<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
--
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-22-309
ASI SOLUTIONS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 13-3903237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
780 THIRD AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 319-8400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
The number of shares of the registrant's Common Stock, par value $0.01 per
share, outstanding on August 7, 1996 was 6,379,624.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASI SOLUTIONS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1997 MARCH 31, 1997
(UNAUDITED)
-------------- ---------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 6,459,710 $ 60,190
Accounts receivable, net 4,487,507 4,184,886
Prepaid expenses and other current 348,709 343,455
assets
Deferred income taxes 5,910 5,910
Notes receivable from stockholders - 389,191
----------- ----------
Total current assets 11,301,836 4,983,632
Property and equipment, net 2,697,043 2,219,801
Intangible assets, net 1,102,258 1,121,815
Other assets 747,253 269,990
----------- ----------
Total assets $15,848,390 $8,595,238
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes payable to bank $ - $1,844,000
Current portion, long-term debt 66,506 66,506
Accounts payable and accrued 1,866,485 1,874,139
expenses
Accrued income taxes 143,389 1,046,584
----------- ----------
Total current liabilities 2,076,380 4,831,229
Deferred income taxes 78,303 78,303
Long-term debt, less current portion 290,594 306,626
Other liabilities 130,634 136,194
----------- ----------
Total liabilities 2,575,911 5,352,352
Stockholders' equity:
Common stock 64,252 46,252
Additional paid-in capital 10,130,438 1,109,218
Retained earnings 3,470,520 3,052,450
----------- ----------
13,665,210 4,207,920
Less: Treasury stock at cost
(45,534 shares) (392,731) -
Deferred offering costs - (965,034)
----------- ----------
Total stockholders' equity 13,272,479 3,242,886
----------- ----------
Total liabilities & $15,848,390 $8,595,238
stockholders' equity =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
1
<PAGE>
ASI SOLUTIONS INCORPORATED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE 3 MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Revenue $6,700,275 $3,911,416
Cost of services 3,444,723 1,742,145
---------- ----------
Gross profit 3,255,552 2,169,271
Operating expenses:
General and administrative 1,317,618 760,184
Sales and marketing 784,877 372,171
Research and development 474,644 231,125
---------- ----------
Income from operations 678,413 805,791
Interest (expense) income, net 62,232 (26,637)
---------- ----------
Income before provision for income taxes 740,645 779,154
Provision for income taxes 322,575 366,982
---------- ----------
Net income $ 418,070 $ 412,172
========== ==========
Net income per common share $0.07 $0.09
========== ==========
Weighted average common shares 6,106,191 4,667,404
outstanding ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
ASI SOLUTIONS INCORPORATED AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 3 MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Cash flow from operating activities:
Net income: $ 418,070 $ 412,172
Adjustments to reconcile net income
to net cash
provided by operating activities:
Depreciation and amortization 159,622 55,799
Provision for doubtful accounts 7,500
Accrual of straight-line rent (5,560) (3,180)
Deferred income taxes
Changes in assets and liabilities:
Accounts receivable (310,121) (714,504)
Prepaid expenses (5,254) (20,305)
Other Assets (480,803) (28,466)
Notes receivable,shareholder (2,800)
Accounts payable and
accrued expenses (7,654) 52,184
Income taxes (903,195) (258,200)
----------- ---------
Net cash provided by (1,127,395) (507,300)
operating activities ----------- ---------
Cash flow from investing activities:
Fixed assets additions (617,307) (176,743)
----------- ---------
Net cash used in investing activities (617,307) (176,743)
----------- ---------
Cash flow from financing activities:
Book overdraft 44,460
Proceeds from borrowings 570,000
Repayment of bank debt (1,860,032)
Proceeds from issuance of common stock,
net 10,004,254
----------- ---------
Net cash used in financing activities 8,144,222 614,460
----------- ---------
Net increase (decrease) in cash 6,399,520 (69,583)
Cash, at beginning of year 60,190 69,583
----------- ---------
Cash, at end of quarter $ 6,459,710 $ -
=========== =========
Supplemental disclosures of non
cash investing and activities:
Transfer of common stock back to the
Company in full satisfaction of
shareholder debt of $389,191.
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
ASI SOLUTIONS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ASI SOLUTIONS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION:
On March 26, 1996, ASI Solutions Incorporated (the "Company") was
incorporated in the State of Delaware. Effective March 31, 1996, the
Company issued 4,625,158 shares of Common Stock in exchange for
substantially all of the issued and outstanding shares of common stock of
Proudfoot Reports Incorporated ("PRI") and 95% of the common stock of
Assessment Solutions Incorporated ("Assessment Solutions"). During fiscal
1997, the remaining 5% of the outstanding common stock of Assessment
Solutions was redeemed. The initial stockholders of the Company were also
the principal stockholders of PRI and Assessment Solutions, the two
previously separate but commonly controlled companies. After the
reorganization, Assessment Solutions and PRI are wholly-owned subsidiaries
of the Company. C3 Solutions Incorporated ("C3") was formed on September
16, 1996 as a wholly-owned subsidiary of the Company. The Company,
Assessment Solutions, PRI and C3 are hereinafter referred to collectively
as the "Company."
Effective April 16, 1997, the Company sold 1,800,000 shares of common stock
to the public at a price of $6 per share in an initial public offering (the
"Offering"). Proceeds from the Offering, net of underwriters discount and
offering costs, were approximately $9,039,000. Offering costs were
approximately $965,000. Effective on the Offering date, the Company's
Certificate of Incorporation (the "Certificate") was restated to increase
the number of authorized shares of Common Stock to 18 million shares. In
addition, effective on the Offering date, the Board of Directors of the
Company were authorized to issue up to 2,000,000 shares of Preferred Stock
in one or more classes or series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, and
the number of shares constituting any series or the designation of such
series. However, pursuant to the Certificate, the holders of Preferred
Stock would not have cumulative voting rights with respect to the election
of directors. Any such 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.
The exchange described above has been accounted for as a reorganization
since all entities involved were under common control. The consolidated
financial statements reflect the interests attributable to the one
controlling shareholder of both combined entities at their historical basis
of accounting. The remaining interests have been accounted for as a
purchase of minority interests and the excess of the purchase price over
the related historical cost of $1,063,000 has been allocated to intangible
assets. All intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying unaudited interim financial statements of ASI Solutions
Incorporated have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Certain information
and note disclosures normally included in annual financial statements have
been condensed or omitted pursuant to those rules and regulations. In the
opinion of management, all adjustments, consisting of normal, recurring
adjustments considered necessary for a fair presentation, have been
included. Although management believes that the disclosures made are
adequate to ensure that the information presented is not misleading, it is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1997. The results
of the three months ended June 30, 1997 and 1996 are not necessarily
indicative of the results of operations for the entire year.
2. OPERATIONS:
THE COMPANY
Assessment Solutions is a management consulting firm with primary emphasis
on research and the application of simulation technology to the assessment
of sales, service and management personnel. PRI provides pre-employment
and post-employment background checks. C3 provides monitoring services for
clients who engage in large-scale use of call centers for their customer
contact functions.
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"), which requires that changes in comprehensive income be shown
in a financial statement that is displayed with the same prominence as
other financial statements. SFAS No. 130 becomes effective in fiscal 1999.
Management has not yet evaluated the effects of this change on the
Company's financial statements.
In June 1997, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise
and Related Information" ("SFAS 131"), which changes the way public
companies report information about segments. SFAS 131, which is based on
the management approach to segment reporting, includes requirements to
report selected segment information quarterly and entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds and reports revenues. SFAS 131 becomes effective in
fiscal 1999. Management has not yet evaluated the effect of this change on
the Company's financial statements.
USE OF OFFERING PROCEEDS
The Copmpany has used approximately $3,064,000 of the offering proceeds to
repay debt, $1,030,000 to purchase equipment and has invested the remainder
in liquid short term investments.
3. STOCKHOLDERS EQUITY:
A SUMMARY OF THE CHANGES IN THE STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED
JUNE 30, 1997 IS AS FOLLOWS:
<TABLE>
<CAPTION>
COMMON ADDITIONAL RETAINED EARNINGS DEFERRED TREASURY STOCK TOTAL
STOCK PAID-IN CAPITAL OFFERING COSTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1997 $46,252 $ 1,109,218 $3,052,450 $(965,034) $ - $ 3,242,886
ISSUANCE OF COMMON
STOCK IN INITIAL PUBLIC
OFFERING AND PAYMENT OF
OFFERING COSTS 18,000 9,021,220 965,034 10,004,254
TRANSFER OF TREASURY STOCK (392,731) (392,731)
NET INCOME 418,070 418,070
------- ----------- ---------- --------- ---------- -----------
BALANCE, JUNE 30, 1997 $64,252 $10,130,438 $3,470,520 $ - (392,731) $13,272,479
======= =========== ========== ========= ========== ===========
</TABLE>
4. SUBSEQUENT EVENT:
On July 22, 1997, the Company entered into a Revolving Credit Agreement ("Credit
Agreement") with a financial institution. The Credit Agreement is for revolving
credit loans with borrowing availability of up to $10 million. Borrowing under
the Credit Agreement bears interest at the prime rate. The Credit Agreement's
term expires on September 30, 1999 at which time any outstanding principal and
interest is payable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
QUARTERLY COMPARISON OF RESULTS OF OPERATIONS
The Company's first quarter revenue increased 71.3% to $6.7 million from $3.9
million in the first quarter of fiscal 1997 and net income rose 1.4% to $418
thousand from $412 thousand in the first quarter of fiscal 1997.
Revenue increased in all four business areas. Assessment and Selection revenue
was $3.0 million, an increase of $1.7 million, or 133.8%, principally due to
increased revenue with existing clients and the addition of several new clients
since the first quarter of fiscal 1997.
Employment Process Administration revenue was $2.6 million, an increase of $0.5
million, or 26.3%, due principally to higher volume with existing clients.
Customer Contact Monitoring revenue was $0.5 million, an increase of $0.4
million from the first quarter of last year. This is a new business area and the
increase was due to services provided to one principal client.
Training and Development revenue was $0.7 million, an increase of $0.1 million,
or 22.5%, due in part to the addition of two new clients.
4
<PAGE>
Cost of services increased $1.7 million, or 97.7%, to $3.4 million primarily due
to personnel additions and higher equipment expenses needed to meet the
increased business volume. As a percentage of revenue, cost of services
increased to 51.4% from 44.5% due to expenses incurred to expand operations
center capacity and due to a change in sales mix to lower margin business
including customer contact monitoring and employment background reports.
General and administrative expense increased $0.6 million, or 73.3%, to $1.3
million due to personnel additions in senior management and the finance staff as
well as higher outside services associated with operating as a publicly owned
entity. Higher fixed expenses associated with the new corporate offices
also contributed to the increase. As a percentage of revenue, general and
administrative expense increased from 19.4% to 19.7%.
Sales and marketing expense increased by $0.4 million, or 110.9%, to $0.8
million principally due to the addition of senior staff to manage business units
and sales areas, and to higher spending incurred to promote business volume. As
a percentage of revenue, sales and marketing expense increased from 9.5% to
11.7%.
Research and development expense was $0.5 million, an increase of $0.2 million
from the first quarter of last year due to increased personnel, outside services
and conference expenses. As a percentage revenue, research and development
expense was 7.1%, up from 5.9% last year.
Net interest income was due to the investment of the proceeds of the initial
public offering in April, 1997. The provision for income taxes declined to 43.6%
from 47.1% due to lower New York City taxes resulting from the transfer of a
significant portion of operations out of New York City.
(Percentages are based on actual amounts as opposed to the rounded amounts shown
above.)
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise from capital requirements, capital
expenditures and principal and interest payments on debt. The Company funds its
operating and capital needs with cash flow generated from operations,
supplemented by short-term borrowings under bank lines of credit and long-term
equipment financing. The Company raised $9 million after expenses in an Initial
Public Offering in April 1997.
Cash flow used in operations was $1,127,395 in the first quarter of fiscal
1998 due to higher receivables resulting from the growth in sales, deposits on
real estate leases, and income tax payments. Cash flow used in investing
activities of $617,307 was primarily used for furniture and computer and
telecommunications equipment for the new operations center in Melville, New
York.
In July, 1997, a new bank credit facility was established which provides up to
$10 million of credit availability. This facility expires September 30, 1999.
The Company also has a $1.9 million equipment lease facility. At June 30, 1997,
there were no
5
<PAGE>
borrowings against the bank credit facility and $0.4 million against the
equipment lease facility.
The Company used a portion of the $9 million net proceeds from the Initial
Public Offering to repay bank lines of credit of $2 million and other payables
of $1 million.
IMPACT OF RECENTLY ISSUES ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), which requires that changes in comprehensive income be shown in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 becomes effective in fiscal 1999. Management
has not yet evaluated the effects of this change on the Company's financial
statements.
In June 1997, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and
Related Information" ("SFAS 131"), which changes the way public companies report
information about segments. SFAS 131, which is based on the management approach
to segment reporting, includes requirements to report selected segment
information quarterly and entity-wide disclosures about products and services,
major customers, and the material countries in which the entity holds and
reports revenues. SFAS 131 becomes effective in fiscal 1999. Management has not
yet evaluated the effect of this change on the Company's financial statements.
NOTE ON FORWARD LOOKING STATEMENTS
Certain statements in this 10Q and written and oral statements made by the
Company may contain, in addition to historical information, forward-looking
statements within the meaning of section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
words "believe, "expect", "intend", "estimate" and "anticipate" and other
expressions which are predictions of or indicate futures events and trends and
which do not relate to historical matters identify forward-looking statements.
Any such statements are subject to risks and uncertainties that could cause the
actual results to differ materially from those projected in such statements,
including negative developments relating to unforeseen order cancellations or
the effect of a customer delaying an order, negative developments relating to
the Company's significant customers, a reduction in the demand for the Company's
services which could impact capacity utilization as well as sales volume, the
impact of intense competition, changes in the industry, and changes in the
general economy such as inflationary pressure which could increase the Company's
cost of borrowing and those factors discussed in the section entitled "Risk
Factors" as well as those discussed elsewhere in the Company's prospectus from
its initial public offering (a copy of which will be provided without change
upon request to the Company). The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
6
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report:
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.1 Lease Agreement by and between 320 Expressway Associates and the
Company dated March 27, 1977.
