein, shall mean those
improvements to the Premises which Landlord has agreed to provide pursuant to
the plans and bid ("collectively Plans") attached to Exhibit "C" hereto and
made a part hereof. All Tenant Improvements shall be made and constructed only
by Landlord or Landlord's designee. Except to the extent otherwise agreed (and
described on an addendum to the Plans), the making and constructing of the
Tenant Improvements shall be at Tenant's expense. "Building Standard" shall
mean the type, brand and/or quality of materials Landlord designates from time
to time to be the minimum quality to be used in the Building or the exclusive
type, grade or quality of material to be used in the Building.
2
<PAGE> 3
2. Lease Grant. Subject to and upon the terms herein set forth, Landlord
leases to Tenant and Tenant leases from Landlord the Premises.
3. Lease Term. This Lease shall continue in force during a period
beginning on the Commencement Date and continuing until the expiration of the
Lease Term, unless this Lease is sooner terminated or extended to a later day
under any other term or provision hereof.
4. Use. The Premises shall be used for office purposes and for no other
purpose. Tenant agrees not to use or permit the use of the Premises for any
purpose which is illegal, or which, in Landlord's opinion, creates a nuisance
or which would increase the cost of insurance coverage with respect to the
Project or the Building.
5. Base Rental.
(a) Tenant agrees to pay to Landlord during the Lease Term, without
any setoff or deduction whatsoever, the Base Rental and all such other sums of
money as shall become due hereunder as additional rent, all of which are
sometimes herein collectively called "rent", for the nonpayment of which
Landlord shall be entitled to exercise all such rights and remedies as are
herein provided in the case of the nonpayment of Base Rental. The Base Rental,
together with any estimated adjustments thereto pursuant to Paragraphs 6, 19,
20, and 28 hereof and pursuant to any other provision of this Lease, shall be
due and payable in advance in monthly installments as shown on the Base Rental
Schedule attached hereto on the first day of each calendar month during the
Lease Term except as the first month's Base Rental may have been paid with the
execution hereof, and Tenant hereby agrees to pay such Base Rental and any
adjustments thereto to Landlord at Landlord's address provided herein (or such
other address in Tulsa County as may be designated by Landlord in writing from
time to time) monthly, in advance, and without demand.
(b) In the event all or any part of any installment of rent is not
paid when due and payable, Landlord may at its sole option require Tenant to
pay a late payment fee of $100.00. In addition, an interest charge shall accrue
on the delinquent rent at one and one-half percent (1 1/2%) per month.
(c) In the event any installment of rent paid by check is returned to
the Landlord because of insufficient funds, Tenant shall pay to Landlord as
rent on demand a returned check charge fee of $50.00.
6. Basic Cost Increase Adjustment. The Base Rental payable hereunder
shall be adjusted upward (but not downward) from time to time in accordance
with the following provisions:
(a) The Building contains approximately 321,500 square feet of Net
Rentable Area in aggregate. Tenant's Base Rental is based, in part, upon the
estimate that during each calendar year of the Lease Term, Basic Costs will be
equal to the actual Basic Costs for the calendar year 1993 (such estimate on a
square foot of Net Rentable Area in the Building basis being hereafter referred
to as the "Expense Stop"). Tenant shall, when Landlord so requires, during the
Lease Term pay as an adjustment to Base Rental hereunder an amount (per each
square foot of Net Rentable Area of the Premises, including those portions of
Common Areas allocated to the Premises from time to time) equal to the excess
("Excess") from time to time of actual Basic Costs per square foot of Net
Rentable Area in the Building over the amount of the Expense Stop. Landlord
may collect such additional Base Rental in arrears on a yearly basis. Landlord
shall also have the option to make a good faith estimate of the Excess for each
upcoming calendar year and upon thirty (30) days' written notice to Tenant may
adjust the monthly
3
<PAGE> 4
payment of Base Rental in the then current year in accordance with such
estimate. Any amounts paid based on such an estimate shall be subject to
adjustment pursuant to Paragraph 6(b) when actual Basic Costs are available for
each calendar year.
(b) Tenant, at its expense, shall have the right, no more frequently
than once per calendar year, following prior written notice to Landlord, to
audit, at Tenant's sole expense, Landlord's books and records relating to Basic
Costs incurred during the calendar year preceding such audit. In the event such
an audit demonstrates that additional Base Rental collected for such preceding
year and attributable to any Excess to be higher or lower than the amount of
additional rental actually due pursuant to subparagraph 6(a) above, then, if
higher, Landlord may at Landlord's discretion, apply any over-payment to the
estimate described in the next to the last sentence in the preceding paragraph
or apply any over-payment in equal installments to the monthly Base Rental for
the remainder of the then current calendar year or, if lower, Tenant shall pay
to Landlord any under-payment within ten (10) days of such determination.
(c) Notwithstanding anything to the contrary contained herein,
Landlord and Tenant agree that for the months of October, November, and
December, 1994, Tenant shall pay to Landlord, in lieu of adjustment of Base
Rental under the terms of subparagraph 6(a) above, the sum of $85.83 in each of
said three months as an adjustment to the installment of Base Rental for each
of said three months and shall be payable at the same time and on the same
terms as the installment of Base Rental for each of said three months is
otherwise payable. This provisions of this subparagraph 6(c) shall not alter or
affect in any way the adjustment of Base Rental pursuant to the provisions of
subparagraph 6(a) hereof except for the calendar year 1994.
7. Services to be Furnished by Landlord. Landlord agrees to furnish Tenant
the following services:
(a) Hot and cold water at those points of supply provided for general
use of tenants in the Building on the floor(s) on which the Premises are
located and central heat and air conditioning in the Premises in season, at
such temperatures and in such amounts as are considered by Landlord to be
standard or as required by governmental authority; provided, however, heating
and air conditioning service at times other than during "Normal Business Hours"
for the Building (which are 7:30 a.m. to 6:00 p.m. on Mondays through Fridays
and 8:00 a.m. to 1:00 p.m. on Saturdays, exclusive of normal business
holidays), shall be furnished only upon the written request of Tenant delivered
to Landlord prior to 3:00 p.m. at least three (3) days in advance of the date
such usage is requested. Tenant shall bear the entire cost of such additional
service allocable to the Premises as such costs are determined by Landlord from
time to time and shall pay such costs to Landlord upon demand.
(b) Routine maintenance and electric lighting service for all
Exterior Common Areas, Building Common Areas, Single Floor Common Areas on the
floor on which the Premises are located, and Service Areas in the manner and to
the extent deemed by Landlord to be standard.
(c) Janitor service in the Premises, Monday through Friday, exclusive
of normal business holidays; provided, however, if Tenant's floor covering or
other improvements require special treatment, Tenant shall pay the additional
cleaning cost attributable thereto as additional rent upon presentation of a
statement therefor by Landlord. Tenant shall cooperate with Landlord's
employees in the furnishing by Landlord of janitorial services at such times
(including Normal Business Hours) as Landlord elects to have the necessary work
performed; provided, however, that janitorial services performed by Landlord
during
4
<PAGE> 5
directory in the lobby of the Building at a ratio of one (1) line per one
thousand (1,000) square feet of Net Rentable Area of the Premises. Landlord
agrees to provide Tenant's name and suite number, at Tenant's sole cost and
expense, in a standard form selected by Landlord, on or adjacent to the entry
door to the Premises.
11. Care of the Premises by Tenant. Tenant agrees not to commit or allow
any waste to be committed on any portion of the Premises, and at the
termination of this Lease to deliver up the Premises to Landlord in as good
condition as at the date of the commencement of the term of this Lease,
ordinary wear and tear excepted.
12. Repairs and Alterations by Tenant. Tenant covenants and agrees with
Landlord that all repairs and replacements to the Building or Project
occasioned by damage done to the Building or Project or any part thereof caused
by Tenant or Tenant's agents, employees, invitees, or visitors shall be made by
Landlord or Landlord's designee at the Tenant's sole cost and expense. Such
repairs shall restore the Building or Project to as good a condition as it was
in prior to such damage and shall be effected in compliance with all applicable
laws. Tenant shall pay the Landlord's cost of such repairs and alterations to
the Landlord in advance as additional rent. Tenant agrees with Landlord not to
make or allow to be made any alterations to the Premises, install any vending
machines on the Premises, or place signs on the Premises which are visible from
outside the Premises, without first obtaining the prior written consent of
Landlord in each such instance, which consent may be given on such conditions
as Landlord may elect. Any and all alterations to the Premises shall be made by
Landlord or Landlord's designee and shall become the property of Landlord upon
termination of this Lease (except for movable equipment or furniture owned by
Tenant). Landlord may, nonetheless, require Tenant to remove any and all
fixtures, equipment and other improvements installed on the Premises which
removal, if required, shall be performed by Landlord or Landlord's designee
and, in such event Tenant shall pay to Landlord on demand Landlord's cost of
restoring the Premises to Building Standard.
13. Use of Electrical Services by Tenant. Tenant's use of electrical
services furnished by Landlord shall be subject to the following:
(a) Tenant's electrical equipment shall be restricted to that
equipment which individually does not have a rated capacity greater than
.5 kilowatts per hour and/or require voltage other than 120/208 volts, single
phase. Collectively, Tenant's equipment shall not have an electrical design
load greater than an average of 2 watts per square foot of Net Rentable Area of
the Premises.
(b) Tenant's lighting shall not have a design load greater than an
average of 2 watts per square foot of Net Rentable Area of the Premises.
(c) If Tenant's consumption of electrical services exceeds either
the rated capacities and/or design loads as per subparagraphs 13(a) and 13(b),
or generates heat in excess of that Landlord's air conditioning system is
designed to handle, then Tenant shall remove such equipment and/or lighting to
achieve compliance within ten (10) days after receiving notice from Landlord
or, upon receiving Landlord's prior written approval, such equipment and/or
lighting may remain in the Premises, subject to the following:
(i) Tenant shall pay for all costs of installation and
maintenance of submeters, wiring, additional air conditioning systems and other
items required by Landlord, in Landlord's discretion, to accommodate Tenant's
excess design loads and capacities or heat generation.
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(ii) Tenant shall reimburse to Landlord, upon demand, the cost
of the excess demand and consumption of electrical service at rates charged to
Landlord (which rates shall be in accordance with any applicable laws) as well
as all costs of operating additional air conditioning systems deemed necessary
by Landlord on account of Tenant's excess consumption and/or heat generation.
(iii) Landlord may, at its option, upon not less than thirty
(30) days' prior written notice to Tenant, discontinue the availability of such
extraordinary utility service and/or air conditioning service. If Landlord
gives any such notice, Tenant will contract directly with such public utility
at Tenant's cost for the supplying of such utility service to the Premises.
14. Laws and Requlations. Tenant agrees to comply with all applicable
laws, ordinances, rules and regulations of any governmental entity or agency
having jurisdiction of the Premises.
15. Building Rules. Tenant will comply with the rules of the Building and
the Project adopted and altered by Landlord from time to time and will cause
all of its agents, employees, invitees and visitors to do so; all changes to
such rules will be sent by Landlord to Tenant in writing. The initial rules for
the Project are attached hereto as Exhibit "D" and made a part hereof.
16. Entry by Landlord. Tenant agrees to permit Landlord or its agents or
representatives to enter into and upon all or any part of the Premises or to
the Building at all reasonable hours (and in emergencies at all times) to
inspect the same, to show the Premises to prospective purchasers, mortgagees,
tenants or insurers, or to clean or make repairs, alterations or additions
thereto or to the Building or Project, and Tenant shall not be entitled to any
abatement or reduction of rent by reason thereof.
17. Assignment and Subletting.
(a) Tenant shall not assign, sublease, transfer, sell or encumber
this Lease or any interest therein. Any attempted assignment, sublease,
transfer, sale, or encumbrance by Tenant in violation of the term and covenants
of this paragraph shall be void.
(b) All cash or other proceeds of any assignment, sublease,
transfer, or sale of Tenant's interest in this Lease, whether consented to by
Landlord or not, shall be paid to Landlord, notwithstanding the fact that such
proceeds exceed the rentals called for hereunder, unless Landlord agrees to the
contrary in advance in writing, and Tenant hereby assigns to Landlord all
rights it might have or ever acquire in any such proceeds. This covenant and
assignment shall run with the land and shall bind Tenant and Tenant's heirs,
executors, administrators, personal representatives, successors and assigns.
Any assignee, sublessee, transferee, or purchaser of Tenant's interest in this
Lease (all such assignees, sublessees, transferees, and purchasers being
hereinafter referred to as "Successors"), by assuming Tenant's obligations
hereunder, shall assume liability to Landlord for all amounts paid to persons
other than Landlord by such Successor in consideration of any such assignment,
subletting, transfer, or sale in violation of the provisions hereof. In no
event shall such assignment, subletting, transfer, or sale relieve Tenant of
liability for any obligation hereunder, regardless of whether any assignee,
sublessee, transferee, or purchaser assumes Tenant's liability hereunder and
regardless of whether such assignment, subletting, transfer, or sale is
approved by Landlord.
18. Mechanic's Liens. Tenant will not permit any mechanic's or
materialman's lien or liens to be placed upon the Premises, the Building, or
the Project and nothing in this Lease shall be deemed or construed in anyway as
constituting the consent or request of
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Landlord, express or implied, by inference or otherwise, to any person for the
performance of any labor or the furnishing of any materials to the Premises,
the Building, or the Project, or any part thereof, nor as giving Tenant any
right, power, or authority to contract for or permit the rendering of any
services or the furnishing of any materials that would give rise to any
mechanic's, materialman's, or other liens against the Premises. In the event
any such lien is attached to the Premises, then, in addition to any other right
or remedy of Landlord, Landlord may, but shall not be obligated to, discharge
the same. Any amount paid by Landlord for any of the aforesaid purposes shall
be paid by Tenant to Landlord on demand as additional rent.
19. Insurance.
(a) Landlord shall maintain fire and extended coverage insurance on
the Building and the Premises in such amounts as the Building's mortgagees
shall require payable solely to Landlord or the mortgagees of the Building as
their interests shall appear. Tenant shall maintain at its expense, in an
amount equal to full replacement cost, fire and extended coverage insurance on
all of its personal property, including removable trade fixtures, located in
the Premises and in such additional amounts as are required to meet Tenant's
obligations pursuant to subparagraph 23 hereof. Tenant's insurance pursuant to
the provisions of subparagraphs 19(a) and 19(b) hereof shall provide that such
insurance may not be cancelled or expire without at least thirty (30) days'
prior written notice to Landlord from the insurer. All policies of insurance
required of Tenant under this Lease and representing the coverages and
conditions required by any provision of this Lease (including without
limitation subparagraphs 19(a) and 19(b) and Paragraph 22) shall contain an
endorsement requiring thirty (30) days' prior written notice to Landlord before
cancellation, termination or change in the coverage, scope, amount, or
conditions of any such policy. Each such policy, or a certificate thereof
evidencing to Landlord's satisfaction such coverages and conditions, together
with evidence of payment of premiums, shall be deposited with Landlord at the
commencement of the Lease Term, and on renewal of the policy not less than
thirty (30) days before expiration of the term of the policy.
(b) Each of Tenant and Landlord shall, each at its own expense,
except Landlord's policy premiums shall be included in Basic Costs, maintain a
policy or policies of comprehensive general liability insurance with respect to
the respective activities of each in the Building with the premiums thereon
fully paid on or before due date, issued by and binding upon an insurance
company approved by Landlord, such insurance to afford minimum protection of
not less than $1,000,000 combined single limit coverage of bodily injury,
property damage or combination thereof. Landlord shall be named as an
additional insured on Tenant's insurance required by this subparagraph l9(b).
Landlord shall not be required to maintain insurance against thefts within the
Premises, the Building or the Project generally.
20. Property Taxes. Landlord agrees (subject to the provisions of
Paragraph 6 hereof) to pay all ad valorem taxes levied against the Project, but
Tenant shall be liable for all taxes levied against personal property and trade
fixtures placed by Tenant in the Premises. If any taxes for which Tenant is
liable under this Paragraph are levied against Landlord or Landlord's property
and if Landlord elects to pay the same or if the assessed value of Landlord's
property is increased by inclusion of personal property and trade fixtures
placed by Tenant in the Premises and Landlord elects to pay the taxes based on
such increase, Tenant shall pay to Landlord upon demand that part of such taxes
for which Tenant is liable hereunder.
21. Indemnity. Landlord and its officers, agents, managers, and employees
shall not be liable to Tenant, or to Tenant's agents,
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servants, employees, customers, or invitees for any injury to person or damage
to property, including without limitation liability for consequential damages,
caused by any act, omission, or neglect of Tenant, its agents, servants, or
employees, invitees, licensees or any other person entering the Project under
the invitation of Tenant or arising out of the use of the Premises by Tenant
and the conduct of its business or out of a default by Tenant in the
performance of its obligations hereunder. Tenant hereby indemnifies and holds
Landlord and its officers, agents, managers, and employees harmless from all
liability and claims for or resulting from any such damage or injury.
22. Waiver of Subrogation Rights. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives any and all rights of
recovery, claim, action, or cause of action, against the other, its agents,
officers, managers, or employees, for any loss or damage that may occur to the
Premises, or any improvements thereto, or the Building or the Project, or any
improvements thereto, or any personal property of such party therein, by reason
of fire, the elements, or any other cause(s) which are insured against under
the terms of the standard fire and extended coverage insurance policies
referred to in Paragraph 19 hereof, regardless of cause or origin, including
negligence of the other party hereto, its agents, officers, managers, or
employees.
23. Casualty Damage. If the Premises or any part thereof shall be damaged
by fire or other casualty, Tenant shall give prompt written notice thereof to
Landlord. In case the Building shall be so damaged that substantial alteration
or reconstruction of the Building shall, in Landlord's sole opinion, be
required (whether or not the Premises shall have been damaged by such casualty)
or in the event any mortgagee of the Building should require that the insurance
proceeds payable as a result of a casualty be applied to the payment of the
mortgage debt or in the event of any material uninsured loss to the Building,
Landlord may, at its option, terminate this Lease by notifying Tenant in
writing of such termination within ninety (90) days after the date of such
damage. If Landlord does not thus elect to terminate this Lease, Landlord shall
commence and proceed with reasonable diligence to restore the Building to
substantially the same condition in which it was immediately prior to the
happening of the casualty, except that Landlord's obligation to restore shall
not exceed the scope of the work required to be done by Landlord at Landlord's
expense in originally constructing the Building and installing the Tenant
Improvements, nor shall Landlord be required to spend for such work an amount
in excess of the insurance proceeds actually received by Landlord as a result
of the casualty. When the portions of the Premises originally furnished at
Landlord's expense have been restored by Landlord, Tenant shall, at Tenant's
expense, complete the restoration of the Premises, including the reconstruction
of all improvements in excess of those Tenant Improvements originally installed
at Landlord's expense, and the restoration of Tenant's furniture and equipment.
Landlord shall not be liable for any inconvenience or annoyance to Tenant or
injury to the business of Tenant resulting in any way from such damage or the
repair thereof, except that, subject to the provisions of the next sentence,
Landlord shall allow Tenant a fair diminution of rent during the time and to
the extent the Premises are unfit for occupancy. If the Premises or any other
portion of the Building or the Project be damaged by fire or other casualty
resulting from the fault or negligence of Tenant or any of Tenant's agents,
employees, or invitees, the rent hereunder shall not be diminished during the
repair of such damage and Tenant shall be liable to Landlord for the cost of
the repair and restoration of the Building or the Project caused thereby to the
extent such cost and expense is not covered by insurance proceeds.
24. Condemnation. If the whole or substantially the whole of the Building
or the Premises should be taken for any public or quasi-public use, by right of
eminent domain or otherwise, or
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should be sold in lieu of condemnation, then this Lease shall terminate as of
the date when physical possession of the Building or the Premises is taken by
the condemning authority. If less than the whole or substantially the whole of
the Building or the Premises is thus taken or sold, Landlord (whether or not
the Premises are affected thereby) may terminate this Lease by giving written
notice thereof to Tenant; in which event, this Lease shall terminate as of the
date when physical possession of such portion of the Building or Premises is
taken by the condemning authority. If this Lease is not so terminated upon any
such taking or sale, the Base Rental payable hereunder shall be diminished by
an equitable amount, and Landlord shall, to the extent Landlord deems feasible,
restore the Building and the Premises to substantially their former condition,
but such work shall not exceed the scope of the work done by Landlord in
originally constructing the Building and the Tenant Improvements, nor shall
Landlord in any event be required to spend for such work an amount in excess of
the amount received by Landlord as compensation for such taking. All amounts
awarded upon a taking of any part or all of the Building or the Premises shall
belong to Landlord, and Tenant shall not be entitled to, and expressly waives
all claim to, any such compensation.
25. Damages From Certain Causes. Landlord shall not be liable to Tenant
for any loss or damage to any property or person occasioned by theft, fire, act
of God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, or order of governmental body or authority or by any other cause
beyond the control of Landlord. Nor shall Landlord be liable for any damage or
inconvenience which may arise through repair or alteration of any part of the
Building, the Project, or the Premises.
26. Events of Default/Remedies.
(a) The following events shall be deemed to be events of default by
Tenant under this Lease: (i) Tenant shall fail to comply with any provision of
this Lease or any other agreement between Landlord and Tenant all of which
terms, provisions and covenants shall be deemed material; (ii) the leasehold
hereunder demised shall be taken on execution or other process of law in any
action against Tenant; (iii) Tenant shall fail to promptly move into and take
possession of the Premises when the Premises are ready for occupancy or shall
cease to do business in or abandon any substantial portion of the Premises;
(iv) Tenant shall become insolvent or unable to pay its debts as they become
due, or Tenant notifies Landlord that it anticipates either condition; (v)
Tenant takes any action to, or notifies Landlord that Tenant intends to file a
petition under any section or chapter of the United States Bankruptcy Code, as
amended, or under any similar law or statute of the United States or any State
thereof; or a petition shall be filed against Tenant under any such statute or
Tenant or any creditor of Tenant's notifies Landlord that it knows such a
petition will be filed or Tenant notifies Landlord that it expects such a
petition to be filed; or (vi) a receiver or trustee shall be appointed for
Tenant's leasehold interest in the Premises or for all or a substantial part of
the assets of Tenant.
(b) If Tenant does not make payment when due of any rental
installment required of Tenant in the Lease, or if default by Tenant under this
Lease otherwise occurs, in addition to the imposition of appropriate late
charges, Landlord may, at its option, declare the total Base Rental due or to
be due under this Lease immediately due and payable and, upon such declaration,
if the same is not paid upon demand, said total Base Rental shall be past due,
delinquent, and in default.
(c) If Tenant does not make payment when due of any rental
installment, Tenant waives notice of rent due and demand for payment of said
unpaid installment and waives notice and demand by Landlord for the Tenant to
quit and vacate the Premises if such rent not be paid.
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<PAGE> 10
(d) Upon the occurrence of any event or events of default by Tenant,
whether enumerated in this Paragraph 26 or not, Landlord shall have the option
to pursue any one or more of the following remedies without any notice or
demand for possession whatsoever (and without limiting the generality of the
foregoing), Tenant hereby specifically waives notice and demand for payment of
rent or other obligations due and waives any and all other notices or demand
requirements imposed by applicable law): (i) terminate this Lease in which
event Tenant shall immediately surrender the Premises to Landlord; (ii)
terminate Tenant's right to occupy the Premises and re-enter and take
possession of the Premises (without terminating this Lease but without
prejudice to later termination for the same or other default by Tenant); (iii)
enter upon the Premises and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant further agrees that Landlord shall not be
liable for any damages resulting to the Tenant from such action; and (iv)
exercise all other remedies available to Landlord at law or in equity,
including, without limitation, injunctive relief of all varieties. No re-entry
or taking possession of the Premises by Landlord shall be construed as an
election by Landlord to terminate this Lease unless a written notice of such
election be delivered by landlord to Tenant.
(e) In the event Landlord elects to re-enter or take possession of
the Premises after Tenant's default, Tenant hereby waives notice of such
re-entry or repossession and of Landlord's intent to re-enter or take
possession. Landlord may, without prejudice to any other remedy which he may
have for possession or arrearages in rent, expel or remove Tenant any other
persons who may be occupying said Premises or any part thereof. In addition,
the provisions of Paragraph 29 hereof shall apply with respect to the period
from and after the giving of notice of such election to Tenant. All Landlord's
remedies shall be cumulative and not exclusive. Forbearance by Landlord to
enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default or a
waiver of Landlord's right to invoke additional remedies for the same or other
defaults.
(f) This Paragraph 26 shall be enforceable to the maximum extent not
prohibited by applicable law, and the unenforceability of any portion thereof
shall not thereby render unenforceable any other portion. To the extent any
provision of applicable law requires some action by Landlord to evidence or
effect the termination of this Lease or to evidence the termination of Tenant's
right of occupancy, Tenant and Landlord hereby agree that notice, either oral
or by telephone, or by any act of Landlord that comes to the attention of
Tenant, its agents, servants, or employees, which reflects Landlord's
intention to terminate, shall be sufficient to evidence and effect the
termination herein provided for, but Tenant hereby agrees that, as between
Landlord and Tenant, its successors and assigns, no such notice shall ever be
necessary to effect a termination hereunder.
(g) Landlord shall be in default hereunder in the event Landlord has
not begun and pursued with reasonable diligence the cure of any failure of
Landlord to meet its obligations hereunder within thirty (30) days of the
receipt by Landlord of written notice from Tenant of the alleged failure to
perform. In no event shall Tenant have the right to terminate or rescind this
Lease as a result of Landlord's default as to any covenant or agreement
contained in this Lease or as a result of the breach of any promise or
inducement hereof, whether in this Lease or elsewhere. Tenant hereby waives
such remedies of termination and rescission and hereby agrees that Tenant's
remedies for default hereunder and for breach of any promise or inducement
shall be limited to a suit for damages and/or injunction. In addition, Tenant
hereby covenants that, prior to the exercise of any such remedies, it will give
the mortgagees holding mortgages on the Building notice and a reasonable time
to cure any default by Landlord.
<PAGE> 11
27. Peaceful Enjoyment. Tenant shall, and may peacefully have, hold, and
enjoy the Premises, subject to other terms hereof, provided that Tenant pays
the rent and other sums herein recited to be paid by Tenant and performs all of
Tenant's covenants and agreements herein contained. This covenant and any and
all other covenants of Landlord shall be binding upon each of Landlord and its
successors only with respect to breaches occurring during the respective
periods of ownership of each of the landlords' interest hereunder.
28. Consumer Price Index Adjustment. Intentionally omitted
29. Holding Over. In the event of holding over by Tenant after expiration
or other termination of this Lease, or in the event Tenant continues to occupy
the Premises after the termination of Tenant's right of possession pursuant to
Paragraph 26 (d)(ii) hereof, Tenant shall, throughout the entire holdover
period, pay rent equal on a per diem basis to twice the Base Rental and
additional Base Rental which would have been applicable had the term of this
Lease continued through the period of such holding over by Tenant. No holding
over by Tenant after the expiration of the Lease Term shall be construed to
extend the term of the Lease. The provision of this paragraph shall not be in
place of or in lieu of, but shall be in addition to, the provisions of
subparagraphs 26(a), 26(d), and 26(e).
30. Subordination to Mortgaged. Tenant accepts this Lease subject and
subordinate to any mortgage, deed of trust or other lien presently existing or
hereafter arising upon the Premises, upon the Building or upon the Project as a
whole, and to any renewals, refinancing and extensions thereof, but Tenant
agrees that any such mortgagee shall have the right at any time to subordinate
such mortgage, deed of trust or other lien to this Lease on such terms and
subject to such conditions as such mortgagee may deem appropriate in its
discretion. Landlord is hereby irrevocably vested with full power and authority
to subordinate this Lease to any mortgage, deed of trust or other lien now
existing or hereafter placed upon the Premises, the Building or the Project as
a whole, and Tenant agrees upon demand to execute such further instruments
subordinating this Lease or attorning to the holder of any such liens as
Landlord may request. The terms of this Lease are subject to approval by the
Building's permanent lender(s), and such approval is a condition precedent to
Landlord's obligations hereunder. In the event that Tenant should fail to
execute any instrument of subordination herein required to be executed by
Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as
its attorney-in-fact to execute such instrument in Tenant's name, place and
stead, it being agreed that such power is one coupled with an interest. Tenant
agrees that it will from time to time upon request by Landlord execute and
deliver to such persons as Landlord shall request a statement in recordable
form certifying that this Lease is unmodified and in full force and effect (or
if there have been modifications, that the same is in full force and effect as
so modified), stating the dates to which rent and other charges payable under
this lease have been paid, stating that Landlord is not in default hereunder
(or if Tenant alleges a default stating the nature of such alleged default) and
further stating such other matters as Landlord shall reasonably require.
31. Landlord's Lien. Tenant hereby grants to Landlord a lien and security
interest on all equipment, goods, furniture, fixtures, and inventory of Tenant
now or hereafter placed in or upon the Premises and the proceeds thereof, and
such property shall thereafter, wherever located, be and remain subject to such
lien and security interest of Landlord for payment of all rent and other sums
agreed to be paid by Tenant herein. The provisions of this paragraph relating
to such lien and security interest shall constitute a security agreement under
and subject to the Oklahoma Uniform Commercial Code so that Landlord shall have
and may enforce
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a security interest on all such property of Tenant now or hereafter placed in
or on the Premises, in addition to and cumulative of the Landlord's liens and
rights provided by law or by the other terms and provisions of this Lease.
Tenant agrees to execute as debtor such financing statement or statements as
Landlord may now or hereafter request. Landlord may at its election at any time
file a copy of this Lease as a financing statement. Notwithstanding the
above, Landlord shall neither sell nor withhold from Tenant, Tenant's business
records.
32. Attorney's Fees. In the event either party defaults in the performance
of any of the terms of this Lease and the other party employs an attorney in
connection therewith, the defaulting party agrees to pay the other party's
reasonable attorney's fees.
33. No Implied Waiver. The failure of Landlord to insist at any time upon
the strict performance of any covenant or agreement of this Lease or to
exercise any option, right, power or remedy contained in this Lease shall not
be construed as a waiver or a relinquishment thereof for the future. No payment
by Tenant or receipt by Landlord of a lesser amount than the monthly
installment of rent due under this Lease shall be deemed to be other than on
account of the earliest rent due hereunder, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment of rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this Lease provided.
34. Personal Liability. The liability of Landlord to Tenant for any default
by Landlord under the terms of this Lease shall be limited to the interest of
Landlord in the Project and Tenant agrees to look solely to Landlord's interest
in the Project for the recovery of any judgment from the Landlord, it being
intended that Landlord shall not be personally liable for any judgment or
deficiency.
35. Security Deposit. The Security Deposit shall be held by Landlord
without liability for interest and as security for the performance by Tenant of
Tenant's covenants and obligations under this Lease, it being expressly
understood that the Security Deposit shall not be considered an advance payment
or rental or a measure of Tenant's damages in case of default by Tenant. Unless
otherwise provided by mandatory nonwaivable law or regulation, Landlord may
commingle the Security Deposit with Landlord's other funds. Landlord may, from
time to time, without prejudice to any other remedy, use the Security Deposit
to the extent necessary to make good any arrearages of rent or to satisfy any
other covenant or obligation of Tenant hereunder. Following any such
application of all or any part of the Security Deposit, Tenant shall pay to
Landlord on demand the amount so applied in order to restore the Security
Deposit to its original amount. If Tenant is not in default at the termination
of this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to Tenant. If Landlord transfers its
interest in the Premises during the term of the Lease, Landlord may assign the
Security Deposit to the transferee and thereafter shall have no further
liability for the return of such Security Deposit.
36. Notice. Any notice in the Lease provided for must, unless otherwise
expressly provided herein, be in writing, and may, unless otherwise in this
Lease expressly provided, be given or be served by depositing the same in the
United States mail, postpaid and certified and addressed to the party to be
notified, with return receipt requested. Notice deposited in the mail in the
manner hereinabove described shall be effective from and after the expiration
of three (3) days after it is so deposited. Notices mailed shall be addressed
to the parties at the following addresses:
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If to Landlord:
RMM Corporation
c/o Paragon Group, Inc.
401 South Boston, Suite 700
Tulsa, OK 74103
If to Tenant:
Systems & Programming Resources of Tulsa, Inc.
400 Mid-Continent Tower
Tulsa, OK 74103
or in each case to such other address as either party may from time to time
designate in writing.
37. Severability. If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and enforced to the fullest
extent permitted by law.
38. Recordation. Tenant agrees not to record this Lease.
39. Governing Law. This Lease and the rights and obligations of the parties
hereto shall be interpreted, construed, and enforced in accordance with the
laws of the State of Oklahoma.
40. Force Majeure. Whenever a period of time is herein prescribed for the
taking of any action by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation of such period of time,
any delays due to strikes, riots, acts of God, shortages of labor or materials,
war, governmental laws, regulations or restrictions, or any other cause
whatsoever beyond the control of Landlord.
41. Time of Performance. Except as expressly otherwise herein provided,
with respect to all required acts of Tenant time is of the essence of this
Lease.
42. Transfers by Landlord. Landlord shall have the right to transfer and
assign, in whole or in part, a11 its rights and obligations hereunder and in
the Premises, the Building, the Project, and property referred to herein, and
in such event and upon such transfer Landlord shall be released from any
further obligations hereunder and Tenant agrees to look solely to Landlord's
successor in interest then occupying Landlord's position hereunder for the
performance of such obligations.
43. Effect of Delivery of This Lease. Landlord has delivered a copy of this
Lease to Tenant for Tenant's review only, and the delivery hereof does not
constitute an offer or option to Tenant for Tenant to lease the Premises. This
Lease shall not be effective until a copy executed by both Landlord and Tenant
is delivered to and accepted by Landlord.
44. Relocation. In the event the Premises contain 2,500 square feet or less
of Net Rentable Area of the Premises, Landlord shall be entitled to cause
Tenant to relocate from the Premises to a comparable space ("Relocation Space")
within the Building at any time after reasonable written notice not in excess
of ninety (90) days is given to Tenant of Landlord's election. Any such
relocations shall be entirely at the expense of Landlord or the third party
tenant replacing Tenant in the Premises. Such a relocation shall not terminate
or otherwise affect or modify this Lease except that from and after the date of
such relocation, "Premises" shall refer to the Relocation Space into which
Tenant
14
<PAGE> 14
has been moved, rather than the original Premises as herein defined.
45. Building Name. Landlord reserves the right at any time and from time to
time to change the name by which the Building is designated.
46. Corporate Authority. If Tenant is a corporation, Tenant warrants that
it has legal authority to operate and is authorized to do business in the state
of Oklahoma. Tenant and the person executing this Lease on behalf of Tenant
warrant that the person or persons executing this Lease on behalf of Tenant has
authority to do so and to fully obligate Tenant to all terms and provisions of
this Lease. Tenant shall, upon request from Landlord, furnish Landlord with a
certified copy of resolutions of Tenant's Board of Directors authorizing this
Lease and granting authority to execute it to the person or persons who have
executed it on Tenant's behalf.
47. Exhibits and Base Rental Schedule. Exhibits "A", "B", "C", "D", and "E"
and the Base Rental Schedule are attached hereto and incorporated herein and
made a part of this Lease for all purposes.
48. Brokers and Commissions. Landlord has dealt only with Paragon Group,
Inc., as a leasing broker in connection with this Lease. Tenant represents it
has dealt with no leasing broker in connection with this Lease. Each party (the
"Indemnifying Party") represents and warrants to the other that it has not
dealt with any other leasing broker or other third parties in connection with
this Lease other than as set forth above, and the Indemnifying Party agrees to
defend, indemnify, and hold the other party harmless from any liability, claim,
loss, damage, fee, cost, or expense, including attorneys' fees, arising out of
any compensation due or alleged to be due to any broker with whom the
Indemnifying Party may have dealt other than as set forth above.
49. Miscellaneous.
A. RMM Corporation, the Landlord in this Lease, is the lessee of the
owner ("Owner") of the Project. This Lease is expressly made subject to the
provisions of the lease between the Owner and RMM Corporation.
B. Tenant represents and warrants that Tenant is not related to RMM
Corporation or Fourth Street Associates.
C. Tenant acknowledges that prior to its entering into of this Lease
the Landlord and Paragon Group, Inc., have disclosed to Tenant that:
(i) Paragon Group, Inc., is a licensed real estate broker in
Oklahoma, and,
(ii) with regard to the Building, Paragon Group, Inc., is the
Landlord's leasing agent and property manager.
D. Tenant acknowledges, agrees, and accepts that smoking is prohibited
in the Building except, and subject to the rules of the Building, within
enclosed areas leased to tenants. The terms of this subparagraph shall not
prevent a tenant from prohibiting smoking in premises leased to such tenant.
E. On the Commencement Date Tenant shall execute and deliver to
Landlord a letter acknowledging the Commencement Date and the acceptance by
Tenant of the Premises and any Tenant Improvements made thereto, such letter
being in the form attached hereto as Exhibit "E".
IN WITNESS WHEREOF, Landlord and Tenant have executed this
15
<PAGE> 15
Lease in multiple counterparts as of the day and year first above written.
LANDLORD
(corporate seal) RMM Corporation
ATTEST:
/s/ [Signature] By /s/ [Signature]
- ---------------------------- ----------------------------------------
Secretary Its President
- ----- ----------
TENANT
(corporate seal) Systems & Programming Resources
ATTEST: of Tulsa, Inc.
Rene Potter /s/ [Signature] By Michael J. Fletcher /s/ [Signature]
----------------- ------------------
Its Secretary Its President
----- -------
16
<PAGE> 16
STATE OF NEW YORK )
COUNTY OF NEW YORK) SS:
This instrument was acknowledged before me this 18 day of August, 1994, by
Sarah A. Antonelli, as __________ President of RMM Corporation, a Delaware
corporation, on behalf of the corporation.
(seal) Dominick Manasi
------------------------
My commission expires: Notary Public
April 5, 1998
- ---------------------
STATE OF OKLAHOMA)
COUNTRY OF TULSA ) SS:
This instrument was acknowledged before me this 10 day of August, 1994, by
Michael J. Fletcher, as __________ President of Systems & Programming Resources
of Tulsa, Inc., an Oklahoma corporation, on behalf of the corporation.
(seal) Patricia M. Caviness
------------------------
My commission expires: Notary Public
May 12, 1997
- ---------------------
17
<PAGE> 17
Exhibit "A"
LEGAL DESCRIPTION
A tract or parcel of land situated in and being a portion of Block 137 of said
City of Tulsa, all in accordance with the duly recorded and existing Plats of
said City of Tulsa, and bounded and described as follows, to wit: BEGINNING at
the Northwest Corner of said Block 137 where the South line of Fourth Street
intersects the East line of Boston Avenue, running thence in a Southerly
direction 100 feet parallel with and along the East line of Boston Avenue;
thence in an Easterly direction a distance of 140 feet parallel with the South
line of Fourth Street; thence in a Northerly direction parallel with the East
line of Boston Avenue a distance of 100 feet to the South line of Fourth
Street, thence Westerly along the South line of Fourth Street a distance of 140
feet to the Point of Beginning, said tract being 140 feet Easterly and Westerly
by 100 feet Northerly and Southerly in the Northwest Corner of said Block 137,
also known as the Westerly 140 feet of Lot 6, Block 137, in the ORIGINAL TOWN,
now City of Tulsa, Tulsa County, State of Oklahoma, according to the recorded
Plat thereof.
18
<PAGE> 18
EXHIBIT B
(GRAPHIC)
<PAGE> 19
Exhibit "C"
Landlord shall at Landlord's expense make to the Premises the improvements (a)
described in the plans dated February 10, 1994, initialed by the parties, and
attached as Attachment "1" to this Exhibit "C" and (b) included in the bid from
Crestline Construction dated May 23, 1994, and attached as Attachment "2" to
this Exhibit "C" (the plans and the bid referred to in this Exhibit "C" being
those referred to in subparagraph l(q) of the Lease and being the "Plans").
Any modifications to the Plans shall be at Tenant's sole expense and subject to
Landlord's prior written approval.
<PAGE> 20
(GRAPHIC)
ATTACHMENT 2
05/23/94
ATTN: PHONE:
JOHN 587-1900
PARASON GROUP PROJECT:
ADDRESS: SUITE 400
LOCATION:
CITY, STATE: MIDCONTINENT TOWER
TULSA, OK.
ARCHITECT PLAN DATE
NONE NONE
*******************************************************************************
WE PROPOSE: To furnish Labor & Materials to complete the following scope of
work per plans & specifications as outlined below:
DEMOLITION OF EXISTING WALLS, GRID AND TILE TO ACCOMMODATE PLANS
NEW METAL STUD PARTITIONS W/ GYPSUM BOARD, TAPE AND BED
GRID AND TILE CEILING COMPLETE IN CONFERENCE ROOM
ALL MILLWORK AS SPECIFIED
PAINT COMPLETE
NEW VINYL WALLCOVERING IN ENTRY AREA ($7.00 YD ALLOWANCE, MTRL)
FLOOR COVERING COMPLETE (EXCEPT KITCHEN).
RE-SWITCH LIGHTING IN FRONT AREA
PERMITS
CLEAN UP
EXCLUSIONS: COMPUTERS REMOVED BY OTHERS, DESK & CABINETS UNLOADED
BY OTHERS.
ALTERNATES:
LUMP SUM BASE BID:
FOURTEEN THOUSAND TWO HUNDRED FORTY TWO DOLLARS ........................
............................................................... $14,242
Progress billings will be invoiced by the 25th of the month, based on labor
and/or material stored or installed. Due the 10th of the following month.
_________________________________
Acceptance to be within 30 days
JEFF CHAFMAN ESTIMATOR or bid may be withdrawn
<PAGE> 21
**************BUILDOUT****************BUILDOUT*****************BUILDOUT*********
JOB NAME.....................SUITE 400
JOB LOCATION.................MIDCONTINENT TOWER
OWNER........................PARAGON GROUP
BID DATE.....................5/24/94
BID TIME.....................8:00 A.M.
ARCHITECT....................NONE
PLAN DATE....................NONE
FILE NAME....................MCTST400
**************BUILDOUT****************BUILDOUT*****************BUILDOUT*********
SUITE 400
$447.99 DEMOLITION
$0.00 RELOCATION BOND RATE $0.00
$11,936.20 NEW CONSTR.
$12,384.19 SUBTOTAL
$990.74 OVERHEAD 0.08
$866,89 PROFIT 0.07
$14,241.82 Total
SALE PRICE $14,241.82
********************************************************************************
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY UNIT PRICE TOTAL COMMENT
----------- -------- ---------- ----- -------
<S> <C> <C> <C> <C>
DEMOLITION======================================================================
WALLS-sheetrock, studs 10 $7.50 $75.00 ____________
GRID 192 $0.19 $36.48 ____________
TILE 192 $0.18 $34.56 ____________
DOORS/JAMBS 1 $25.00 $25.00 ____________
CARPET 197 $1.25 $246.25 ____________
VINYL TILE 0 $0.20 $0.00 ____________
RUBBER COVE BASE 414 $0.05 $20.70 ____________
LIGHT SWITCH 1 $10.00 $10.00 ____________
SUB TOTAL $447.99 ____________
RELOCATION=======================================================================
DOOR 0 $25.00 $0.00 ____________
OTHER 0 $0.00 $0.00 ____________
SUBTOTAL $0.00 ____________
NEW CONSTRUCTION=================================================================
WALL PATCHES 3 $25.00 $75.00 ____________
WALL TO GRID 10 $30.00 $300.00 ____________
LOW WALL 10 $30.00 $300.00 ____________
CEILING TILE INSTALLED 192 $0.80 $153.60 ____________
CEILING GRID INSTALLED 192 $0.50 $96.00 ____________
NEW DOOR FRAME 0 $100.00 $0.00 ____________
FULL HEIGHT SHELVING UNIT 8 $90.00 $720.00 ____________
BASE CABINETS 15 $65.00 $975.00 ____________
UPPER/SHELVING UNIT 8 $45.00 $360.00 ____________
FORMICA COUNTER TOP 54 $4.25 $229.50 TYPE SUB-CONTR.
PAINT 1 $2,047.00 $2,047.00 TYPE SUB-CONTR.
PAINT SET-UP 0 $0.00 $0.00 TYPE SUB-CONTR.
VINYL & INSTALLATION 1 $1,264.00 $1,264.00 TYPE SUB-CONTR.
CARPET 197 $12.00 $2,364.00 TYPE SUB-CONTR.
CARPET PARTCH 1 $0.00 $0.00 TYPE SUB-CONTR.
FURNITURE 197 $1.50 $295.50 TYPE SUB-CONTR.
OFF HOURS 197 $1.50 $295.50 TYPE SUB-CONTR.
RUBBER COVE BASE 414 $0.85 $351.90 TYPE SUB-CONTR.
GLASS 1 $0.00 $0.00 TYPE SUB-CONTR.
MINI BLINDS 1 $0.00 $0.00 TYPE SUB-CONTR.
ELECTRICAL COMPLETE 1 $100.00 $100.00 TYPE SUB-CONTR.
H.V.A.C. COMPLETE 1 $0.00 $0.00 TYPE SUB-CONTR.
PLUMBING COMPLETE 1 $0.00 $0.00 TYPE SUB-CONTR.
SPRINKLER SYSTEM 1 $1,175.00 $1,175.00 TYPE SUB-CONTR.
PERMITS 1 $75.00 $75.00 ____________
TRASH REMOVAL 1728 $0.15 $259.20 ____________
OCCUPANCY 1 $500.00 $500.00 ____________
SUBTOTAL $11,936.20 ____________
</TABLE>
22
<PAGE> 22
Exhibit "D"
RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways, and similar areas
shall not be obstructed nor shall refuse, furniture, boxes or other items be
placed therein by Tenant or its officers, agents, servants, and employees, or
used for any purpose other than ingress and egress to and from the leased
premises or for going from one part of the Building to another part of the
Building. Canvassing, soliciting, and peddling in the Building are prohibited.
2. Plumbing fixtures and appliances shall be used only for the purposes
for which constructed, and no unsuitable material shall be placed therein.
3. No signs, directories, posters, advertisements, or notices shall be
painted or affixed on or to any of the windows or doors, or in corridors or
other parts of the Building, except in such color, size, and style, and in such
places as shall be first approved in writing by Landlord in its discretion. One
(1) building standard identification sign will be prepared by Landlord at
Landlord's expense. No additional signs shall be posted without Landlord's
prior written consent as to location and form, and the cost of preparing and
posting such signs shall be borne solely by Tenant. Landlord shall have the
right to remove all unapproved signs without notice to Tenant, at the expense
of Tenant.
4. Tenant shall not do, or permit anything to be done in or about the
Building, or bring or keep anything therein, that will in any way increase the
rate of fire or other insurance on the Building, or on property kept therein or
otherwise increase the possibility of fire or other casualty.
5. Landlord shall have the power to prescribe the weight and position of
heavy equipment or objects which may overstress any portion of the floor. All
damage done to the Building by the improper placing of such heavy items will be
repaired at the sole expense of the responsible tenant.
6. A tenant shall notify the Building manager when safes or other heavy
equipment or objects are taken in or out of the Building, and the moving shall
be done after written permission is obtained from Landlord on such conditions
as Landlord shall require. Any moving in or moving out of Tenant's equipment,
furniture, files, and/or fixtures shall be done only with prior written notice
to Landlord, and Landlord shall be entitled to prescribe the hours of such
activity, the elevators which shall be available for such activity and shall,
in addition, be entitled to place such other conditions upon Tenant's moving
activities as Landlord deems appropriate. Tenant shall bear all risk of loss
relating to damage incurred with respect to Tenant's property in the process of
such a move, and in addition, shall indemnify and hold Landlord harmless as to
all losses, damages, claims, causes of action, costs and/or expenses relating
to personal injury or property damage sustained by Landlord or any third part
on-account of Tenant's moving activities.
7. Corridor doors, when not in use, shall be kept closed.
8. All deliveries must be made via the service entrance and elevators
designated by Landlord for service, if any, during normal working hours.
Landlord's written approval must be obtained for any delivery after normal
working hours.
9. Each tenant shall cooperate with Landlord's employees in keeping leased
premises neat and clean.
<PAGE> 23
10. Tenant shall not cause or permit any improper noises in the Building,
or allow unpleasant odors to emanate from the leased premises, or otherwise
interfere, injure, or annoy in any way other tenants or persons having business
with them.
11. No animals shall be brought into or kept in or about the Building.
12. No boxes, crates, or other such materials shall be stored in hallways
or other Common Areas. When Tenant must dispose of crates, boxes, etc., it will
be the responsibility of Tenant to dispose of same prior to, or after the hours
of 7:30 a.m. and 5:30 p.m., so as to avoid having such debris visible in the
Common Area during Normal Business Hours.
13. No machinery of any kind, other than ordinary office machines such as
typewriters and calculators, shall be operated on leased premises without the
prior written consent of Landlord, nor shall a tenant use or keep in the
Building any flammable or explosive fluid or substance (including Christmas
trees and ornaments), or any illuminating materials, except candles. No space
heaters or fans shall be operated in the Building.
14. No bicycles, motorcycles or similar vehicles will be allowed in the
Building.
15. No nails, hooks, or screws shall be driven into or inserted in any part
of the Building except as approved by Building maintenance personnel. Nothing
shall be affixed to, or made to hang from the ceiling of the Premises without
Landlord's prior written consent.
16. Landlord has the right to evacuate the Building in the event of an
emergency or catastrophe.
17. No food and/or beverages shall be distributed from Tenant's office
without the prior written approval of the Building manager.
18. No additional locks shall be placed upon any doors without the prior
written consent of Landlord. All necessary keys shall be furnished by Landlord,
and the same shall be surrendered upon termination of this Lease, and Tenant
shall then give Landlord or his agent an explanation of the combination of all
locks on the doors or vaults. Tenant shall initially be given two (2) keys to
the Demised Premises by Landlord. No duplicates of such keys shall be made by
Tenant. Additional keys shall be obtained only from Landlord, at a fee to be
determined by Landlord.
