<PAGE> 1
As filed with the Securities and Exchange Commission on August 1, 1997
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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<C> <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 60523-1874 (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
CHIEF EXECUTIVE OFFICER
SPR INC.
2015 SPRING ROAD, SUITE 750, OAK BROOK, ILLINOIS 60523-1874 (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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<C> <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)
<S> <C> <C>
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Common Stock, $.01 par value................................ $44,850,000.00 $13,591
==============================================================================================================
</TABLE>
(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 AUGUST , 1997
PROSPECTUS
2,600,000 SHARES
SPR LOGO
COMMON STOCK
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Of the 2,600,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering"), 1,600,000 shares are being
offered by SPR Inc. ("SPR" or the "Company") and 1,000,000 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 $13.00 and $15.00 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."
------------------
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 $1.1 million, all of which are
payable by the Company.
(3) Certain Selling Stockholders have granted the Underwriters a 30-day option
to purchase up to 390,000 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
September , 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
INSIDE FRONT COVER OF PROSPECTUS
The inside front cover is a multicolor graphic and text layout. The following
text appears above the graphics:
"SPR SERVICES
SPR blends three levels of consulting support into five service offerings to
provide a comprehensive solution for maintaining, improving, and transitioning
existing systems. This blend of consulting support enables SPR to design a
customized solution, tailored to meet each client's individual needs."
[Graphics consist of a flow diagram depicting SPR's blend of three levels of
consulting support into five service offerings.]
The following text appears below the graphics:
"SPR delivers these customized solutions through a combination of experienced
people, using proprietary and commercially available tools, following an
established methodology. When applied with their service offerings, this
formula enables SPR to deliver high quality, innovative solutions designed to
help companies derive maximum value from their existing systems."
[The SPR logo inside a triangle containing the words "People," "Tools" and
"Methodology" appears in the lower left corner below a page curl.]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVERALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<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 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
("DataFlex"). 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, (ii) assumes a 1.044-to-1 split of the Common Stock effective
immediately prior to consummation of the Offering and (iii) 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 24 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. SPR provides these clients with three levels of consulting support
which are distinguished by the degree of responsibility the Company assumes:
strategic planning, project management and implementation. Within this
framework, SPR currently provides outsourcing services through four service
offerings: Systems Re-engineering, Century Date Compliance, Application
Management and Information Delivery Services ("IDS") in addition to providing
General Consulting services. SPR bills its clients on either a time and
materials or a fixed-price basis. 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 proprietary 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
proprietary methodologies and software analysis tool, as well as key strategic
alliances with third-party software providers, facilitate the development of
well-defined tasks and timetables for each phase of an engagement from strategic
planning through implementation.
Many large organizations are outsourcing IT services relating to
mission-critical business systems due to the complex and rapidly changing
technological environment and problems inherent in implementing mass changes to
application systems and their associated data bases. Examples of mass change
include the year 2000 problem (the software glitch that will prevent computers
from properly recognizing dates after the year 1999), the European Union's
expected conversion to the euro currency and the extension of the number of
digits or other characters in zip codes, product codes and account numbers. 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 and other mass change
problems; (iii) IT solutions are becoming increasingly complex; and (iv)
organizations often lack the IT skills necessary to address their IT needs.
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:
- Expand Entry-level Training Program. To address the industry-wide
shortage of qualified technical consultants, the Company has implemented a
comprehensive entry-level training program for college graduates with
degrees other than in computer science. The Company, in conjunction with
DeVry,
3
<PAGE> 5
Inc., a leading higher education institution specializing in technology,
has developed several additional training programs to further enhance its
consultants' careers and improve their technical skills. SPR believes that
these training programs and its stock option and stock purchase plans
provide the Company with a competitive advantage in attracting, developing
and retaining qualified technical consultants.
-Continue to 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.
-Capitalize on Outsourcing Trend through 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's approach to Century Date Compliance provides SPR with the
platform to make unsolicited proposals for additional outsourcing
engagements. 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 a competitive advantage in
cross-selling additional IT services.
-Develop Additional Virtual Insourcing Centers. As part of its outsourcing
services, in 1996 SPR 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.
The Company intends to establish additional Virtual Insourcing Centers.
-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, data warehousing 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.
-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.
SPR's growth strategies have allowed it to capitalize on the growing demand
for IT services. The Company's revenues increased at a compound annual growth
rate of approximately 37% from 1992 through 1996. From 1995 to 1996, the
Company's revenues increased 42%. More than 70% of the Company's 1996 revenues
were attributable to 40 companies which had been clients for at least the prior
three consecutive years. During 1996, the Company made significant
infrastructure investments, which adversely affected the Company's gross profit
and operating income. Principal among these investments was the development and
implementation of the Company's entry-level training program, which has enabled
the Company to keep pace with the growing demand for its service offerings. For
the first six months of 1997, the Company's revenues increased 51% compared to
the same period in 1996, and its gross and operating margins increased to 38%
and 10%, respectively.
4
<PAGE> 6
THE OFFERING
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Common Stock Offered Hereby by:
The Company...................................... 1,600,000 shares
The Selling Stockholders......................... 1,000,000 shares
Common Stock to Be Outstanding After the
Offering......................................... 8,067,400 shares(1)
Use of Proceeds.................................... Payment of certain undistributed S corporation
earnings, repayment of debt, fund build-out and
equipping of additional Virtual Insourcing
Centers, expand the Company's entry-level
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) 1,044,252 shares of Common Stock reserved for issuance upon
exercise of options granted and to be granted pursuant to the Company's
Combined Incentive and Non-statutory Stock Option Plan (of which options to
purchase 819,215 shares of Common Stock are outstanding at an exercise price
of $7.66 per share); 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 Notes 11 and 15 of Notes to Financial
Statements.
5
<PAGE> 7
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
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<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
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1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues......................... $9,122 $11,731 $14,797 $ 22,908 $ 32,511 $ 15,087 $ 22,722
Gross profit..................... 2,218 3,393 4,373 7,383 9,224 4,435 8,732
Selling expenses............... 743 1,012 1,165 2,141 3,046 1,366 2,093
Recruiting expenses............ 290 341 410 777 1,323 612 698
Stock-based compensation....... -- -- 6,510(2) 27,987(2) 12,231(2) 9,510(2) --
General and administrative
expenses..................... 1,015 1,230 1,334 1,642 3,742 1,328 3,719(3)
------ ------- ------- -------- --------- --------- ---------
Total costs and expenses......... 2,048 2,583 9,419 32,547 20,342 12,816 6,510
------ ------- ------- -------- --------- --------- ---------
Operating income (loss).......... 170 810 (5,046)(2) (25,164)(2) (11,118)(2) (8,381)(2) 2,222
Other income (expense)........... 27 6 (57) (109) (71) (22) (101)
------ ------- ------- -------- --------- --------- ---------
Income (loss) before income
taxes.......................... 197 816 (5,103)(2) (25,273)(2) (11,189)(2) (8,403)(2) 2,121
Provision for income taxes....... 15 4 75 21 9 -- 1
------ ------- ------- -------- --------- --------- ---------
Net income (loss), as
reported(4).................... $ 182 $ 812 $(5,178)(2) $(25,294)(2) $ (11,198)(2) $ (8,403)(2) $ 2,120
====== ======= ======= ======== ========= ========= =========
Pro forma provision for income
taxes(4)....................... 408 443 847
--------- --------- ---------
Pro forma net income (loss)(4)... $ (11,606) $ (8,846) $ 1,273
========= ========= =========
Pro forma net income (loss) per
share(4)(5).................... $ (1.74) $ (1.33) $ .19
========= ========= =========
Weighted average common shares
outstanding(5)................. 6,659,412 6,659,412 6,659,412
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1997
--------
(UNAUDITED)
<S> <C>
BALANCE SHEET DATA(1):
Cash...................................................... $ 546
Working capital........................................... 2,140
Total assets.............................................. 8,726
Long-term debt, less current portion...................... 930
Total stockholders' equity................................ 2,823(2)
</TABLE>
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(1) In October 1996, Systems Inc., SPR Chicago, SPR Tulsa, SPR Wisconsin and
DataFlex merged into SPR and, in connection therewith, the stockholders of
such companies received an aggregate of 6,467,191 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 1996 and the six months ended June 30, 1996 on a pro forma basis
would have been $0.6 million and $0.7 million, respectively. See "-- Summary
Unaudited Pro Forma Financial Data" and Note 10 of Notes to Financial
Statements.
(3) General and administrative expenses include $0.2 million of expenses related
to the Company's March 1997 proposed initial public offering that was
postponed. Total costs of the March 1997 offering were approximately $0.8
million of which $0.2 million was expensed in the second quarter of 1997 and
$0.6 million will be charged against the proceeds of the Offering.
(4) 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. The
pro forma provision for income taxes represents a combined Federal and state
effective tax rate of 40%. The pro forma provision for income taxes is
computed by multiplying the effective tax rate times the income (loss)
before income taxes adjusted to eliminate the stock-based compensation
expense and subtracting income taxes previously recorded.
(5) Pro forma net income (loss) per share information assumes that 192,012 of
the shares of Common Stock being offered by the Company hereby were
outstanding during the periods presented. This represents the approximate
number of shares of Common Stock which are being offered by the Company
(assuming an initial public offering price of $14.00 per share and after
deducting estimated underwriting discounts and commissions) to fund the
payment to existing stockholders of undistributed S corporation earnings for
the period from November 1, 1996 through the closing date of the Offering
(the "Distribution"). The Company currently estimates that the Distribution
will be $2.5 million.
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, 1996 in the case of the Statement of Operations Data
and June 30, 1997 in the case of the Balance Sheet Data. The Unaudited Pro Forma
Financial Data are neither necessarily indicative of the results of operations
which would have been achieved had the Offering occurred on January 1, 1996 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.
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<CAPTION>
PRO FORMA
---------------------------------------------
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED ---------------------
DECEMBER 31, 1996 1996 1997
----------------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................... $32,511 $15,087 $22,722
Operating income.................................. 1,113(1) 1,129(1) 2,222
Net income(2)..................................... 625 664 1,273
Earnings per share................................ $ .08 $ .08 $ .16
Weighted average number of shares outstanding..... 8,067 8,067 8,067
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------
ACTUAL AS ADJUSTED(3)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash........................................................ $ 546 $15,184(4)
Working capital............................................. 2,140 18,108(4)
Total assets................................................ 8,726 22,724
Long-term debt, less current portion........................ 930 23
Total stockholders' equity.................................. 2,823(5) 19,327(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 1996 and for the six months ended June 30,
1996; accordingly, operating income for 1996 and for the six months ended
June 30, 1996 was increased by $12.2 million and $9.5 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 $19.7 million (assuming an initial public offering
price of $14.00 per share). The proceeds from the Offering will be used to
make the Distribution (see note 4), pay borrowings under a revolving credit
facility and two term notes and for general corporate purposes.
(4) Immediately prior to consummation of the Offering, the Company intends to
make the Distribution. The Company currently estimates that the Distribution
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 $0.7 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 Distribution 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 a sufficient number of 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, maintain the quality of its services and
integrate and operate the branch offices that were merged into the Company in
October 1996. 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. 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
expertise to obtain other consulting engagements from its Century Date
Compliance clients. If the Company fails to consistently complete Century Date
Compliance engagements to its clients' satisfaction or to procure additional
consulting engagements from such clients any such failures 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."
While several software programs have been developed to assist IT service
professionals in making existing systems year 2000-compliant, the Company is
unaware of any fully-automated solution (a "silver bullet") to the year 2000
problem. There can be no assurance that a silver bullet will not be developed.
Moreover, certain companies may elect to replace their existing systems with
year 2000-compliant hardware and software, rather than incur substantial cost in
making their existing systems year 2000-compliant. The development of a silver
bullet or decisions by a significant number of companies to replace their
existing systems with year 2000-compliant hardware and software could 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.
8
<PAGE> 10
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. 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."
The Company is providing Century Date Compliance services to a client which
filed a case under Chapter 11 of the federal Bankruptcy Code in July 1997. As a
result, there can be no assurance the Company will receive full payment for
services it provides to such client. The Company does not believe that the case
will have a material adverse effect on the Company's financial condition or
results of operations; however, the case is in an early stage and the ultimate
outcome is uncertain. See Note 2 of Notes to Financial Statements.
Fixed-Price Engagements. 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. The Company occasionally has
entered into fixed-price billing engagements and may in the future enter into
additional engagements billed on a fixed-price basis. The failure of the Company
to complete a fixed-price engagement within budget would expose the Company to
risks associated with cost overruns, 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."
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, 1996 and for the six months ended June 30, 1997, the
Company's largest client accounted for approximately 11%, 16% and 15% of its
revenues, respectively, and its ten largest clients accounted for approximately
51%, 52% and 49% 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. See "Business -- Client Base."
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
hiring and training of corporate personnel to open and staff additional branch
offices. The Company opened its Dallas branch office in February, 1997. There
can be no assurance that any branch offices which may be opened will be
profitable. See "-- Need to Attract and Retain Qualified Technical Consultants."
9
<PAGE> 11
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 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 Chief Executive
Officer. Although all of its executive officers and certain key employees will
enter into employment agreements with the Company which will 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 52.7%, 7.5% and 7.0%, 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, consultant
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 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'
10
<PAGE> 12
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 proprietary 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 $11.60 per
share of Common Stock based on an assumed initial public offering price of
$14.00 per share. To the extent outstanding options to purchase Common Stock 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 Distribution; repayment of certain indebtedness; 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 -- Develop Additional Virtual Insourcing
Centers." Accordingly, a substantial majority of the Company's anticipated net
proceeds of the Offering has not been 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
11
<PAGE> 13
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."
Benefits to Existing Stockholders. The existing stockholders of the Company
will realize substantial benefits from the Offering, including the creation of a
public market for the Common Stock and an immediate increase in the net tangible
book value of their shares of Common Stock. Moreover, a portion of the Company's
net proceeds from the Offering will be used to make the Distribution to the
existing stockholders. In addition, certain stockholders of the Company intend
to sell an aggregate of 1,000,000 shares of Common Stock in the Offering
(1,390,000 shares if the underwriters' over-allotment option is exercised in
full). The proceeds of such proposed sales (net of estimated underwriting
discounts and commissions) based upon an assumed initial public offering price
of $14.00 per share will significantly exceed the amount paid for such shares by
the Selling Stockholders. See "Use of Proceeds," "Dilution," "Certain
Transactions" and "Principal and Selling Stockholders."
Shares Eligible for Future Sale. Upon completion of the Offering, the
Company will have 8,067,400 shares of Common Stock outstanding, of which the
2,600,000 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 5,467,400 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. In addition,
1,044,252 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 5,467,400 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 has
expired. The current minimum Rule 144 holding period is one year. Thereafter,
all 5,467,400 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 &
Programming Resources, Inc. ("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
DataFlex (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 60523-1874. 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 1,600,000 shares of
Common Stock offered by it hereby (after deducting estimated underwriting
discounts and commissions and estimated offering expenses) are estimated to be
approximately $19.7 million, based upon an assumed initial public offering price
of $14.00 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 make the Distribution to existing stockholders of the Company in an amount
equal to the Company's undistributed S corporation earnings for the period from
November 1, 1996 through the closing date of the Offering. The Company currently
estimates that the Distribution will be $2.5 million. See "Certain
Transactions." In addition, the Company intends to use approximately $2.8
million of its net proceeds to pay outstanding indebtedness under a revolving
credit facility and two term notes. 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 $1.0 million of the net proceeds will be used to build-out
and equip additional Virtual Insourcing Centers. See "Business -- Growth
Strategies -- Develop Additional Virtual Insourcing Centers." As of June 30,
1997, the Company had not incurred, or made any commitments to incur,
significant capital expenditures with respect to the additional Virtual
Insourcing Centers.
The Company intends to use the remaining net proceeds for general corporate
purposes, including the expansion of its entry-level training program, working
capital, branch expansion and possible acquisitions of related businesses. The
Company is not currently engaged in any negotiations for the acquisition of any
other business. 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 the distributions to stockholders to fund their payments of
taxes, the Company has not declared or paid any cash dividends on the Common
Stock. After the Offering, except for the Distribution, 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 June 30, 1997 and as adjusted to give effect to the sale of
1,600,000 shares of Common Stock offered by the Company (at an assumed initial
public offering price of $14.00 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 contained
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------------
ACTUAL AS ADJUSTED
------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Current debt................................................ $ 2,103 $ 206
======== ========
Long-term debt, less current maturities..................... 930 23
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value; 3,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common Stock, $.01 par value; 25,000,000 shares
authorized; 6,467,400 shares issued and outstanding
actual; 8,067,400 shares issued and outstanding as
adjusted............................................... 64(1) 81(1)
Additional paid-in capital.................................. 46,735 66,451(2)
Retained deficit............................................ (43,976) (47,205)(2)
-------- --------
Total stockholders' equity.................................. 2,823 19,327(2)
-------- --------
Total capitalization...................................... $ 3,753 $ 19,350
======== ========
</TABLE>
- -------------------------
(1) Excludes 1,044,252 shares of Common Stock reserved for issuance upon
exercise of options granted or to be granted 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 Notes 11 and 15 of Notes to Financial Statements.
(2) Immediately prior to closing of the Offering, the Company intends to make
the Distribution. The Company currently estimates that the Distribution 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 $0.7 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 Distribution 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 June 30, 1997, the Company's net tangible book value was $2,823,413
or $.44 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 June 30, 1997, 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 $14.00 per share,
the payment of the Distribution and the recording of deferred taxes of
approximately $0.7 million, the pro forma net tangible book value of the Company
on June 30, 1997 would have been $19,326,613 or $2.40 per share. This represents
an immediate increase in net tangible book value to the existing stockholders of
approximately $2.46 per share and an immediate dilution to purchasers of shares
of Common Stock in the Offering of $11.60 per share, as illustrated by the
following:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $14.00
Net tangible book value per share as of June 30, 1997..... $ .44
Decrease per share attributable to the Distribution and
deferred taxes(1)...................................... (.50)
Increase per share attributable to new investors.......... 2.46
Pro forma net tangible book value per share after the
Offering(2)............................................... 2.40
------
Net tangible book value per share dilution to new
investors................................................. $11.60
======
</TABLE>
- -------------------------
(1) Includes the Distribution and deferred taxes of $0.7 million to be recorded
upon conversion of the Company from an S corporation to a C corporation.
(2) Does not reflect 1,044,252 shares of Common Stock reserved for issuance upon
exercise of options granted or to be granted in the future pursuant to the
Option Plan (of which options to purchase 819,215 shares of Common Stock are
currently outstanding at an exercise price of $7.66 per share).