10.2 Revolving Credit Agreement by and between Fleet Bank, N.A., and the
Company, dated July 22, 1997.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASI SOLUTIONS INCORPORATED
Date: August 14, 1997 By: /s/ MICHAEL J. MELE
Michael J. Mele
Vice President and Chief Financial Officer (on
behalf of the registrant and as principal
financial and accounting officer)
8
<PAGE>
EXHIBIT 10.1
AGREEMENT OF LEASE
BETWEEN
320 EXPRESSWAY ASSOCIATES
AND
ASSESSMENT SOLUTIONS INCORPORATED
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPACE.......................................................... 1
TERM........................................................... 1
RENT........................................................... 4
USE............................................................ 5
LANDLORD ALTERATION............................................ 5
SERVICES....................................................... 6
LANDLORD'S REPAIRS AND SERVICES................................ 6
WATER SUPPLY................................................... 6
PARKING FIELD.................................................. 7
DIRECTORY...................................................... 7
TAXES AND OTHER CHARGES........................................ 7
TENANT'S REPAIRS............................................... 9
FIXTURES & INSTALLATIONS....................................... 10
ALTERATIONS.................................................... 11
REQUIREMENTS OF LAW............................................ 14
END OF TERM.................................................... 16
QUIET ENJOYMENT................................................ 17
SIGNS.......................................................... 18
RULES AND REGULATIONS.......................................... 18
RIGHT TO SUBLET OR ASSIGN...................................... 18
LANDLORD'S ACCESS TO PREMISES.................................. 22
SUBORDINATION.................................................. 24
</TABLE>
i
<PAGE>
PROPERTY LOSS, DAMAGE REIMBURSEMENT............................ 25
TENANT'S AND LANDLORD'S INDEMNITY.............................. 26
DESTRUCTION - FIRE OR OTHER CASUALTY........................... 26
INSURANCE...................................................... 28
EMINENT DOMAIN................................................. 30
NONLIABILITY OF LANDLORD....................................... 31
DEFAULT........................................................ 32
TERMINATION ON DEFAULT......................................... 34
DAMAGES........................................................ 35
SUMS DUE LANDLORD.............................................. 37
NO WAIVER...................................................... 37
WAIVER OF TRIAL BY JURY........................................ 38
NOTICES........................................................ 39
INABILITY TO PERFORM........................................... 39
INTERRUPTION OF SERVICE........................................ 40
CONDITIONS OF LANDLORD'S LIABILITY............................. 40
TENANT'S TAKING POSSESSION..................................... 41
SUBSTITUTED PREMISES........................................... 41
ENTIRE AGREEMENT............................................... 41
DEFINITIONS.................................................... 42
PARTNERSHIP TENANT............................................. 42
SUCCESSORS, ASSIGNS, ETC....................................... 43
BROKER......................................................... 43
CAPTIONS....................................................... 44
ii
<PAGE>
<TABLE>
<S> <C>
NOTICE OF ACCIDENTS............................................ 44
TENANT'S AUTHORITY TO ENTER LEASE.............................. 44
RENEWAL OPTION................................................. 44
RIGHT OF FIRST REFUSAL......................................... 45
SCHEDULE "A"................................................... 48
SCHEDULE "B"................................................... 49
SCHEDULE "C"................................................... 51
SCHEDULE "D"................................................... 52
EXHIBIT 1...................................................... 55
EXHIBIT 2...................................................... 56
</TABLE>
iii
<PAGE>
AGREEMENT OF LEASE, made as of this ____ day of __________, 1997, between
320 EXPRESSWAY ASSOCIATES, a partnership, having its principal office at 225
Broadhollow Road, Suite 212 W, CS 5341, Melville, New York 11747-0983
(hereinafter referred to as "Landlord"), and ASSESSMENT SOLUTIONS INCORPORATED,
a ____________ corporation, having its principal place of business at 1300 Walt
Whitman Road, Melville, New York 11747 (hereinafter referred to as "Tenant").
WITNESSETH: Landlord and Tenant hereby covenant and agree as follows:
SPACE
1. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
the space substantially as shown on the Rental Plan initialed by the parties and
made part hereof as Exhibit "1" ("Demised Premises" or "Premises") in the
building known as 320 South Service Road, Melville, New York (hereinafter
referred to as the "Building") which the parties agree contains 22,780 square
feet in a Building containing 62,547 square feet which constitutes 36.42%
percent of the area of the Building ("Tenant's Proportionate Share").
TERM
2. The term ("Term" or "Demised Term" or "term") of this lease shall
commence upon execution of this lease (the "Term Commencement Date"). Subject
to postponement by reason of the Concession period (defined below), Tenant's
obligation to pay Rent (as defined in Article 3 hereof) and all items of
additional rent hereunder shall commence on the sooner to occur of (i) Tenant's
taking possession or occupancy of all or any part of the Demised Premises for
the purpose of conducting Tenant's business therein, or (ii) fifteen (15) days
following the date on which Landlord provides Tenant with written notice that
the Demised Premises have been "substantially completed" as defined herein in
accordance with Article 5 hereof (hereinafter referred to as the "Rent
Commencement Date"). The Term of this lease shall expire on the day preceding
the day which is eight (8) years and three (3) months after (i) the Rent
Commencement Date, if such date is the first day of a calendar month, or (ii)
the first day of the first full calendar month following the Rent Commencement
Date, if such date
1
<PAGE>
is not the first day of a calendar month (hereinafter referred to as the
"Expiration Date"). "Substantially completed" or "substantial completion" as
used herein is defined to mean when Landlord has made the installations set
forth on Schedule A and Exhibit 1 annexed hereto and the only items to be
completed with respect to the Demised Premises are "punch list" items which do
not materially interfere with the Tenant's use and occupancy of the Demised
Premises. The punchlist items shall be reasonably agreed to by Landlord and
Tenant, and shall be completed by Landlord, at Landlord's sole cost and expense,
within thirty (30) days of the date that the Premises are "substantially
completed". If Landlord shall be delayed in such "substantial completion" as a
result of (i) Tenant's failure to furnish plans and specifications which Tenant
shall be required to provide to Landlord pursuant to the terms of this lease;
(ii) Tenant's request for materials, finishes or installations other than
Landlord's standard; (iii) Tenant's changes in said plans or specifications;
(iv) the performance or completion of any work, labor or services by a party
employed by Tenant; or (v) Tenant's failure to approve final plans, working
drawings or reflective ceiling plans; then the Rent Commencement Date hereunder
shall be accelerated by the number of days of such delay and the dates set forth
in the next paragraph shall be extended one (1) day for each day of said delay.
Notwithstanding the foregoing, in the event Landlord has not substantially
completed the Premises on or before the date that is one hundred and fifty (150)
days from the date of this lease, subject to delays by Tenant as set forth
above, the Rent (as hereinafter defined) computed on a per diem basis shall be
abated one day for each day that the Premises are not substantially completed
beyond the date that is one hundred and fifty (150) days from the date of this
lease. Such abatement shall be in addition to the Concession Period as
hereinafter defined. In no event, however, shall the abatement provided for
herein exceed a period of sixty (60) days. In the event the Premises are not
substantially completed within one hundred ninety five (195) days from the date
of this lease, Tenant shall provide Landlord with written notice of Tenant's
intention to terminate this lease. If Landlord fails to substantially complete
the Premises on or before the date that is two hundred and ten (210) days from
the date of this lease, this lease shall terminate as of such date and all sums
paid to Landlord on account herein shall be returned to Tenant within ten (10)
days from the date of such termination.
In the event the final plans are not initialed by Landlord and Tenant on or
before the date that is one (1) week from the date of this lease,, 1997, then
the date set forth in the immediately preceding paragraph shall be extended one
(1) day for each day
2
<PAGE>
beyond the date that is one (1) week from the date of this lease, until this
lease is signed and the final plans are initialed by Landlord and Tenant.
Subject to all of the terms, covenants and conditions of this lease, except
Tenant's obligation to pay Rent or additional rent, Landlord shall permit Tenant
and its contractors, suppliers and workmen to enter the Premises prior to the
Rent Commencement Date in order for Tenant to perform any alterations and
installations to prepare the Premises for Tenant's occupancy. Tenant shall
indemnify and hold Landlord harmless from any claim, damage, liability or
expense arising out of the foregoing Tenant's work. The scheduling and
coordination of Tenant's contractors and their workmen and mechanics will be
subject to reasonable regulation by Landlord and Landlord's contractor to avoid
unreasonable interferences with labor employed by Landlord or Landlord's
contractor. Any such entry before the Rent Commencement Date shall be subject
to applicable building codes and ordinances.
Provided Tenant shall not be in default of its obligations to pay Rent and
additional rent under the provisions of this lease beyond any applicable notice
and cure periods, Tenant's obligation to pay the Rent reserved under Article 3
hereof (but not Tenant's obligation to pay the additional rent reserved under
this lease) shall be abated for a period of three (3) months from the Rent
Commencement Date (such three (3) month period being herein referred to as the
"Concession Period").
Upon the request of Landlord, Tenant agrees to execute a writing,
prepared and executed by Landlord, setting forth the actual date on which the
Term Commencement Date, the Rent Commencement Date and the Expiration Date took
place or will take place. Notwithstanding anything to the contrary contained
herein, such writing shall be deemed a part of this lease and conclusive
evidence of such dates.
A "Lease Year" shall be comprised of a period of twelve (12)
consecutive months. The first Lease Year shall commence on the Rent
Commencement Date but, notwithstanding the first sentence of this paragraph, if
the Rent Commencement Date is not the first day of a month, then the first Lease
Year shall include the additional period from the Rent Commencement Date to the
end of the then current month. Each succeeding Lease Year shall end on the
anniversary date of the last day of the preceding Lease Year. For example, if
the Rent Commencement Date is January 1, 1996, the first Lease Year would begin
on January 1, 1996 and end on December 31, 1996 and each succeeding Lease Year
would end on December 31st. If, however, the Rent Commencement Date is January
2, 1996, the
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first Lease Year would end on January 31, 1997, the second Lease Year would
commence on February 1, 1997, and each succeeding Lease Year would end on
January 31st. Notwithstanding the foregoing, in the event Tenant shall be
entitled to the Concession Period described above, the Rent Commencement Date
for purposes of determining the beginning and end of the first Lease Year shall
be deemed to be the date on which Tenant shall be required to pay the Rent
reserved under Article 3 after postponement by reason of the Concession Period.
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RENT
3. The annual minimum rental ("Rent" or "rent") is as follows:
During the first Lease Year, the Rent shall be $499,907.10 payable $107,122.95
for the first month and $35,707.65 for each of the second through twelfth
months.
During the second Lease Year, the Rent shall be $443,162.16, payable in monthly
installments of $36,930.18.
During the third Lease Year, the Rent shall be $458,345.88, payable in monthly
installments of $38,195.49.
During the fourth Lease Year, the Rent shall be $474,061.08, payable in monthly
installments of $39,505.09.
During the fifth Lease Year, the Rent shall be $490,326.36, payable in monthly
installments of $40,860.53.
During the sixth Lease Year, the Rent shall be $507,160.92, payable in monthly
installments of $42,263.41.
During the seventh Lease Year, the Rent shall be $524,584.68, payable in monthly
installments of $43,715.39.
During the eighth Lease Year, the Rent shall be $542,618.16, payable in monthly
installments of $45,218.18.
During the last three months of the term of this lease, the rent shall be
$68,905.44, payable $46,773.58 for the first month and $11,065.93 for each of
the second and third months.
In the event this lease is terminated prior to the Expiration Date pursuant to
Article 24 or 26 herein provided Tenant is not in default under the terms of
this Lease, Tenant shall receive a refund of $35,707.65 per month against the
Rent paid by Tenant for the last two months of the term of this Lease. Tenant
agrees to pay the Rent to Landlord, without notice or demand, in lawful money of
the United States which shall be legal tender in payment of the debts and dues,
public and private, at the time of payment in advance on the first day of each
calendar month during the Demised Term at the office of the Landlord, or at such
other place as Landlord shall designate at least five (5) days prior thereto by
written notice given to Tenant in the manner hereinafter provided in this lease,
except that Tenant shall pay the first monthly
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installment on the execution hereof. Tenant shall pay the Rent as above and as
hereinafter provided, without any set off or deduction whatsoever. Should the
Term Commencement Date be a date other than the first day of a calendar month,
the Tenant shall pay a pro rata portion of the Rent on a per diem basis, based
upon the fourth full calendar month of the first Lease Year, from such date to
and including the last day of that current calendar month, and the first Lease
Year shall include said partial month. The Rent payable for such partial month
shall be in addition to the Rent payable pursuant to the Rent schedule set forth
above.
USE
4. (A) Tenant shall use and occupy the Demised Premises only for
executive and administrative offices related to human resources consulting, and
employment and related investigations and verifications and the sale of such
services, and for no other purpose.
(B) Tenant shall not use or occupy, suffer or permit the Premises, or
any part thereof, to be used in any manner which would in any way, in the
reasonable judgment of Landlord, (i) violate any laws or regulations of public
authorities; (ii) make void or voidable any insurance policy then in force with
respect to the Building; (iii) impair the appearance, character or reputation of
the Building; (iv) discharge objectionable fumes, vapors or odors into the
Building, air-conditioning systems or Building flues or vents in such a manner
as to offend other occupants. The provisions of this Section shall not be
deemed to be limited in any way to or by the provisions of any other Section or
any Rule or Regulation.
(C) Business machines and mechanical equipment in the Premises shall
be placed and maintained by Tenant, at Tenant's expense, in such manner as shall
be sufficient in Landlord's reasonable judgment to absorb vibration and noise
and prevent annoyance or inconvenience to Landlord or any other tenants or
occupants of the Building.
(D) Tenant will not at any time use or occupy the Demised Premises in
violation of the certificate of occupancy (temporary or permanent) issued for
the Building or portion thereof of which the Demised Premises form a part.
Landlord represents that, to the best of its knowledge, the Building is zoned
for office use.
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LANDLORD ALTERATION
5. Landlord, at its sole cost and expense, will perform or cause to be
performed the work and the installations, as set forth in Schedule A and Exhibit
1 annexed hereto, by licensed contractors and in accordance with applicable
laws, codes and regulations, which is sometimes hereinafter referred to as the
"Landlord's Initial Construction". Landlord represents that the heating,
ventilating and air conditioning ("HVAC") units to be installed by Landlord
pursuant to Schedule A and Exhibit 1 shall be new HVAC units and Landlord shall
provide Tenant with the make and model number of such HVAC units when such
information is obtained by Landlord. Landlord, at its sole cost and expense,
shall prepare all construction plans and drawings and secure all necessary
permits to complete Landlord's Initial Construction as set forth in Schedule A
and Exhibit 1 annexed hereto. In the event that Tenant requires additional
generators, Landlord, at Tenant's expense, shall secure the necessary permits
and install such generators.
SERVICES
6. Landlord shall provide, at Landlord's expense, an electric meter
which shall measure Tenant's consumption of electricity in the Demised Premises
for all purposes except heating, including, without limitation, lighting, office
equipment, ventilation and air conditioning. Tenant shall make arrangements to
secure electricity for such purposes directly from the utility servicing the
Building and Tenant shall pay the charges for such electricity directly to such
utility in a timely manner. Landlord shall install, at Landlord's expense, a
separate gas meter to measure Tenant's consumption of gas for heating purposes
and shall make arrangements to secure gas directly from the utility servicing
the Building and Tenant shall pay the charges for such gas directly to such
utility in a timely manner.
LANDLORD'S REPAIRS AND SERVICES
7. Landlord, at its expense, will make all the repairs to and provide the
maintenance for the Demised Premises (excluding painting and decorating) and for
all public areas and facilities as set forth in Schedule B, except such repairs
and maintenance as may be necessitated by the negligence, improper care or use
of such premises and facilities by Tenant, its agents, employees, licensees
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or invitees, which will be made by Landlord at Tenant's expense. Landlord shall
make all repairs at reasonable times on reasonable notice to Tenant, except in
the case of emergency repairs, which may be made by Landlord without notice to
Tenant and at any time.
WATER SUPPLY
8. Landlord, at its expense, shall furnish hot and cold or tempered water
for lavatory purposes only.
PARKING FIELD
9. Tenant shall have the right to use one hundred eight (108) parking
spaces, forty (40) of which shall be reserved and designated with lettering
"ASI" for the parking of automobiles of the Tenant, its employees and invitees,
in the parking area designated for tenants of the building (hereinafter
sometimes referred to as "Building Parking Area"), subject to the Rules and
Regulations now or hereafter adopted by Landlord. Tenant shall not use nor
permit any of its officers, agents or employees to use any parking spaces in
excess of Tenant's allotted number of spaces therein.
DIRECTORY
10. In the event that Landlord erects a building directory, Landlord will
furnish listings requested by Tenant, not to exceed four (4) listings. The
initial listings will be made at Landlord's expense and any subsequent changes
by Tenant shall be made at Tenant's expense. Landlord's acceptance of any name
for listing on the directory will not be deemed, nor will it substitute for,
Landlord's consent, as required by this lease, to any sublease, assignment or
other occupancy of the Premises. At Tenant's sole cost and expense, Landlord
shall install a sign on the left wall of the interior of the Building in
accordance with Exhibit "2" annexed hereto similar in size and style to the
existing tenant's interior sign.