19. Tenant will not locate furnishings or cabinets adjacent to mechanical
or electrical access panels so as to prevent personnel from servicing such
units as routine or emergency access may require. Cost of moving such
furnishing for Landlord's access will be for Tenant's account. The lighting and
air conditioning equipment of the Building will remain the exclusive charge of
the Building designated personnel.
20. Tenant shall comply with parking rules and regulations as may be posted
and distributed from time to time.
21. No portion of the Building shall be used for the purpose of lodging
rooms.
22. Vending machines or dispensing machines of any kind will not be placed
in the leased premises by Tenant.
23. Prior written approval, which shall be at Landlord's sole discretion,
must be obtained for installation of window shades, blinds, drapes, or any
other window treatment of any kind whatsoever. Landlord will control all
internal lighting that may be visible from the exterior of the Building and
shall have the right to change any unapproved lighting, without notice to
Tenant,
<PAGE> 24
at Tenant's expense.
24. No tenant shall make any changes or alterations to any portion of the
Building without Landlord's prior written approval, which may be given on such
conditions as Landlord may elect. All such work shall be done by Landlord or by
contractors and/or workmen approved by Landlord working under Landlord's
supervision.
25. Tenant shall provide plexiglass or other pads for all chairs mounted on
rollers or casters.
26. Landlord reserves the right to rescind any of these rules and make such
other and further rules and regulations as in its judgment shall from time to
time be needful for the operation of the Building, which rules shall be binding
upon each Tenant upon delivery to such Tenant of notice thereof in writing.
<PAGE> 25
EXHIBIT "E"
Date: _________________________
RMM Corporation
Ladies and Gentlemen:
This letter will confirm that the Commencement Date of the Lease
dated____________________, 1994, between RMM Corporation, as Landlord, and the
undersigned, as Tenant, is October 1, 1994. The undersigned accepts as complete
the Tenant Improvements, if any, made by Landlord in the Premises, all as
described in the Lease.
___________________________________________
<PAGE> 26
BASE RENTAL SCHEDULE
<TABLE>
<CAPTION>
Month Monthly Base Rental before adjustment
<S> <C>
October 1, 1994, through
December 1, 1999 (sixty-three
equal monthly installments) $156,271.50
TOTAL BASE RENTAL BEFORE ADJUSTMENT $156,271.50
</TABLE>
<PAGE> 27
AMENDMENT TO LEASE AGREEMENT
This Amendment to Lease Agreement ("Amendment") is entered into between
RMM Corporation ("Landlord") and Systems & Programming Resources of Tulsa,
Inc., d/d/a SPR ("Tenant"). Landlord and Tenant entered into a Mid-Continent
Tower Lease Agreement ("Lease") dated August 29, 1994, whereby Tenant leased
certain office space ("Original Premises") in the Mid-Continent Tower Building,
401 South Boston, Tulsa, Oklahoma ("Building"). The Lease as amended hereby is
referred to herein as the "Amended Lease". Landlord and Tenant wish to agree
for the amendment of the Lease on the terms and conditions set forth herein. At
the date of the execution of this Amendment, but prior thereto, Tenant leases
from Landlord 2871 square feet of Net Rentable Area of office space in the
Building which 2871 square feet of Net Rentable Area of office space comprise
the Original Premises.
Therefore, in consideration of the mutual promises and covenants contained
herein, the parties agree that the Lease is amended as follows:
1. The original term of the Lease was to expire on December 31, 1999. The
Lease Term (as defined in the Lease) is extended from December 31, 1999, so as
to expire on December 31, 2000.
2. Tenant effective September 1, 1995, will lease from Landlord certain
additional office space ("Additional Space") in the Building consisting of 1477
square feet of Net Rentable Area. From and after September 1, 1995, for the
remainder of the Lease Term and all extensions and renewals thereof, the
Premises as
<PAGE> 28
that term is used in the Lease shall be the Original Premises and the
Additional Space and the Premises shall be as described on Exhibit "A" attached
hereto and made a part hereof. The Base Rental for the Premises for that part
of the Lease Term from and after September 1, 1995, shall be $45,088.76 per
annum ($3,757.40 per month) subject to adjustment as provided in paragraph 6
and elsewhere in the Lease and as adjustment is otherwise provided in the
Amended Lease. The Base Rental Schedule attached to the Lease is amended to
provide as follows:
BASE RENTAL SCHEDULE
<TABLE>
<CAPTION>
Month Monthly Base Rental before adjustment
<S> <C>
October, 1994, through
August, 1995 (eleven equal
monthly installments) $ 2,480.50
September, 1995, through
December, 1998 (sixty-four equal
monthly installments) 3,757.40
-----------
TOTAL BASE RENTAL BEFORE ADJUSTMENT $267,759.10
</TABLE>
Therefore, as of September 1, 1995, Tenant will lease office space in the
Building totalling 4,348 square feet of Net Rentable Area. Tenant's lease of
the Premises shall be under the terms and conditions of the Lease except as
provided for herein.
3. Landlord shall make to the Additional Space the improvements described
in the bid from Crestline Construction Company dated June 29, 1995, a copy of
which is attached hereto as Exhibit "B". Tenant shall pay $5,000.00 of the cost
of such
2
<PAGE> 29
improvements and Landlord shall pay the remainder of the costs. Tenant shall
pay said $5,000.00 to Landlord upon substantial completion of the improvements
and prior to Tenant's occupancy of the Additional Space. Except as otherwise
stated in the immediately preceding sentence, Landlord shall be required to
make no improvements to any part of the Premises.
4. All of the terms and provisions of the Lease, except as modified and
amended herein, shall remain in full force and effect and are hereby ratified
and confirmed by the parties hereto and Tenant acknowledges its liability as
the Tenant under the Amended Lease. The execution of this Amendment shall in no
event be deemed to constitute a waiver of any right or claim of Landlord under
or by virtue of the Lease except as specifically set forth herein.
5. In the event of conflict between the terms and provisions of this
Amendment and the terms and provisions of the Lease, the terms and provision of
this Amendment shall control.
6. Neither the Amended Lease nor any of its components will be recorded by
Tenant or Landlord in the land records of Tulsa County, Oklahoma.
Dated ______________________ 1995.
<TABLE>
<S> <C>
RMM CORPORATION SYSTEMS & PROGRAMMING
a Delaware corporation RESOURCES OF TULSA, INC.,
an Oklahoma corporation
By By Mike Fletcher /s/
------------------------------- ------------------
President its President
------------------------------- ----------------------------
"Landlord" "Tenant"
</TABLE>
3
<PAGE> 30
LANDLORD
--------
STATE OF NEW YORK )
COUNTY OF NEW YORK) SS:
This instrument was acknowledged before me on this 26 day of July, 1995, by
Sarah A. Antonelli, as __________ President of RMM Corporation, a Delaware
corporation, on behalf of the corporation.
(seal) Dominick Manasi
------------------------
My commission expires: Notary Public
April 4, 1997
- ---------------------
TENANT
------
STATE OF OKLAHOMA)
COUNTRY OF TULSA ) SS:
This instrument was acknowledged before me on this 10 day of July, 1995, by
Michael J. Fletcher, as __________ President of Systems & Programming Resources
of Tulsa, Inc., an Oklahoma corporation, on behalf of the corporation.
(seal) Patricia M. Caviness
------------------------
My commission expires: Notary Public
May 12, 1997
- ---------------------
4
<PAGE> 31
EXHIBIT A
(GRAPHIC)
<PAGE> 32
(GRAPHIC)
PROPOSAL
29 JUNE 1995
PARAGON GROUP
MID-CONTINENT TOWER
401 S. BOSTON DR., SUITE 700
TULSA. OK
PROJECT: MID-CONTINENT BUILDING, SUITE 400, SPR REMODEL
1. Building permit
2. Demo walls, doors, cabinets, carpet, etc.
3. Relocate 3 doors and jambs
4. Install 3 new doors and jambs
5. Reuse existing door hardware
6. New walls to grid per print
7. Wallcovering in reception to match existing
8. Install 6 lin ft base cabinet and 12 lin ft upper cabinet
9. Install adjustable shelving in 2 locations
10. Relocate sink to new cabinet
11. Water to ice maker
12. Rework sprinkler system to meet code
13. HVAC: Relocate 5 supply air grills, 4 pneumatic thermostat
and install 4 new 2x2 supply grills. NOTE: NO REPAIR
OR SERVICE TO EXISTING EQUIPMENT.
14. ELECTRIC:
a) 4 new 2x4 fixtures
b) Relocate 17 - 2x4 fixtures
c) 8 single pole switches
d) 15 duplex receptacles
e) 1 dedicated receptacle for copier
f) 8 phone stub-ups
15. Instal 1 carpet and cove base to match existing
Labor and Material: $20,107.00
EXHIBIT B
2301 N. Yellowood (bullet) Broken Arrow, OK 74012 9107 (bullet)
(918) 254-4600 (bullet) FAX (918)254-2931
<PAGE> 33
SECOND AMENDMENT TO LEASE AGREEMENT
This Second Amendment to Lease Agreement ("Second Amendment") is entered into
between RMM Corporation ("Landlord") and Systems & Programming Resources of
Tulsa, Inc., d/b/a SPR ("Tenant"). Landlord and Tenant entered into a
Mid-Continent Tower Lease Agreement ("Original Lease") dated August 29, 1994,
whereby Tenant leased certain office space ("Original Premises") in the
Mid-Continent Tower Building, 401 South Boston, Tulsa, Oklahoma ("Building").
Landlord and Tenant thereafter entered into an Amendment to Lease ("First
Amendment") whereby the Lease Term (as defined in the Original Lease) was
extended and Tenant leased additional office space ("First Additional Space")
in the Building. The First Amendment amended the Original Lease and the
Original Lease as amended by the First Amendment is referred to herein as the
"Lease". The Lease as amended hereby is referred to herein as the "Amended
Lease". Landlord and Tenant wish to agree for the amendment of the Lease on
the terms and conditions set forth herein. At the date of the execution of this
Second Amendment, but prior thereto, Tenant leases from Landlord 4,348 square
feet of Net Rentable Area of office space in the Building which 4,348 square
feet of Net Rentable Area of office space comprise the Premises as that term is
used in the Lease.
Therefore, in consideration of the mutual promises and covenants contained
herein, the parties agree that the Lease is amended as follows:
1. Tenant effective June 1, 1996, will lease from Landlord certain
additional office space ("Second Additional Space") in
<PAGE> 34
the Building consisting of 672 square feet of Net Rentable Area. From and after
June 1, 1996, for the remainder of the Lease Term and all extensions and
renewals thereof, the Premises shall be comprised of the Original Premises,
First Additional Space, and the Second Additional Space and the Premises shall
be as described on Exhibit "A" attached hereto and made a part hereof. The Base
Rental for the Premises for that part of the Lease Term from and after June 1,
1996, shall be $238,596.60 subject to adjustment as provided in paragraph 6 of
the Original Lease and as adjustment is otherwise provided in the Amended
Lease. The Base Rental Schedule attached to the Original Lease as amended by
the First Amendment is further amended to provide as follows:
BASE RENTAL SCHEDULE
<TABLE>
<CAPTION>
Month Monthly Base Rental before adjustment
<S> <C>
October, 1994, through
August, 1995 (eleven equal
monthly installments) $ 2,480.50
September, 1995, through
May, 1996 (nine equal
monthly installments) 3,757.40
June, 1996, through
December, 2000 (fifty-five
equal monthly installments) 4,338.12
-----------
TOTAL BASE RENTAL BEFORE ADJUSTMENT $299,698.70
</TABLE>
Thefore, as of June 1, 1996, Tenant will lease office space in
2
<PAGE> 35
the Building totalling 5,020 square feet of Net Rentable Area. Tenant's lease
of the Premises shall be under the terms and conditions of the Lease except as
provided for herein.
2. Landlord shall make to the Second Additional Space the improvements
described in Exhibit "B" hereto. Landlord shall pay up to but not more than
$5,376.00 of the cost of such improvements and Tenant shall immediately pay to
the Landlord upon demand all costs of such improvements in excess of $5,376.00.
Except as otherwise stated in this Paragraph 3, Landlord shall be required to
make no improvements to any part of the Premises.
3. Tenant acknowledges and approves the addition of the following rules
to the rules of the Building:
Smoking is prohibited in the Building except that a tenant may
specifically authorize smoking within an enclosed area or areas leased to
such tenant.
Firearms are not allowed in the Building without the prior written
consent of Landlord except for firearms carried by federal, state, or
local law enforcement officers when in the performance of their official
duties.
Landlord shall not be required to place any change, addition, or deletion to
the rules of the Building in any amendment or other instrument executed by the
Tenant in order for such change, addition, or deletion to be binding on Tenant.
4. All of the terms and provisions of the Lease, except as modified and
amended herein, shall remain in full force and effect and are hereby ratified
and confirmed by the parties
3
<PAGE> 36
hereto and Tenant acknowledges its liability as the Tenant under the Amended
Lease. The execution of this Second Amendment shall in no event be deemed to
constitute a waiver of any right or claim of Landlord under or by virtue of the
Lease except as specifically set forth herein.
5. In the event of conflict between the terms and provisions of this
Second Amendment and the terms and provisions of the Lease, the terms and
provisions of this Second Amendment shall control.
6. Neither the Amended Lease nor any of its components will be recorded by
Tenant or Landlord in the land records of Tulsa County, Oklahoma.
Dated 4-8-96, 1996.
RMM CORPORATION,
a Delaware corporation
By /s/ [Signature]
-------------------------
President
"Landlord"
SYSTEMS & PROGRAMMING
RESOURCES OF TULSA, INC.,
a Oklahoma corporation
Bye /s/ [Signature]
------------------------
its President
"Tenant"
4
<PAGE> 37
LANDLORD
STATE OF )
------
COUNTY OF ) SS:
-----
This instrument was acknowledged before me on this day of ,
------ --------
1996, by , as President of RMM
------------------------------ -----
Corporation, a Delaware corporation, on behalf of the corporation.
(seal)
<TABLE>
<S> <C>
My commission expires:
-------------------------------
Notary Public
- ---------------------
</TABLE>
TENANT
STATE OF OKLAHOMA )
COUNTY OF TULSA ) SS:
This instrument was acknowledged before me on this 8th day of April, 1996,
by Michael J. Fletcher, as Its President of Systems & Programming Resources of
Tulsa, Inc., a Oklahoma corporation, on behalf of the corporation.
<TABLE>
<S> <C>
(seal)
My commission expires: /s/ [Signature]
-------------------------------
Notary Public
09-27-99
</TABLE>
5
<PAGE> 1
EXHIBIT 10.8
OFFICE LEASE
100 EAST WISCONSIN AVENUE
BY AND BETWEEN
100 EAST WISCONSIN AVENUE JOINT VENTURE,
AS LANDLORD,
AND
SYSTEMS & PROGRAMMING RESOURCES, INC.,
AS TENANT.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
1. BASIC LEASE PROVISIONS AND IDENTIFICATION OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . 1
2. PREMISES AND TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. POSSESSION, USE AND ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. CONDITION OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9. MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. ALTERATIONS AND IMPROVEMENTS SUBSEQUENT TO INITIAL OCCUPANCY . . . . . . . . . . . . . . . . . . 8
11. WAIVER OF CLAIMS AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
13. SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14. HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
15. DAMAGE BY FIRE OR OTHER CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
18. RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
19. LANDLORD'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
20. ESTOPPEL CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
21. RELOCATION OF TENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
22. ADJUSTMENTS TO MONTHLY BASE RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
23. REAL ESTATE BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
24. SUBORDINATION AND ATTORNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
25. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
26. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SCHEDULE 1 RENT SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
RIDER NO. 1 HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R-1
RIDER NO. 2 TENANT'S LEASE COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R-2
EXHIBIT A PLAN OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT A-1 LEGAL DESCRIPTION OF THE LAND ON WHICH THE
BUILDING AND PARKING STRUCTURE ARE LOCATED . . . . . . . . . . . . . . . . . . . . . . . A-2
EXHIBIT B RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C WORK LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
<PAGE> 3
OFFICE LEASE
1. BASIC LEASE PROVISIONS AND IDENTIFICATION OF EXHIBITS
1.01 Basic Lease Provisions.
A. BUILDING AND ADDRESS: 100 EAST WISCONSIN AVENUE
Located on the Northwest Corner
of East Wisconsin Avenue and Water
Street, Milwaukee, Wisconsin 53202
B. LANDLORD AND ADDRESS: 100 EAST WISCONSIN AVENUE JOINT VENTURE
c/o Faison & Associates, Inc.
100 East Wisconsin Avenue
Suite 2400
Milwaukee, Wisconsin 53202
COPY TO: 100 EAST WISCONSIN AVENUE JOINT VENTURE
c/o Faison & Associates, Inc.
121 West Trade Street
1900 Interstate Tower
Charlotte, North Carolina 28202-5399
COPY TO: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Manager - Asset Management
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
COPY TO: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Milwaukee District Real Estate Office
Attention: District Manager
611 East Wisconsin Avenue
Suite 500
Milwaukee, Wisconsin 53202
C. TENANT AND NOTICE ADDRESS:
PRIOR TO COMMENCEMENT DATE: SYSTEMS & PROGRAMMING
RESOURCES, INC.
Attention: John Figliulo
100 North Corporate Drive
Suite 150
Brookfield, WI 53045
AFTER COMMENCEMENT DATE: SYSTEMS & PROGRAMMING
RESOURCES, INC.
Attention: John Figliulo
100 East Wisconsin Avenue
Suite 2700
Milwaukee, WI 53202
D. MANAGER AND ADDRESS: FAISON & ASSOCIATES, INC.
121 West Trade Street
1900 Interstate Tower
Charlotte, North Carolina 28202-
5399
E. DATE OF LEASE: April 19, 1996
F. LEASE TERM: Five (5) years.
G. COMMENCEMENT DATE OF TERM: June 1, 1996
H. EXPIRATION DATE OF TERM: May 31, 2001
<PAGE> 4
I. MONTHLY BASE RENT: See Schedule 1 attached hereto
J. RENTABLE AREA OF THE PREMISES: 5,220 rentable square
feet
K. FLOOR: Twenty-Seven (27) SUITE NO. 2700
L. TENANT'S BROKER: The Lozoff Company
M. RENTABLE SQUARE FOOTAGE OF THE BUILDING: 430,865 (as may
later be adjusted)
1.02 Identification of Exhibits and Riders. The exhibits and riders set
forth below and attached to this Lease are incorporated in this Lease
by this reference:
RIDER NO. 1 - HAZARDOUS MATERIALS
RIDER NO. 2 - TENANT'S LEASE COLLATERAL
EXHIBIT A - PLAN OF PREMISES
EXHIBIT A-1 - LEGAL DESCRIPTION OF THE LAND ON WHICH THE
BUILDING AND PARKING STRUCTURE ARE LOCATED
EXHIBIT B - RULES AND REGULATIONS
EXHIBIT C - WORK LETTER
2
<PAGE> 5
2. PREMISES AND TERM
2.01 Lease Of Premises. Landlord leases to Tenant and Tenant
leases from Landlord the premises ("Premises") shown on Exhibit A which are or
will be contained in the office building ("Building") located at the address
stated in 1.01A, which Building is part of an office building complex known as
the name given in 1.01A, upon the following terms and conditions. For purposes
of this Lease, "Complex" shall mean all land, building and other improvements
including the "Common Areas" (hereinafter defined) associated with the Building
located on the real property described in Exhibit A-1. It is agreed that the
rentable area of the Premises is as shown on Exhibit A and contains the number
of square feet of area stated in 1.01J (the "Rentable Area").
2.02 Term. The term of this Lease ("Term") shall commence on
the date ("Commencement Date") which is the earlier to occur of (i) the date
stated in 1.01G or (ii) the date Tenant first occupies all or part of the
Premises for the conduct of business. The Term shall expire on the date
("Expiration Date") stated in 1.01H unless sooner terminated as otherwise
provided in this Lease. The Commencement Date and the Expiration Date may be
extended in accordance with the work letter attached as Exhibit C ("Work
Letter"). Landlord and Tenant agree to execute and deliver a written
declaration, in recordable form, expressing the actual Commencement Date and
Expiration Date.
3. RENT
Tenant agrees to pay to Landlord at the office of the
Landlord's building manager ("Manager"), or at such other place designated by
Landlord, without any prior notice or demand and without any deduction
whatsoever, base rent at the initial monthly rate stated in 1.01I on a per diem
basis ("Monthly Base Rent"). Monthly Base Rent shall be paid monthly in
advance on or before the first day of each month of the Term, except that the
first installment of Monthly Base Rent shall be paid by Tenant to Landlord on
the Commencement Date. Tenant shall further pay Tenant's share of Operating
Costs as provided in 22.02. Monthly Base Rent shall be prorated on a per diem
basis for partial months within the Term. All charges, costs and sums required
to be paid by Tenant to Landlord under this Lease and under the Work Letter, in
addition to Monthly Base Rent shall be considered additional rent, and shall be
collectively called "Rent." Tenant's covenant to pay Rent shall be independent
of every other covenant in this Lease.
4. SECURITY DEPOSIT
[Intentionally Deleted]
5. SERVICES
5.01 Landlord's General Services. Landlord shall provide the
following services: (1) heat and air-conditioning in the Premises, Monday
through Friday from 8:00 a.m. to 6:00 p.m. and Saturday from 8:00 a.m. to 1:00
p.m., excluding national holidays, to the extent necessary for the comfortable
occupancy of the Premises under normal business operations (subject, however,
to applicable legal requirements and restrictions) and in the absence of the
use of machines, equipment or devices which
3
<PAGE> 6
affect the temperature otherwise maintained in the Premises; (2) city water
from the regular Building fixtures for drinking, lavatory and toilet purposes
only; (3) customary cleaning and janitorial services in the Premises Monday
through Friday, excluding national holidays; (4) customary cleaning, mowing,
grounds keeping, snow removal and trash removal in the "Common Areas"
(hereinafter defined); (5) washing of windows in the Premises, inside and
outside at reasonable intervals; (6) adequate passenger elevator service in
common with other tenants of the Building; and (7) freight elevator service
during operating hours subject to scheduling by Landlord. Additional capacity
or usage shall be provided at the option of Landlord (reasonably exercised) and
at the sole cost of Tenant.
5.02 Additional And After-Hour Services. Landlord shall not
be obligated to furnish any services or utilities, other than those stated in
5.01 above. If Landlord elects to furnish services or utilities requested by
Tenant in addition to those listed in 5.01 or at times other than those stated
in 5.01, Tenant shall pay to Landlord as additional Rent, the prevailing
charges for such services and utilities, within ten (10) days after billing.
If Tenant fails to make any such payment, Landlord may, without notice to
Tenant and in addition to Landlord's other remedies under this Lease,
discontinue any or all of such additional or after-hour services. No such
discontinuance of any service shall result in any liability of Landlord to
Tenant or be considered an eviction or a disturbance of Tenant's use of the
Premises.
5.03 Delays in Furnishing Services. If as a result of any
failure to furnish or delay in furnishing any of the services described in
5.01, the Premises are rendered substantially untenantable for a period of more
than seventy-two (72) consecutive hours and Tenant does not occupy the Premises
due to such untenantability, then, commencing upon the expiration of said
72-hour period, Monthly Base Rent shall abate for the duration of such
untenantability until Tenant is able to resume or does resume occupancy of the
Premises. Tenant agrees that Landlord shall not be liable for damages for
failure to furnish or delay in furnishing any service if attributable to any of
the causes described in 26.05 and if not thus attributable, then only to the
extent of abatement of Monthly Base Rent. No failure or delay shall be
considered to be an eviction or disturbance of Tenant's use or possession of
Premises.
5.04 Telephone. Tenant shall make arrangements directly with
a telephone company for telephone service in the Premises desired by Tenant.
Tenant shall pay for all telephone service used or consumed in the Premises,
including the cost of installation, maintenance and replacement of any items.
5.05 Electricity. Landlord shall provide electrical conduit
and wiring to the boundary of the Premises with sufficient capacity to provide
electricity for normal business usage for lights and business machines.
Tenant's usage of electricity shall be separately metered and Tenant shall pay
for all electricity used in the Premises and for the installation and
maintenance of the meter. Such costs shall not be included in Operating Costs
as defined in 22.01C.
6. POSSESSION, USE AND ENJOYMENT
6.01 Possession and Use of Premises. Tenant shall be
entitled to possession of the Premises when the Work is "substantially
completed" (as defined in the Work Letter).
4
<PAGE> 7
Tenant shall occupy and use the Premises for general office purposes only.
Tenant shall be entitled to access to the Premises twenty-four (24) hours a day
seven (7) days a week, subject to reasonable security policies and restrictions
of Landlord. Tenant shall not occupy or use the Premises or permit the use or
occupancy of the Premises for any purpose or in any manner which: (1) is
unlawful or in violation of any applicable legal, governmental or
quasi-governmental requirement, ordinance or rule (including the Board of Fire
Underwriters); (2) may be dangerous to persons or property; (3) may invalidate
or increase the amount of premiums for any policy of insurance affecting the
Building or the Complex, and if any additional amounts of insurance premiums
are so incurred, Tenant shall pay to Landlord the additional amounts on demand
and such payment shall not authorize such use; (4) may create a nuisance,
disturb any other tenant of the Building or the Complex or the occupants of
neighboring property or injure the reputation of the Building or the Complex;
or (5) violates the Rules and Regulations of the Building or any restrictions
of record as they are now or may be modified. A copy of the Rules and
Regulations is attached to this Lease as Exhibit B.
6.02 Quiet Enjoyment. So long as Tenant is not in default
under this Lease, Tenant shall be entitled to peaceful and quiet enjoyment of
the Premises, subject to the terms of this Lease.
6.03 Common Areas.
A. For purposes of this Lease "Common Areas" shall
mean all areas, improvements, space, equipment and special services in
or serving the Complex provided by Landlord for the common or joint
use and benefit of tenants, customers, and other invitees, including
without limitation garage access roads, driveways, entrances and
exits, skywalks connected to the Building, retaining walls, landscaped
areas, truck serviceways or tunnels, loading docks, pedestrian
walk-ways, atriums, walls, courtyards, concourses, stairs, ramps,
sidewalks, washrooms, signs identifying or advertising the Complex,
maintenance buildings, utility buildings, maintenance and utility
rooms and closets, hallways, lobbies, elevators and their housing and
rooms, common window areas, walls and ceilings in Common Areas, and
trash or rubbish areas.
B. Provided Tenant is not in default under this
Lease, Tenant shall be entitled to use, in common with others entitled
thereto, the Common Areas (other than any portion of the riverwalk
areas that might be part of the Complex) as may be designated from
time to time by Landlord, subject however to the terms and conditions
of this Lease and to the rules and regulations for the use thereof as
may be prescribed from time to time by Landlord. If the size or
configuration of the Common Areas is diminished or altered, Landlord
shall not be liable to Tenant therefor, nor shall Tenant be entitled
to any compensation or diminution or abatement of Rent, nor shall such
diminution or alteration of the Common Areas be considered a
constructive or actual eviction.
7. CONDITION OF PREMISES
Tenant shall notify Landlord in writing within thirty (30)
days after Tenant takes possession of the Premises of any defects in the
Premises claimed by Tenant. Except for defects
5
<PAGE> 8
stated in such notice and latent defects discovered within one (1) year after
such possession, Tenant shall be conclusively presumed to have accepted the
Premises in the condition existing on the date Tenant first takes possession,
and to have waived all claims relating to the condition of the Premises. No
agreement of Landlord to alter, remodel, decorate, clean or improve the
Premises, the Building, the Common Areas or the Complex and no representation
regarding the condition of the Premises, the Building, the Common Areas or the
Complex has been made by or on behalf of Landlord to Tenant, except as stated
in this Lease or in the Work Letter. Landlord shall use reasonable efforts to
correct any defect in the Premises reported by Tenant within thirty (30) days
after Landlord receives such notice from Tenant.
8. ASSIGNMENT AND SUBLETTING
8.01 Assignment and Subletting. Without the prior written
consent of Landlord, Tenant shall not sublease the Premises, or assign,
mortgage, pledge, hypothecate or otherwise transfer or permit the transfer of
this Lease or the interest of Tenant in this Lease, in whole or in part, by
operation of law, court decree or otherwise. Landlord's consent shall not be
unreasonably withheld or delayed. Landlord will not be deemed to have
unreasonably withheld its consent if it does so because (a) the subtenant's or
assignee's use of the Premises is in contravention of 6.01 hereof, or breaches
any exclusive rights granted any other tenant; (b) the proposed subtenant or
assignee has defaulted under any other leases with Landlord for space in the
building or elsewhere; (c) the subtenant's or assignee's intended use of the
Premises is reasonably expected to either (i) increase the Landlord's common
area maintenance or operating costs over those attributable to Tenant's use of
the Premises; or (ii) be incompatible with the other tenant mix in the
building; or (d) the subtenant or assignee is not credit worthy or, in
Landlord's reasonable judgement, financially capable of performing Tenant's
obligations under this Lease. The enumeration of the foregoing reasons shall
not be deemed to exclude other reasons for denying consent. If Tenant desires
to assign this Lease or enter into any sublease of the Premises, Tenant shall
deliver written notice of such intent to Landlord, together with a copy of the
proposed assignment or sublease at least sixty (60) days prior to the effective
date of the proposed assignment or commencement date of the term of the
proposed sublease. Landlord shall respond to the proposed assignment or
sublease at least thirty (30) days prior to the effective date of the proposed
assignment or commencement date of the term of the proposed sublease. Any
sublease shall be expressly subject to the terms and conditions of this Lease,
and Tenant shall pay Landlord on the first day of each month during the term of
the sublease, fifty percent (50%) of the excess of all rent and other
consideration due from the subtenant for such month over that portion of the
Monthly Base Rent due under this Lease for said month which is allocable on a
square footage basis to the space sublet. In the event of any sublease or
assignment, Tenant shall not be released or discharged from any liability,
whether past, present or future, under this Lease, including any renewal term
of this Lease. For purposes of this Section, an assignment shall be considered
to include a change in the majority ownership or control of Tenant if Tenant is
a partnership or a corporation whose shares of stock are not traded publicly;
provided, however, in the event the net worth of the Tenant after such change
in majority ownership or control is equal to or greater than the net worth of
the Tenant prior thereto (in the reasonable opinion of Landlord), Landlord's
consent to such change in the majority ownership or control of Tenant shall not
be required. Tenant
6
<PAGE> 9
shall reimburse Landlord for all reasonable costs incurred by Landlord in
connection with the proposed assignment or sublease, including without
limitation attorneys' fees, brokerage fees and costs incurred in connection
with review and investigation of the proposed assignee or subtenant.
Anything contained in the foregoing provisions of this Section
to the contrary notwithstanding, neither Tenant nor any other person having an
interest in the possession, use, occupancy or utilization of the Premises shall
enter into any lease, sublease, license, concession or other agreement for use,
occupancy or utilization of space in the Premises which provides for rental or
other payment for such use, occupancy or utilization based, in whole or in
part, on the net income or profits derived by any person from the premises
leased, used, occupied or utilized (other than an amount based on a fixed
percentage or percentages of receipts or sales), and any such purported lease,
sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use,
occupancy or utilization of any part of the Premises.
8.02 Recapture. If Tenant desires to enter into any sublease
of the Premises, Landlord shall have the option to exclude from the Premises
covered by this Lease, the space proposed to be sublet by Tenant, effective as
of the proposed commencement date of sublease of said space by Tenant.
Landlord may exercise said option by giving Tenant written notice within twenty
(20) days after receipt by Landlord of Tenant's notice of the proposed
sublease; provided, however, in the event Landlord exercises its right to
exclude any such portion or all of the Premises from this Lease, Tenant shall
have the right, by written notice delivered to Landlord within five (5) days
after receipt by Tenant of Landlord's exercise notice, to rescind Tenant's
request to sublease such portion or all of the Premises, and Tenant's request
to sublease all or a portion of the Premises and Landlord's exercise of the
option contained in this Section 8.02 shall be deemed null and void. If
Landlord exercises said option, Tenant shall surrender possession of the
proposed sublease space to Landlord on the effective date of exclusion of said
space from the Premises covered by this Lease, and neither party hereto shall
have any further rights or liabilities with respect to said space under this
Lease. Effective as of the date of exclusion of any portion of the Premises
covered by this Lease pursuant to this paragraph, (i) the Monthly Base Rent
shall be reduced in the same proportion as the number of square feet of
Rentable Area contained in the portion of the Premises so excluded bears to the
number of square feet of Rentable Area contained in the Premises immediately
prior to such exclusion, and (ii) the Rentable Area of the Premises specified
in 1.01J shall be decreased by the number of square feet of Rentable Area
contained in the portion of the Premises so excluded, for all purposes under
this Lease.
9. MAINTENANCE
9.01 Landlord's Maintenance. Landlord, at its expense, shall
maintain and make necessary repairs to the structural elements and exterior
windows of the Building and the Common Areas, and, subject to 15.04, the
electrical, plumbing, heating, ventilation and air conditioning systems of the
Building and the Common Areas, except that:
A. Landlord shall not be responsible for the
maintenance, repair or replacement of any such systems which
7
<PAGE> 10
are located within the Premises and are supplemental or special to the
Building's standard systems, whether installed pursuant to the Work
Letter or otherwise, or floor or wall coverings in the Premises; and
B. The cost of performing any of said maintenance or
repairs caused by the negligence of Tenant, its employees, agents,
servants, licensees, subtenants, contractors or invitees, or the
failure of Tenant to perform its obligations under this Lease shall be
paid by Tenant, except to the extent of insurance proceeds, if any,
actually collected by Landlord with regard to the damage necessitating
such repairs. Tenant shall perform such repairs subject to the
procedures established in 10.01 herein.
9.02 Tenant's Maintenance. Tenant, at its expense, shall
keep and maintain the Premises in good order, condition and repair and in
accordance with all applicable legal, governmental and quasi-governmental
requirements, ordinances and rules (including the Board of Fire Underwriters).
9.03 Maintenance of Common Areas. The Common Areas shall be
subject to the control, management, operation and maintenance of Landlord.
Landlord shall have the right from time to time to establish, modify and
enforce rules and regulations with respect to the Common Areas. Tenant agrees
to comply with such rules and regulations, to cause its officers, agents,
contractors and employees to so comply and to use its best efforts to cause its
customers, invitees, concessionaires, suppliers and licensees to so comply.
Landlord shall have the right to construct, maintain and operate lighting and
other facilities in and on the Common Areas; to grant third parties temporary
rights of use thereof; from time to time to change the area, level, location or
arrangement of parking areas and other facilities located in the Common Areas
(provided such change does not unreasonably affect Tenant's parking rights
provided herein); to close all or any portion of the Common Areas to such
extent as may, in the opinion of Landlord, be legally sufficient to prevent a
dedication thereof or accrual of any rights to any person or the public
therein; to close temporarily all or any part of the parking areas or parking
facilities; and to do and perform such other acts in and to the Common Areas
as, in the exercise of good business judgment, Landlord shall determine to be
advisable. Landlord will operate and maintain the Common Areas in such manner
as Landlord, in its sole discretion, shall determine from time to time. In
exercising its rights under this 9.03, Landlord shall use reasonable efforts to
minimize any interference with Tenant's use of the Premises and Common Areas.
10. ALTERATIONS AND IMPROVEMENTS SUBSEQUENT TO INITIAL OCCUPANCY
10.01 Tenant's Alterations Subsequent to Initial Occupancy.
Tenant shall not, without the prior written consent of Landlord, make or cause
to be made any alterations, improvements, additions or installations in or to
the Premises subsequent to the initial occupancy of the Premises by Tenant. If
Landlord so consents, before commencement of any such work or delivery of any
materials into the Premises or the Building, Tenant shall furnish to Landlord
for approval: architectural plans and specifications, names and addresses of
all contractors, contracts, necessary permits and licenses, certificates of
insurance and instruments of indemnification against any and all claims, costs,
expenses, damages and liabilities which may arise in connection with such work,
all in such form and amount as may
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be satisfactory to Landlord. In addition, prior to commencement of any such
work or delivery of any materials into the Premises, Tenant shall provide
Landlord with evidence reasonably satisfactory to Landlord of Tenant's ability
to pay for such work and materials in full, and, if requested by Landlord,
shall deposit with Landlord at such time such security for the payment of said
work and materials as Landlord may require. Tenant agrees to hold Landlord,
the Manager and their respective agents and employees forever harmless against
all claims and liabilities of every kind, nature and description which may
arise out of or in any way be connected with such work. All such work shall be
done only by contractors or mechanics approved in writing by Landlord and at
such time and in such manner as Landlord may from time to time designate.
Tenant shall pay the cost of all such work. Upon completion of such work,
Tenant shall furnish Landlord with contractors' affidavits and full and final
waivers of lien and receipted bills covering all labor and materials expended.
All such work shall be in compliance with all applicable legal, governmental
and quasi-governmental requirements, ordinances and rules (including the Board
of Fire Underwriters), and all requirements of applicable insurance companies.
All such work shall be done in a good and workmanlike manner and with the use
of good grades of materials including fire protection grades equivalent with
those of the Building. Tenant shall permit Landlord, if Landlord so desires,
to supervise construction operations in connection with such work; provided,
however, that such supervision or right to supervise by Landlord and the
approval or disapproval of the plans and specifications for such work in any
situation shall not constitute any warranty by Landlord to Tenant of the
adequacy of the design, workmanship or quality of such work or materials for
Tenant's intended use or impose any liability upon Landlord in connection with
the performance of such work. All alterations, improvements, additions and
installations to or on the Premises shall (subject to Article 13) become part
of the Premises at the time of their installation and shall remain in the
Premises at the expiration or termination of this Lease or termination of
Tenant's right to possession of the Premises, without compensation or credit to
Tenant; provided, however, all such alterations, improvements, additions and
installations shall remain the personal property of the Tenant for tax purposes
during the Term of this Lease.
10.02 Decorative Alterations. Notwithstanding the foregoing,
nothing herein shall be deemed to require the Landlord's consent for decorative
alterations such as installation of wall coverings, hanging of paintings,
prints and other wall hangings, painting of walls or similar alterations
affecting only the interior of the Premises.
10.03 Liens. Tenant shall not permit any lien or claim for
lien of any mechanic, laborer or supplier or any other lien to be filed against
the Complex, the Building, the Common Areas, the land which comprises the
Complex, the Premises, or any part of such property arising out of work
performed, or alleged to have been performed by, or at the direction of, or on
behalf of Tenant. If any such lien or claim for lien is filed, Tenant shall
within five (5) days after such filing either have such lien or claim for lien
released of record or shall deliver to Landlord a bond or other security in
form, content, amount, and issued by a company satisfactory to Landlord
indemnifying Landlord, Manager and others designated by Landlord against all
costs and liabilities resulting from such lien or claim for lien and the
foreclosure or attempted foreclosure thereof. If Tenant fails to have such
lien or claim for lien so released or to deliver such bond to Landlord,
Landlord, without investigating
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the validity of such lien, may pay or discharge the same and Tenant shall
reimburse Landlord upon demand for the amount so paid by Landlord, including
Landlord's expenses and attorneys' fees.
11. WAIVER OF CLAIMS AND INDEMNITY
11.01 Waiver. To the fullest extent permitted by law, Tenant
hereby releases and waives all claims against Landlord, the Manager and their
respective agents and employees for injury or damage to person or property
sustained in or about the Complex, the Building or the Premises by Tenant, its
agents or employees other than damage caused by the negligence of Landlord, the
Manager or their respective agents or employees.
11.02 Indemnification.
A. Tenant agrees to indemnify, defend and hold
harmless Landlord, the Manager and their respective agents and
employees, from and against any and all liabilities, claims, demands,
costs and expenses of every kind and nature (including attorneys'
fees), including those arising from any injury or damage to any person
(including death) or property (a) sustained in or about the Premises,
(b) resulting from the negligence or willful act of Tenant, its
employees, agents, servants, invitees, licensees or subtenants, or (c)
resulting from the failure of Tenant to perform its obligations under
this Lease; provided, however, Tenant's obligations under this section
shall not apply to injury or damage resulting from the negligence or
willful act of Landlord, the Manager or their respective agents or
employees.
B. Landlord agrees to indemnify, defend and hold
harmless Tenant, and its respective agents and employees, from and
against any and all liabilities, claims, demands, costs and expenses
of every kind and nature (including attorneys' fees), arising from any
injury or damage to any person (including death) or property (a)
sustained in or about the Building and resulting from the negligence
or willful act of Landlord, its employees, agents or servants, or (b)
resulting from the failure of Landlord to perform its obligations
under this Lease; provided, however, Landlord's obligations under this
Section shall not apply to injury or damage resulting from the
negligence or willful act of Tenant, or its respective agents or
employees.
11.03 Waiver of Subrogation. Notwithstanding such waiver and
indemnification or anything else to the contrary contained in this Lease:
A. Tenant shall not be responsible or liable to
Landlord for any loss resulting from a peril to the extent that
Landlord is required to insure against such peril hereunder. Landlord
shall cause its policy or policies of insurance to contain effective
waivers of subrogation for the benefit of Tenant.
B. Landlord and Manager shall not be responsible or
liable to Tenant for any event, act or omission to the extent covered
by insurance required to be obtained and maintained by Tenant with
respect to the Premises and its use and occupancy thereof (whether or
not such insurance is actually obtained or maintained) and the
proceeds of such other insurance as is obtained and maintained by
Tenant with
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respect to the Premises and to its use and occupancy thereof. Tenant
shall cause its policy or policies of insurance to contain effective
waivers of subrogation for the benefit of Landlord.
12. EVENTS OF DEFAULT
12.01 Events of Default. Each of the following shall
constitute an event of default by Tenant under this Lease: (1) Tenant fails to
pay any installment of Rent when due, and such failure continues for five (5)
days after written notice to Tenant (provided Landlord shall not be obligated
to give more than two (2) such notices in any calendar year, and any failure by
Tenant to pay rent when due in any calendar year after Landlord has given
Tenant such notices shall immediately be considered an event of default); (2)
Tenant fails to observe or perform any of the other non-monetary covenants,
conditions or provisions of this Lease or under the Work Letter to be observed
or performed by Tenant and fails to cure such non-monetary default within
fifteen (15) days after written notice to Tenant, provided, however, in the
event Tenant is unable in good faith to cure any non-monetary default within
such fifteen (15) days, and further provided Tenant proceeds prudently and
diligently to cure such default, Tenant shall have a reasonable time thereafter
to cure such default; (3) the interest of Tenant in this Lease is levied upon
through execution or other legal process; (4) a petition is filed by Tenant to
declare Tenant bankrupt or seeking a plan of reorganization or arrangement
under any Chapter of the Bankruptcy Code, or any amendment, replacement or
substitution therefor, or to delay payment of, reduce or modify Tenant's debts,
or an involuntary petition is filed by or against Tenant to declare Tenant
bankrupt or seeking a plan of reorganization or arrangement under any Chapter
of the Bankruptcy Code, or any amendment, replacement or substitution therefor,
or to delay payment of, reduce or modify Tenant's debts, and such involuntary
petition is not dismissed within sixty (60) days after the same is filed, or
any petition is filed or other action taken to reorganize or modify Tenant's
capital structure or upon the dissolution of Tenant; (5) Tenant is declared
insolvent by law or any assignment of Tenant's property is made for the benefit
of creditors; (6) a receiver is appointed for Tenant or Tenant's property; (7)
Tenant abandons the Premises; or (8) Tenant fails to provide or maintain the
Tenant's Lease Collateral as provided in Rider No. 2 hereof.
12.02 Late Charges. All delinquent Rent shall bear interest
at the maximum rate permitted by law or fifteen percent (15%) per annum,
whichever is less, from the date due (prior to any grace period for payment)
until paid.
12.03 Landlord's Remedies. Upon the occurrence of an event
of default by Tenant under this Lease, Landlord, at its option, without further
notice or demand to Tenant, may in addition to all other rights and remedies
provided in this Lease, at law or in equity:
A. Terminate this Lease and Tenant's right of
possession of the Premises, and recover all damages to which Landlord
is entitled under law, specifically including, without limitation: (a)
the sum of all rental and other payments owed to Landlord hereunder
accrued to the date of such termination; (b) all Landlord's expenses
of reletting (including repairs, alterations, improvements, additions,
decorations, legal fees and brokerage commissions) to the
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extent provided for in Chapter 704, Wis. Stats.; and (c) as liquidated
damages, an amount equal to (i) the present value of the total rental
and other payments owed hereunder for the remaining portion of the
Lease Term, calculated as if such term expired on the date set forth
in 1.01(H), less (ii) the then present fair market rental value of the
Premises for such period.
B. Terminate Tenant's right of possession of the
Premises without terminating this Lease, in which event Landlord shall
be entitled to all remedies available under Wisconsin law and equity,
including without limitation, Section 704.29, Wis. Stats., provided
Landlord shall use reasonable efforts to relet the Premises, or any
part thereof for the account of Tenant, for such rent and term and
upon such terms and conditions as are then reasonably obtainable. For
purposes of such reletting Landlord is authorized to redecorate,
repair, alter and improve the Premises to the extent provided for by
Chapter 704, Wis. Stats. Until Landlord does relet the Premises,
Tenant shall pay Landlord monthly on the first day of each month
during the period that Tenant's right of possession is terminated, a
sum equal to the amount of Rent due under this Lease for such month.
If and when the Premises are relet and a sufficient sum is not
realized from such reletting after payment of all Landlord's expenses
of reletting permitted under Chapter 704, Wis. Stats. (including
repairs, alterations, improvements, additions, decorations, legal fees
and brokerage commissions) to satisfy the payment of Rent due under
this Lease for any month, Tenant shall pay Landlord any such
deficiency monthly upon demand. Tenant agrees that Landlord may file
suit to recover any sums due to Landlord under this Section from time
to time and that such suit or recovery of any amount due Landlord
shall not be any defense to any subsequent action brought for any
amount not previously reduced to judgment in favor of Landlord. If
Landlord elects to terminate Tenant's right to possession only without
terminating this Lease, Landlord may, at its option, enter into the
Premises, remove Tenant's signs and other evidences of tenancy, and
take and hold possession thereof, as stated in Article 13; provided,
however, that such entry and possession shall not terminate this Lease
or release Tenant, in whole or in part, from Tenant's obligation to
pay the Rent reserved hereunder for the full Term or from any other
obligation of Tenant under this Lease. Nothing contained herein shall
be deemed to affect Landlord's obligation to mitigate damages.
C. Upon the filing of a petition by or against the
Tenant under the Bankruptcy Code, the Tenant, as debtor and as
debtor-in-possession, and any trustee who may be appointed agree as
follows: (a) to perform each and every obligation of Tenant under
this Lease until such time as this Lease is either rejected or assumed
by order of the United States Bankruptcy Court; (b) to pay monthly in
advance on the first day of each month as reasonable compensation for
use and occupancy of the Premises an amount equal to all Rent and
other charges otherwise due pursuant to this Lease; (c) to reject or
assume this Lease within sixty (60) days of the filing of such
petition; (d) to give Landlord at least forty-five (45) days prior
written notice of any proceeding relating to any assumption of this
Lease; (e) to give at least thirty (30) days prior written notice of
any abandonment of the Premises; any such abandonment to be deemed a
rejection of this Lease; (f) to do all other things of benefit to the
Landlord otherwise required under
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the Bankruptcy Code; (g) to be deemed to have rejected this Lease in
the event of the failure to comply with any of the above; and (h) to
have consented to the entry of an order by an appropriate United
States Bankruptcy Court providing all of the above, waiving notice and
hearing of the entry of same. No default of this Lease by the Tenant,
either prior to or subsequent to the filing of such a petition, shall
be deemed to have been waived unless expressly done so in writing by
the Landlord.
12.04 Attorneys' Fees. Tenant shall pay, upon demand, all
costs and expenses, including reasonable attorneys' fees, incurred by Landlord
in enforcing Tenant's obligations under this Lease or in the Work Letter or
resulting from Tenant's default under this Lease. Landlord shall pay, upon
demand, all costs and expenses, including reasonable attorneys' fees, incurred
by Tenant in enforcing Landlord's obligations under this Lease and the Work
Letter or resulting from Landlord's default under this Lease.
13. SURRENDER OF PREMISES
Upon the expiration or termination of this Lease or
termination of Tenant's right of possession of the Premises, Tenant shall
surrender and vacate the Premises immediately and deliver possession thereof to
Landlord in a clean, good and tenantable condition, ordinary wear excepted.
Upon any termination which occurs other than by reason of Tenant's default,
Tenant shall be entitled to remove from the Premises all unattached and
moveable trade fixtures and personal property of Tenant without credit or
compensation from Landlord, provided Tenant immediately shall repair all damage
resulting from such removal and shall restore the Premises to a tenantable
condition. In the event possession of the Premises is not immediately
delivered to Landlord or if Tenant shall fail to remove any unattached and
movable trade fixtures or personal property which Tenant is entitled to remove,
Landlord may remove same without any liability to Tenant. Any movable trade
fixtures and personal property which may be removed from the Premises by Tenant
but which are not so removed upon the vacancy of the Premises shall be
conclusively presumed to have been abandoned by Tenant and title to such
property shall pass to Landlord without any payment or credit and Landlord may,
at its option and at Tenant's expense, store and/or dispose of such property.
14. HOLDING OVER
Tenant shall pay Landlord double the Rent then applicable for
each month or partial month during which Tenant retains possession of the
Premises, or any part of the Premises, after the expiration or termination of
this Lease, or the termination of Tenant's right of possession of the Premises.
Tenant shall also indemnify Landlord against all liabilities and damages
sustained by Landlord by reason of such retention of possession. The
provisions of this Article shall not constitute a waiver by Landlord of any
re-entry rights of Landlord available under this Lease or by law.