The following table sets forth, at June 30, 1997, 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 $14.00 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........... 6,467,400 80.2% $46,799,536(3) 67.6% $ 7.24(3)
New investors................... 1,600,000 19.8 22,400,000 32.4 14.00
--------- ----- ----------- -----
Total...................... 8,067,400 100.0% $69,199,536 100.0%
========= ===== =========== =====
</TABLE>
- -------------------------
(1) Excludes 1,044,252 shares of Common Stock reserved for issuance upon
exercise of options granted or to be granted pursuant to the Option Plan (of
which options to purchase 819,215 shares of Common Stock are currently
outstanding at an exercise price of $7.66 per share). 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 June 30, 1997. Sales by Selling
Stockholders in the Offering will reduce the number of shares held by
existing stockholders to 5,467,400 shares or 67.8% of the total number of
shares of Common Stock outstanding after the Offering (62.9% if the
Underwriters' over-allotment option is exercised in full), and will increase
the number of shares held by new investors to 2,600,000 shares or 32.2% of
the total number of shares of Common Stock outstanding after the Offering
(37.1% 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 $46.7 million, or $7.23 per share, of non-cash,
stock-based compensation for 1994, 1995 and 1996.
15
<PAGE> 17
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE 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 four year period ended December 31, 1996 are derived from the
audited Financial Statements of the Company and included herein in reliance upon
the report of Arthur Andersen LLP as experts in auditing and accounting. The
Statement of Operations Data and Balance Sheet Data for, and as of, the year
ending December 31, 1992 and the six months ended June 30, 1996 and 1997, 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 period and at the date
presented.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- ------------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues...................... $9,122 $11,731 $14,797 $ 22,908 $ 32,511 $ 15,087 $ 22,722
Cost of services.............. 6,904 8,338 10,424 15,525 23,287 10,652 13,990
------ ------- ------- -------- --------- --------- ---------
Gross profit.................. 2,218 3,393 4,373 7,383 9,224 4,435 8,732
Costs and expenses:
Selling..................... 743 1,012 1,165 2,141 3,046 1,366 2,093
Recruiting.................. 290 341 410 777 1,323 612 698
Stock-based compensation.... -- -- 6,510(2) 27,987(2) 12,231(2) 9,510(2) --
General and
administrative............ 1,015 1,230 1,334 1,642 3,742 1,328 3,719(3)
------ ------- ------- -------- --------- --------- ---------
Total costs and expenses...... 2,048 2,583 9,419 32,547 20,342 12,816 6,510
------ ------- ------- -------- --------- --------- ---------
Operating income (loss)....... 170 810 (5,046)(2) (25,164)(2) (11,118)(2) (8,381)(2) 2,222
Other income (expense)........ 27 6 (57) (109) (71) (22) (101)
------ ------- ------- -------- --------- --------- ---------
Income (loss) before income
taxes....................... 197 816 (5,103)(2) (25,273)(2) (11,189)(2) (8,403)(2) 2,121
Provision for income taxes.... 15 4 75 21 9 -- 1
------ ------- ------- -------- --------- --------- ---------
Net income (loss), as
reported(4)................. $ 182 $ 812 $(5,178)(2) $(25,294)(2) $ (11,198)(2) $ (8,403)(2) $ 2,120
====== ======= ======= ======== ========= ========= =========
Pro forma provision for income
taxes(4).................... 408 443 847
--------- --------- ---------
Pro forma net income
(loss)(4)................... $ (11,606) $ (8,846) $ 1,273
========= ========= =========
Pro forma net income (loss)
per share(4)(5)............. $ (1.74) $ (1.33) $ .19
========= ========= =========
Weighted average common shares
outstanding(5).............. 6,659,412 6,659,412 6,659,412
BALANCE SHEET DATA (AT END OF
PERIOD)(1):
Cash.......................... $ 298 $ 289 $ 1,083 $ 1,109 $ 356 $ 502 $ 546
Working capital............... 1,098 1,771 1,674 2,370 1,194 2,112 2,140
Total assets.................. 1,670 2,418 3,573 5,584 7,131 5,500 8,726
Long-term debt, less current
portion..................... -- -- 1,841 704 206 397 930
Total stockholders' equity.... 1,149 1,954 326 2,275 2,507 2,757 2,823
</TABLE>
- ---------------
(1) In October 1996, Systems Inc., SPR Chicago, SPR Tulsa, SPR Wisconsin and
DataFlex merged into SPR and, in connection therewith, the stockholders of
such companies received an aggregate of 6,467,191 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
16
<PAGE> 18
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 1996 and the six
months ended June 30, 1996 on a pro forma basis would have been $0.6
million and $0.7 million, respectively. See "Prospectus Summary -- Summary
Unaudited Pro Forma Financial Data" and Note 10 of Notes to Financial
Statements.
(3) General and administrative expenses include $0.2 million of expenses related
to the Company's March 1997 proposed initial public offering that was
postponed. Total costs of the March 1997 offering were approximately $0.8
million of which $0.2 million was expensed in the second quarter of 1997 and
$0.6 million will be charged against the proceeds of the Offering.
(4) 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
1996 and the six months ended June 30, 1997. The pro forma provision for
income taxes represents a combined Federal and state effective tax rate of
40%. The pro forma provision for income taxes is computed by multiplying the
effective tax rate times the income (loss) before income taxes adjusted to
eliminate the stock-based compensation expense and subtracting income taxes
previously recorded.
(5) Pro forma net income (loss) per share information assumes that 192,012 of
the shares of Common Stock being offered by the Company hereby were
outstanding during the periods indicated. This represents the approximate
number of shares of Common Stock which are being offered by the Company
(assuming an initial public offering price of $14.00 per share and after
deducting estimated underwriting discounts and commissions) to enable the
Company to make the Distribution. The Company currently estimates that the
Distribution will be $2.5 million.
17
<PAGE> 19
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," "believe" 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. The Company has
occasionally entered into fixed-price billing engagements and may enter into
more such engagements in the future. 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. The initial seven-week entry-level course specifically
focuses on Century Date Compliance, while advanced course modules concentrate on
the Company's other service offerings. The individuals enrolled in the
entry-level training course are paid a salary commensurate with the salary paid
to computer science graduates. Since the commencement of the entry-level
training program on February 15, 1996, 84 individuals have entered and
successfully completed entry-level training. The Company incurred approximately
$1.3 million in expenses attributable to the training program in 1996, all of
which have been expensed as incurred. These expenses adversely affected gross
profit and operating income in 1996. Employees who complete the entry-level
course and are placed on customer engagements generate significantly higher
gross margins than the Company's more experienced consultants. The Company
believes that these higher margins are sufficient to fund additional training
classes on a regular basis while increasing overall corporate profitability. The
Company intends to conduct additional training classes on a regular basis.
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
18
<PAGE> 20
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 1996 and for the six months ended June 30, 1996;
accordingly, pro forma operating income reflects additional income of $12.2
million in 1996 and $9.5 million for the six months ended June 30, 1996. 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>
PERCENTAGE OF REVENUE
------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- ---------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues.................................................... 100% 100% 100% 100% 100%
Cost of services............................................ 70 68 72 71 62
--- ---- --- --- ---
Gross profit............................................ 30 32 28 29 38
Costs and expenses:
Selling................................................... 8 9 9 9 9
Recruiting................................................ 3 3 4 4 3
Stock-based compensation(1)............................... 44 122 38 63 --
General and administrative................................ 9 7 11 9 17(2)
--- ---- --- --- ---
Total costs and expenses................................ 64 141 62 85 29
--- ---- --- --- ---
Operating income (loss)(1).................................. (34) (109) (34) (56) 9
Provision for income taxes.................................. 1 -- -- -- --
--- ---- --- --- ---
Net income (loss)(1)........................................ (35)% (109)% (34)% (56) 9
=== ==== === === ===
</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, 1996 and for
the six months ended June 30, 1996; accordingly, operating income for 1996
and the six months ended June 30, 1996 was increased by $12.2 million and
$9.5 million, respectively. See Note 10 of Notes to Financial Statements.
(2) General and administrative expenses include bad debt expense of
approximately $0.5 million relating primarily to a retail customer which
recently filed for Chapter 11 bankruptcy and $0.2 million of expenses
related to the Company's March 1997 proposed initial public offering that
was postponed.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Revenues. Revenues increased 51% to $22.7 million in the first six months
of 1997 from $15.1 million in the comparable 1996 period. This increase was
primarily the result of revenue generated by the consultants who completed the
entry-level training program in 1996 and of an increased number of engagements
for 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. Revenues from Century Date Compliance
engagements increased to $8.7 million in the first six months of 1997 from $2.1
million in the comparable 1996 period.
19
<PAGE> 21
Gross Profit. Gross profit consists of revenues less cost of services,
which includes consultant salaries, benefits and travel expenses. Gross profit
increased 97% to $8.7 million in the first six months of 1997 from $4.4 million
in the comparable 1996 period. Gross profit as a percentage of revenues
increased to 38% in the first six months of 1997 from 29% in the comparable 1996
period. The increase in gross profit was primarily attributable to higher
billing rates and a higher billing-to-consultant cost ratio. The higher billing
rates were realized as a result of the increase in project management
engagements and the higher billing ratio was attributable primarily to the
placement of consultants who completed the entry-level training program in 1996.
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 53% to $2.1
million in the first six months of 1997 from $1.4 million in the comparable 1996
period. This increase was primarily the result of increased commissions
attributable to the 51% increase in sales over the comparable period. The
Company's selling expenses as a percentage of revenues were 9% in both the first
six months of 1997 and in the comparable 1996 period.
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, recruiters' travel
expenses, and advertising costs. The Company hired 160 consultants during the
first six months of 1997 compared to 149 in the first six months of 1996.
Recruiting expenses increased to $0.7 million in the first six months of 1997
from $0.6 million in the comparable 1996 period. Total recruiting costs per hire
increased to approximately $4,400 in the first six months of 1997 from
approximately $4,100 in the comparable 1996 period.
Stock-based Compensation Expense. Stock-based compensation expense consists
of non-cash expense resulting from the financial statement treatment of the 1994
transfers by Systems Inc. of certain of its assets and liabilities to SPR
Chicago and SPR Wisconsin. The stock-based compensation expense was allocated to
each period based upon the increase in the estimated fair market value of SPR
Chicago and SPR Wisconsin. The increase in the estimated fair market value of
SPR Chicago and SPR Wisconsin for the periods presented was based primarily upon
SPR Chicago's and SPR Wisconsin's revenue growth over such periods. The expense
is non-recurring subsequent to October 31, 1996. Stock-based compensation
expense allocated to the six months ended June 30, 1996 was $9.5 million.
General and Administrative Expenses. General and administrative expenses
include salaries and benefits of management and support staff, leased facilities
cost, training, travel expenses related to general and administrative matters,
outside professional fees, depreciation and all other corporate costs. General
and administrative expenses increased 180% to $3.7 million in the first six
months of 1997 from $1.3 million in the comparable 1996 period. This increase
was primarily attributable to six additional employees, general salary and
management bonus increases, bad debt expense of approximately $0.5 million
relating primarily to a client which recently filed for Chapter 11 bankruptcy
and $0.2 million in expenses relating to the Company's March 1997 proposed
initial public offering that was postponed. Total costs of the March 1997
offering were approximately $0.8 million, of which $0.2 million was expensed in
the second quarter of 1997 and $0.6 million was deferred and will be charged
against the proceeds of the Offering. Additional factors contributing to this
increase include increased rent relating to new office space in Wisconsin,
increased depreciation, increased professional fees and training costs
associated primarily with outside instructors.
1996 COMPARED TO 1995
Revenues. Revenues increased 42% to $32.5 million in 1996 from $22.9
million in 1995. This increase was primarily the result of an increased number
of engagements for 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. Revenues from Century
Date Compliance engagements increased to $9.0 million in 1996 from $0.6 million
in 1995.
Gross Profit. Gross profit increased 25% to $9.2 million in 1996 from $7.4
million in 1995. Gross profit as a percentage of revenues decreased to 28% in
1996 from 32% in 1995. The decrease in gross profit was primarily attributable
to salaries and benefits of trainees enrolled in the entry-level training
program, and the
20
<PAGE> 22
subsequent delay in the assignment of these individuals to billable engagements.
This resulted in an increase in expenses of approximately $0.8 million without
any increase in revenues. In addition, the Company hired 20 project managers (an
increase of 200% from 1995) to satisfy anticipated demand for the Company's
services. The Company's operating income for the year ended December 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 continue to
improve as these project managers devote more time to billable engagements.
Selling Expenses. Selling expenses increased 42% to $3.0 million in 1996
from $2.1 million in 1995. This increase was primarily the result of increased
commissions attributable to the 42% increase in sales over 1995. The Company's
selling expenses, as a percentage of revenues, were 9% in 1996 and 1995.
Recruiting Expenses. The Company hired 292 consultants during 1996 compared
to 254 in 1995. Recruiting expenses increased 70% to $1.3 million in 1996 from
$0.8 million in 1995. The Company employed on average 4 more recruiters in 1996
than in 1995 to handle the increased hiring activity. As a result of such
additions, total recruiting costs per hire increased to approximately $4,500 in
1996 from approximately $3,100 in 1995.
Stock-based Compensation Expense. Stock-based compensation expense
allocated to 1996 was $12.2 million compared to $28.0 million allocated to 1995.
General and Administrative Expenses. General and administrative expenses
increased 128% to $3.7 million in 1996 from $1.6 million in 1995. This increase
was primarily attributable to hiring eight additional employees, 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. Revenues from Century Date Compliance engagements
increased to $0.6 million in 1995 from an immaterial amount in 1994.
Gross Profit. Gross profit increased 69% to $7.4 million in 1995 from $4.4
million in 1994 and, as a percentage of revenues, increased to 32% of revenues
in 1995 from 30% in 1994. This increase resulted 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, 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
and recorded this expense as cost of services in 1994.
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.
21
<PAGE> 23
Stock-based Compensation Expense. Stock-based compensation expense
allocated to 1995 was $28.0 million compared to $6.5 million allocated to 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.
UNAUDITED QUARTERLY RESULTS
The following tables set forth certain unaudited quarterly data for the
periods shown:
<TABLE>
<CAPTION>
1995 QUARTER ENDED 1996 QUARTER ENDED 1997 QUARTER ENDED
------------------------------------- ------------------------------------- --------------------
MAR. 31 JUNE 30 SEP. 30 DEC. 31 MAR. 31 JUNE 30 SEP. 30 DEC. 31 MAR. 31 JUNE 30
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $4.5 $5.3 $6.3 $6.8 $7.4 $7.6 $8.4 $9.1 $10.5 $12.2
Gross profit............... 1.4 1.7 2.1 2.2 2.3 2.1 2.6 2.2 3.8 4.9
</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.
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 have decreased to 33 days of revenues at June 30, 1997
from 43 days of revenues at December 31, 1996 and 45 days of revenues at
December 31, 1995. The Company continues to work with its clients to attempt to
shorten receivable cycles on a case-by-case basis.
Net cash flow provided by operating activities, primarily to fund the
growth in accounts receivable, totaled $0.7 million, $1.6 million and $1.3
million for the years ended December 31, 1996, 1995, and 1994, respectively, and
totaled $1.5 million and $0.9 million for the six months ended June 30, 1997 and
1996, respectively. Net cash (used in) the Company's investing activities,
primarily to fund capital expenditures, totaled ($0.9 million), ($0.1 million)
and ($0.2 million) for the years ended December 31, 1996, 1995, and 1994,
respectively, and totaled ($0.3 million) and ($0.4 million) for the six months
ended June 30, 1997 and 1996, respectively. Net cash (used in) financing
activities consisting primarily of payments on a note payable to Eugene Figliulo
and dividend distributions to stockholders to fund their payment of taxes due on
S corporation income totaled ($0.5 million), ($1.5 million) and ($0.4 million)
for the years ended December 31, 1996, 1995 and 1994, respectively, and totaled
($1.0 million) and ($1.1 million) for the six months ended June 30, 1997 and
1996, respectively.
The Company periodically has supplemented cash generated by operations with
term loans and short-term borrowings under lines of credit. The proceeds from a
$0.3 million term note funded furniture and equipment purchases for the
Company's Chicago facility. The term 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 June 30, 1997,
this term note had an outstanding balance of $0.2 million. The Company intends
to pay this 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 provided for maximum
borrowings of $2.5 million and were limited based upon a percentage of eligible
accounts receivable. On December 31, 1996 there was $1.3 million outstanding on
the lines. Interest rates on the lines of credit were at each of the respective
bank's prime rate and were collateralized by certain assets including accounts
receivable. In May 1997, one of the lines expired and the Company replaced the
other line.
22
<PAGE> 24
The Company entered into a loan agreement in June 1997 which provides for
both a revolving credit facility and a term loan facility. Both the revolving
loan facility and the term loan facility are secured by certain accounts
receivable and other assets. The loan agreement contains certain restrictions,
prohibiting, among other things, additional indebtedness without the lender's
consent. The loan agreement also contains certain covenants, including, among
others, a requirement that the Company maintain a cash flow coverage ratio, as
defined, of not less than 1.1 to 1. The revolving credit facility allows SPR to
borrow up to the lesser of (i) $2.0 million or (ii) the borrowing base, as
defined, in each case less the undrawn face amount of any letters of credit
issued on behalf of the Company. Interest is at the lender's prime rate. The
revolving credit facility matures in March 1998. As of June 30, 1997, the
Company's outstanding balance in the revolving credit facility was $1.6 million,
all of which had been used for general corporate purposes.
The term loan facility provides for maximum borrowings of $2.0 million for
use for certain purposes. Interest on the term loan facility is payable
quarterly at 1% over the lender's prime rate. In addition, installments of
principal in the amount of $62,500 are payable quarterly commencing in September
1997. Within 30 days of the end of each calendar quarter, the Company is
required to pay a portion of the principal amount of the term note then
outstanding in an amount equal to 40% of the excess cash flow, as defined,
during such calendar quarter. The term loan facility matures in March 1999. SPR
borrowed approximately $1.0 million on the term loan facility to make
distributions to stockholders to fund their payments of taxes, all of which was
outstanding on June 30, 1997.
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.
23
<PAGE> 25
BUSINESS
COMPANY OVERVIEW
SPR has over 24 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. SPR
provides its clients with three levels of consulting support which are
distinguished by the degree of responsibility the Company assumes: strategic
planning, project management and implementation. Within this framework, SPR
currently provides outsourcing services through four service offerings: Systems
Re-engineering, Century Date Compliance, Application Management and Information
Delivery Services ("IDS") in addition to providing General Consulting services.
SPR bills its clients on either a time and materials or a fixed-price basis. 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 four branch offices located in Chicago, Tulsa,
Milwaukee and Dallas and 467 IT consulting professionals, including 44 project
managers and 36 independent contractors. The number of consultants employed or
retained by the Company as of June 30, 1997 was 15% greater than at the end of
1996. 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.
SPR has capitalized on the growing demand for IT services. The Company's
revenues have increased at a compound annual growth rate of approximately 37%
from 1992 through 1996. From 1995 to 1996, the Company's revenues increased 42%.