TAXES AND OTHER CHARGES
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11. (A) As used in and for the purposes of this Article 11, the following
definitions shall apply:
(i) "Taxes" shall be the real estate taxes, assessments, special or
otherwise, sewer rents, rates and charges, and any other governmental charges,
general, specific, ordinary or extraordinary, foreseen or unforeseen, levied on
a calendar year or fiscal year basis against the Real Property. If at any time
during the Term the method of taxation prevailing at the date hereof shall be
altered so that there shall be levied, assessed or imposed in lieu of, or as in
addition to, or as a substitute for, the whole or any part of the taxes, levies,
impositions or charges now levied, assessed or imposed on all or any part of the
Real Property (a) a tax, assessment, levy, imposition or charge based upon the
rents received by Landlord, whether or not wholly or partially as a capital levy
or otherwise, or (b) a tax, assessment, levy, imposition or charge measured by
or based in whole or in part upon all or any part of the Real Property and
imposed on Landlord, or (c) a license fee measured by the rent payable by Tenant
to Landlord, or (d) any other tax, levy, imposition, charge or license fee
however described or imposed, then all such taxes, levies, impositions, charges
or license fees or any part thereof, so measured or based, shall be deemed to be
Taxes.
(ii) "Base Year Taxes" shall be the greater of: (a) taxes actually
due and payable in the 1997/98 tax year; or (b) $125,094.00.
(iii) "Escalation Year" shall mean each calendar year which shall
include any part of the Demised Term.
(iv) "Real Property" shall be the land upon which the Building stands
and any part or parts thereof utilized for parking, landscaped areas or
otherwise used in connection with the Building, and the Building and other
improvements appurtenant thereto.
(B) The Tenant shall pay the Landlord increases in Taxes levied against the
Real Property as follows: If the Taxes actually due and payable with respect to
the Real Property in any Escalation Year shall be increased above the Base Year
Taxes, then the Tenant shall pay to the Landlord, as additional rent for such
Escalation Year, a sum equal to Tenant's Proportionate Share of said increase
("Tenant's Tax Payment" or "Tax Payment").
(C) Landlord shall render to Tenant a statement containing a computation of
Tenant's Tax Payment ("Landlord's Statement"). Within twenty (20) days after
the rendition of the Landlord's Statement, Tenant shall pay to Landlord the
amount of Tenant's Tax
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Payment. On the first day of each month following the rendition of each
Landlord's Statement, Tenant shall pay to Landlord, on account of Tenant's next
Tax Payment, a sum equal to one-twelfth (1/12th) of Tenant's last Tax Payment
due hereunder, which sum shall be subject to adjustment for subsequent increases
or decreases in Taxes.
(D) Upon Tenant's written request, Landlord shall provide Tenant with a
copy of the tax bill for the Building. Every Landlord's Statement given
pursuant to this Article shall be presumptively true and binding upon Tenant
unless Tenant provides notice, within thirty (30) days after the rendition of
Landlord's Statement, that Tenant disputes the correctness of Landlord's
Statement specifying the particular aspects in which Landlord's Statement is
claimed to be incorrect. Pending the determination of such dispute by agreement
or otherwise, Tenant shall pay Tenant's Tax Payment in accordance with
Landlord's Statement and such payment or acceptance shall be without prejudice
to Tenant's position.
(E) Tenant shall not, without Landlord's prior written consent, institute
or maintain any action, proceeding or application in any court or body or with
any governmental authority for the purpose of changing the Taxes. However, if
Landlord fails to commence such a proceeding thirty (30) days prior to the final
date to file challenges for the tax year in question and Landlord has not
provided to Tenant in writing upon Tenant's written request a reasonable
justification for not doing so prior to such thirtieth (30th) day, and KIII and
KG Corp. - New York I, Inc. ("KG"), a tenant of the Building, has not commenced
such a proceeding pursuant to the provisions of the lease between Landlord and
KG, then Tenant shall be permitted to commence such a proceeding for the tax
year in question at Tenant's sole cost and expense and upon prior notice to
Landlord. In the event Tenant commences such a proceeding as permitted by this
Article, Tenant shall furnish Landlord with copies of all documents delivered
and received by or on behalf of Tenant in connection with said proceeding. In
the event any such action initiated by Landlord, KG or Tenant is successful,
then Tenant shall receive, or have credited against its Rent thereafter due (at
Landlord's option), Tenant's Proportionate Share of any tax refund or credit
obtained thereby to the extent said Taxes were actually paid by Tenant (after
reimbursement to the appropriate party for reasonable legal fees and other
customary out of pocket expenses).
(F) Landlord's failure to render a Landlord's Statement with respect to any
Escalation Year shall not prejudice Landlord's right
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to render a Landlord's Statement with respect to any Escalation Year. The
obligation of Landlord and Tenant under the provisions of this Article with
respect to any additional rent for any Escalation Year shall survive the
expiration or any sooner termination of the Demised Term.
(G) Notwithstanding anything to the contrary contained in this Article 11,
Tenant shall not be required to make, and shall not be liable for, a Tax Payment
for a period of twelve (12) months from the date of this lease.
TENANT'S REPAIRS
12. Tenant shall take good care of the Demised Premises and, subject to
the provisions of Article 7 hereof, Landlord at the expense of Tenant, shall
make as and when needed as a result of misuse or neglect by Tenant or Tenant's
servants, employees, agents or licensees, all repairs in and about the Demised
Premises necessary to preserve them in good order and condition. Except as
provided in Article 24 hereof, there shall be no allowance to Tenant for a
diminution of rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord, Tenant or
others making any repairs, alterations, additions or improvements in or to any
portion of the Building or of Demised Premises, or in or to the fixtures,
appurtenances or equipment thereof, and no liability upon Landlord for failure
of Landlord or others to make any repairs, alterations, additions or
improvements in or to any portion of the Building or of the Demised Premises, or
in or to the fixtures, appurtenances or equipment thereof. Notwithstanding the
foregoing, Landlord shall use reasonable efforts not to unreasonably interfere
with the conduct of Tenant's business, provided such reasonable efforts shall
not be deemed to include the use of overtime services.
FIXTURES & INSTALLATIONS
13. All appurtenances, fixtures, improvements, additions and other
property attached to or built into the Demised Premises, whether by Landlord or
Tenant or others, and whether at Landlord's expense, or Tenant's expense, or the
joint expense of Landlord and Tenant, shall be and remain the property of
Landlord (except for purposes of sales tax which shall remain Tenant's
obligation). All trade fixtures, office equipment, furniture, furnishings and
other
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articles of movable personal property owned by Tenant and located within the
Premises (collectively, "Tenant's Property") may be removed from the Premises by
Tenant at any time during the Term. Tenant, before so removing Tenant's
Property, shall establish to Landlord's satisfaction that no structural damage
or change will result from such removal and that Tenant can and promptly will
repair and restore any damage caused by such removal without cost or charge to
Landlord. Any such repair and removal shall itself be deemed an Alteration (as
defined in Article 14 below) within the purview of this lease. Any Tenant's
Property for which Landlord shall have granted any allowance, contribution or
credit to Tenant shall, at Landlord's option, not be so removed. All the outside
walls of the Demised Premises including corridor walls and the outside entrance
doors to the Demised Premises, any balconies, terraces or roofs adjacent to the
Demised Premises, and any space in the Demised Premises used for shafts, stacks,
pipes, conduits, ducts or other building facilities, and the use thereof, as
well as access thereto in and through the Demised Premises for the purpose of
operation, maintenance, decoration and repair, are expressly reserved to
Landlord, and Landlord does not convey any rights to Tenant therein.
Notwithstanding the foregoing, Tenant shall enjoy full right of access to the
Demised Premises through the public entrances, public corridors and public areas
within the Building.
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ALTERATIONS
14. (A) After completion of the Demised Premises as set forth in Schedule
A and Exhibit 1, Tenant shall make no alterations, decorations, installations,
additions or improvements (hereinafter collectively referred to as
"Alterations") in or to the Demised Premises without Landlord's consent, which
consent shall not be unreasonably withheld or delayed provided Tenant otherwise
complies with the provisions of this Article 14, and then only by contractors or
mechanics reasonably approved by Landlord and at such times and in such manner
as Landlord may from time to time designate. Notwithstanding the foregoing:
(i) Tenant shall be permitted to paint and install wall coverings and floor
coverings and make other similar decorative alterations in the Premises
("Decorative Alterations") without Landlord's prior consent; and (ii) Tenant
shall be permitted to make nonstructural alterations the cost of which do not
exceed $25,000 in the aggregate during the term of this lease without Landlord's
prior consent provided said alterations do not affect the Building service
systems including, without limitation, heating, ventilating, air conditioning,
electrical, plumbing and other mechanical systems, health safety and life safety
systems and partitioning ("Minor Alterations") However, Tenant shall notify
Landlord prior to performing such Decorative Alterations or Minor Alterations.
(B) All Alterations done by Tenant shall at all times comply with (i)
laws, rules, orders and regulations of governmental authorities having
jurisdiction thereof, and (ii) rules and regulations of the Landlord attached as
Schedule D.
(C) With respect to all Alterations, plans and specifications
prepared by and at the expense of Tenant shall be submitted to Landlord for its
prior written approval in accordance with the following requirements:
(i) With respect to any Alterations to be performed by Tenant
pursuant to this lease, Tenant shall, at its expense, furnish Landlord with all
drawings, plans, layouts and specifications for work to be performed by Tenant,
including, without limitation, architectural, plumbing, electrical, mechanical
and heating, ventilating and air conditioning plans (the "Tenant's Plans"). All
of the Tenant's Plans shall: (a) be compatible with the Landlord's building
plans, (b) comply with all applicable laws and the rules, regulations,
requirements and orders of any and all governmental agencies, departments or
bureaus having jurisdiction,
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and (c) be fully detailed, including locations and complete dimensions;
(ii) Tenant's Plans shall be subject to reasonable approval by
Landlord;
(iii) Tenant shall, at Tenant's expense, (a) cause Tenant's Plans to
be filed with the governmental agencies having jurisdiction thereover if
applicable laws, rules and regulations require such filing, (b) obtain when
necessary all governmental permits, licenses and authorizations required for the
work to be done in connection therewith, and (c) obtain all necessary
certificates of occupancy, both temporary and permanent. Landlord shall execute
such documents as may be reasonably required in connection with the foregoing
and Landlord shall otherwise cooperate with Tenant in connection with obtaining
the foregoing, but without any expense to Landlord. Tenant shall make no
amendments or additions to Tenant's Plans without the prior written consent of
Landlord in each instance;
(iv) No work shall commence in the Premises until (a) Tenant has
procured all necessary permits therefor and has delivered copies of same to
Landlord, (b) Tenant has procured a paid builder's risk insurance policy naming
Landlord as an additional insured and has delivered to Landlord a certificate of
insurance evidencing such policy, and (c) Tenant or its contractor has procured
a workmen's compensation insurance policy covering the activities of all persons
working at the Premises naming Landlord as an additional insured and has
delivered to Landlord a certificate of insurance evidencing such policy;
(v) Tenant may use any licensed architect or engineer to prepare its
plans and to file for permits. However, all such plans and permit applications
shall be subject to review, revision and reasonable approval by Landlord or its
architect;
(vi) Tenant, at its expense, shall perform all work, in accordance
with Tenant's Plans and all Alterations, unless Landlord performs same at
Tenant's request, shall be subject to Landlord's supervisory fee charge of 10%
of the cost thereof. In receiving such fee, Landlord assumes no responsibility
for the quality or manner in which such work has been performed; and
(vii) Provided Tenant has notified Landlord of the identity of its
contractors, laborers and materialmen, Tenant agrees that it will not knowingly
or intentionally, either directly or indirectly, use any contractors and/or
labor and/or materials if the use of such contractors and/or labor and/or
materials would or
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will create any difficulty with other contractors and/or labor engaged by Tenant
or Landlord or others in the construction, maintenance or operation of the
Building or any part thereof.
(D) Tenant's right to make Alterations shall be subject to the
following additional conditions: (i) the Alterations will not result in a
violation of, or require a change in, any Certificate of Occupancy applicable to
the Premises or the Building; (ii) the outside appearance, character or use of
the Building shall not be affected; (iii) no part of the Building outside of the
Premises shall be physically affected; (iv) the proper functioning of any air-
conditioning, elevator, plumbing, electrical, sanitary, mechanical and other
service or utility system of the Building shall not be affected.
(E) Tenant shall defend, indemnify and save harmless Landlord against
any and all mechanics' and other liens filed in connection with its Alterations,
repairs or installations, including the liens of any conditional sales of, or
chattel mortgages upon, any materials, fixtures or articles so installed in and
constituting part of the Premises and against any loss, cost, liability, claim,
damage and expense, including reasonable counsel fees, penalties and fines
incurred in connection with any such lien, conditional sale or chattel mortgage
or any action or proceeding brought thereon. As a condition precedent to
Landlord's consent to the making by Tenant of Alterations, Tenant agrees to
obtain and deliver to Landlord, written and unconditional waivers of mechanics'
liens for all work, labor and services to be performed and materials to be
furnished, signed by all contractors, subcontractors, materialmen and laborers
to become involved in such work.
(F) Tenant, at its expense, shall procure the satisfaction, bond or
discharge of all such liens within thirty (30) days of the filing of such lien
against the Premises or the Building. If Tenant shall fail to cause such lien
to be discharged within the aforesaid period, then, in addition to any other
right or remedy, Landlord may, but shall not be obligated to, discharge the same
either by paying the amount claimed to be due or by procuring the discharge of
such lien by deposit or by bonding proceedings, and in any such event Landlord
shall be entitled, if Landlord so elects, to compel the prosecution of an action
for the foreclosure of such lien by the lienor and to pay the amount of the
judgment in favor of the lienor with interest, costs and allowances. Any amount
so paid by Landlord, and all costs and expenses incurred by Landlord in
connection therewith, together with interest thereon at the maximum rate
permitted by law from the respective dates of Landlord's making of the payments
or incurring
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of the cost and expense, shall constitute additional rent and shall be paid on
demand.
(G) Nothing in this lease contained shall be construed in any way as
constituting the consent or request of Landlord, expressed or implied, to any
contractor, subcontractor, laborer or materialman for the performance of any
labor or the furnishing of any material for any improvement, alteration or
repair of the Premises, nor as giving any right or authority to contract for the
rendering of any services or the furnishing of any materials that would give
rise to the filing of any mechanics' liens against the Premises.
REQUIREMENTS OF LAW
15. (A) Tenant, at Tenant's sole cost and expense, shall comply with all
statutes, laws, ordinances, orders, regulations and notices of Federal, State,
County and Municipal authorities, and with all directions, pursuant to law, of
all public officers, which shall impose any duty upon Tenant arising from or
relating to Tenant's use or occupancy or manner of use or occupancy of the
Demised Premises,except that Tenant shall not be required to make any structural
alterations in order so to comply unless such alterations shall be necessitated
or occasioned, in whole or in part, by the acts, omissions, or negligence of
Tenant or any person claiming through or under Tenant or any of their servants,
employees, contractors, agents, visitors or licensees, or by the manner of use
or manner of occupancy of the Demised Premises by Tenant, or any such person, in
which case Landlord shall make such alterations at Tenant's expense.