15. DAMAGE BY FIRE OR OTHER CASUALTY
15.01 Substantial Untenantability. If either the Premises,
the Building or the Complex is rendered substantially untenantable by fire or
other casualty, Landlord may elect by
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giving Tenant written notice within one hundred twenty (120) days after the
date of said fire or casualty, either to: (1) terminate this Lease as of the
date of the fire or other casualty; or (2) proceed to repair or restore the
Premises, the Building or the Complex (other than leasehold improvements and
personal property installed by Tenant), to substantially the same condition as
existed immediately prior to such fire or casualty.
If Landlord elects to proceed pursuant to subsection (2)
above, Landlord's notice shall contain Landlord's reasonable estimate of the
time required to substantially complete such repair or restoration. If such
estimate indicates that the time so required will exceed one hundred eighty
(180) days from the date of the casualty, then Tenant shall have the right to
terminate this Lease as of the date of such casualty by giving written notice
to Landlord not later than twenty (20) days after the date of the Landlord's
notice. If Landlord's estimate indicates that the repair or restoration can be
substantially completed within one hundred eighty (180) days, or if Tenant
fails to exercise its said right to terminate this Lease, this Lease shall
remain in force and effect.
15.02 Insubstantial Untenantability. If either the Premises,
the Building or the Complex is damaged by fire or other casualty but is not
rendered substantially untenantable, then Landlord shall diligently proceed to
repair and restore the damaged portions thereof, other than the leasehold
improvements and all personal property installed by Tenant, to substantially
the same condition as existed immediately prior to such fire or casualty,
unless such damage occurs during the last twelve (12) months of the Term, in
which event Landlord shall have the right to terminate this Lease as of the
date of such fire or other casualty by giving written notice to Tenant within
thirty (30) days after the date of such fire or other casualty.
15.03 Rent Abatement. If all or any part of the Premises are
damaged by fire or other casualty and this Lease is not terminated, Monthly
Base Rent shall abate for all or that part of the Premises which are
untenantable on a per diem and proportionate area basis from three (3) days
after the date of the fire or other casualty until Landlord has substantially
completed the repair and restoration work in the Premises which it is required
to perform, provided, that as a result of such fire or other casualty, Tenant
does not occupy the portion of the Premises which are untenantable during such
period.
15.04 Tenant's Restoration. If all or any part of the
Premises are damaged by fire or other casualty and this Lease is not
terminated, Tenant shall promptly and with due diligence repair and restore the
leasehold improvements, and all personal property previously installed by
Tenant pursuant to this Lease.
16. EMINENT DOMAIN
16.01 Permanent Taking. If all or any part of the Premises,
the Building or the Complex is permanently taken or condemned by any competent
authority for any public use or purpose (including a deed given in lieu of
condemnation), which renders the Premises substantially untenantable, this
Lease shall terminate as of the date title vests in such authority, and Monthly
Base Rent shall be apportioned as of such date.
16.02 Insubstantial Taking. If any part of the Premises, the
Building or the Complex is taken or condemned for any public use or purpose
(including a deed given in lieu of
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condemnation) and this Lease is not terminated pursuant to 16.01, Monthly Base
Rent shall be reduced for the period of such taking by an amount which bears
the same ratio to Monthly Base Rent then in effect as the number of square feet
of Rentable Area in the Premises so taken or condemned, if any, bears to the
number of square feet of Rentable Area specified in 1.01J. Landlord, upon
receipt and to the extent of the award in condemnation or proceeds of sale,
shall make necessary repairs and restorations (exclusive of leasehold
improvements and personal property installed by Tenant) to restore the Premises
remaining to as near its former condition as circumstances will permit, and to
the Building and Complex to the extent necessary to constitute the portion of
same not so taken or condemned as a complete architectural unit. In the event
of any taking or condemnation described in this 16.02, the Rentable Area of the
Premises stated in 1.01J and the Rentable Area of the Complex as specified in
this Lease, shall be reduced, respectively, for all purposes under this Lease
by the number of square feet of Rentable Area of the Premises, if any, and the
Complex, if any, so taken or condemned as determined and certified by an
independent professional architect selected by Landlord.
16.03 Compensation. Landlord shall be entitled to receive
the entire price or award from any such sale, taking or condemnation without
any payment to Tenant, and Tenant hereby assigns to Landlord Tenant's interest,
if any, in such award; provided, however, Tenant shall have the right
separately to pursue against the condemning authority an award in respect of
the loss, if any, to leasehold improvements paid for by Tenant without any
credit or allowance from Landlord. Under no circumstances shall the Tenant
seek or be entitled to any compensation for the value of its leasehold estate.
17. INSURANCE
17.01 Tenant's Insurance. Tenant, at its expense, shall
maintain in force during the Term:
A. Comprehensive general public liability insurance,
which shall include coverage for personal liability, contractual
liability, bodily injury (including death) and property damage, all on
an occurrence basis with respect to the business carried on, in or
from the Premises and Tenant's use and occupancy of the Premises with
coverage for any one occurrence or claim of not less than $3,000,000
or such other amount as Landlord may reasonably require upon not less
than six (6) months prior written notice; and
B. All risk coverage insurance for the replacement
value of leasehold improvements (regardless of whether they belong to
Landlord or Tenant) and Tenant's property (including fixtures,
improvements and equipment) located in the Premises and such other
insurance against such other perils and in such amounts as Landlord
may from time to time reasonably require upon not less than ninety
(90) days prior written notice, such requirement to be made on the
basis that the required insurance is customary at the time for prudent
tenants of properties similar to the Complex in the area of the city
stated in 1.01A.
All insurance required to be maintained by Tenant shall be on
terms and with insurers reasonably acceptable to Landlord. Landlord shall be
named as an additional insured and such insurance shall contain a cross
liability endorsement with respect to the comprehensive general public
liability insurance.
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The policy will not change, lapse or be canceled, except after not less than
thirty (30) days prior written notice to Landlord of the intended change, lapse
or cancellation. Tenant shall furnish to Landlord, if and whenever requested
by it, certificates or other evidences acceptable to Landlord as to the
insurance from time to time maintained by Tenant and the renewal or
continuation in force of such insurance.
17.02 Landlord's Insurance. Landlord, at its expense, shall
maintain in force during the Term:
A. Fire and extended coverage insurance for at least
ninety percent (90%) of the replacement value of the Complex (other
than those portions required to be insured by Tenant), less footings
and foundations; and
B. Comprehensive general public liability insurance
with respect to the business carried on in the Complex with coverage
for any one occurrence or claim of not less than $5,000,000.
18. RULES AND REGULATIONS
Tenant agrees for itself and for its subtenants, employees,
agents, and invitees to comply with the Rules and Regulations attached hereto
as Exhibit B. Landlord and Tenant agree that the Rules and Regulations may be
amended from time to time. Said amendment shall become a part of this Lease
upon written notification to Tenant of the changes. Landlord agrees that the
rules and regulations shall not be enforced in an inconsistent or
discriminatory manner.
19. LANDLORD'S RIGHTS
Landlord shall have the following rights exercisable without
notice (except as expressly provided to the contrary) and without being deemed
an eviction or disturbance of Tenant's use or possession of the Premises or
giving rise to any claim for set-off or abatement of Rent: (1) to change the
name or street address of the Building or the Complex, upon thirty (30) days'
prior written notice to Tenant; (2) to install, affix and maintain all signs on
the exterior and/or interior of the Building and in and about the Complex; (3)
to designate and/or approve prior to installation, all types of signs, window
shades, blinds, drapes, awnings or other similar items, and all internal
lighting that may be visible from the exterior of the Premises; (4) to display
the Premises to prospective tenants at reasonable hours during the last nine
(9) months of the Term; (5) to change the arrangement of entrances, doors,
corridors, elevators and stairs in the Building including adding skywalks to
connect the Building to another building, provided that no such change shall
materially adversely affect access to the Premises; (6) to grant to any party
the exclusive right to conduct any business or render any service in or to the
Building, provided such exclusive right shall not operate to prohibit Tenant
from using the Premises for the purposes permitted hereunder; (7) to prohibit
the placing of vending or dispensing machines of any kind in or about the
Premises other than for the use by Tenant's employees; (8) to have access for
Landlord and other tenants of the Building to any mail chutes and boxes located
in or on the Premises according to the rules of the United States Post Office;
(9) to close the Building after normal business hours, except that Tenant and
its employees and invitees shall be entitled to admission at all times under
such regulations as Landlord
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prescribes for security purposes; (10) to take any and all reasonable measures,
including inspections and repairs to the Premises or to the Building, as may be
necessary or desirable in the operation or protection thereof; (11) to retain
at all times master keys or pass keys to the Premises; (12) to install, operate
and maintain security systems which monitor, by closed circuit television or
otherwise, all persons entering and leaving the Building or the Complex; (13)
to install and maintain pipes, ducts, conduits, wires and structural elements
located in the Premises which serve other parts or other tenants of the
Building; and (14) to inspect the Premises from time to time to determine
compliance with Tenant's obligations under this Lease and to show the Premises
to prospective purchasers or lenders. In exercising its rights under this
Section 19, Landlord shall use reasonable efforts to minimize any interference
with Tenant's use of the Premises and Common Areas.
20. ESTOPPEL CERTIFICATE
Tenant shall from time to time, upon not less than ten (10)
days prior written request by Landlord or any mortgagee or ground lessor of the
Complex, deliver to Landlord or such mortgagee or ground lessor a statement in
writing certifying: (1) that this Lease and the Work Letter are unmodified and
in full force and effect or, if there have been modifications, that this Lease
and the Work Letter, as modified, are in full force and effect; (2) the amount
of Monthly Base Rent then payable under this Lease and the date to which Rent
has been paid; (3) that Landlord is not in default under this Lease or any work
letter agreement, or, if in default, a detailed description of such default(s);
(4) that Tenant is or is not in possession of the Premises, as the case may be;
and (5) such other information as may be requested.
If Tenant fails or refuses to execute, acknowledge and deliver
any such instrument within twenty (20) days after written demand, Landlord will
be entitled to execute, acknowledge and deliver any such instrument on behalf
of Tenant as Tenant's attorney-in-fact. Tenant constitutes and irrevocably
appoints Landlord as Tenant's attorney-in-fact to execute, acknowledge and
deliver on behalf of Tenant any document described in this paragraph.
21. RELOCATION OF TENANT
At any time after the date of this Lease, Landlord may
substitute for the Premises, other premises in the Complex (the "New
Premises"), in which event the New Premises shall be deemed to be the Premises
for all purposes under this Lease, provided: (1) the New Premises shall be
similar to the Premises in area and configuration; (2) the substitution shall
be made in order to lease the Premises to a tenant of the Complex who then
occupies, or as a result of such substitution will occupy, all or a substantial
part of the floor of the Building on which the Premises are located; (3) if
Tenant is then occupying the Premises, Landlord shall pay the actual and
reasonable expenses of physically moving Tenant, its property and equipment to
the New Premises and the actual and reasonable expense of replacing Tenant's
stationary rendered inaccurate due to such relocation; (4) Landlord shall give
Tenant not less than thirty (30) days prior written notice of such
substitution; and (5) Landlord, at its expense, shall improve the New Premises
with improvements substantially similar to those in the Premises at the time of
such substitution, if the Premises are then improved, or if not
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then improved, Landlord, at its expense, shall improve the New Premises in
accordance with the Work Letter.
22. ADJUSTMENTS TO MONTHLY BASE RENT
22.01 Definitions. For the purpose of this Article 22, the
following words and phrases shall have the following meanings:
A. "Adjustment Date" shall mean each January 1
occurring within the Term.
B. "Adjustment Year" shall mean each calendar year
or partial calendar year during the Term of this Lease.
C. "Operating Costs" shall mean all costs, expenses,
Taxes and disbursements of every kind and nature which Landlord shall
pay or become obligated to pay in connection with the management,
operation, maintenance, replacement and/or repair of all buildings,
improvements and land comprising the Complex and of the personal
property, fixtures, machinery, equipment, systems and apparatus
located in or used in connection therewith. Operating Costs shall not
include the following: (1) costs of improvement of the Premises and
the premises of other tenants of the Building; (2) charges for
depreciation of the building and improvements comprising the Complex;
(3) interest and principal payments on mortgages; (4) ground rental
payments; (5) real estate brokerage and leasing commissions; (6)
salaries and other compensation of executive officers of the Manager
senior to the individual Building or Complex manager; (7) any
expenditures for which Landlord has been reimbursed (other than
pursuant to proration of Operating Costs, rent adjustment and
escalation provisions provided in leases); (8) capital improvements to
the Complex, except with respect to the costs associated with capital
improvements installed by Landlord for the purpose of reducing
Operating Costs and then only the annual straight line amortization of
such costs over the useful life thereof; and (9) replacements other
than as a result of obsolescence.
D. "Per Square Foot Operating Costs" shall mean the
amount of Operating Costs for any Adjustment Year divided by the
Rentable Square Footage of the Building as stated in 1.01M.
E. "Taxes" shall mean all federal, state and local
governmental taxes, assessments and charges (including transit or
district taxes or assessments) of every kind or nature, whether
general, special, ordinary or extraordinary, which Landlord shall pay
because of or in connection with the ownership, improvements and land
comprising the Complex, or of Landlord's personal property, fixtures,
machinery, equipment systems and apparatus located therein or used in
connection therewith (including any rental sales, leasing or similar
taxes levied on or with respect to the Rent, or any part thereof,
payable under the Lease in lieu of or in addition to general real
and/or personal property taxes). For purposes hereof, Taxes for any
year shall be Taxes which are due for payment or paid in that year,
rather than Taxes which are assessed or become a lien during such
year. There shall be included in Taxes for any year the amount of all
fees, costs and expenses (including reasonable attorneys' fees) paid
by Landlord during such year in seeking or
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<PAGE> 21
obtaining any refund or reduction of Taxes and Tenant shall receive
its pro rata share of the benefit of any such refund or reduction,
even after the expiration or earlier termination of the Term. Taxes
in any year shall be reduced by the net amount of any tax refund
received by Landlord during such year. If a special assessment
payable in installments is levied against the Complex, Taxes for any
year shall include only the installment of such assessment and any
interest paid during such year. Taxes shall not include any federal,
state or local sales, use, franchise, capital stock, inheritance,
general income, gift or estate taxes, except that if a change occurs
in the methods of taxation resulting in whole or in part in the
substitution of any such taxes, or any other assessment, for any Taxes
as above defined, such substituted taxes or assessments shall be
included in the Taxes; provided, however, that Tenant shall be
responsible for and shall pay personal property taxes on its
personalty, even if such personalty includes improvements to the
Building that may become the property of Landlord upon expiration or
termination of this Lease.
22.02 Adjustments to Monthly Base Rent. Throughout the Term,
Tenant shall pay with each payment of Monthly Base Rent, as additional Rent, a
portion of Operating Costs for the Complex. Tenant's share of Operating Costs
shall be determined on the Commencement Date and on each Adjustment Date by
multiplying the Rentable Area of the Premises by the Per Square Foot Operating
Costs for the Adjustment Year in which such Commencement Date or Adjustment
Date occurs (based on Landlord's Projections pursuant to 22.03, and subject to
adjustment pursuant to 22.04). Monthly installments of Tenant's share of
Operating Costs, as provided above, shall be 1/12th of the annual amount.
22.03 Projections. For purposes of calculating Operating
Costs for any Adjustment Year, Landlord may make reasonable estimates,
forecasts or projections (collectively, the "Projections") of Operating Costs
for such Adjustment Year. Not less than ten (10) days prior to each Adjustment
Date, Landlord shall deliver to Tenant a written statement setting forth the
Projections of Operating Costs for the Adjustment Year in which such Adjustment
Date occurs and providing a calculation of the increase in installments of
Monthly Base Rent to become effective as of said Adjustment Date; provided,
however, that the failure of Landlord to provide any such statement shall not
relieve Tenant from its obligation to continue to pay Operating Costs at the
rate then in effect under this Lease, and if and when Tenant receives such
statement from Landlord, Tenant shall pay any increases in Operating Costs
reflected thereby effective retroactively to the most recently preceding
Adjustment Date. Landlord shall further deliver to Tenant, not later than ten
(10) days prior to the Commencement Date, a written statement setting forth the
Projections of Operating Costs for that portion of the Term occurring prior to
the first Adjustment Date.
22.04 Readjustments. On or about April 1st following the end
of each Adjustment Year, or at such later time as Landlord shall be able to
determine the actual amounts of Operating Costs for the Adjustment Year last
ended, Landlord shall notify Tenant in writing of such actual amounts. If such
actual amounts exceed the Projections for such Adjustment Year, then Tenant
shall, within thirty (30) days after the date of such written notice from
Landlord, pay to Landlord its proportionate share of the excess based on the
Net Rentable Area of the Premises as compared to the total Rentable Square
Footage of the Building. The obligation to make such payments shall survive
the expiration or earlier termination of the Term. If the total
19
<PAGE> 22
Operating Costs paid by Tenant during such Adjustment Year exceeds the amount
thereof payable for such year based upon actual Operating Costs for such
Adjustment Year, then Landlord shall credit such excess to installments of
Operating Costs payable after the date of Landlord's notice until such excess
has been exhausted, or if this Lease shall expire prior to full application of
such excess, Landlord shall pay to Tenant the balance thereof not theretofore
applied against Rent. No interest or penalties shall accrue on any amounts
which Landlord is obligated to credit or to pay Tenant by reason of this
Section.
22.05 Partial Occupancy. For purposes of determining the
initial and any adjusted amounts of Tenant's share of Operating Costs for any
Adjustment Year prior to the first full calendar year in which at least
ninety-five percent (95%) of the rentable area of the Building is occupied by
tenants, the amount of Taxes and Operating Costs for such Adjustment Year may,
at Landlord's option, be increased to the amount that would have been payable
had there been at least ninety-five percent (95%) occupancy in the Building
during such Adjustment Year.
22.06 Books and Records. Landlord shall maintain books and
records showing Operating Costs in accordance with sound accounting and
management practices and shall retain such books and records for a period of
one (1) year after the end of each calendar year during which such Operating
Costs were paid or incurred. The books and records shall be available to
Tenant for inspection upon prior reasonable notice.
22.07 No Decreases in Monthly Base Rent. Notwithstanding
anything to the contrary contained in this Lease, Monthly Base Rent shall not
be adjusted or decreased below the amount set forth in 1.01I.
23. REAL ESTATE BROKERS
Tenant represents that, except for the broker, if any, set
forth in 1.01L hereof as Tenant's Broker, Tenant has not dealt with any real
estate broker, salesperson, or finder in connection with this Lease, and no
such person initiated or participated in the negotiation of this Lease, or
showed the Premises to Tenant. Tenant agrees to indemnify and hold harmless
Landlord and the Manager from and against any and all liabilities and claims
for commissions and fees arising out of a breach of the foregoing
representation. Landlord shall only be responsible for the payment of all
commissions to the broker, if any, specified in this Article 23, based upon the
leasing commission policy of Landlord applicable to the Complex as of the date
of this Lease.
24. SUBORDINATION AND ATTORNMENT
24.01 Subordination. This Lease and Tenant's rights under
this Lease are subject and subordinate to any ground lease or underlying lease,
first mortgage, first deed of trust or other first lien encumbrance or
indenture, together with any renewals, extensions, modifications,
consolidations, and replacements of them, which now or at any subsequent time
affect the Premises or any interest of Landlord in the Premises or Landlord's
interest in this Lease and the estate created by this Lease (except to the
extent that any such instrument expressly provides that this Lease is superior
thereto). This provision will be self-operative and no further instrument of
subordination will be
20
<PAGE> 23
required in order to effect the same. Nevertheless, Tenant will execute,
acknowledge and deliver to Landlord, at any time and from time to time, upon
demand by Landlord, such documents as may be requested by Landlord, and ground
landlord or underlying lessor or any mortgagee, or any holder of a deed of
trust or other instrument described in this Section, to confirm or effect any
such subordination. If Tenant fails or refuses to execute, acknowledge, and
deliver any such document within twenty (20) days after written demand,
Landlord, its successors and assigns will be entitled to execute, acknowledge,
and deliver any such document on behalf of Tenant as Tenant's attorney-in-fact.
Tenant constitutes and irrevocably appoints Landlord, its successors and
assigns, as Tenant's attorney-in-fact to execute, acknowledge, and deliver on
behalf of Tenant any document described in this paragraph.
24.02 Attornment. If any holder of any mortgage, indenture,
deed of trust, or other similar instrument described in 24.01 succeeds to
Landlord's interest in the Premises, Tenant will pay to it all rents
subsequently payable under this Lease. Tenant will, upon request of any one so
succeeding to the interest of Landlord, automatically become the Tenant of, and
attorn to, such successor in interest without change in this Lease. Such
successor in interest will not be bound by (1) any payment of rent for more
than one month in advance, or (2) any amendment or modification of this Lease
made without its written consent, or (3) any claim against Landlord arising
prior to the date on which such successor succeeded to Landlord's interests, or
(4) any claim or offset of Rent against the Landlord. Upon request by such
successor in interest and without cost to Landlord or such successor in
interest, Tenant will execute, acknowledge, and deliver an instrument or
instruments confirming the attornment. The instrument of attornment will also
provide that such successor in interest will not disturb Tenant in its use of
the Premises in accordance with this Lease so long as Tenant is not in default
under this Lease. If Tenant fails or refuses to execute, acknowledge, and
deliver any such instrument within twenty (20) days after written demand, such
successor in interest will be entitled to execute, acknowledge, and deliver any
such document on behalf of Tenant as Tenant's attorney-in-fact. Tenant
constitutes and irrevocably appoints such successor in interest as Tenant's
attorney-in-fact to execute, acknowledge and deliver on behalf of Tenant any
document described in this Section.
25. NOTICES
All notices required or permitted to be given under this Lease
shall be in writing and shall be deemed given and delivered, whether or not
received, when deposited in the United States Mail, postage prepaid and
properly addressed, certified mail, return receipt requested, at the addresses
shown in 1.01 hereof or such other address as either party may designate for
itself from time to time by written notice to the other party. In addition,
any notice may be given by hand delivery to the notice address of either party
with a signed receipt obtained.
26. MISCELLANEOUS
26.01 Entire Agreement. This Lease and the Exhibits and
Schedules attached hereto contain the entire agreement between Landlord and
Tenant concerning the Premises and there are no other agreements, either oral
or written. This Lease may not
21
<PAGE> 24
be altered, changed or amended except by instrument in writing signed by
Landlord and Tenant.
26.02 No Option. The execution of this Lease by Tenant and
delivery of same to Landlord or Manager does not constitute a reservation of or
option for the Premises or an agreement to enter into a Lease and this Lease
shall become effective only if and when Landlord executes and delivers same to
Tenant; provided, however, the execution and delivery by Tenant of this Lease
to Landlord or the Manager shall constitute an irrevocable offer by Tenant to
lease the Premises on the terms and conditions herein contained, which offer
may not be withdrawn or revoked for thirty (30) days after such execution and
delivery. If Tenant is a corporation, it shall, if requested by Landlord,
deliver to Landlord certified resolutions of Tenant's directors authorizing
execution and delivery of this Lease and the performance by Tenant of its
obligations hereunder. If Tenant is a partnership, every general partner
thereof shall execute this Lease, unless a lesser number is deemed sufficient
in the reasonable opinion of Landlord's legal counsel.
26.03 Accord and Satisfaction. No payment by Tenant or
receipt by Landlord of a lesser amount than any installment or payment of Rent
due shall be deemed to be other than on account of the amount due, and no
endorsement or statement on any check or any letter accompanying any check or
payment of Rent shall be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such installment or payment of Rent or pursue any other remedies
available to Landlord. No receipt of money by Landlord from Tenant after the
termination of this Lease or Tenant's right of possession of the Premises shall
reinstate, continue or extend the Term.
26.04 Binding Effect. This Lease shall be binding upon and
inure to the benefit of Landlord and Tenant and their respective heirs, legal
representatives, successors and permitted assigns.
26.05 Force Majeure. Neither party hereto shall be deemed in
default with respect to any of the terms, covenants and conditions of this
Lease, if such party fails to timely perform same and such failure is due in
whole or in part to any strike, lockout, labor trouble (whether legal or
illegal), civil disorder, inability to procure materials, failure of power,
restrictive governmental laws and regulations, riots, insurrections, war, fuel
shortages, accidents, casualties, Acts of God, acts caused directly or
indirectly by the other party (or such other party's agents, employees or
invitees) or any other cause beyond the commercially reasonable control of the
non-performing party; provided, however, that nothing herein shall excuse
Tenant's failure to pay Monthly Base Rent or any other charges due to Landlord
hereunder.
26.06 Captions. The Article and Section captions of this
Lease are inserted only as a matter of convenience and in no way define, limit,
construe, or describe the scope or intent of such Articles and Sections.
26.07 Applicable Law. This Lease shall be construed in
accordance with the laws of the State of Wisconsin.
26.08 Time. Time is of the essence with respect to this
Lease and the performance of all obligations hereunder.
22
<PAGE> 25
26.09 Landlord's Right to Perform Tenant's Duties. If Tenant
fails timely to perform any of its duties under this Lease or the Work Letter,
Landlord shall have the right (but not the obligation), after the expiration of
any grace period elsewhere under this Lease or the Work Letter expressly
granted to Tenant for the performance of such duty, to perform such duty on
behalf and at the expense of Tenant without further prior notice to Tenant, and
all sums expended or expenses incurred by Landlord in performing such duty
shall be deemed to be additional Rent under this Lease and shall be due and
payable upon demand by Landlord.
26.10 Relationships. The relationship between Landlord and
Tenant is that of landlord and tenant and nothing herein shall be construed to
give rise to any other relationship including, without limitation, a creditor
and debtor relationship.
26.11 Invalidity. If any term(s), condition(s), covenant(s),
clause(s) or provision(s) herein contained shall operate or would prospectively
operate to invalidate this Lease in whole or in part, then only such term(s),
condition(s), covenant(s), clause(s), and/or provision(s) shall be held for
naught as though not herein contained, and the remainder of this Lease shall
remain operative and in full force and effect.
26.12 Limitation of Landlord's Liability. Anything contained
in this Lease to the contrary notwithstanding, Tenant agrees that it shall look
solely to the estate and property of the Landlord in the Building and the land
thereunder for the collection of any judgment (or other judicial process)
requiring the payment of money by Landlord for any default or breach by
Landlord of any of its obligations under this Lease, subject, however, to the
prior rights of any ground or underlying landlord or the holder of any mortgage
covering the Building or of Landlord's interest therein. No other assets of
the Landlord shall be subject to levy, execution or other judicial process for
the satisfaction of Tenant's claim. This provision shall not be deemed,
construed or interpreted to be or constitute an agreement, express or implied,
between Landlord and Tenant that the Landlord's interest hereunder and in the
Building shall be subject to impressment of an equitable lien or otherwise.
Nothing herein contained shall be construed to limit any right of injunction
against the Landlord, where appropriate.
26.13 Transfer of Landlord's Interest. In the event of the
sale, assignment or transfer by Landlord of its interest in the Building or in
this Lease (other than a collateral assignment to secure a debt of Landlord) to
a successor in interest who expressly assumes the obligations of Landlord
hereunder, Landlord shall thereupon be released or discharged from all of its
covenants and obligations hereunder, except such obligations as shall have
accrued prior to any such sale, assignment or transfer; and Tenant agrees to
look solely to such successor in interest of Landlord for performance of such
obligations. Any securities given by Tenant to Landlord to secure performance
by Tenant of its obligations hereunder may be assigned by Landlord to such
successor in interest of Landlord; and, upon acknowledgement by such successor
of receipt of such security and its express assumption of the obligation to
account to Tenant for such security in accordance with the terms of the Lease,
Landlord shall thereby be discharged of any further obligation relating
thereto. Landlord's assignment of the Lease or of any or all of its rights
herein shall in no manner affect Tenant's obligations hereunder. Tenant shall
thereafter attorn and look to such assignee, as Landlord, provided Tenant has
first received written notice of such assignment of Landlord's
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<PAGE> 26
interest. Landlord shall have the right to freely sell, assign or otherwise
transfer its interest in the Building and/or this Lease.
26.14 Parking. Throughout the Lease Term, Tenant shall have
the right to lease from Landlord at the rate then being charged by Landlord, as
adjusted from time to time, two (2) unassigned parking space(s) in the parking
structure located in the 100 East Wisconsin Avenue building and three (3)
unassigned parking spaces in the parking structure located in the 720 North
Water Street building; provided, however, that a cancellation by Tenant of the
use of such parking space(s) shall constitute a waiver by Tenant of any further
right to lease such space(s). Subject to the availability of parking spaces in
the parking structure serving the Building from time to time, Tenant shall have
the right to lease one or more additional unassigned parking spaces from the
Landlord at the rate then being charged by Landlord, as adjusted from time to
time, provided, however, Landlord or Tenant may cancel one or more of such
additional unassigned parking spaces upon thirty (30) days written notice to
the other party.
26.15 Riders. Riders One (1) through Two (2) attached hereto
shall be deemed to be a part hereof and are hereby incorporated herein.
IN WITNESS WHEREOF, this Lease has been executed as of the
date set forth in 1.01E hereof.
LANDLORD:
100 EAST WISCONSIN AVENUE JOINT
VENTURE, a Wisconsin Joint Venture
By: FAISON & ASSOCIATES, INC., as
agent for the Landlord
By: JOSEPH T. WEIRICK
-----------------------
Joseph T. Weirick, Vice
President
TENANT:
SYSTEMS & PROGRAMMING RESOURCES,
INC., a Wisconsin corporation
By: JOHN FIGLIULO
-----------------------
Title: PRESIDENT
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<PAGE> 27
SCHEDULE 1
Rent Schedule
Monthly Base Rent shall be payable in the following amounts:
<TABLE>
<CAPTION>
Lease Year Annual Base Rent/s.f. Monthly Base Rent
- ---------- --------------------- -----------------
<S> <C> <C>
1 $10.00 $4,350.00
2 $11.00 $4,785.00
3 $12.00 $5,220.00
4 $13.00 $5,655.00
5 $14.00 $6,090.00
</TABLE>
Tenant shall further be responsible for its share of Operating
Costs pursuant to Section 22.02, as adjusted for any increase as provided under
Article 22.
A "Lease Year" is a twelve (12) consecutive month period
beginning on the Commencement Date (or in the event the Commencement Date does
not fall on the first day of a calendar month, then the first day of the first
full calendar month following the Commencement Date) or any anniversary
thereof. Rents for any partial month of a Lease Year shall be prorated on a
daily basis and paid in advance.
S-1
<PAGE> 28
RIDER NO. 1
HAZARDOUS MATERIALS
1. Tenant shall not use, generate, manufacture, produce,
store, release, discharge or dispose of on, in, or under the Premises or the
Complex, or transport to or from the Premises or Complex, any Hazardous
Materials (as defined in subparagraph 5 below), or allow any other person or
entity to do so.
2. Tenant shall comply with all local, state and federal
laws, ordinances and regulations relating to Hazardous Materials on, in, under
or about the Premises.
3. Tenant shall promptly notify Landlord should Tenant
receive notice of, or otherwise become aware of, any: (a) pending or
threatened environmental regulatory action against Tenant, the Premises or the
Complex; (b) claims made or threatened by any third party relating to any loss
or injury resulting from any Hazardous Material; or (c) release or discharge,
or threatened release or discharge, of any Hazardous Material in, on, under or
about the Premises or the Complex.
4. Tenant agrees to indemnify, defend and hold Landlord, the
Manager and their respective agents and employees harmless from and against any
and all liabilities, claims, demands, costs and expenses of every kind and
nature (including attorneys' fees) directly or indirectly attributable to
Tenant's failure to comply with this Rider, including, without limitation: (a)
all consequential damages; and (b) the costs of any required or necessary
repair, cleanup or detoxification of the Premises and/or the Complex, and the
preparation and implementation of any closure, remedial or other required plan.
The indemnity contained in this Rider shall survive the termination or
expiration of this Lease.
5. As used in this Rider, the term "Hazardous Materials"
shall mean any element, compound, mixture, solution, particle or substance
which is dangerous or harmful or potentially dangerous or harmful to the health
or welfare of life or environment, including but not limited to explosives,
petroleum products, radioactive materials, hazardous wastes, toxic substances
or related materials, including, without limitation: (1) any substances
defined as or included within the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "toxic substances," "hazardous
pollutants" or "toxic pollutants," as those terms are used in the Resource and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Hazardous Materials Transportation Act, the Toxic
Substances Control Act, the Clean Air Act and the Clean Water Act, or any
amendments thereto, or any regulations promulgated thereunder, and any other
law or regulation promulgated by any federal, municipal, state, county or other
governmental or quasi governmental authority and/or agency or department
thereof; (2) any "PCBs" or "PCB items" (as defined in 40 C.F.R. Section 761.3);
or (3) any "asbestos" (as defined in 40 C.F.R. Section 763.63).
R-1
<PAGE> 29
RIDER NO. 2
Tenant's Lease Collateral
As security for the payment of Rent hereunder, Tenant hereby agrees to
provide to Landlord as of the date hereof and hereby grants to the Landlord the
following "Tenant's Lease Collateral:"
(a) Amount of Tenant's Lease Collateral. The total
amount of Tenant's Lease Collateral as of the Commencement Date shall
be One Hundred Nineteen Thousand Five Hundred and 00/100th Dollars
($119,500.00) (the "Collateral Amount") which shall consist of the
unconditional and irrevocable letter of credit as defined in (b)
below.
(b) Unconditional and Irrevocable Letter of Credit. As
of the date hereof, Tenant shall deliver to Landlord an unconditional
and irrevocable letter of credit for the full Collateral Amount from
an institution acceptable to Landlord (the "Letter of Credit"). The
Letter of Credit shall provide: (i) that the expiration of the Letter
of Credit shall be on the earlier of the Termination Date of this
Lease or upon the date on which drawing is permitted pursuant to the
Letter of Credit; (ii) that the amount of the Letter of Credit may
decrease according to the terms and conditions contained in (c) below;
(iii) that, in the event of a Tenant default pursuant to Article 12 of
the Lease, Landlord may draw upon such Letter of Credit, without any
additional action by Landlord, by presenting a certificate of such
default to the institution which issued the Letter of Credit, a sight
draft and the original Letter of Credit.
(c) Reduction in Tenant's Lease Collateral. Provided
Tenant is not then in default under the Lease, upon each anniversary
of the Commencement Date the Tenant shall be allowed to reduce the
Collateral Amount on the Letter of Credit as follows:
<TABLE>
<CAPTION>
Anniversary of Commencement Date Collateral Amount
-------------------------------- -----------------
<S> <C>
1st $100,000.00
2nd $78,700.00
3rd $55,000.00
4th $28,900.00
</TABLE>
R-2
<PAGE> 30
EXHIBIT A
[PLAN OF THE PREMISES]
<PAGE> 31
EXHIBIT "A-1"
LEGAL DESCRIPTION OF THE LAND
Lots 4, 5 and 6 in Block 2, Plat of Milwaukee, on the east side of the river in
the Northeast one-quarter of Section 29, Township 7 North, Range 22 East, City
of Milwaukee, County of Milwaukee, Wisconsin.
More commonly known as 100 East Wisconsin Avenue.
LEGAL DESCRIPTION OF THE LAND ON WHICH
THE PARKING STRUCTURE IS LOCATED
That part of Lots 9, 10 and 11 in Block 9, Plat of Milwaukee, on the East side
of the river in the Northeast one-quarter of Section 29, Township 7 North,
Range 22 East, City of Milwaukee, County of Milwaukee, Wisconsin as described
as follows: Parcel A - The South 20 feet of Lot 11 containing 2,410 square
feet; Parcel B - All of Lots 9 and 10 excepting the South 20 feet of the North
49 feet of Lot 10 containing 12,026 square feet; Parcel C - The South 20 feet
of the North 49 feet of Lot 10 containing 2,407 square feet.
More commonly known as 720 North Water Street Parking Garage.
<PAGE> 32
EXHIBIT "B"
RULES AND REGULATIONS
1. The Landlord may refuse admission to the Building outside
of ordinary business hours to any person not known to the watchman in charge or
not properly identified, and may require all persons admitted to or leaving the
Building outside of ordinary business hours to register. Any person whose
presence in the Building at any time shall, in the judgment of the Landlord, be
prejudicial to the safety, character, reputation and interests of the Building
or its Tenants may be denied access to the Building or may be ejected
therefrom. In case of invasion, riot, public excitement or other commotion,
the Landlord may prevent all access to the Building during the continuance of
the same, by closing the doors or otherwise, for the safety of the Tenants, the
Building and protection of property in the Building. The Landlord may require
any person leaving the Building with any package or other object to exhibit a
pass from the Tenant from whose Premises the package or object is being
removed, but the establishment and enforcement of such requirement shall not
impose any responsibility on the Landlord for the protection of any Tenant
against the removal of property from the Premises of the Tenant. The Landlord
shall in no way be liable to any Tenant for damages or loss arising from the
admission, exclusion or ejection of any person to or from the Tenant's Premises
or the Building under the provisions of this Rule.
2. Landlord reserves the right to exclude or expel from the
Building any person who in the judgment of Landlord is intoxicated or under the
influence of liquor or drugs.
3. Tenants shall not do or permit anything to be done in
their Premises or bring or keep anything therein which will in any way obstruct
or interfere with the rights of other tenants, or do, or permit anything to be
done in their Premises which shall, in the judgment of the Landlord or its
manager, in any other way injure or annoy them, or conflict with the laws
relating to fire, or with the regulations of the fire department or with any
insurance policy upon the Building or any part thereof or any contents therein
or conflict with any of the rules and ordinances of the public building or
health authorities.
4. All electrical equipment used by Tenants shall be U.L.
approved. Nothing shall be done or permitted in Tenant's Premises, and nothing
shall be brought into or kept in the Premises which would impair or interfere
with any of the Building services or the proper and economic heating, cooling,
cleaning or other servicing of the Building or the Premises.
5. Tenants shall not install or operate any steam or gas
engine or boiler, or carry on any mechanical business, in the Building. The
use of oil, gas or inflammable liquids for heating, lighting or any other
purpose is expressly prohibited. Explosives or other articles deemed extra
hazardous shall not be brought into the Building. Tenants shall not use any
method of heating other than that supplied by the Landlord.
6. Tenants shall give Landlord prompt notice of all accidents
to or defects in air-conditioning equipment, plumbing, electric facilities or
any part or appurtenance of their Premises.
B-1
<PAGE> 33
7. Tenants shall use electric, gas and any other form of
energy only from such sources of supply as is furnished in the Building.
8. All deliveries to the Building for or by any Tenant are to
be made through the service entrance to the Building as designated by Landlord,
unless special permission is granted by Landlord for the use of other Building
entrances.
9. Furniture, equipment or supplies shall be moved in or out
of the Building only upon the elevator designated by Landlord and then only
during such hours and in such manner as may be prescribed by Landlord.
10. Should any Tenant desire to place in the Building any
unusually heavy equipment, including, but not limited to, large files, safes
and electronic data processing equipment, it shall first obtain written
approval of the Landlord to place such items within the Building, for the use
of the Building elevators, and for the proposed location in which such
equipment is to be installed. The Landlord shall have the power to prescribe
the weight and position of any equipment that may exceed the weight load limits
of the Building structure, and may further require, at the Tenant's expense,
the reinforcement of any flooring on which such equipment may be placed, and/or
to have an engineering study performed to determine such weight and position of
equipment, to determine added reinforcement required, and/or determine whether
or not such equipment can be safely placed within the Building.
11. Tenants shall not place additional locks or bolts of any
kind upon any of the doors of their Premises and no lock on any door therein
shall be changed or altered in any respect. Duplicate keys for Tenant's
Premises and toilet rooms (if applicable) shall be procured only from Landlord,
which may make a reasonable charge therefor. Upon the termination of a
Tenant's lease, all keys of the Premises and toilet rooms shall be delivered to
the Landlord.
12. Tenants shall not leave any refuse in the public hallways
or other areas of Building (excepting Tenant's own Premises) for disposal.
13. Landlord shall have the right to prohibit any advertising
by Tenants which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as a building or offices; upon written notice from
the Landlord, Tenant shall refrain from or discontinue such advertising.
14. If a Tenant employs laborers or others outside of the
Building, such Tenant shall not have its employees paid in the Building, but
shall arrange to pay their payrolls elsewhere. Tenants shall not advertise for
laborers, giving an address at the Building.
15. Bicycles or other vehicles shall not be permitted in the
offices, halls, corridors, lobbies and elevators of the Building, nor shall any
obstruction of sidewalks or entrances of the Building by such be permitted.
16. The sidewalks, entries, passages, elevators and
staircases shall not be obstructed or used by Tenants, their servants, agents
or visitors for any other purpose than ingress and egress to and from the
respective offices.
B-2
<PAGE> 34
17. Canvassing, soliciting and peddling in the Building is
prohibited and Tenants shall cooperate to prevent the same.
18. No animals, birds or pets (other than seeing-eye dogs) of
any kind shall be allowed in Tenant's Premises or Building.
19. The water closets, urinals, waste lines, vents or flues
of the Building shall not be used for any purpose other than those for which
they were constructed, and no rubbish, acids, vapors, newspapers or other such
substances of any kind shall be thrown into them. The expense caused by any
breakage, stoppage or damage resulting from a violation of this Rule by any
Tenant, its employees, visitors, guests or licensees, shall be paid by Tenant.
20. All decorating, carpentry work, or any labor required for
the installation of Tenant's equipment, furnishings or other property shall be
performed at Tenant's expense, subject to Landlord's prior written approval
and, by Landlord's employees or at Landlord's option and consent by persons or
contractors authorized in writing by Landlord. This shall apply to all work
including but not limited to, installation of telephone or telegraph equipment,
electrical devices and attachments, and all installations affecting floors,
walls, windows, doors, ceilings, equipment or any other physical feature of the
Building. None of this work shall be done by Tenant without Landlord's prior
written approval.
21. If any Tenant desires radio signal, communication, alarm
or other utility or service connection installed or changed, such work shall be
done at the expense of Tenant, with the prior written approval and under the
direction of Landlord. No wiring shall be installed in any part of the
Building without Landlord's approval and direction. Landlord reserves the
right to disconnect any radio signal or alarm system when, in Landlord's
opinion, such installation or apparatus interferes with the proper operation of
the Building or systems within the Building, or if it interferes with other
Tenant operations.
22. Except as permitted by Landlord, Tenants shall not mark
upon, paint signs upon, cut, drill into, drive nails or screws into, or in any
way deface the walls, ceilings, partitions or floors of their Premises or of
the Building and the repair cost of any defacement, damage or injury caused by
any Tenant, its agents or employees, shall be paid for by the Tenant.
23. All glass, lighting fixtures, locks and trimmings in or
upon the doors and windows of the Tenant's Premises shall be kept whole and
whenever any part thereof shall be broken through cause attributable to any
Tenant, its agents, guests or employees, the same shall immediately be replaced
or repaired by Landlord at Tenant's expense.
24. The cost of repairing any damage to the public portions
of the Building or the public facilities or to any facilities used in common
with other Tenants, caused by any Tenant or the employees, licensees, agents or
invitees of the Tenant, shall be paid by such Tenant.
25. Tenants shall not remove any carpet, or wall coverings,
window blinds, or window draperies in their Premises without the prior written
approval from Landlord.
B-3
<PAGE> 35
26. The sashes, sash doors, windows, side glass, glass floors
and any lights or skylights that reflect or admit light into the halls or other
places of Building shall not be covered or obstructed by Tenants without the
prior written approval from Landlord.
27. Tenant shall cooperate fully with the life safety plans
of the Building as established and administered by the Landlord, if any. This
includes participation by Tenant and employees of the Tenant in exit drills,
fire inspections, life safety orientations and other programs relating to fire
safety that may be promulgated by the Landlord.
B-4
<PAGE> 36
EXHIBIT "C"
WORK LETTER
100 EAST WISCONSIN AVENUE JOINT VENTURE ("Landlord") and SYSTEMS & PROGRAMMING
RESOURCES, INC. ("Tenant") are executing simultaneously with this Agreement an
Office Building Lease dated April 19, 1996 pertaining to certain space (the
"Premises") in 100 East Wisconsin Avenue, Milwaukee, Wisconsin.
In consideration of the mutual covenants herein contained,
Landlord and Tenant agree as follows:
1. TENANT'S PLANS AND SPECIFICATIONS:
A. Standard Work. Except to the extent otherwise provided in
Sections 1B and 1C Landlord agrees that, at its sole cost and expense, and
through its architects and engineers, Landlord will furnish all architectural,
mechanical and electrical engineering plans required for the performance of the
work (referred to as "Building Standard Work") described below, including
complete detailed plans and specifications for Tenant's partition layout,
reflected ceiling plan, electrical outlets and switches, telephone outlets and
room finish schedule for Building Standard finishes.
B. Nonstandard Work. It is understood and agreed that Tenant
may require work (referred to as "Building Nonstandard Work") different from or
in addition to said Building Standard Work. In such event, any additional
architectural, mechanical and electrical plans and specifications required
shall be furnished at Tenant's sole cost and expense by Landlord's architects
and engineers.
C. Interior Decoration. It is understood and agreed that any
interior decorating services and the costs of the related work such as
selection of wallpaint colors, and/or wallcoverings, fixtures or carpeting
other than Building Standard, and any or all other decorator items required by
Tenant in the performance of the work referred to above in 1A and 1B, shall be
at Tenant's sole cost and expense.
D. Plan Approval. It is understood and agreed that all plans
and specifications referred to in 1B and 1C are subject to the Landlord's
approval. Tenant also agrees that, when requested by Landlord's architects,
Tenant will furnish complete information respecting Tenant's requirements and
that complete plans, specifications and budgets will be prepared according to
the guidelines established in Section 2 below.
2. SPACE PLAN/CONSTRUCTION DOCUMENTATION:
A. Preliminary Planning. Tenant approved space plans have
been delivered to Landlord.
B. Construction Documentation. Landlord and Tenant have both
approved the construction documents. Landlord shall arrange to have Architect
submit ten (10) sets of construction documents to Landlord for contractor
pricing and submission to the Milwaukee Building Inspection Department for
issuance of a building permit. Upon issuance of a building permit, Landlord
shall then have seven (7) working days to obtain cost of construction.
C. Delays by Tenant. Landlord has allocated twenty-nine (29)
working days for the completion of the Building
C-1
<PAGE> 37
Standard work, and will have contractual agreements with the general contractor
to this end. Any delays or time extensions required due to Building
Nonstandard Work will be subject to the provisions of Section 6 below. Failure
by Tenant to comply with the time frames identified herein shall in no way
relieve Tenant from the previous established Lease Commencement Date.
3. BUILDING STANDARD WORK AT LANDLORD'S COST AND EXPENSE:
Landlord agrees, at its sole cost and expense, to furnish and
install all of the Building Standard Work, as set forth in the attached
Schedule A, limited to the quantities specified, as selected and specified by
Landlord, and as indicated on Tenant's final approved plans.
4. BUILDING NONSTANDARD WORK AT TENANT'S COST AND EXPENSE:
Provided that Tenant's plans and specifications are furnished
within the time frames provided in Section 2 above, the Landlord shall cause
the Tenant's Building Nonstandard Work to be installed. At the expense of
Tenant, Landlord shall supply, install and finish, at cost plus fifteen percent
(15%) for coordination by the Landlord, all items of the Building Nonstandard
Work. Prior to commencing any such work, Landlord shall have received from
Tenant the Expenditure Authorization as outlined in Section 2 above. If Tenant
fails to approve the Expenditure Authorization within the time frame as
specified, then same shall be deemed disapproved in all respects by Tenant, and
Landlord's contractors shall not proceed with such work.
Subsequent to Tenant's approval of the Expenditure
Authorization, the Landlord or its agent will submit a statement to the Tenant,
whereupon ninety percent (90%) of the amounts of such statement will be
immediately due and payable by Tenant to Landlord. Landlord shall then
commence construction work as authorized. The balance, together with any other
amount due to Landlord as a result of Tenant change orders, shall be billed
periodically as the work is completed, and Tenant agrees to pay Landlord within
fifteen (15) days of receipt of such invoice.
It is further understood that all finished work shall require
the installation of new materials equal in quality to that installed in other
parts of the Building.
5. COMPLETION AND RENTAL COMMENCEMENT DATE:
It is agreed that, notwithstanding that date provided in the
Lease for the commencement thereof, Tenant's obligation for the payment of rent
under the Lease shall not commence until Landlord shall have substantially
completed all work to be performed by Landlord as set forth in Section 3
hereof; provided, however, if Tenant's occupancy and use of the Premises shall
be delayed as a result of: (1) Tenant's failure to comply with the provisions
of Section 2; (2) Tenant's request for materials, finishes or installations of
other than Landlord's standard; (3) Tenant's changes in the approved drawings;
(4) the performance by a person, firm or corporation employed by the Tenant in
the completion of said work; or (5) any other delay chargeable to Tenant, its
agents, employees or independent contractors, then the commencement of the term
of the Lease and the payment of rent thereunder shall commence notwithstanding
any contrary provisions of the Lease, on the expressed commencement date as set
forth in Section 2 of the Lease. Landlord further agrees that, regardless of
whether the delay in completion of the Premises is caused by
C-2
<PAGE> 38
the Landlord or the Tenant, in the event the Premises is not substantially
completed on or before the commencement date set forth in Section 2 of the
Lease, Landlord shall lease temporary space in the Building (the "Temporary
Space") to Tenant until the Premises is substantially completed; provided,
however, in the event the delay in completion of the Premises is due to a
Tenant delay, Landlord shall only be required to provide the Tenant with the
Temporary Space for thirty (30) days after Tenant's occupancy of the Temporary
Space, and, in the event Tenant occupies the Temporary Space for more than such
thirty (30) day period, such event shall be considered and event of default
under Section 12.01 of the Lease. The lease of such Temporary Space shall be
on the same terms and conditions as set forth in this Lease except that the
monthly base rent for the Temporary Space shall be calculated as follows:
monthly base rent for the Temporary Space shall equal $10.00 multiplied by the
actual rentable square footage of the Temporary Space divided by 12. Tenant
shall be responsible to pay monthly base rent for any full or partial month
Tenant occupies the Temporary Space, and, Tenant shall be responsible for all
Operating Costs for the Temporary Space. Furthermore, Landlord agrees that, in
the event the Premises are not substantially completed on or before the
commencement date set forth in Section 2 of the Lease due to a delay caused by
Landlord and, as a direct result thereof, Tenant occupies the Temporary Space,
Landlord shall reimburse Tenant for the reasonable cost of moving Tenant from
the Temporary Space to the Premises (including, but not limited to, the cost of
telephone and computer cabling relocation).