More than 70% of the Company's revenues in 1996 were attributable to 40
companies which had been clients for at least the prior three consecutive years.
For the first six months of 1997, the Company's revenues increased 51% compared
to the same period in 1996 and its gross and operating margins increased to 38%
and 10%, respectively.
INDUSTRY OVERVIEW
Dataquest Incorporated estimated total expenditures for professional IT
services in the United States were $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% between 1997 and 1999, reaching $79.6
billion by 1999.
The Company's experience is that many large organizations find 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
information needed to build replacement systems; and (iv) regardless of which
front-end computing platform is utilized, clients still need to access data
resident in mainframe computers.
24
<PAGE> 26
The Company also is capitalizing on the substantial growth opportunity
created by problems inherent in implementing mass changes to application systems
and their associated data bases. Examples of mass change include the European
Union's expected conversion to the euro currency, the extension of the number of
digits and other characters in zip codes, product codes and account numbers and,
especially, the year 2000 problem, the software glitch that will prevent
computers from properly recognizing dates after the year 1999. Coding 19YY as YY
eliminated 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 will 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:
EXPAND ENTRY-LEVEL TRAINING PROGRAM TO ATTRACT, DEVELOP AND RETAIN
QUALIFIED TECHNICAL CONSULTANTS. The Company currently employs 21 full-time
recruiters: eight in Chicago, seven in Tulsa, five in Milwaukee and one in
Dallas. Over the past 24 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 has developed a
three-year training program. This program, targeted at college graduates with
degrees other than computer science, begins with a seven-week entry-level course
specifically focused on Century Date Compliance. The Company, in conjunction
with DeVry, Inc., has developed several other training courses to enable its
consultants to enhance their careers and to improve their technical skills. See
"-- Recruiting and Training." The Company believes its training program,
together with its comprehensive employee welfare plans and the Option Plan and
the Employee Stock Purchase Plan, provide the Company with a competitive
advantage in attracting, developing and retaining qualified technical
consultants. See "Management -- Stock Plans."
CONTINUE TO FOCUS ON PROJECT MANAGEMENT TO DELIVER VALUE-ADDED IT
SOLUTIONS. In recent years, the Company has shifted its focus from general
consulting engagements such as contract programming to outsourcing engagements
focusing on project management and strategic planning engagements such as
Century Date Compliance, Systems Re-engineering, Application Management 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 anticipating opportunities to provide additional IT services.
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, data warehousing 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.
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
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<PAGE> 27
increase productivity and efficiency, the Company has developed specific
proprietary service methodologies, Renovation(SM) and Renovation2000(SM), and a
proprietary software analysis tool, CodeVu(SM). See "-- Proprietary Service
Methodologies and Software Analysis Tool." 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.
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 OUTSOURCING TREND THROUGH 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
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.
DEVELOP ADDITIONAL VIRTUAL INSOURCING CENTERS. In order to capitalize on
the corporate trend towards outsourcing, the Company established its first
Virtual Insourcing Center in the third quarter of 1996. Virtual Insourcing
Centers augment the Company's Application Management service offering and are
logical extensions of the Company's Systems Re-engineering, Century Date
Compliance and General Consulting service offerings. See "-- Service Offerings."
The Company intends to establish additional 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 Application Management engagements without
interrupting its clients' businesses. In addition, Virtual Insourcing Centers
allow 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.
DEVELOP AND EXPAND ADDITIONAL 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. 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.
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. The Company derived more than 70% of
its revenues in 1996 from 40 clients to which it had provided IT services in at
least the prior three consecutive years. The Company intends to further
penetrate its existing client base by providing additional 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. The Company opened a Dallas branch in February, 1997. The
Company also may pursue strategic acquisitions either to expand its geographic
presence or to complement and further diversify its existing service offerings.
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<PAGE> 28
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 provides its clients with three levels of consulting
support which are distinguished by the degree of responsibility the Company
assumes: strategic planning, project management and implementation. Within this
framework, SPR currently provides outsourcing services through four service
offerings: Systems Re-engineering, Century Date Compliance, Application
Management and IDS in addition to providing General Consulting services. 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 -- Develop Additional Virtual
Insourcing Centers." SPR employs proven proprietary service methodologies and
software analysis tools to deliver these services. See "-- Proprietary Service
Methodologies and Software Analysis Tool." SPR bills its clients on either a
time and materials or fixed-price basis.
[GRAPHICS REGARDING THE COMPANY'S SERVICE OFFERINGS]
GENERAL CONSULTING. General Consulting consists of providing technical
personnel with expertise in a wide variety of skills and disciplines to augment
clients' internal IT departments. Clients' IT departments often require advice
and programming skills without the full range of project management support.
General Consulting consists of staff augmentation principally for maintenance
and development of client/server and mainframe environments.
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.
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<PAGE> 29
CENTURY DATE COMPLIANCE. Century Date Compliance consists of retrofitting
existing systems to address the date-coding problem that will be caused by the
year 2000. Century Date Compliance services include high-level organizational
assessment of a client's software portfolio and organizational readiness,
engagement planning and management and implementation. See "-- Industry
Overview."
APPLICATION MANAGEMENT. Application Management consists of providing the
management, systems maintenance and support of all or part of clients' existing
IT applications. Using proprietary and third-party 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 AND SOFTWARE ANALYSIS TOOL
The Company's proprietary service methodologies, Renovation(SM) and
Renovation2000(SM), and its proprietary 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, as well as key
strategic alliances with third-party software providers, 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 Application Management. CodeVu(SM) is often
integrated into client environments to assist with the maintenance and
preservation of source code.
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RECRUITING AND TRAINING
The Company employs 21 full time recruiters, including three 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 24
years. See "Risk Factors -- Need to Attract and Retain Qualified Technical
Consultants."
In the first quarter of 1996, the Company implemented a three-year 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 in computer science, such as music,
mathematics and philosophy. Based upon its experience with graduates of the
entry-level portion of 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 seven-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 to six years. Since the commencement of this entry-level
training course on February 15, 1996, 84 individuals have entered and
successfully completed training. The Company intends to continue to conduct
additional training classes on a regular basis. The Company has developed
additional training courses in conjunction with DeVry, Inc., a leading higher
education institution specializing in technology. These courses offer SPR's
consultants advanced training in information technologies. By participating in
these advanced training courses, the Company's consultants can attain
certification from DeVry and earn credits toward both a master's degree in
information technology and an MBA.
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.
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
Chief Executive Officer 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
1996 and for the six months ended June 30, 1997, SPR's ten largest clients
accounted for approximately 52% and 49% of the Company's revenues, respectively,
and Allstate Insurance Company accounted for approximately 16% and 15% of its
revenues, respectively.
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The following table shows selected clients, categorized by industry group,
for which the Company provided services in 1996. Revenues derived from any
particular client engagement vary from year to year. The clients listed below
represented approximately 56%, 45% and 41% of the Company's total revenues for
1996, 1995 and 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
CUNA Mutual Group
Guarantee National Insurance Companies
Kemper National Insurance
The Lincoln National Life Insurance Company
Wausau Insurance
OIL & GAS
Chevron Information Technology Company
Citgo Petroleum Corporation
MAPCO
Oxy USA Inc.
HEALTHCARE
Baxter Healthcare Corporation
G E Medical Systems
G.D. Searle & Co.
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
Sabre Group Holdings, Inc.
OTHER INDUSTRIES
Kraft Foods
Land's End
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.
WorldCom
EMPLOYEES
As of June 30, 1997, the Company had 467 IT consulting professionals, of
whom 431 were employees and 36 were independent contractors. Of these IT
consulting professionals, 44 were project managers. As of such date, the Company
had 495 employees: 241, 138, 114 and 2 in Chicago, Tulsa, Milwaukee and Dallas,
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 80% of the Company's IT consultants are salaried employees and 12%
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 8% 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.
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COMPETITION
The market for IT professional services is intensely competitive on local
and national levels, 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 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 competitors 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
competitors 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 Service Methodologies and Software
Analysis Tool."
PROPERTY
SPR leases its principal executive offices, which are located at 2015
Spring Road, Oak Brook, Illinois 60523-1874, and also leases facilities in
Tulsa, Oklahoma and Milwaukee, Wisconsin. These leases expire on January 21,
2002, May 31, 2004 and May 31, 2001, respectively. The Company also leases space
in Oak Brook, Illinois to house a Virtual Insourcing Center. This lease expires
on August 31, 2002. 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 and executive officers of the Company, and their ages and
positions as of July 1, 1997, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Executive Officers and Directors
Robert M. Figliulo................... 43 Chief Executive Officer and Chairman of
the Board of Directors
Michael J. Fletcher.................. 42 Executive Vice President, General Manager
--Tulsa and Director
David A. Figliulo.................... 36 Executive Vice President and Director
Stephen J. Tober..................... 32 Executive Vice President -- Finance and
Business Development
Stephen T. Gambill................... 46 Chief Financial Officer
Ronald L. Taylor(1).................. 53 Director
Sydnor W. Thrift, Jr.(2)............. 68 Director
David P. Yeager(1)(2)................ 44 Director
</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. Unless otherwise stated, the directors
and executive officers 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 Chief Executive Officer and Chairman of SPR
since June 1997 and previously served as President and Chairman of the Company
and SPR Chicago. 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 J. Tober served as Executive Vice President -- Finance and Business
Development since June 1997. Prior to joining the Company, Mr. Tober worked in
the investment banking division of Smith Barney Inc. from 1995 through 1997.
From 1991 through 1995 Mr. Tober worked in the corporate finance group of the
law firm Latham & Watkins. Mr. Tober received a J.D. degree from the University
of Virginia School of Law in 1991 and a B.A. degree from Amherst College in
1987.
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<PAGE> 34
Stephen T. Gambill served as Chief Financial Officer 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 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.
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 Systems Inc. See "Certain Transactions." Mr.
Robert Figliulo and Mr. David Figliulo, former executive officers and directors
of SPR Chicago, determined their 1996 compensation. Mr. Fletcher and Ms. Potter,
former executive officers and directors of SPR Tulsa, determined their 1996
compensation. Mr. John Figliulo, the sole officer and director of SPR Wisconsin,
determined his 1996 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.
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<PAGE> 35
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, 1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
--------------------------- ------ ----- ------------
<S> <C> <C> <C>
Robert M. Figliulo.......................................... $140,000 $104,694 $6,121(1)
Chief Executive Officer and
Chairman of the Board of Directors
Michael J. Fletcher......................................... 108,039 93,273 6,164(2)
Executive Vice President, General Manager-Tulsa and
Director
David A. Figliulo........................................... 100,000 63,290 9,499(3)
Executive Vice President and Director
</TABLE>
- -------------------------
(1) Represents (i) $5,621 of automobile lease payments made by the Company and
(ii) $500 in matching payments under the Company's 401(k) plan.
(2) Represents (i) $5,664 of automobile lease payments made by the Company and
(ii) $500 in matching payments under the Company's 401(k) plan.
(3) Represents (i) $8,999 of automobile lease payments made by the Company and
(ii) $500 in matching payments under the Company's 401(k) plan.
EMPLOYMENT AGREEMENTS
The Company has either entered into or, prior to the closing date of the
Offering, intends to enter into substantially identical employment agreements
with Robert Figliulo, David Figliulo, Michael Fletcher, Stephen Tober, Rene
Potter and Stephen Gambill. The agreements will provide that upon termination of
employment by the Company, other than for Cause (as defined in the agreements),
death or retirement, the Company shall pay the executive an amount equal to no
more than the executive's annual base compensation in effect at the time of
termination. The agreements will 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 and annual bonus 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. The agreements will also
contain noncompetition, nonsolicitation and nondisclosure covenants.
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 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 $25,000
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 shall be the lesser of (i) 85% of
the fair market value of the Common Stock (as calculated pursuant to the
Purchase Plan) on the first day of an offering period or (ii) 85% of the fair
market value of the Common Stock 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
34
<PAGE> 36
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 1,044,252 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.
On June 2, 1997 options to purchase 819,215 shares of Common Stock at an
exercise price of $7.66 per share were granted to certain employees (other than
the Named Executive Officers) and outside directors under the Option Plan, of
which options to purchase 276,726 shares of Common Stock are presently
exercisable.
35
<PAGE> 37
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 the years ended December 31, 1994, 1995 and 1996, and during the six
months ended June 30, 1997, the Company made distributions of $80,955, $744,559,
$800,663 and $1,803,900, respectively, to its stockholders to enable them to pay
income taxes attributable to S corporation income of the Company for such
periods.
In 1993, DataFlex made a loan to Eugene Figliulo in the original principal
amount of $100,000. The loan is evidenced by an unsecured promissory note and
bears interest at 6% per annum. As of June 30, 1997, the entire unpaid principal
balance plus accrued interest due on the DataFlex note was outstanding. The
DataFlex note plus accrued interest is expected to be paid with a portion of the
proceeds of this Offering payable to Mr. Figliulo.
In 1995 and 1996, SPR Chicago made two unsecured loans to Robert Figliulo
in the principal amounts of $39,500 and $4,385, respectively. These loans are
evidenced by separate demand promissory notes and bear interest at 7% per annum.
In January 1997, the Company made an unsecured loan to Robert Figliulo in the
principal amount of $80,000. This loan is evidenced by a demand promissory note
and bears interest at 7% per annum. As of June 30, 1997, the aggregate unpaid
principal balance plus accrued interest on these three notes was $132,421.
During 1994, Systems Inc. transferred certain of its assets and liabilities
in Chicago, Tulsa and Milwaukee to three S corporations organized by the
executives primarily responsible for operations in each of those respective
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"). The Redemption Note has been paid in full.
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, $1,613,045 and $1,239,765, respectively (the "Acquisition
Notes"). 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. As of the effective date of the Mergers, an aggregate of $3,266,947 plus
accrued interest was outstanding on the Acquisition Notes. The Acquisition Notes
were cancelled by operation of law in the Mergers.
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 1,542,270 shares of Common
Stock. Also in October 1996: (i) SPR Tulsa was merged into SPR and Michael
Fletcher and Rene Potter each received 603,130 shares of Common Stock in the
Merger; (ii) SPR Wisconsin was merged into SPR and John Figliulo received
482,650 shares of Common Stock in the Merger; and (iii) Systems Inc. and
DataFlex were merged into SPR. Each stockholder of Systems Inc. and DataFlex
36
<PAGE> 38
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............................................. 74,857
Robert Figliulo............................................. 190,457
David Figliulo.............................................. 190,457
John Figliulo............................................... 190,457
Stephen Figliulo............................................ 190,457
Donald Figliulo............................................. 190,457
Mark Figliulo............................................... 190,457
James Figliulo.............................................. 190,457
Jeanne Young................................................ 190,457
Michael Cymbala............................................. 95,229
---------
Total.................................................. 1,693,742
=========
</TABLE>
Each of the Company's existing stockholders will receive cash from the net
proceeds of the Offering in an amount equal to the Company's undistributed 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............................................. $ 27,335
Robert Figliulo............................................. 614,628
David Figliulo.............................................. 614,628
John Figliulo............................................... 269,624
Stephen Figliulo............................................ 80,331
Donald Figliulo............................................. 80,331
James Figliulo.............................................. 80,331
Mark Figliulo............................................... 80,331
Jeanne Young................................................ 79,670
Michael Cymbala............................................. 40,165
Michael Fletcher............................................ 261,682
Rene Potter................................................. 269,624
Stephen Gambill............................................. 1,320
----------
Total.................................................. $2,500,000
==========
</TABLE>
Prior to the closing date of the Offering, 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.
Prior to the closing date of the Offering, the Company intends to enter
into a noncompetition, nonsolicitation and confidentiality agreement with John
Figliulo precluding him from competing with the Company for a period of one year
after the closing date of the Offering.
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<PAGE> 39
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 31, 1997, 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(2)....................... 1,732,831 26.8 0 1,732,831 21.5
David A. Figliulo(3)........................ 1,732,831 26.8 0 1,732,831 21.5
Michael J. Fletcher......................... 603,130 9.3 0 603,130 7.5
Stephen J. Tober(4)......................... 245,399 3.7 0 245,399 3.0
Stephen T. Gambill.......................... 5,221 * 0 5,221 *
Ronald L. Taylor(4)......................... 10,442 * 0 10,442 *
Sydnor W. Thrift, Jr.(4).................... 10,442 * 0 10,442 *
David P. Yeager(4).......................... 10,442 * 0 10,442 *
John Figliulo(5)............................ 673,107 10.4 336,554 336,553 4.2
Rene M. Potter.............................. 603,130 9.3 38,589 564,541 7.0
James Figliulo.............................. 190,457 2.9 100,000 90,457 1.1
Stephen Figliulo............................ 190,457 2.9 100,000 90,457 1.1
Donald Figliulo............................. 190,457 2.9 100,000 90,457 1.1
Mark Figliulo............................... 190,457 2.9 100,000 90,457 1.1
Jeanne Young................................ 185,236 2.9 100,000 85,236 1.1
Michael Cymbala............................. 95,229 1.5 50,000 45,229 *
Eugene Figliulo............................. 74,857 1.2 74,857 0 *
All Directors and Executive Officers as a
Group (8 persons)......................... 4,350,738 64.5 0 4,350,738 52.1
</TABLE>
- -------------------------
* Less than 1%.
(1) If the Underwriters' over-allotment option is exercised in full, the
following stockholders of the Company 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>
Robert M. Figliulo.......................................... 146,250 1,586,581(2) 19.7
David A. Figliulo........................................... 146,250 1,586,581(3) 19.7
Michael J. Fletcher......................................... 68,250 534,880 6.6
Rene M. Potter.............................................. 29,250 535,291 6.6
</TABLE>
(2) Includes 372,947 shares owned by the Robert M. Figliulo 1997 Grantor
Retained Annuity Trust, for which Robert M. Figliulo serves as sole trustee
and has sole investment and voting discretion.
(3) Includes 372,947 shares owned by the David A. Figliulo 1997 Grantor Retained
Annuity Trust, for which David A. Figliulo serves as the sole trustee and
has sole investment and voting discretion.
(4) Consists of shares subject to an option granted under the Option Plan that
is exercisable within 60 days. Such shares are deemed outstanding for
computing the percentage beneficially owned by the person holding such
options, but are not deemed outstanding for computing the percentage
beneficially owned by any other person.
(5) John Figliulo was the President, sole stockholder and sole director of SPR
Wisconsin prior to the Mergers.
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<PAGE> 40
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 provisions 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 25,000,000 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 8,067,400 shares of Common Stock outstanding, no shares
of Preferred Stock outstanding and 819,215 shares of Common Stock will be
issuable upon exercise of outstanding options (276,726 of which are presently
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. Application has been made to have the Common Stock listed 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
39
<PAGE> 41
"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 Chief Executive
Officer 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.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is
.