(B) The parties acknowledge that there are certain Federal, State
and local laws, regulations and guidelines now in effect and that additional
laws, regulations and guidelines may hereafter be enacted, relating to or
affecting the Premises, the Building, and the land of which the Premises and the
Building may be a part, concerning the impact on the environment of
construction, land use, the maintenance and operation of structures and the
conduct of business. Tenant will not cause, or permit to be caused, any act or
practice, by negligence, omission, or otherwise, that would adversely affect the
environment or do anything or permit anything to be done that would violate any
of said laws, regulations, or guidelines. Any violation of this covenant shall
be an event of default under this lease.
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(C) Tenant shall keep or cause the Premises to be kept free of
Hazardous Materials (hereinafter defined). Without limiting the foregoing,
Tenant shall not cause or permit the Premises to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce
or process Hazardous Materials, except in compliance with all applicable
Federal, State and Local laws or regulations, nor shall Tenant cause or permit,
as a result of any intentional or unintentional act or omission on the part of
Tenant or any person or entity claiming through or under Tenant or any of their
employees, contractors, agents, visitors or licensees (collectively, "Related
Parties"), a release of Hazardous Materials onto the Premises or onto any other
property. Tenant shall comply with and ensure compliance by all Related Parties
with all applicable Federal, State and Local laws, ordinances, rules and
regulations affecting the Premises, the Building and the land on which the
Building is situated to the extent same apply to Tenant's use or manner of use
of the Premises, whenever and by whomever triggered, and shall obtain and comply
with, and ensure that all Related Parties obtain and comply with, any and all
approvals, registrations or permits required thereunder. With respect to
Hazardous Substances for which Tenant is responsible hereunder, Tenant shall (i)
conduct and complete all investigations, studies, samplings, and testing, and
all remedial removal and other actions necessary to clean up and remove such
Hazardous Materials, on, from, or affecting the Premises (a) in accordance with
all applicable Federal, State and Local laws, ordinances, rules, regulations,
policies, orders and directives, and (b) to the satisfaction of Landlord, and
(ii) defend, indemnify, and hold harmless Landlord, its employees, agents,
officers, and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of, or in any way
related to, (a) the presence, disposal, release, or threatened release of such
Hazardous Materials which are on, from, or affecting the soil, water,
vegetation, buildings, personal property, persons, animals, or otherwise; (b)
any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Materials; (c) any lawsuit
brought or threatened, settlement reached, or government order relating to such
Hazardous Materials; and/or (d) any violation of laws, orders, regulations,
requirements, or demands of government authorities, or any policies or
requirements of Landlord which are based upon or in any way related to such
Hazardous Materials, including, without limitation, attorney and consultant
fees, investigation and laboratory fees, court costs, and litigation expenses.
In the event this lease is terminated, or Tenant is dispossessed, Tenant shall
deliver the Premises to Landlord in the same condition with respect to
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Hazardous Materials as on the date of Tenant's occupancy of the Premises
including the date of Tenant's early occupancy as provided in Article 2 herein.
For purposes of this paragraph, "Hazardous Materials" includes, without
limitation, any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related materials
defined in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et
seq.), and in the regulations adopted and publications promulgated pursuant
thereto, or any other Federal, State or Local environmental law, ordinance,
rule, or regulation. Landlord represents that, to the best of Landlord's
knowledge, the Premises are not in violation of any applicable environmental
law, ordinance, rule or regulation. Notwithstanding anything to the contrary in
Article 15(B) and 15(C), Tenant shall not be responsible for Hazardous Materials
existing at the Premises prior to the date of Tenant's occupancy of the Premises
(including Tenant's early occupancy as provided in Article 2 herein) or during
the term of this lease if the presence of such Hazardous Materials on the
Premises is the result of any act or omission of Landlord, its agents or
employees.
END OF TERM
16. (A) Upon the expiration or other termination of the Term of this
lease, Tenant shall, at its own expense, quit and surrender to Landlord the
Demised Premises, broom clean, in the same condition as the Demised Premises
were in on the Rent Commencement Date ordinary wear, tear and damage by fire or
other insured casualty excepted, and Tenant shall remove all of its property and
shall pay the cost to repair all damage to the Demised Premises or the Building
occasioned by such removal. Any property not removed from the Premises shall be
deemed abandoned by Tenant and may be retained by Landlord, as its property, or
disposed of in any manner deemed appropriate by the Landlord. Any expense
incurred by Landlord in removing or disposing of such property shall be
reimbursed to Landlord by Tenant on demand. Notwithstanding anything to the
contrary contained herein, upon the expiration or other termination of this
lease, Tenant may, at Tenant's sole cost and expense, remove the uninterrupted
power supply and backup generators installed by Tenant pursuant to Article 2
herein, provided Tenant shall pay the cost to repair all damage to the Demised
Premises or the Building occasioned by such removal. Tenant expressly waives,
for itself and for any person claiming
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through or under Tenant, any rights which Tenant or any such person may have
under the provisions of Section 2201 of the New York Civil Practice Law and
Rules and of any successor law of like import then in force, in connection with
any holdover or summary proceeding which Landlord may institute to enforce the
foregoing provisions of this Article. Tenant's obligation to observe or perform
this covenant shall survive the expiration or other termination of the Term of
this lease. If the last day of the Term of this lease or any renewal hereof
falls on Sunday or a legal holiday, this lease shall expire on the business day
immediately preceding. Tenant's obligations under this Article 16 shall survive
the Expiration Date or sooner termination of this lease.
(B) In the event of any holding over by Tenant after the expiration or
termination of this Lease without the consent of Landlord, Tenant shall:
(i) pay as holdover rental for each month of the holdover tenancy an
amount equal to the greater of (a) the fair market rental value of the Premises
for such month (as reasonably determined by Landlord) or (b) one hundred and
fifty (150%) percent during the first thirty (30) days of such holdover and two
hundred (200%) percent during any holdover period thereafter of the Rent payable
by Tenant for the third month prior to the Expiration Date of the term of this
lease, and otherwise observe, fulfill and perform all of its obligations under
this lease, including but not limited to, those pertaining to additional rent,
in accordance with its terms;
(ii) be liable to Landlord for any payment or rent concession which
Landlord may be required to make to any tenant in order to induce such tenant
not to terminate an executed lease covering all or any portion of the Premises
by reason of the holdover over by Tenant; and
(iii) be liable to Landlord for any damages suffered by Landlord as
the result of Tenant's failure to surrender the Premises.
No holding over by Tenant after the Term shall operate to extend the
Term.
The holdover, with respect to all or any part of the Premises, of a
person deriving an interest in the Premises from or through Tenant, including,
but not limited to, an assignee or subtenant, shall be deemed a holdover by
Tenant.
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Notwithstanding anything in this Article contained to the contrary,
the acceptance of any Rent paid by Tenant pursuant to this Paragraph 16(B),
shall not preclude Landlord from commencing and prosecuting a holdover or
eviction action or proceeding or any action or proceeding in the nature thereof.
The preceding sentence shall be deemed to be an "agreement expressly providing
otherwise" within the meaning of Section 232-c of the Real Property Law of the
State of New York and any successor law of like import.
(C) If at any time during the last month of the Term Tenant shall
have removed all of Tenant's property from the Premises, Landlord may, and
Tenant hereby irrevocably grants to Landlord a license to, immediately enter and
alter, renovate and redecorate the Premises, without elimination, diminution or
abatement of Rent, or incurring liability to Tenant for any compensation, and
such acts shall have no effect upon this lease.
QUIET ENJOYMENT
17. Landlord covenants and agrees with Tenant that upon Tenant paying the
Rent and additional rent and observing and performing all the terms, covenants
and conditions on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the Demised Premises during the Term of this lease
without hindrance or molestation by anyone claiming by or through Landlord,
subject, nevertheless, to the terms, covenants and conditions of this lease
including, but not limited to, Article 22.
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SIGNS
18. No signs or lettering of any nature may be put on or in any window or
on the exterior of the Building or elsewhere within the Demised Premises such as
will be visible from the street. No sign or lettering in the public corridors
or on the doors is permitted except Landlord's standard name plaque.
Notwithstanding the foregoing, to the extent permitted by applicable laws and
regulations, Landlord, at Tenant's sole cost and expense, shall secure all
necessary permits and install a sign on the Building in the form annexed as
Exhibit "2", which sign shall be no larger than the existing tenant's sign, and
which shall be similar in style to such tenant's existing sign. Tenant's sign
shall be located on the east facade of the Building. Landlord hereby approves
the style and location of such sign Landlord's approval herein shall not,
however, relieve Tenant of Tenant's obligation to comply with all laws, rules
and regulations. Landlord, at Landlord's sole expense, shall list Tenant's name
on the monument sign outside the Building.
RULES AND REGULATIONS
19. Tenant and Tenant's agents, employees, visitors, and licensees shall
faithfully observe and comply with, and shall not permit violation of, the Rules
and Regulations set forth on Schedule D annexed hereto and made part hereof, and
with such further reasonable Rules and Regulations as Landlord at any time may
make and communicate in writing to Tenant which, in Landlord's reasonable
judgment, shall be necessary for the reputation, safety, care and appearance of
the Building and the land allocated to it or the preservation of good order
therein, or the operation or maintenance of the Building, and such land, its
equipment, or the more useful occupancy or the comfort of the tenants or others
in the Building. Landlord shall not be liable to Tenant for the violation of
any of said Rules and Regulations, or the breach of any covenant or condition,
in any lease by any other tenant in the Building. Landlord will not amend the
rules and regulations in a manner which would increase Tenant's monetary
obligations under this lease.
RIGHT TO SUBLET OR ASSIGN
20. (A) Tenant covenants that it shall not assign this lease nor sublet
the Demised Premises or any part thereof by operation of
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law or otherwise, including, without limitation, an assignment or subletting as
defined in (D) below, without the prior written consent of Landlord in each
instance, which consent shall not be unreasonably withheld or delayed by more
than twenty (20) business days provided Tenant timely complies with the
provisions of this Article 20, except on the conditions hereinafter stated.
Tenant may assign this lease or sublet all or a portion of the Demised Premises
with Landlord's written consent, provided:
(i) That such assignment or sublease is for a use which is in
compliance with this lease and the then existing zoning regulations and the
Certificate of Occupancy;
(ii) That, at the time of such assignment or subletting, there is no
material default under the terms of this lease on the Tenant's part;
(iii) That, in the event of an assignment, the assignee shall assume in
writing the performance of all of the terms and obligations of the within lease;
(iv) That a duplicate original of said assignment or sublease shall be
delivered by certified mail to the Landlord at the address herein set forth
within twenty (20) days from the said assignment or sublease and within ninety
(90) days of the date that Tenant first advises Landlord of the name and address
of the proposed subtenant or assignee, as required pursuant to subparagraph (B)
hereof;
(v) Such assignment or subletting shall not, however, release the
within Tenant or any successor tenant or any guarantor from their liability for
the full and faithful performance of all of the terms and conditions of this
lease;
(vi) If this lease be assigned, or if the Demised Premises or any part
thereof be underlet or occupied by anybody other than Tenant, Landlord may after
default by Tenant collect rent from the assignee, undertenant or occupant, and
apply the net amount collected to the rent herein reserved.
(B) Notwithstanding anything contained in this Article 20 to the
contrary, no assignment or underletting shall be made by Tenant in any event,
except with respect to any permitted assignment or subletting under Paragraph
20(C) herein, until Tenant has offered to terminate this lease as of the last
day of any calendar month during the Term hereof and to vacate and surrender the
Demised Premises to Landlord on the date fixed in the notice served by Tenant
upon Landlord (which date shall be prior to the
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date of such proposed assignment or the commencement date of such proposed
lease). Simultaneously with said offer to terminate this lease, Tenant shall
advise the Landlord, in writing, of the name and address of the proposed
assignee or subtenant, a reasonably detailed statement of the proposed
subtenant/assignee's business, reasonably detailed financial references, and all
the terms, covenants, and conditions of the proposed sublease or assignment.
(C) Tenant may, without the consent of Landlord, assign this lease or
sublet all or any part of the Demised Premises to an affiliated (i.e., a
corporation 20% or more of whose capital stock is owned by the same stockholders
owning 20% or more of Tenant's capital stock), parent or subsidiary corporation
of Tenant or to a corporation to which it sells or assigns all or substantially
all of its assets or stock or with which it may be consolidated or merged,
provided such purchasing, consolidated, merged, affiliated or subsidiary
corporation shall, in writing, assume and agree to perform all of the
obligations of Tenant under this lease and it shall deliver such assumption with
a copy of such assignment to Landlord within ten (10) days thereafter, and
provided further than Tenant shall not be released or discharged from any
liability under this lease by reason of such assignment or sublet.
(D) For purposes of this Article 20, (i) the transfer of a majority
of the issued and outstanding capital stock of any corporate tenant, or of a
corporate subtenant, or the transfer of a majority of the total interest in any
partnership tenant or subtenant, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions, shall be deemed
an assignment of this lease, or of such sublease, as the case may be; (ii) any
person or legal representative of Tenant, to whom Tenant's interest under this
lease passes by operation of law or otherwise, shall be bound by the provisions
of this Article 20; and (iii) a modification or amendment of a sublease shall be
deemed a sublease. Notwithstanding the foregoing, for purposes of this Article
20, the transfer of the stock of Tenant, its affiliates or subsidiaries through
the over-the-counter market or any recognized national securities exchange shall
not be deemed an assignment or sublease under this Article 20.
(E) Whenever Tenant shall claim under this Article or any other part
of this lease that Landlord has unreasonably withheld or delayed its consent to
some request of Tenant, Tenant shall have no claim for damages by reason of such
alleged withholding or delay, and Tenant's sole remedy thereof shall be a right
to obtain specific performance or injunction but in no event with recovery of
damages.
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(F) Without affecting any of its other obligations under this lease,
except with respect to any permitted assignment or subletting under Paragraph
20(C), Tenant will pay Landlord as additional rent fifty (50%) percent of any
sums or other economic consideration, which (i) are actually received by Tenant
as a result of an assignment or subletting whether or not referred to as rentals
under the assignment or sublease (after deducting therefrom the reasonable costs
and expenses incurred by Tenant in connection with the assignment or subletting
in question provided such costs were approved by Landlord when it approved the
assignment or sublease); and (ii) exceed in total the sums which Tenant is
obligated to pay Landlord under this lease (prorated to reflect obligations
allocable to that portion of the Demised Premises subject to such assignment or
sublease), it being the express intention of the parties that Tenant shall not
in any manner whatsoever be entitled to any profit by reason of such sublease or
assignment. The failure or inability of the assignee or subtenant to pay rent
pursuant to the assignment or sublease will not relieve Tenant from its
obligations to Landlord under this Paragraph 20(F). Tenant will not amend the
assignment or sublease in such a way as to reduce or delay payment of amounts
which are provided in the assignment or sublease approved by Landlord.
(G) Landlord agrees that it shall not unreasonably withhold or delay
by more than twenty (20) business days (provided Tenant timely complies with the
provision of this Article 20), its consent to a subletting or assignment in
accordance with the terms of this Article 20. In determining reasonableness,
there shall be taken into account the character and reputation of the proposed
subtenant or assignee, the specific nature of the proposed subtenant's or
assignee's business and whether same is in keeping with other tenancies in the
building; the financial standing of the proposed subtenant or assignee; and the
impact of all of the foregoing upon the Building and the other tenants of
Landlord therein. Landlord shall not be deemed to have unreasonably withheld
its consent if it refuses to consent to a subletting or assignment to an
existing tenant in any building in Melville, New York owned by Reckson Operating
Partnership or its affiliates or to a proposed subtenant or assignee with whom
Landlord is negotiating a lease for space in a building owned by Reckson
Operating Partnership or its affiliates in Melville, New York or if at the time
of Tenant's request, Tenant is in default, beyond applicable grace and notice
periods provided herein for the cure thereof, of any of the material terms,
covenants and conditions of this lease to be performed by Tenant. At least
twenty (20) days prior to any proposed subletting or assignment, Tenant shall
submit to Landlord a written notice of the proposed subletting or
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assignment, which notice shall contain or be accompanied by the following
information:
(i) the name and address of the proposed subtenant or assignee;
(ii) the nature and character of the business of the proposed
subtenant or assignee and its proposed use of the premises to be demised;
(iii) the most recent three (3) years of balance sheets and profit
and loss statements of the proposed subtenant or assignee or other financial
information satisfactory to Landlord; and
(iv) such shall be accompanied by a copy of the proposed sublease or
assignment of lease.