6. CHANGES, ADDITIONS OR DELETIONS IN WORKING DRAWINGS:
If Tenant shall request any change, addition or alteration in
working drawings, subsequent to the approval of Landlord and Tenant, then
Tenant shall have such working drawings prepared, and shall promptly reimburse
Architect for the costs thereof. Upon completion of the revisions, Landlord
shall notify Tenant, in writing, of the estimated costs which will be
chargeable to the Tenant by reason of such change, addition or deletion.
Tenant shall, within three (3) working days, notify Landlord in writing whether
it desires to proceed with such change, addition or deletion, and, in the
absence of such written authorization, Landlord shall not be obligated to
continue work on Tenant's Premises, and Tenant shall be chargeable with any
delay in the completion of the Premises resulting therefrom, and Rent shall
commence to accrue as set forth in Paragraph 3 of the Lease.
C-3
<PAGE> 39
SCHEDULE A
TO
WORK LETTER
BUILDING STANDARD ALLOWANCES
<TABLE>
<CAPTION>
ITEMS TO BE PROVIDED BY TENANT UTILIZING BUILDING
ITEMS TO BE PROVIDED BY BUILDING OWNER: OWNER'S CONTRACTOR:
<S> <C>
Completed Corridors on Multi- All Building Standard Upgrades
Tenant Floors & Overages Not Necessarily
Ceramic Tile Toilet Rooms Limited to the List Provided
Computer Controlled Elevators Below
Building Standard Tenant Entry Special Fixtures, Furniture &
Graphics Equipment
Building Directory Bookcases, Counters & Shelves
Building Standard Tenant Upgraded Carpeting & Special
Finish Items (listed Floor Coverings
below) Upgrade & Additional Lighting
Demising (Slab to Slab) Partitions & Electrical Requirements
Plumbing, Private Restrooms &
Wet Bars
Special Sound Requirements
Paneling
</TABLE>
BUILDING STANDARD TENANT FINISH ITEMS
In addition to the items referenced above as being provided by the Landlord,
the following Building Standard Finish Items will be provided for the Tenant at
the Landlord's expense. The quantity of these items to be provided shall be
determined by the plans and specifications approved by Landlord pursuant to the
Work Letter:
A. FLOORS:
Floors leveled to specified tolerances designed to support a
live load of fifty (50) pounds per square foot.
B. PARTITIONS AND TRIM:
Steel stud and drywall interior partition with 2-1/2" vinyl
base.
C. ENTRY DOORS:
Double glass entrance doors as indicated on the approved
construction documents.
D. INTERIOR DOORS:
Interior door or doors complete with frame, trim and hardware.
E. CEILINGS:
Exposed 2' x 2' grid suspension system with acoustical ceiling
tiles.
F. LIGHTS & SWITCHES:
Recessed fluorescent parabolic light fixtures with initial
installation of the lamps and ballasts, and switches.
<PAGE> 40
G. ELECTRICAL OUTLETS:
Standard wall-mounted 120 volt duplex outlets.
H. TELEPHONE OUTLETS:
Standard wall-mounted outlets.
I. HEATING, COOLING AND VENTILATION:
Perimeter and interior zone grille diffuser cooling units
provided for an open floor plan. Perimeter heating distribution network as
described in plans and specifications approved by Landlord.
J. SPRINKLERS:
A fully sprinklered system installed in compliance with local
fire codes as described in plans and specifications approved by Landlord.
K. PAINTING AND CLEAN-UP:
Partitions and perimeter conditions painted with one primer
and one finish coat selected by Tenant from those available from Landlord, and
a clean-up of the entire Premises prior to Tenant occupancy.
L. FIRE PROTECTION:
Fire detection and fire warning systems shall be provided in
accordance with local fire codes.
M. WATER AND DRAINAGE:
Access to domestic cold water, drainage and ventilation
systems at a central location on the floor.
N. AUXILIARY CONDENSER SYSTEM:
Access to central auxiliary condenser water piping at a
central location on the floor.
O. CARPETING:
Thirty-six (36) ounces finished face weight, cut pile, in
colors selected by Tenant from Landlord's standard available material.
P. VINYL WALL COVERING:
Vinyl wall covering in reception area, executive offices,
conference rooms, interview room and one (1) wall in associate offices.
Q. GLASS CONFERENCE ROOM WALL:
Glass wall for conference room as indicated on approved
construction documents.
2
<PAGE> 1
EXHIBIT 10.9
SUBLEASE
This Sublease is made and entered into as of the ____ day of October,
1996, by and between GIS Information Systems, Inc., an Illinois corporation,
referred to herein as the "Sublessor", and SPR Chicago, Inc., an Illinois
corporation, referred to herein as the "Sublessee".
W I T N E S S E T H:
WHEREAS, Sublessor, as "Tenant", and LaSalle National Bank, not
personally but as Trustee under Trust Agreement number 107194, as "Landlord",
have heretofore entered into a certain Lease, dated June 10, 1987, as amended
by a certain Lease Amendment Agreement, dated as of August 1, 1990, between
Sublessor and The Aetna Casualty and Surety Company (Collectively, the "Master
Lease"), a copy of which Master Lease is attached hereto as Exhibit "A",
pursuant to which, among other things, Sublessor leased certain premises (the
"Master Leased Premises") on the first and second floors of the building
commonly known as 815 Commerce Drive, Oak Brook, Illinois (the "Building"), and
more fully described in the Master Lease; and
WHEREAS, the Landlord's interest in the Master Lease is now owned by
Plum Tree National, Ltd. (The "Master Landlord"); and
WHEREAS, Sublessor desires to sublease to Sublessee, and Sublessee
desires to sublease from Sublessor, a part of the Master Leased Premises
(referred to herein as the "Subleased Premises"), consisting of the areas
described in numbered paragraph 2 below;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sublessor and Sublessee agree as
follows:
1. DEFINED TERMS. Terms used in this Sublease as defined terms
and not otherwise defined herein, shall have the same meanings as in the Master
Lease.
2. SUBLEASED PREMISES.
(a) The Subleased Premises shall consist initially of the
area located on the first floor of the Building and designated "Space A" on the
drawing attached to this Sublease as Exhibit B, which Sublessor and Sublessee
agree, for all purposes of this Sublease, contains 4,000 square feet.
Sublessor shall deliver to Sublessee, and Sublessee shall accept from
Sublessor, possession of Space A on the later to occur of October 14, 1996 or
the day on which Sublessor receives the Master Landlord's written consent to
this Sublease (the "Commencement Date"). When the Commencement Date is
ascertainable, Sublessor and Sublessee shall enter into a side-letter agreement
confirming the actual date of the Commencement Date.
(b) Effective as of a date specified by at least 10 days
prior written notice from Sublessor to Sublessee, which date shall not be
earlier than April 1, 1997 or later than July 1, 1997 (the "Space B
Commencement Date"), Sublessor shall deliver to Sublessee, and Sublessee shall
accept from Sublessor, possession of the area designated as "Space B" on
Exhibit B hereto,
<PAGE> 2
consisting of the remainder of the space on the first floor of the Building
leased by Sublessor, and, thereafter, the Subleased Premises shall consist of
Space A and Space B. Sublessor and Sublessee agree that, for all purposes of
this Sublease, the Subleased Premises, from and after the Space B Commencement
date, shall contain 9,107 square feet. When the Space B Commencement Date is
ascertainable, Sublessor and Sublessee shall enter into a side letter agreement
confirming the actual date of the Space B Commencement Date. Sublessor agrees
to abate Base Rent (defined herein) at a rate of two times the per diem rate
for Base Rent for that portion of the Subleased Premises to be delivered on the
Space B Commencement Date for each day following July 1, 1997, until delivery
of possession of such space (such abatement being hereinafter referred to as
the "Space B Delivery Abatement"). The Space B Delivery Abatement shall be
applied immediately following the Space B Commencement Date.
(c) During the period beginning on the Commencement Date
and ending on the Space B Commencement Date (at which time the Subleased
Premises will consist of the entire first floor area leased by Sublessor),
Sublessee and Sublessee's employees and invitees shall have the right to use,
in common with Sublessor and Sublessor's employees and invitees and subject to
such reasonable rules and regulations governing the use thereof as Sublessor
may from time to time establish, which rules and regulations shall not
unreasonably interfere with Sublessee's use and enjoyment of the Subleased
Premises, Sublessor's first floor entrance and reception area and the kitchen
and conference room presently located within Space B. Sublessor and Sublessee
shall each indemnify and hold harmless the other against any loss, claim,
liability, cost or expense, including reasonable attorneys' fees and expenses,
arising out of the use or possession of the areas in Space B used in common by
Sublessor and Sublessee prior to the Space B Commencement Date.
3. DEMISE OF SUBLEASED PREMISES. Sublessor hereby subleases and
demises to Sublessee, and Sublessee hereby accepts from Sublessor, on the terms
and conditions set forth above and hereinafter, the Subleased Premises.
4. RENT.
(a) For each Lease Year (defined below) during the Term
of this Sublease, Sublessee shall pay to Sublessor, as rent for the Subleased
Premises an annual sum, determined as follows (the "Base Rent"):
During the first Lease Year: $11.00 multiplied by
the number of square
feet contained in the
Subleased Premises;
During the second Lease Year: $11.50 multiplied
by the number of
square feet contained
in the Subleased
Premises;
2
<PAGE> 3
During the third Lease Year: $12.00 multiplied by
the number of square
feet contained in the
Sublease Premises;
During the fourth Lease Year: $12.50 multiplied by
the nuber of square feet
contained in the
Subleased Premises;
During the fifth Lease Year: $13.00 multiplied by
the number of square
feet contained in the
Sublease Premises;
As used herein, the term "Lease Year" shall mean the period of
365 consecutive days beginning on the Commencement Date and ending on the day
before the first anniversary thereof, and each subsequent period of 365
consecutive days, except that the last Lease Year shall end on the last day of
the Term. Subject to the provisions of subparagraph 4(c) hereof, the Base Rent
shall be paid in equal monthly installments, in advance, beginning on the
Commencement Date and continuing on the first day of each calendar month during
the Term thereafter.
(b) The Base Rent and all other sums payable hereunder
(such other sums being referred to herein as "Additional Rent") shall be paid
to Sublessor without deduction, set off, prior notice or demand, except as
provided in paragraph 13(c) hereof, in lawful money of the United States of
America, at Sublessor's office at 815 Commerce Drive, Oak Brook, Illinois
60521, or at such other place as Sublessor may specify from time to time by
written notice to Sublessee.
(c) Sublessee shall pay the monthly installment of Base
Rent due for the first full calendar month of the Term to Sublessor
concurrently with execution and delivery of this Sublease. If the Commencement
Date should occur on a day other than the first day of a calendar month, or if
the last day of the Term should occur on a day other than the last day of a
calendar month, then, the Base Rent and Additional Rent payable for such
fractional month shall be prorated on a daily basis.
5. OPERATING COSTS.
(a) In addition to the Base Rent provided for in
paragraph 4 above, and in addition to any other Additional Rent payable by
Sublessee hereunder, Sublessee shall reimburse Sublessor for Sublessee's
Proportionate Share (as hereinafter defined) of the costs incurred by Sublessor
for Taxes and Operating Expenses payable to the Master Landlord, as provided in
the Master Lease (collectively "Base Expenses"), to the extent that such Base
Expenses exceed those payable by Sublessor in respect of the calendar year 1996
("Excess Expenses").
3
<PAGE> 4
(b) Sublessee's Proportionate Share shall equal the ratio
of the number of square feet contained within the Subleased Premises from time
to time to the number of square feet contained within the entire Master Leased
Premises, expressed as a percentage.
(c) Sublessee shall pay Sublessee's Proportionate Share
of Excess Expenses for each calendar year, or part thereof during the Term,
less the amount of any monthly estimated payments thereof made by Sublessee
pursuant to the requirements of subparagraph 5(d) below, to Sublessor within
30 days after receipt of Sublessor's statement thereof, which statement shall
include Sublessor's calculation of Sublessee's Proportionate Share of such
Excess Expenses, set forth in reasonable detail, a copy of the annual statement
of Taxes and Operating Expenses for such calendar year, as furnished to
Sublessor by the Master Landlord, and an accounting by Sublessor of the monthly
estimated payments of Excess Expenses for such calendar year received by
Sublessor.
(d) Sublessor shall have the right from time to time, but
not more frequently than once in any calendar year, to prepare reasonable
estimates of the Excess Expenses payable by Sublessee hereunder and to require,
by written notice to Sublessee, that Sublessee pay such estimated amounts to
Sublessor, in monthly installments, in advance, together with Sublessee's
payments of Base Rent. All such monthly estimated payments shall be credited
against the Excess Expenses payable by Sublessee for the calendar year to which
such monthly estimated payments pertain. In the event Sublessee's monthly
estimated payments of Excess Expenses for any calendar year are greater than
the Excess Expenses payable by Sublessee for such calendar year, Sublessee
shall be entitled to credit the overpayment against the monthly estimated
payments of Excess Expenses next coming due hereunder, or, if such overpayment
is of Excess Expenses for the calendar year in which the Term ends and no
further sums are due from Sublessee to Sublessor under this Sublease, Sublessor
shall refund such overpayment to Sublessee within 30 days after the time at
which the amount of the Excess Expenses payable by Sublessee for such final
calendar year has been determined.
6. ELECTRICITY. Sublessor has advised Sublessee that
Sublessor's first floor space is separately metered for electricity. Sublessee
shall be responsible for and shall pay to Sublessor from time to time within 10
days after receipt of Sublessor's statement thereof, Sublessee's Share (as
defined below) of the cost of electricity consumed within such first floor
space ("Electricity Expense"), as determined by the statements to Sublessor
from the public utility providing such electricity. During the period
beginning of the Commencement Date and ending on the Space B Commencement date,
Sublessee's Share of the Electricity Expense shall be forty-three and nine
tenths percent (43.9%), which, Sublessor, represents is the ratio of the number
of square feet within the Subleased Premises to the number of square feet
contained within the Sublessor's first floor space. In the event either
Sublessor or Sublessee shall use electricity in extraordinary amounts, the
parties shall make an equitable allocation based on such use. If no such
allocation can be agreed upon, then a final determination shall be made by a
representative of the public utility for electric service. From and after the
Space B Commencement Date, Sublessee shall be responsible for the entire
Electricity Expense and shall contract directly with the public utility for
electric service to the Subleased Premises.
4
<PAGE> 5
7. TERM. The term of this Sublease ("Term") shall begin on the
Commencement Date and shall end on September 30, 2002, unless sooner terminated
by reason of Sublessee's default or by reason of the exercise by Sublessor or
Sublessee of a termination option, as provided in paragraph 11 hereof.
8. CONDITION OF SUBLEASED PREMISES. Sublessee agrees to accept
the Subleased Premises in their "as is" condition, and Sublessee acknowledges
that Sublessor has not agreed and is under no obligation to make any repairs,
replacements or improvements to the Subleased Premises and that Sublessor has
made no representation or warranty concerning the condition of the subleased
premises or their suitability for Sublessee's proposed use.
9. USE. Sublessee shall use the Subleased Premises for the uses
permitted under the Master Lease (excluding the use referred to in the insert
on page 4-a of the Master Lease) and for no other purpose.
10. ALTERATIONS AND IMPROVEMENTS. Sublessee shall not make any
alterations or improvements to the Subleased Premises without the prior written
consent of Sublessor. Sublessor agrees that Sublessor will not withhold or
delay its consent to a proposed alteration or improvement unreasonably, but (i)
Sublessor may withhold Sublessor's consent to a particular alteration or
improvement notwithstanding that the Master Landlord has consented thereto, and
(ii) Sublessor may condition its consent to a particular alteration or
improvement upon (A) Master Landlord's consent thereto, as provided in the
Master Lease, and (B) Sublessee's agreement to remove such alteration or
improvement at the end of the Term and restore the Subleased Premises to their
condition prior to the construction of such alteration or improvement, all at
Sublessee's sole expense. Further, Sublessor may require that Sublessee
deliver to Sublessor a cash deposit or other security acceptable to Sublessor,
in an amount equal to the cost of any such removal and restoration, as
reasonably determined by Sublessor, estimated to exceed $5,000.00.
11. TERMINATION OPTIONS.
(a) Sublessee shall have a one time right (the "First
Termination Option") to terminate this Sublease, effective as of January 1,
2001, by delivering a written notice of such termination to Sublessor (the
"First Termination Notice") on or prior to July 1, 2000, accompanied by
Sublessee's payment to Sublessor in an amount equal to fifty percent (50%) of
the Base Rent payable for the period from January 1, 2001 through the end of
the Term (the "First Termination Fee"). In the event Sublessee serves the
First Termination Notice, as provided above, and delivers to Sublessor the
First Termination Fee, this Sublease shall terminate on December 31, 2000, and
Sublessee shall, on or before such date, vacate the Subleased Premises and
surrender possession thereof to Sublessor, in the manner and condition provided
in the Master Lease.
(b) In addition to the First Termination Option,
Sublessee shall have a one time right (the "Second Termination Option") to
terminate this Sublease, effective as of January 1, 2002, by delivering a
written notice of such termination to Sublessor (the "Second Termination
Notice")
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on or prior to July 1, 2001, accompanied by Sublessee's payment to Sublessor in
an amount equal to seventy-five percent (75%) of the Base Rent payable for the
period from January 1, 2002 through the end of the Term (the "Second
Termination Fee"). In the event Sublessee serves the Second Termination
Notice, as provided above, and delivers to Sublessor the Second Termination
Fee, this Sublease shall terminate on December 31, 2001, and Sublessee shall,
on or before such date, vacate the Subleased Premises and surrender possession
thereof to Sublessor, in the manner and condition provided in the Master Lease.
12. BROKERAGE FEES. Sublessee shall pay all brokerage fees
payable by reason of this Sublease to Strobeck Real Estate, which is
Sublessee's broker. Sublessor represents to Sublessee that Sublessor has
dealt with no broker or finder in connection with this Sublease, and Sublessee
represents to Sublessor that Sublessee has dealt with no broker or finder in
connection with this Sublease other than Strobeck Real Estate.
13. MASTER LEASE.
(a) This Sublease is subject to, and Sublessee accepts
subject to, all the terms, covenants, provisions, conditions and agreements
contained in the Master Lease and the matters, if any to which the Master Lease
is subject and subordinate. This Sublease shall also be subject to, and
Sublessee accepts subject to, any amendments and supplements to the Master
Lease made subsequent to this Sublease so long as any such amendments and
supplements shall not adversely affect Sublessee's quiet enjoyment of Subleased
Premises. Notwithstanding the preceding sentence to the contrary, no consent,
waiver, amendment, or other change by Master Landlord of Sublessor's
obligations and liabilities as tenant under the Master Lease shall reduce,
limit or expand Sublessee's obligations and liabilities to Sublessor hereunder
or diminish Sublessee's rights hereunder unless Sublessee, Sublessor and Master
Landlord shall have agreed in writing that such consent, waiver, amendment or
change shall be effective hereunder. Except as set forth in subparagraph (b)
below, the terms and conditions of the Master Lease are incorporated in this
Sublease as though fully set forth herein, and, except as set forth below,
Sublessee shall perform, observe and be bound by all of the terms and
conditions of the Master Lease to be performed and observed by the Tenant
thereunder, insofar as the same are applicable to the Subleased Premises;
Sublessor shall perform, observe and be bound by, or take commercially
reasonable measures to cause the Master Landlord to perform and observe, all of
the terms and conditions of the Master Lease to be performed or observed by the
Landlord thereunder, insofar as the same are applicable to the Subleased
Premises; Sublessee shall have, as to Sublessor, all of the rights and benefits
arising and accruing to the Tenant under the Master Lease; and Sublessor shall
have, as to Sublessee, all of the rights and benefits arising or accruing to
the Landlord under the Master Lease. Notwithstanding the foregoing, Sublessor
shall not be liable to Sublessee for performance or non-performance of the
obligations of Master Landlord under the Master Lease, and Sublessee shall look
solely to and hold solely responsible the Master Landlord for the performance
of such obligations. If Master Landlord shall default in the performance of
any of its obligations under the Master Lease with respect to the Subleased
Premises, Sublessee shall have the right to take such action in its own name
and, for that purpose and only to such extent, all of the rights of Sublessor
under the Master Lease hereby are conferred upon and assigned to Sublessee, and
Sublessee hereby is subrogated to such
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rights to the extent that the same shall apply to the Subleased Premises. If
and to the extent that any of Master Landlord's obligations under the Master
Lease are required to be performed only when or to the extent requested by
Sublessor (and are not otherwise covered by an agreement among Master Landlord,
Sublessor and Sublessee), Sublessor shall endorse and forward Sublessee's
requests therefor to Master Landlord or, upon Sublessee's written request in
each case, Sublessor shall permit Sublessee to submit such requests to Master
Landlord in Sublessor's name and Sublessor shall deliver to Sublessee such
documentation, including without limitation an irrevocable power-of-attorney
coupled with an interest, for such limited purpose, as shall be reasonably
necessary to effectuate such requests. In the event of conflict between any
provision of this Sublease and a provision of the Master Lease, this Sublease
shall, as between Sublessor and Sublessee, control.
(b) The following provisions of the Master Lease are not
incorporated herein and shall not apply to this Sublease:
(i) The description of the Premises, together
with references to components of the Master Lease Premises including,
without limitation, the Initial Office Space and the Computer Space;
(ii) The Term;
(iii) Sections 3 and 4, pertaining to Base Rent and
Additional Rent , but not pertaining to the definitions of Taxes and
Operating Expenses (including the exclusions thereto) or added
provisions granting tenant certain rights relating to the auditing of
books;
(iv) All provisions pertaining to construction of
improvements by the Landlord, including, without limitation, Exhibit B
and the attachment thereto;
(v) Section 7B, pertaining to billing for
electricity;
(vi) The second grammatical paragraph of page 9a;
(vii) Sections 11A and 11B, pertaining to
insurance;
(viii) Sections 26 and 27, pertaining to security
deposit and real estate brokers;
(ix) Page 11a;
(x) Addendum to Lease;
(xi) Lease Amendment Agreement;
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(xii) All exhibits and attachments related to any
of the foregoing inapplicable provisions.
(c) Sublessor and Sublessee agree, each with the other,
that neither will take or permit any action or fail to perform or observe any
obligation, which causes an event of default under the Master Lease and/or
causes the Master Lease to be terminated or forfeited, and each shall indemnify
the other and hold the other harmless from and against any and all claims,
demands, suits, costs, expenses, damages and liabilities, including reasonable
attorneys' fees, arising by reason of any act or omission on the part of the
indemnifying party which causes the Master Lease to be terminated or forfeited.
Sublessor shall, promptly upon receipt, deliver to Sublessee copies of all
notices of default under the Master Lease which have been delivered to
Sublessor. In the event that Sublessor defaults in any payment or performance
obligation contained in the Master Lease, Sublessee may, in addition to any
other remedies which Sublessee may have by reason of such default, but shall
not be obligated to, cure such default under the terms of the Master Lease, if
permitted so to cure by Master Landlord, and the amount of any payment made or
cost or expense to cure such default shall be treated as a sum of money
advanced by Sublessee to Sublessor and shall be repayable by Sublessor to
Sublessee within 30 days of demand. If said sum so advanced is not so paid
within said 30 day period, Sublessee shall have the right to deduct such amount
from any installment of Base Rent or other amounts next becoming due and
payable under this Sublease.
14. EVENTS OF DEFAULT.
(a) Each of the following shall constitute an event of
default by Sublessee under this Sublease and shall entitle Sublessor to
exercise any and all remedies available to the Master Landlord under the Master
Lease and/or available to Sublessor by operation of law:
(i) Sublessee shall fail to pay when due any
monthly installment of Base Rent or Excess Expenses, or shall fail to
pay when due any other sum payable hereunder, and such failure shall
continue for five days after delivery to Sublessee of Sublessor's
written notice thereof;
(ii) Sublessee shall fail to observe or perform
any other term or condition to be observed or performed by Sublessee
hereunder or under the Master Lease, and such failure shall continue
for 30 days after delivery to Sublessee of Sublessor's written notice
thereof, unless such failure of performance, by its nature, cannot be
cured within 30 days, in which event, such failure of performance
shall be deemed cured if Sublessee commences to cure the same within
such 30 day period and completes such cure as soon as reasonably
practicable; and
(iii) Sublessee shall file a petition in bankruptcy
or avail itself of any other state or federal law providing for the
relief of debtors.
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(b) In the event of a breach by Sublessor of any of the
covenants, agreements, terms or conditions which are contained herein,
Sublessee may exercise any remedies available to Sublessee herein, or any other
legal remedies available to Sublessee with respect to a default this Sublease
or any act, omission, negligence or willful misconduct of Sublessor or its
agents, servants, employees, officers, contractors and invitees, whether at law
or in equity, all such rights and remedies being cumulative and the exercise of
any one of which shall not exclude any other. Sublessee shall use reasonable
efforts to mitigate any damages it may suffer by reason of a default by
Sublessor hereunder.
15. CONSENT OF MASTER LANDLORD. Sublessee acknowledges that,
under the terms of the Master Lease, this Sublease requires the prior written
consent of the Master Landlord (the "Master Landlord's Consent"). Sublessor
agrees to use reasonable diligence to obtain Master Landlord's Consent,
promptly upon delivery to Sublessor of at least three counterparts of this
Sublease, duly executed by Sublessee. If Sublessor has not received Master
Landlord's Consent within 30 days after receipt of such executed counterparts
of this Sublease from Sublessee, either Sublessor or Sublessee shall have the
right, by written notice to the other party, to elect to terminate this
Sublease.
16. ASSIGNMENT AND SUBLETTING.
(a) Sublessee shall not mortgage, pledge, hypothecate or
otherwise encumber all or any part of its interest under this Sublease. In
addition, Sublessee shall not assign this Sublease or any of its rights
hereunder, or sublet all or any part of the Subleased Premises, or suffer or
permit the use or occupancy of all or any part of the Subleased Premises by any
party other than Sublessee, without in each instance requesting and obtaining
the prior written consent of Sublessor and Master Landlord.. Any request for
Sublessor's consent to any proposed assignment, subletting or use of the
Subleased Premises by a party other than Sublessee (each, a "Transfer") shall
be in writing, setting forth in reasonable detail the terms of the proposed
Transfer and including copies of the proposed assignment or sublease relating
thereto, as well as reasonable information concerning the identity, financial
strength and business of the proposed Assignee, Sublessee or other occupant of
the Subleased Premises. In addition, Sublessee shall furnish promptly any
further information concerning the proposed Transfer which Sublessor may
reasonably request.
(b) Sublessor agrees that it will not withhold or delay
unreasonably its consent to a proposed Transfer; provided, however, that
Sublessor may withhold its consent to any Transfer which (i) is not consented
to by the Master Landlord, if such Transfer, under the terms of the Master
Lease, requires the consent of the Master Landlord thereto, or which (ii) in
the reasonable judgment of Sublessor would cause Sublessor to be in breach of
the Master Lease. If Sublessor consents to any Transfer, Sublessee shall enter
into and effect such Transfer only upon terms and conditions consistent with
Sublessee's request for Sublessor's consent, the information furnished in
connection with such request and any conditions to Sublessor's consent imposed
by Sublessor, and Sublessee shall further enter
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into and cause the transferee to enter into any and all agreements prepared by
Sublessor or its attorneys, as may be appropriate to implement any amendment to
this Sublease required by such Transfer and/or to satisfy any of the conditions
to Sublessor's consent. No consent of Sublessor to any Transfer shall release
or be construed as releasing any obligation of Sublessee under this Sublease,
except if and to the extent such consent by Sublessor shall expressly release
or modify any such obligation. Sublessee shall pay to Sublessor on demand,
Sublessor's reasonable costs incurred in connection with each request by
Sublessee for consent to a Transfer, including the reasonable fees and expenses
of Sublessor's attorneys.
(c) Notwithstanding the foregoing to the contrary,
Sublessee may, without Sublessor's consent, assign, transfer or sublet its
entire interest in this Sublease, the leasehold estate created hereby and the
Subleased Premises to any of the following (each a "Permitted Transferee"), (i)
any successor to Sublessee resulting from a merger or consolidation with, of or
into Sublessee, (ii) any entity (including any parent) that controls Sublessee
or any entity (including any affiliate) that is under the common control of or
with Sublessee or is acquired by Sublessee, its parent or affiliate, or (iii)
any entity that acquires all or substantially all of the assets of Sublessee,
or that acquired a material portion of Sublessee's business; and provided,
further, the sale, transfer or exchange of Sublessee's stock or the stock of
any entity described in (i), (ii) or (iii), on a nationally recognized exchange
shall not be or be deemed to be an assignment or transfer or a subletting of
the sublessee's interest in this Sublease, the leasehold estate hereby created
or of the Subleased Premises.
17. EXPANSION OPTION.
(a) In the event Sublessor elects to offer for sublease
Sublessor's space located on the second floor of the Building, which, for all
purposes of this Sublease, Sublessor and Sublessee agree contains 15,954 square
feet (the "Second Floor Space"), Sublessee shall have an option, on the terms
and conditions set forth in this paragraph, to add the Second Floor Space to
the Subleased Premises, for a term coterminous with the Term of this Sublease.
Sublessor shall, prior to offering the Second Floor Space to others, notify
Sublessee of the availability of the Second Floor Space by a written notice
(the "Offer Notice"), delivered to Sublessee at least 120 days prior to the
date on which the Second Floor Space will be available for occupancy (the
"Second Floor Delivery Date"). Sublessor's Offer Notice shall set forth
Sublessor's reasonable, good faith estimate of the base rent and other economic
terms on which Sublessor could sublease the Second Floor Space to an unrelated
third party for a term equal to the then unexpired portion of the Term of this
Sublease and in the condition in which Sublessor is offering the Second Floor
Space (which the parties contemplate will be "as-is") (collectively, the
"Second Floor Terms").
(b) Provided that no event of default on the part of
Sublessee is then existing, and provided that no such event of default occurs
prior to the Second Floor Delivery Date, Sublessee shall have the right
exercisable by written notice ("Acceptance Notice") to Sublessor within five
business days after delivery of the Offer Notice, to elect to add the Second
Floor Space to the Subleased Premises for a Term commencing on the Second Floor
Delivery Date and ending on the last day of the Term of this Sublease. In the
event Sublessee serves an Acceptance Notice, Sublessee shall state therein
whether or not Sublessee accepts the Second Floor Terms set forth in
Sublessor's Offer Notice and, if Sublessee does not accept such terms, which of
such Second
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Floor Terms Sublessee does not accept and, as to each of such unacceptable
terms, an alternative, determined reasonably and in good faith, which would be
acceptable to Sublessee. In the event Sublessee accepts all of the Second
Floor Terms set forth in Sublessor's Offer Notice, the Second Floor Space
shall as of the Second Floor Delivery Date, become part of the Subleased
Premises and shall be subject to all the terms and conditions of this Sublease,
except as otherwise provided in the Second Floor Terms.
(c) In the event Sublessee does not accept the Second
Floor Terms, then Sublessor and Sublessee shall, for a period of five business
days after delivery to Sublessor of Sublessee's Acceptance Notice (the
"Negotiation Period"), negotiate with each other in good faith concerning the
Second Floor Terms which were not accepted by Sublessee. In the event that, at
the end of the Negotiation Period, Sublessor and Sublessee are unable to reach
agreement concerning the Second Floor Terms, Sublessee shall have the right, by
written notice to Sublessor within three business days after the end of the
Negotiation Period (the "Election Notice"), the elect either (i) to withdraw
Sublessee's Acceptance Notice or (ii) to have the Second Floor Terms determined
by binding arbitration, as provided herein. Failure of Sublessee to deliver
the Election Notice within such three business day period shall be deemed an
election by Sublessee to withdraw Sublessee's Acceptance Notice. In the event
Sublessee elects, as provided above, to have the Second Floor Terms determined
by binding arbitration, Sublessee's Acceptance Notice shall thereafter be
irrevocable, and the matters upon which Sublessor and Sublessee are unable to
agree shall be referred to an arbitrator selected by Sublessor and Sublessee,
or if Sublessor and Sublessee are unable to agree upon an arbitrator, an
arbitrator appointed by the Chicago, Illinois office of the American
Arbitration Association, whose decision as to such matters shall be final and
binding upon Sublessor and Sublessee. The arbitrator shall be a person with
at least 10 years' experience in commercial leasing in the Chicago, Illinois
western suburbs. The fees and expenses of the arbitrator shall be paid by
Sublessor and Sublessee in equal shares. Upon request by Sublessor, Sublessee
shall execute and deliver to Sublessor an appropriate amendment to this
Sublease, reflecting the addition of the Second Floor Space to the Subleased
Premises on terms established as set forth above in this paragraph.
(d) In the event Sublessee does not deliver an Acceptance
Notice with in the 120 day period provided in subparagraph (a) above, or in the
event Sublessee's Acceptance Notice is withdrawn or deemed withdrawn, Sublessee
shall have no further rights under this paragraph or with respect to the Second
Floor Space, and, thereafter, Sublessor shall be free to sublease the same to
any party upon such terms as Sublessor, in its sole discretion, may accept.
18. BUILT-IN OFFICE FURNITURE. Sublessor agrees to leave in
the Subleased Premises Sublessor's existing built-in cubicle furnishings,
consisting generally of work surface, overhead storage and pedestal
drawer/files. Sublessee shall have the right, at no cost to Sublessee to use
such furniture during the Term of this Sublease and any extension thereof to
which Sublessor and Sublessee may agree; however, such furniture shall remain
the property of Sublessor. Sublessee agrees that such furniture may remain
within the Subleased Premises at the time possession of the Subleased Premises
is delivered to Sublessee.
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19. INSURANCE.
(a) Sublessee shall maintain at its sole expense
throughout the Term the following types of insurance:
(i) comprehensive general public liability
insurance for bodily injury, death and damage to property of others,
including tenant's legal liability for damage to the Subleased
Premises and blanket contractual liability, with respect to all
business conducted in, at, upon or from the Subleased Premises and the
use and occupancy thereof including the activities, operations and
work conducted or performed by Sublessee, by any other person on
behalf of the Sublessee, by those for whom Sublessee is in law
responsible and by any other person on the Subleased Premises. The
aforesaid policy or policies shall be written with inclusive limits of
not less than $3,000,000 for any one accident or occurrence or such
higher limits as the Sublessor shall reasonably require from time to
time;
(ii) all risk insurance including extended
coverage endorsement for the risks of water escape and leakage from
fire protective devices and such additional perils as the Sublessor
shall reasonably require from time to time in respect of Sublessee's
fixtures, Sublessee's furnishings, the Sublessee's equipment, and the
Subleased Premises. The aforesaid policy or policies shall be written
with insurance limits of not less than the full replacement cost
thereof, on a stated amount basis, subject only to such deductibles
and exclusions as Sublessor may approve; and
(iii) such other insurance as Sublessor may
reasonably require having regard to the risks which are customarily
insured against by prudent tenants of similar leased premises.
(b) All policies of physical damage insurance required to
be maintained by Sublessee on property covered under this Paragraph shall be
taken out with insurers reasonably acceptable to the Sublessor, shall be in
form and on terms and conditions satisfactory from time to time to the
Sublessor, shall name as additional insured (i) Sublessor, (ii) the Master
Landlord, and (iii) such other persons as Sublessor may from time to time
designate, and shall be non-contributing with, and shall apply only as primary
and not as excess to, any other insurance available to the Sublessor.
(c) All policies of liability insurance required to be
maintained by Sublessee shall be taken out with insurers reasonably acceptable
to Sublessor and shall be in a form and on terms and conditions reasonably
acceptable to Sublessor and shall include Sublessor as additional insured and
in addition shall contain cross-liability and severability clauses in respect
of claims by Sublessee or other persons or both as if Sublessor was separately
insured. If both Sublessor and Sublessee have claims to be indemnified under
any such liability insurance, the indemnity shall be first applied to the
settlement of the claim of Sublessor and the balance to the settlement of the
claim of Sublessee.
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(d) All policies of insurance required to be maintained
by Sublessee shall contain provisions prohibiting the insurer from materially
altering to the detriment of Sublessor or canceling the coverage or allowing
it to lapse without first giving Sublessor at least 30 days' prior notice
thereof.
(e) Sublessee shall deliver to Sublessor from time to
time copies of current policies or certificates or other proof as may be
required by Sublessor to establish Sublessee's insurance coverage in effect
from time to time and the payment of premiums thereon. If Sublessee fails to
insure or pay premiums or to deliver satisfactory proof thereof as so required,
Sublessor may but shall not be obliged to obtain such insurance on behalf of
Sublessee and Sublessee shall pay to Sublessor forthwith on demand Sublessor's
cost of obtaining such insurance.
(f) Each of Sublessor and Sublessee hereby waives any and
every claim for recovery from the other for any and all loss or damage to the
Building or Subleased Premises or to the contents thereof, whether such loss
or damage is due to the negligence of Sublessor or Sublessee or its respective
agents or employees, to the extent that the amount of such loss or damage is
recovered under its policies of insurance; provided, however, that the
foregoing waiver shall not be operative in any case where the effect thereof is
to invalidate any insurance coverage of the waiver party or increase the cost
of such insurance coverage; provided further, however, that Sublessor and
Sublessee each agree to give notice of the terms of this mutual waiver to each
insurance company which has issued, or in the future may issue, policies of
physical damage to it, and to have said insurance policies properly endorsed,
if necessary, to prevent the invalidation of said insurance coverage by reason
of said waiver.
20. LIMITATION OF LIABILITIES; INDEMNIFICATION.
(a) Subject to the provisions of paragraph 13(c) hereof,
and excluding any of the following arising out of Sublessor's negligence,
willful misconduct or breach of Sublessor's obligations under this Sublease, no
claim for damages or compensation or abatement of rent or otherwise shall be
made by Sublessee by reason of inconvenience, nuisance or discomfort arising
from the diminution in the quality or quantity or interruption or cessation of
or failure in the supply of any utilities, services or systems serving the
Subleased Premises or from the repair, renovation or rebuilding of any portion
of the Building or basic systems thereof nor shall the same give rise to a
claim in Sublessee's favor that such interruption, cessation, failure, repair,
renovation or rebuilding constitutes actual or constructive, total or partial
eviction from the Subleased Premises.
(b) To the extent not prohibited by law, and excluding
the negligence and willful misconduct of Sublessor, and Sublessor's employees,
agents, servants, contractors, or invitees, Sublessor shall not be liable or in
any way responsible for the death of or injury to Sublessee or others, or for
the loss of or damage to property (including books, records, files, money,
securities, negotiable instruments, papers or other valuables) of Sublessee or
others, or for any indirect or consequential or economic loss, injury or damage
(including business losses or damages for personal discomfort or inconvenience)
of Sublessee or others arising from or out of any occurrence or situation in,
upon, at or relating to the Subleased Premises and/or the Building, and without
limiting the generality of the foregoing, Sublessor shall not be
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liable or in any way responsible for any death, injury, loss or damage to
persons or property resulting from electricity, water, rain, flood, snow, ice
or leaks from any part of the Subleased Premises or the Building or from the
pipes, sprinklers, appliances, plumbing works, roof, windows or subsurface of
any floor or ceiling of the Building; or caused by other tenants, occupants or
persons in the Subleased Premises or other premises in the Building or the
public; or caused by operations in the construction of any private, public or
quasi-public work; or against which Sublessee is required to insure pursuant to
this Sublease.
(c) Sublessee shall and hereby does indemnify the
Sublessor, its shareholders, directors, officers, agents and employees,
contractors, licensees or concessionaires, and save it and each of them
harmless from and against any and all claims, actions, damages, liabilities,
loss, costs and expenses, including legal expenses, whatsoever including,
without limitation, those in respect of loss of life, personal injury in, upon
or at the Subleased Premises, the occupancy or use of the Subleased Premises,
signs of Sublessee, or any act or omission of, or work done by or on behalf of,
or breach of this Sublease by, Sublessee, its servants, agents, employees,
contractors, sub-tenants, licensees, concessionaires or other occupants of the
Subleased Premises, or any person for whom Sublessee is responsible at law,
including, without limitation, Sublessee's customers or any person having
business with Sublessee. This indemnification shall survive the expiration of
the Term by lapse of time or otherwise.
(d) Sublessor shall and hereby does indemnify the
Sublessee, its shareholders, directors, officers, agents and employees,
contractors, licensees or concessionaires, and save it and each of them
harmless from and against any and all claims, actions, damages, liabilities,
loss, costs and expenses, including legal expenses, whatsoever including,
without limitation, those in respect of loss of life, personal situation in,
upon or at the Subleased Premises, the occupancy or use of the Building by
Sublessor, signs of Sublessor, or any act or omission of, or work done by or on
behalf of, or breach of this Sublease by, Sublessor, its servants, agents,
employees, contractors, sub-tenants, licensees, concessionaires or other
occupants of the Subleased Premises, or any person for whom Sublessor is
responsible at law, including, without limitation, Sublessor's customers or any
person having business with Sublessor. This indemnification shall survive the
expiration of the Term by lapse of time or otherwise.
21. NOTICES. All notices or demands required or permitted under
this Sublease shall be in writing and shall be addressed as set forth herein
below or to such other address as either party may, by written notice to the
other, specify in writing from time to time. All notices shall be deemed
served upon delivery, if hand-delivered, or 24 hours after delivery to Federal
Express or another recognized overnight courier with charges prepaid, if served
by overnight courier, or three business days after deposited in the United
States mail, with postage pre-paid, registered or certified mail, return
receipt requested, if served by mail. Notices hereunder may also be served by
facsimile, with a copy sent by United States mail postage prepaid, and shall be
deemed served when received by the recipient's facsimile machine.
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Notices to Sublessor shall be addressed as follows:
GIS Information Systems, Inc.
815 Commerce Drive
Oak Brook, Illinois 60521
Attention: President
Facsimile (630) 574-3704
Notices to Sublessee shall be addressed as follows:
SPR Chicago, Inc.
2015 Spring Road, Suite 7500
Oak Brook, Illinois 60521
Attention: President
Facsimile: (630) 990-2062
With a copy to:
Donald E. Figliulo, Esq.
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, Illinois 60606
22. QUIET ENJOYMENT. Sublessor covenants and agreed with
Sublessee that upon Sublessee paying the Base Rent and all other amounts due
and payable under this Sublease and observing and performing the terms,
covenants and conditions on Sublessee's part to be observed and performed under
this Sublease, Sublessor shall not do or cause to be done any act (whether of
omission or commission) which would interfere with Sublessee's right peaceably
and quietly to enjoy the Subleased Premises hereby dismissed.
23. PARKING. Sublessor agrees to provide Sublessee with exclusive
assigned parking spaces at the ratio of one parking space per 1,000 square feet
of rentable area contained in the Subleased Premises from time to time, on the
parking lot of the Building, for the term of this Sublease, or any renewal
thereof, without charge, as agreed upon by Sublessor and Sublessee, with
one-half of said spaces being covered and one-half uncovered. Sublessor and
Sublessee agree that, at such time as the Subleased Premises consist of
Sublessor's entire first floor space in the Building, the number of parking
spaces which Sublessor is obligated to provide hereunder shall consist of five
uncovered spaces and four covered spaces.
24. GENERAL PROVISIONS.
(a) The waiver by either party hereto of a breach of any
covenant, obligation or condition set forth herein to be performed or observed
by the other party hereto shall not be deemed to be a waiver of any subsequent
breach of the same or of any other covenant, obligation or condition of this
Sublease to be performed or observed by such party.
15
<PAGE> 16
(b) This Sublease shall be governed by and construed in
accordance with the laws of the State of Illinois.
(c) If any term, covenant or condition of this Sublease
or the application thereof to any person or circumstance shall be held to be or
rendered invalid, unenforceable or illegal, then such term, covenant or
condition shall be considered separate and severable from the remainder of this
Sublease, shall not affect, impair or invalidate the remainder of this
Sublease, and shall continue to be applicable to and enforceable to the fullest
extent permitted by law against any person or circumstances other than those as
to which it has been held or rendered invalid, unenforceable or illegal.
(d) This Sublease may be executed in one or more
counterparts, each of which shall constitute an original but all of which
together shall constitute one and the same instrument.
(e) This Sublease sets forth all the covenants, promises,
agreements, conditions or understandings between the parties hereto concerning
the Subleased Premises and the subject matter of this Sublease. No alteration,
amendment or change of, or addition to this Sublease shall be binding upon the
parties hereto unless in writing and signed by Sublessor and Sublessee.
(f) The captions and paragraph numbers appearing in this
Sublease are inserted only as a matter of convenience and in no way define,
limit, construe or describe the scope or intent of any of the provisions hereof
nor in any way affect this Sublease.
(g) The words "hereof," "herein," "hereunder" and similar
expressions used in any provision of this Sublease relate to the whole of this
Sublease and not to such provision alone, unless otherwise expressly provided,
and whenever the singular number of a gender is used herein the same shall be
construed as including the plural and the masculine, feminine and neuter
respectively where the fact or context so requires.
(h) Time is of the essence of this Sublease and of every
part hereof.
(i) Each party to this Sublease represents and warrants
to the other party hereto that the execution, delivery and performance of this
Sublease by the representing and warranting party has been authorized by all
necessary corporate action of such party and that the officer or officers
executing this Sublease on behalf of such party have full power and authority
to do so and to bind such party hereto.
(j) Sublessor represents and warrants that as of the date
hereof:
(i) the Master Lease is un-modified (except as
set forth in Exhibit A hereto) and in full force and effect;
16
<PAGE> 17
(ii) Sublessor has no knowledge that Master
Landlord is in default under the Master Lease;
(iii) Sublessor is the owner of the entire Tenant's
interest under the Master Lease, subject to no claim, lien, charge or
encumbrance;
(iv) Sublessor has paid all Base Rent, Rent
Adjustments and Rent Adjustment Deposits due and owing under the
Master Lease through October 31, 1996;
(v) Sublessor has received no notice, and has no
knowledge of, any default by Sublessor under the Master Lease and to
the knowledge of Sublessor no event has occurred which through the
passage of time or otherwise would result in a default by Sublessor
under the Master Leases or, to the knowledge of Sublessor, would
result in a default by Master Landlord under the Master Lease;
(vi) Except with respect to the consent of Master
Landlord required under the Master Lease, Sublessor has full right and
authority to sublet the Subleased Premises to Sublessee and to enter
into this Sublease;
(vii) To Sublessor's best actual knowledge the
Subleased Premises are free of asbestos containing materials; and
(viii) Sublessor has received no notice of any
violations of the Americans with Disabilities Act ("ADA") with respect
to the Subleased Premises, and to the best of Sublessor's actual
knowledge, the Subleased Premises are in compliance with the ADA.
As used in this subparagraph 24(j), references to Sublessor's
knowledge and phrases of similar import shall mean and be limited to the actual
knowledge, without investigation, of Michael J. Geisen, Sublessor's Executive
Vice President.
(k) The warranties and representations contained in subparagraphs
(j) (i) through (x) above shall be effective as of the Commencement Date and
the Space B Commencement Date as if such representations and warranties were
made on said Commencement Date and Space B Commencement Date.
(l) In the event this Sublease, and Sublessee's right of
possession under this Sublease, are terminated by reason of a termination of
the Master Lease (other than a termination of the Master Lease resulting from a
default by Sublessee in its observance or compliance with the terms of the
Master Lease as they apply to the Subleased Premises), all future rental and
other obligations of Sublessee under this Sublease shall terminate, except to
the extent of obligations which expressly survive termination pursuant to the
terms of this Sublease or the Master Lease, to the extent incorporated herein.
17
<PAGE> 18
IN WITNESS WHEREOF, Sublessor and Sublessee have duly executed this
Sublease as of the day and year first above written.
SUBLESSOR:
GIS Information Systems,
Inc., an Illinois corporation
By: /s/ [Signature]
-------------------------
Its:
-----------------------
SUBLESSEE:
SPR Chicago, Inc.
an Illinois corporation
By: /s/ [Signature]
-------------------------
Its:
------------------------
18
<PAGE> 19
EXHIBIT A
Master Lease
<PAGE> 20
LEASE
Between
GIS INFORMATION SYSTEMS, INC.