40
<PAGE> 42
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 8,067,400 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 5,467,400 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 Underwriters 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, a person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least one year,
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 80,674 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 of Common Stock for at least two years, would be entitled to sell
such shares without regard to the volume limitations, manner of sale provisions
or notice or other requirements of Rule 144.
Options to purchase a total of 819,215 shares of Common Stock at an
exercise price of $7.66 per share are presently outstanding, of which 276,726
are presently exercisable. An additional 225,037 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 one-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.
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.
41
<PAGE> 43
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...........
NUMBER OF
UNDERWRITER SHARES
----------- ---------
---------
Total...................................... 2,600,000
=========
</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 390,000 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 130,000 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
42
<PAGE> 44
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, the current level of economic activity in the
industry in which the Company 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.
In connection with this offering and in compliance with applicable law, the
Underwriters may overallot (i.e., sell more Common Stock than the total amount
shown on the list of Underwriters and participations which appears above) and
may effect transactions which stabilize, maintain or otherwise affect the market
price of the Common Stock at levels above those which might otherwise prevail in
the open market. Such transactions may include placing bids for the Common Stock
or effecting purchases of the Common Stock for the purpose of pegging, fixing or
maintaining the price of the Common Stock or for the purpose of reducing a
syndicate short position created in connection with the Offering. A syndicate
short position may be covered by exercise of the option described above rather
than by open market purchases. In addition, the contractual arrangements among
the Underwriters include a provision whereby, if, prior to termination of price
and trading restrictions, the Representatives purchase Common Stock in the open
market for the account of the underwriting syndicate and the securities
purchased can be traced to a particular Underwriter or member of the selling
group, the underwriting syndicate may require the Underwriter or selling group
member in question to purchase the Common Stock in question at the cost price to
the syndicate or may recover from (or decline to pay to) the Underwriter or
selling group member in question, the selling concession applicable to the
securities in question. The Underwriters are not required to engage in any of
these activities and any such activities, if commenced, may be discontinued at
any time.
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. Donald E. Figliulo, the owner of shares of Common Stock and a Selling
Stockholder, is a partner of Wildman, Harrold, Allen & Dixon. 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,
1996 and 1995, and for each of the years in the three-year period ended December
31, 1996 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, DataFlex 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
43
<PAGE> 45
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, 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. There
were no disagreements with Ernst & Young LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures from January 14, 1994 through September 9, 1996 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 August 1, 1997 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 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 stockholders with quarterly reports for
the first three quarters of each year containing unaudited summary financial
information.
44
<PAGE> 46
SPR INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Balance Sheets as of December 31, 1995 and 1996 and June 30,
1997 (unaudited) and June 30, 1997 (unaudited pro
forma).................................................... F-3
Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and for the six months ended June 30,
1996 (unaudited) and 1997 (unaudited)..................... F-4
Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and for the six months
ended June 30, 1997 (unaudited)........................... F-5
Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and for the six months ended June 30,
1996 (unaudited) and 1997 (unaudited)..................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 47
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
WHEN THE TRANSACTION REFERRED TO IN NOTE 16 OF THE NOTES TO FINANCIAL
STATEMENTS HAS BEEN CONSUMMATED, WE WILL BE IN A POSITION TO RENDER THE
FOLLOWING REPORT.
ARTHUR ANDERSEN LLP
To the Stockholders of SPR Inc.:
We have audited the accompanying balance sheets of SPR INC. (a Delaware
corporation) as of December 31, 1995 and 1996 and the related statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1996. 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,
1995 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
January 23, 1997 (except with
respect to the matters
discussed in Notes 14 and 15,
as to which the date is
March 5, 1997 and with respect
to the matter discussed in Note 16,
as to which the date is
, 1997.)
F-2
<PAGE> 48
SPR INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
--------------------------- JUNE 30, 1997
1995 1996 JUNE 30, 1997 (NOTE 13)
---- ---- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................................. $ 1,108,506 $ 356,179 $ 546,045 $ 546,045
Accounts receivable, net of allowance for
doubtful accounts of $31,900, $74,399, and
$568,340 at December 31, 1995 and 1996 and June
30, 1997, respectively......................... 3,096,220 4,272,655 5,265,057 5,265,057
Notes receivable -- related parties, current
portion........................................ 325,981 181,245 260,385 260,385
Notes receivable -- other........................ 75,000 -- -- --
Prepaid expenses and other....................... 369,024 801,661 1,040,708 1,040,708
------------ ------------ ------------ ----------
Total current assets......................... 4,974,731 5,611,740 7,112,195 7,112,195
------------ ------------ ------------ ----------
Property and equipment:
Leasehold improvements........................... 8,278 111,318 116,761 116,761
Computer equipment and software.................. 391,204 1,043,782 1,252,798 1,252,798
Office furniture and equipment................... 153,188 672,105 739,127 739,127
------------ ------------ ------------ ----------
552,670 1,827,205 2,108,686 2,108,686
Less -- accumulated depreciation and
amortization................................. (59,818) (308,046) (494,892) (494,892)
------------ ------------ ------------ ----------
Property and equipment, net.................. 492,852 1,519,159 1,613,794 1,613,794
------------ ------------ ------------ ----------
Notes receivable -- related parties, net of
current portion................................ 115,946 -- -- --
------------ ------------ ------------ ----------
Total assets................................. $ 5,583,529 $ 7,130,899 $ 8,725,989 $8,725,989
============ ============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit and revolving loan................ $ -- $ 1,300,000 $ 1,600,000 $1,600,000
Current portion of term loan..................... -- -- 250,000 250,000
Current portion of term note..................... -- 44,967 46,722 46,722
Current portion of note payable -- related
party.......................................... 1,200,000 641,266 161,266 161,266
Current portion of capital lease obligations..... 45,683 64,094 45,190 45,190
Accounts payable................................. 402,626 959,492 1,192,776 1,192,776
Dividends payable................................ -- -- -- 2,500,000
Accrued expenses:
Salaries, commissions, and withholding taxes... 554,796 982,885 1,078,001 1,078,001
Other.......................................... 401,882 424,620 598,190 598,190
Deferred income taxes............................ -- -- -- 356,400
------------ ------------ ------------ ----------
Total current liabilities.................... 2,604,987 4,417,324 4,972,145 7,828,545
------------ ------------ ------------ ----------
Long-term liabilities:
Term loan, net of current portion................ -- -- 760,000 760,000
Term note, net of current portion................ -- 171,038 147,610 147,610
Note payable -- related party, net of current
portion........................................ 641,266 -- -- --
Capital lease obligations, net of current
portion........................................ 62,693 35,189 22,821 22,821
Deferred income taxes............................ -- -- -- 372,400
------------ ------------ ------------ ----------
Total long-term liabilities.................. 703,959 206,227 930,431 1,302,831
------------ ------------ ------------ ----------
Stockholders' equity:
Common stock, $.01 par, 13,000,000 shares
authorized, 6,467,400 shares issued and
outstanding.................................... 64,674 64,674 64,674 64,674
Preferred stock, $.01 par, 3,000,000 shares
authorized, no shares issued and outstanding... -- -- -- --
Additional paid-in capital....................... 34,503,777 46,734,862 46,734,862 (470,061)
Retained deficit................................. (32,293,868) (44,292,188) (43,976,123) --
------------ ------------ ------------ ----------
Total stockholders' equity................... 2,274,583 2,507,348 2,823,413 (405,387)
------------ ------------ ------------ ----------
Total liabilities and stockholders' equity... $ 5,583,529 $ 7,130,899 $ 8,725,989 $8,725,989
============ ============ ============ ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-3
<PAGE> 49
SPR INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues..................... $14,797,259 $ 22,907,928 $ 32,510,743 $15,086,778 $22,722,427
Cost of services............. 10,424,690 15,525,198 23,287,234 10,651,784 13,990,202
----------- ------------ ------------ ----------- -----------
Gross profit................. 4,372,569 7,382,730 9,223,509 4,434,994 8,732,225
Costs and expenses:
Selling.................... 1,165,141 2,141,374 3,046,045 1,365,913 2,093,407
Recruiting................. 409,938 776,651 1,323,105 611,702 697,990
Stock-based compensation... 6,509,750 27,986,681 12,231,085 9,510,000 --
General and administrative
expenses................ 1,334,175 1,642,112 3,741,574 1,328,792 3,718,926
----------- ------------ ------------ ----------- -----------
Total costs and
expenses.............. 9,419,004 32,546,818 20,341,809 12,816,407 6,510,323
----------- ------------ ------------ ----------- -----------
Operating income (loss)...... (5,046,435) (25,164,088) (11,118,300) (8,381,413) 2,221,902
Other income (expense):
Interest expense........... (88,065) (160,484) (122,862) (47,546) (109,366)
Interest income............ 55,520 51,477 39,329 17,756 8,914
Other, net................. (24,136) -- 13,176 7,922 --
----------- ------------ ------------ ----------- -----------
Total other income
(expense)............. (56,681) (109,007) (70,357) (21,868) (100,452)
----------- ------------ ------------ ----------- -----------
Income (loss) before income
taxes...................... (5,103,116) (25,273,095) (11,188,657) (8,403,281) 2,121,450
Income taxes................. 75,123 20,788 9,000 -- 1,485
----------- ------------ ------------ ----------- -----------
Net income (loss)............ $(5,178,239) $(25,293,883) $(11,197,657) $(8,403,281) $ 2,119,965
=========== ============ ============ =========== ===========
Pro forma income data
(unaudited):
Net income (loss) as
reported................ $(11,197,657) $(8,403,281) $ 2,119,965
Pro forma adjustment to
recognize "C"
Corporation provision
for income taxes........ 407,971 442,688 847,095
------------ ----------- -----------
Pro forma net income
(loss).................. $(11,605,628) $(8,845,969) $ 1,272,870
============ =========== ===========
Pro forma net income (loss)
per share............... $ (1.74) $ (1.33) $ .19
============ =========== ===========
Pro forma weighted average
number of shares
outstanding............. 6,659,412 6,659,412 6,659,412
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-4
<PAGE> 50
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 December 31, 1993........ 6,885,101 $68,851 $ 40,399 $ 1,847,804 $ 1,957,054
Net loss.......................... -- -- -- (5,178,239) (5,178,239)
Distributions..................... -- -- -- (80,955) (80,955)
Stock purchased and cancelled..... (417,701) (4,177) (33,053) (2,844,036) (2,881,266)
Stock-based compensation.......... -- -- 6,509,750 -- 6,509,750
--------- ------- ----------- ------------ ------------
Balance at December 31, 1994........ 6,467,400 64,674 6,517,096 (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........ 6,467,400 64,674 34,503,777 (32,293,868) 2,274,583
Net loss.......................... -- -- -- (11,197,657) (11,197,657)
Distributions..................... -- -- -- (800,663) (800,663)
Stock-based compensation.......... -- -- 12,231,085 -- 12,231,085
--------- ------- ----------- ------------ ------------
Balance at December 31, 1996........ 6,467,400 64,674 46,734,862 (44,292,188) 2,507,348
Net income........................ -- -- -- 2,119,965 2,119,965
Distributions..................... -- -- -- (1,803,900) (1,803,900)
--------- ------- ----------- ------------ ------------
Balance at June 30, 1997
(unaudited)....................... 6,467,400 $64,674 $46,734,862 $(43,976,123) $ 2,823,413
========= ======= =========== ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE> 51
SPR INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) for the
period.......................... $(5,178,239) $(25,293,883) $(11,197,657) $(8,403,281) $ 2,119,965
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization... 20,810 51,259 252,215 112,506 186,847
Stock-based compensation........ 6,509,750 27,986,681 12,231,085 9,510,000 --
Loss on sale of property and
equipment..................... 27,409 -- -- 2,349 --
Increase in accounts
receivable.................... (106,315) (1,623,833) (1,176,435) (428,111) (992,402)
Increase in prepaid expenses and
other......................... (69,429) (225,640) (432,637) 200,489 (318,187)
Increase in accounts payable.... 5,022 300,537 556,866 (78,292) 233,284
Increase in accrued expenses.... 137,729 373,047 450,827 14,696 268,685
----------- ------------ ------------ ----------- -----------
Net cash provided by operating
activities...................... 1,346,737 1,568,168 684,264 930,356 1,498,192
----------- ------------ ------------ ----------- -----------
Cash flows from investing
activities:
Purchases of property and
equipment....................... (62,467) (332,721) (1,238,595) (664,033) (281,482)
(Increase) decrease in notes
receivable -- related parties... (89,035) 338,773 260,682 253,694 --
(Increase) decrease in notes
receivable -- other............. -- (75,000) 75,000 -- --
----------- ------------ ------------ ----------- -----------
Net cash used in investing
activities...................... (151,502) (68,948) (902,913) (410,339) (281,482)
----------- ------------ ------------ ----------- -----------
Cash flows from financing
activities:
Payments on note payable --
related party................... (320,000) (720,000) (1,200,000) (720,000) (480,000)
Distributions..................... (80,955) (744,559) (800,663) (624,223) (1,803,900)
Payments on capital lease
obligations..................... -- (9,183) (49,020) (22,400) (31,271)
Borrowings on term note payable... -- -- 250,000 250,000 --
Payments on term note payable..... -- -- (33,995) (10,014) (21,673)
Net borrowings on line of credit
and term loan................... -- -- 1,300,000 -- 1,310,000
----------- ------------ ------------ ----------- -----------
Net cash used in financing
activities...................... (400,955) (1,473,742) (533,678) (1,126,637) (1,026,844)
----------- ------------ ------------ ----------- -----------
Net increase (decrease) in cash... 794,280 25,478 (752,327) (606,620) 189,866
Cash, beginning of period........... 288,748 1,083,028 1,108,506 1,108,506 356,179
----------- ------------ ------------ ----------- -----------
Cash, end of period................. $ 1,083,028 $ 1,108,506 $ 356,179 $ 501,886 $ 546,045
=========== ============ ============ =========== ===========
Supplemental disclosure of cash
payments made for:
Interest.......................... $ 68,677 $ 143,148 $ 135,792 $ 55,230 $ 108,471
Income taxes...................... 964 72,087 9,000 2,752 1,485
=========== ============ ============ =========== ===========
Supplemental disclosure of noncash
investing and financing
activities:
Investment in equipment through
issuance of capitalized lease
obligations..................... -- $ 117,559 $ 39,926 $ -- $ --
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> 52
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 provides its clients with three levels of consulting
support which are distinguished by the degree of responsibility the Company
assumes: strategic planning, project management and implementation. Within this
framework, SPR currently provides outsourcing services through four service
offerings: Systems Re-engineering, Century Date Compliance, Application
Management and Information Delivery Services ("IDS") in addition to providing
General Consulting services.
(b) Interim Financial Information -- The unaudited balance sheet as of June
30, 1997, the unaudited statement of stockholders' equity for the six months
ended June 30, 1997 and the unaudited statements of operations and cash flows
for the six months ended June 30, 1996 and 1997 include, in the opinion of
management, all adjustments (consisting of normal and recurring adjustments)
necessary to present fairly the Company's financial position, results of
operations and cash flows. Operating results for the six months ended June 30,
1997 are not necessarily indicative of the results which may be expected for the
year ending December 31, 1997. The information included in these Notes to
Financial Statements relating to the six months ended June 30, 1996 and 1997 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. DataFlex) merged into SPR Inc. at which
time the stockholders of such companies received an aggregate of 6,467,191
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) Accounts Receivable -- Accounts receivable include fees and expenses
for services rendered prior to year end which were billed subsequent to year
end. Amounts relating to such fees and expenses included in accounts receivable
are $613,722, $919,956 and $1,405,052 at December 31, 1995 and 1996 and June 30,
1997, respectively.
(e) Prepaid Expenses and Other -- Prepaid expenses and other includes
$477,653 and $640,801 in Initial Public Offering-related costs at December 31,
1996 and June 30, 1997, respectively.
(f) Revenue Recognition -- Revenues are recognized as the related services
are performed. Clients are generally billed on a time and materials basis. In
June, 1997 the Company entered into a significant fixed-price billing
engagement. Services on this engagement commenced in July, 1997. Revenues and
related costs for this engagement will be recognized using the percentage of
completion method of accounting.
(g) 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
F-7
<PAGE> 53
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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>
(h) Distributions -- Distributions are recorded when declared by the Board
of Directors.
(i) 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.
(j) 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, prior to the Offering, the
Company will change to the accrual basis of accounting. If the effective date of
the Offering had been June 30, 1997, deferred income tax liabilities and income
tax expenses of approximately $728,800 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 June 30, 1997, deferred income tax liabilities would have
consisted of the following:
<TABLE>
<S> <C>
Change in tax accounting methods (cash to accrual).......... $712,800
Fixed Assets................................................ 16,000
--------
Total deferred income tax liabilities.................. $728,800
========
</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.
(k) Pro forma net income (loss) per share -- Pro forma net income (loss)
per share is computed based upon the weighted average number of shares and
common share equivalents outstanding during each period. Pro forma per share
information assumes that 192,012 of the shares of Common Stock being offered by
the Company were outstanding during the periods indicated. This represents the
approximate number of shares of Common Stock which are being offered by the
Company (assuming an initial public offering price of $14.00
F-8
<PAGE> 54
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
per share and after deducting estimated underwriting discounts and commissions)
to fund the payment of certain undistributed S corporation earnings. The Company
currently estimates that the dividend will be $2,500,000.
NOTE 2 -- CONCENTRATION OF CREDIT RISK
The Company's financial instruments that are exposed to concentrations of
credit risk consist of accounts receivable.
During 1997 the Company began performing services for a client which
recently filed for Chapter 11 bankruptcy. The Company has recorded a reserve for
doubtful accounts of approximately $400,000 related to receivables from this
customer at June 30, 1997. The Company is continuing to perform services for
this customer.
The Company's customers are predominantly in the Midwest, with the majority
of customers located in Chicago, Tulsa, Milwaukee and Dallas. One customer in
the insurance industry accounted for approximately 11%, 16% and 15% of revenues
for the years ended December 31, 1995 and 1996 and for the six months ended June
30, 1997, respectively. 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.
NOTE 3 -- NOTES RECEIVABLE FROM RELATED PARTIES
Notes receivable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- --------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Stockholder notes receivable, unsecured, payable on demand,
interest at 7%............................................ $ 42,233 $ 44,745 $123,885
Stockholder notes receivable, unsecured, payable on demand,
interest at 6%............................................ 399,694 100,000 100,000
Stockholder note receivable, unsecured, payable on demand,
interest at prime plus 1%................................. -- 36,500 36,500
-------- -------- --------
Total notes receivable from related parties................. 441,927 181,245 260,385
Less--current portion....................................... 325,981 181,245 260,385
-------- -------- --------
$115,946 $ -- $ --
======== ======== ========
</TABLE>
NOTE 4 -- LINES OF CREDIT AND LONG-TERM DEBT
As of December 31, 1996, the Company had line of credit agreements that
allowed for maximum borrowings of $2,500,000 and were limited based upon a
percentage of eligible accounts receivable, as defined. Interest was at the
applicable bank's prime rate. Borrowings were collateralized by certain assets
including accounts receivable. One agreement provided for maximum borrowings of
$2,000,000 and expired in May, 1997. Another line of credit agreement which
provided for maximum borrowings of $500,000 was cancelled in May, 1997. There
were no borrowings outstanding as of December 31, 1995. At December 31, 1996,
borrowings outstanding were $1,300,000.