Notwithstanding the foregoing, Tenant agrees that it and anyone holding through
Tenant shall not sublet or assign all or any portion of the Demised Premises to
any subtenant or assignee who will use the Demised Premises or a portion thereof
for any of the following designated uses nor for any other use which is
substantially similar to any one of the following designated uses:
(i) federal, state or local governmental division, department or
agency which generates heavy public traffic, including, without limitation,
court, social security offices, labor department office, drug enforcement
agency, motor vehicle agency, postal service, military recruitment office;
(ii) union or labor organization;
(iii) office for the practice of medicine, dentistry or the
rendering of other health related services;
(iv) chemical or pharmaceutical company provided however, that the
subletting or assignment to such a company which will use the premises only for
executive, general and sales offices and waive the right to conduct any research
and development shall not be prohibited;
(v) insurance claims office, including, but not limited to,
unemployment insurance or worker's compensation insurance, provided however,
that the subletting or assignment to such a company which will use the Premises
only for executive, general and sales offices and waive the right to process
claims shall not be prohibitive; or securities brokerage company.
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(H) Notwithstanding anything to the contrary contained in this Article
20, in no event shall any assignment or subletting be permitted where the total
sums and other economic consideration required to be paid or given by the
assignee or sublessee, as the case may be, for such assignment or sublease is
less than five (5%) percent below the then current rent, on a per square foot
basis, which Landlord is currently receiving for comparable space in the
Building.
LANDLORD'S ACCESS TO PREMISES
21. (A) Landlord or Landlord's agents shall have the right to enter
and/or pass through the Demised Premises at all reasonable times on reasonable
notice, except in an emergency, to examine the same, and to show them to ground
lessors, prospective purchasers or lessees or mortgagees of the Building, and to
make such repairs, improvements or additions as Landlord may deem necessary or
desirable, and Landlord shall be allowed to take all material into and upon
and/or through said Demised Premises that may be required therefor. In
exercising the foregoing rights,Landlord shall use reasonable efforts not to
unreasonably interfere with Tenant's business, provided such reasonable efforts
shall not be deemed to include the use of overtime services. During the six (6)
months prior to the expiration of the Term of this lease, or any renewal term,
Landlord may , upon reasonable notice, exhibit the Demised Premises to
prospective tenants or purchasers at all reasonable hours and without
unreasonably interfering with Tenant's business. If Tenant shall not be
personally present to open and permit an entry into said premises at any time,
when for any reason an entry therein shall be necessary or permissible, Landlord
or Landlord's agents may enter the same by a master key, or forcibly in the case
of an emergency, without rendering Landlord or such agent liable therefor (if
during such entry Landlord or Landlord's agents shall accord reasonable care to
Tenant's property).
(B) Landlord shall also have the right, at any time, to change the
arrangement and/or location of entrances or passageways, doors and doorways, and
corridors, stairs, toilets, or other public parts of the Building, provided,
however, that Landlord shall make no change in the arrangement and/or location
of entrances or passageways or other public parts of the Building which will
reduce the size of the Demised Premises or adversely affect in any material
manner Tenant's use and enjoyment of the Demised Premises. Landlord shall also
have the right, at any time, to name the Building, including, but not limited
to, the use of appropriate signs and/or lettering on any or all entrances to the
Building, and
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to change the name, number or designation by which the Building is commonly
known.
(C) Neither this lease nor any use by Tenant shall give Tenant any
right or easement to the use of any door or passage or concourse connecting with
any other building or to any public conveniences, and the use of such doors and
passages and concourse and of such conveniences may be regulated and/or
discontinued at any time and from time to time by Landlord without notice to
Tenant. Notwithstanding the foregoing, Tenant shall have full and complete
access to the Demised Premises.
(D) The exercise by Landlord or its agents of any right reserved to
Landlord in this Article shall not constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution
of rent, or relieve Tenant from any of its obligations under this lease, or
impose any liability upon Landlord, or its agents, or upon any lessor under any
ground or underlying lease, by reason of inconvenience or annoyance to Tenant,
or injury to or interruption of Tenant's business, or otherwise.
SUBORDINATION
22. (A) This lease and all rights of Tenant hereunder are, and shall be,
subject and subordinate in all respects to all ground leases and/or underlying
leases and to all first mortgages and building loan agreements which may now or
hereafter be placed on or affect such leases and/or the Real Property of which
the Demised Premises form a part, or any part or parts of such Real Property,
and/or Landlord's interest or estate therein, and to each advance made and/or
hereafter to be made under any such mortgages, and to all renewals,
modifications, consolidations, replacements and extensions thereof and all
substitutions therefor. This Section A shall be self-operative and no further
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall execute and deliver promptly any certificate that
Landlord and/or any mortgagee and/or the lessor under any ground or underlying
lease and/or their respective successors in interest may request. Landlord
shall obtain a non-disturbance agreement from its mortgagee on such mortgagee's
standard form, and shall use reasonable efforts to obtain a non-disturbance
agreement from any future mortgagees.
(B) Without limitation of any of the provisions of this lease, in the
event that any mortgagee or its assigns shall succeed
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to the interest of Landlord or of any successor-Landlord and/or shall have
become lessee under a new ground or underlying lease, then, at the option of
such mortgagee, this lease shall nevertheless continue in full force and effect
and Tenant shall and does hereby agree to attorn to such mortgagee or its
assigns and to recognize such mortgagee or its respective assigns as its
Landlord.
(C) Tenant shall, at any time and from time to time, upon not less
than ten (10) days prior notice by Landlord, execute, acknowledge and deliver to
Landlord a statement in writing 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 modified and stating the modification) and the dates to
which the Rent, additional rent and other charges have been paid in advance, if
any, and stating whether or not to the best knowledge of the signer of such
certificate Landlord is in default in performance of any covenant, agreement,
term, provision or condition contained in this lease, and if so, specifying each
such default of which the signer may have knowledge, it being intended that any
such statement delivered pursuant hereto may be relied upon by any prospective
purchaser or lessee of said real property or any interest or estate therein, any
mortgagee or prospective mortgagee thereof, or any prospective assignee of any
mortgage thereof. If, in connection with obtaining financing for the Building
and the land allocated to it, a banking, insurance or other recognized
institutional lender shall request reasonable modifications in this lease as a
condition to such financing, Tenant will not unreasonably withhold, delay or
defer its consent thereof, provided that such modifications do not increase the
obligations of Tenant hereunder or adversely affect the leasehold interest
hereby created. If, in connection with such financing, such institutional
lender shall require financial audited information on the Tenant, Tenant shall
promptly comply with such request.
PROPERTY LOSS, DAMAGE REIMBURSEMENT
23. (A) Landlord or its agents shall not be liable for any damages to
property of Tenant or of others entrusted to employees of the Building, nor for
the loss of or damage to any property of Tenant by theft or otherwise, unless
caused by or due to the negligence of Landlord, its agents, servants or
employees. Landlord or its agents shall not be liable for any injury or damage
to persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, electrical disturbance, water, rain or snow or leaks from any
part of the Building or from the
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pipes, appliances or plumbing works or from the roof, street or subsurface or
from any other place or by dampness or by any other cause of whatsoever nature,
unless caused by or due to the negligence or misconduct of Landlord, its agents,
servants or employees; nor shall Landlord or its agents be liable for any such
damage caused by other tenants or persons in the Building or caused by
operations in construction of any private, public or quasi-public work. If at
any time any windows of the Demised Premises are temporarily closed or darkened
for a reasonable period of time incident to or for the purpose of repairs,
replacements, maintenance and/or cleaning in, on, to or about the Building or
any part or parts thereof, Landlord shall not be liable for any damage Tenant
may sustain thereby and Tenant shall not be entitled to any compensation
therefor nor abatement of rent nor shall the same release Tenant from its
obligations hereunder nor constitute an eviction. Tenant shall reimburse and
compensate Landlord as additional rent for all expenditures (including, without
limitation, reasonable attorneys' fees) made by, or damages or fines sustained
or incurred by, Landlord due to non-performance or non-compliance with or breach
or failure to observe any term, covenant or condition of this lease upon
Tenant's part to be kept, observed, performed or complied with. Tenant shall
give immediate notice to Landlord in case of fire or accidents in the Demised
Premises or in the Building or of defects therein or in any fixtures or
equipment.
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TENANT'S AND LANDLORD'S INDEMNITY
(B) Tenant shall indemnify and save harmless Landlord against and from
any and all claims by or on behalf of any person or persons, firm or firms,
corporation or corporations arising from the conduct or management of or from
any work or other thing whatsoever done (other than by Landlord or its
contractors or the agents or employees of either) in and on the Demised Premises
during any other period of occupancy by Tenant including the Term of this lease
and during the period of time, if any, prior to the specified commencement date
that Tenant may have been given access to the Demised Premises for the purpose
of making installations, and will further indemnify and save harmless Landlord
against and from any and all claims arising from any condition of the Demised
Premises or Tenant's occupancy thereof due to or arising from any act or
omissions or negligence of Tenant or any of its agents, contractors, servants,
employees, licensees or invitees and against and from all costs, expenses, and
liabilities incurred in connection with any such claim or claims or action or
proceeding brought thereon; and in case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from Landlord,
agrees that Tenant, at Tenant's expense, will resist or defend such action or
proceeding and will employ counsel therefor reasonably satisfactory to Landlord.
Landlord agrees to indemnify and save harmless Tenant against and from any and
all claims, by or on behalf of any person or persons, firm or firms, corporation
or corporations arising from : (i)the conduct or management of or from any work
or other thing whatsoever done (other than by Tenant or its contractors or the
agents or employees of either), in or about the common area of the Building
during the Term (unless such injury, loss, claim or damages is attributable to
the negligence of Tenant or its agents, servants or employees); and (ii) work
performed by Landlord, its agents or employees in or on the Demised Premises
(unless such injury, loss, claim or damage is attributable to the negligence of
Tenant or its agents, servants or employees); and in the event any action or
proceeding is brought against Tenant by reason of such claim, Landlord, upon
notice from Tenant, shall, at Landlord's expense, resist and defend such action
or proceeding and will employ counsel therefor reasonably satisfactory to
Tenant.
DESTRUCTION - FIRE OR OTHER CASUALTY
24. (A) If the Premises or any part thereof shall be damaged by fire or
other casualty and Tenant gives prompt notice thereof to
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Landlord, Landlord shall proceed with reasonable diligence to repair or cause to
be repaired such damage. The Rent and additional rent shall be abated to the
extent that the Premises shall have been rendered untenantable, such abatement
to be from the date of such damage or destruction to the date the Premises shall
be substantially repaired or rebuilt, in proportion which the area of the part
of the Premises so rendered untenantable bears to the total area of the
Premises.
(B) If the Premises shall be substantially damaged or rendered
substantially untenantable by fire or other casualty, and Landlord has not
terminated this lease pursuant to Subsection (C) and Landlord has not completed
the making of the required repairs and restored and rebuilt the Premises and/or
access thereto within nine (9) months from the date of such damage or
destruction, and such additional time after such date (but in no event to exceed
four (4)as shall equal the aggregate period Landlord may have been delayed in
doing so by unavoidable delays or adjustment of insurance, Tenant may serve
notice on Landlord of its intention to terminate this lease, and, if within
thirty (30) days thereafter Landlord shall not have completed the making of the
required repairs and restored and rebuilt the Premises, this lease shall
terminate on the expiration of such thirty (30) day period as if such
termination date were the Expiration Date, and the Rent and additional rent
shall be apportioned as of the date of damage and any prepaid portion of Rent
and additional rent for any period after such date shall be refunded by Landlord
to Tenant.
(C) If the Premises shall be substantially damaged or rendered
substantially untenantable by fire or other casualty or if the Building shall be
so damaged by fire or other casualty that substantial alteration or
reconstruction of the Building shall, in Landlord's opinion, be required
(whether or not the Premises shall have been damaged by such fire or other
casualty), then in any of such events Landlord may, at its option, terminate
this lease and the Term and estate hereby granted, by giving Tenant thirty (30)
days notice of such termination within sixty (60) days after the date of such
damage. In the event that such notice of termination shall be given, this lease
and the Term and estate hereby granted, shall terminate as of the date provided
in such notice of termination (whether or not the Term shall have commenced)
with the same effect as if that were the Expiration Date, and the Rent and
additional rent shall be apportioned as of the date of damage or sooner
termination and any prepaid portion of Rent and additional rent for any period
after such date shall be refunded by Landlord to Tenant.
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(D) 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
by fire or other casualty or the repair thereof, except for such damage or
casualty caused by the negligence or misconduct of Landlord or its agents.
Landlord will not carry insurance of any kind on Tenant's property, and Landlord
shall not be obligated to repair any damage thereto or replace the same.
(E) This lease shall be considered an express agreement governing any case
of damage to or destruction of the Building or any part thereof by fire or other
casualty, and Section 227 of the Real Property Law of the State of New York
providing for such a contingency in the absence of such express agreement, and
any other law of like import now or hereafter enacted, shall have no application
in such case.
INSURANCE
25. (A) Tenant shall not do anything, or suffer or permit anything to be
done, in or about the Premises which shall (i) invalidate or be in conflict with
the provisions of any fire or other insurance policies covering the Building or
any property located therein, or (ii) result in a refusal by fire insurance
companies of good standing to insure the Building or any such property in
amounts reasonably satisfactory to Landlord, or (iii) subject Landlord to any
liability or responsibility for injury to any person or property by reason of
any activity being conducted in the Premises or (iv) cause, by its conduct or
omission or as proscribed by the terms of this lease, any increase in the fire
insurance rates applicable to the Building or equipment or other property
located therein at the beginning of the Term or at any time thereafter. Tenant,
at Tenant's expense, shall comply with all rules, orders, regulations or
requirements of the New York Board of Fire Underwriters and the New York Fire
Insurance Rating Organization or any similar body excluding those rules, orders,
regulations or requirements which would require structural changes to the
Building or the Premises.
(B) If, by reason of any act or omission on the part of Tenant, the
rate of fire insurance with extended coverage on the Building or equipment or
other property of Landlord or any other tenant or occupant of the Building shall
be higher than it otherwise would be, Tenant shall reimburse Landlord and all
such other tenants or occupants, on demand, for the part of the increase
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in premiums for fire insurance and extended coverage paid by Landlord and such
other tenants or occupants because of such act or omission on the part of
Tenant.
(C) In the event that any dispute should arise between Landlord and
Tenant concerning insurance rates, a schedule or make up of insurance rates for
the Building or the Premises, as the case may be, issued by the New York Fire
Insurance Rating Organization or other similar body making rates for fire
insurance and extended coverage for the Premises concerned, shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rates with extended coverage then applicable to such Premises.