Tenant
and
LASALLE NATIONAL BANK, NOT PERSONALLY
BUT AS TRUSTEE U/T/A #107194, AND
815 COMMERCE DRIVE REIP
for
815 Commerce Drive Oak Brook, Illinois
Building
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. TERM.............................................................................. 1
2. POSSESSION........................................................................ 1
3. BASE RENT......................................................................... 1
4. ADDITIONAL RENT................................................................... 2
A. Definitions................................................................... 2
B. Expense Adjustment............................................................ 2
C. Adjustment for Services Not Rendered by Landlord.............................. 3
D. Consumer Price Index Adjustment............................................... 3
5. USE OF PREMISES................................................................... 4
6. CONDITION OF PREMISES............................................................. 4
7. SERVICES.......................................................................... 4
A. List of Services.............................................................. 4
B. Billing for Electricity....................................................... 4
C. Interruption of Services...................................................... 5
D. Charges for Services.......................................................... 5
8. REPAIRS........................................................................... 5
9. ADDITIONS AND ALTERATIONS......................................................... 5
10. COVENANT AGAINST LIENS............................................................ 5
11. INSURANCE......................................................................... 6
A. Waiver of Subrogation......................................................... 6
B. Coverage...................................................................... 6
C. Avoid Action Increasing Rates................................................. 6
12. FIRE OR CASUALTY.................................................................. 6
13. WAIVER OF CLAIMS - IDEMNIFICATION................................................. 7
14. NONWAIVER......................................................................... 7
15. CONDEMNATION...................................................................... 7
16. ASSIGNMENT AND SUBLETTING......................................................... 7
17. SURRENDER OF POSSESSION........................................................... 8
18. HOLDING OVER...................................................................... 8
19. ESTOPPEL CERTIFICATE.............................................................. 9
20. SUBORDINATION..................................................................... 9
21. CERTAIN RIGHTS RESERVED BY LANDLORD............................................... 9
22. RULES AND REGULATIONS............................................................. 10
23. LANDLORD'S REMEDIES............................................................... 10
24. EXPENSES OF ENFORCEMENT........................................................... 10
25. COVENANT OF QUIET ENJOYMENT....................................................... 11
26. SECURITY DEPOSIT.................................................................. 11
27. REAL ESTATE BROKER................................................................ 11
28. MISCELLANEOUS..................................................................... 11
A. Rights Cumulative............................................................. 11
B. Interest...................................................................... 11
C. Terms......................................................................... 12
D. Binding Effect................................................................ 12
E. Lease Contains All Terms...................................................... 12
F. Delivery For Examination...................................................... 12
G. No Air Rights................................................................. 12
H. Modification of Lease......................................................... 12
I. Substitution of Other Premises................................................ 12
J. Transfer of Landlord's Interest............................................... 12
K. Landlord's Title.............................................................. 12
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
L. Prohibition Against Recording................................................. 12
M. Captions...................................................................... 12
N. Covenants and Conditions...................................................... 12
O. Only Landlord/Tenant Relationship............................................. 12
P. Application of Payments....................................................... 13
Q. Definition of "Landlord"...................................................... 13
29. NOTICES........................................................................... 13
30. LIMITATION ON LANDLORD'S LIABILITY................................................ 13
Exhibit A -- Plan of Premises
Exhibit B -- Work Letter
Attachment A -- To Work Letter
Exhibit C -- Estoppel Statement
Exhibit D -- Rules & Regulations
Exhibit E -- Parking Plan
Exhibit F -- Air Conditioning Specifications
Exhibit G -- Memorandum for Recording
Exhibit A-A -- Contract of Purchase and Sale
Exhibit A-B -- Plans and Drawings, Initial Computer Space
Exhibit A-C -- Axelrod Unit Costs
Exhibit A-D -- Plans and Drawings, Initial Office Space
</TABLE>
<PAGE> 23
815 COMMERCE DRIVE
OAK BROOK, ILLINOIS
AGREEMENT OF LEASE made as of this 10th day of June, 1987 (Hereinafter
referred to as the "Lease") between LaSalle National Bank Co., not personally,
but as trustee U/T/A #107194 and 815 Commerce Drive REIP, an Illinois limited
partnership, a beneficiary of said trust, jointly and severally referred to as
"Landlord", GIS Information Systems, Inc., an Illinois corporation whose present
address is 640 N. LaSalle Street, Chicago, Illinois 60610 (hereinafter referred
to as "Tenant"):
WITNESSETH:
Landlord hereby leases to Tenant, and Tenant hereby accepts, the premises
(hereinafter referred to as the "Premises") designated on the plan attached
hereto as Exhibit A and commonly described as approximately 4513 square feet of
rentable area of office space (hereinafter "Initial Office Space") and
approximately 441 square feet of rentable area of computer area (hereinafter
"Initial Computer Space"), both on the second floor. In the building known as
815 Commerce Drive (thereinafter referred to as the "Building"), all in the
(Village) of (Oak Brook, hereinafter referred to, together with all present and
future easements, additions, improvements and other rights appurtenant thereto,
as the "Land"), subject to the covenants, terms, provisions and conditions of
this Lease.
In consideration thereof, Landlord and Tenant covenant and agree as
follows:
1. TERM.
The term of this Lease (hereinafter referred to as the "Term") shall be for
fifteen (15) years and no months commencing on the 1st day of September 1987
(hereinafter referred to as the "Commencement Date") and ending on the 31st day
of August 2002 (hereinafter referred to as the "termination Date"), unless
sooner terminated as provided herein.
2. POSSESSION.
(a) In the event the Premises shall not be completed and ready for
occupancy on the Commencement Date or in the event Landlord is unable to deliver
possession on such date by reason of the holding over or retention of possession
by any tenant or occupant, this Lease shall nevertheless continue in force and
effect, but Rent (as hereinafter defined) shall abate until the Premises are
ready for occupancy or until the Landlord is able to deliver possession, as the
case may be, and Landlord shall have no other liability whatsoever on account
hereof; provided, however, there shall be no abatement of Rent if the Premises
are not ready for occupancy because of the failure to complete the installation
of special equipment, fixtures or materials ordered by Tenant, or because of any
delays resulting from Tenant's failure to promptly submit plans in accordance
with the Work Letter attached hereto as Exhibit B or resulting from changes or
additions to Tenant's plans after the initial submission thereof if changes
during construction do, in fact, cause a delay or impede construction. The
Premises shall not be deemed incomplete or not ready for occupancy if only
insubstantial details of construction, decoration or mechanical adjustments
remain to be done. The determination of Landlord's architect or interior space
planner for the Building shall be final or conclusive on Tenant as to whether
the Premises are completed and ready for occupancy, subject to punchlists or
latent defects, that Tenants shall have the right to engage its own architect
and in case of a dispute.
(b) If Tenant shall take possession of the Premises or any part thereof
prior to the Commencement Date; all of the covenants and conditions of this
Lease shall be binding upon the parties hereto with respect to such whole or
part of the Premises as if the Commencement Date had been fixed as the date when
Tenant took possession of such whole or part of the Premises.
(c) Under no circumstances shall the occurrence of any of the events
described in this Paragraph 2 be deemed to accelerate or defer the Termination
Date.
(d) Notwithstanding the contents of this Section 2., Tenant shall have the
right, immediately after execution of this Lease by both Landlord and Tenant,
and prior to the Commencement Date, to take possession of its Initial Computer
Space. Landlord also agrees to commence demolition in the Initial Office Space
upon execution of this Lease by Landlord and Tenant and to use its best efforts
to complete
2
<PAGE> 24
construction in said area by July 15, 1987, as extended by any delay caused by
Tenant. If Landlord fails to complete the required demolition and reconstruction
by that date, Landlord agrees to pay Tenant the sum of $10,000.00 as penalty
therefor. Landlord will continue said construction to its completion, in any
case.
Rent shall not be payable or owed by Tenant for areas so occupied, but
Additional Rent, as hereinafter defined, shall be owed and payable for said
areas, for the period of beginning with the date of occupancy through August 31,
1987, for Landlord-supplied Building services provided to Tenant, including
electricity, after-hours heating, ventilating, and air-conditioning (pursuant to
Section 7.A.(i) of this Lease), janitor services, if utilized, and additional
security required by Tenant and beyond the scope of security otherwise provided
the Building by Landlord.
If the additional chiller and associated air conditioning installation
described in Section 7.A.(i) are not completed by July 15, 1987, Landlord
nevertheless covenants and agrees that it will provide for that interim period
air conditioning and ventilation from the existing Building system for the
Initial Office Space at a comfort level commensurate with that described in
Section 7.A.(i).
3. BASE RENT.
Tenant shall pay to LaSalle Mortgage & Realty Co., Inc. Landlord's agent at
2301 W. 22nd Street, Oak Brook, Illinois, or at such other place as Landlord may
from time to time designate in writing, in coin or currency which, at the time
of payment, is legal tender for private or public debts in the United States of
America, rent at the annual rate of
(See Addendum A-5.) DOLLARS
($
- ------------------) per annum (hereinafter referred to as the "Base Rent") in
equal monthly installments of
(See Addendum A-5.) DOLLARS
the opinion of Tenant's architect will prevail as to whether Premises are
completed and ready for occupancy, subject to punchlists or latent defects, as
to the Initial Office Space only, and as to the storage room in the Initial
Computer Space.
($
- ------------------) each in advance on or before the first day of each and every
month during the Term, without any set-off or deduction whatsoever, except that
Tenant shall pay the first full monthly installment at the time of execution of
this Lease, which installment shall be applied to the Base Rent for the
twentieth (20th) month of the Lease Term. If the Term commences other than on
the first day of a month or ends other than on the last day of the month, the
Rent for such month shall be prorated. The prorated Rent for the portion of the
month in which the Term commences shall be paid on the first day of the first
full-month during the Term.
4. ADDITIONAL RENT.
In addition to paying the Base Rent specified in Section 3 hereof, Tenant
shall pay as "Additional Rent" the amounts determined as hereinafter set forth.
The Base Rent and the Additional Rent are sometimes herein collectively referred
to as the "Rent". All amounts due under this Section as Additional Rent shall be
payable for the same periods and in the same manner, time and place as the Base
Rent. Without limitation on other obligations of Tenant which shall survive the
expiration of the Term, the obligations of Tenant to pay the Additional Rent
provided for in this Section 4 shall survive the expiration of the Term. For any
partial Calendar Year, Tenant shall be obligated to pay only a pro rata share of
the Additional Rent, based on the number of the days of the Term falling within
such Calendar Year.
A. DEFINITIONS. As used in this Section 4, the terms:
(i) "Calendar Year" shall mean each calendar year in which any part of the
Term falls, through and including the year in which the Term expires:
(ii) "Tenant's Proportionate Share" shall mean 25.245%, being the
percentage calculated by dividing 63,196 (being the total rentable area of the
Building) into the rentable area contained in the Premises, rentable area to be
determined by Landlord on a uniform basis for the tenants of the Building.
Landlord certifies that the rentable area of the Building and the Premises are
accurate as stated.
3
<PAGE> 25
(iii) "Taxes" shall mean all real estate taxes and assessments, special or
otherwise, levied or assessed upon or with respect to the Land and/or Building
and ad valorem taxes for any personal property used in connection therewith.
Should the State of Illinois, or any political subdivision thereof, or any other
governmental authority having jurisdiction over the Land and/or the Building,
(a) impose a tax, assessment, charge or fee, or increase a then existing, tax,
assessment, charge or fee, which Landlord shall be required to pay, either by
way of substitution for such real estate taxes and ad valorem personal property
taxes, or in addition to such real estate taxes and ad valorem personal property
taxes, or (b) impose an income or franchise tax or a tax on rents in
substitution for or as a supplement to a tax levied against the Land and/or the
Building and/or the personal property used in connection with the Land or
Building, all such taxes, assessments, fees or charges (hereinafter defined as
"in lieu taxes") shall be deemed to constitute Taxes hereunder. "Taxes" shall
also include all reasonable fees and costs incurred by Landlord in seeking to
obtain a reduction of, or a limit on the increase in, any Taxes, regardless of
whether any reduction or limitation is obtained. Except as hereinabove provided
with regard to "in lieu taxes". Taxes shall not include any inheritance, estate,
succession, transfer, gift, franchise, net income or capital stock tax; any
interest or penalties owed or paid by Landlord by reason of late payment of
Taxes; and
(iv) "Operating Expenses" shall mean all expenses, costs and disbursements
(other than Taxes) of every kind and nature (determined for the applicable
Calendar Year on an accrual basis) paid or incurred by Landlord or Landlord's
beneficiaries in connection with the ownership, management, operation and repair
of the Land and Building, except the following:
(I) Costs of alterations of any tenant's premises;
(II) Principal or interest payments on loans secured by mortgages or trust
deeds on the Building and/or on the Land;
(III) Costs of capital improvements, except that Operating Expenses shall
include (a) the cost during the Term, as reasonably amortized by Landlord in
accordance with sound management and accounting principles with interest at the
rate of 10% on the unamortized amount, of any capital improvement completed
after the Base Year which reduces any component cost included within Operating
Expenses; and (b) the cost of any capital improvements which are necessary to
keep the Land and Building in compliance with all governmental rules and
regulations applicable from time to time thereto; and
(IV) Real estate brokers' leasing commissions.
(V) Legal fees incurred by Landlord in connection with negotiating or
enforcing leases in the Building.
(VI) Management fees in excess of 6% of gross revenue received by Landlord
from the Building's tenants.
(VII) Expenses or costs reimbursed by insurance policies of Landlord or any
tenant.
(VIII) Costs of special services rendered a tenant in the Building that are
not generally rendered to Tenant herein.
(IX) Landlord's costs associated with leasing and marketing space in the
Building, including but not limited to architectural and engineering fees so
incurred.
(X) Salaries of all employees for this Building over the level of building
manager, which Building Manager's salary is included in management fees.
Landlord further agrees that any contract for materials or services for the
Building entered into with any person or entity affiliated directly or
indirectly with Landlord shall provide for costs and/or compensation at
reasonably prevailing costs for similar materials or services in the Oak Brook
market.
B. EXPENSE ADJUSTMENT. Tenant shall pay to Landlord as Rent, in addition
to the Base Rent required by Section 3 hereof, an amount to Tenant's
Proportionate Share of the total of Taxes paid during each Calendar Year and
Operating Expenses incurred with respect to each Calendar Year said amounts
shall be paid in-monthly installments, in an amount estimated from time to time
by Landlord but not to exceed twice per Calendar Year, and communicated by
written notice to Tenant. Landlord shall cause to be kept books and records
showing Operating Expenses and Taxes in accordance with an appropriate system of
accounts and
4
<PAGE> 26
accounting practices consistently maintained. As promptly as practicable
following the close of each Calendar Year. Landlord shall cause a firm of
independent public accountants to review such books and records (and to do such
other work as may be necessary to enable such firm to give the certificate
hereinafter required) and to deliver to Landlord its certificate specifying the
amount of Operating Expenses and Taxes for such Calendar Year for the Building.
After receipt of such certificate, Landlord shall cause the amount of the total
of taxes and operating expenses for such calendar year to be computed based on
Operating Expenses and Taxes for such Calendar Year for the Building as
specified in such firm's certificate and Landlord shall deliver to Tenant a
statement of such amount and Tenant shall pay any deficiency to Landlord as
shown by such statement within thirty (30) days after receipt of such statement.
The certificate of such independent accounting firm as to the amount of
Operating Expenses and Taxes for such Calendar Year for the Building shall
constitute a determination which is final and conclusive on Tenant. If the total
of the estimated monthly installments paid by Tenant during any Calendar Year
exceeds the actual Expenses Adjustment Amount due from Tenant for such Calendar
Year, at Landlord's option, such excess shall be either credited against
payments next due hereunder or refunded by Landlord, provided Tenant is not then
in default hereunder. The amount of any refund of Taxes received by Landlord
shall be credited against Taxes for the year in which such refund is received.
In determining the amount of Taxes for any year, the amount of special
assessments to be included shall be limited to the amount of the installment
(plus any interest payable thereon) of such special assessment required to be
paid during such year if the Landlord had elected to have such special
assessment paid over the maximum period of time permitted by law. All references
to Taxes "for" a particular year shall be deemed to refer to Taxes paid during
such year without regard to when such Taxes are assessed or levied.
Notwithstanding the contents of the above paragraph, Tenant shall have the right
to pay its Expenses Adjustment Amount under protest and cause an audit of
Landlord's books and records to be conducted by Tenant's certified public
accountant at its own expenses. If the result of that audit shows a variance
exceeding 3% from the results of Landlord's certificate, Landlord shall pay the
reasonable cost of Tenant's audit and refund Tenant's share of the variance,
together with interest at the then-current prime rate as published and utilized
by First National Bank, Chicago, plus two (2) per cent.
5. USE OF PREMISES.
Tenant shall continuously and without interruption use and occupy the
entire Premises as an office for the following type of business: and for no
other purpose: executive and general offices and all legal uses incidental
thereto, which may include computer operations.
Landlord acknowledges and agrees that Tenant is in the data processing
business and that nothing herein or in the Rules and Regulations, now or during
the Lease Term, shall interfere with or impede Tenant's use of the Premises for
that purpose.
6. CONDITIONS OF PREMISES.
Subject to a punchlist and to latent defects, the Tenant's taking
possession of any portion of the Premises shall be conclusive evidence that such
portion of the Premises was in good order and satisfactory condition when the
Tenant took possession, except as to latent defects, excluding items of damage
caused by Tenant or its agents, independent contractors or suppliers. No promise
of the Landlord to alter, remodel or improve the Premises or the Building and no
representation by Landlord or its agents respecting the condition of the
Premises or the Building have been made to Tenant or relied upon by Tenant other
than as may be contained in this Lease or in any written amendment hereto signed
by Landlord and Tenant. Landlord agrees to extend to Tenant any manufacturer's
warranties it has relative to the equipment or installation contained in the
Premises.
7. SERVICES.
A. LIST OF SERVICES.
Landlord shall provide the following services on all days during the Term,
except Sundays and holidays, unless otherwise stated:
(i) Heating and air conditioning when necessary for normal comfort in the
Premises, from Monday through Friday, during the period from 8 a.m. to 6 p.m.
and, on Saturday, during the period from 8 a.m. to
5
<PAGE> 27
1 p.m. Tenant will pay for all heating and air conditioning requested and
furnished prior to or following such hours at rates to be established from time
to time by Landlord. (Subject to all governmental rules, regulations and
guidelines applicable thereto). Notwithstanding the contents of this Section
7.A.(i), heat shall be made available to Tenant by Landlord, at all hours and
during the entire Lease Term on Tenant's request, and at after-hour rates
consistent with the provisions of page 4-a.
Landlord will install at its own expense a chiller, together with necessary
fan and control equipment therefor, and any sheet metal duct work and electrical
connections necessary to effectuate the operation thereof, capable of providing
air conditioning for up to 10,000 square feet of rentable area of office space,
but initially with a capacity to provide air conditioning for 4,513 square feet
of rentable area of office space.
Landlord and Tenant agree to cooperate to determine the most cost-effective
method to provide Tenant with its HVAC requirements. After and before the hours
stated in Section 7.A.(i), Landlord agrees to provide Tenant with heat, as
required, on the second floor of the Building, at Landlord's cost plus 5%;
Tenant may alternatively engage its own engineer to determine a more
cost-effective method of obtaining heat.
Landlord's specifications for providing air conditioning are contained in
Exhibit F to Lease.
(ii) Adequate electrical wiring and facilities for standard building
lighting fixtures provided by Landlord and for Tenant's incidental uses. Tenant
shall bear the cost of replacement of bulbs and ballasts for lighting fixtures.
In respect of such incidental uses, adequate electrical wiring and facilities
will be furnished in the Premises by Landlord, provided that (a) the connected
electrical load of the incidental use equipment does not exceed an average of
one watt per square foot of the Premises; (b) the electricity so furnished for
incidental uses will be at a nominal 120 volts and no electrical circuit for the
supply of such incidental use will have a current capacity exceeding 15 amperes;
and (c) such electricity will be used only for equipment and accessories normal
to office usage. If Tenant's requirements for electricity for incidental uses
are in excess of those set forth in the preceding sentence, the Landlord
reserves the right to require Tenant to install the conduit wiring and other
equipment necessary to supply electricity for such excess incidental use
requirements at the Tenant's expense by arrangement with Commonwealth Edison
Company or another approved local utility.
(iii) Village water from the regular Building outlets for drinking,
lavatory and toilet purposes.
(iv) Janitor services at Tenant's request; Monday through Friday in and
about the Premises, comparable to the standard janitor service furnished by
other first-class office buildings, unless Tenant contracts directly for such
services on prior reasonable notice to Landlord.
(v) Window washing of all inside and outside windows in the Premises at
intervals to be determined by Landlord, but in no event fewer than three (3)
times per year.
(vi) Adequate operatorless passenger and freight elevator service at all
times.
B. BILLING FOR ELECTRICITY.
1. SEPARATE METERING. Tenant shall pay for the use of all electrical
service to the Premises (other than the electrical service necessary for
Landlord to fulfill its obligation to provide heating and air conditioning as
provided in Paragraph 7A(i) hereof). Provided that Landlord can make
arrangements satisfactory to Landlord and Tenant with the utility company
supplying electricity to the Premises, Tenant shall be billed directly by such
utility and Tenant agrees to pay each bill promptly in accordance with its
terms. In the event that for any reason Tenant cannot be billed directly,
Landlord shall forward each bill with respect to the Premises and Tenant shall
pay it promptly in accordance with its terms.
2. LACK OF SEPARATE METERING. If Tenant cannot be separately metered for
any reason, Tenant shall pay Landlord as additional Rent, in monthly
installments at the time prescribed for monthly installments of Rent, an annual
amount, as estimated by Landlord from time to time, which Tenant would pay for
such electricity if the same were separately metered to the Premises by the
local electric utility company and billed to Tenant at such utility company's
current rates.
3. ALLOCATION OF ELECTRICITY IN INITIAL COMPUTER SPACE. Landlord agrees to
cause to be installed a separate circuit and electric meter, for Computer
Sciences Corporation's computer area, so that upon completion of said work (1)
electric usage in Tenant's Initial Computer Space will be accurately measured
6
<PAGE> 28
and (2) Tenant will pay thereafter only for electricity metered and used in its
own Initial Computer Space. The cost of the separate circuit and meter and their
installation shall be allocated as between Landlord and Tenant as found in
Section A-8. of the Addendum. Nothing contained in this Section 7.B.3. shall
relieve Tenant from the obligation to pay for its electric usage in the Initial
Office Space or in spaces later leased from Landlord.
Tenant agrees that Landlord shall not be liable in damages, by abatement of
Rent or otherwise, for failure to furnish or delay in furnishing any service, or
for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whose or in part, by repairs, renewals or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at the Building after reasonable
effort so to do, by any accident or casualty whatsoever, by the act or default
of Tenant or other parties, or by any other cause beyond Landlord's reasonable
control; and such failures or delays or diminution shall never be deemed to
constitute an eviction or disturbance of the Tenant's use and possession of the
Premises or relieve the Tenant from paying Rent or performing any of its
obligations under this Lease. Landlord shall be diligent in its efforts to cure
such failure or delay or diminution.
Notwithstanding the contents of Section 7.C., Rent shall abate if heat is
not provided to the Premises of five (5) successive days (beginning on the sixth
day and only until heat is restored). A similar formula shall be applicable if a
water pipe or cooling tower bursts, causing substantial disruption to Tenant's
business, and is not cured and repaired within five (5) days.
Notwithstanding the contents of Section 7.C., if Landlord's negligence is
the cause of the interruption of the providing of electricity to Tenant,
Tenant's Rent shall abate if electricity is not restored within five (5) days;
this covenant shall not be subject to interruption of electricity, due to force
majeure. If the electricity fails through no fault of Landlord, and the UPS is
activated and then fails, Tenant's Rent shall not abate so long as the original
interruption of electricity was not due to Landlord's negligence. Landlord will
provide Tenant with UPS "spares" in the Premises and in the Building; Tenant
shall have the responsibility to maintain the UPS and to recharge them, as
necessary.
Notwithstanding the contents of Section 7.C., in any case of interruption
of services, Tenant shall have the right to self-help and to offset against Rent
the reasonable cost of that self-help.
D. CHARGES FOR SERVICES.
Charges for any services for which Tenant is required to pay from time to
time hereunder including but not limited to hoisting services (except that there
shall be no charge for hoisting services related to Tenant's initial move-in),
or after hours heating or air conditioning shall be due and payable at the same
time as the installment of Rent with which they are billed, or, if billed
separately, shall be due and payable within ten (10) days after such billing. If
Tenant shall fail to make payment for any such services, Landlord may, with
notice to Tenant, discontinue any or all of such services and such
discontinuance shall not be deemed to constitute an eviction or disturbance of
the Tenant's use and possession of the Premises or relieve Tenant from paying
Rent or performing any of its other obligations under this Lease.
8. REPAIRS.
Tenant will, at Tenant's own expense, keep the Premises (except for damage
caused by the negligence of Landlord, its employees, agents, contractors or
invitees), in good order, repair and condition at all times during the Term, and
Tenant shall promptly and adequately repair all damage to the Premises and
replace or repair all damaged or broken fixtures and appurtenances, under the
supervision and subject to the approval of the Landlord, and within any
reasonable period of time specified by the Landlord. If the Tenant does not do
so, Landlord may, but need not, make such repairs and replacements, and Tenant
shall pay Landlord the reasonable cost thereof, including a percentage of the
cost thereof (to be uniformly established for the Building) sufficient to
reimburse Landlord (at a cost not to exceed 10% of the repairs and replacements)
for all overhead, general conditions, fees and other costs or expenses arising
from Landlord's involvement with such repairs and replacements forthwith upon
being billed for same. Landlord may, but shall not be required to, enter the
Premises at all reasonable times to make such repairs, alterations, improvements
and additions to the Premises or to the Building or to any equipment located in
the Building as Landlord shall desire or deem necessary or as Landlord may be
required to do by governmental authority or court order or decree.
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Notwithstanding the contents of this Section, Landlord shall be solely
responsible for repairs associated with the Building's structural and
weight-bearing components and glass, unless damage to said items are caused by
Tenant's negligence. Landlord agrees to provide reasonable notice of repairs it
is conducting and to attempt to minimize the disturbance to Tenant's business
resulting thereby.
9. ADDITIONS AND ALTERATIONS.
Tenant shall not, without the prior written consent not to be unreasonably
withheld or delayed, of Landlord, make any alterations, improvements or
additions to the Premises. Landlord's refusal to give said consent shall be
conclusive. If Landlord consents to said alterations, improvements or additions,
it may impose such conditions with respect thereto as Landlord deems
appropriate, including, without limitation, requiring Tenant to furnish Landlord
with security for the payment of all costs to be incurred in connection with
such work, insurance against liabilities which may arise out of such work, and
plans and specifications plus permits necessary for such work. The work
necessary to make any alterations, improvements or additions to the Premises
shall be done at Tenant's expense by employees of or contractors hired by
Landlord except to the extent Landlord gives its prior written consent not to be
unreasonably withheld or delayed, to Tenant's hiring contractors. Tenant shall
promptly pay to Landlord or to Tenant's contractors, as the case may be, when
due, the cost of all such work and of all decorating required by reason thereof.
Tenant shall also pay to Landlord a percentage of the cost of such work (such
percentage not to exceed 10%) sufficient to reimburse Landlord for all overhead,
general conditions, fees and other costs and expenses arising from Landlord's
involvement with such work. Upon completion of such work Tenant shall deliver to
Landlord, if payment is made directly to contractors, evidence of payment,
contractors' affidavits and full and final waivers of all liens for labor,
services or materials. Tenant shall defend and hold Landlord and the Land and
Building harmless from all costs, damages, liens (unless Landlord is acting as
the general contractor) and expenses related to such work. All work done by
Tenant or its contractors pursuant to Sections 8 or 9 shall be done in a
first-class workmanlike manner using only good grades of materials and shall
comply with all insurance requirements and all applicable laws and ordinances
and rules and regulations of governmental departments or agencies.
All alterations, improvements and additions to the Premises, whether
temporary or permanent in character, made or paid for by Landlord or Tenant,
shall without compensation to Tenant become Landlord's property at the
termination of this Lease by lapse of time or otherwise and shall, be
relinquished to Landlord in good condition, ordinary wear excepted.
10. COVENANT AGAINST LIENS.
Tenant has no authority or power to cause or permit any lien or encumbrance
of any kind whatsoever, whether created by act of Tenant, operation of law or
otherwise, to attach to or be placed upon Landlord's title or interest in the
Land, Building or Premises, and any and all liens and encumbrances created by
Tenant shall attach to Tenant's interest only. Tenant covenants and agrees not
to suffer or permit any lien of mechanics or materialmen or others to be placed
against the Land, Building or the Premises with respect to work or services
claimed to have been performed for or materials claimed to have been furnished
to Tenant or the Premises, and, in case of any such lien attaching, Tenant
covenants and agrees to cause it to be immediately released and removed of
record.
In the event that such lien is not immediately released and removed,
Landlord, at its sole option, may take all action necessary to release and
remove such lien (without any duty to investigate the validity thereof) and
Tenant shall promptly upon notice reimburse Landlord for all sums, costs and
expenses (including reasonable attorneys' fees) incurred by Landlord in
connection with such lien. Notwithstanding the contents of the preceding
paragraph, Landlord shall give Tenant notice of any such lien and Tenant shall
have the right to bond over it in a reasonable period of time with a bond
reasonably satisfactory to Landlord.
11. INSURANCE.
A. WAIVER OF SUBROGATION.
Landlord and Tenant each hereby waive any and every claim for recovery from
the other for any and all loss of or damage to the Building or Premises or to
the contents thereof, which loss or damage is covered by valid and collectible
fire and extended coverage insurance policies, to the extent that such loss or
damage is
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recoverable under said insurance policies. Inasmuch as this mutual waiver will
preclude the assignment of any such claim by subrogation (or otherwise) to an
insurance company (or any other person), Landlord and Tenant each agree to give
to each insurance company which has issued, or in the future may issue, to it
policies of fire and extended coverage insurance, written notice of the terms of
this mutual waiver, and to have said insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waiver. Landlord shall carry insurance providing full replacement coverage
of the Building at all times during this Lease and liability insurance for
common areas of the Building in limits of not less than $1,000,000 and with a
deductible under said policy or policies not greater than the deductible for
similar quality buildings in the OakBrook Market.
B. COVERAGE.
Tenant shall carry insurance during the entire Term insuring Tenant and
Landlord as their interests may appear with terms, coverages and in companies
satisfactory to Landlord, and with such reasonable increases in limits as
Landlord may from time to time request, but initially Tenant shall maintain the
following coverages in the following amounts;
(i) in case of personal injury to or death of any person or persons, not
less than $1,000,000 for each injury or death to a person and $3,000,000 for
each incident involving personal injury or death to persons, and, in case of
property damage, not less than $1,000,000 for any one occurrence; and
(ii) in case of fire, sprinkler leakage, malicious mischief, vandalism, and
other extended coverage perils, for the full insurance replacement value of all
additions, improvements and alterations to the Premises which are beyond the
"building standard" Tenant improvements provided by Landlord and of all office
furniture, trade fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises.
Tenant shall, prior to the commencement of the Term, furnish to Landlord
certificates evidencing such coverage, which certificates shall state that such
insurance coverage may not be changed or cancelled without at least ten days
prior written notice to Landlord and Tenant.
C. AVOID ACTION INCREASING RATES.
Tenant shall comply with all applicable laws and ordinances, all orders and
decrees of court and all requirements of other governmental authorities, and
shall not, directly or indirectly, make any use of the Premises which may
thereby be prohibited or be dangerous to person or property or which may
jeopardize any insurance coverage, or may increase the cost of insurance or
require additional insurance coverage. If by reason of the failure of Tenant to
comply with the provisions of this Section 11C, any insurance coverage is
jeopardized or insurance premiums are increased, Landlord shall have the option
to require Tenant to make immediate payment of the increased insurance premium.
12. FIRE OR CASUALTY.
Paragraph 8 hereof notwithstanding, if the Premises or the Building
(including machinery or equipment used in its operation) shall be damaged by
fire or other casualty and if such damage does not render all or a substantial
portion of the Premises or Building untenantable, then Landlord shall repair and
restore the same with reasonable promptness, subject to reasonable delays for
insurance adjustments and delays caused by matters beyond Landlord's reasonable
control. If any such damage renders all or a substantial portion of the Premises
or Building untenantable, Landlord shall have the right to terminate this Lease
as of the date of such damage (with appropriate prorations of Rent being made
for Tenant's possession subsequent to the date of such damage of those
tenantable portions of the Premises) upon giving written notice to the Tenant at
any time within sixty (60) days after the date of such damage. If any such
damage renders all or more than fifty percent (50%) of the Premises untenantable
Tenant shall also have the right to terminate this Lease as of the date of such
damage upon giving written notice to Landlord at any time within forty-five (45)
days after the date of such damage. Unless this Lease is terminated as provided
in the two preceding sentences and Landlord shall proceed with reasonable
promptness to repair and restore the Premises, subject to reasonable delays for
insurancee adjustments and delays caused by matters beyond Landlord's reasonable
control. Rent, however shall abate on those portions of the Premises as are,
from time to time, untenantable as a result of such damage.
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Notwithstanding the contents of this paragraph, Landlord shall use its best
efforts and diligence to rebuild the Premises after any fire or casualty; if the
Building is damaged by fire or other casualty and Landlord chooses not to
rebuild, Landlord shall provide Tenant notice within 30 days of said fire or
casualty of Landlord's decision; if Landlord chooses to rebuild, it shall use
its best efforts and diligence to complete the restoration as quickly as
possible.
If said restoration is not completed within 180 days from date of
inception, Tenant shall have the right to terminate this Lease and all
obligations hereunder.
Tenant hereby acknowledges that Landlord is under no obligation to insure
Landlord's interest in the Premises or the Building, except as provided herein.
Notwithstanding anything to the contrary herein set forth, Landlord shall
have no duty pursuant to this Section 12 to repair or restore any portion of the
alterations, additions or improvements in the Premises or the decoration thereto
except to the extent that such alterations, additions, improvements and
decoration were provided by Landlord, at Landlord's cost, at the beginning of
the Term. If Tenant wants any other or additional repairs or restoration and if
Landlord consents thereto, the same shall be done at Tenant's expense subject to
all of the provisions of Section 8 hereof.
13. WAIVER OF CLAIMS -- INDEMNIFICATION.
To the extent not prohibited by law, and excluding the negligence of
Landlord, its employees, agents, servants, contractors, or invitees, Landlord
and its officers, agents, servants and employees shall not be liable for any
damage either to person or property or resulting from the loss of use thereof
sustained by Tenant or by other persons due to the Building or any part thereof
or any appurtenances thereof becoming out of repair, or due to the happening or
any accident or event in or about the Building, or due to any act or neglect of
any tenant or occupant of the Building or of any other person. This provision
shall apply particularly (but not exclusively) to damage caused by gas,
electricity, snow, frost, steam, sewage, sewer gas or odors, fire, water or by
the bursting or leaking of pipes, faucets, sprinklers, plumbing fixtures, and
windows, and shall apply without distinction as to the person whose act or
neglect was responsible for the damage and whether the damage was due to any of
the causes specifically enumerated above or to some other cause of an entirely
different kind. Tenant further agrees that all personal property upon the
Premises, or upon-loading docks, receiving and holding areas, or freight
elevators of the Building, shall be at the risk of Tenant only, and that
Landlord shall not be liable for any loss or damage thereto or theft thereof.
Without limitation of any other provisions thereof, Tenant agrees to defend,
protect, indemnify and save harmless Landlord from and against all liability to
third parties arising out of the acts of Tenant and its servants, agents,
employees, contractors, suppliers, workmen and invitees. This Section shall be
reciprocal in effect between Landlord and Tenant, and Landlord except the
trustee agrees to defend, protect, indemnify and save harmless Tenant from and
against all liability to third parties arising out of the acts of Landlord and
its servants, agents, employees, contractors, suppliers, workmen and invitees.
14. NONWAIVER.
No waiver of any provision of this Lease shall be implied by any failure of
Landlord to enforce any remedy on account of the violation of such provision,
even if such violation be continued or repeated subsequently, and no express
waiver shall affect any provision other than the one specified in such waiver
and that one only for the time and in the manner specifically stated. No receipt
of moneys by Landlord from Tenant after the termination of this Lease shall in
any way alter the length of the Term or of Tenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the Term or affect any notice given Tenant prior to the receipt of such moneys,
it being agreed that after the service of notice or the commencement of a suit
or after final judgment for possession of the Premises. Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.
15. CONDEMNATION.
If the Land or the Building or any portion thereof shall be taken or
condemned by any competent authority for any public or quasi-public use or
purpose (a "taking"), or if the configuration of any street, alley, riverbank,
or bridge adjacent to the Building is changed by any competent authority and
such taking or change
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in configuration makes it necessary to remodel or reconstruct the Building.
Landlord shall have the right, exercisable at its sole discretion, to cancel
this Lease upon not less than ninety (90) days notice prior to the date of
cancellation designated in the notice. No money or other consideration shall be
payable by Landlord to Tenant for the right of cancellation and Tenant shall
have no right to share in the condemnation award or in any judgment for damages
caused by such taking or change in configuration. Tenant, however, shall have
the right to seek its own separate award in any such proceeding and for
improvements installed and paid for by it, so long as any such award does not
otherwise diminish Landlord's award.
16. ASSIGNMENT AND SUBLETTING.
a. Tenant shall not, without Landlord's prior written consent;
(i) assign, hypothecate, mortgage, encumber, or convey this Lease;
(ii) allow any transfer thereof or any lien upon Tenant's interest by
operation of law;
(iii) sublet the premises or any part thereof; or
(iv) permit the use or occupancy of the premises or any part thereof by
anyone other than Tenant.
b. If Tenant desires the consent of Landlord to an assignment of the entire
demised premises for the remaining term or subletting of all or a part of the
demised premises (the entire demised premises for the remaining term if an
assignment is desired or the portion of the demised premises if a sublet is
desired being hereinafter referred to as "Subject Premises"), Tenant shall
submit to Landlord;
(i) the proposed sublease or assignment (executed by Tenant and subtenant
or assignee), which is not to commence prior to the first day of the month
immediately following the month in which the thirtieth day following the
submission to Landlord occurs, and
(ii) sufficient information to permit Landlord to determine the
acceptability of the financial responsibility and character of subtenant or
assignee.
c. Landlord shall not unreasonably withhold its consent except that such
consent need not be granted if:
(i) in the reasonable judgment of Landlord the subtenant or assignee is of
a character or engaged in a business which is not in keeping with the standards
of Landlord for the Building;
(ii) in the reasonable judgment of Landlord the purposes for which the
subtenant or assignee intends to use the Subject Premises are not in keeping
with the standards of Landlord for the Building, it being understood that the
purposes for which subtenant or assignee intends to use the Subject Premises may
not be in violation of this Lease;
(iii) a subletting will result in there being more than two occupants per
floor within the demised premises, including Tenant and all subtenants;
(iv) the Subject Premises is not regular in shape with appropriate means of
ingress and egress and suitable for normal renting purposes;
(v) the subtenant or assignee is either a government (or subdivision or
agency thereof) or an occupant of the Building;
(vi) an assignment is desired and the Subject Premises are less than the
entire demised premises or less than the remaining term is being assigned;
(vii) Tenant is in default under this Lease.
(viii) Tenant has exercised its option to expand or renew under paragraphs
28 or 29.
d. If Landlord grants consent:
(i) the terms and conditions of this Lease, including among other things.
Tenant's liability for the Subject Premises shall in no way be deemed modified,
abrogated or amended;
(ii) Tenant shall pay Landlord $250.00 for each sublease or assignment
submitted as reimbursement to Landlord for expenses incurred, plus 50% of all
net profit ("net profit" being defined hereunder as gross profit less all costs
incurred or concessions granted, including but not limited to rent abatement,
alterations to
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Premises, commissions, and attorney fees. The dollar total of said costs and
concessions shall be fully amortized over the term of said sublease of
assignment, and "net profit" calculated after allowing for said amortization)
derived by Tenant in such sublease or assignment.
(iii) the consent shall not be deemed a consent to any further subletting
or assignments by either Tenant, subtenants or assignees.
e. Notwithstanding the contents of this Section, no notice need be given by
Tenant, nor consent obtained by Landlord, as to an assignment of the Lease to an
affiliate of Tenant, so long as guarantor herein (or its successor, guarantor,
possessing a net worth as much as, or greater than, guarantor herein) remains as
guarantor of the Lease. The same shall apply to a merger of Tenant with another
entity, so long as the guarantor herein shall continue as guarantor after such a
merger:
17. SURRENDER OF POSSESSION.
Upon the expiration of the Term or upon the termination of Tenant's right
of possession, whether by lapse of time or at the option of Landlord as herein
provided. Tenant shall forthwith surrender the Premises to Landlord in good
order, repair and condition, ordinary wear excepted, and shall, if Landlord so
requires, restore the Premises to the condition existing at the beginning of the
Term. Any interest of Tenant in the alterations, improvements, and additions to
the Premises (including without limitation all carpeting or floorcovering) made
or paid for by Landlord or Tenant shall without compensation to Tenant become
Landlord's property at the termination of this Lease by lapse of time or
otherwise and such alterations, improvements and additions shall be relinquished
to Landlord in good condition, ordinary wear excepted. At the termination of the
Term or of Tenant's right of possession Tenant agrees to remove the following
items of Tenant's property: office furniture, trade fixtures, office equipment
and all other items of Tenant's property on the Premises. Tenant shall pay to
Landlord upon demand the cost of repairing any damage to the Premises and to the
Building caused by any such removal. If Tenant shall fail or refuse to remove
any such property from the Premises, Tenant shall be conclusively presumed to
have abandoned the same, and title thereto shall thereupon pass to Landlord
without any cost either by set-off, credit, allowance or otherwise, and Landlord
may at its option accept the title to such property or at Tenant's expense may
(i) remove the same or any part in any manner that Landlord shall choose,
repairing any damage to the Premises caused by such removal, and (ii) store,
destroy or otherwise dispose of the same without incurring liability to Tenant
or any other person.
18. HOLDING OVER.
Tenant shall pay to Landlord an amount as Base Rent equal to 200% of the
Rent herein provided during each month or portion thereof for which Tenant shall
retain possession of the Premises or any part thereof after the termination of
the Term or of Tenant's right of possession, whether by lapse of time or
otherwise, and also shall pay all damages sustained by Landlord, whether direct
or consequential, on account thereof. The provisions of this Section 18 shall
not be deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law.
19. ESTOPPEL CERTIFICATE.
The Tenant agrees that, from time to time upon not less than ten days prior
request by Landlord, the Tenant, or Tenant's duly authorized representative
having knowledge of the following facts, will deliver to Landlord a statement in
writing certifying (i) that this Lease is unmodified and in full force and
effect (or if there have been modifications that the Lease as modified is in
full force and effect); (ii) the dates to which Rent and other charges have been
paid; (iii) that the Landlord is not in default under any provision of this
Lease, or, if in default, the nature thereof in detail; and (iv) such further
matters as are set forth on the form of estoppel certificate attached hereto as
Exhibit C and made a part hereof, it being intended that any such statement may
be relied upon by any prospective purchaser or tenant of the Building, any
mortgagees or prospective mortgagees thereof, or any prospective assignee of any
mortgage thereof. Tenant shall execute and deliver whatever instruments may be
required for such purposes, and in the event Tenant fails so to do within twenty
(20) days after demand in writing. Tenant shall be considered in default under
this Lease.
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STANDARD MORTGAGEE PROTECTION CLAUSE
Tenant agrees to give any Mortgagees and/or Trust Deed Holders, by
Registered Mail, a copy of any Notice of Default served upon the Landlord,
provided that prior to such notice tenant has been notified, in writing, (by way
of Notice of Assignment of Rents and Leases, or otherwise) of the address of
such Mortgagees and/or Trust Deed Holders. Tenant further agrees that if
Landlord shall have failed to cure such default within the time provided for in
this Lease, then the Mortgagees and/or Trust Deed Holders shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
if within such thirty (30) days, any Mortgagee and/or Trust Deed Holder has
commenced and is diligently pursuing the remedies necessary to cure such
default, (including but not limited to commencement of foreclosure proceedings,
if necessary to effect such cure) in which event this Lease shall not be
terminated while such remedies are being so diligently pursued.
20. SUBORDINATION.
This Lease is subject and subordinate to all present and future ground or
underlying leases of the Land and to the lien of any mortgages or trust deeds,
now and hereafter in force against the Land and Building, or either, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages or trust deeds,
or the lessors under such ground lease or underlying leases require in writing
that this Lease shall be superior thereto. Tenant shall at Landlord's request
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases. Tenant
hereby irrevocably authorizes Landlord to execute and deliver in the name of
Tenant any such instrument or instruments if Tenant fails to do so, provided
that such shall in no way relieve Tenant from the obligation of executing such
instruments of subordination or superiority.
Tenant agrees to subordinate this Lease to future mortgagee(s) only if
Landlord provides Tenant with a non-disturbance and attornment agreement from
said mortgagee(s). Landlord agrees to submit this Lease, upon its completion,
but prior to execution, to the present mortgagee and to use its best efforts to
obtain from the mortgagee a non-disturbance and attornment agreement in favor of
Tenant. In the event Landlord is unable to obtain said agreement by July 10,
1987, Landlord agrees to provide Tenant, and Tenant agrees to accept from
Landlord an agreement (in form and substance acceptable to Tenant), whereby
LaSalle National Bank and Trust Company, not personally, but U/T/A #107194, 815
Commerce Drive REIP, and The Great-West Life Assurance Company of Winnipeg,
Canada, agree not to sell, convey, or transfer the Building, the real estate
upon which it is situated, the beneficial interest in said land trust, or any
portion thereof, the general partnership interest in the 815 Commerce Drive
REIP, or any portion of their interest or equity therein, prior to the time when
the present mortgage loan encumbering the Building is first due.
21. CERTAIN RIGHTS RESERVED BY LANDLORD.
Landlord shall have the following rights, each of which Landlord may
exercise without notice to Tenant and without liability to Tenant for damage or
injury to property, person or business on account of the exercise thereof, and
the exercise of any such rights shall not be deemed to constitute an eviction or
disturbance of Tenant's use or possession of the Premises and shall not give
rise to any claim for set-off or abatement of rent and any other claim:
(a) On 90 days' notice to change the Building's name or street address.
(b) To install, affix and maintain any and all signs on the exterior and on
the interior of the Building.
(c) On reasonable notice to Tenant and in a manner so as to minimize
disturbance to Tenant's business, to decorate or to make repairs, alterations,
additions, or improvements, whether structural or otherwise, in and about the
Building, or any part thereof, and for such purposes to enter upon the Premises,
and, during the continuance of any of said work, to temporarily close doors,
entryways, public space and corridors in the Building and to interrupt or
temporarily suspend services or use of facilities, all without affecting any of
Tenant's obligation hereunder, so long as the Premises are reasonably accessible
and usable. Landlord shall
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not be liable to Tenant, and Tenant shall not be entitled to any abatement or
adjustment of rent by reason of any such interruption or suspension.
(d) To furnish (2) door keys for doors in the Premises at the commencement
of the lease. To retain at all times, and to use in appropriate instances, keys
to all doors within and into the Premises. Tenant agrees to purchase only from
Landlord additional duplicate keys as required, to change no locks, and not to
affix locks on doors without the prior written consent of Landlord.
Notwithstanding the provisions for Landlord's access to Premises, Tenant
relieves and releases the Landlord of all responsibility arising out of theft,
robbery and pilferage, except for the negligence of Landlord, its employees,
agents, servants, contractors, and invitees. Upon the expiration of the Term or
of Lessee's right to possession, Tenant shall return all keys to Landlord and
shall disclose to Landlord the combination of any safes, cabinets or vaults left
in the Premises.
(e) To designate that window treatment shall be Building Standard venetian
blinds or curtains and to designate and approve, prior to installation, all
types of a additional window shades, blinds or draperies.
(f) To approve the weight, size and location of safes, vaults and other
heavy equipment and articles in and about the Premises and the Building (so as
not to exceed the legal live load per square foot designated by the structural
engineers for the building), and to require all such items and furniture and
similar items to be moved into or out of the Building and Premises only at such
times and in such manner as Landlord shall direct in writing. Tenant shall not
install or operate machinery or any mechanical devices of a nature not directly
related to Tenant's ordinary use of the Premises without the prior written
consent of Landlord. Movements of Tenant's property into or out of the Building
and within the Building are entirely at the risk and responsibility of Tenant
and Landlord reserves the right to require permits before allowing any property
to be moved into or out of the Building.
(g) To close the Building after regular working hours and on Saturdays,
Sundays and legal holidays subject, however, to Tenant's right to admittance to
the Premises under such regulations as Landlord may prescribe from time to time,
which may include but shall not be limited to, a requirement that persons
entering or leaving the Building identify themselves to a watchman by
registration or otherwise and establish their right to enter or leave the
Building. Such regulations may include, but shall not be limited to the
requiring of identification from Tenant's employees, agents, clients, customers,
invitees, visitors and guests.
(h) To establish controls for the purpose of regulating all property and
packages (both personal and otherwise) to be moved into or out of the Building
and Premises.
(i) To regulate delivery and service of supplies in order to insure the
cleanliness and security of the Premises and to avoid congestion of the loading
docks, receiving areas and freight elevators.
(j) To show the Premises to prospective tenants at reasonable hours during
the last twelve months of the Term and, if vacated or abandoned, to show the
Premises at any time and to prepare the Premises for the re-occupancy. Landlord
shall not, however, prepare the Premises for reoccupancy by another tenant
during the Term of this Lease.
(k) To erect, use and maintain pipes, ducts, wiring and conduits, and
appurtenances thereto, in and through the Premises at reasonable locations.
(l) To enter the Premises at any reasonable time to inspect the Premises on
reasonable notice from Landlord (except in cases of emergency) and in a manner
so as to minimize the disturbance of Tenant's business.
(m) To modify or relinquish any and all easement rights provided such
modification or relinquishing will not materially interfere with Tenant's use.
22. RULES AND REGULATIONS.
Subject to Section 5. hereof as amended, Tenant agrees to observe the rules
and regulations for the Building attached hereto as Exhibit D and made a part
hereof. Landlord shall have the right from time to time to prescribe additional
rules and regulations which, in its judgment, may be desirable for the use,
entry, operation and management of the Premises and Building, each of which
rules and regulations and any amendments thereto shall become a part of this
Lease. Tenant shall comply with all such rules and regulations
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provided however that such rules and regulations shall not contradict or
abrogate any right or privilege herein expressly granted to Tenant. All such
rules and regulations shall be uniformly applied and consistently implemented
for all tenants in the Building.