In June, 1997, the Company entered into a loan agreement which provides for
a revolving loan facility and a term loan facility. The revolving loan facility
allows for maximum borrowings of the lesser of (a) $2,000,000 less the undrawn
face amount of letters of credit or (b) the borrowing base, as defined, less the
undrawn face amount of letters of credit. Interest is at the bank's prime rate.
The revolving loan facility
F-9
<PAGE> 55
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
matures in March, 1998. The term loan facility provides for maximum borrowings
of $2,000,000 for use for certain purposes. Interest is payable quarterly at the
prime rate plus 1%. Installments of principal in the amount of $62,500 are
payable quarterly, commencing September, 1997. Within 30 days of the end of each
calender quarter, the Company is required to pay a portion of the principal
amount of the term note then outstanding in an amount equal to 40% of the excess
cash flow, as defined, during such calendar quarter. A final balloon payment is
due March, 1999. Substantially all assets of the Company are collateral for
borrowings under these two facilities. The loan agreement contains certain
restrictions, prohibiting, among other things, additional indebtedness without
the lender's consent. The loan agreement contains certain covenants including,
among others, a requirement of a cash flow coverage ratio of not less than 1.1
to 1. The balances outstanding at June 30, 1997 were $1,600,000 on the revolving
loan and $1,010,000 on the term loan.
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, JUNE 30,
--------------------- ----------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Term loan.................................................. $ -- $ -- $1,010,000
Note payable to stockholder, unsecured, due August, 1997,
payable in monthly installments of $80,000 plus interest
at 6.75%................................................. 1,841,266 641,266 161,266
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................................................... -- 216,005 194,332
Capital lease obligations, collateralized by certain
equipment, personally guaranteed by a stockholder,
interest rates ranging from 7.75% to 8%.................. 108,376 99,283 68,011
---------- -------- ----------
Total long-term debt....................................... 1,949,642 956,554 1,433,609
Less--current maturities................................... 1,245,683 750,327 503,178
---------- -------- ----------
$ 703,959 $206,227 $ 930,431
========== ======== ==========
</TABLE>
The aggregate maturities for long-term and related party debt are as
follows:
<TABLE>
<S> <C>
Remainder of 1997........................................... $ 342,380
1998........................................................ 325,472
1999........................................................ 697,031
2000........................................................ 68,726
----------
Total long term-debt........................................ $1,433,609
==========
</TABLE>
NOTE 5 -- LEASE AGREEMENTS
The Company leases its office facilities under operating lease agreements
which expire at various times through 2004. 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 $89,594, $135,167, $383,746, $186,663 and $249,828 for the years
ended December 31, 1994, 1995 and 1996 and for the six months ended June 30,
1996 and 1997, respectively.
F-10
<PAGE> 56
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following is a schedule of minimum future rental payments required
under the operating leases:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997................................................. $ 352,066
1998................................................. 418,185
1999................................................. 427,117
2000................................................. 486,508
2001................................................. 442,630
Thereafter........................................... 421,914
----------
Total minimum payments required............................. $2,548,420
==========
</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 $21,375, $27,202, $66,865, $47,050 and
$82,086 for the years ended December 31, 1994, 1995 and 1996 and for the six
months ended June 30, 1996 and 1997, 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 year ended December 31,
1996, the Company was paid approximately $18,000. For the six months ended June
30, 1997, the Company recorded $12,289 in license fees.
NOTE 8 -- COMMITMENTS AND CONTINGENCIES
Letter of Credit -- The Company had letters of credit of $119,500 and
$100,000 at December 31, 1996 and June 30, 1997 as 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 1,206,259 shares
of SPR Inc.'s common stock. This company provided 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
F-11
<PAGE> 57
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
been restated to include the accounts of this company. Revenues and net income,
net of intercompany eliminations of the separate companies for the periods
preceding the acquisition were:
<TABLE>
<CAPTION>
SPR INC. INCLUDING
SYSTEMS AND PROGRAMMING SYSTEMS &
RESOURCES, INC., SPR-WISCONSIN, INC., PROGRAMMING
SPR CHICAGO INC. AND DATAFLEX RESOURCES OF TULSA, INC.
------------------------------------- ------------------------
<S> <C> <C>
Ten months ended October 31, 1996
Revenues.................................... $ 18,447,117 $8,128,336
Net income (loss), net of intercompany
eliminations............................. (11,265,184) 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)
</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. Compensation expense was calculated as follows: 1) multiply the
number of shares of Common Stock owned by the former stockholders of SPR Chicago
Inc. and SPR-Wisconsin, Inc. by the estimated market value per share of the
Company (which was estimated at $15.00 per share in 1994 and 1995 and $14.00 per
share in 1996); 2) then subtract the payments made by SPR Chicago Inc. and
SPR-Wisconsin, Inc. to the Company on the original acquisition notes; 3) then
subtract the value of the shares received by the stockholders of SPR Chicago
Inc. and SPR-Wisconsin, Inc. attributable to such stockholders' interests in
Consulting Acquisition, Inc. and Systems and Programming Resources, Inc.
Compensation expense was allocated to each period presented based on the
increase in the estimated market values of SPR Chicago Inc. and SPR-Wisconsin,
Inc. which was determined primarily based on revenue growth of each of the
respective companies. The estimated increase in value of SPR-Wisconsin, Inc.
from 1994 to 1995 was 73.75% and from 1995 to 1996 was 26.25%. The estimated
increase in value of SPR Chicago Inc. during 1994 was 14.69%, from 1994 to 1995
was 52.55% and from 1995 to 1996 was 32.76%. The final measurement occurred when
the relative ownership interests in SPR Inc. were determined in October, 1996.
The ownership interests of the former stockholders of SPR Chicago Inc. and
SPR-Wisconsin, Inc. is collectively 63.99% of the Company. 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
DESCRIPTION
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 835,400 shares of common stock are reserved for issuance under the
F-12
<PAGE> 58
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Combined Incentive and Non-statutory Stock Option Plan. On December 31, 1996,
options to purchase an aggregate of 461,559 shares of common stock were granted
at an exercise price of $13.41 per share. Subsequent to December 31, 1996 the
Company cancelled all 461,559 outstanding options and granted 819,215 new
options (see Note 15). 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 $25,000 worth of
stock in any calendar year. The purchase price shall be the lesser of 85% of the
market value of the common stock on the first or 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 to
purchase shares of common stock and stock appreciation rights (SARs). Incentive
stock options vest over a five year period at the rate of 20% per year. 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 on the date the
option is granted. Options and SARs granted under the option plan must generally
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.
ACTIVITY
Stock option activity for the Company's Combined Incentive and
Non-statutory Stock Option Plan for the year ended December 31, 1996 and the six
months ended June 30, 1997 is as follows:
<TABLE>
<CAPTION>
INCENTIVE STOCK WEIGHTED NON-STATUTORY WEIGHTED
OPTIONS AVERAGE STOCK OPTIONS AVERAGE
----------------- EXERCISE ---------------- EXERCISE
SHARES PRICE PRICE SHARES PRICE PRICE
------ ----- -------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding as of December 31, 1995.... -- $ -- $ -- -- $ -- $ --
======== =======
Granted.............................. 430,232 13.41 13.41 31,327 13.41 13.41
Exercised............................ -- -- -- -- -- --
Cancelled............................ -- -- -- -- -- --
-------- -------
Outstanding as of December 31, 1996.... 430,232 13.41 13.41 31,327 13.41 13.41
======== =======
Stock options exercisable at December
31, 1996............................. -- 31,327
======== =======
Cancelled............................ (430,232) $13.41 $13.41 (31,327) $13.41 $13.41
Granted.............................. 430,232 11.49 11.49 31,327 11.49 11.49
Cancelled............................ (430,232) 11.49 11.49 (31,327) 11.49 11.49
Granted.............................. 542,489 7.66 7.66 276,726 7.66 7.66
Exercised............................ -- -- -- -- -- --
-------- -------
Outstanding as of June 30, 1997........ 542,489 7.66 7.66 276,726 7.66 7.66
======== =======
Stock options exercisable at June 30,
1997................................. -- 276,726
======== =======
</TABLE>
ACCOUNTING
The Company currently utilizes Accounting Principles Board Opinion No. 25
in its accounting for stock options. In October, 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123
("Statement 123"), "Accounting for Stock-based Compensation." The accounting
method as provided in the pronouncement is not required to be adopted; however,
it is encouraged.
F-13
<PAGE> 59
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Company is not adopting the accounting provisions of Statement 123. Had the
Company accounted for its stock options in accordance with Statement 123, pro
forma net income (loss) and pro forma net income (loss) per share would have
been approximately ($11,725,328) and ($1.76) for the year ended December 31,
1996, and $662,310 and $.10 for the six months ended June 30, 1997,
respectively. The pro forma disclosure is not likely to be indicative of pro
forma results which may be expected in future years because of the fact that
options vest over several years, compensation expense is recognized as the
options vest and additional awards may also be granted.
For purposes of determining the pro forma effect of these options, the fair
value of each option is estimated on the date of grant based on the
Black-Scholes option pricing model assuming among other things, no dividend
yield, expected volatility of 41%, risk free interest rates between 6.11% and
6.52% and expected life of 5.0 years.
The weighted average fair value of options granted under the Company's
Combined Incentive and Non-Statutory Stock Option Plan for the periods ended
December 31, 1996 and the six months ended June 30, 1997 was $6.65 and $3.84,
respectively. As of December 31, 1996 and as of June 30, 1997 the remaining
contractual life of all options was approximately ten to fifteen years.
NOTE 12 -- RELATED PARTY TRANSACTION
The Company paid approximately $22,000, $56,000, $80,000, $21,814 and
$108,907 during 1994, 1995 and 1996, and for the six months ended June 30, 1996
and 1997, respectively, in fees to a law firm having a partner who is a
stockholder of the Company and who is a brother of certain executive officers of
the Company.
NOTE 13 -- SUBSEQUENT EVENTS AND PRO FORMA FINANCIAL DATA
The pro forma net income and net income per share includes a provision for
federal and state income taxes as if the Company had been a C corporation. The
effective income tax rate of 40% reflects the combined federal and state income
taxes.
The Company will convert to a C corporation in connection with the
completion of the Offering resulting in the recording of approximately $728,800
in deferred income tax liabilities, as discussed in Note 1(j). Prior to
consummation of the Offering, the Company intends to make a distribution to its
existing stockholders of the Company's undistributed S corporation earnings for
the period from November 1, 1996 through the Closing of the Offering (the
"Distribution"). The Company currently estimates the Distribution will be
$2,500,000. Retained earnings (deficit) of the Company (which includes the
aggregate stock-based compensation expense), after recording the Distribution
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.
NOTE 14 -- SUBSEQUENT EVENT -- AUTHORIZED STOCK
On February 24, 1997, the Company increased the number of authorized common
shares to 25,000,000.
NOTE 15 -- SUBSEQUENT EVENT -- STOCK OPTIONS
On March 5, 1997 the Company cancelled the options to purchase an aggregate
of 461,559 shares of common stock that were granted on December 31, 1996 at an
exercise price of $13.41 per share and granted options to purchase an aggregate
of 461,559 shares of common stock at an exercise price of $11.49 per share. On
June 2, 1997 the Company cancelled the options to purchase an aggregate of
461,559 shares of Common Stock that were granted on March 5, 1997. Also on June
2, 1997, the Company's Board of Directors and
F-14
<PAGE> 60
SPR INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
stockholders approved the adoption of the SPR Inc. Amended and Restated Combined
Incentive and Non-statutory Stock Option Plan to provide for the increase to
1,044,252 from 835,400 of the number of shares of common stock reserved for
issuance upon the exercise of incentive and non-statutory stock options. The
Company granted options to purchase 819,215 shares of common stock at an
exercise price of $7.66 per share to certain employees and directors on June 2,
1997. Of these outstanding options, 276,726 are non-statutory stock options
which are presently exercisable and 542,489 are incentive stock options which
vest over a five year period at a rate of 20% per year.
NOTE 16 -- SUBSEQUENT EVENT -- STOCK SPLIT
On , 1997 the Company's Board of Directors approved a 1.044-to-1
split of the Company's Common Stock in the form of a stock dividend effective
immediately prior to the Offering contemplated hereby. All Common Stock and per
share amounts have been adjusted retroactively to give effect to this stock
split.
F-15
<PAGE> 61
INSIDE BACK COVER OF PROSPECTUS
The inside back cover is a multicolor graphic and text layout. The following
text appears above the graphics:
"SPR OFFICES
SPR services the Midwest with offices located in:
Chicago, Illinois
Milwaukee, Wisconsin
Tulsa, Oklahoma
Dallas, Texas
[Graphics consist of map of the United States with spotlights emanating from
Chicago, Milwaukee, Tulsa and Dallas the four cities in which SPR offices are
currently located]
The following text appears below the graphics:
"To view SPR online,
visit the SPR web site.
[Graphics depicting an excerpt from the SPR home page.]
www.sprinc.com"
[The Company's logo appears in the lower right corner of the page below a page
curl.]
<PAGE> 62
======================================================
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....................... 18
Business.............................. 24
Management............................ 32
Certain Transactions.................. 36
Principal and Selling Stockholders.... 38
Description of Capital Stock.......... 39
Shares Eligible for Future Sale....... 41
Underwriting.......................... 42
Legal Matters......................... 43
Experts............................... 43
Change in Accountants................. 43
Additional Information................ 44
Index to Financial Statements......... F-1
</TABLE>
------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), 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.
======================================================
======================================================
2,600,000 SHARES
SPR INC.
COMMON STOCK
SPR LOGO
------------
PROSPECTUS
, 1997
------------
SMITH BARNEY INC.
ROBERT W. BAIRD & CO.
INCORPORATED
======================================================
<PAGE> 63
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......... $ 14,000
Legal fees and expenses..................................... 335,000
Accountants' fees and expenses.............................. 310,000
Printing expenses........................................... 132,000
Nasdaq National Market listing fee.......................... 40,000
Transfer Agent and Registrar fees and expenses.............. 15,000
NASD filing fee............................................. 5,000
Blue Sky fees and expenses.................................. 5,000
Directors' and officers' insurance fees and expenses........ 100,000
Miscellaneous expenses...................................... 144,000
----------
Total.................................................. $1,100,000
==========
</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 January
1, 1994 that were not registered under the Securities Act of 1933, as amended
(the "Securities Act"). No underwriters were involved, and there were no
underwriting
II-1
<PAGE> 64
discounts or commissions. The share numbers set forth below do not reflect the
1.044-to-1 split of the Common Stock to be effected immediately prior to
consummation of the Offering.
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 $1.4 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 $1.2 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, 3,239,306 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>
</TABLE>
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.
3.1.1 Certificate of Amendment of Certificate of Incorporation.
3.2 By-laws of the Registrant.
4.1 Description of specimen stock certificate representing
Common Stock.
5.1 Opinion of Wildman, Harrold, Allen & Dixon.*
10.1 Form of Management Employment Agreement.
10.4 Amended and Restated Combined Incentive and Non-statutory
Stock Option Plan.
II-2
<PAGE> 65
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.5 Revised 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.
10.7.1 Third Amendment to 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.
10.11 Form of Tax Indemnity Agreement.*
16.1 Revised 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> 66
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 August 1, 1997.
SPR INC.
By: /s/ ROBERT M. FIGLIULO
------------------------------------
Robert M. Figliulo
Chief Executive Officer
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 August 1, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ ROBERT M. FIGLIULO Chief Executive Officer and Chairman of the Board of
- --------------------------------------------- Directors (Principal Executive Officer)
Robert M. Figliulo
/s/ STEPHEN J. TOBER Executive Vice President, Finance and Business
- --------------------------------------------- Administration (Principal Financial Officer)
Stephen J. Tober
/s/ STEPHEN T. GAMBILL Chief Financial Officer (Principal Accounting
- --------------------------------------------- Officer)
Stephen 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> 67
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE
WHEN THE TRANSACTION REFERRED TO IN NOTE 16 OF THE NOTES TO FINANCIAL
STATEMENTS HAS BEEN CONSUMMATED, WE WILL BE IN A POSITION TO RENDER THE
FOLLOWING REPORT.
ARTHUR ANDERSEN LLP
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 January 23, 1997 (except with respect to
the matters discussed in Notes 14 and 15, as to which the date is March 5, 1997,
and the matter discussed in Note 16, as to which the date is , 1997). 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.
Chicago, Illinois
January 23, 1997
S-1
<PAGE> 68
SCHEDULE II
SPR INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<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, 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
For the year ended December 31, 1996:
Allowance for doubtful accounts................. $31,900 $ 45,000 $ 2,501 $ 74,399
For the six months ended June 30, 1997:
Allowance for doubtful accounts (unaudited)..... $74,399 $493,941 -- $568,340
</TABLE>
- -------------------------
(1) Bad debts written off.
S-2
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
</TABLE>
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.
3.1.1 Certificate of Amendment of Certificate of Incorporation.
3.2 By-laws of the Registrant.
4.1 Description of specimen stock certificate representing
Common Stock.
5.1 Opinion of Wildman, Harrold, Allen & Dixon.*
10.1 Form of Management Employment Agreement.
10.4 Amended and Restated Combined Incentive and Non-statutory
Stock Option Plan.
10.5 Revised 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.
10.7.1 Third Amendment to 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.
10.11 Form of Tax Indemnity Agreement.*
16.1 Revised 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.
- -------------------------
* 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.
<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
-4-
<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
-6-
<PAGE> 1
EXHIBIT 3.1.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SPR INC.
-------------
SPR INC., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY THAT:
FIRST: The Board of Directors of the Corporation approved and adopted the
following resolution for amending its Certificate of Incorporation declaring it
advisable and recommended that the amendment be submitted to the stockholders
for their consideration:
RESOLVED, that ARTICLE FOURTH part A. of the Certificate of
Incorporation of the Corporation be amended in its entirety to read as
follows:
"FOURTH: A. Authorized Shares. The total number of shares of all
classes of stock which the Corporation shall have authority to issue
is Twenty-Eight Million (28,000,000), consisting of Twenty-Five
Million (25,000,000) 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")."
SECOND: The amendment was duly adopted in accordance with the provisions
of Sections 242 and 228 of the General Corporation Law of the State of Delaware,
by the written consent of all of its stockholders.