(D) Tenant shall obtain and keep in full force and effect during the
Term, at its own cost and expense, (i) Public Liability Insurance, such
insurance to afford protection in an amount of not less than Three Million
($3,000,000) Dollars for injury or death arising out of any one occurrence, and
Five Hundred Thousand ($500,000) Dollars for damage to property, protecting
Landlord and Tenant as insureds against any and all claims for bodily injury,
death or property damage and (ii) Fire and Extended Coverage Insurance on
Tenant's property, insuring against damage by fire, and such other risks and
hazards as are insurable under present and future standard forms of fire and
extended coverage insurance policies, to Tenant's property for the full
insurable value thereof, protecting Tenant as insured.
(E) Said insurance is to be written in form and substance reasonably
satisfactory to Landlord by a good and solvent insurance company of recognized
standing, admitted to do business in the State of New York, which shall be
reasonably satisfactory to Landlord. Tenant shall procure, maintain and place
such insurance and pay all premiums and charges therefor and upon failure to do
so Landlord may, but shall not be obligated to, procure, maintain and place such
insurance or make such payments, and in such event the Tenant agrees to pay the
amount thereof, plus interest at the maximum rate permitted by law, to Landlord
on demand and said sum shall be in each instance collectible as additional rent
on the first day of the month following the date of payment by Landlord. Tenant
shall cause to be included in all such insurance policies a provision to the
effect that the same will be non-cancelable except upon twenty (20) days written
notice to Landlord. On the Term Commencement Date the original insurance
policies or appropriate certificates shall be deposited with Landlord. Any
renewals, replacements or endorsements thereto shall also be deposited with
Landlord to the end that said insurance shall be in full force and effect during
the Term.
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(F) Each party agrees to use its best efforts to include in each of
its insurance policies (insuring the Building and Landlord's property therein,
in the case of Landlord, and insuring Tenant's property, in the case of Tenant,
against loss, damage or destruction by fire or other casualty) a waiver of the
insurer's right of subrogation against the other party, or if such waiver should
be unobtainable or unenforceable (i) an express agreement that such policy shall
not be invalidated if the insured waives or has waived before the casualty, the
right of recovery against any party responsible for a casualty covered by the
policy, or (ii) any other form of permission for the release of the other party,
or (iii) the inclusion of the other party as an additional insured, but not a
party to whom any loss shall be payable. If such waiver, agreement or
permission shall not be, or shall cease to be, obtainable without additional
charge or at all, the insured party shall so notify the other party promptly
after learning thereof. In such case, if the other party shall agree in writing
to pay the insurer's additional charge therefor, such waiver, agreement or
permission shall be included in the policy, or the other party shall be named as
an additional insured in the policy, but not a party to whom any loss shall be
payable. Each such policy which shall so name a party hereto as an additional
insured shall contain, if obtainable, agreements by the insurer that the policy
will not be cancelled without at least thirty (30) days prior notice to both
insureds and that the act or omission of one insured will not invalidate the
policy as to the other insured. During any period while the foregoing waiver of
right of recovery is in effect, Landlord shall look solely to the proceeds of
such policies to compensate Landlord for any loss occasioned by fire or other
casualty which is an insured risk under such policies.
(G) Landlord shall keep the Building (including Landlord's Initial
Construction) insured against fire and other casualties for its full replacement
value with a reputable insurance company licensed to do business in the state of
New York. Landlord hereby waives (i) any obligation on the part of Tenant to
make repairs to the Premises necessitated or occasioned by fire or other
casualty that is an insured risk under such policies, and (ii) any right of
recovery against Tenant, any other permitted occupant of the Premises, and any
of their servants, employees, agents or contractors, for any loss occasioned by
fire or other casualty that is an insured risk under such policies.
(H) Tenant hereby waives (and agrees to cause any other permitted
occupants of the Premises to execute and deliver to Landlord written instruments
waiving) any right of recovery against Landlord, any other tenants or occupants
of the Building, and any servants, employees, agents or contractors of Landlord
or of any
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such other tenants or occupants, for any loss occasioned by fire or other
casualty which is an insured risk under such policies required to be maintained
by Tenant hereunder. During any period while the foregoing waiver of right of
recovery is in effect, Tenant, or any other permitted occupant of the Premises,
as the case may be, shall look solely to the proceeds of such policies to
compensate Tenant or such other permitted occupant for any loss occasioned by
fire or other casualty which is an insured risk under such policies.
EMINENT DOMAIN
26. (A) In the event that the whole of the Demised Premises shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this lease and the Term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title. In the event that only a part of
the Demised Premises shall be so condemned or taken, then effective as of the
date of vesting of title, the Rent hereunder shall be abated in an amount
thereof apportioned according to the area of the Demised Premises so condemned
or taken. In the event that only a part of the Building shall be so condemned
or taken, then (i) Landlord (whether or not the Demised Premises be affected)
may, at its option, terminate this lease and the Term and estate hereby granted
as of the date of such vesting of title by notifying Tenant in writing of such
termination within sixty (60) days following the date on which Landlord shall
have received notice of vesting of title, and (ii) if such condemnation or
taking shall be of a substantial part of the Demised Premises or a substantial
part of the means of access thereto, Tenant shall have the right, by delivery of
notice in writing to Landlord within sixty (60) days following the date on which
Tenant shall have received notice of vesting of title, to terminate this lease
and the Term and estate hereby granted as of the date of vesting of title, or
(iii) if neither Landlord nor Tenant elects to terminate this lease, as
aforesaid, this lease shall be and remain unaffected by such condemnation or
taking, except that the Rent shall be abated to the extent, if any, hereinabove
provided in this Article 26. In the event that only a part of the Demised
Premises shall be so condemned or taken and this lease and the Term and estate
hereby granted are not terminated as hereinbefore provided, Landlord will, at
its expense, restore the remaining portion of the Demised Premises as nearly as
practicable to the same condition as it was in prior to such condemnation or
taking.
(B) In the event of a termination in any of the cases hereinabove
provided, this lease and the Term and estate granted
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shall expire as of the date of such termination with the same effect as if that
were the date hereinbefore set for the expiration of the Term of this lease, and
the Rent hereunder shall be apportioned as of such date.
(C) In the event of any condemnation or taking hereinabove mentioned
of all or part of the Building, Landlord shall be entitled to receive the entire
award in the condemnation proceeding, including any award made for the value of
the estate vested by this lease in Tenant, and Tenant hereby expressly assigns
to Landlord any and all right, title and interest of Tenant now or hereafter
arising in or to any such award or any part thereof, and Tenant shall be
entitled to receive no part of such award, except that the Tenant may file a
claim for any taking of nonmovable fixtures owned by Tenant and for moving
expenses incurred by Tenant. It is expressly understood and agreed that the
provisions of this Article 26 shall not be applicable to any condemnation or
taking for governmental occupancy for a limited period.
NONLIABILITY OF LANDLORD
27. (A) If Landlord or a successor in interest is an individual (which
term as used herein includes aggregates of individuals, such as joint ventures,
general or limited partnerships or associations), such individual shall be under
no personal liability with respect to any of the provisions of this lease, and
if such individual hereto is in breach or default with respect to its
obligations under this lease, Tenant shall look solely to the equity of such
individual in the land and Building of which the Demised Premises form a part
for the satisfaction of Tenant's remedies and in no event shall Tenant attempt
to secure any personal judgment against any such individual or any partner,
employee or agent of Landlord by reason of such default by Landlord.
(B) The word "Landlord" as used herein means only the owner of the
landlord's interest for the time being in the land and Building (or the owners
of a lease of the Building or of the land and Building) of which the Premises
form a part, and in the event of any sale of the Building and land of which the
Demised Premises form a part, Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord hereunder and, it shall be
deemed and construed without further agreement between the parties or between
the parties and the purchaser of the Premises, that such purchaser has assumed
and agreed to carry out any and all covenants and obligations of Landlord
hereunder.
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DEFAULT
28. (A) Upon the occurrence, at any time prior to or during the Demised
Term, of any one or more of the following events (referred to as "Events of
Default"):
(i) If Tenant shall default in the payment when due of any installment
of Rent or in the payment when due of any additional rent, and such default
shall continue for a period of ten (10) days after notice by Landlord to Tenant
of such default; or
(ii) If Tenant shall default in the observance or performance of any
term, covenant or condition of this lease on Tenant's part to be observed or
performed (other than the covenants for the payment of Rent and additional rent)
and Tenant shall fail to remedy such default within fifteen (15) days after
notice by Landlord to Tenant of such default, or if such default is of such a
nature that it cannot be completely remedied within said period of fifteen (15)
days and Tenant shall not commence within said period of fifteen (15) days, or
shall not thereafter diligently prosecute to completion, all steps necessary to
remedy such default; or
(iii) If Tenant shall file a voluntary petition in bankruptcy or
insolvency, or shall be adjudicated a bankrupt or become insolvent, or shall
file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy code or any other present or future
applicable federal, state or other statute or law, or shall make an assignment
for the benefit of creditors or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Tenant or of all or any
part of Tenant's property; or
(iv) If, within ninety (90) days after the commencement of any
proceeding against Tenant, whether by the filing of a petition or otherwise,
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, such proceedings shall not have been dismissed, or if, within sixty (60)
days after the appointment or any trustee, receiver or liquidator of Tenant, or
of all or any part of Tenant's property, such appointment shall not have been
vacated or otherwise discharged, or if any execution or attachment shall be
issued
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against Tenant or any of Tenant's property pursuant to which the Demised
Premises shall be taken or occupied or attempted to be taken or occupied; or
(v) If Tenant shall default in the observance or performance of any
term, covenant or condition on Tenant's part to be observed or performed under
any other lease with Landlord of space in the Building and such default shall
continue beyond any grace period set forth in such other lease for the remedying
of such default; or
(vi) If Tenant's interest in this lease shall devolve upon or pass to
any person, whether by operation of law or otherwise, except as expressly
permitted under Article 20;
then, upon the occurrence, at anytime prior to or during the Demised
Term, of any one or more of such Events of Default, Landlord, at any time
thereafter, at Landlord's option, may give to Tenant a five (5) days' notice of
termination of this lease and, in the event such notice is given, this lease and
the Term shall come to an end and expire (whether or not said term shall have
commenced) upon the expiration of said five (5) days with the same effect as if
the date of expiration of said five (5) days were the Expiration Date, but
Tenant shall remain liable for damages as provided in Article 30.
(B) If, at any time (i) Tenant shall be comprised of two (2) or more
persons, or (ii) Tenant's obligations under this lease shall have been
guaranteed by any person other than Tenant, or (iii) Tenant's interest in this
lease shall have been assigned, the word "Tenant", as used in subsection (iii)
and (iv) of Section 28(A), shall be deemed to mean any one or more of the
persons primarily or secondarily liable for Tenant's obligations under this
lease. Any monies received by Landlord from or on behalf of Tenant during the
pendency of any proceeding of the types referred to in said subsections (iii)
and (iv) shall be deemed paid as compensation for the use and occupation of the
Demised Premises and the acceptance of such compensation by Landlord shall not
be deemed an acceptance of Rent or a waiver on the part of Landlord of any
rights under Section 28(A).
TERMINATION ON DEFAULT
29. (A) If Tenant shall default in the payment when due of any
installment of rent or in the payment when due of any
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additional rent and such default shall continue for a period of ten (10) days
after notice by Landlord to Tenant of such default, or if this lease and the
Demised Term shall expire and come to an end as provided in Article 28:
(i) Landlord and its agents and servants may immediately, or at any
time after such default or after the date upon which this lease and the Demised
Term shall expire and come to an end, re-enter the Demised Premises or any part
thereof, without notice, either by summary proceedings or by any other
applicable action or proceeding, or by force or other means provided such force
or other means are lawful (without being liable to indictment, prosecution or
damages therefor), and may repossess the Demised Premises and dispossess Tenant
and any other persons from the Demised Premises and remove any and all of their
property and effects from the Demised Premises; and
(ii) Landlord shall use reasonable efforts to relet the whole or any
part or parts of the Demised Premises from time to time, either in the name of
Landlord or otherwise, to such tenant or tenants, for such term or terms ending
before, on or after the Expiration Date, at such rental or rentals and upon such
other conditions, which may include concessions and free rent periods, as
Landlord, in its sole discretion, may determine. Landlord shall have no
obligation to relet the Demised Premises or any part thereof and shall in no
event be liable for refusal or failure to relet the Demised Premises or any part
thereof, or, in the event of any such reletting, for refusal or failure to
collect any rent due upon any such reletting, and no such refusal or failure
shall operate to relieve Tenant of any liability under this lease or otherwise
to affect any such liability; Landlord, at Landlord's option, may make such
repairs, replacements, alterations, additions, improvements, decorations and
other physical changes in and to the Demised Premises as Landlord, in its sole
discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this lease or otherwise affecting any such liability.
(B) Tenant, on its own behalf and on behalf of all persons claiming
through or under Tenant, including all creditors, does hereby waive any and all
rights which Tenant and all such persons might otherwise have under any present
or future law to redeem the Demised Premises, or to re-enter or repossess the
Demised Premises, or to restore the operation of this lease, after (i) Tenant
shall have been dispossessed by a judgment or by warrant of any court or judge,
or (ii) any re-entry by Landlord, or (iii) any expiration or termination of this
lease and the Demised Term,
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whether such dispossess, re-entry, expiration or termination shall be by
operation of law or pursuant to the provisions of this lease. In the event of a
breach or threatened breach by Tenant or any persons claiming through or under
Tenant, of any term, covenant or condition of this lease on Tenant's part to be
observed or performed, Landlord shall have the right to enjoin such breach and
the right to invoke any other remedy allowed by law or in equity as if re-entry,
summary proceeding and other special remedies were not provided in this lease
for such breach. The rights to invoke the remedies hereinbefore set forth are
cumulative and shall not preclude Landlord from invoking any other remedy
allowed at law or in equity.
DAMAGES
30. (A) If this lease and the Demised Term shall expire and come to an
end as provided in Article 28 or by or under any summary proceeding or any other
action or proceeding, or if Landlord shall re-enter the Demised Premises as
provided in Article 29 or by or under any summary proceedings or any other
action or proceeding, then, in any of said events:
(i) Tenant shall pay to Landlord all Rent, additional rent and other
charges payable under this lease by Tenant to Landlord to the date upon which
this lease and the Demised Term shall have expired and come to an end or to the
date of re-entry upon the Demised Premises by Landlord, as the case may be; and
(ii) Tenant shall also be liable for and shall pay to Landlord, as
damages, any deficiency (referred to as "Deficiency") between the Rent and
additional rent reserved in this lease for the period which otherwise would have
constituted the unexpired portion of the Demised Term and the net amount, if
any, of rents collected under any reletting effected pursuant to the provisions
of Section 29(A) for any part of such period (first deducting from the rents
collected under any such reletting all of Landlord's reasonable expenses in
connection with the termination of this lease or Landlord's re-entry upon the
Demised Premises and with such reletting including, but not limited to, all
repossession costs, brokerage commissions, legal expenses, reasonable attorneys'
fees, alteration costs and other expenses of preparing the Demised Premises for
such reletting). Any such Deficiency shall be paid in monthly installments by
Tenant on the days specified in this lease for payment of installments of Rent.
Landlord shall be entitled to recover from Tenant each monthly Deficiency as the
same shall arise, and no suit to collect the amount of the Deficiency for any
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month shall prejudice Landlord's rights to collect the Deficiency for any
subsequent month by a similar proceeding; and
(iii) At any time after the Demised Term shall have expired and come
to an end or Landlord shall have re-entered upon the Demised Premises, as the
case may be, whether or not Landlord shall have collected any monthly
Deficiencies as aforesaid, Landlord shall be entitled to recover from Tenant,
and Tenant shall pay to Landlord, on demand, as and for liquidated and agreed
final damages, a sum equal to the amount by which the Rent and additional rent
reserved in this lease for the period which otherwise would have constituted the
unexpired portion of the Demised Term exceeds the then fair and reasonable
rental value of the Demised Premises for the same period, both discounted to
present worth at the rate of four (4%) per cent per annum. If, before
presentation of proof of such liquidated damages to any court, commission, or
tribunal, the Demised Premises, or any part thereof, shall have been relet by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Demised Term, or any part thereof, the amount of Rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Demised Premises so relet during
the term of the reletting. In no event shall Tenant be required to pay
duplicate damages under the provisions of Sections 30(A)(ii) and 30(A)(iii).