23. LANDLORD'S REMEDIES.
If default shall be made in the payment of the Rent or any installment
thereof or in the payment of any other sum required to be paid by Tenant under
this Lease or under the terms of any other agreement between Landlord and Tenant
and such default shall continue for five (5) days after written notice to
Tenant, (but Tenant shall have five (5) days thereafter to cure), or if default
shall be made in the observance or performance of any of the other covenants or
conditions in this Lease which Tenant is required to observe and perform and
such default shall continue for thirty (30) days (or if such default cannot be
cured within 30 days, Tenant shall have such reasonable time thereafter to cure,
utilizing due diligence to do so.) after written notice to Tenant, or if a
default involves a hazardous condition and is not cured by Tenant immediately
upon written notice to Tenant, or if the interest of Tenant in this Lease shall
be levied on under execution or other legal process, or if any voluntary
petition in bankruptcy or for corporate reorganization or any similar relief
shall be filed by Tenant, or if any involuntary petition in bankruptcy shall be
filed against Tenant under any federal or state bankruptcy or insolvency act and
Tenant shall not have filed a motion to dismiss said involuntary petition within
60 days of the filing thereof, or if a receiver shall be appointed for Tenant or
any of the property of Tenant by any court and Tenant shall not have filed a
motion to dismiss said receiver with 60 days of his appointment, or if Tenant
shall make an assignment for the benefit of creditors, or if Tenant shall admit
in writing Tenant's inability to meet Tenant's debts as they mature, or if
Tenant shall abandon or vacate the Premises during the Term, then Landlord may
treat the occurrence of any one or more of the foregoing events as a breach of
this Lease, and thereupon at its option may, with or without notice or demand of
any kind to Tenant or any other person, have any one or more of the following
described remedies in addition to all other rights and remedies provided at law
or in equity or elsewhere herein.
(i) Landlord may terminate this Lease and the Term created hereby, in
which event Landlord may forthwith repossess the Premises and be entitled
to recover forthwith, in addition to any other sums or damages for which
Tenant may be liable to Landlord, as damages a sum of money equal to the
excess of the value of the Base Rent provided to be paid by Tenant for the
balance of the Term over the fair market rental value of the Premises,
after deduction of all anticipated expenses of reletting, for said period.
Should the fair market rental value of the Premises, after deduction of all
anticipated expenses of reletting, for the balance of the Term exceed the
value of the Base Rent provided to be paid by Tenant for the balance of the
Term, Landlord shall have no obligation to pay to Tenant the excess or any
part thereof or to credit such excess or any part thereof against any other
sums or damages for which Tenant may be liable to Landlord. Any liquidated
damages paid to Landlord by operation of this subsection (insofar as said
damages are attributable to Rent for the balance of the Term) shall be
discounted to the date of payment at a discount factor equal to 120% of the
borrowing costs to the U.S. government for a term equal to the term
commencing with the date of the payment and ending at the Termination Date
of the Initial Term of the Lease.
(ii) Landlord may terminate Tenant's right of possession and may
repossess the Premises by forcible entry and detainer suit, by taking
peaceful possession or otherwise, without terminating this Lease, in which
event Landlord may, but shall be under no obligation to, relet the same for
the account of Tenant, for such rent and upon such terms as shall be
satisfactory to Landlord. For the purpose of such reletting. Landlord is
authorized to decorate, repair, remodel or alter the Premises. If Landlord
shall fail to relet the Premises. Tenant shall pay to Landlord as damages a
sum equal to the amount of the Rent reserved in this Lease for the balance
of the Term. If the Premises are relet and a sufficient sum shall not be
realized from such reletting after paying all of the costs and expenses of
all decoration, repairs, remodeling, alterations and additions and the
expenses of such reletting and of the collection of the rent accruing
therefrom to satisfy the Rent provided for in this Lease. Tenant shall
satisfy and pay the same upon demand therefor from time to time. Tenant
agrees that Landlord may file suit to recover any sums failing due under
the terms of this Section 23 from time to time and that no suit or recovery
of any portion due Landlord hereunder shall be any defense to any
subsequent action brought for any amount
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not theretofore reduced to judgment in favor of Landlord. Landlord agrees
to use its best efforts to mitigate the damages due it hereunder.
24. EXPENSES OF ENFORCEMENT.
The non-prevailing party shall pay upon demand all of the prevailing
party's reasonable costs, charges and expenses including the fees and
out-of-pocket expenses the non-prevailing party's obligations hereunder or
incurred by the prevailing party in any litigation, negotiation or transaction
in which the non-prevailing party causes the prevailing party without the
prevailing party's fault to become involved or concerned.
25. COVENANT OF QUIET ENJOYMENT.
The Landlord covenants that the Tenant, on paying the Rent, charges for
services and other payments herein reserved and on keeping, observing and
performing all the other terms, covenants, conditions, provisions and agreements
herein contained on the part of the Tenant to be kept, observed, and performed,
shall, during the Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions, and agreements hereof.
26. SECURITY DEPOSIT. Tenant hereby deposits with Landlord the sum of Seventeen
Thousand Two Hundred Two and 69/100 DOLLARS ($17,202.69), (hereinafter referred
to as "Collateral"), as security for the prompt, full and faithful performance
by Tenant of each and every provision of this Lease and of all obligations of
Tenant hereunder.
(a) If Tenant fails to perform any of its obligations hereunder, Landlord
may use, apply or retain the whole or any part of the Collateral for the payment
of (i) any Rent or other sums of money which Tenant may not have paid when due,
(ii) any sum expended by Landlord on Tenant's behalf in accordance with the
provisions of this Lease, or (iii) any sum which Landlord may expend or be
required to expend by reason of Tenant's default, including, without limitation,
any damage or deficiency in or from the reletting of the Premises as provided in
Section 23. The use, application or retention of the Collateral, or any portion
thereof, by Landlord shall not prevent Landlord from exercising another right or
remedy provided by this Lease or by law (it being intended that Landlord shall
not first be required to proceed against the Collateral) and shall not operate
as a limitation on any recovery to which Landlord may otherwise be entitled. If
any portion of the Collateral is used, applied or retained by Landlord for the
purposes set forth above. Tenant agrees, within 10 days after the written demand
therefor is made by Landlord, to deposit cash with the landlord in an amount
sufficient to restore the Collateral to its original amount.
(b) If Tenant shall fully and faithfully comply with all of the provisions
of this Lease, the Collateral, or any balance thereof, shall be returned to
Tenant without interest after the expiration of the Term or upon any later date
after which Tenant has vacated the Premises. In the absence of evidence
satisfactory to Landlord of any permitted assignment of the right to receive the
Collateral, or of the remaining balance thereof, Landlord may return the same to
the original Tenant, regardless of one or more assignments of Tenant's interest
in this Lease or the Collateral. In such event, upon the return of the
Collateral, or the remaining balance thereof to the original Tenant, Landlord
shall be completely relieved of liability under this Section 26 or otherwise
with respect to the Collateral.
(c) Tenant acknowledges that Landlord has the right to transfer or mortgage
interest in the Land and the Building and in this Lease and Tenant agrees that
in the event of any such transfer or mortgage, Landlord shall have the right to
transfer or assign the Collateral to the transferee or mortgagee. Upon, and only
upon, written acknowledgement of transferee's or mortgagee's receipt of such
Collateral, Landlord shall thereby be released by Tenant from all liability or
obligation for the return of such Collateral and Tenant shall look solely to
such transferee or mortgagee for the return of the Collateral.
(d) The Collateral shall not be mortgaged, assigned or encumbered in any
manner whatsoever by Tenant without the prior written consent of Landlord.
(e) Notwithstanding any thing to the contrary in this Section, Landlord
shall accord Tenant a credit annually against Rent in amount equal to interest
capable of being earned on said Collateral if said Collateral
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were invested in a one-year Treasury Bill, purchased annually on the anniversary
date of the execution of this Lease.
(f) In the event of the filing of a bankruptcy by Landlord, and the
Collateral is found to be a part of the bankrupt's estate, Tenant shall have the
right of set-off against any sums then due from Tenant to Landlord an amount
equal to the amount of the Collateral.
(g) Notwithstanding anything in this Section to the contrary, Tenant
reserves to itself the right to secure the return of the Collateral from any
party, now or hereafter, who shall have the obligation to perform Landlord's
duties under the Lease.
27. REAL ESTATE BROKER
The Tenant represents that the Tenant has dealt with (and only with)
LaSalle Commercial Brokerage Co., Inc. and Irvine & Associates as broker in
connection with this Lease, and that insofar as the Tenant knows, no other
broker negotiated this Lease or is entitled to any commission in connection
therewith. Tenant agrees to indemnify, defend and hold Landlord and its
beneficiaries, employees, agents, their officers and partners, harmless from and
against any claims made by any broker or finder other than the broker named
above for a commission or fee in connection with this Lease, provided that
Landlord has not in fact retained such broker or finder. Landlord expressly
agrees to pay any and all brokerage commissions to identified brokers involved
in procuring this Tenant for Landlord.
28. MISCELLANEOUS
A. RIGHTS CUMULATIVE.
All rights and remedies of Landlord under this Lease shall be cumulative
and none shall exclude any other rights and remedies allowed by law.
B. INTEREST.
All payments becoming due under this Lease and remaining unpaid when due
shall bear interest until paid at the rate of ten per cent per annum (but in no
event at a rate which is more than the highest rate which is at the time lawful
in the State of Illinois).
C. TERMS.
The necessary grammatical changes required to make the provisions hereof
apply either to corporations or partnerships or individuals, men or women, as
the case may require, shall in all cases be assumed as though in each case fully
expressed.
D. BINDING EFFECT.
Each of the provisions of this Lease shall extend to and shall, as the case
may require, bind or inure to the benefit not only of the Landlord and of
Tenant, but also of their respective successors or assigns, provided this clause
shall not permit any assignment by Tenant contrary to the provisions of Section
16 hereof.
E. LEASE CONTAINS ALL TERMS.
All of the representations and obligations of Landlord are contained herein
and in the Work Letter, and no modification, waiver or amendment of this Lease
or of any of its conditions or provisions shall be binding upon the Landlord
unless in writing signed by Landlord or by a duly authorized agent of Landlord
empowered by a written authority signed by Landlord.
F. DELIVERY FOR EXAMINATION.
Submission of the form of the Lease for examination shall not bind Landlord
in any manner, and no Lease or obligations of the Landlord shall arise until
this instrument is signed by both Landlord and Tenant and delivery is made to
each.
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G. NO AIR RIGHTS.
No rights to any view or to light or air over any property, whether
belonging to Landlord or any other person, are granted to Tenant by this Lease.
H. MODIFICATION OF LEASE.
If any lender requires, as a condition to its lending funds the repayment
of which is to be secured by a mortgage or trust deed on the Land and Building
or either, that certain modifications be made to this Lease, which modifications
will not require Tenant to pay any additional amounts or otherwise change
materially the rights or obligations of Tenant hereunder. Tenant shall, upon
Landlord's written request, execute appropriate instruments effecting such
modifications.
J. TRANSFER OF LANDLORD'S INTEREST.
Tenant acknowledges that Landlord has the right to transfer its interest in
the Land and Building and in this Lease, and Tenant agrees that in the event of
any such transfer Landlord shall automatically be released from all liability
under this Lease and Tenant agrees to look solely to such transferee for the
performance of Landlord's obligations hereunder. Tenant further acknowledges
that Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder. Notwithstanding
anything in this paragraph to the contrary, Landlord agrees that Tenant shall
not be obligated to look to any such transferee for the performance of
Landlord's obligations hereunder unless there shall exist an express written
assumption by said transferee of said obligations. Any such express assumption
of Landlord's obligation by any such transferee shall not alter, modify,
abrogate, or change any pre-existing or accrued liability or obligation of
Landlord to Tenant.
K. LANDLORD'S TITLE.
Landlord's title is and always shall be paramount to the title of Tenant.
Nothing herein contained shall empower Tenant to do any act which can, shall or
may encumber the title of Landlord.
Tenant shall have the right to record a memorandum of lease as attached as
Exhibit G hereto; all parties hereto agree to sign such memorandum prior to
recordation of such by Tenant.
M. CAPTIONS.
The captions of Sections and subsections are for convenience only and shall
not be deemed to limit, construe, affect or alter the meaning of such Sections
or subsections.
N. COVENANTS AND CONDITIONS.
All of the covenants of Tenant hereunder shall be deemed and construed to
be "conditions", if Landlord so elects, as well as "covenants" as though the
words specifically expressing or importing covenants and conditions were used in
each separate instance. All of the covenants of Landlord hereunder shall be
deemed and construed to be "conditions", if Tenant so elects, as well as
"covenants" as though the words specifically expressing or importing covenants
and conditions were used in each separate instance.
O. ONLY LANDLORD/TENANT RELATIONSHIP.
Nothing contained in this Lease shall be deemed or construed by the parties
hereto or by any third party to create the relationship of principal and agent,
partnership, joint venturer or any association between Landlord and Tenant, it
being expressly understood and agreed that neither the method of computation of
Rent nor any act of the parties hereto shall be deemed to create any
relationship between Landlord and Tenant other than the relationship of landlord
and tenant.
P. APPLICATION OF PAYMENTS.
Landlord shall have the right to apply payments received from Tenant
pursuant to this Lease (regardless of Tenant's designation of such payments) to
satisfy any obligations of Tenant hereunder, in such order and amounts, as
Landlord in its sole discretion, may elect.
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This Lease is executed by LA SALLE NATIONAL BANK, not personally but as
Trustee as aforesaid, in the exercise of the power and authority conferred upon
and vested in it as such Trustee, and under the express direction of the
beneficiaries of a certain Trust Agreement dated 10/28/83 and known as Trust No.
107194 at LA SALLE NATIONAL BANK, to all provisions of which Trust Agreement
this Lease is expressly made subject. It is expressly understood and agreed that
nothing herein or in said Lease contained shall be construed as creating any
liability whatsoever against said Trustee personally, and in particular without
limiting the generality of the foregoing, there shall be no personal liability
to pay any indebtedness accruing hereunder or to perform any covenant, either
express or implied, herein contained, or to keep, preserve or sequester any
property of said Trust, and that all personal liability of said Trustee of every
sort, if any, is hereby expressly waived by said Lessee, and by every person now
or hereafter claiming any right or security hereunder; and that so far as said
Trustee is concerned the owner of any indebtedness or liability accruing
hereunder shall look solely to the premises hereby leased for the payment
thereof. It is further understood and agreed that said Trustee has no agents or
employees and merely holds naked legal title to the property herein described;
that said Trustee has no control over, and under this Lease, assumes no
responsibility for (1) the management or control of such property, the upkeep,
inspection, maintenance or repair of such property, (3) the collection of rents
or rental of such property, or (4) the conduct of any business which is carried
on upon such premises.
<TABLE>
<S> <C>
TENANT: LANDLORD:
GIS Information Systems, Inc. LaSalle National Bank, not personally but as
Trustee U/T/A #107194
By By
Its Its
Attested by and
815 Commerce Drive REIP
By
Its
</TABLE>
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ADDENDUM TO LEASE
A-1. The Base Rent set forth in Section 3 and the Tenant's Proportionate
Share as defined in Subsection 4.A.(iv) are calculated on the basis that the
Premises consist of 4,513 square feet of rentable area of office space and
11,441 square feet of rentable area of computer space square feet of rentable
area contained in the Premises. Prior to the Commencement Date of this Lease,
Landlord shall cause the Premises to be measured, determine the actual number of
square feet of rentable area contained in the Premises, and recalculate the Base
Rent and the Tenant's Proportionate Share as follows: (A) the Base Rent set
forth in Section 3 shall be equal to the amount obtained by multiplying the
number of square feet of rentable office area contained in the Premises by
$10.25 per square foot per-annum; together with the amount obtained by
multiplying the number of square feet of rentable computer space contained in
the Premises by S14.00 per rentable square foot per annum, (B) the Tenant's
Proportionate Share shall be equal to the percentage calculated by dividing the
total rentable area of the Building set forth in Subsection 4.A.(iv) into the
total rentable area of the Premises. Promptly after Landlord has notified Tenant
of such determination and recalculations, Landlord certifies the following and
Landlord and Tenant agree to enter into an amendment to this Lease: (A) defining
the rentable area of the Premises, as determined by Landlord; (B) defining the
Base Rent as recalculated; and (C) defining the Tenant's Proportionate Share as
recalculated.
A-2. In the event that the total rentable area of the Building or the
Premises increases or decreases during the Term, Landlord shall recompute the
Base Rent, if applicable (using the then-current Base Rent) and the Tenant's
Proportionate Share in accordance with A-1. Promptly after Landlord has notified
Tenant of such recomputation, Landlord and Tenant agree to enter into an
amendment to the Lease: (A) describing and designating the Premises to reflect
any increase or decrease, if applicable; (B) defining the Base Rent as
recomputed, if applicable; and (C) defining the Tenant's Proportionate Share as
recalculated.
A-3. In the event that the number of square feet of rentable area in the
Premises or the Building as stated in the Lease or any amendment thereto is in
error, Landlord and Tenant agree to recompute, promptly after such error is
discovered, the Base Rent, if applicable (using the then-current Base Rent) and
the Tenant's Proportionate Share in accordance with Section A-1. Promptly after
such recomputation, Landlord and Tenant: (1) agree to enter into an amendment to
the Lease (A) setting forth the correct number of square feet of rentable square
feet in the Building and/or the Premises, as applicable (B) defining the Base
Rent as recomputed, and (C) defining the Tenant's Proportionate Share as
recomputed; and (2) agree to retroactively adjust Base Rent and the Tenant's
Proportionate Share as recomputed. If an error in the number of square feet in
the Premises or the Tenant's Proportionate Share previously resulted in Tenant
being overcharged, Landlord, upon discovery of the error, will retroactively
adjust the square footage and/or Tenant's Proportionate Share so as to accord
Tenant a credit against Rent due.
A-4. Notwithstanding anything in the Lease or Exhibits thereto to the
contrary, Tenant shall pay no Base Rent for the first nineteen (19) months of
the Term, the forty-ninth month of the Term beginning with the Commencement Date
and the sixty-first month of the Term.
A-5. Tenant shall pay Base Rent, subject to the remeasurement provisions
of Section A-1. through A-3. and further subject to the abatement provisions of
Section A-4., for the Premises, as follows:
(1) During the period September 1, 1987 through August 31, 1990, at the
annual rate of $206,432.25, payable in equal monthly installments of
$17,202.69 each.
(2) During the period September 1, 1990 through August 31, 1991, at the
annual rate of $211,593.05, payable in equal monthly installments of
$17,632.75 each.
(3) During the period September 1, 1991 through August 31, 1992, at the
annual rate of $216,753.86, payable in equal monthly installments of
$18,062.82 each.
(4) During the period September 1, 1992 through August 31, 1993, at the
annual rate of $221,914.66, payable in equal monthly installments of
$18,492.89 each.
(5) During the period September 1, 1993 through August 31, 1994, at the
annual rate of $227,075.47, payable in equal monthly installments of
$18,922.96 each.
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(6) During the period September 1, 1994 through August 31, 1995, at the
annual rate of $232,236.28, payable in equal monthly installments of
$19,353.02 each.
(7) During the period September 1, 1995 through August 31, 1996, at the
annual rate of $238,429.24, payable in equal monthly installments of
$19,869.10 each.
(8) During the period September 1, 1996 through August 31, 1997, at the
annual rate of $244,622.21, payable in equal monthly installments of
$20,385.18 each.
(9) During the period September 1, 1997 through August 31, 1998, at the
annual rate of $250,815.18, payable in equal monthly installments of
$20,901.27 each.
(10) During the period September 1, 1998 through August 31, 1999, at the
annual rate of $257,008.15, payable in equal monthly installments of
$21,417.35 each.
(11) During the period September 1, 1999 through August 31, 2000, at the
annual rate of $264,233.28, payable in equal monthly installments of
$22,019.44 each.
(12) During the period September 1, 2000 through August 31, 2001, at the
annual rate of $271,458.40, payable in equal monthly installments of
$22,621.33 each.
(13) During the period September 1, 2001 through August 31, 2002, at the
annual rate of $278,683.53, payable in equal monthly installments of
$23,223.63 each.
A-6. If Tenant is not in default, and on written notice delivered to
Landlord no later than November 30, 1992, Tenant shall have the right to cancel
and terminate this Lease, effective November 30, 1993, contingent on Tenant
having paid to Landlord no later than November 30, 1993, a sum equivalent to the
total of the following:
(1) $230,000.00, plus
(2) a dollar sum representing the product obtained by multiplying: (a)
$20.00 by (b) the number of square feet of rentable area for which
Tenant is then under lease, insofar as said number exceeds the total of
rentable square feet contained in the Initial Office Space and Initial
Computer Space, plus
(3) Any unpaid amounts owed by Tenant to Landlord pursuant to Tenant
obligation to repay Landlord for amounts advanced by Landlord as to
office space converted to computer space, pursuant to Section A-17.
(4) Any amounts that become Landlord's obligation to pay to Computer
Sciences Corporation to effect a termination of that tenant's lease,
pursuant to Section A-20. (but not to exceed $35.000.00).
A-7. If Tenant is not in default, it shall have the option (the "Option")
to purchase the Land and Building (collectively referred to herein as the
"Property") for the price of $8,300,000.00 exercisable during the two-year
period of the Lease Term between September 1, 1992 and August 31, 1994 (the
"Option Period"). The Option shall be exercised by notice in writing to
Landlord, such notice to include an earnest money deposit in the amount of
$100,000.00 made payable to Chicago Title and Trust Company as Escrowee. Within
five (5) days thereafter the parties shall execute and deliver to each other a
purchase contract identical in substance to the form attached hereto as Exhibit
A-A (the "Purchase Contract") and a deed and money escrow agreement as
contemplated in the Purchase Contract, and the earnest money shall be deposited
into the Escrow.
Upon exercise of the purchase option, Tenant's option to cancel the Lease
pursuant to paragraph A-6, shall terminate.
Purchaser may, beginning July 1, 1992 and during the Option Period and
prior to the exercise of the Option, exercise a right of inspection by notice in
writing to Landlord. Upon exercise of its right of inspection, Tenant, its
agents and representatives shall be entitled, upon reasonable notice to Seller,
(i) to perform inspections and tests of the Building, including but not limited
to, all leased areas and structural and mechanical systems within the
Improvements; (ii) examine and copy any and all books and records maintained by
Seller or its agents relating to receipts and expenditures pertaining to the
Project for the three (3) most recent full calendar years and the current
calendar year; (iii) make investigations with regard to
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zoning and building code requirements; and (iv) make market studies and real
estate tax analyses. Without limitation of the foregoing, Purchaser or its
designated independent accounts may audit the operating statements for the
Project at Purchaser's sole cost and expense and Seller shall supply such
documentation as Purchaser or its accountants may reasonably request to complete
such audit.
Within five (5) days after receipt of notice of the right of inspection,
Landlord shall deliver to Tenant true, accurate and correct copies (or the
originals thereof for reproduction by Tenant) of the following:
(i) All leases related to the Property, together with a statement of
any rents and other charges in arrears or prepaid thereunder and the period
for which such rents or other charges are in arrears or have been prepaid
and the most current rent roll and operating statement for the Project. The
rent roll shall set forth with respect to each of the leases the following:
the space covered thereby, the date and term thereof, renewal options, if
any, the rent and other charges payable thereunder, including escalations
and percentage rentals payable thereunder and the period for which such
rents and other charges are in arrears or have been prepaid, the amount of
security deposit thereunder, and the utilities, if any, which are furnished
as part of the rent. Any rentable area in the Project that is vacant shall
be shown on the rent roll;
(ii) All certificates of occupancy, licenses, permits, authorizations,
and approvals required by law and issued by all governmental authorities
having jurisdiction over the Project as are in the possession of Landlord
or its agents;
(iii) All insurance policies currently in force and effect for the
Project;
(iv) All service, executory, employment and union contracts affecting
the Project and a list of all employees of Landlord.
(v) All existing policies of title insurance and surveys of the
Property.
(vi) All engineering and inspection reports for the Property.
(vii) All mortgage documents.
(viii) Proposed Exhibits "A" through "J" to the Purchase Contract.
Tenant shall have until forty-five (45) days after receipt of all of the
documents referred to above (the "Feasibility Period") to investigate and
satisfy itself as to the feasibility and desirability of owning and operating
the Project. The notice of the right of inspection may be exercised by Tenant
three (3) more times during the Option Period. The documents to be delivered to
Tenant by Landlord for any additional Feasibility Periods shall supplement and
update the documents previously delivered. In the event that Tenant is not
satisfied for any reason with the result of its investigation, Tenant may, in
its sole discretion, elect not to exercise the Option. If the Option is not
exercised by Tenant during the Option Period, the Option shall terminate at the
end of the Option Period.
Any changes, modifications, notices or new information with respect to the
above items (i) through (viii) made or received by Landlord at any time after
such items have been delivered to Tenant shall be delivered in writing to Tenant
immediately upon such change or modification or receipt by Landlord of such
notice or new information.
Tenant acknowledges that, prior to the commencement of the Option Period,
Landlord may refinance the Property. Landlord hereby agrees that in the event of
any refinancing, to the extent that the new financing restricts prepayment of
the principal balance for any period during or after the Option Period, such
financing shall be upon terms which (i) are commercially reasonable in light of
then-prevailing market conditions for projects of a similar nature in the
metropolitan Chicago area; and (ii) will not interfere with or prohibit the
exercise by Tenant of its Option as set forth in this Section A-7.
A-8. Notwithstanding anything in the Lease or Exhibits thereto to the
contrary, Landlord's construction obligation to Tenant to prepare the Premises
for Tenant's occupancy shall consist of paying:
(1) for a turnkey buildout of the Initial Office Space utilizing (a)
existing Space Study #2, (with specifications as set forth therein)
dated May 21, 1987, by Bilimoria & Associates, Ltd., including
telephone, electrical, and reflected ceiling plans, (b) material
quantities as required to effect said
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construction, (c) and finish materials having a value of 125% of
Building Standard value of same (as said finish materials are described
in Attachment A to Workletter).
Notwithstanding anything herein to the contrary, Landlord also agrees to install
(at its own expense) throughout the Initial Office Space full height interior
doors of building standard-type finish, parabolic lenses, and upgraded ceiling,
as well as providing all necessary demolition, space plan(s), and architectural
and mechanical drawings for said Space. Landlord also agrees to provide and
install, at its own expense the chiller and related equipment and resulting
installation therefor, as detailed in Section 7.A. of the Lease.
The cost of installing the separate circuit and meter as described in Section
7.B. of the Lease shall be allocated as follows:
1. Landlord shall pay the first $5,000.00 thereof.
2. Tenant shall pay the next $5,000.00 thereof.
3. Landlord shall pay the next $5,000.00 thereof.
4. Tenant shall pay the next $5,000.00 thereof.
5. Landlord shall pay any excess above $20,000.00.
(2) $10.00 per rentable square foot of area in the Initial Computer Space
for:
(a) Space plan(s), and architectural and mechanical drawings, (for
which, collectively, a sum not exceeding $.80 per rentable square
foot shall be allocated against the construction allowance).
(b) Demolition (for which a sum not exceeding $1.00 per rentable square
foot shall be allocated), except that if the demolition costs more
than said sum, Landlord shall pay the excess above $1.00 per
rentable square foot.
(c) Buildout of said Premises per plans and drawings to be attached
hereto as Exhibit A-B, and per Axelrod Construction Company's unit
costs, attached hereto as Exhibit A-C.
Any overage above said construction allowance shall be paid by
Tenant.
A-9. Any portion of the construction allowance accorded by Landlord to
Tenant not otherwise utilized pursuant to Section A-8. shall be applied dollar
for dollar so as to: (1) increase the Base Rent abatement periods previously
granted Tenant at commencement of the Lease Term, (2) at Tenant's option may be
applied to the Base Rent abatement periods previously granted Tenant during
latter periods in the course of the Lease Term, or (3) at Tenant's option, may
be applied to Tenant's dollar obligation incurred, if any, in effecting a
termination of Computer Sciences Corporation's lease, pursuant to Section A-20.
of the Addendum to Lease, or (4) at Tenant's option, may be applied to Tenant's
cost of installing the separate circuit and meter described in Section 7.B. of
the Lease.
A-10. Landlord agrees to and will provide Tenant with a written report,
prior to the Commencement Date of the Lease Term, from a mutually agreeable,
certified and qualified engineer nominated by Tenant, certifying that the
existing computer room equipment and installation is functional and in good
working order. After the submission and acceptance of said certification,
Landlord shall have no continuing obligation to repair, restore, renovate, or
replace the computer room equipment/installation. The afore-mentioned
engineering certification shall address the following areas of concern and such
other aspects of the integral components of the computer room as may later
become apparent:
(a) Halon system -- Halon to be fully charged and operable.
(b) Ed-Pacs -- to be in good working order, and all primary (daily and
weekly) and secondary (monthly and annually) maintenance shall have been
performed.
(c) Electrical supply system -- all components to be in good condition and
fully operable at their rated capacity.
(d) Light bulbs to be replaced, lenses and fixtures cleaned.
(e) Alarm and/or security systems -- checked, certified as operable and at
full capacity.
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(f) UPS systems -- checked, certified as operable and at full capacity.
A-11. Subject to rights of renewal, extension, option, or first refusal
accorded to the tenants in the Building prior to the execution of this Lease,
Tenant shall have the option, if it is not in default under this Lease, unless
Tenant is in the process of curing said default, to lease from Landlord, within
120 days from the Commencement Date of this Lease and on prior written notice
delivered to Landlord, on the same terms, including concessions, as are
contained in this Lease, all or any portion of the Building's rentable area
which, as of the date this Lease is executed by both parties hereto, is unleased
to any other party (hereinafter "Current Vacant Space").
Notwithstanding anything in this Section A-11. to the contrary, the area of
the Building presently under lease to D.C. Northam Co. or under negotiation for
addition to the D.C. Northam Co. lease shall be dealt with as follows:
Landlord represents to Tenant that Landlord is presently negotiating
with said tenant relative to a renewal of said lease, and to include, in
said renewal, an additional area consisting of approximately 1,600 square
feet of rentable area. Notwithstanding the pending negotiations with D.C.
Northam Co., Landlord agrees with Tenant herein that Landlord will not
enter into a Lease Amendment with D.C. Northam Co. for said 1,600 square
feet for a term expiring later than the termination date of D.C. Northam
Co.'s existing lease. If D.C. Northam Co. leases said 1,600 square feet,
upon the termination of the term thereof said space shall be considered
Current Vacant Space, and all of the terms and conditions contained in
Section A-11. and otherwise applicable to Current Vacant Space shall be
equally applicable as to said 1,600 square feet. Landlord further agrees
that any extension or renewal of lease for the existing D.C. Northam Co.
space beyond the current termination date thereof shall be consistent with
the notice provisions and Tenant's rights of Section A-13. of the Addendum.
Notwithstanding anything in this Lease to the contrary, Tenant herein also
expressly consents to Landlord leasing to Williams Electronics Co., Inc. an
area consisting of approximately 9,000 square feet of area contained in
what is currently space leased to United States Lines, Inc. on the first
floor of the Building, for a five (5) year term. If said space is leased to
said prospective tenant, said space on the termination of lease therefor
shall also be treated as Current Vacant Space and thereafter available to
Tenant herein on the terms and conditions as are contained in Section A-11.
of this Lease.
A-12. If Tenant fails to exercise its option for Current Vacant Space,
pursuant to Section A-11. hereof, it shall nevertheless have a continuing right
of first refusal as to any portion of the Current Vacant Space which another
tenant or prospective tenant desires to lease from Landlord, on the following
terms and conditions:
(1) Landlord shall submit to Tenant herein any bona fide offers to lease
space in the Building.
(2) Tenant shall thereafter have the right to match the business terms
contained in the bona fide offer submitted to Section A-12.(1) above by
advising Landlord in writing within thirty (30) days of receipt of any
such bona fide offer of its intent to Lease the premises by said offer
on the same terms and conditions as are contained therein.
(3) If Tenant herein fails to advise Landlord of its intent to lease said
premises within said period of time or refuses to lease said premises on
the terms and conditions as are contained in said bona fide offer,
Tenant's rights of first refusal shall be waived as to said space, if
the other tenant or prospective tenant does, in fact, lease said
premises. If the terms and conditions in said bona fide offer change
during the course of negotiation with the Tenant or prospective tenant
and a lease is executed by Landlord pursuant thereto, said lease shall
be null and void and Tenant herein shall be entitled to receive
consequential damages resulting from its loss therefrom.
(4) If Tenant herein does exercise its right of first refusal as to said
premises, Tenant and Landlord shall, as soon as is practicable
thereafter, enter into a Lease Amendment incorporating said premises
into the Premises demised by Landlord to Tenant.
(5) The right of first refusal as to Current Vacant Space shall be a
continuing right; i.e.; if the subject premises are leased to another
tenant or prospective tenant, Tenant herein shall have the right to
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<PAGE> 46
lease the subject premises from Landlord pursuant to this Section A-12.
upon the expiration of said other tenant or prospective tenant's lease.
(6) Landlord further agrees with Tenant herein that it shall not hereafter
lease any portion or all of the Current Vacant Space to another tenant
or prospective tenant for a period of more than five (5) years,
including renewals, option terms, or extensions, without first obtaining
the consent of Tenant herein, said consent not to be unreasonably
withheld.
A-13. Landlord further agrees that as to any space in the Building
hereafter vacated by a tenant under lease in the Building as of the date of the
execution of this Lease, by reason of the termination of said tenant's lease or
lease term, Landlord will provide Tenant with 300 days prior written notice
thereof, (if Landlord, in fact, has 300 days prior knowledge of said
termination) and Tenant herein shall thereafter have the right to lease said
space to be vacated as follows:
(1) Within 105 days of the receipt notice from Landlord to Tenant of the
expected vacating of said space, on the same terms and conditions as are
then applicable to the Premises demised hereby, (except that the
abatement of Rent shall be ratably reduced for said space, pursuant to
the formula for ratable reduction of construction, as contained in
Section A-17.), or
(2) Thereafter, pursuant to the rights of first refusal accorded to Tenant
herein pursuant to Section A-11. and A-12. (except that the abatement of
Rent shall be ratably reduced for said space, pursuant to the formula
for ratable reduction of construction, as contained in Section A-17.).
A-14. Landlord further agrees that as to any space in the Building
hereafter vacated by a tenant not under lease in the Building as of the date of
the execution of this Lease (hereafter "Intervening Tenant"), by reason of the
termination of said tenant's lease or lease term, Landlord will provide Tenant
herein with 300 days prior written notice thereof (if Landlord, in fact, has 300
days prior knowledge of said termination), and Tenant herein shall thereafter
have the right to lease said space to be vacated by the Intervening Tenant as
follows:
(1) Within 105 days of the receipt of notice from Landlord to Tenant of
the expected vacating of said space, on the same terms and conditions as
are then applicable to the Premises demised hereby, (except that the
abatement of Rent shall be ratably reduced for said space, pursuant to
the formula for ratable reduction of construction, as contained in
Section A-17.), or
(2) Thereafter, Tenant shall have the rights of first refusal accorded it
herein pursuant to Section A-11. and A-12. (except that the abatement of
Rent shall be ratably reduced for said space, pursuant to the formula
for ratable reduction of construction, as contained in Section A-17.).
Landlord shall use its best efforts in negotiating lease(s) with
Intervening Tenant(s) to assure that Landlord shall have the right under
said lease(s) to substitute premises, if required, for said Intervening
Tenant(s).
(3) If said space is vacant and Landlord fails to procure a new tenant for
it, Tenant having failed to lease it from Landlord pursuant to A-14. (1)
above, Tenant shall nevertheless have a continuing right, absent
exercise of its first refusal rights accorded in A-14.(2), to lease said
space from Landlord, on all the terms and conditions applicable to
Intervening Tenant space, except that the rental terms, including any
concessions customarily being offered for like space at that time in the
Oak Brook market, shall be the then fair market value for said space.
In case of a dispute between Landlord and Tenant as to said rental
terms, the dispute will be submitted to a binding arbitration process,
involving a qualified broker and/or appraiser, with the associated costs
divided equally between Landlord and Tenant and a result obtained in 30
- 40 days from date of submission.
A-15. The rights of first refusal accorded Tenant by Landlord pursuant to
Sections A-13. and A-14. shall be recurring and continuing; i.e.; if Tenant
fails or chooses not to exercise its rights when first applicable, said rights
of first refusal shall nevertheless survive said initial failure and thereafter
be available to Tenant herein, when next available.
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As to any offer(s) to lease space to another tenant or prospective tenant,
Tenant herein shall be advised by Landlord of any changes in business terms
after Landlord's initial offer(s).
A-16 Landlord's construction obligation to Tenant herein to prepare the
original Premises for Tenant's occupancy shall consist of:
(1) the turnkey construction for the Initial Office Space, pursuant to
Section A-8.
(2) $10.00 per rentable square foot for each square foot of Initial
Computer Space.
Said construction allowances are intended to pay for space plan(s),
architectural and mechanical drawings, (which costs, collectively, shall be
accorded an allowance not exceeding $.80 per rentable square foot; as in Section
A-8. (2) (a) herein, demolition, and construction of a permanent nature
(including wiring and installation thereof) excluding, for example, but not
limited to: furniture, trade fixtures, telephone and computer equipment (all as
detailed in Section A-8. herein).
Any additional construction costs are to be borne solely by Tenant, except
that Landlord shall be solely responsible for paying all costs associated with
installation of air conditioning necessary to comply with Landlord's obligation
pursuant to Section 7. of Lease relative to the difference between the 4,513
square feet of rentable area (Initial Office Space) and the 10,000 rentable
square feet of potential office space, or a difference of 5,487 rentable square
feet.
A-17. Landlord's construction obligation as to any space in the Building
presently built out as office space which Tenant leases from Landlord subsequent
to the Premises originally demised, shall be ratably reduced from $20.00 per
rentable square foot allowance; e.g.; if Tenant leases space at a point in time
when 10% of its Term has expired, Landlord's construction obligation shall be
reduced to $18.00 per rentable square foot.
As to any space in the Building built out as office space at the time this
Lease is executed and subsequently leased by Tenant and used as computer space,
Landlord's construction obligation shall consist of paying $20.00 per rentable
square foot, ratably reduced pursuant to the above formula in relation to the
amount of the Term remaining when said space is leased. Said primary costs shall
be paid by Landlord and Landlord shall not be entitled to a refund of same.
Landlord, however, agrees to pay any and all additional construction costs
associated with said build-out. To the extent any such additional costs exceed
the result of the construction formula associated with said secondary space,
Landlord shall advance said costs, but Tenant shall repay Landlord for those
advances, fully amortizing said sum over the balance of the Term then remaining,
together with interest at a rate equivalent to 100 basis points above the United
States Treasury Department's cost of borrowing for the same period of time, in
equal monthly installments, together with Rent, and as Rent.
Notwithstanding the contents of this Section A-17. to the contrary,
Landlord's $20.00 per rentable square foot construction obligation for computer
space leased as of the date of the execution of this Lease may be applied to:
(1) construction, or
(2) additional abated Base Rent otherwise due for said computer space, or
(3) any costs to be borne by Tenant associated with the buyout, if any, of
Computer Sciences Corporation's lease for computer space.
A-18. All options to add space and/or exercise of rights of first refusal
shall, under all circumstances, reflect a Termination Date which is the same as
the Termination Date of the Premises originally demised.
A-19. Only Base Rent is abated pursuant to Section A-4.; Tenant shall have
the obligation to pay from the Commencement Date of this Lease its proportionate
share of all Taxes and Operating Expenses, as said terms are defined in the
Lease.
A-20. Upon notice from Tenant to Landlord, Landlord and Tenant agree to
use their best efforts to negotiate a termination of the lease between Landlord
and Computer Sciences Corporation for that tenant's computer space in the
Building. Landlord agrees to pay the first $50,000.00 required to effect such a
termination; any amounts above $50,000.00 required to effect a termination will
be paid by Tenant herein.
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A-21. If Tenant is not in default, or is in the process of curing said
default, and on written notice delivered to Landlord no later than twelve (12)
months prior to the end of the Term of this Lease, Tenant shall have the right
to renew this Lease for an additional term of five (5) years, commencing
September 1, 2002 and terminating August 31, 2007 (hereafter "First Extended
Term"), on all the terms and conditions of this Lease, except as follows:
(1) There shall be no abatement of Rent.
(2) Landlord's construction obligation as to any space not leased by
Tenant prior to the Commencement of the First Extended Term shall
consist of paying the cost of a then-building standard buildout. If the
First Extended Term expires and Tenant has not renewed the Lease for the
Second Extended Term, Tenant will refund to Landlord on or by August 31,
2007, an amount equal to the unamortized cost of said buildout, based on
a five (5) year amortization schedule, e.g.; if Tenant leases space for
the first time at the end of the second year of the First Extended Term,
and the then-building standard buildout is $15.00 per rentable square
foot, and Tenant does not renew pursuant to Section A-22., Tenant will
owe Landlord on or by August 31, 2007 the sum of $6.00 per rentable
square foot so leased ($15.00 X 40% = $6.00/rentable square foot).
(3) Tenant shall have no right to cancel or terminate the Term of Lease.
(4) The Base Rent for said First Extended Term shall be an amount, on a
per rentable square foot per annum basis, which is the greater of:
(a) Tenant's Base Rent rate as of the commencement of the First
Extended Term, or
(b) 80% of the then fair market value for equivalent space in the Oak
Brook Market.
A-22. If Tenant is not in default, or in the process of curing said
default, and on written notice delivered to Landlord no later than twelve (12)
months prior to the end of the First Extended Term of this Lease, Tenant shall
have the right to renew this First Extended Term for an additional term of five
(5) years, commencing September 1, 2007 and terminating August 31, 2012
(hereafter "Second Extended Term"), on all of the terms and conditions of this
First Extended Term, except as follows:
(1) There shall be no abatement of Rent.
(2) Landlord's construction obligation as to any space not leased by
Tenant prior to the commencement of the Second Extended Term shall
consist of paying the cost of a then-building standard buildout ratably
reduced by the percentage of the Second Extended Term that has expired
prior to the commencement date of the lease term for said space; e.g.;
if Tenant leases space for the first time at the end of the second year
of the Second Extended Term, and the then-building standard buildout is
$15.00 per rentable square foot, Landlord's construction obligation
therefor shall be $9.00 per rentable square foot so leased ($15.00 X 60%
= $9.00/rentable square foot).
(3) Tenant shall have no right to cancel or terminate the Term of Lease.
(4) The Base Rent for said Second Extended Term shall be an amount, on a
per rentable square foot per annum basis, which is the greater of:
(a) Tenant's Base Rent rate as of the commencement of the Second
Extended Term, or
(b) 80% of the then fair market value for equivalent space in the Oak
Brook market.
A-23. At any time after the execution of this Lease, but before the
Commencement Date hereof, Tenant shall have the right to enter into the Premises
to test the facilities therein and set up necessary equipment, and, pursuant to
this Lease, to occupy the Initial Computer Space at any time, and the Initial
Office Space after completion of its reconstruction. Landlord shall cooperate
fully in granting access to Tenant therefor, but shall impose such reasonable
requirements as are necessary to assure security for, and control of, the
Building. During such period of time prior to the Commencement Date hereof,
Tenant agrees to hold Landlord harmless from any damage, liability or claims it
may suffer as a result of Tenant's activities and to indemnify Landlord for any
losses, claims, damage, or liability (except as same result from Landlord's
gross negligence) Landlord may suffer by reason of Tenant's activities in the
Premises. All of the applicable provisions of this Lease relating to
construction, insurance, covenant against liens, possession, repairs, fire and
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casualty, rules and regulations, shall be equally applicable during this period
of time prior to the Commencement Date.
A-24. Prior to signage other than building standard signage, tenant shall
have the right to erect and the obligation to maintain, both at its sole cost,
any desired signage in the interior or on the exterior of the Building, subject
to Landlord's consent, not to be unreasonably withheld, and further subject to
applicable rules and ordinances of any governmental body, including, but not
limited to, the Village of Oak Brook. Tenant's signage rights, subject to this
Section, shall be exclusive to Tenant only (and not accorded to any other tenant
or prospective tenant in the Building) after such time as Tenant herein has
leased one-half or more of the rentable square feet in the Building; at that
point in time, Tenant shall also have the right to rename the Building, subject
to Landlord's consent, not to be unreasonably withheld.
A-25. The uninterrupted power supply system (UPS) presently in the
Building will be maintained jointly by Landlord, Tenant, and Computer Sciences
Corporation, with Tenant paying its proportionate share of the cost of said
maintenance. Tenant will immediately utilize its best efforts to negotiate with
Computer Sciences Corporation a joint maintenance agreement of the UPS system.
If such an arrangement is made, Landlord's maintenance obligation shall be
waived.
Landlord's maintenance obligation, so long as it exists hereunder, shall be
undertaken with a responsible and qualified maintenance firm. Landlord and
Tenant shall use their best efforts to agree on a maintenance contractor; in the
event the parties fail to reach agreement, Landlord shall have the right to
choose the contractor.
A-26. Tenant shall have the exclusive right to use five (5) assigned
covered parking spaces and five (5) assigned uncovered parking spaces on the
parking lot of the Building during the Term of Lease, or any renewal thereof,
without charge, as agreed upon by Landlord, and Tenant as shown on Exhibit E. At
such time as Tenant leases from Landlord additional space beyond the Premises
originally demised, Landlord agrees to provide Tenant with additional, exclusive
assigned parking spaces at the ratio of one parking space per 1,000 square feet
of rentable area so leased, on the parking lot of the Building, for the Term of
the Lease, or any renewal thereof, without charge, as agreed upon by Landlord,
and Tenant, with one-half of said spaces being covered and one-half uncovered.
A-27. In addition to the Option granted to Tenant in section A-7. hereof,
Tenant has the following rights:
In the event that Landlord receives a bona fide offer (the "Offer") from a
third party to purchase the Property which Landlord desires to accept, Landlord
shall first give written notice (the "Notice") thereof to Tenant. The Notice
must be received by Tenant not less than thirty (30) days before the proposed
sale and shall state the date of the proposed sale, the name and address of the
proposed purchaser, and shall include a copy of the Offer specifying the terms
and conditions of the proposed sale. Within thirty (30) days after the receipt
of the Notice, Tenant shall have a right of first refusal to purchase the
Property on the terms and conditions set forth in the Offer except as to the
proposed date of sale contained therein. If Tenant exercises its right of first
refusal to purchase the Property, by written notice to Landlord, Tenant and
Landlord shall, as soon as is practicable thereafter, enter into a contract for
sale and purchase of the Property on the same terms and conditions as contained
in the Offer except the date of sale shall be sixty (60) days after exercise of
the right of first refusal.
The right of first refusal accorded Tenant by Landlord pursuant to this
Section A-28 shall be recurring and continuing; i.e., if Tenant chooses not to
exercise its right when first applicable, and the Property remains unsold, the
right of first refusal shall nevertheless continue to be available to Tenant,
when next applicable. As to any Offer from any prospective purchaser to purchase
the Property, Landlord shall advise Tenant of any changes in terms or conditions
from those contained in the Offer attached in the Notice, whereupon Tenant shall
have thirty (30) additional days in which to exercise the right of first refusal
as set forth herein.
A-28. Except as amended, modified, or supplemented hereby, all of the
terms and conditions of the Lease and Exhibits thereto shall remain in full
force and effect. Wherever there is a conflict between the Lease (and Exhibits
thereto) and this Addendum, the Addendum shall control and prevail.
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<TABLE>
<S> <C>
ACCEPTED AND AGREED: LANDLORD:
By: LaSalle National Bank, not personally
TENANT: GIS Information Systems, Inc. but as Trustee U/T/A #107194
By: By: /s/ [Signature]
Attest: Its:
and
815 Commerce Drive REIP
By: /s/ [Signature]
Its:
Tenant's Guarantor(s)
</TABLE>
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<PAGE> 51
EXHIBIT A
<PAGE> 52
EXHIBIT B TO LEASE
FOR
815 Commerce Drive
Oak Brook Illinois 60521
Certified Collateral Corporation
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Gentlemen:
You (hereinafter called "Tenant") and we (hereinafter called "Landlord"),
are executing simultaneously with this letter agreement a written lease (the
"Lease") covering certain premises, as more particularly described in said
lease, in the building known as 815 Commerce Drive.
To induce Tenant to enter into the Lease (which is hereby incorporated by
reference to the extent that the provisions of this letter agreement may apply
thereto) and in consideration of the mutual covenants hereinafter contained,
Landlord and Tenant agree as follows:
1. (a) Landlord, at Landlord's cost and expense (as detailed in A-8. to
Addendum to Lease) shall do the work outlined in accordance with Axelrod
Construction Co.'s unit costs, attached as Exhibit A-C, and quantity breakdown"
identified by Landlord and Tenant and attached hereto (hereinafter called
"Work"). Landlord shall pay for the necessary initial architectural drawings for
the work (hereinafter called "Plans") to be drawn at a cost (as detailed in A-8.
to Addendum to Lease), by Tenant's space planner and engineer. The Plans must
include partition drawings, telephone and electric drawings and reflected
ceiling drawings and must be suitable in all respects for submission to the
Building Department of the village of Oak Brook in order to obtain a building
permit. All of the Plans are expressly subject to Landlord's written approval.
Tenant has assured itself by direct communication with its space planner or
architect that the Plans can be delivered to Landlord by Tenant on or before
June 15, 1987, provided that Tenant promptly furnishes complete information
concerning Tenant's requirements with respect to the Work to said space planner
or architect as and when requested by them. Tenant covenants and agrees to cause
said Plans to be delivered to Landlord on or before said date. Landlord will, at
Landlord's sole cost and expense, have mechanical (sprinkler, air conditioning,
heating, electric and plumbing) drawings prepared by Landlord's mechanical
engineer covering, and limited to, the mechanical elements of the Work as shown
on the Plans as the Work relates specifically to Building Standard installations
as set forth in Addendum hereto.
(b) Except as set forth in subparagraph (a), Landlord has no other
agreement with Tenant and has no other obligation to do any other work with
respect to said premises. Any other work in said premises which may be permitted
by Landlord pursuant to the terms and conditions of the Lease shall be done at
Tenant's sole cost and expense and in accordance with said terms and conditions.