IN WITNESS WHEREOF, SPR INC. has caused this Certificate to be executed by
its President this 21st day of February, 1997.
SPR INC.
By: /s/ Robert M. Figliulo
---------------------------------
Robert M. Figliulo, President
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EXHIBIT 3.2
BY-LAWS
OF
SPR INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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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
<TABLE>
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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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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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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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<PAGE> 14
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 4.1
Description of Specimen Stock Certificate Representing Common Stock
Face of Certificate:
The front of the specimen common stock certificate (the "Certificate")
contains the logo of the Company above the name of the Company and the
Company's CUSIP number (784922 10 6). The Certificate is signed by David A.
Figliulo, Secretary of the Company, and Robert M. Figliulo, President of the
Company. The Company's corporate seal appears in the lower left hand corner of
the Certificate. The Certificate contains the following language:
This certifies that _________ is the owner of __________ fully-paid and
non-assessable shares of the common stock, $.01 par value per share, of
SPR INC. (herein called the "Corporation") transferable upon the books of
the Corporation in person or by attorney upon surrender of this
certificate duly endorsed or assigned. This certificate and the shares
represented hereby are subject to the laws of The State of Delaware, and
the Certificate of Incorporation and the By-Laws of the Corporation, as
now or hereafter amended, as to all of which the holder of this
certificate assents by acceptance hereof. This certificate is not valid
unless countersigned and registered by the Transfer Agent and Registrar.
In witness whereof, SPR INC. has caused this certificate to be executed
by the facsimile signatures of its duly authorized officers and sealed
with the facsimile seal of the Corporation.
Reverse of Certificate:
The reverse of the Certificate contains standard stock transfer
instructions.
<PAGE> 1
EXHIBIT 10.1
MANAGEMENT
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the ____ day of ____________, 19__, by
and between SPR INC., a Delaware corporation ("Employer" or "Corporation") and
_______________________ ("Employee").
I. ACKNOWLEDGEMENTS OF THE PARTIES
A. Employer is presently engaged in the business of developing,
renovating, implementing and maintaining computer programs and software
products and is headquartered in Chicago, Illinois.
B. Employer desires to hire and retain Employee, who [is also a
holder of a significant amount of shares of the Corporation,] is a member of
the management team of the Employer. Employer and Employee, therefore, wish
to enter into an employment agreement (hereinafter "Agreement") which sets
forth the specific terms and conditions of Employee's employment with Employer.
C. Employee, in the course of his employment with Employer, will
frequently come into contact with Employer's clients to such an extent that he
might be able to control, in whole or in part, the business and relationships
between Employer and its clients and unless prevented from doing so could take
with him or otherwise appropriate such business and relationships.
D. Employee, during the course of his employment, will have
frequent and often close contact with Employer's corporate management staff,
Professional Technical Representatives, Account Managers, Technical Service
Managers, and other of Employer's staff and executive employees. Employee,
during the course of his employment, will also make frequent and often close
contact with prospective clients and prospective employees. Solely as a result
of Employee's position, he will gain confidential information concerning and
relating to the aforestated corporate management staff, Account Managers,
Professional Technical Representatives, other of Employer's staff and executive
employees, prospective clients and prospective employees, which information is
not generally available to Employer's competitors.
E. Employer will expend considerable time, money and other
resources recruiting, training, making instructions available to and
compensating its employees and potential employees, representatives and
contractors, and the loss of their services or potential services would
constitute a substantial and irreparable injury to Employer. Employer will
expend considerable time and money locating and establishing contacts and
business relationships with prospective clients, and the loss of the potential
benefits of such efforts would constitute a substantial and irreparable injury
to Employer.
F. Employee acknowledges that during the course of his
employment, he will have access to certain secret and confidential matters
belonging to Employer including, but not limited to, Employer's marketing and
financial plans and strategies, market surveys and analyses;
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<PAGE> 2
Employer and customer technical information; Employer's financial statements,
personnel records, and other confidential books and records; private and
confidential discussions and discussions of the Board of Directors; plans and
strategies for new services and product development; employee and independent
contractor performance evaluations; contracts with customers, suppliers and
others; business opportunities; capital financing; litigation; lists of
customers and potential customers; promotional materials; internal operating
reports; employee and potential employee names and addresses; account
projections; customer strategy information; confidential employment and payroll
data; marketing information; employee manuals, recruiting manuals, personnel
policy manuals and expense policy manuals; billing reports, pricing information
and strategies; management methods and systems; contracts with clients,
subcontractors and others; client correspondence; resumes of existing and
potential employees; customer bids and proposals; customer expense manuals;
other of Employer's confidential books and records; client systems
documentation, information concerning talents and capabilities of client
personnel and other confidential and sensitive client information.
G. Employer will, in its business, develop commercially valuable
technical and non-technical information, the safeguarding of which, by holding
the same secret and confidential, is necessary and Employer must be protected
from the divulgence by Employee either directly or indirectly of any such
information.
H. Employer's relationship with its clients, its ongoing service
to them, and the protection of confidential, unique and secret information
belonging to both the Employer and its clients are vital to the continued
operation of the Employer's business. The divulgence of any of the above
stated information would constitute an irreparable injury to Employer and for
its clients.
I. Employee (1) acknowledges (a) that he has received and will
receive substantial and adequate additional monetary consideration and
benefits, pursuant to this Agreement for entry into this Agreement; (b) that
the terms of this Agreement were set by mutual negotiations between Employee
and Employer; and (c) that he understood the terms of this Agreement and agreed
to be bound by same at the time he accepted employment with Employer;
(2) understands that he need not accept employment with the Employer; that he
has freely chosen to enter into the terms of this Agreement because of his
desire to take advantage of the specific and unique employment opportunities
available with the Employer, and that entry into, adherence to and compliance
with this Agreement and its terms are conditions of his employment with
Employer. Employee acknowledges that the position which he is accepting with
the Corporation is one of great trust and confidence requiring on his part the
highest degrees of loyalty, trust, honesty and integrity.
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<PAGE> 3
II. EMPLOYMENT
A. DUTIES. Employee shall serve as ____________________________
of the Corporation and in such position shall perform such executive duties
and functions as are assigned by the Employer. The specific title, function and
responsibilities of the Employee shall be designated by the Employer. Further,
the precise services which Employee shall perform for Employer or Employer's
clients may be extended or curtailed from time to time by Employer and Employee
shall, at all times, be subject to the orders, advice and direction of
Employer. Employee's compensation shall not be affected by any such change,
extension or curtailment of such services.
B. COMPENSATION AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT.
1. Salary. During the period of the Employee's
employment hereunder, Employer shall pay to the Employee a salary which shall
be established and may be reviewed periodically by the Employer. Compensation
of the Employee by salary payments shall not be deemed exclusive and shall not
prevent the Employee from participating in any other compensation or benefit
plan of the Employer. The salary payments (including any increased salary
payments) hereunder shall not in any way limit or reduce any other obligation
of the Employer hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the Employer to
pay the Employee's salary hereunder.
2. Expenses. During the term of the Employee's
employment hereunder, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in
performing services hereunder, including all expenses of travel and living
expenses while away from home on business or at the request of and in the
service of the Employer, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures presently established by the
Employer.
In the event that Employee is required by the Corporation to
relocate his residence to a different metropolitan area than that in which he
resides as of the date of this Agreement, the Employer shall promptly reimburse
Employee for all reasonable and necessary expenses related to the relocation,
which expenses shall include all realtor fees, moving and storage fees and
costs, the costs of travel and lodging for the Employee and his spouse for up
to two house-hunting trips, temporary lodging expenses for Employee and his
family during any wait required for the purchase and/or closing of a new home,
and the costs for the Employee to travel home to visit his family from the
relocated area up to once per month.
3. Other Benefits. The Employer shall provide and
maintain in full force and effect, and the Employee shall be entitled to
participate in, employee benefit plans and arrangements which are substantially
equivalent to those in effect on the date hereof in which the Employee
participates (including without limitation each pension and retirement plan and
arrangement, life insurance and health-and-accident plan and arrangement,
medical insurance plan, and disability plan). The Employer shall not make any
changes in such plans or arrangements which would materially and adversely
affect the Employee's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executives of the Employer and does not
result in a proportionately greater reduction in the rights of or benefits to
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<PAGE> 4
the Employee as compared with any other executive of the Employer. The
Employee shall be entitled to participate in or receive benefits under any
employee benefit plan or arrangement made available by the Employer in the
future to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements. Any payments or benefits payable to the Employee
hereunder in respect of any calendar year during which the Employee is employed
by the Employer for less than the entire year shall, unless otherwise provided
in the applicable plan or arrangement, be prorated in accordance with the
number of days in such calendar year during which he is so employed.
4. Bonuses. Employee shall be entitled to participate
in bonus plans or programs offered by the Employer for executives who are
members of the Corporation's senior management, in accord with the requirements
of said plans or programs.
5. Stock Option and Purchase Plans. Employee shall be
entitled to participate in stock option and purchase plans or programs
established by the Employer for executives who are members of the Corporation's
senior management, in accord with the requirements of said plans or programs.
6. Vacations. During the term of this Agreement,
Employee shall be entitled to reasonable vacation periods during which his
compensation shall be paid in full. Such vacations may be taken at such time
or times as the Employee may choose, but shall be scheduled in such manner as
to avoid unreasonable interference with the performance of his duties and
obligations to the Employer. Vacation periods substantially equivalent to
those taken by Employee while performing his present duties prior to execution
of this Agreement shall be considered reasonable.
7. Automobile Allowance. During his employment with the
Corporation, Employer shall provide Employee with the use of a company vehicle
and an additional allowance to cover related insurance, maintenance and
operation expenses for the vehicle, up to a reasonable amount per year as
established by the Employer.
8. Facilities Furnished. The Employer shall furnish the
Employee with office space, stenographic assistance and such other facilities
and services as shall be suitable to the Employee's position and adequate for
the performance of his duties.
9. Consideration. It is expressly agreed and understood
that the Employee's employment, all of the compensation and benefits set forth
above, and the stock in the Corporation being provided to Employee is
consideration for his agreement to all the terms of this Agreement, including,
specifically, his agreement to the restrictive covenants set forth in
Sub-paragraphs II.D, II.E, II.F and II.G below.
C. BEST EFFORTS. Employee agrees that he will at all times
faithfully and industriously perform all of his duties that may be required of
and from him by Employer, that he will devote substantially his full time and
exert his best efforts in the performance of his duties and functions for the
Corporation, and that he will perform such other reasonable duties as are
assigned to him pursuant to the express and implicit terms and conditions of
this Agreement to the reasonable satisfaction of Employer. Employee further
agrees that during the term of this
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Agreement he will not engage in or become interested in any other business,
calling or enterprise which is or may be contrary to or in competition with the
interest, welfare or benefit of Employer.
D. NON-SOLICITATION OF BUSINESS. In addition to any obligation
under any other Paragraph of this Agreement, during the term of Employee's
employment with Employer and for a period of twelve (12) months after the date
of termination of employment with Employer, regardless of who initiated such
termination, Employee will not, directly or indirectly, whether as an
individual or for his own account or with any other person or entity of any
kind whatsoever solicit, interfere with, or endeavor to entice away or divert
from Employer any client or any business Employer had enjoyed or solicited
from its clients during the one year prior to termination of his employment.
This restriction shall only apply to and include clients and accounts with
which Employee had worked or been involved, directly or indirectly, during his
employment with Employer.
E. NON-COMPETE. In addition to any obligation under any other
Paragraph of this Agreement, during the term of Employee's employment with
Employer and for a period of twelve (12) months after the date of termination
of employment with Employer, regardless of who initiated such termination,
Employee shall not, alone, or as a member, employee or agent of any
partnership, or as an officer, agent, employee, director, stockholder (except
stockholder of not more than five percent (5%) of the outstanding stock of any
company listed on a national securities exchange or traded over the counter) or
investor of any other corporation, directly or indirectly, (i) own, manage,
operate, join, control or participate in the ownership, management, operation
or control of, or (ii) become employed by, consult or advise, or (iii) be
connected in any manner with, any business or activity which involves or
relates to the sale or marketing of products or services which are
substantially similar to, the same as, or serve the same function as, those
sold or marketed by the Employer, and which business or activity is conducted
within a 50 mile radius of any office of the Employer.
F. NON-ENTICEMENT. In addition to any obligation under any other
Paragraph of this Agreement, during the term of Employee's employment with
Employer and for a period of twelve (12) months after the date of termination
of employment with Employer, regardless of who initiated such termination,
Employee shall not, directly or indirectly, whether as an individual or for his
own account or for or with any other person or entity of any kind whatsoever
hire, solicit or endeavor to entice away from Employer or any client of
Employer, any person who was employed by Employer or any client of Employer at
any time during Employee's employment with Employer, in order to accept
employment or association with another person, or entity of any kind
whatsoever, and Employee shall not approach any such person for any such
purpose or authorize or knowingly cooperate with the taking of any such action
by any other individual, person or entity. Employer's clients are third-party
beneficiaries of aforestated covenants and shall have standing to enforce the
terms of this sub-paragraph, II.F., and to seek and obtain whatever equitable
or legal remedies are necessary to make them whole, including but not limited
to all remedies provided to Employer under this Agreement.
G. CONFIDENTIALITY. In addition to any obligation under any
other Paragraph of this Agreement, Employee shall not at any time during the
term of his employment with Employer or at any time thereafter communicate,
divulge or disclose for use by himself or others any
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information or knowledge, disclosed or otherwise obtained by him during his
employment by Employer (including but not limited to information and knowledge
conceived, discovered or developed by Employee) which is not generally known in
the computer programming, renovation and computer software products industry
and which relates to the business of the Employer or the business of the
Employer's customers or is in the nature of a trade or business secret of
Employer, or the Employer's customers. Confidential information shall include,
in addition to the specific items so identified in this Agreement, all
information and matters designated by Employer during the term of Employee's
employment as confidential. Employer's customers are third-party beneficiaries
of the aforestated covenants contained in this Sub-paragraph II.G., and shall
have standing to enforce its terms and to seek whatever equitable or legal
remedies are necessary to make them whole including but not limited to, all
remedies provided to Employer under this Agreement or pursuant to law.
Notwithstanding any other provision contained herein, Employee shall not at any
time directly or indirectly appropriate to his own use or to the use of others
any software product methodology, or portion thereof, that Employee owned or
developed during the term of Employee's employment.
H. REASONABLENESS. Employee represents and acknowledges that the
foregoing restrictions will not prevent him from obtaining good employment in
his field of expertise or cause him undue hardship, and there are numerous
other employment opportunities available to him that are not affected by the
foregoing restrictions. Employee further acknowledges that the foregoing
restrictions are reasonable and necessary in order to protect Employer's
legitimate interests, and that any violation thereof would result in
irreparable injury to Employer.
I. DISCLOSURE. Employee shall make the terms and conditions of
this Agreement known to any business, entity, or persons engaged in activities
competitive with Employer's business, with which he becomes associated within
two years subsequent to his termination of his employment with Employer.
Employer shall have the right to make the terms of this Agreement known to
third parties during such period.
J. DEVELOPMENTS; COMPANY PROPERTY. Employee agrees that all work
product, programs, software, inventions, designs, product developments, patent
applications, trademarks, trade names, service marks, copyrights and all rights
acquired therein ("Developments") that Employee creates, conceives or develops,
whether solely or jointly with others, which are based in whole or in part upon
information Employee or any other employee of the Employer gathers in the
course of, or arising from, Employee's employment with the Employer, shall
inure to and be the property of the Employer for its exclusive use and benefit.
Employee agrees that, during and after Employee's employment with the Employer,
Employee shall fully cooperate with the Employer to ensure that such
Developments remain Employer property. Such cooperation shall include, without
limitation, the execution of appropriate assignment documents, applications and
other documents as the Employer requests. All documents that Employee
prepares, or confidential information that might be given to Employee in the
course of Employee's employment with the Employer, are the exclusive property
of the Employer. On the Employee's termination of employment regardless of how
termination is effected, or whenever requested by the Employer, Employee shall
immediately return to the Employer, without making copies, excerpts or
summaries, all of the Employer's property, including, without limitation, all
equipment, materials, documents, agreements, files, vendor lists or files,
client and potential client lists or files, computer software or hardware,
computer programs (whether on floppy
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disks, mini disks, CDs or hard drives), instruction manuals, proposals, reports,
correspondence, records, business cards and all other documents made available
by the Employer, or used by Employee in rendering services hereunder or
otherwise, that is in Employee's possession or under Employee's control.
III. REMEDIES
In the event of any violation of this Agreement Employer shall be
authorized and entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief as well as an equitable accounting
of all profits or benefits arising out of such violation, which rights and
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled, including the right to damages directly or
indirectly sustained by Employer, and all reasonable attorneys' fees, court
costs and litigation expenses incurred in enforcing any of the provisions of
this Agreement.
IV. TERMINATION
A. Employment of Employee under this Agreement may be terminated
immediately at any time without prior notice to the other party and without
payment of any Severance Compensation (as defined below), bonus or other
compensation, other than salary and vacation benefits earned:
1. by the Employer upon the death of Employee;
2. by the Employer when Employee reaches mandatory
retirement age under any retirement policy applicable to all executive members
of the Corporation's senior management team, as adopted by the Employer;
3. by the Employer for just cause. For purposes of this
Agreement, "just cause" shall mean any one or more of the following: (A)
Employee's breach of his obligations, duties and responsibilities under any
term or provision of this Agreement which is materially detrimental to
Employer, which breach remains uncured for a period of five days after written
notice by the Employer to Employee; (B) Employee's gross negligence or willful
misconduct in the performance of his duties hereunder; (C) Employee's
dishonesty, fraud, misappropriation or embezzlement in the course of, related
to or connected with the business of the Employer; or (D) Employee's conviction
of a felony.
If the Employee is advised that he is being terminated for
just cause and within fifteen (15) days thereafter submits to the Chief
Executive Officer a written objection to such a determination, this Section
will not be applicable unless the Board of Directors of the Employer at or
before its next regularly scheduled meeting determines by majority vote that
just cause exists.
B. Employment of Employee may also be terminated upon thirty (30)
days written notice to the other party for any reason other than those set
forth in Section IV. A. above.
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1. Employer may terminate Employee for any reason. In
the event that Employer terminates Employee for reasons not set forth in
Section IV. A., and where a Change in Control has not occurred as set forth
below, Employer shall provide to Employee Severance Compensation. Severance
compensation shall equal four (4) months of Employee's effective annual base
compensation immediately prior to the termination date for each year of
Employee's employment with the Employer, subject to a maximum severance benefit
of one (1) year's annual base compensation.
2. In the event of a Change in Control, Employer or
Employee may terminate Employee's employment and, upon such termination of
employment, the following provisions shall apply.