(B) If the Demised Premises, or any part thereof, shall be relet
together with other space in the Building, the rents collected or reserved under
any such reletting and the expenses of any such reletting shall be equitably
apportioned for the purposes of this Article 30. Tenant shall in no event be
entitled to any rents collected or payable under any reletting, whether or not
such rents shall exceed the rent reserved in this lease. Solely for the
purposes of this Article, the term "Rent" as used in Section 30(A) shall mean
the rent in effect immediately prior to the date upon which this lease and the
Demised Term shall have expired and come to an end, or the date of re-entry upon
the Demised Premises by Landlord, as the case may be, plus any additional rent
payable pursuant to the provisions of Article 11 for the Escalation Year (as
defined in Article 11) immediately preceding such event. Nothing contained in
Articles 28 and 29 of this lease shall be deemed to limit or preclude the
recovery by Landlord from Tenant of the maximum amount allowed to be obtained as
damages by any statute or rule of law, or of any sums or damages to which
Landlord may be entitled in addition to the damages set forth in Section 30(A).
SUMS DUE LANDLORD
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31. If Tenant shall default in the performance of any covenants on
Tenant's part to be performed under this lease, Landlord may immediately, or at
anytime thereafter, without notice, and without thereby waiving such default,
perform the same for the account of Tenant and at the expense of Tenant. If
Landlord at any time is compelled to pay or elects to pay any sum of money, or
do any act which will require the payment of any sum of money by reason of the
failure of Tenant to comply with any provision hereof, or, if Landlord is
compelled to or elects to incur any expense, including reasonable attorneys'
fees, instituting, prosecuting and/or defending any action or proceeding
instituted by reason of any default of Tenant hereunder, the sum or sums so paid
by Landlord, with all interest, costs and damages, shall be deemed to be
additional rent hereunder and shall be due from Tenant to Landlord on the first
day of the month following the incurring of such respective expenses or, at
Landlord's option, on the first day of any subsequent month. Any sum of money
(other than rent) accruing from Tenant to Landlord pursuant to any provisions of
this lease, including, but not limited to, the provisions of Schedule C, whether
prior to or after the Term Commencement Date, may, at Landlord's option, be
deemed additional rent, and Landlord shall have the same remedies for Tenant's
failure to pay any item of additional rent when due as for Tenant's failure to
pay any installment of Rent when due. Tenant's obligations under this Article
shall survive the expiration or sooner termination of the Demised Term. In any
case in which the Rent or additional rent is not paid within ten (10) days of
the day when same is due, Tenant shall pay a late charge equal to 8-1/2 cents
for each dollar so due. This late payment charge is intended to compensate
Landlord for its additional administrative costs resulting from Tenant's failure
to pay in a timely manner and has been agreed upon by Landlord and Tenant as a
reasonable estimate of the additional administrative costs that will be incurred
by Landlord as a result of Tenant's failure as the actual cost in each instance
is extremely difficult, if not impossible, to determine. This late payment
charge will constitute liquidated damages and will be paid to Landlord together
with such unpaid amounts. The payment of this late payment charge will not
constitute a waiver by Landlord of any default by Tenant under this lease.
NO WAIVER
32. No act or thing done by Landlord or Landlord's agents during the term
hereby demised shall be deemed an acceptance of a surrender of said Demised
Premises, and no agreement to accept such surrender shall be valid unless in
writing signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power
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to accept the keys of the Demised Premises prior to the termination of this
lease. The delivery of keys to any employee of Landlord or of Landlord's agents
shall not operate as a termination of this lease or a surrender of the Demised
Premises. In the event Tenant shall at any time desire to have Landlord underlet
the Demised Premises for Tenant's account, Landlord or Landlord's agents are
authorized to receive said keys for such purposes without releasing Tenant from
any of the obligations under this lease, and Tenant hereby relieves Landlord of
any liability for loss of or damage to any of Tenant's effects in connection
with such underletting, except where such loss or damage is caused by the
negligence of Landlord or its agents . The failure of Landlord to seek redress
for violation of, or to insist upon the strict performance of, any covenants or
conditions of this lease, or any of the Rules and Regulations annexed hereto and
made a part hereof or hereafter adopted by Landlord, shall not prevent a
subsequent act, which would have originally constituted a violation, from having
all the force and effect of an original violation. The receipt by Landlord of
rent with knowledge of the breach of any covenant of this lease shall not be
deemed a wavier of such breach. The failure of Landlord to enforce any of the
Rules and Regulations annexed hereto and made a part hereof, or hereafter
adopted, against Tenant and/or any other tenant in the Building shall not be
deemed a waiver of any such Rules and Regulations. No provision of this lease
shall be deemed to have been waived by Landlord, unless such waiver be in
writing signed by Landlord. No payment by Tenant or receipt by Landlord of a
lesser amount then the monthly Rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated Rent nor shall any endorsement
or statement 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.
WAIVER OF TRIAL BY JURY
33. To the extent such waiver is permitted by law, Landlord and Tenant
hereby waive trial by jury in any action, proceeding or counterclaim brought by
Landlord or Tenant against the other on any matter whatsoever arising out of or
in any way connected with this lease, the relationship of landlord and tenant,
the use or occupancy of the Demised Premises by Tenant or any person claiming
through or under Tenant, any claim of injury or damage, and any emergency or
other statutory remedy. The provisions of the foregoing sentence shall survive
the expiration or any sooner
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termination of the Demised Term. If Landlord commences any summary proceeding
for nonpayment, Tenant agrees not to interpose any counterclaim of whatever
nature or description in any such proceeding or to consolidate such proceeding
with any other proceeding.
Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord's obtaining
possession of the Demised Premises, by reason of the violation by Tenant of any
of the covenants and conditions of this lease or otherwise.
NOTICES
34. Except as otherwise expressly provided in this lease, any bills,
statements, notices, demands, requests or other communications (other than
bills, statements or notices given in the regular course of business) given or
required to be given under this lease shall be effective only if rendered or
given in writing, sent by regular, registered or certified mail (return receipt
requested), addressed (A) to Tenant (i) at Tenant's address set forth in this
lease if mailed prior to Tenant's taking possession of the Demised Premises, or
(ii) at the Building if mailed subsequent to Tenant's taking possession of the
Demised Premises, or (iii) at any place where Tenant or any agent or employee of
Tenant may be found if mailed subsequent to Tenant's vacating, deserting,
abandoning or surrendering the Demised Premises, or (B) to Landlord at
Landlord's address set forth in this lease, Attention: Chief Financial Officer,
or (C) addressed to such other address as either Landlord or Tenant may
designate as its new address for such purpose by notice given to the other in
accordance with the provisions of this Article. Any such bills, statements,
notices, demands, requests or other communications shall be deemed to have been
rendered or given on the date when it shall have been mailed as provided in this
Article. A copy of any bills, statements, notices, demands, requests or other
communications sent to Tenant (other than bills, statements or notices given in
the regular course of business) shall also be sent, as a courtesy only, to
Frances R. Zujkowski, Esq., Koerner Silberberg & Weiner, LLP, 112 Madison
Avenue, Third Floor, New York, New York 10016-7424.
INABILITY TO PERFORM
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35. (A) If, by reason of strikes or other labor disputes, fire or other
casualty, accidents, orders or regulations of any Federal, State, County or
Municipal authority, or any other cause beyond Landlord's reasonable control,
whether or not such other cause shall be similar in nature to those hereinbefore
enumerated, Landlord is unable to furnish or is delayed in furnishing any
utility or service required to be furnished by Landlord under the provisions of
this lease or any collateral instrument or is unable to perform or make or is
delayed in performing or making any installations, decorations, repairs,
alterations, additions or improvements, whether or not required to be performed
or made under this lease, or under any collateral instrument, or is unable to
fulfill or is delayed in fulfilling any of Landlord's other obligations under
this lease, or any collateral instrument, no such inability or delay shall
constitute an actual or constructive eviction, in whole or in part, or entitle
Tenant to any abatement or diminution of rent, or relieve Tenant from any of its
obligations under this lease, or impose any liability upon Landlord or its
agents, by reason of inconvenience or annoyance to Tenant, or injury to or
interruption of Tenant's business, or otherwise.
INTERRUPTION OF SERVICE
(B) Landlord reserves the right to stop the services of the air
conditioning, elevator, escalator, plumbing, electrical or other mechanical
systems or facilities in the Building for a reasonable period of time when
necessary by reason of accident or emergency, or for repairs, alterations or
replacements, which, in the judgment of Landlord are desirable or necessary,
until such repairs, alterations or replacements shall have been completed. The
exercise of such rights by Landlord shall not constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of rent, or relieve Tenant from any of its obligations under this
lease, or impose any liability upon Landlord or its agents by reason of
inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's
business or otherwise.
CONDITIONS OF LANDLORD'S LIABILITY
(C) (i) In addition to the requirements for constructive eviction
imposed by law, Tenant shall not be entitled to claim a constructive eviction
from the Demised Premises unless
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<PAGE>
Tenant shall have first notified Landlord of the condition or conditions giving
rise thereto, and if the complaints be justified, unless Landlord shall have
failed to remedy such conditions within a reasonable time after receipt of such
notice.
(ii) Subject to the provisions of Articles 2 and 5 of this lease, if
Landlord shall be unable to give possession of the Demised Premises on any date
specified for the commencement of the term by reason of the fact that the
Premises have not been sufficiently completed to make the Premises ready for
occupancy, or for any other reason, Landlord shall not be subject to any
liability for the failure to give possession on said date, nor shall such
failure in any way affect the validity of this lease or the obligations of
Tenant hereunder.
TENANT'S TAKING POSSESSION
(D) (i) Except for punchlist items as set forth in Article 2 hereof,
Tenant, by entering into occupancy of the Premises, shall be conclusively deemed
to have agreed that Landlord, up to the time of such occupancy has performed all
of its obligations hereunder and that the Premises were in satisfactory
condition as of the date of such occupancy, unless within ten (10) days after
the such date Tenant shall have given written notice to Landlord specifying the
respects in which the same were not in such condition.
(ii) If Tenant shall use or occupy all or any part of the Demised
Premises for the conduct of business prior to the Term Commencement Date, such
use or occupancy shall be deemed to be under all of the terms, covenants and
conditions of this lease, including the covenant to pay rent for the period from
the commencement of said use or occupancy to the Term Commencement Date, subject
to the three (3) month rent abatement as provided in Article 2 herein.
SUBSTITUTED PREMISES
36. [INTENTIONALLY OMITTED.]
ENTIREMENT AGREEMENT
46
<PAGE>
37. This lease (including the Schedules and Exhibits annexed hereto)
contains the entire agreement between the parties and all prior negotiations and
agreements are merged herein. Tenant hereby acknowledges that neither Landlord
nor Landlord's agent or representative has made any representations or
statements, or promises, upon which Tenant has relied, regarding any matter or
thing relating to the Building, the land allocated to it (including the parking
area) or the Demised Premises, or any other matter whatsoever, except as is
expressly set forth in this lease, including, but without limiting the
generality of the foregoing, any statement, representation or promise as to the
fitness of the Demised Premises for any particular use, the services to be
rendered to the Demised Premises, or the prospective amount of any item of
additional rent. No oral or written statement, representation or promise
whatsoever with respect to the foregoing or any other matter made by Landlord,
its agents or any broker, whether contained in an affidavit, information
circular, or otherwise, shall be binding upon the Landlord unless expressly set
forth in this lease. No rights, easements or licenses are or shall be acquired
by Tenant by implication or otherwise unless expressly set forth in this lease.
This lease may not be changed, modified or discharged, in whole or in part,
orally, and no executory agreement shall be effective to change, modify or
discharge, in whole or in part, this lease or any obligations under this lease,
unless such agreement is set forth in a written instrument executed by the party
against whom enforcement of the change, modification or discharge is sought.
All references in this lease to the consent or approval of Landlord shall be
deemed to mean the written consent of Landlord, or the written approval of
Landlord, as the case may be, and no consent or approval of Landlord shall be
effective for any purpose unless such consent or approval is set forth in a
written instrument executed by Landlord.
DEFINITIONS
38. The words "re-enter", "re-entry", and "re-entered" as used in this
lease are not restricted to their technical legal meanings. The term "business
days" as used in this lease shall exclude Saturdays (except such portion thereof
as is covered by specific hours in Article 6 hereof), Sundays and all days
observed by the State or Federal Government as legal holidays. The terms
"person" and "persons" as used in this lease shall be deemed to include natural
persons, firms, corporations, partnerships, associations and any other private
or public entities, whether any of the foregoing are acting on their behalf or
in a representative capacity. The various terms which are defined in other
Articles of
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this lease or are defined in Schedules or Exhibits annexed hereto, shall have
the meanings specified in such other Articles, Exhibits and Schedules for all
purposes of this lease and all agreements supplemental thereto, unless the
context clearly indicates the contrary.
PARTNERSHIP TENANT
39. If Tenant is a partnership (or is comprised of two (2)or more persons,
individually or as co-partners of a partnership) or if Tenant's interest in this
lease shall be assigned to a partnership (or to two (2) or more persons,
individually or as co-partners of a partnership) pursuant to Article 20 (any
such partnership and such persons are referred to in this Section as
"Partnership Tenant"), the following provisions of this Section shall apply to
such Partnership Tenant: (a) the liability of each of the parties comprising
Partnership Tenant shall be joint and several, and (b) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by, any modifications of this lease which may hereafter be made, and by
any notices, demands, requests or other communications which may hereafter be
given, by Partnership Tenant or by any of the parties comprising Partnership
Tenant, and (c) any bills, statements, notices, demands, requests and other
communications given or rendered to Partnership Tenant or to any of the parties
comprising Partnership Tenant shall be deemed given or rendered to Partnership
Tenant and to all such parties and shall be binding upon Partnership Tenant and
all such parties, and (d) if Partnership Tenant shall admit new partners, all of
such new partners shall, by their admission to Partnership Tenant, be deemed to
have assumed performance of all of the terms, covenants and conditions of this
lease on Tenant's part to be observed and performed, and (e) Partnership Tenant
shall give prompt notice to Landlord of the admission of any such new partners,
and upon demand of Landlord, shall cause each such new partner to execute and
deliver to Landlord an agreement in form satisfactory to Landlord, wherein each
such new partner shall assume performance of all of the terms, covenants and
conditions of this lease on Tenant's part to be observed and performed (but
neither Landlord's failure to request any such agreement nor the failure of any
such new partner to execute or deliver any such agreement to Landlord shall
vitiate the provisions of subdivision (d) of this Section).
SUCCESSORS, ASSIGNS, ETC.
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<PAGE>
40. The terms, covenants, conditions and agreements contained in this
lease shall bind and inure to the benefit of Landlord and Tenant and their
respective heirs, distributees, executors, administrators, successors, and,
except as otherwise provided in this lease, their respective assigns.
BROKER
41. Landlord and Tenant represent that this lease was brought about by
Sutton & Edwards, Inc. as broker and all negotiations with respect to this lease
were conducted exclusively with said broker. Landlord and Tenant agree that if
any claim is made for commissions by any other broker through or on account of
any acts of Landlord or Tenant, Landlord or Tenant will hold each other free and
harmless from any and all liabilities and expenses in connection therewith,
including the respective party's reasonable attorney's fees. Landlord agrees to
pay Sutton & Edwards, Inc. a commission pursuant to separate agreement.