2. If Landlord further agrees to perform, at Tenant's request and upon
submission by Tenant (at Tenant's sole cost and expense) of all necessary
drawings, plans and specifications, any other work in addition to the Work
described in Paragraph 1 hereof, such other work to be done at Tenant's sole
cost and expense as a Tenant's extra. Prior to commencing any such other work
requested by Tenant. Landlord shall submit to Tenant written estimates of the
cost of such other work. If Tenant shall fail to approve said estimates within
seven (7) days from the receipt thereof, the same shall be deemed disapproved in
all respects by Tenant and Landlord shall not be authorized to proceed thereon.
Tenant agrees to pay to Landlord promptly upon being billed therefor, at any
time and from time to time, the cost of all such other work together with ten
percent (10%) of said cost for Landlord's overhead. Landlord shall not charge a
fee for itself for the initial construction.
3. Notwithstanding the date provided in the Lease for commencement of the
term thereof, Tenant's obligation to pay rent thereunder shall not commence
until Landlord shall have substantially completed all of
<PAGE> 53
the Work to be done by Landlord as described in Paragraph 1 hereof; provided,
however, that if Landlord shall be delayed in substantially completing said work
as a result of
(a) Tenant's failure to furnish the Plans for the Work in accordance with
paragraph 1 hereof, or
(b) Tenant's failure to approve cost estimates within the time specified
in paragraph 2 hereof, or
(c) Tenant's request for materials, finishes or installations other than
Building Standard, or
(d) Tenant's changes in the Work or the Plans thereof (notwithstanding
Landlord's approval of such changes); or
(e) The performance of any work by Tenant or any person, firm or
corporation employed by Tenant; or
(f) Any fault of Tenant or its agents,
the commencement of the term thereof and the payment of rent thereunder shall
not be affected or deferred on account of such delay.
4. Landlord, at Landlord's discretion, may permit Tenant and Tenant's
agents to enter said premises prior to the date specified as the commencement of
the term of the Lease in order that Tenant may do such other work as may be
required by Tenant to make said premises ready for Tenant's use and occupancy
thereof. If Landlord permits such entry prior to commencement of the term, then
such permission however, is conditioned upon Tenant and Tenant's agents,
contractors, workmen, mechanics, suppliers and invitees, working in harmony and
not interfering with Landlord and Landlord's agents in doing Landlord's work in
said premises or for other tenants and occupants of said building. If at any
time such entry shall cause or threaten to cause such disharmony or
interference, Landlord shall have the right to withdraw such permission upon
twenty-four (24) hours written notice, to Tenant. Tenant agrees that any such
entry into and occupation of the premises shall be deemed to be under all of the
terms, covenants, conditions and provisions of the Lease except as to the
covenant to pay rent, and further agrees Landlord shall not be liable in any way
for any injury, loss or damage (except for the negligence of Landlord, its
agents, employees, servants, contractors and invitees) which may occur to any of
Tenant's work and installations made in said premises or to properties placed
therein prior to the commencement of the term of the Lease, the same being at
Tenant's sole risk.
5. Notwithstanding anything in this Exhibit or in the Lease to the
contrary, Tenant shall have the right, as to construction work performed after
the work associated to install Tenant in the Premises, to choose its own
contractor if its bid is lower and/or bid out said work. If Tenant thereafter
engages its own contractor to perform the requisite construction, Landlord shall
have no supervisory capacity as to said contractor, but said contractor shall:
(a) Provide Landlord with a current certificate of insurance, satisfactory
in content and coverage.
(b) Adhere to the then-prevailing practice in Oak Brook relative to the
hiring of union personnel for the construction.
(c) Provide Landlord with a performance bond for the subject construction.
(d) Possess a current contractor's license enabling it to perform
construction in Oak Brook.
(e) Certify to Landlord that it has, for each of the three (3) years
previous to the subject construction, performed and completed similar
construction in an amount of not less than $2,000,000.00 in value.
Any such Tenant-contracted construction shall be performed in a timely,
diligent and workmanlike manner and Tenant shall be solely responsible for the
quality of such work.
Tenant agrees to indemnify and hold Landlord harmless from any claims
arising from, or as a result of, any such Tenant-contracted construction.
If the foregoing correctly sets forth our understanding, kindly sign as
indicated below.
<PAGE> 54
<TABLE>
<S> <C>
ACCEPTED AND AGREED: LANDLORD:
By: LaSalle National Bank, not personally
TENANT: GIS Information Systems, Inc. but as Trustee U/T/A #107194
By:
By:
Its:
Attest:
and
815 Commerce Drive REIP
By:
Its:
Tenant's Guarantor(s)
</TABLE>
<PAGE> 55
EXHIBIT B
Drawing of Subleased Premises
<PAGE> 56
815 Commerce Drive Building
Attachment A to Workletter
The Building Standard is:
1. Full height, solid core, single leaf entry door(s) in accordance with
building code with lever handle(s) and lockset.
2. Partitions where designated on the Plans not to exceed one (1) lineal foot
for each fifteen (15) square feet of usable area.
3. Standard height interior door frames and solid core doors including door
stops, hinges, and latchset hardware where designated on the Plans not to
exceed one (1) door for each five hundred (500) square feet of usable
area.
4. Suspended mineral acoustical tile ceiling throughout the Premises.
5. Recessed two foot by four foot (2' x 4') fluorescent light fixtures in a
quantity not to exceed one (1) fixture for each eighty (80) square feet of
usable area. The lighting fixtures shall be controlled by one (1) switch
for each six hundred (600) square feet of usable area.
6. Duplex electrical wall receptacles on the basis of not more than one (1)
receptacle for each 200 square feet of usable area.
7. Telephone outlets, in walls, on the basis of not more than one (1) outlet
for each two hundred fifty (250) square feet of usable area.
8. Floor covering allowance of One Dollar ($1.33) per usable square foot of
floor space.
9. Sprinkler heads in a quantity as and if required by Oak Brook Building
Code.
10. Standard building window treatment on all exterior windows.
11. Painting and partitions and columns and interior side of exterior window
walls in Landlord's standard manner, colors to be selected by Tenant from
Landlord's Building Standard Colors; but not more than one (1) color in
any one room or other area.
<PAGE> 57
(LOGO) EXHIBIT C
TENANT ESTOPPEL CERTIFICATE
TO: The AEtna Casualty and Surety Company and/or whom else it may concern:
THIS IS TO CERTIFY THAT:
1. The undersigned is the Lessee (Tenant) under that certain Lease dated
___________________ by and between _____________________ as Lessor
(Landlord) and ________________________________________________________ as
Lessee, covering those certain premises commonly known and designated as
_______________________________________________________________________
2. The Lease has not been modified, changed, altered or amended in any
respect (except as indicated following this sentence) and is the only
Lease or agreement between the undersigned and the Lessor affecting said
premises. If none, state "none."_______________________________________
_______________________________________________________________________
3. The undersigned has made no agreements with Lessor or its agents or
employees concerning free rent, partial rent, rebate of rental payments
or any other type of rental concession (except as indicated following
this sentence). If none, sate "none."_________________________________
______________________________________________________________________
4. The undersigned has accepted and now occupies the premises, and is and has
been open for business since __________, 19___. The lease term began
________, 19___, and the rent for said premises has been paid to and
including ________, 19___. No rent has been prepaid for more than
two (2) months. The fixed minimun rent being paid as above is $________
per month.
_______________________________________________________________________
5. The Lease is not in default and is in full force and effect. As of the
date hereof, the undersigned is entitled to no credit, and no
offset or deduction in rent, except as otherwise allowed pursuant to the
Lease.
6. The undersigned has received or will receive payment or credit for tenant
improvement work in the total amount of $__________ (or if other than cash,
describe below). If none, state "none."___________________________________
__________________________________________________________________________
7. No actions, whether voluntary or otherwise, are pending against the
undersigned under the bankruptcy laws of the United States or any state
thereof.
8. This certification is made to induce The AEtna Casualty and Surety Company
to make certain fundings, knowing that The AEtna Casualty and Surety
Company relies upon the truth of this certificate in disbursing said funds.
9. Standard Mortgagee Protection Clause attached hereto as Exhibit A
Dated this ____________ day of ___________ 19___.
__________________________, LESSEE
By:_______________________________
Its_______________________________
<PAGE> 58
GUARANTEE
In order to induce Landlord to enter into the foregoing Lease, CCC
Information Services, Inc. (the "Guarantor") hereby directly, absolutely, and
unconditionally guarantees to Landlord and Landlord's successors and assigns
the full and punctual payment of Rent due under the Lease and the full,
complete and timely performance of all of Tenant's obligations under the Lease.
Any act of the Landlord or its agents, or the successors or assigns
of the Landlord, or their agents consisting of a waiver of any of the terms or
conditions of the Lease, or the giving of any consent to any manner or thing
relating to the Lease, or the granting of any indulgences or extensions of time
to the Tenant, or to the release of any collateral providing security for the
full performance of Tenant's obligations may be done without notice to the
Guarantor and without releasing the obligations of the Guarantor hereunder.
The obligations of the Guarantor hereunder shall not be released by
Landlord's receipt, application, or release of security given for the
performance and observance of covenants and conditions in the Lease contained
on the Tenant's part to be performed or observed, nor by any modification of
the Lease, but in case of any such modification the liability of the Guarantor
shall be deemed modified in accordance with the terms of any such modification
of the Lease.
The liability of the Guarantor hereunder shall in no way be affected
by (a) the release or discharge of the Tenant in any creditors', receivership,
bankruptcy, or other proceedings; (b) the impairment, limitation, or
modification of the liability of the Tenant or the estate of the Tenant in
bankruptcy, or of any remedy for the enforcement of the Tenant's said liability
under the Lease, resulting from the operation of any present or future
provision of the Bankruptcy Act or other statute or from the decision in any
court; (c) the rejection or disaffirmance of the Lease in any such proceedings;
(d) the assignment or transfer of the Lease by the Tenant; (e) any disability
or other defense of the Tenant; (f) the cessation from any cause whatsoever of
the liability of the Tenant other than a termination of Lease (resulting from a
judgment by a court of competent jurisdiction) due to Landlord's default; or
(g) the impairment or release of any collateral securing the full performance
of Tenant's obligation.
Guarantor's liability herein is direct, absolute, continual, and
unconditional and is joint and several and independent of the obligations of
Tenant, and a separate actions or actions may be brought and the obligation of
the Guarantor may be immediately enforced without necessity of any action
against Tenant or collateral and prosecuted against Guarantor whether or not
action or actions are brought against Tenant or whether or not Tenant is joined
in any such action or actions or whether or not Landlord has resorted to any
collateral, and Guarantor waive benefit of any enforcement thereof.
<PAGE> 59
EXHIBIT D TO LEASE FOR
815 Commerce Drive
-----------------------
Oak Brook, Illinois
-----------------------
RULES AND REGULATIONS
RULES AND REGULATIONS. Tenant agrees to observe (to the extent not
inconsistent with rights granted under the Lease) the rights reserved to
Landlord in the lease and agrees, for itself, its employees, agents, clients,
customers, invitees and guests, to comply with the following rules and
regulations and with such reasonable modifications thereof and additions
thereto as Landlord may make for the Building:
(a) Any sign, lettering, picture, notice, or advertisement installed
within Tenant's Premises which is visible to the public from within the
Building shall be installed at Tenant's cost and in such manner, character and
style as Landlord may approve in writing. No sign, lettering, picture, notice
or advertisement shall be placed on any outside window or in any position so as
to be visible from outside the Building or from the atrium areas of the
Building.
(b) Tenant shall not use the name of the Building or use pictures or
illustrations of the Building in advertising or other publicity, without prior
written consent of Landlord, not to be unreasonably withheld.
(c) Tenant, its customers, invitees, licensees, and guests shall not
obstruct sidewalks, entrances, passages, courts, corridors, vestibules, halls,
elevators and stairways in and about the Building. Tenant shall not place
objects against glass partitions or doors or windows or adjacent to any open
common space which would be unsightly from the Building corridors or atriums,
or from the exterior of the Building, and will promptly remove the same upon
notice from Landlord.
(d) Tenant shall not make noises, cause disturbances, create vibrations,
odors or noxious fumes or use or operate any electrical or electronic devices
or other devices that emit sound, waves, or dangerous to other tenants and
occupants of the Building or that would interfere with the operation of any
device or equipment or radio or television broadcasting or reception from or
within the Building or elsewhere, and shall not place or install any
projections, antennae, aerials or similar devices inside or outside of the
Premises, without the prior consent of Landlord, not to be unreasonably
withheld.
(e) Tenant shall not make any room-to-room canvass to solicit business
from other tenants in the Building, and shall not exhibit, sell or offer to
sell, use, rent or exchange any item or service in or from the Premises unless
ordinarily embraced within the Tenant's use of the Premises as specified in its
lease.
(f) Tenant shall not waste electricity or water and agrees to cooperate
fully with Landlord to assure the most effective operation of the Building's
heating and air conditioning, and shall refrain from attempting to adjust any
building controls. Tenant shall keep public corridor doors closed.
(g) Two door keys for door in the Premises will be furnished at the
commencement of the lease by Landlord. Tenant shall not affix additional locks
on doors and shall purchase duplicate keys only from Landlord. When the lease
is terminated, Tenant shall return all keys to Landlord and will provide to
Landlord the means of opening any safes, cabinets or vaults left in the
Premises.
(h) Tenant assumes full responsibility (subject to the negligence of
Landlord, its agents, employees, servants, contractors or invitees) for
protecting its space from theft, robbery and pillerage, which includes keeping
doors locked and other means of entry to the Premises closed and secured.
(i) Peddlers, solicitors and beggars shall be reported to the office of
the Building or as Landlord otherwise requests.
(j) Tenant shall not install and operate machinery or any mechanical
devices of a nature not directly related to Tenant's ordinary use of the
Premises without the written permission of the Landlord.
(k) Except as otherwise provided in the lease, no person or contractor
not employed by Landlord shall be used to perform window washing, cleaning,
decorating, repair or other work in the Premises.
(l) Tenant shall not, and Tenant shall not permit or suffer anyone to:
(1) Cook in the Premises;
(2) Place vending or dispensing machines of any kind in or
about the Premises;
(3) At any time sell, purchase or give away, or permit the
sale, purchase or gift of, food in any form;
<PAGE> 60
However, with prior written consent of Landlord, such activities may be
permitted in lounges or other facilities designated for this purpose, or in
Tenant's Premises.
(m) Tenant shall not:
(1) Use the Premises for lodging or for any immoral or illegal
purposes.
(2) Use the Premises to engage in the manufacture or sale of, or
permit the use of, any spirituous, fermented, intoxicating
or alcoholic beverages on the Premises.
(3) Use the Premises to engage in the manufacture or sale of, or
permit the use of, any illegal drugs on the Premises.
(n) In no event shall any person bring into the Building
inflammables such as gasoline, kerosene, naphtha and benzine, or
explosives or firearms or any other article of intrinsically
dangerous nature. If by reason of the failure of Tenant to
comply with the provisions of this paragraph, any insurance
premium payable by Landlord for all or any part of the Building
shall at any time be increased above normal insurance premiums
for insurance not covering the items aforesaid, Landlord shall
have the option to require Tenant to make immediate payment
for the whole of the increased insurance premium.
(o) Tenant shall comply with all applicable federal, state and
municipal laws, ordinances and regulations and building rules,
and shall not directly or indirectly make any use of the Premises
which may be prohibited thereby or which shall be dangerous to
person or property or shall increase the cost of insurance or
require additional insurance coverage.
(p) If Tenant desires signal, communication, alarm or other
utility or service connection installed or changed, the same
shall be made at the expense of Tenant, with approval and under
direction of Landlord.
(q) Tenant shall not move into the Premises or allow itself to be
moved into the Premises, in whole or in part, nor move from
the Premises or allow itself to be moved from the Premises, in
whole or in part, unless it shall first contact Landlord and
make arrangements to do so at such reasonable times as Landlord
may direct.
<PAGE> 61
(GRAPHIC)
<PAGE> 62
EXHIBIT F
S.H. COHEN & ASSOCIATES
Consulting Mechanical & Electrical Engineers
May 30, 1987
Mr. Larry Elsberg
LaSalle Mortgage & Realty Co. Inc.
4301 W. Petersn Ave.
Chicago Ill. 60646
RE: GIS Information Systems
815 Commarce Dr., Oakbrook
Dear Larry:
Following is a description of the new H.V.A.C. system being designed to
serve the GIS Information Systems offices at 815 Commarce Drive.
The existing H.V.A.C. is located on the second floor and serves all
tenant space on that floor with the exception of the computor room.
The new tenant space will be diconnected from this system and a new
system will be installed to serve only this space.
The new system will be a roof top variable volume System, designed
to operate 24 hours a day 365 days per year. This system will provide both
heating and cooling for the tenant space. The system components and
operation is as follows.
The main air handler and refrigeration equipment will be a package unit
with a capacity of approx. 30 tons of refrigeration located on the roof
above the tenant space. This package unit will provide both the
ventilation air and cooling for the space. The unit will have a
economizer cycle to provide free cooling when the outside air temperature
is low enough to satisfy the space requirements. The control to start and
stop the unit will be located in tenant space. Conditioned air to
the perimeter rooms will be delivered to variable volume fan powered boxes
with hot water heating coils controlled by automatic valves. Interior
rooms will be served by variable volume boxes. Each box will be considered
as a control zone operated by a thermostat to provide independent
control of the space served. Each control zone will serve multiple rooms as
long as they have the same outside exposure and usage. Space such as
conference rooms will have independent control for each room.
<PAGE> 63
S.H. COHEN & ASSOCIATES
Consulting Mechanical & Electrical Engineers
Fan powered boxes operate as variable volume boxes as long as heating is
not required, when heating is required the fan and coil are activated
automatically by a thermostat to provide a constant heated air flow to
the space. The variable volume box provides a variable air flow to the
space by controlling a damper in the box. The control of both boxes is
accomplished by a thermostat located in the space served. The system is
very flexible and additional control zones can be added if the tenant so
desires. The hot water system used to provide heat to the box will be
provided by the existing building system. The building hot water system
operates 365 days a year so hot water is always available.
The system I have just described is very energy conserving and the
present state of the art. If you require any additional information as to
the exact operation of each component I will be happy to provide you with
a detailed description.
Sincerely:
/s/ Sheldon Cohen
<PAGE> 64
EXHIBIT G
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE, made this ______ day of ___________, 1987, by and
between LaSALLE NATIONAL BANK, not personally, but as trustee under Trust
Number 107194 and 815 COMMERCE DRIVE REIP, an Illinois limited partnership, a
beneficiary of said trust (collectively, "Landlord"), and GIS INFORMATION
SYSTEMS, INC., an Illinois corporation ("Tenant").
W I T N E S S E T H:
1. Landlord, in consideration of the rents reserved and the terms,
covenants, agreements and conditions contained in that certain lease agreement
("the Lease") dated as of the date hereof between Landlord and Tenant, has
leased and demised and does hereby lease and demise to Tenant certain office
space in the building ("the Building") known as 815 Commerce Drive, Oak Brook,
Illinois, located on real property (the "Property") legally described in
Exhibit "A" attached hereto and incorporated herein by this reference. Tenant
accepts the demised premises subject to the terms and conditions of the Lease.
2. The term of the Lease (the "Lease Term") commences on or about
September 1, 1987 and ends on August 31, 2002. Tenant has options to extend the
Lease Term for two (2) additional five (5) year terms, as more fully set forth
in the Lease.
3. Tenant has a right of first refusal, exercisable at any time during the
Lease Term, to purchase the Property upon the same business terms as set forth
in any bona fide offer to purchase the Property from a third party, which offer
Landlord desires to accept, as more fully set forth in the Lease.
4. Tenant has an option to purchase the Property at a fixed price and
on fixed terms during the two-year period of the Lease Term between September 1,
1992 and August 31, 1994, as more fully set forth in the Lease.
<TABLE>
<S> <C>
This Instrument prepared by Property Address:
and after recording, please 815 Commerce Drive
return to: Oak Brook, Illinois
Irwin I. Gzesh
Sachnoff Weaver & Rubenstein,
Ltd.
30 S. Wacker Drive, 29th Floor Permanent Index Number:
Chicago, Illinois 60606 06 23 407 004
</TABLE>
<PAGE> 65
5. Subject to the rights of other tenants of the Building, Tenant has an
option to lease any space available in the Building as of the date of execution
of the Lease on the same terms as are contained in the Lease, which option is
exercisable within 120 days from the Commencement Date of the Lease, as more
fully set forth in the Lease.
6. In Inanition to the option referred to at Paragraph 5.
This Lease is executed by LA SALLE NATIONAL BANK, not personally but as Trustee
as aforesaid, in the exercise of the power and authority conferred upon and
vested in it as such trustee, and under the express direction of the
beneficiaries of a certain Trust Agreement dated 10/28/83 and known as Trust
No. 107194 at LA SALLE NATIONAL BANK, to all provisions of which Trust
Agreement this Lease is expressly made subject. It is expressly understood and
agreed that nothing herein or in said Lease contained shall be construed as
creating any liability whatsoever against said Trustee personally, and in
particular without limiting the generality of the foregoing, there shall be no
personal liability to pay any indebtedness accruing hereunder or to perform any
covenant, either express or implied, herein contained, or to keep, preserve or
sequester any property of said Trust, and that all personal liability of said
Trustee of every sort, if any, is hereby expressly waived by said Lessee, and
by every person now or hereafter claiming any right or security hereunder; and
that so far as said Trustee in concerned the owner of any indebtedness or
liability accruing hereunder shall look solely to the premises hereby leased
for the payment thereof. It is further understood and agreed that said
Trustee has no agents or employees and merely holds naked legal title to the
property herein described; that said Trustee has no control over, and under
this Lease, assumed no responsibility for (l) the management or control of such
property, (2) the upkeep, inspection, maintenance or repair of such property,
(3) the collection of rents or the rental of such property, or (4) the conduct
of any business which is carried on upon such premises.
<TABLE>
<S> <C>
ATTEST: LASALLE NATIONAL BANK,
Trustee as aforesaid
/s/______________________ By:/s/__________________
Secretary Asst. (Vice) President
ATTEST:
/s/____________________
(Assistant) Secretary
</TABLE>
2
<PAGE> 66
STATE OF ILLINOIS )
) SS.
COUNTY OF________ )
The foregoing instrument was acknowledged before me this day ______ of
June, 1987 by ____________ , (Vice) President, and ________________________ ,
(Assistant) Secretary, of GIS Information Systems, Inc., an Illinois
corporation, on behalf of the corporation.
___________________________
Notary Public
* * * * * *
STATE OF ILLINOIS )
) SS.
COUNTY OF_________)
The foregoing instrument was acknowledged before me this day ______ of
June, 1987 by ____________ , general partner of 815 Commerce Drive REIP, an
Illinois limited
partnership, on behalf of the partnership.
____________________________
Notary Public
* * * * * *
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
The foregoing instrument, was acknowledged before me this ______ day of
June, 1987 by ____________ Asst. (Vice) President, and ______________________
(Assistant) Secretary, of LaSalle National Bank, a national banking
association, on behalf of said national banking association.
/s/____________________________
Notary Public
3
<PAGE> 67
EXHIBIT A
Lot 3 in Oak Brook Development Company's Commerce Plaza Subdivision, Unit 2,
being a Subdivision of Part of Lot 1 in Butler Company M-1 Incorporated
Assessment Plat #1, of Parts of Sections 23 and 24, Township 30 North, Range
11, East of the Third Principal Meridian, According to the Plat thereof
recorded June 28, 1968 as Document R68-27679, in DuPage County, Illinois.
<PAGE> 68
EXHIBIT A-A
CONTRACT OF PURCHASE AND SALE
815 Commerce Drive
Oak Brook, Illinois
THIS CONTRACT (the "Contract") is made and entered into as of this ______
day of _____________, 19 ___ by and between _____________________________
________________________________________________________________________
_________________________________________________________________________
("Seller"), and _______________________________________________________
_________________________________________________________________________
_________________________________________________________________________
("Purchaser").
1. Sale.
Seller agrees to sell and convey to Purchaser and Purchaser agrees to
purchase from Seller, for the purchase price and on the terms and
conditions herein set forth, that certain two-story building located at 815
Commerce Drive, Oak Brook, Illinois (the "Project"), consisting of: (a) the
real estate legally described on Exhibit "A" attached hereto and made a
part hereof, together with all rights, easements and interests appurtenant
thereto including, but not limited to, all of Seller's right, title and
interest in any streets or other public ways adjacent to said real
property, before and after vacation thereof and all sidewalk vaults
adjacent thereto (the "Real Estate"); (b) all improvements located on the
Real Estate including, without limitation, the two-story building located
thereon (the "Improvements"); (c) all fixtures, equipment, supplies and
personal property owned by Seller located on or in the Real Estate or
Improvements or used in connection with the operation and maintenance of
the Real Estate or Improvements (the "Personal Property"); (d) all of
Seller's right, title and interest in all intangible property used or
useful in connection with the foregoing, including without limitation all
trademarks, tradenames, contract rights, guarantees, licenses, permits and
warranties (the "Intangible Personal Property"); and (e) Seller's interest
in all leases and other agreements to occupy the Improvements, or any
portion thereof, as amended from time to time (the "Leases").
2. Purchase Price.
The purchase price to be paid to Seller by Purchaser is $8,300,000.00 for
the Project (the "Purchase Price"). The Purchase Price, plus or minus
prorations, shall be paid at Closing (as hereinafter defined) by wire
transfer or other immediately available funds.
1
<PAGE> 69
3. Closing.
The purchase and sale contemplated herein shall be consummated at a closing
(the "Closing") to take place at the office of Chicago Title Insurance
Company (the "Title Insurer") at 111 W. Washington, Chicago, Illinois, on
the date sixty (60) days after the date hereof, or at such other time as
the parties may agree upon in writing. The closing date in effect from time
to time shall be referred to as the "Closing Date." Seller shall deliver
possession of the Project to Purchaser at Closing.
For the purpose of this Contract, in computing any period of time
prescribed or allowed by this Contract, the day of the act or event from
which the designated period of time begins to run shall not be included,
but the last day of the period so computed shall be included, unless it is
a Saturday, a Sunday or a holiday as defined or fixed in any statute now
or hereafter in force in the State of Illinois, in which event the period
runs until and includes the next day which is not a Saturday, a Sunday or
such a holiday.
4. Earnest Money.
Purchaser has delivered to Seller its earnest money check in the amount of
$100,000.00, made payable to the Title Insurer (the "Earnest Money"), which
shall be deposited in a deed and money escrow at the Title Insurer pursuant
to a deed and money escrow agreement in the form then in use by the Title
Insurer as modified to conform with this Contract and, at the request of
Purchaser, shall be invested in accordance with Purchaser's directions. All
interest earned thereon shall accrue for the benefit of the Purchaser and
shall be paid to Purchaser upon Closing or the termination of this
Contract, unless the Earnest Money is paid to Seller as a result of
Purchaser's default, in which event the interest shall be paid to Seller.
Seller shall execute and deliver all documentation as requested by
Purchaser or the Title Insurer in order to effectuate the foregoing.
5. Feasibility Period.
The parties hereby acknowledge that this Contract is being executed
pursuant to an option to purchase the Project, as contained in Paragraph
A-7 of that certain lease (the "GIS Lease") dated June __, 1987 by and
between LaSalle National Bank, not personally but as Trustee under Trust
Number 107194, and 815 Commerce Drive REIP, as landlord, and GIS
Information Systems, Inc., an Illinois corporation, as tenant. Pursuant to
the GIS Lease, Purchaser was granted a period of time (the "Feasibility
Period") during which it was allowed to inspect the Project prior to the
exercise of its option to purchase the Project. Notwithstanding anything to
the contrary contained in this Contract, no act or
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failure to act by Purchaser or its agents to verify the accuracy of
Seller's warranties and representations set forth in this Contract, shall
in any way affect the binding nature of such warranties and representations
nor the liability of Seller for any breach thereof.
6. Title and Survey Matters.
(a) No later than thirty (30) days after acceptance of this Contract by
Seller, Seller will deliver to Purchaser, at Seller's sole cost and
expense, (i) a title commitment (the "Title Commitment") dated on or
after the date hereof issued by the Title Insurer committing to issue to
Purchaser an ALTA Form B owner's policy of title insurance with respect
to the Project in a nominal amount (which shall be increased to the
amount of the Purchase Price, not later than fifteen (15) days prior to
Closing) showing fee simple title in Seller (the "Title Policy") and
(ii) copies of all documents, whether recorded or unrecorded, referred
to in the Title Commitment. The Title Commitment shall show title
subject only to (i) the general exceptions contained in the policy with
an extended coverage endorsement over general exceptions 1 through 5,
(ii) the title exceptions set forth in Exhibit "B" attached hereto and
made a part hereof (the "Permitted Exceptions"), and (iii) title
exceptions pertaining to liens or encumbrances of a definite or
ascertainable amount which may be removed by the payment of money at
Closing and which Seller may so remove at that time by using funds to be
paid upon delivery of the deed hereunder (the "Abatement Exceptions").
The Title Commitment shall also include a Restrictions Endorsement 1, a
Location Endorsement and a 3.1 Zoning Endorsement. If the Title
Commitment discloses any exceptions to title other than the Permitted
Exceptions and the Abatement Exceptions, and if Seller for any reason
cannot have such other exceptions waived or insured over (provided, that
if such exceptions can be waived or insured over they shall be deemed to
be "Abatement Exceptions") Purchaser, at its option may elect' by
notifying Seller within ten (10) days after receipt of the Title
Commitment, the aforesaid title documents and the Survey referred to in
subparagraph (b) below, to terminate this Contract in which event the
Earnest Money shall be returned to Purchaser and neither party shall
have any further liability to the other. If no such notice is given,
this Contract shall remain in full force and effect and any such other
exceptions shown in the Title.Commitment shall be deemed to be among the
"Permitted Exceptions" except that Seller shall, subject to the
provisions of subparagraph (d) below, at its sole cost, cause the
Abatement Exceptions to be removed or insured over prior to or at the
Closing. Seller shall, at its sole cost,
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cause the Title Commitment to be later dated effective as of fifteen
(15) days prior to Closing, said later dated Title Commitment to be
delivered to Purchaser no later than ten (10) days prior to Closing, and
cause the Title Policy to be issued as of the Closing Date to cover the
recording of the deed to be delivered by Seller, as provided herein.
(b) No later than thirty (30) days from the date of Seller's acceptance of
this Contract, Seller will deliver to Purchaser, at Seller's sole cost
and expense, six (6) prints of an as-built, spotted survey of the Real
Estate and Improvements (the "Survey") prepared by a surveyor registered
in the State of Illinois and certified by said surveyor to have been
prepared in accordance with minimum detail requirements of the American
Land Title Association land survey standards as of a date on or after
the date hereof, said certificate to be certified to Purchaser, its
nominee, lender and the Title Insurer. Without limitation of the
foregoing, the Survey shall state the legal description of the Real
Estate; the square footage thereof; shall show the location of the
Improvements (including distances from perimeter lot lines); all
easements and other agreements of record over the Real Estate; easements
or other agreements over property other than the Real Estate for the
benefit of the Project and shown in the Title Commitment; and adjacent
public streets and ways (showing name and width of street). The surveyor
shall also certify that the Real Estate is not located in a flood plain.
Any encroachment over a lot line, a prohibited encroachment over any
easement or any other matter shown on the Survey which other matter does
or could in the future materially interfere with the use, operation or
financing of the Project or render title thereto unmarketable is
referred to herein as a "Survey Defect." If the Survey contains any
Survey Defects, Purchaser may elect, by written notice delivered to
Seller within ten (10) days after receipt of the Survey to (i) terminate
this Contract, in which event, the Earnest Money shall be returned to
Purchaser and neither party shall have any further liability to the
other, or (ii) direct Seller to comply with the provisions of
subparagraph below.
(c) Seller shall deliver to Purchaser no later than twenty (20) days prior
to the Closing Date, at its sole cost and expense, searches, dated on or
after thirty (30) days before the Closing Date, of the records of the
Recorder of Deeds of DuPage County, Illinois and the Secretary of State
of Illinois for all UCC financing statements showing Seller and Seller's
management agent as debtor (the "Lien Searches").
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(d) In the event the later dated Title Commitment, Survey or Lien
Searches disclose any unpermitted claim, lien, encumbrance or other
defect, including without limitation Abatement Defects and Survey
Defects or the Title Insurer refuses to issue the endorsements
to the Title Policy described in subparagraph (a) above (the
"Defect"), Seller shall, prior to Closing, cause such Defect to be
removed or insured over by the Title Insurer not less than ten (10)
days prior to Closing, or such later time as Purchaser, in its sole
discretion, shall permit. If any Defect is not so removed or
insured over not less than ten (10) days prior to Closing, Purchaser,
may, at its sole option, either (i) terminate this Contract by
written notice to Seller, in which event the Earnest Money shall
be returned immediately to Purchaser, and neither party shall have
any further liability to the other, except that Seller shall be
liable to Purchaser for Purchaser's actual out-of-pocket expenses
incurred in connection with this Contract and the Feasibility Period,
or (ii) proceed to close the purchase of the Project and deduct
from the Purchase Price payable at Closing such sums as Purchaser
may deem necessary to remove, or cause the Title Insurer to insure
over, such Defect.
7. Seller's Representations and Warranties.
Seller represents and warrants to, and covenants with, Purchaser that the
following matters are and shall be true as of the date of execution of this
Contract and as of the Closing Date:
(a) The leases delivered to Purchaser during the Feasibility Period (the
"Leases") constitute the entire agreement with each tenant. No tenant
has any right to renew or extend its Lease except as shown on the rent
roll ("Rent Roll") delivered to Purchaser during the Feasibility Period
as the same have been or will be updated as required in the GIS Lease or
elsewhere in this Contract. There are no leases, tenancies, or other
rights of occupancy or use for any portion of the Project other than as
set forth in the Leases.
(b) None of the Leases and none of the rents or other amounts payable
thereunder have been assigned, pledged, or encumbered except to the
first mortgage lender; any such assignment, pledge or encumbrance will
be released at or prior to Closing unless Purchaser takes title to the
Project subject to such mortgage as provided elsewhere in this Contract.
There are no valid claims of offset or defenses to the payment of rents
and each of the tenants is in fact paying and performing and is legally
required to pay and perform all sums and obligations set forth in the
Leases.
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(c) Except as otherwise provided in Exhibit "C" attached hereto, no
brokerage or leasing commissions, management fees or other compensation
are due or payable to any person, firm, corporation, or other entity
with respect to or on account of any of the Leases or any extensions or
renewals thereof. Any such commissions, fees or other compensation as
are identified on Exhibit "C" shall remain the obligation of Seller and
Seller agrees to indemnify, defend and save harmless Purchaser from any
such liability. All brokerage or leasing commissions and tenant
build-out concessions and allowances payable in conjunction with any
Lease entered into on or after the date hereof, will be the
responsibility of Purchaser and shall be paid by Purchaser, except that,
if any tenant under any lease entered into on or after the date hereof
is required to make payments of rent after execution of this Contract
but prior to Closing, any commissions or concessions made with respect
to such lease shall be prorated at Closing.
(d) No tenant or other occupant under any of the Leases and no other person,
firm, corporation, or other entity has any right or option to acquire
the Property or any portion thereof.
(e) Except as otherwise provided in Exhibit "D" attached hereto, all
painting, repairs, alterations and other work expressly required to be
performed by the landlord under each of the Leases, and all of the other
obligations of the landlord thereunder which are required to be
performed prior to Closing (including but not limited to, all tenant
build-out work) (the "Tenant Work") have been fully performed and paid
for in full or will be fully performed and paid in full on or before the
Closing Date and all of the tenants under each of the Leases have
unconditionally accepted the space they are occupying in the Project.
All Tenant Work identified on Exhibit "D" as remaining to be completed
shall either be completed by Seller prior to Closing or Purchaser shall
be given a credit at Closing for the reasonably estimated expenses of
completing the Tenant Work.
(f) The Rent Roll and the updates thereof (including at the time of
Closing), are and shall be true and correct in all material respects.
(g) The statements of income and expense for the Project that are to be
furnished hereunder accurately represent the operations of the Project
for periods covered thereby and are and will be true and correct in all
material respects.
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(h) Except as otherwise provided in Exhibit "E" attached hereto, Seller
shall have received no written notices from fire or casualty insurance
carriers suggesting or requiring physical alterations to the
Improvements or any of its mechanical, electrical or plumbing systems,
which have not been corrected.
(i) Except as otherwise provided in Exhibit "F" attached hereto, there are
no service, executory or other contracts or collective bargaining
agreements or employment contracts (either oral or written) with respect
to the Project which are not cancellable on sixty (60) days' notice (the
"Contracts") and there are no recorded mechanics' or materialmens' liens
or claims for such liens affecting the Project or unrecorded mechanics'
or materialmens' liens or claims for such liens affecting the Project of
which Seller has received notice. Seller shall terminate all non-union
employees of the Project, who are not subject to any employment contract
identified in Exhibit "F", effective on or before Closing unless
Purchaser requests in writing not less than twenty-one (21) days prior
to Closing that any of such employees should not be terminated, in which
event the salaries and other benefits to which such employee(s) are
entitled shall be prorated at Closing.
(j) Except as otherwise provided in Exhibit "G" attached hereto, Seller has
no knowledge nor has received notice of any pending, threatened or
contemplated condemnation of the Project or any part thereof. The rights
of the parties with respect to any pending or threatened condemnation
proceeding identified on Exhibit "G" are governed by Paragraph 13 of
this Contract.
(k) In the event that Seller is comprised of a land trust and a beneficiary
thereof, Seller represents and warrants that the trust is the sole title
holder of the Project and that all parties executing this Contract on
behalf of Seller are executing this Contract with full power and
authority to execute and cause the consummation of this Contract. In
the event that Seller does not include a land trust, but instead is a
person, partnership or other entity, Seller represents and warrants
that it is the sole owner of the Project and is executing this
Contract with full power and authority to execute and cause the
consummation of the Contract. In either event, Seller represents,
warrants and covenants that there shall be no change in the ownership,
operation or control of Seller from the date hereof to the Closing and
Seller will not create any easements, liens or other encumbrances with
respect to the Project.
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(l) Seller represents, but does not warrant, that, except as otherwise
provided in Exhibit "H" attached hereto, Seller has not been advised of
and is not aware of any defect in the condition of the Project, or any
portion thereof, which has not been corrected or which will impair the
operation of the Project. To the best of Seller's knowledge without any
obligation on the part of Seller to investigate, there is no defect in
the Real Estate, the Improvements, the structural elements thereof, the
mechanical systems (including without limitation all heating,
ventilating, air conditioning, plumbing, electrical, elevator, security,
utility and sprinkler systems) therein or the roof. To the best of
Seller's knowledge, the Personal Property is in good operating
condition.
(m) To the best of Seller's knowledge, the Project and the use and operation
thereof are in compliance with all applicable municipal and governmental
laws, ordinances, regulations, licenses, permits and authorizations and
there are presently in effect all licenses, permits and other
authorizations necessary for the use, occupancy and operation of the
Project as it is presently being operated (the "Governmental
Approvals").
(n) Except as otherwise provided in Exhibit "I" attached hereto, there are
no pending or, to the best of Seller's knowledge, threatened judicial,
municipal or administrative proceedings affecting the Project or in
which Seller is or will be a party by reason of Seller's ownership of
the Project or any portion thereof, including without limitation,
proceedings for or involving tenant evictions, collections,
condemnation, eminent domain, alleged building code or zoning violations
or personal injuries or property damage alleged to have occurred on the
Project or by reason of the condition or use of the Project. To the
extent that any proceeding involving personal injury or property damage
exists or later arises due to an act or omission alleged to have
occurred prior to Closing, Seller agrees to indemnify, defend and save
harmless Purchaser from any liability arising therefrom. No attachments,
execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending,
or to the best of Seller's knowledge, threatened, against Seller, any of
the entities comprising Seller, nor are any of such proceedings
contemplated by Seller, or any of the entities comprising Seller.
(o) Seller represents, but does not warrant, that, except as otherwise
provided in Exhibit "J" attached hereto, to the best of Seller's
knowledge without any obligation on the part of Seller to investigate,
there is no asbestos
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or other material of a hazardous, toxic or dangerous nature contained
within the Project or any component part thereof, including but not
limited to, any pipes, ducts, paint, tiles or equipment.
(p) Seller's execution of and performance of this Contract shall not
constitute a breach of any agreement, understanding, order, judgment or
decree, written or oral, to which any of the entities constituting Seller
is a party.
The continued validity in all respects of all representations and warranties
set forth in this Contract shall be conditions precedent to Purchaser's
obligations hereunder, which conditions precedent may be waived in writing
in whole or in part by Purchaser in its sole discretion. The obligation of
Purchaser to consummate this Contract and the transactions contemplated
hereby is further subject to the condition precedent that all
representations and warranties set forth in this Contract shall be true and
correct on and as of the Closing with the same force and effect as if made
at that time. In the event that any representation or warranty is determined
to be inaccurate on or before the Closing Date, Seller shall take such
action as is necessary to remedy the situation causing such inaccuracy.
Seller shall deliver an affidavit or certificate to Purchaser at Closing
remaking all representations and warranties as of the Closing. With respect
to Seller's knowledge relating to the representations and warranties
contained in this Paragraph 7, Seller is under no obligation to
independently investigate and Seller's failure to independently investigate
will not impute knowledge to Seller.
8. Covenants of Seller.
Seller hereby covenants with Purchaser, as follows:
(a) In the event that after the date hereof, Seller receives notice from any
governmental body having jurisdiction over the Project of a building code
or other violation, it shall immediately notify Purchaser, send a copy of
such notice to Purchaser, Seller shall promptly commence to repair and
cure such violation and prosecute the repairs to the Closing with due
diligence or otherwise commence to remove such violation of record with
due diligence. In the event such repairs (if necessary) are not completed
prior to the Closing Date, Seller shall furnish to Purchaser at the
Closing, proof of payment for the repairs theretofore made and shall
credit Purchaser with a closing adjustment equal to the amount necessary
to complete the repairs pursuant to the terms of the contract entered
into for such repair work. Such contract shall be entered into with a
reputable contractor unaffiliated with Seller and provide for
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compensation at no greater than reasonably prevailing market rates for
the area in which the Project is located. Such contract shall be assigned
to Purchaser at Closing. Notwithstanding the foregoing, if the building
code or other violation results in a cost to Seller in excess of
$400,000.00, Seller may, within fifteen (15) days after receipt of such
notice from a governmental body, give notice to Purchaser of its intent
to terminate this Contract, subject to Purchaser's right to prevent any
such termination by giving notice to Seller, within ten (10) days after
its receipt of Seller's notice, agreeing to pay all such costs in excess
of $400,000.00, in which event, this Contract shall remain in full force
and effect. In the event that Purchaser fails to so notify Seller, this
Contract shall terminate, in which event the Earnest Money shall be
returned to Purchaser, and neither party shall have any further liability
to the other, except that Seller shall be liable to Purchaser for
Purchaser's actual out-of-pocket expenses incurred in connection with this
Contract and the Feasibility Period.
(b) In addition to, but not in limitation or derogation of the above, Seller
shall execute and deliver to Purchaser at Closing an assignment or
assignments assigning to Purchaser all existing assignable guarantees and
warranties issued or made in connection with the construction,
improvement, alteration and repair of any improvements or personal
property comprising a part of the Project, together with the original of
each such guaranty and warranty in Seller's possession, if any.
(c) Prior to Closing and except as otherwise provided herein, unless Seller
obtains the prior written consent of Purchaser, which consent shall not
be unreasonably withheld or delayed, Seller shall neither execute any new
lease nor renew or modify any existing Lease. Withholding of consent by
Purchaser shall be deemed to be reasonable if the terms of any proposed
new lease or renewal or modification of any existing Lease do not comport
with current rental market standards in Oak Brook, Illinois. Subject to
the foregoing, Seller shall use reasonable efforts to obtain tenants for
all space which is now vacant or which will become vacant prior to the
end of the month following the Closing. Seller shall use its best efforts
to obtain renewals of existing Leases which expire prior to closing.
Without the prior written consent of Purchaser, which shall not be
unreasonably withheld, Seller shall not terminate any of the Leases,
unless the tenant thereunder shall have materially defaulted. Seller
shall not accept from any of the tenants payment of rent more than one
month in advance or apply any security deposit to rent due from any
tenant. At Closing the security deposit provided for
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under each of the Leases and all interest accrued thereon, if any, shall
be fully assigned to Purchaser.
(d) Prior to Closing, Seller shall not enter into any contract with respect
to the Project which will survive the Closing or otherwise affect the
use, operation or enjoyment of the Project after the Closing. Further,
Seller will deliver to Purchaser copies of any notices it receives from
the DuPage County, Illinois Assessor's Office with respect to a change in
the assessed valuation of the Real Estate and Improvements.
(e) The existing insurance policies pertaining to the Project shall remain
continuously in force to the Closing Date.
(f) Seller shall operate and manage the Project in a first class manner,
maintaining present services (including pest control), and shall
maintain the Project in good repair and working order (including such
replacements as may be required), shall keep on hand sufficient
materials, supplies, equipment and other personal property for the
efficient operation and management of the Project in a first class
manner, and shall perform when due all of Seller's obligations under the
Leases, Contracts, Governmental Approvals and other agreements relating
to the Project and otherwise in accordance with applicable laws,
ordinances, rules and regulations affecting the Project. Except as
otherwise provided herein, Seller shall deliver the Project at Closing in
substantially the same condition as it is on the date hereof, reasonable
wear and tear excepted, and shall terminate the Contracts, effective as
of the Closing Date, except those of the Contracts designated in writing
by Purchaser prior to Closing. None of the Personal Property or fixtures
shall be removed from the Project, unless replaced by personal property
or fixtures of equal or greater utility and value.
(g) In the event that any Lease terminates prior to Closing, Seller shall
consult with Purchaser as to the extent of enforcement of any
requirements in the Lease with respect to the condition of the leased
premises upon surrender of the leased premises. All debris shall be
removed from any vacant space.
(h) Except for brokerage or leasing commissions for Leases entered into after
the date hereof, Seller has paid or will pay in full, prior to Closing,
all bills and invoices for labor, goods, material and services of any
kind relating to the Project and utility charges, relating to the period
prior to Closing. Except as provided elsewhere in this Contract, any
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Tenant Work and other work required to be performed under the Leases or
other agreements affecting the Project have been or will by the Closing
be completed and paid for in full. Any brokerage fee or similar
commission which is or will become due and payable in connection with any
Lease entered into prior to the date hereof has been or will be paid by
Seller prior to Closing.
(i) All action required pursuant to this Contract which is necessary to
effectuate the transaction contemplated herein will be taken promptly and
in good faith by Seller, and Seller shall furnish Purchaser with such
documents or further assurances as Purchaser may reasonably require.
(j) Except as otherwise provided herein, after the date hereof and prior to
Closing, no part of the Project, or any interest therein, will be
alienated, liened, encumbered or otherwise transferred except as
otherwise provided herein.
(k) From and after the date hereof through Closing, Seller agrees to furnish
to Purchaser monthly, upon preparation thereof, updated rent rolls and
operating statements for the Project.
All covenants made in this Contract by Seller shall survive the Closing and
shall not be merged into any deed or other instrument of conveyance
delivered at Closing.
9. Conditions Precedent to Closing.
The following shall be conditions precedent to Purchaser's obligation to
close hereunder (the "Conditions Precedent"), which Conditions Precedent may
be waived in writing by Purchaser in its sole discretion in whole or in
part:
(a) The physical condition of the Project shall be substantially the same on
the Closing Date as on the date hereof, reasonable wear and tear
excepted, unless the alteration of said physical condition is the result
of a Casualty (as defined herein).
(b) At Closing, there shall be no administrative agency, litigation or
governmental proceeding of any kind whatsoever, pending or threatened,
which, if not bonded over to Purchaser's reasonable satisfaction prior to
Closing, after Closing would in Purchaser's sole, reasonable discretion
adversely affect the value of the Project, or the ability of Purchaser to
operate the Project in the manner it is being operated on the date
hereof.
(c) On the Closing Date, no proceedings shall be pending or threatened which
could or would involve the change,
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redesignation, redefinition or other modification of the zoning
classification of (or any building or environmental code requirements
applicable to) the Project, or any portion thereof.
(d) As of the Closing Date, the warranties, representations and covenants of
Seller hereunder shall be true and correct and Seller shall have
performed all of its covenants and obligations hereunder.
(e) As of the Closing Date, the information set forth on the exhibits
attached hereto is true and correct.