A. A Change in Control shall be deemed to have occurred
if (i) any "person(s)" (as such term is used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), become(s)
the "beneficial owner(s)" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities or other interests of the Employer
representing a 50 percent or greater voting or other interest in the Employer,
or (ii) the stockholders of the Employer approve an agreement for the sale or
disposition by the Employer of all or substantially all the Employer's assets.
B. In the event of a Change in Control, the following
Change in Control compensation shall be provided to Employee: (i) a sum equal
to one (1) year of the Employee's effective annual base compensation
immediately prior to the termination date plus (ii) the equivalent cash value,
at standard independent insurance premium rates, of purchasing, as of the
termination date, benefits for the Employee on an individual basis which are
equal to the Employee's participation (including dependent coverage) in the
Employer's health insurance plan, calculated as if such benefits were continued
during the one (1) year period following the termination date, and payable in
equal semi-monthly installments over one (1) year following the termination
date.
C. In the event that any payment received or to be
received by the Employee in connection with a Change in Control of Employer or
the termination of the Employee's employment (whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Employer, any person whose actions result in a Change in Control or any person
affiliated with the Employer or such person) would not be deductible by the
Employer (in whole or in part) as a result of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), such payment shall be reduced
until no portion of the payment is not deductible as a result of Section 280G
of the Code. For purposes of this limitation (i) no portion of the payments
the receipt or enjoyment of which the Employee shall have effectively waived in
writing prior to the date of payment shall be taken into account; (ii) no
portion of the payment shall be taken into account which, in the opinion of tax
counsel selected by the Employer's independent auditors and acceptable to the
Employee, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the payment shall be determined by
the Employer's independent auditors servicing the Employer immediately prior to
the time of a Change in Control of the Employer in accordance with the
principles of Sections 280(G)(d)(3) and (4) of the Code.
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V. NOTICES
All notices pursuant to this Agreement must be in writing. All
notices to Employer shall be addressed to the main office of Employer, or such
other address as Employer may hereafter designate by written notice to Employee
given in accordance with this Paragraph and all notices to Employee shall be
addressed to the Employee at the office in which he is based with a copy to his
home address as last indicated in the books and records of the Employer or at
such other address as Employee may hereafter designate by written notice to
Employer given in accordance with this Paragraph. All notices shall be
considered effective on the earlier of: a) the date when delivered personally
to Employer or Employee or; b) two (2) days after deposit of said notice in the
United States mail, registered mail, postage prepaid, return receipt requested,
addressed to the address of the party to whom directed as hereinabove set
forth.
VI. MISCELLANEOUS
A. PRIOR AGREEMENTS. All of the terms and conditions of this
Agreement take precedence over any and all prior understandings and agreements
made by and between Employer and Employee regarding employment and the
execution of this Agreement shall constitute the termination of any and all
such prior agreements.
B. NO BREACH. Employee hereby warrants that he is not now under
any legal or contractual obligation that would conflict in any manner with the
obligations and duties he is undertaking herein, and that his execution of this
Agreement will not breach any agreement to which he is now a party.
C. SEVERABILITY. In the event any of the restrictions contained
in this Agreement are held to be in any respect an unreasonable restriction
upon Employee, then the court so holding shall alter or amend the Agreement,
including making any reduction in the territory to which it pertains and/or the
period of time in which it operates, or effect any other change to the extent
necessary to render any of the restrictions enforceable. Each of the terms and
provisions of this Agreement is and is to be deemed severable in whole or in
part and, if any term or provision or the application thereof in any
circumstances should be invalid, illegal or unenforceable, the remaining terms
and provisions or the application thereof to circumstances other than those as
to which it is held invalid, illegal or unenforceable, shall not be affected
thereby and shall remain in full force and effect.
D. CAPTIONS. The captions contained herein are solely for the
convenience of the parties and shall not be deemed to govern the meaning or
intent of any of the provision of this Agreement.
E. BINDING EFFECT; NO ASSIGNMENT. The rights and obligations of
Employer and Employee hereunder shall inure to the benefit of and be binding
upon any successor or assign of Employer. This Agreement is personal to
Employee and shall not be assigned by him to any other party whatsoever.
F. NO WAIVER. The waiver or non-enforcement by Employer of any
breach of any provision of this Agreement by Employee shall not operate or be
construed as a waiver of any
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subsequent breach by Employee. No waiver shall be legally operative unless in
writing and signed by an authorized agent of Employer.
G. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois without reference to the
principles governing conflicts of laws.
H. AMENDMENTS; ENTIRE AGREEMENT. This Agreement, unless stated
otherwise herein, may only be amended by the written mutual agreement of the
parties hereto. This Agreement constitutes the entire agreement between the
parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
EMPLOYER:
SPR INC.
By: ________________________
Its: ________________________
EMPLOYEE:
_____________________________
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EXHIBIT 10.4
AMENDED AND RESTATED 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 CHANGE IN CONTROL shall be deemed to have occurred if (i) any
"person(s)" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act become(s) the "beneficial owner(s)" as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities or other interests of the
Company representing a 50% or greater voting or other interest in the Company,
or (ii) the stockholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
2.3 CODE shall mean the Internal Revenue Code of 1986, as now in effect or
as hereafter amended.
2.4 COMMITTEE shall mean the Compensation Committee, if any, appointed by
the Board in accordance with the provisions of Article IV to administer the
Plan.
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2.5 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.
2.6 COMPANY shall mean SPR INC., a Delaware corporation and any successor
to it.
2.7 DIRECTOR shall mean a member of the Board of Directors of the Company.
2.8 EMPLOYEE shall mean any individual employed by and receiving
compensation from the Company or any Subsidiary.
2.9 ERISA shall mean the Employee Retirement Income Security Act of 1974,
as now in effect or as hereinafter amended.
2.10 EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as now
in effect or as hereinafter amended.
2.11 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. ("NASD") 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.
2.12 GRANTEE shall mean an Employee who is granted an Option by the Board
under the Plan.
2.13 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.
2.14 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.
2.15 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.
2.16 OPTION shall mean both an Incentive Stock Option and a Non-Statutory
Stock Option.
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2.17 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.
2.18 PLAN shall mean the SPR Inc. Combined Incentive and Non-Statutory
Stock Option Plan, as set forth herein, as amended from time to time.
2.19 REFERENCE OPTION shall mean an Option with respect to which the
Company has granted a Stock Appreciation Right.
2.20 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 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 One Million (1,000,000)
(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.
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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 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.
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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 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.
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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 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 RESTRICTIONS ON TRANSFERABILITY. (a) Stock Options and Stock
Appreciation Rights shall not be assigned, alienated, pledged, attached, sold,
transferred or encumbered by a Grantee other than by will or by the laws of
descent and distribution, or in the case of a Non-Statutory Stock Option, (i)
pursuant to a "domestic relations order" as defined in Section 414 of the Code
or Section 206 of ERISA, or (ii) by transfer without consideration by a
Grantee, subject to such rules as the Board may adopt to preserve the purposes
of the Plan (including limiting such transfers to transfers by Grantees who are
directors or senior executives), to (A) a member of his or her Immediate
Family, (B) a trust solely for the benefit of the Grantee and his or her
Immediate Family, or (C) a partnership or limited liability company whose only
partners or members are the Grantee and his or her Immediate Family members,
(each transferee described in (i) - (ii) is hereafter referred to as a
"Permitted Transferee"), provided that the Board is notified in advance in
writing of the terms and conditions of any proposed transfer intended to be
described in (i) or (ii) and it determines that the proposed transfer complies
with the requirements of the Plan and the applicable Option Agreement. Any
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance that does not qualify under (i) or (ii) shall be void and
unenforceable against the Company. For this purpose, "Immediate Family" means,
with respect to a particular Grantee, the Grantee's spouse, parents, children
or grandchildren (including adopted and stepchildren and grandchildren),
siblings, mothers- and fathers-in-law, sons- and daughters-in-law and brothers-
and sisters-in-law.
(b) The terms of the Option or Stock Appreciation Right shall
apply to the beneficiaries, executors and administrators of the Grantee and of
the Permitted Transferees of the Grantee (including the beneficiaries,
executors and administrators of the Permitted
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Transferees), including the right to agree to any amendment of the applicable
Option Agreement, except that Permitted Transferees shall not transfer any
Option other than by will or by the laws of descent and distribution.
(c) An Option or Stock Appreciation Right shall be exercised only
by the Grantee (or his or her attorney in fact or guardian) (including, in the
case of a transferred Option or Stock Appreciation Right, by a Permitted
Transferee), or, in the case of the Grantee's death, by the Grantee's executor
or administrator (including, in the case of a transferred Option, by the
executor or administrator of the Permitted Transferee).
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 (or, in the case of a
transferred Option, by the Permitted Transferee or by the executor or
administrator of the Permitted Transferee), 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 (or, in the case of
a transferred Option, by the Permitted Transferee) was entitled to exercise it
as of the date of death.
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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 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. The exercise price for Options and Stock Appreciation
Rights may be paid in cash, or by the delivery of shares of Common Stock then
owned by the Grantee, or, in the discretion of the Board, if the Common Stock
is readily tradeable on a national securities exchange or other market system
at the time the Option is exercised, payment may also be made either (i) by
delivery of a properly executed exercise notice to the Company together with a
copy of irrevocable instructions to a broker to sell enough of the Grantee's
exercised shares to pay the exercise price, and deliver promptly to the Company
sufficient sales proceeds to pay the exercise price or (ii) in a cashless
exercise pursuant to which the Grantee would receive the full number of shares
of Common Stock for which the Option is then being exercised less that number
of such shares having a Fair Market Value (determined at the time of exercise)
equal to the then aggregate exercise price for the shares of Common Stock as to
which the Option is being exercised. If payment is made in cash, 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:
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(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) The Stock Appreciation Right shall be transferable only
when the Reference Option is transferable, and under the same
conditions.
(d) The Stock Appreciation Right shall expire no later than
the time at which the Reference Option expires.
(e) 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.
(f) 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.
(g) 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.
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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 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
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<PAGE> 11
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.
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 (other than
a mere reincorporation or the creation of a holding 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; and further provided that in the
event any such major transaction results in a Change in Control, any Option or
Stock Appreciation Right which has not vested by its terms shall immediately
vest.
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
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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.
ARTICLE XI
AMENDMENT AND TERMINATION
The Board may at any time amend, alter, suspend or discontinue this Plan,
but no amendment, alteration, suspension or discontinuation shall be made which
would impair the rights of any Grantee under any grant heretofore made without
his or her consent. In addition, to the extent necessary and desirable to
comply with Rule 16b-3 under the Exchange Act along with Section 422 of the
Code (or any other applicable law or regulation, including the requirements of
the NASD or an established stock exchange or The Nasdaq Stock Market), the
Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required.
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.
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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.
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. Except as provided in the second sentence
of this Section 4 the Plan shall be implemented by consecutive Offering Periods
with a new Offering Period
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<PAGE> 3
commencing on the first working day on or after each January 1 and July 1 and
ending on the last working day of such Offering Period. The first Offering
Period hereunder shall commence on the first date of the offering to the public
of shares of Common Stock under the Company's First Registration Statement on
Form S-1 under the Securities Act of 1933, as amended (the "S-1 Registration
Statement") and shall end on the last day of June 1997. 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 an enrollment form and, if the Participant's contributions
to the Plan are made by payroll deductions, a payroll deduction authorization
form and filing such forms with the Company at least five (5) business days
prior to the applicable Enrollment Date, unless a later time for filing the
forms is set by the Committee for all eligible Employees with respect to a
given Offering Period.
(b) Payroll deductions for a Participant who elect to
contribute by payroll deduction 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 11. Lump sum cash contributions made by a Participant must be made by
the last payroll date in the Offering Period for which the payment is made.
6. PARTICIPANT CONTRIBUTIONS. Participant contributions may be
made by payroll deductions or by a lump sum cash payment.
(a) At the time a Participant files his or her payroll
deduction authorization form, the Participant shall elect to have payroll
deductions made on each payday during the Offering Period. All Participant
payroll deduction contributions and lump sum cash contributions are subject to
such dollar or percentage limitations during an Offering Period as the Company
shall determine prior to such Offering Period provided, however, that the
aggregate of such Participant contributions 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 or, in the case of lump sum cash payments, One Thousand Dollars
($1,000.00) for the Offering Period.
(b) All payroll deductions made for a Participant and all
lump sum cash contributions made by a Participant shall be credited to his or
her payroll deduction account under the Plan (the "Payroll Deduction Account").
No interest shall accrue on a Participant's contributions deposited in the
Participant's Payroll Deduction 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 11.
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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 contributions may be decreased or ended, during any
calendar year in which the total of accumulated contributions equal Twenty-Five
Thousand Dollars ($25,000). 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 11.
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
Participant's contributions accumulated prior to such Exercise Date and
retained in the Participant's Payroll Deduction Account as of the Exercise Date
by a price equal to the lesser of (i) eighty-five percent (85%) of
the Fair Market Value of a share of Common Stock on the Enrollment Date and
(ii) eighty-five percent (85%) of the Fair Market Value of a share of Common
Stock on the Exercise Date; provided, however, that for the purpose of the
first Offering Period the purchase price shall be an amount equal to the lesser
of (i) eighty-five percent (85%) of the offering price per share of Common
Stock to the public pursuant to the S-1 Registration Statement and (ii)
eighty-five percent (85%) of the Fair Market Value of a share of Common stock
on the Exercise Date; provided further that in no event shall an Employee be
permitted to purchase during each Offering Period more than a number of shares
determined by dividing $25,000 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 Sections 3(b) and 12 hereof.
Exercise of the Option shall occur as provided in Section 8, unless the
Participant has withdrawn pursuant to Section 11, 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 11 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 contributions in his or her Payroll Deduction
Account. Any amount remaining in the Participant's Payroll Deduction 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. BROKERAGE ACCOUNTS OR PLAN SHARE ACCOUNTS. By enrolling in
the Plan, each Participant shall be deemed to have authorized the establishment
of a brokerage account on his or her behalf at a securities brokerage firm
selected by the Committee. Alternatively, the Committee may provide for Plan
share accounts for each Participant to be established by the Company or by an
outside entity selected by the Committee which is not a brokerage firm. Shares
purchased by a Participant pursuant to the Plan shall be held in the
Participant's brokerage or Plan share account (the "Plan Share Account") in his
or her name, or if the Participant so indicates on his or her payroll deduction
authorization form, in the Participant's name jointly with a member of the
Participant's family, with right of survivorship. A Participant who is a
resident of a jurisdiction which does not recognize such a joint tenancy may
request that such shares of Common Stock be held in his or her name as tenant
in common with a member of the Participant's family, without right of
survivorship.
10. CERTIFICATES. Certificates for shares of Common Stock
purchased under the Plan will not be issued automatically. However,
certificates for whole shares of Common Stock shall be issued as soon as
practicable following a Participant's written request. The Company may make a
reasonable charge for the issuance of such certificates. Fractional interests
in shares of Common Stock shall be carried forward in a Participant's Plan
Share Account until they equal one whole share of Common Stock or until the
termination of the Participant's participation in the Plan, in which event an
amount equal to the value of such fractional interest shall be paid to the
Participant in cash.
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11. WITHDRAWAL; TERMINATION OF EMPLOYMENT
(a) A Participant may withdraw all but not less than all
the contributions credited to his or her Payroll Deduction 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 contributions credited to his
or her Payroll Deduction Account will be paid to such Participant promptly
after receipt of notice of withdrawal and such Participant's Option for the
Offering Period will be automatically terminated, and no further contributions
for the purchase of shares may 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 contributions credited to such Participant's Payroll
Deduction 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
contributions credited to his or her Payroll Deduction 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.
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 of Common Stock covered by his or her Option until such Option has
been exercised and payment for such shares has been completed on the Exercise
Date. A Participant shall have no right to vote any fractional interest in a
share of Common Stock credited to his or her Plan Share Account.
-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 the immediately preceding sentence, 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 shall comply with
the applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan sahll 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 Payroll Deduction Account and Plan Share Account if such
Participant dies after an Exercise Date on which the Option is exercised but
before receiving his or her Common Stoch and cash. In addition, a
Participant's Payroll Deduction Account 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 shares 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 Payroll Deduction 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 11. 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
11(b) and 14.
16. USE OF FUNDS. All Participant contributions received or held
by the Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall be not be obligated to segregate such
contributions.
-6-
<PAGE> 7
17. REPORTS. Individual Payroll Deduction Accounts and Plan
Share Accounts will be maintained for each Participant in the Plan. Statements
of such accounts will be given to Participants as soon as practical following
each Exercise Date, which statements will set forth the amounts of the
Participant's contributions, per share purchase price, the number of shares of
Common Stock 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 crediting such Participant's Plan
Share Account with the shares of Common stock purchased upon the exercise of
such Option or the delivery of any certificate or certificates for such 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> 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.
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<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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<PAGE> 30
(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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<PAGE> 36
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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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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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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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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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.
A-9
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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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(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
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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 10.7.1
THIRD AMENDMENT TO LEASE AGREEMENT
This Third Amendment to Lease Agreement ("Third Amendment") is entered
into between Terry Argue, as the duly appointed receiver in Case No.
CJ-94-03054, Fleet National Bank of Massachusetts v. Fourth Street Associates,
et al., District Court, Tulsa County, Oklahoma ("Receiver") and Systems &
Programming Resources of Tulsa, Inc., d/b/a SPR ("Tenant"). RMM Corporation
("RMM") 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"). RMM and Tenant thereafter entered into
an Amendment to Lease Agreement ("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. RMM and Tenant thereafter entered into a Second Amendment
to Lease Agreement ("Second Amendment") whereby the Tenant leased additional
office space ("Second Additional Space") in the Building. The Second
Amendment amended the Original Lease as amended by the First Amendment. The
original Lease as amended by the First Amendment and the Second Amendment is
referred to herein as the "Lease". The Lease as amended hereby is referred to
herein as the "Amended Lease". Receiver 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 Third Amendment, but prior thereto, Tenant leases
5,020 square feet of
<PAGE> 2
Net Rentable Area of office space in the Building which 5,020 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. The term of the Lease was to expire on December 31, 2000. The
Lease Term (as defined in the Lease) is extended from December 31, 2000, so as
to expire on May 31, 2004.
2. Tenant effective June 1, 1997, will lease certain additional
office space ("Third Additional Space") in the Building consisting of 6,044
square feet of Net Rentable Area. From and after June 1, 1997, for the
remainder of the Lease Term and all extensions and renewals thereof, the
Premises shall be comprised of the Original Premises, the First Additional
Space, the Second Additional Space, and the Third 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, 1997, shall be $860,115.36 subject to adjustment as provided
in paragraph 6 of the Original Lease and as adjustment is otherwise provided in
the Amended Lease except that the part of the Base Rental payable on and after
June 1, 1997, is based, in part, upon the estimate that during each calendar
year of the Lease Term, as extended hereunder, Basic Costs will be equal to the
actual Basic Costs
-2-
<PAGE> 3
for the calendar year 1997, which estimate on a square foot of Net Rentable
Area basis shall be the Expense Stop as defined in the Lease for calculation of
Basic Cost Increase Adjustment beginning with the Base Rental payment payable
June 1, 1997. Basic Costs for calendar year 1993 shall continue to be the
basis for Basic Cost Increase Adjustment for all Base Rental payable prior to
June 1, 1997. The Base Rental Schedule attached to the Original Lease as
amended by the First Amendment and the Second Amendment is further amended to
provide as follows:
BASE RENTAL SCHEDULE
Month Monthly Base Rental before adjustment
- ----- -------------------------------------
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
May, 1997 (twelve equal
monthly installments) 4,338.12
June, 1997, through
May, 1999 (twenty-four equal
monthly installments) 9,561.14
June, 1999, through
May, 2002 (thirty-six equal
monthly installments) 10,142.00
June, 2002, through
May, 2004 (twenty-four equal
monthly installments) 11,064.00
TOTAL BASE RENTAL BEFORE ADJUSTMENT $973,274.90
-3-
<PAGE> 4
Therefore, as of June 1, 1997, Tenant will lease office space in the Building
totalling 11,064 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. Receiver shall pay up to $40,000 ("Allowance") for improvements
("Improvements") to be made in the Third Additional Space prior to Tenant's
occupancy thereof, including without limitation construction and space planning,
working drawings, and permits and supervision fees related to the construction
and development of the Third Additional Space. All of the Improvements will be
constructed as provided in Paragraph 12 of the Lease and shall be subject to
Receiver's prior written approval. Tenant shall pay upon demand from Receiver
in advance all costs for the Improvements in excess of the Allowance. Tenant
may have the existing fixtures and materials contained in the Third Additional
Space at the time of the execution of this Third Amendment reused in the
Improvements. Fees for design services related to the Third Additional Space
may be paid from the Allowance. Any portion of the Allowance not initially used
for the purposes described above may be used for future alterations and/or
refurbishment of the Premises, all of which shall be considered alterations for
the purposes of Paragraph 12 of the Lease. Except as otherwise stated in this
paragraph, Receiver shall be required to make no improvements to any part of the
Premises. Tenant and its contractors, subcontractors,
-4-
<PAGE> 5
agents, and employees may upon reasonable terms approved in advance by Receiver
enter the Additional Office Space prior to June 1, 1997, for the purpose of
installing furniture, fixtures, and equipment (including without limitation
telephones) without the obligation of Tenant to pay rent prior to June 1, 1997,
in excess of that shown on the Base Rental Schedule.
4. Another tenant ("Other Tenant") leases the Third Additional
Space as of the date of this Third Amendment. Notwithstanding anything to the
contrary contained herein, this Third Amendment shall only be effective upon
the agreement by the Receiver and the Other Tenant not later than May 15, 1997,
that the Other Tenant's lease of the Third Additional Space will terminate as
of May 15, 1997. Receiver shall not be required to give any consideration to
induce the Other Tenant to agree with Receiver to so terminate the Other
Tenant's lease of the Third Additional Space. If the Receiver and the Other
Tenant so agree for the termination of the Other Tenant's lease of the Third
Additional Space, Tenant's occupancy of the Third Additional Space shall occur
upon the later of (i) June 1, 1997, or (ii) the vacation by the Other Tenant of
the Third Additional Space and the substantial completion of the improvements
to be made in the Third Additional Space pursuant to the terms of this Third
Amendment.
5. All of the terms and provisions of the Lease, except as
modified and amended herein, shall remain in full force and
-5-
<PAGE> 6
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 Third Amendment shall in no event be deemed to constitute a waiver of
any right or claim of Receiver under or by virtue of the Lease except as
specifically set forth herein.
6. In the event of conflict between the terms and provisions of
this Third Amendment and the terms and provisions of the Lease, the terms and
provisions of this Third Amendment shall control.
7. Receiver's rights, obligations, and liabilities hereunder and
with regard to this Third Amendment are solely in his capacity as receiver.
Terry Argue, individually, shall not have rights, obligations, or liabilities
hereunder. Notwithstanding anything herein to the contrary, the Receiver
conveys herein only such rights as he has and makes such agreements,
warranties, representations, and provisions as he is actually authorized to
make. A copy of the order appointing the Receiver as receiver is attached
hereto as Exhibit "B".
8. Neither the Amended Lease nor any of its components will be
recorded by Tenant or Receiver in the land records of Tulsa County, Oklahoma.
Dated May 16, 1997.
Systems & Programming
Resources of Tulsa, Inc.
Terry Argue By Michael J. Fletcher
- ----------------------------- ---------------------------
Terry Argue, Receiver President
"Receiver" "Tenant"
-6-
<PAGE> 7
TENANT
STATE OF OKLAHOMA )
COUNTY OF TULSA ) SS:
This instrument was acknowledged before me on this 6 day of May, 1997,
by Michael J. Fletcher, as President of Systems & Programming Resources of
Tulsa, Inc., a Delaware corporation.
(seal) Patricia M. Caviness
My commission expires: ----------------------------
Notary Public
May 12, 1997
-7-
<PAGE> 8
Exhibit A
Fourth Floor - Floorplan
<PAGE> 9
IN THE DISTRICT COURT IN AND FOR TULSA COUNTY
STATE OF OKLAHOMA
FLEET NATIONAL BANK OF )
MASSACHUSETTS, formerly named )
Shawmut Bank, N.A., a national )
banking association, formerly ) DISTRICT COURT
named Shawmut Bank of Boston, ) FILED
N.A., as Trustee under Collateral ) MAR 19, 1997
Trust Indenture dated as of )
June 1, 1984, ) SALLY HOWE SMITH, COURT CLERK
) STATE OF OKLA. TULSA, COUNTY
Plaintiff, )
) Case No. CJ-94-03054
vs. )
)
FOURTH STREET ASSOCIATES, )
an Oklahoma limited partnership, )
formerly named Mid-Continent )
Associates; GREATER SOUTHWESTERN )
FUNDING CORPORATION, a Delaware )
corporation, RMM CORPORATION, )
a Delaware corporation; BLYTHE )
EASTMAN PAINE WEBBER SERVICING, )
INC., a Delaware corporation; )
and READING & BATES CORPORATION, )
a Delaware corporation, )
)
Defendants. )
ORDER APPOINTING RECEIVER
This matter comes on for hearing this 24th day of February, 1997, upon the
application of the Plaintiff for the appointment of a receiver. The Court,
having reviewed the Affidavit of Robert L. Bice, II, submitted by Plaintiff, and
hearing no objections to Plaintiff's application, finds that, pursuant to 12
O.S.1991, Section 1551, and for good cause shown, a receiver should be
appointed.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED by the Court that:
(i) Terry Argue of Tulsa, Oklahoma, is hereby appointed as receiver of the
Mid-Continent Tower and Mid-Continent Auto Garage
EXHIBIT B
<PAGE> 10
in Tulsa, Oklahoma, including the following described real property situated in
Tulsa County, Oklahoma:
TRACT 1:
A tract or parcel of land situated in and being part of Block One
Hundred Thirty-seven (137) of the ORIGINAL TOWN, NOW CITY OF TULSA,
Tulsa County, State of Oklahoma, according to the Recorded Plat No.
510, more particularly 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 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.
TRACT 2:
All of Lot Four (4) and that part of Lot Three (3), Block One Hundred
Eighteen (118), ORIGINAL TOWN, NOW CITY OF TULSA, Tulsa County, State
of Oklahoma, according to the Recorded Plat No. 510, more
particularly described as follows, to-wit:
BEGINNING at the Southeast corner of said Lot 4, Block 118; thence
North along the Easterly line of Lots 4 and 3, a distance of 141.2
feet to a point on the Easterly line of Lot 3, said point being 8.8
feet South of the Northeast corner of said Lot 3; thence Southwesterly
a distance of 140.09 feet to a point on the Westerly line of said Lot
3, said point being 12.8 feet South of the Northwest corner of said
Lot 3; thence South along the Westerly line of Lots 3 and 4, a
distance of 137.2 feet to a point, said point being the Southwest
corner of Lot 4; thence Easterly along the Southerly line of said Lot
4, a distance of 140 feet to the POINT OF BEGINNING.
TUNNEL LICENSE:
Horizontal Legal Description: Beginning at a point on the north line
of Block 137, Original Townsite, Tulsa,
-2-
<PAGE> 11
Oklahoma, said point being 140.00 feet easterly of the Northwest Corner of
said Block; thence northeasterly perpendicular to said north line of said
Block 137, a distance of 73.00 feet; thence northwesterly parallel to the
northerly boundary of said Block 137 a distance of 21.00 feet; thence
southwesterly a distance of 73.00 feet to a point on the northerly line of
said Block 137, 119.00 feet southeasterly of the said Northwest Corner;
thence 21.00 feet southeasterly along said northerly line to the Point of
Beginning.
Vertical Legal Description: Included in the above description is the
vertical area between Elevation 731.00, (United States Geological Survey
Datum), extending upward to the underside of surfaces maintained by the
City of Tulsa for the benefit of the Public, including license agreement
between City of Tulsa and Mid-Continent Tower Co. dated October 12, 1982
and recorded October 14, 1982, at Book 4643, Page 1673 in the records of
the Tulsa County Clerk;
and all improvements thereon (the "Mortgaged Property").
(ii) The appointment of the receiver is to be effective immediately upon
the filing of this Order, upon the receiver filing herein his oath as required
by law, and upon the receiver posting a bond in the amount of $1,500,000 with
sufficient surety to be approved by the Court, subject to adjustment by the
Court in the future upon application, notice and hearing.
(iii) The receiver, when so qualified, is hereby ordered, authorized and
directed to take possession of the Mortgaged Property, to preserve, insure and
protect the Mortgaged Property and to retain Insignia Commercial Group, Inc.
("Insignia") as the property manager therefore on the same terms and provisions
(including compensation) as presently in effect with Insignia. No additional
fees or other compensation beyond the fees, commissions and compensation
currently being paid to Insignia shall be paid to the receiver except only for
extraordinary services rendered by the
-3-
<PAGE> 12
receiver and/or Insignia in connection with major capital expenditures
contemplated by clause (vii)(b) hereof following application to the court and
notice to the parties to this proceeding.
(iv) All operating, tax, tenant security, money market and other
accounts currently held by Fourth Street Associates ("Fourth Street"), RMM
Corporation ("RMM") or Insignia for or on behalf of the Mortgaged Property,
including all such accounts listed or described in the monthly operating
reports submitted by Insignia to Plaintiff, RMM and Fourth Street, shall be
transferred thereby to receiver.
(v) The receiver shall maintain a separate account or accounts with a
national banking association or an Oklahoma banking corporation insured by the
Federal Deposit Insurance Corporation or by investment in treasury securities
or money market funds, for the receipt of all funds and the payment of all
expenditures relating to the Mortgaged Property, including without limitation,
all normal and ordinary course expenses incurred prior to the receiver's
appointment, as well as the transfer of existing funds held by Insignia for
and/or on behalf of the Mortgaged Property or Fourth Street, the record owner
thereof, or RMM. The receiver shall maintain books and records of receipts and
disbursements, to which all parties hereto shall have access upon reasonable
notice, and the receiver shall file with the Court a summary of the monthly
operating reports concerning the Mortgaged Property within twenty (20) days
following the close of each calendar month, commencing
-4-
<PAGE> 13
with a summary of the February, 1997 monthly operating report due March 20,
1997. Such summary reports to the Court shall include, without limitation, all
fees, commissions and other compensation paid to Insignia or the receiver
during such applicable month. Full and complete copies of the monthly
operating reports shall be submitted to Fourth Street, RMM and Plaintiff.
(vi) The receiver shall reasonably cooperate with Fourth Street by
providing data and reports thereto pertaining to the Mortgaged Property in
connection with Fourth Street's annual audit and K-1 tax reports to its
partners.
(vii) The receiver shall have the authority, power and capacity in
his name and/or the name of Insignia, (a) upon ten (10) days prior written
notice to Fourth Street and RMM without written objection therefrom, to enter
into leases, lease renewals and lease extensions pertaining to the Mortgaged
Property and (b) upon ten (10) days prior written notice (which such notice
shall include a cash flow/business plan or detailed projection for the payment
thereof) to Fourth Street, RMM, Plaintiff, counsel of record for the respective
parties who have intervened in these proceedings prior to or within ten (10)
days of the date of this Order (collectively the "Intervenors") without written
objection from any thereof, to contract for or otherwise bind the Mortgaged
Property to incur extraordinary expenses for capital expenditures, lease
buildouts or any other extraordinary expenditures in excess of $50,000;
provided, however, upon timely written objection from Fourth Street or RMM or,
insofar as clause (b) above is concerned,
-5-
<PAGE> 14
Fourth Street, RMM, Plaintiff or any of the Intervenors, the receiver shall
seek approval from the Court prior to consummation of the action to which a
timely objection has been filed.
SO ORDERED this 3rd day of March, 1997.
[SIG]
-------------------------------------
DISTRICT JUDGE
Approved as to form:
/s/ Victor E. Morgan
- --------------------------------
Gary R. McSpadden, OBA #6093
Victor E. Morgan, OBA #12419
BAKER & HOSTER LLP
800 Kennedy Building
321 South Boston
Tulsa, Oklahoma 74103
(918) 592-5555
Attorneys for Plaintiff
I, Sally Moore Smith,
Court Clerk, for Tulsa
County, Oklahoma, hereby
certify that the
foregoing is a true,
correct and full copy
of the instrument
herewith set out as
appears on record in
the Court Clerk's
Office of Tulsa County,
Oklahoma, this
March 19, 1997
By [SIG]
--------------------
Deputy
-6-
<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
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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).
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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
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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
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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
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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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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
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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
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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
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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
23
<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
24
<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;
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<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")
5
<PAGE> 6
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
6
<PAGE> 7
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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<PAGE> 8
(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.
8
<PAGE> 9
(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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<PAGE> 10
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
10
<PAGE> 11
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.
11
<PAGE> 12
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.
12
<PAGE> 13
(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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<PAGE> 14
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.
14
<PAGE> 15
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
for the calendar year 1997, which estimate on a square foot of Net Rentable
Area basis shall be the Expense Stop as defined in the Lease for calculation
of Basic Cost Increase Adjustment beginning with the Base Rental payment
prior to June 1, 1997. The Base Rental Schedule attached to the Original Lease
as amended by the First Amendment and the Second Amendment is further amended
to provide as follows:
BASE RENTAL SCHEDULE
--------------------
Month Monthly Base Rental before adjustment
----- -------------------------------------
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
May, 1997 (twelve equal
monthly installments) 4,338.12
June, 1997, through
May, 1999 (twenty-four equal
monthly installments) 9,561.14
June, 1999, through
May, 2002 (thirty-six equal
monthly installments) 10,142.00
June, 2002, through
May, 2004 (twenty-four equal
monthly installments) 11,064.00
TOTAL BASE RENTAL BEFORE ADJUSTMENT $973,274.90
-3-
<PAGE> 18
(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> 19
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> 20
EXHIBIT A
Master Lease
<PAGE> 21
EXHIBIT B
Drawing of Subleased Premises
<PAGE> 22
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> 23
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> 24
<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> 25
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
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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.
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<PAGE> 27
(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
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<PAGE> 28
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> 29
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> 30
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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<PAGE> 31
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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<PAGE> 32
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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<PAGE> 33
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.
<PAGE> 44
(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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<PAGE> 46
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> 48
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.
6
<PAGE> 49
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.
7
<PAGE> 50
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
8
<PAGE> 51
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.
9
<PAGE> 52
<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>
10
<PAGE> 53
EXHIBIT A
<PAGE> 54
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> 55
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> 56
<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> 57
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> 58
(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> 59
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> 60
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> 61
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> 62
(GRAPHIC)
<PAGE> 63
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> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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.
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<PAGE> 70
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
3
<PAGE> 71
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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<PAGE> 72
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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<PAGE> 73
(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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<PAGE> 74
(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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<PAGE> 75
(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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<PAGE> 76
(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.
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(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
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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
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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.
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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
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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
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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> 90
(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> 91
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> 92
<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> 93
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> 94
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> 95
EXHIBIT "A"
Legal Description
<PAGE> 96
EXHIBIT "B"
Permitted Exceptions
<PAGE> 97
EXHIBIT "C"
Brokerage or Leasing Commissions,
Management Fees, Other Compensation
<PAGE> 98
EXHIBIT "D"
Tenant Work
<PAGE> 99
EXHIBIT "E"
Insurance Notices
<PAGE> 100
EXHIBIT "F"
Contracts
<PAGE> 101
EXHIBIT "G"
Condemnation Notices
<PAGE> 102
EXHIBIT "H"
Defects
<PAGE> 103
EXHIBIT "I"
Legal Proceedings
<PAGE> 104
EXHIBIT "J"
Hazardous Materials
<PAGE> 105
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> 106
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> 107
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> 108
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> 109
GUARANTOR:
CCC Information Services;, Inc.
By _____________________________
Its ____________________________
Attested by ____________________
Its ____________________________
<PAGE> 110
EXHIBIT A FOR THE REAFFIRMATION OF GUARANTEE AGREEMENT
<PAGE> 111
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> 112
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> 113
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> 114
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> 115
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> 116
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> 117
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> 118
2
GUARANTOR
CGC Information Services, Inc .
By __________________________
Its _________________________
Attested by _________________
Its _________________________
<PAGE> 119
Draft: October 2, 1996 Freeborn & Peters, Chicago
EXHIBIT B
Drawing of Subleased Premises
<PAGE> 120
(GRAPHIC)
<PAGE> 1
EXHIBIT 16.1
[ERNST & YOUNG LLP LETTERHEAD]
August 1, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
This is to inform you that we have read the "Change in Accountants" section on
pages 44 and 45 to the Registration Statement on Form S-1 (Registration No.
333- ) of SPR Inc. and are in agreement with the statements contained
therein insofar as they relate to Ernst & Young LLP. 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 use of our
report, which contained a captioned opinion dated January 23, 1997 (except
with respect to the matters discussed in Notes 14 and 15, as to which the date
is March 5, 1997 and with respect to the matter discussed in Note 16, as to
which the date is , 1997.) and to all references to our Firm included in
or made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 1, 1997
<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 24th
day of July, 1997.
/s/ Michael J. Fletcher
----------------------------------
Michael J. Fletcher
Executive Vice President,
General Manager - Tulsa
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 24th
day of July, 1997.
/s/ Ronald L. Taylor
---------------------------
Ronald L. Taylor
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 24th
day of July, 1997.
/s/ David P. Yeager
-------------------------------
David P. Yeager
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 24th
day of July, 1997.
/s/ Sydnor W. Thrift, Jr.
---------------------------------
Sydnor W. Thrift, Jr.
Director
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