10. Prorations and Adjustments.
The following shall be prorated and adjusted between Seller and Purchaser
as of the Closing Date, except as otherwise specified:
(a) Mortgage principal balance and accrued and unpaid interest (in the event
Purchaser takes title to the Project subject to Seller's existing first
mortgage as provided in this Contract), rents and other charges collected
by Seller for the month of Closing (and succeeding months), security
deposits, prepaid service contracts, maintenance and operating employees'
wages, maintenance and operating employees' accrued rights, if any, under
union contracts to paid vacations, general real estate taxes, special
assessments, and other similar items shall be adjusted ratably as of the
Closing. General real estate taxes shall be prorated on the basis of the
last ascertainable tax bill, but shall be reprorated when the actual tax
bills therefor issue. Seller shall be entitled to all tax refunds, if
any, obtained on account of taxes paid for the years preceding the
Closing, and a prorata portion of tax refunds for the year of Closing,
less the amount, if any, of Seller's prorata share of such funds expended
by Purchaser in obtaining such refunds. Purchaser shall receive credit
for advance rents beyond the then current month and for security deposits
under the Leases. None of the security deposits may be applied by Seller
to delinquent rents. There shall be no proration credit to Seller for
delinquent rents and other charges (the "Delinquent Rents"), except that
rents that are not more than thirty (30) days delinquent that are due
from tenants who are not more than thirty (30) days delinquent in the
payment of rent shall be prorated, but settlement between the parties
shall be made only when such amounts have actually been collected. After
Closing, Seller shall not take any action against any tenant owing
Delinquent Rents. For a period of thirty (30) days after Closing,
Purchaser shall use reasonable efforts to collect Delinquent Rents but
such undertaking shall not
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be deemed to obligate Purchaser to expend any funds or institute legal
proceedings of any kind. Rents and other amounts received by Purchaser
after Closing from a tenant owing Delinquent Rents shall be applied (i)
first, to all of Purchaser's costs of collection incurred with respect to
such tenant (including reasonable attorneys' fees), (ii) second, to rents
due for the month in which such payment is received by Purchaser, (iii)
third, to rents attributable to any period after Closing which are past
due on the date of receipt, and (v) then to Delinquent Rents. Seller
shall promptly remit to Purchaser and account for all sums received by
Seller from tenants after Closing and Purchaser shall promptly remit to
Seller and account for all sums received by Purchaser from tenants after
closing which, pursuant to this subparagraph, are to be applied to
Delinquent Rents or are otherwise to be paid to Seller. All percentage
rents and additional rents, if any, payable under any of the Leases,
shall be prorated as of the Closing based on respective periods of
ownership during the lease year covered thereby, but reprorated and paid
when and as received.
(b) In lieu of prorating electricity, gas, water and other public utilities
due to the utility companies, Seller shall arrange for the rendition of
final bills as of the Closing Date or as near as possible thereto by the
respective utility companies, and Seller shall pay such bills as and when
rendered. As to charges to tenants for such public utilities, Seller
shall also arrange for the rendition of bills to tenants as of the
Closing Date or as near as possible thereto, and Seller shall be
entitled to remittances from Purchaser of such charges as and when
collected from tenants in accordance with the provisions of subparagraph
(a) above. In any event, all master meters and submeters shall be read
within a period of three consecutive days.
(c) The Project shall be operated for the benefit of Seller until the Closing
Date. After Closing, the Project shall be operated for the benefit of
Purchaser. Solely for purposes of the prorations to be made hereunder the
Closing shall be deemed to occur at 11:59 p.m. on the day prior to the
Closing Date. All such prorations shall be made on the basis of the
actual number of days elapsed as of the Closing Date. Bills received
after Closing which relate to expenses incurred prior to Closing or
services performed at the direction of Seller prior to Closing shall be
paid by Seller.
11. Escrow.
This transaction shall be closed through an escrow (the "Escrow") with the
Title Insurer, in accordance with the general provisions of the usual form
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of Deed and Money Escrow Agreement then in use by the Title Insurer, with
such special provisions inserted in the escrow agreement as may be required
to conform with this Contract. Payment of the purchase price and delivery
of the deed and other documents to be delivered hereunder shall be made
through the Escrow. The cost of the Escrow shall be divided equally between
Seller and Purchaser. Purchaser shall be solely responsible for the cost
of any money lender's escrow required by its lender, if any, in connection
with the Closing. The attorneys for Seller and Purchaser are authorized to
execute the escrow agreement, any amendments thereto and all directions or
communications thereunder. The escrow agreement shall be auxiliary to this
Contract and the terms and provisions hereof shall be controlling as
between the parties hereto. The escrow agreement shall be executed by the
parties within fifteen (15) days from the date hereof and upon creation of
the Escrow, the Earnest Money shall be immediately deposited therein. At
Closing, the Earnest Money shall be returned to Purchaser.
12. Closing Documents.
At the Closing, Seller shall do or perform the following:
(a) Execute, acknowledge and deliver to Purchaser a warranty deed or
Trustee's Deed (if appropriate) sufficient to convey fee simple title to
the Real Estate and Improvements to Purchaser or its nominee, subject
only to the Permitted Exceptions, which shall be in form for recording.
(b) Execute, acknowledge and deliver to Purchaser an assignment and bill of
sale, assigning, conveying and warranting to Purchaser title to the
Personal Property and the Intangible Personal Property, free and clear of
all liens and encumbrances other than the Permitted Exceptions.
(c) Execute, acknowledge and deliver to Purchaser two counterparts of an
assignment in recordable form) by Seller of the Leases to Purchaser,
together with an agreement by Seller to indemnify, protect, defend and
hold Purchaser harmless from and against any and all claims, damages,
losses, costs and expenses (including attorneys' fees) arising in
connection with the Leases relating to the period prior to Closing,
including without limitation, claims for the return of security deposits
held with respect to the Leases and those leases of the Project which
expired prior to Closing, to the extent that such security deposits are
not credited to Purchaser at Closing. Said assignment shall be
accompanied by the original or duplicate original of each such Lease,
as the same may have been amended or modified.
15
<PAGE> 83
(d) Execute, acknowledge and deliver to Purchaser letters to each of the
tenants of the Project advising of the sale of the Project to Purchaser,
notifying and directing payment of all rent and other sums due from
tenants, from and after the Closing Date to be made to Purchaser or at
its direction, in form prepared by Purchaser and approved by Seller,
which approval shall not be unreasonably withheld.
(e) Deliver to Purchaser executed assignments by Seller of all of its rights
and interests under all Contracts, which Purchaser elects to keep in
effect, together with the original or duplicate original (or copies if no
original is available) thereof.
(f) Deliver to Purchaser estoppel letters in form prepared or approved by
Purchaser from each tenant under the Leases, certifying, among other
things, that the applicable Lease is (i) unmodified and in full force and
effect (or, if modified, stating the nature of such modification and
certifying that the Lease as so modified is in full force and effect),
and the date to which the rent and other charges are paid in advance, if
any, (ii) acknowledging that there are not, to such tenant's knowledge,
any uncured defaults on the part of landlord thereunder, or specifying
such defaults if any are claimed, (iii) setting forth the date of
commencement of the lease term, the date of commencement of rent
thereunder, the expiration of the lease term, and all renewal rights, and
(iv) acknowledge that such tenant has no right to acquire any other
interest in such space, including, but not limited to any fee interest,
pursuant to such lease or otherwise. Further, Seller shall furnish to
Purchaser photocopies of all checks received from tenants under Leases
for their rent payments for the month of Closing or the most current rent
payment period and landlord estoppel letters, if no tenant estoppel
letters are obtained.
(g) Execute, acknowledge and deliver to Purchaser the affidavit or
certificate relating to Seller's representations and warranties
contemplated by Paragraph 7 above.
(h) Deliver to Purchaser copies of any building plans and specifications in
Seller's possession.
(i) Deliver possession of the Project subject, however, to the rights of
tenants under their respective Leases.
(j) Deliver to Purchaser all Governmental Approvals and copies of all
certificates issued by the local board of fire underwriters (or other
body exercising similar
16
<PAGE> 84
functions), and the original of each bill for current real estate taxes,
together with proof of payment thereof (if any of the same have been
paid).
(k) Deliver keys to all locks located in the Project (and an accounting for
keys in possession of others) subject, however, to the rights of tenants
under their respective Leases.
(l) Execute, acknowledge and deliver an Affidavit of Title.
(m) The Title Policy issued by the Title Insurer in the amount of the
Purchase Price, with such endorsements and otherwise in accordance with
the requirements of Paragraph 6(a) above, with all exceptions other than
the Permitted Exceptions deleted (it being understood that Seller will
induce the Title Insurer to insure over any "gap" period resulting from
any delay in recording of documents or later dating the title insurance
file).
(n) Execute and deliver in triplicate a closing statement conforming to the
proration and other relevant provisions of this Contract (the "Closing
Statement").
(o) Execute and deliver State, County and Municipal transfer declarations, if
required. Seller shall pay the amount of any stamp tax imposed by state
and/or county law on the transfer of title and Purchaser shall pay the
amount of any stamp tax imposed by the Village of Oak Brook.
(p) Execute and deliver ALTA Statements.
(q) Execute and deliver such other documents or instruments as in the
reasonable opinion of counsel for Purchaser or the Title Insurer may be
necessary or desirable to effectuate the Closing.
(r) File in a timely manner a Notice of Sale/Purchase of Business Assets (and
furnish a copy to Purchaser) on Form 542-A of the Illinois Department of
Revenue (Bulk Sales Unit) pursuant to Section 902(d) of the Illinois
Income Tax Act and Section 444(j) of the Retailers' Occupation Tax Act
(or such successor forms or statutes as may then be in effect) in order
to obtain an appropriate release or stop order to protect Purchaser
against any potential personal liability for income tax or sales tax
liabilities of Seller arising out of the sale of the Project.
(s) Execute and deliver such documents as are necessary or appropriate to
allow Purchaser to comply with Section 1445 of the Internal Revenue Code
(or such successor statute as may then be in effect) regarding tax
withholding on the sale of U.S. real property by a foreign
17
<PAGE> 85
person or execute and deliver such certificates or affidavits as are
appropriate regarding exemption from such requirements.
(t) Execute and deliver such other instruments and documents specifically
required to be delivered by Seller under the terms of this Contract
whether or not expressly enumerated in this Paragraph 12 as well as such
other documents or instruments as in the reasonable opinion of counsel
for Purchaser and counsel for Seller or the Title Insurer may be
necessary or desirable to effectuate the Closing.
All of the documents and instruments to be delivered by Seller hereunder
shall be in form and substance reasonably satisfactory to counsel for
Purchaser and counsel for Seller.
At or prior to the Closing, Purchaser shall do or perform the following:
(aa) Pay the Purchase Price as required hereunder.
(bb) Execute and deliver counterparts of the Closing Statement.
(cc) Execute and deliver ALTA Statements.
(dd) Execute and deliver assumptions of the aforementioned assignments of
Leases and Contracts. Anything in this Contract to the contrary
notwithstanding, as to all Leases and Contracts to be assigned to
Purchaser under this Contract, Purchaser shall assume the performance of
all obligations accruing from and after the Closing except as otherwise
provided hereunder, and shall indemnify and save Seller harmless from and
against any claims, liabilities and expenses in connection therewith;
provided that Seller shall remain liable for the performance of all
obligations accrued prior to the Closing or otherwise to be performed by
Seller hereunder, and shall indemnify and save Purchaser harmless in
connection with any claims, liabilities and expenses in connection
therewith.
(ee) Execute and deliver such other documents or instruments as in the
reasonable opinion of counsel for Seller and counsel for Purchaser or the
Title Insurer may be necessary or desirable to effectuate the Closing.
All of the documents and instruments to be delivered by Purchaser shall be
in form and substance reasonably satisfactory to counsel for Seller and
counsel for Purchaser.
18
<PAGE> 86
13. Eminent Domain.
In the event that, prior to Closing, any eminent domain proceeding
affecting the Project is commenced or threatened by a governmental body
having the power of eminent domain, Seller shall immediately give Purchaser
written notice thereof. If the proceeding affects or will affect portions
of the Project, the loss of which would not adversely affect the use
thereof or result in a diminution of value of the Project of more than
$50,000.00, then the Closing shall take place as provided in this Contract
and at Closing Seller shall assign to Purchaser all right, title and
interest with respect to such proceeding and awards, damages or other
compensation arising from such proceeding. If the proceeding affects or
will affect portions of the Project, the loss of which would adversely
affect the use thereof or result in a diminution of value of the Project of
more than $50,000,00 then Purchaser may elect by written notice to Seller
to (i) terminate this Contract in its entirety, by written notice to
Seller, in which event the Earnest Money shall be returned immediately to
Purchaser and neither party will have any further liability to the other
hereunder or (ii) proceed to close the purchase of the Project, in which
event Seller shall assign to Purchaser at Closing all of Seller's right,
title and interest with respect to such proceeding. Unless or until this
Contract is terminated in its entirety pursuant to this Paragraph 13 or
otherwise, Seller shall take no action with respect to any pending or
threatened eminent domain proceeding without the prior written consent of
Purchaser.
14. Insurance, Risk of Loss.
At all times prior to Closing, Seller shall maintain the existing casualty
and liability insurance on the Project in full force and effect. Prior to
the Closing Date, and not withstanding the pendency of this Contract, the
entire risk of loss or damage to the Project by fire or other casualty is
borne and assumed by Seller, except as otherwise provided in this Paragraph
14. If all or a portion of the Project is destroyed or damaged by one or
more fires, windstorms, hurricanes, hailstorms, floods, explosions,
earthquakes, sinkholes or other casualties (collectively, the "Casualties")
prior to Closing, Seller shall give Purchaser prompt notice thereof. In the
event one or more Casualties shall occur prior to Closing, then the
following provisions shall apply:
(a) If the reasonably estimated cost of restoration of the Project is less
than $100,000.00, Seller shall use its best efforts to restore, prior to
Closing, the Project to its previous condition. If Seller is unable to
complete said restoration prior to Closing, Purchaser shall be entitled
to elect by written notice to Seller prior to Closing either (i) to
receive a proration credit
19
<PAGE> 87
against the cash due at Closing for the cost of restoration to be
incurred by Purchaser (notwithstanding anything to the contrary in
Paragraph 10 above), or (ii) to accept an assignment from Seller to
Purchaser of all of Seller's rights with respect to all insurance
proceeds receivable in respect of such Casualties and to receive a
proration credit against the cash due at Closing equal to all deductibles
therefrom (notwithstanding anything to the contrary in Paragraph 10
above). In the event Purchaser elects the option set forth in clause (i)
of the preceding sentence, Seller shall be entitled to retain all
insurance proceeds with respect to such Casualties.
(b) If the reasonably estimated cost of restoration of the Project is
$100,000.00 or more, Seller shall promptly take such action as is
required to secure the damaged portion of the Project and protect it from
further damage and promptly file all appropriate claims under its
insurance policies and in good faith negotiate the highest possible
settlement amount from the insurers. Purchaser shall have the right to
participate in the adjustment of the claim. Seller shall notify Purchaser
promptly in writing of the settlement amount which Seller proposes to
accept. At any time prior to fifteen (15) days following receipt of such
notice, Purchaser may elect in a written notice to Seller (it being
understood that Purchaser may make the following election prior to the
receipt of Seller's notice) either:
(i) to proceed with the Closing, in which event, the insurance
proceeds shall be assigned to Purchaser at Closing (with
any proceeds paid to Seller prior to Closing to be credited
to Purchaser) and Purchaser shall receive a proration
credit against the cash due at Closing equal to all
deductibles therefrom (notwithstanding anything to the
contrary in Paragraph 10 above); or
(ii) to terminate this Contract by written notice to Seller, in
which event the Earnest Money shall be returned to
Purchaser, and neither party shall have any further
liability to the other hereunder.
The date set for Closing shall be extended, if necessary, to accommodate
the notice periods provided for in this Paragraph 14. All restoration work
performed pursuant to this Paragraph 14 shall be performed using first
class materials and highest quality workmanship. Purchaser shall have the
right to inspect the work performed by or at the direction of Seller. If
the Project has not been fully restored by the time the Closing occurs,
Purchaser shall receive a proration
20
<PAGE> 88
credit at Closing (notwithstanding anything to the contrary in Paragraph 10
above) for all rents abated by reason of said casualty and which otherwise
would have been due with respect to the period between the Closing Date and
the estimated date of completion of the work.
15. Broker's Commission.
If the sale is consummated and the Purchase Price paid to Seller, Seller
agrees to pay a real estate sales commission of four (4%) percent of the
Purchase Price as follows: two (2%) percent to Irvine Associates Inc. and
two (2%) percent to LaSalle Mortgage and Realty Company, Inc. (the
"Brokers"), the only real estate brokers involved in this transaction. Each
of the parties represents and warrants to the other that it has not
incurred and will not incur any other liability for brokerage fees or
commissions in connection with this Contract. It is agreed that if any
claims for brokerage fees or commissions are ever made against Seller or
Purchaser in connection with this transaction, all such claims shall be
handled and paid by the party (the "Committing Party") whose actions or
alleged commitments form the basis of such claim. The Committing Party
further agrees to indemnify and hold the other harmless from and against
any and all such claims or demands with respect to any brokerage fees or
commissions or other compensation asserted by any person, firm, or
corporation other than the Brokers, in connection with this Contract or the
transaction contemplated hereby.
16. Survival.
The terms, provisions, representations, warranties and covenants made
herein shall be continuing and shall survive for a period of one year from
the date of Closing and shall not merge into the Closing or the delivery of
deeds and other instruments of conveyance; provided, however, that the
obligation of either party contained in Paragraphs 7(c), 8(h) and 15 of
this Contract to indemnify, defend and save harmless the other party from
liabilities arising from events occurring or alleged to have occurred prior
to Closing shall not be subject to the one-year limitation set forth
herein.
17. Default.
(a) In addition to the specific rights of Purchaser to terminate this
Contract as provided in Paragraph 6(d) hereof and other rights incidental
thereto, if any of Seller's representations and warranties contained
herein shall not be true and correct, or if Seller failed to perform in
any material respect any of the covenants and agreements contained herein
to be performed by Seller within the time for performance as specified
herein
21
<PAGE> 89
(including Seller's obligation to close), Purchaser may elect to (i)
terminate Purchaser's obligations under this Contract by written notice
to Seller, in which event the Earnest Money shall be returned immediately
to Purchaser, or (ii) close, in which event Purchaser may file an action
for specific performance of this Contract to compel Seller to close the
transactions contemplated by this Contract and/or cure such default, in
whole or in part, in which event Purchaser shall be entitled to deduct
from the Purchase Price the cost of such action and/or the actual or
reasonably anticipated cost to cure such defects as well as any and all
reasonable expenses incurred by Purchaser in connection therewith
including attorneys' fees, provided such deduction does not exceed
$100,000.00; or (iii) refuse to close by written notice to Seller, in
which event the Earnest Money shall be returned immediately to Purchaser,
and Purchaser shall be entitled to pursue all available rights and
remedies at law or equity against Seller, provided, however, that
Seller's liability to Purchaser for damages at law shall not exceed
$100,000.00. The remedies of Purchaser set forth in this Paragraph 17(a)
shall be in addition to remedies otherwise applicable or provided in this
Contract, it being understood that Purchaser's rights and remedies under
this Contract shall be non-exclusive and cumulative and that the exercise
of one remedy or form of relief available to Purchaser hereunder shall
not be exclusive or constitute a waiver of any other, except that
Seller's total liability for damages shall not exceed $100,000.00. No
act, event, or state of facts, whether constituting a default or event of
default under the GIS Lease or not shall be available to Seller as a
defense to any remedy sought by Purchaser pursuant to this Section 17.
(b) In the event Purchaser defaults in its obligation to close the purchase
of the Project for any reason, the Earnest Money shall be delivered to
Seller, the amount thereof being liquidated damages, it being understood
that Seller's actual damages in the event of such default are not capable
of precise determination and that the forfeiture of the Earnest Money
shall be Seller's sole and exclusive remedy for Purchaser's default.
(c) Anything contained herein to the contrary notwithstanding, if any party
hereto fails to perform any obligation hereunder, or violates the terms
of this Contract, such party shall be entitled to receive notice of such
default and shall be entitled to five (5) days from the date of such
notice in which to cure such default specified. The Closing Date shall
be extended accordingly.
22
<PAGE> 90
18. Existing First Mortgage.
In the event that the existing first mortgage encumbering the Project (the
"Mortgage") cannot, by its terms, be prepaid by Seller at Closing,
Purchaser hereby agrees to take title to the Project subject to the lien of
the Mortgage; provided, however, that (i) Purchaser shall not assume any
liability under the Mortgage or the note (the "Note") secured by the
Mortgage; (ii) any penalties, premiums, fees or charges imposed with
respect to the conveyance of the Project to Purchaser subject to the lien
of the Mortgage shall be paid by Seller; and (iii) any consent required
with respect to the conveyance of the Project to Purchaser subject to the
lien of the Mortgage shall be obtained by Seller. Seller shall provide
Purchaser with a true and complete copy of the Note at least ten (10) days
prior to Closing and Seller shall certify to Purchaser in writing as to the
truth and accuracy of such copy of the Note. In the event that this
Paragraph 18 is in effect, it shall be a Condition Precedent to Purchaser's
obligation to close hereunder, which Condition Precedent may be waived in
writing by Purchaser in its sole discretion in whole or in part, that
Seller shall deliver to Purchaser at Closing, in addition to the other
documents to be delivered to Purchaser hereunder an estoppel letter or
statement from the holder of the Note (a) stating the unpaid principal
balance of the Note; (b) stating the date through which interest has been
paid; (c) stating the existence and amount of any escrows and reserve
accounts; (d) stating that no uncured default exists under the terms of the
Note and Mortgage; (e) consenting to the conveyance of the Project to
Purchaser subject to the lien of the Mortgage; and (f) agreeing to accept
payments due under the Note from Purchaser and to give notice of any
defaults under the Note or Mortgage (or any related documents) to
Purchaser.
19. Notices.
All notices required or desired to be given hereunder shall be in writing
and shall be delivered personally, by a nationally recognized air courier
or by certified or registered mail and, shall be deemed given when
personally delivered, the day following delivery to a nationally recognized
air courier, or if mailed, two (2) days after deposit, postage prepaid, in
the United States Post Office facilities, addressed as follows:
<TABLE>
<S> <C> <C>
(a) If to Purchaser: --------------------------
--------------------------
--------------------------
--------------------------
</TABLE>
<PAGE> 91
<TABLE>
<S> <C>
With a copy to: --------------------------
--------------------------
--------------------------
--------------------------
and Sachnoff Weaver & Rubenstein, Ltd.
30 South Wacker Drive, 29th Floor
Chicago, Illinois 60606
Attn: William N. Weaver, Jr., Esq.
</TABLE>
<TABLE>
<S> <C> <C>
(b) If to Seller: --------------------------
--------------------------
--------------------------
--------------------------
and --------------------------
--------------------------
--------------------------
--------------------------
</TABLE>
<TABLE>
<S> <C>
With a copy to: Katz, Randall & Weinberg
200 North LaSalle Street
Suite 2300
Chicago, Illinois 60601
Attn: Bernard Katz, Esq.
</TABLE>
or to such other address as either party may from time to time designate by
written notice to the other party.
20. Successors and Assigns.
The terms, conditions and covenants of this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective
nominees, successors, beneficiaries and assigns; provided, however, no
conveyance, assignment or transfer of any interest whatsoever of, in or to
the Project or of this Contract shall be made by Seller during the term of
this Contract. Purchaser may assign all or any of its right, title and
interest under this Contract. In the event of such an assignment by
Purchaser, the assignee shall be deemed to be the Purchaser hereunder for
all purposes hereof and have all rights of Purchaser hereunder and the
assignor shall be released from all liability hereunder, but such
assignment shall not affect the remedy of Seller under Paragraph 17(b).
21. Miscellaneous.
(a) This Contract constitutes the entire understanding between the parties
with respect to the transaction contemplated herein, and all prior or
contemporaneous oral agreements, understandings, representations and
statements, and all prior written agreements, understandings,
<PAGE> 92
representations and statements are merged into this Contract. Neither
this Contract nor any provisions hereof may be waived, modified, amended,
discharged or terminated except by an instrument in writing signed by the
party against which the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the
extent set forth in such instrument.
(b) The obligations of Purchaser to make the payments to close the
transaction described herein are subject to the express conditions
precedent set forth in this Contract (the "Conditions Precedent"), each
of which is for the sole benefit of Purchaser and may be waived at any
time by written notice thereof from Purchaser to Seller. The waiver of
any particular Condition Precedent shall not constitute the waiver of any
other.
(c) Relative to each representation and warranty made by Seller in this
Contract, Seller shall make reasonable inquiries as to the accuracy
thereof to its employees, managers, agents and other appropriate parties
and the actual on constructive knowledge of such parties will be imputed
to Seller.
(d) This Contract shall not be construed more strictly against one party than
against the other merely by virtue of the fact that it may have been
prepared by the attorney for one of the parties. The headings of various
paragraphs in this Contract are for convenience only, and are not to be
utilized in construing the content or meaning of the substantive
provisions hereof.
(e) This Contract shall be governed by and construed in accordance with the
laws of the State of Illinois.
(f) At all reasonable times from and after the date hereof to Closing,
Purchaser shall, upon reasonable notice to Seller, be entitled to enter
upon the Real Estate and Improvements; provided, however, that Purchaser
shall
<PAGE> 93
not unreasonably interfere with other tenants' use of their demised
premises.
IN WITNESS WHEREOF, the parties have executed this Contract as of the day and
year first above written.
<TABLE>
<S> <C>
PURCHASER: SELLER:
/s/ Signature /s/ Signature
- ----------------------------------- ------------------------------
By: By:
------------------------------- --------------------------
Its: Its:
--------------------------- ----------------------
Executed on , 19 Executed on , 19
------------- --- ---------- ---
</TABLE>
<PAGE> 94
EXHIBIT "A"
Legal Description
<PAGE> 95
EXHIBIT "B"
Permitted Exceptions
<PAGE> 96
EXHIBIT "C"
Brokerage or Leasing Commissions,
Management Fees, Other Compensation
<PAGE> 97
EXHIBIT "D"
Tenant Work
<PAGE> 98
EXHIBIT "E"
Insurance Notices
<PAGE> 99
EXHIBIT "F"
Contracts
<PAGE> 100
EXHIBIT "G"
Condemnation Notices
<PAGE> 101
EXHIBIT "H"
Defects
<PAGE> 102
EXHIBIT "I"
Legal Proceedings
<PAGE> 103
EXHIBIT "J"
Hazardous Materials
<PAGE> 104
ADDENDUM EXHIBIT A-C
<TABLE>
<CAPTION>
UNIT
DESCRIPTION QUANTITY UNIT PRICE EXT TOTAL
----------- -------- ---- ----- --- -----
<S> <C> <C> <C> <C> <C>
Demolition
Partitions 360 LF 10 3,600
Ceiling Remove tile 4,051 SF .25 1,013
Carpet 4,051 SF .40 1,620
Electric 750 6,983
Partitions
INT STD 89 LF 21.50 1,914
Corridor Patch 12 LF 46 552 2,466
Ceiling 2X2 Regress 4,051 SF 1.45 5,874
Doors (To Match Existing)
INT STD Reuse 5 ED 225 1,125
Closet Bipass 1 UNIT 450 450
Folding - Closet 1 UNIT 650 650 2,225
Millwork
Pantry Labs and Counter - LF 185
Has Shelf and Pole 8 LF 18 144 144
Glazing (Set in Wood Frame) - LF 175
Vinyl Base
Wall Existing
Remove & Replace 452 LF 1.50 588
New Part 178 LF 1.05 187 775
Decorating
Walls 5,670 SF .30 1,701
Doors 16 FA 45 720 2,421
Carpeting 473 SYD 12.00 5,676
</TABLE>
<PAGE> 105
ADDENDUM EXHIBIT A-C
<TABLE>
<CAPTION>
UNIT
DESCRIPTION QUANTITY UNIT PRICE EXT TOTAL
----------- -------- ---- ----- --- -----
<S> <C> <C> <C> <C> <C>
HVAC
Thermostats 2 C 200 400
Balance Space 2 Mandays 560 960
Plumbing
Sink, faucet, HT/WTR/HTR
Tie In'c to Washroom
Includes O.T.
Sprinklers
Relocation (Allowance) 10 ES 90 900
Electric
Relocate Panel 1 EA 950 950
Duplex Outlets 8 EA 67 536
Telephone Outlets 4 EA 90 360
Wire Plug Mold 24 LF 25 600
Sep. Circuit Copier 1 EA 184 184
Hook Up HT/WTR/HTR 1 EA 350 350
2X2 Parabolic Lens 73 EA 165 12,045
2X2 Para Em 2 EA 185 370
Signal Pole Switches 7 EA 57 379
Exit Signs Relocate 2 EA 50 150
Life Safety Speaker 1 EA 277 277
16,221
44,645
En Cond and Suprv 3,572
Overhead and Profit 3,375
Permit 400
Budget Estimate Cost 51,992
Cost for Full Height Doors (Add for Each Opening) 1,005
Alternate Budget Cost for Low Height (Part in Drywall)
L.H. Part 302 LF 17.50 5,285
Vibage 604 LF 1.05 634
Decor 3,624 LF .30 1,087
Carpet Add'l Labor 750
Electric 4,092
Fees
</TABLE>
<PAGE> 106
REAFFIRMATION AND EXTENSION OF GUARANTEE
In order to induce Landlord to enter into the foregoing Lease Amendment
Agreement ("Agreements), CCC Information Services, Inc. (the "Guarantor")
hereby directly, absolutely, continually and unconditionally guarantees to
Landlord and Landlord's successors and assigns a reaffirmation and extension of
its guarantee of the Lease (a copy of which is attached hereto as Exhibit A),
to include the full and punctual payment of rent due under the Agreement and
the full, complete and timely performance of all of Tenant's obligations under
the Lease and the Agreement.
In witness whereof, the undersigned, who represents that he is authorized
and empowered to execute this reaffirmation and extension of guarantee, does so
on this 20th day of August, 1990.
Guarantor:
CCC INFORMATION SERVICES, INC.
By:/s/_______________________
Its: _______________________
Attested by: /s/_____________
Its: _______________________
<PAGE> 107
GUARANTEE
In order to induce Landlord to enter into the foregoing Lease, CCC
Information Services, Inc. (the "Guarantor"), hereby directly, absolutely, and
unconditionally guarantees to Landlord and Landlord's successors and assigns the
full and punctual payment of Rent due under the Lease and the full, complete
and timely performance of all of Tenant's obligations under the Lease.
Any act of the Landlord or its agents, or the successors or assigns
of the Landlord, or their agents consisting of a waiver of any of the terms or
conditions of the Lease, or the giving of any consent to any manner or thing
relating to the Lease, or the granting of any indulgences or extensions of time
to the Tenant, or to the release of any collateral providing security for the
full performance of Tenant's obligations may be done without notice to the
Guarantor and without releasing the obligations of the Guarantor hereunder.
The obligations of the Guarantor hereunder shall not be released by
Landlord's receipt, application, or release of security given for the
performance and observance of covenants and conditions in the Lease contained
on the Tenant's part to be performed or observed, nor by any modification of
the Lease, but in case of any such modification the liability of the Guarantor
shall be deemed modified in accordance with the terms of any such modification
of the Lease.
The liability of the Guarantor hereunder shall in no way be affected
by (a) the release or discharge of the Tenant in any creditors', receivership,
bankruptcy, or other proceedings; (b) the impairment, limitation, or
modification of the liability of the Tenant or the estate of the Tenant in
bankruptcy, or of any remedy for the enforcement of the Tenant's said liability
under the Lease, resulting from the operation of any present or future
provision of the Bankruptcy Act or other statute or from the decision in any
court; (c) the rejection or disaffirmance of the Lease in any such proceedings;
(d) the assignment or transfer of the Lease by the Tenant; (e) any disability
or other defense of the Tenant; (f) the cessation from any cause whatsoever of
the liability of the Tenant other than a termination of Lease (resulting from a
judgment by a court of competent jurisdiction) due to Landlord's default; or
(g) the impairment or release of any collateral securing the full performance
of Tenant's obligation.
Guarantor's liability herein is direct, absolute, continual,
and unconditional and is joint and several and independent of the
obligations of Tenant, and a separate action) or actions may be brought and
the obligation of the Guarantor may be immediately enforced without
necessity of any action Landlord's against Tenant or collateral and prosecuted
against Guarantor; whether or not action or actions are brought against
Tenant or whether or not Tenant is joined in any such action or actions or
whether or not Landlord has resorted to any collateral, and Guarantor waive
benefit of any enforcement thereof.
<PAGE> 108
GUARANTOR:
CCC Information Services;, Inc.
By _____________________________
Its ____________________________
Attested by ____________________
Its ____________________________
<PAGE> 109
EXHIBIT A FOR THE REAFFIRMATION OF GUARANTEE AGREEMENT
<PAGE> 110
LEASE AMENDMENT AGREEMENT
THIS LEASE AMENDMENT AGREEMENT ("Agreement") is made in Oak Brook,
Illinois, as of this 1st day of August, 1990, by and between The Aetna Casualty
and Surety Company, a Connecticut corporation ("Landlord"), and GIS Information
Systems, Inc., an Illinois corporation ("Tenant").
WHEREAS, Tenant is currently the lessee under a lease dated as of June 10,
1987 ("Lease"), between Tenant, as lessee, and LaSalle National Bank, not
personally, but as trustee U/T/A #107194 and 815 Commerce Drive REIP, an
Illinois limited partnership, a beneficiary of said trust, as landlord
(collectively the "Former Landlord") for certain commercial space located at
815 Commerce Drive, Oak Brook, Illinois (the "Property"), a copy of which is
attached hereto as Exhibit A;
WHEREAS, Tenant formerly leased certain additional space totalling
approximately 2,775 square feet and commonly known as Suite 106 ("Suite 106")
at the Property, pursuant to a lease dated November 3, 1989 (a copy of which is
attached as Exhibit B) which is now expired and which Tenant continues to lease
on a month-to-month basis;
WHEREAS, Tenant wishes to lease Suite 106 for an additional term and, in
addition, wishes to lease approximately 5200 additional square feet of space at
the Property;
WHEREAS, Landlord is the new owner of the Property and has succeeded to
the Former Landlord's rights under the Lease;
WHEREAS, Landlord and Tenant each agree to waive any rights relating to
any non-compliance by the other with the terms of the Lease as of the date of
this Agreement;
WHEREAS, Landlord and Tenant wish to amend the Lease;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows:
1. Incorporation of Recitals. The foregoing recitals are hereby
incorporated into this Agreement.
<PAGE> 111
2. Additional Rental Space. Landlord hereby leases to Tenant for a term
beginning on August 1, 1990 and continuing to and including August 31, 2002,
the following space:
a. Suite 106 as further described in Exhibit B attached hereto; and
b. Approximately 5,200 square feet of space, the exact square footage
and location of which are set forth in Exhibit C attached hereto.
Collectively, a and b above shall be referred to herein as the "Additional
Rental Space."
3. Rent and Additional Rent. Subject to the exceptions stated in
paragraphs 5 and 6 below, Tenant shall pay base rent ("Rent") and its pro rata
share of additional rent as that term is defined in the Lease ("Additional
Rent"): for the Additional Rental Space. Rent shall be as set forth in the
Schedule in Exhibit D attached hereto. The Tenant's pro rata share (or
percentage) of Additional Rent shall be equal to the square footage of the
Additional Rental Space, as determined after final measurement, divided by
63,156, the total rental area of the Property. (For example, if the Additional
Rental Space is determined to be 8,000 square feet, the Tenant's pro rata share
of Additional Rent for the Additional Rental Space shall be 8,000 divided by
63,196.)
4. Tenant Improvements. Landlord shall build out tenant improvements
("Tenant Improvements") for the Additional Rental Space in accordance with the
plans and specifications set forth in Exhibit E. Landlord shall pay (or
reimburse Tenant) for the actual cost of the Tenant Improvements up to $16.00
per square foot. If the Tenant Improvements cost less than $16.00 per square
foot, the Tenant shall be entitled to have the difference credited against its
Rent.
5. Rent: During Construction. From the date of this Agreement up to the
time when the Tenant Improvements are substantially completed, the Tenant shall
pay no Rent, no Additional Rent, and no other rent of any kind for that portion
of the Additional Rental Space described in paragraph 2(b) hereof. However,
during that same period, the Tenant shall pay the Landlord rent for Suite
106 at the same rate as formerly provided for in Exhibit B.
6. Rental Abatement After Construction. Tenant shall be entitled to an
abatement of Rent for the entire Additional Rental Space during the first
fifteen months after the Tenant Improvements are substantially completed. During
this
2
<PAGE> 112
fifteen month period, Tenant shall be obligated to pay only Additional Rent for
the Additional Rental Space.
7. Amendment to Lease. The following paragraphs of the Lease (which are
located in that portion of the Lease entitled "Addendum to Lease") are hereby
deleted and of no further legal force or effect: Sections A-11, A-12, A-13,
A-14, A-15 and A-16.
8. Tenant's Right to Lease Extra Space.
(a) Tenant shall have the right at any time and upon thirty (30)
days' written notice to Landlord to lease approximately 3,000 square feet
of additional space located immediately west of the former Madison Pizza
space on the first floor of the Property (as more specifically described
in Exhibit F attached hereto) (the "Extra Space"), provided such Extra
Space is not then under lease to another person.
(b) Landlord shall not lease the Extra Space or any part thereof to
any person other than Tenant without first giving Tenant thirty days'
written notice of Landlord's intention to do so and the opportunity to
lease the Extra Space itself. At any time during the thirty days after its
receipt of such notice, Tenant may exercise its right to lease the Extra
Space by notifying Landlord in writing of its intention to do so.
(c) If Tenant advises Landlord that it does not wish to lease the
Extra Space or fails to advise Landlord of its intention to lease the
Extra Space within the thirty-day period, the Landlord may lease the Extra
Space to the person identified in the Landlord's notice (or to an entity
related to such person). However, if for any reason the Landlord does not
enter into a lease with such person (or an entity related to such person)
within one hundred eighty (180) days of the date of the Landlord's notice,
the proposed lease and the Landlord's notice shall be deemed a nullity and
the Landlord shall comply with subparagraph (b) of this paragraph 8 before
leasing the Extra Space to any person.
(d) If Tenant exercises its right to lease the Extra Space, then
Landlord and Tenant, as soon as is practicable thereafter, shall enter
into a lease agreement for the Extra Space. The terms and conditions of
such lease agreement ("Extra Space Lease Agreement") shall be as follows:
Effective Date: As soon as practicable with an allowance of up to 60
days for
3
<PAGE> 113
construction work and/or tenant improvements to be substantially
completed and the space ready for occupancy.
Initial Team: From commencement date until August 31, 2002.
Rent: To begin upon occupancy or upon the substantial completion of
tenant improvements, whichever is sooner. To be the same (per square
foot) as the Rent payable on the Additional Rental Space determined as
of the effective date of the Extra Space Lease Agreement and with the
same increases thereafter, all in accordance with Exhibit D hereto.
Additional Rent: Tenant shall pay its pro rata share of Additional
Rent for the Extra Space.
Rental Abatement: Tenant shall be entitled to an abatement of Rent
which, in total, shall equal 1 1/4 months for each full year of the
term of the Extra Space Lease Agreement (measured from the
commencement date thereof to August 31, 2002). The abatement shall
begin upon occupancy or upon the substantial completion of tenant
improvements, whichever is sooner.
Build-Out Allowance: To be determined in accordance with Section A-17
of the Lease.
Other Terms: Except to the extent it is inconsistent with the terms
stated above, the Lease shall govern the Landlord's and Tenant's
rights and obligations with respect to the Extra Space.
(e) So long as Tenant is not in default under the Lease as amended
herein (or said default is not in the process of being cured within any
applicable cure periods), the Tenant's right to lease the Extra Space
shall be a continuing right; i.e., if the Extra Space is leased to a
person other than Tenant, Tenant shall once again have the right to lease
the Extra Space on the terms stated in this paragraph 7 upon the
termination or expiration of such other person's lease.
4
<PAGE> 114
9. Tenant's Right of First Refusal on the Sale of the Property. Tenant's
right of first refusal upon sale of the property as set forth in Section A-27
of the Lease is hereby amended to read as follows:
In addition to the option granted to Tenant in Section A-7 hereof, Tenant
has the following rights:
In the event that Landlord negotiates and accepts a signed letter of
intent to purchase the Property from an unrelated party or receives an offer to
purchase the Property which Landlord wishes to accept, Landlord shall notify
Tenant of such facts in writing and shall include in such notice a description
of the relevant terms of the proposed transaction, including price and
financing, as well as a copy of any and all documents constituting the letter
of intent or offer. Tenant has 30 days from receipt of such notice to exercise
this right of first refusal to purchase the Property on the same terms and
conditions as set forth in the notice, by so advising the Landlord in writing.
If Landlord and the same proposed purchaser (which includes any assignee of or
entity related to purchaser) change the conditions of the offer for purchase or
sale by reducing the sales price greater than 5%, or if the purchase money
financing offered by seller is increased by more than 5%, or if the percentage
of interest seller is to charge on such financing is adjusted by more than 1%
(100 basis points) downward, Landlord shall give a new written notice to Tenant
with the changed terms and Tenant has 15 calendar days to respond in writing.
No other changes in the terms of the purchase or sale shall require Landlord to
give additional notice to Tenant. In each case, if Tenant fails to respond by
the required reply date, Tenant shall be deemed as to have waived this right of
first refusal. If the purchaser (or a related entity) identified in any
relevant notice from Landlord does not actually close on the Property within
one year after the date of the Landlord's notice to Tenant, the Landlord's
notice and the proposed transaction shall be deemed null and void and Landlord
again shall comply with the terms of this paragraph before selling the Property
to any person.
The new terms of this Amended Section A-27 shall pertain to the pending
sales transaction pursuant to a Letter of Intent dated June 20, 1990 from
Landlord to Thomas J. McCracken.
10. Lease Remains in Effect. The Lease (including the Addendum thereof),
as expressly modified herein, shall remain in full force and effect. In
addition, except to the extent that its terms are inconsistent with the terms
of this Agreement, the Lease shall govern the rights and obligations of the
Landlord and Tenant with respect to the Additional Rental Space. In particular
and without limiting the
5
<PAGE> 115
generality of the foregoing, Sections A-6, A-21, and A-22 shall apply to this
Agreement.
11. Hazardous Waste. Tenant agrees not to store or dispose of any toxic
or hazardous materials on the Premises and Additional Space at anytime without
the prior written consent of Landlord.
12. Notice. Any notice sent under the Lease or this Agreement shall be
sent by certified or registered mail and shall be addressed as follows:
If to Landlord: The Aetna Casualty and Surety Company
c/o Equity Management Unit
Aetna Realty Investors
242 Trumbull Street
Hartford, CT 06156
If to Tenant: GIS Information Systems, Inc
815 Commerce Drive
Oak Brook, Illinois 60521
Attn: Mr. Frank Burns
President
with a copy to: Mitchell L. Marinello
Novack and Macey
Suite 1500
303 West Madison
Chicago, Illinois 60606
or to such other persons or such other addresses designated by Landlord or
Tenant in writing.
13. Cross-Default Provision. A default by Landlord or Tenant in any of
the terms and conditions of the Lease (as modified by the provisions herein)
shall constitute a default by such party under this Agreement and vice versa.
14. Assignment. All rights and obligations of Landlord and Tenant
hereunder shall inure to the benefit of their respective successors and
assigns.
15. Applicable Law. This Agreement shall be interpreted and governed by
the laws of the State of Illinois.
6
<PAGE> 116
IN WITNESS WHEREOF, the parties, who represent that they are authorized
and empowered to do so, have executed this Agreement as of the date first above
written.
ATTEST THE AETNA CASUALTY AND SURETY
COMPANY ("LANDLORD")
BY: /s/ Signature
------------------------
PRINTED NAME
---------------
ITS
------------------------
ATTEST GIS INFORMATIONS
SYSTEMS, INC ("TENANT")
BY: /s/ Signature
-------------------------
PRINTED NAME:
--------------
ITS
------------------------
7
<PAGE> 117
2
GUARANTOR
CGC Information Services, Inc .
By __________________________
Its _________________________
Attested by _________________
Its _________________________
<PAGE> 118
Draft: October 2, 1996 Freeborn & Peters, Chicago
EXHIBIT B
Drawing of Subleased Premises
<PAGE> 119
(GRAPHIC)
<PAGE> 1
EXHIBIT 16.1
[ERNST & YOUNG LLP LETTERHEAD]
November 18, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
This is to inform you that we have read the third and forth paragraphs under
"Additional Information" on page 67 of Form S-1 dated November 19, 1996 of SPR
Inc. and are in agreement with the statements contained therein. We have no
basis to agree or disagree with other statements of the registrant contained
therein.
Ernst & Young LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion in
this registration statement on Form S-1 of our report dated October 28, 1996 on
our audit of the financial statements of SPR Inc. and to all references to our
firm included in this registration statement.
ARTHUR ANDERSEN LLP
Chicago, IL
November 18, 1996
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, the undersigned director and/or officer of SPR Inc., (the
"Company"), a Delaware corporation, hereby constitutes and appoints Robert M.
Figliulo and Stephen T. Gambill and each of them, his true and lawful attorneys
and agents, with full power of substitution and resubstitution, in the name and
on the behalf of the undersigned, to do any and all acts and things and
execute any and all instruments which said attorneys and agents may deem
necessary or advisable to the Company to comply with the Securities Act of
1933, as amended (the "Securities Act"), and any rules and regulations and
requirements of the Securities and Exchange Commission (the "Commission") in
respect thereof, in connection with the registration under the Securities Act
of common stock issued by the Company, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign the
name of the undersigned in his capacity as a director and/or officer of the
Company to one or more Registration Statements to be filed with the Commission
with respect thereto (including any abbreviated Registration Statements to be
filed pursuant to Rule 462(b) under the Securities Act), to any and all
amendments, including post-effective amendments to the said Registration
Statements and to any and all instruments and documents filed as a part of or
in connection with the said Registration Statements or amendments thereto;
hereby ratifying and confirming all that said attorneys and agents have done,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th
day of November, 1996.
/s/ David A Figliulo
-----------------------
David A. Figliulo
Executive Vice President and Director
<PAGE> 2
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, the undersigned director and/or officer of SPR Inc., (the
"Company"), a Delaware corporation, hereby constitutes and appoints Robert M.
Figliulo and Stephen T. Gambill and each of them, his true and lawful attorneys
and agents, with full power of substitution and resubstitution, in the name and
on the behalf of the undersigned, to do any and all acts and things and execute
any and all instruments which said attorneys and agents may deem necessary or
advisable to the Company to comply with the Securities Act of 1933, as amended
(the "Securities Act"), and any rules and regulations and requirements of the
Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of common stock
issued by the Company, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as a director and/or officer of the Company to one
or more Registration Statements to be filed with the Commission with respect
thereto (including any abbreviated Registration Statements to be filed pursuant
to Rule 462(b) under the Securities Act), to any and all amendments, including
post-effective amendments to the said Registration Statements and to any and
all instruments and documents filed as a part of or in connection with the said
Registration Statements or amendments thereto; hereby ratifying and confirming
all that said attorneys and agents have done, shall do or cause to be done by
virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th
day of November, 1996.
/s/ Michael J. Fletcher
----------------------------------
Michael J. Fletcher
Executive Vice President,
General Manager - Tulsa
and Director
<PAGE> 3
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, the undersigned director and/or officer of SPR Inc., (the
"Company"), a Delaware corporation, hereby constitutes and appoints Robert M.
Figliulo and Stephen T. Gambill and each of them, his true and lawful attorneys
and agents, with full power of substitution and resubstitution, in the name and
on the behalf of the undersigned, to do any and all acts and things and execute
any and all instruments which said attorneys and agents may deem necessary or
advisable to the Company to comply with the Securities Act of 1933, as amended
(the "Securities Act"), and any rules and regulations and requirements of the
Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of common stock
issued by the Company, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as a director and/or officer of the Company to one
or more Registration Statements to be filed with the Commission with respect
thereto (including any abbreviated Registration Statements to be filed pursuant
to Rule 462(b) under the Securities Act), to any and all amendments, including
post-effective amendments to the said Registration Statements and to any and
all instruments and documents filed as a part of or in connection with the said
Registration Statements or amendments thereto; hereby ratifying and confirming
all that said attorneys and agents have done, shall do or cause to be done by
virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th
day of November, 1996.
/s/ Ronald L. Taylor
---------------------------
Ronald L. Taylor
Director
<PAGE> 4
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, the undersigned director and/or officer of SPR Inc., (the
"Company"), a Delaware corporation, hereby constitutes and appoints Robert M.
Figliulo and Stephen T. Gambill and each of them, his true and lawful attorneys
and agents, with full power of substitution and resubstitution, in the name
and on the behalf of the undersigned, to do any and all acts and things and
execute any and all instruments which said attorneys and agents may deem
necessary or advisable to the Company to comply with the Securities Act of
1933, as amended (the "Securities Act"), and any rules and regulations and
requirements of the Securities and Exchange Commission (the "Commission") in
respect thereof, in connection with the registration under the Securities Act
of common stock issued by the Company, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign the
name of the undersigned in his capacity as a director and/or officer of the
Company to one or more Registration Statements to be filed with the Commission
with respect thereto (including any abbreviated Registration Statements to be
filed pursuant to Rule 462(b) under the Securities Act), to any and all
amendments, including post-effective amendments to the said Registration
Statements and to any and all instruments and documents filed as a part of or
in connection with the said Registration Statements or amendments thereto;
hereby ratifying and confirming all that said attorneys and agents have done,
shall do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th
day of November, 1996.
/s/ David P. Yeager
-------------------------------
David P. Yeager
Director
<PAGE> 5
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, the undersigned director and/or officer of SPR Inc., (the
"Company"), a Delaware corporation, hereby constitutes and appoints Robert M.
Figliulo and Stephen T. Gambill and each of them, his true and lawful attorneys
and agents, with full power of substitution and resubstitution, in the name and
on the behalf of the undersigned, to do any and all acts and things and execute
any and all instruments which said attorneys and agents may deem necessary or
advisable to the Company to comply with the Securities Act of 1933, as amended
(the "Securities Act"), and any rules and regulations and requirements of the
Securities and Exchange Commission (the "Commission") in respect thereof, in
connection with the registration under the Securities Act of common stock
issued by the Company, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign the name of the
undersigned in his capacity as a director and/or officer of the Company to one
or more Registration Statements to be filed with the Commission with respect
thereto (including any abbreviated Registration Statements to be filed pursuant
to Rule 462(b) under the Securities Act), to any and all amendments, including
post-effective amendments to the said Registration Statements and to any and
all instruments and documents filed as a part of or in connection with the said
Registration Statements or amendments thereto; hereby ratifying and confirming
all that said attorneys and agents have done, shall do or cause to be done by
virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 14th
day of November, 1996.
/s/ Sydnor W. Thrift, Jr.
---------------------------------
Sydnor W. Thrift, Jr.
Director
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