49
<PAGE>
CAPTIONS
42. The captions in this lease are included only as a matter of
convenience and for reference, and in no way define, limit or describe the scope
of this lease nor the intent of any provisions thereof.
NOTICE OF ACCIDENTS
43. Landlord and Tenant shall give each other notice, promptly after such
party learns thereof, of (i) any accident in or about the Premises, (ii) all
fires and other casualties within the Premises, (iii) all damages to or defects
in the Premises, including the fixtures, equipment and appurtenances thereof for
the repair of which Landlord might be responsible, and (iv) all damage to or
defects in any parts or appurtenances of the Building's sanitary, electrical,
heating, ventilating, air-conditioning and other systems located in or passing
through the Premises or any part thereof.
TENANT'S AUTHORITY TO ENTER LEASE
44. In the event that the Tenant hereunder is a corporation, Tenant
represents that the officer or officers executing this lease have the requisite
authority to do so. Landlord represents that the officer or officers executing
this lease have the requisite authority to do so.
RENEWAL OPTION
45. The Tenant shall have the right to be exercised as hereinafter
provided, to extend the term of this lease for one period of five (5) years (the
"Renewal Term") upon the following terms and conditions:
(A) That at the time of the exercise of such right and at the commencement
of the Renewal Term, Tenant shall not be in default beyond applicable notice and
cure periods provided herein for the cure thereof in the performance of any of
the terms, covenants or conditions which Tenant is required to perform under
this lease.
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(B) That Tenant shall notify Landlord in writing that Tenant intends to
exercise this option at least twelve (12) months prior to the termination of the
initial term set forth in Article 2 of this lease.
(C) That the Renewal Term shall be upon the same terms, covenants and
conditions as in this lease provided, except that (a) there shall be no further
option to extend this lease beyond the one (1) Renewal Term referred to above;
(b) the Premises shall be delivered in its then "as is" condition; and (c) the
Rent to be paid by Tenant during the Renewal Term shall be as follows:
During the first year of the Renewal Term, the Rent shall be the then fair
market annual minimum rent being received by Landlord for comparable space in
the Building, but in no event less than the Rent required to be paid by Tenant
during the first month of the last year of the Term of this lease annualized.
Said sum shall be payable in equal monthly installments.
During each of the second through fifth years of the Renewal Term, the Rent
shall be increased by three and one-half (3 1/2%) percent per annum over the
Rent payable for the prior year. Said sums shall be payable in equal monthly
installments.
"Fair market annual minimum rent" shall mean the rate Landlord generally
receives or that is received for comparable space in the Building. Fair market
annual minimum rent shall not mean "net effective rent to Landlord". In
determining fair market annual minimum rent, no adjustment shall be made in
consideration of and Tenant shall not be entitled to a credit for Tenant
improvements, brokerage commissions, rent concessions and other concessions
which Landlord may typically offer to other tenants.
This Renewal Option is personal to Assessment Solutions, Inc. and is non-
transferable by operation of law or otherwise, except as permitted under Article
20(C) herein.
RIGHT OF FIRST REFUSAL
46. Tenant shall have the right ("First Offer Right") to lease any space
that becomes available for lease in the Building during the first twelve (12)
months of the term of this Lease (each an "Additional Space"). In the event
that Landlord proposes to lease any Additional Space, Landlord shall notify
Tenant of the space to be offered (a "First Offer Notice"). Within five (5)
business days after receipt of the First Offer Notice by Tenant,
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Tenant may elect by notice to Landlord, to lease the Additional Space on the
date that is ten (10) days after delivery of the Additional Space to Tenant in
its "as is" condition. The Additional Space will be added to the Premises
(collectively, "Combined Premises") under this lease on the same terms and
conditions as the Premises pursuant to a lease modification agreement, except
that Tenant's "Proportionate Share" shall be equal to a fraction, the numerator
of which shall be the total number of rentable square feet contained in the
Combined Premises, as then constituted, and the denominator of which shall be
the total rentable square footage in the Building. Should Tenant fail to
exercise this right within the time and in the manner required above, or waive
such right in writing, Landlord may lease the Additional Space to a third party
without further obligations to Tenant including the obligation to notify Tenant
of additional space that may become available during such initial twelve (12)
month period.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed
this lease as of the day and year first above written.
Witness for Landlord: 320 EXPRESSWAY ASSOCIATES
__________________________ By:_______________________
Witness for Tenant: ASSESSMENT SOLUTIONS
INCORPORATED
__________________________ By:_______________________
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF )
On this day of , 1995, before me personally came
to me known, who being by me duly sworn, did depose and say that he resides at
, that he is the of Assessment Solutions Incorporated, the
corporation described in and which executed the foregoing instrument as
"Tenant"; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
_______________________________
Notary Public
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SCHEDULE "A"
(See Attached)
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<PAGE>
SCHEDULE "B"
LANDLORD'S CLEANING SERVICES AND MAINTENANCE OF PREMISES
(to be performed on all business days except those which are union holidays for
the employees performing cleaning services and maintenance in the Building and
grounds or those days in which the Building is closed)
I. CLEANING SERVICES - PUBLIC SPACES:
A. Floor of entrance lobby and public corridors will be vacuumed or swept and
washed nightly and waxed as necessary.
B. Entranceway glass and metal work will be washed and rubbed down daily.
C. Wall surfaces will be kept in polished condition.
D. Lighting fixtures will be cleaned and polished annually. Bulbs will be
replaced as needed.
E. Exterior surfaces and all windows of the building will be cleaned
quarterly.
II. CLEANING SERVICES - TENANT SPACES:
A. Floors will be swept and spot cleaned nightly. Carpets will be swept daily
with carpet sweeper and vacuumed weekly.
B. Office equipment, telephones, etc. will be dusted nightly.
C. Normal office waste in receptacles and ashtrays will be emptied nightly.
D. Interior surface of windows and sills will be washed and blinds dusted
quarterly.
E. There shall be regularly scheduled visits by a qualified exterminator.
F. Restrooms, the locker room, shower and kitchen will be washed and
disinfected once a day. The floors will be mopped as many times as required.
All brightwork and mirrors will be kept in
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polished condition. Dispensers will be continuously checked and receptacles
continuously emptied.
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III. EXTERIOR SERVICES:
A. Parking fields will be regularly swept, cleared of snow in excess of two
inches, and generally maintained so as to be well drained, properly surfaced and
striped.
B. All landscaping, gardening, exterior lighting and irrigation systems will
have regular care and servicing.
IV. EQUIPMENT SERVICE:
A. All air-conditioning and heating equipment will be regularly serviced and
maintained.
B. Plumbing and electrical facilities, doors, hinges and locks will be
repaired as necessary.
V. EXTRA CLEANING SERVICES
Tenant shall pay to Landlord, on demand, Landlord's charges for (a) cleaning
work in the Premises required because of (i) misuse or neglect on the part of
Tenant or its employees or visitors, (ii) use of portions of the Premises for
preparation, serving or consumption of food or beverages, or other special
purposes requiring greater or more difficult cleaning work than office areas;
(iii) unusual quantity of interior glass surfaces; (iv) non-building standard
materials or finishes installed by Tenant or at its request; (v) increases in
frequency or scope in any item set forth in Schedule B as shall have been
requested by Tenant; and (b) removal from the Premises and Building of (i) so
much of any refuse and rubbish of Tenant as shall exceed that normally
accumulated in the routine of ordinary business office activity and (ii) all of
the refuse and rubbish of any eating facility requiring special handling (wet
garbage).
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SCHEDULE "C"
1. Landlord shall have full and unrestricted access to all air-
conditioning and heating equipment, and to all other utility installations
servicing the Building and the Demised Premises. Landlord reserves the right
temporarily to interrupt, curtail, stop or suspend air-conditioning and heating
service, and all other utilities, or other services, because of Landlord's
inability to obtain, or difficulty or delay in obtaining, labor or materials
necessary therefor, or in order to comply with governmental restrictions in
connection therewith, or for any other cause beyond Landlord's reasonable
control. No diminution or abatement of Rent, additional rent, or other
compensation shall be granted to Tenant, nor shall this Lease or any of the
obligations of Tenant hereunder be affected or reduced by reason of such
interruptions, stoppages or curtailments, the causes of which are hereinabove
enumerated, nor shall the same give rise to a claim in Tenant's favor that such
failure constitutes actual or constructive, total or partial, eviction from the
Demised Premises, unless such interruptions, stoppages or curtailments have been
due to the arbitrary, willful or negligent act, or failure to act, of Landlord
or its agents.
2. Telephone and service shall be the responsibility of Tenant. Tenant
shall make all arrangements for telephone service with the company supplying
said service, including the deposit requirement for the furnishing of service.
Landlord shall not be responsible for any delays occasioned by failure of the
telephone company to furnish service.
3. At Landlord's option, it shall furnish and install all lighting tubes,
bulbs and ballasts used in the Premises and Tenant shall pay Landlord's
reasonable charges therefor, on demand, as additional rent.
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SCHEDULE "D"
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the Demised Premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Landlord. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards.
2. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No Tenant shall sweep or throw or permit to be swept or thrown from
the Premises any dirt or other substances into any of the corridors or halls,
elevators, or out of the doors or windows or stairways of the building, and the
Tenant shall not use, keep or permit to be used or kept any noxious gas or
substance in the Demised Premises, or permit or suffer the Demised Premises to
be occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds be kept in or about the Building. Smoking or
carrying lighted cigars or cigarettes in the elevators of the Building is
prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of the Landlord.
5. Except as otherwise provided in Paragraph 18 herein, no sign,
advertisement, notice or other lettering and/or window treatment shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the Demised Premises or the Building or on the inside of the Demised
Premises if the same is visible from the outside of the Demised Premises without
the prior written consent of the Landlord. In the event of the violation of the
foregoing by any Tenant, Landlord may remove same without any liability, and may
charge the expense incurred by such removal to Tenant or Tenants violating this
rule. Interior signs on doors and
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directory tables shall be inscribed, painted or affixed for each Tenant by
Landlord at the expense of such Tenant, and shall be of a size, color and style
acceptable to Landlord.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the Demised Premises or the Building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Landlord, and as Landlord may direct. No tenant shall lay linoleum
or other similar floor covering so that the same shall come in direct contact
with the floor of the Demised Premises and, if linoleum or other similar floor
covering is desired to be used, an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other water soluble material, the
use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any Tenant, nor shall any changes be made in existing
locks or in the mechanisms thereof. Each Tenant must, upon the termination of
his tenancy, restore to Landlord all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by, such Tenant, and in the event of
the loss of any keys, so furnished, such Tenant shall pay to Landlord the cost
thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the Premises only
through the service entrances and corridors, and only during hours and in a
manner approved by Landlord. Landlord reserves the right to inspect all freight
to be brought into the Building and to exclude from the Building all freight
which violates any of these Rules and Regulations or the lease of which these
Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and
each Tenant shall cooperate to prevent the same.
10. Landlord reserves the right to exclude from the building between the
hours of 6:00 P.M. and 8:00 A.M. and at all hours on Sundays and legal holidays,
all persons who do not present a pass to the building signed by Landlord.
Landlord will furnish passes to persons for whom any Tenant requires same in
writing. Each Tenant shall be responsible for all persons for whom he requires
such a pass and shall be liable to Landlord for all acts of such persons.
11. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office
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building, and upon written notice from Landlord, Tenant shall refrain from or
discontinue such advertising.
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12. Tenant shall not bring or permit to be brought or kept in or on the
Premises, any inflammable, combustible, hazardous or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors, to permeate in or
emanate from the Premises.
13. Tenant agrees to keep all entry doors closed at all times and to abide
by all rules and regulations issued by the Landlord with respect to such
services.
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EXHIBIT 10.2
REVOLVING CREDIT AGREEMENT dated as of July 22, 1997, between
ASI SOLUTIONS INCORPORATED, a Delaware corporation with its
principal place of business at 780 Third Avenue, New York, New York
10017 (the "Borrower") and FLEET BANK, N.A., a national banking
association, with an office at 300 Broad Hollow Road, Melville, New
York 11747 (the "Bank").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
-----------
1.1 Defined Terms. As used herein the following terms shall
-------------
have the following meanings:
"Accounts" shall mean those accounts arising out of the
--------
sale or lease of goods or the rendition of services by Assessment
or Proudfoot.
"Account Debtor" shall mean the person who is obligated on
--------------
or under an Account.
"Affiliate" as applied to any Person, means any other Person
---------
directly or indirectly through one or more intermediaries
controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person, means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract
or otherwise.
"Aggregate Outstandings" shall mean, at any time, the aggregate
----------------------
of (i) the principal amount of outstanding Revolving Credit Loans
and (ii) the aggregate of (y) the amount available to be drawn on
all outstanding Letters of Credit and (z) the amount of any
payments made by the Bank under any Letters of Credit that has not
been reimbursed by the Borrower.
"Agreement" shall mean this Revolving Credit Agreement, as
---------
the same from time to time may be amended, supplemented or
modified.
"Assessment" shall mean Assessment Solutions Incorporated,
----------
a New York corporation.
"Assessment Loans" shall mean those Revolving Credit Loans
----------------
used by the Borrower to make loans to Assessment, which loans will
be used by Assessment for working capital purposes.
<PAGE>
"Borrowing Base" shall mean 75% of Assessment's and
--------------
Proudfoot's Eligible Accounts Receivable from time to time
outstanding.
"Borrowing Base Certificate" shall mean a certificate
--------------------------
substantially in the form of Exhibit B hereto.
"Business Day" shall mean a day other than a Saturday,
------------
Sunday or other day on which commercial banks in New York City are
required or permitted by law to remain closed.
"Cleanup Laws" shall mean any Federal, state or local
------------
statute or regulation relating to hazardous or toxic wastes or
substances or the removal thereof.
"Collateral Requirement" shall mean, with respect to Permitted
----------------------
Acquisition Loans, cash or other collateral acceptable to the Bank
having a collateral value in the judgment of the Bank in accordance
with the Bank's policies sufficient to cover any shortfall between
the Aggregate Outstandings and the Borrowing Base.
"Commitment" shall mean the obligation of the Bank to
----------
make Revolving Credit Loans to, and to issue Letters of Credit at
the request of and for the account of the Borrower during the
Commitment Period pursuant to the terms hereof as such Commitment
is described in Section 2.1 hereof and is subject to reduction in
accordance with the terms hereof.
"Commitment Period" shall mean the period from and including
-----------------
the date hereof to and including the Termination Date or such
earlier date as the Commitment shall terminate as provided herein.
"Contractual Obligations" shall mean as to any Person, any
-----------------------
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is a
party or by which it or any of its property is bound.
"Controlled" and "Control" shall mean any partnership,
------------------------
corporation or other entity of which the Borrower, alone, or the
Borrower and/or one or more of its Subsidiaries, either has the
power to direct the management thereof or the power to direct at
least a majority of the voting interests.
"Default" shall mean any of the events specified in Section
-------
8, whether or not any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"Dollars" or "$" shall mean dollars in lawful currency of
------- -
the United States of America.
-2-
<PAGE>
"Eligible Accounts Receivable" shall mean those Accounts which
----------------------------
(i) are due and payable within thirty (30) days from the original
date of invoice, and which do not remain unpaid for more than
ninety (90) days from the original date of invoice, and (ii) have
been validly assigned to the Bank and comply with all of the terms,
conditions, warranties and representations made to the Bank under
this Agreement and the other Loan Documents; but Eligible Accounts
Receivable shall not include the following: (a) Accounts with
respect to which the Account Debtor is an officer, director,
employee, or agent of the Borrower, a Guarantor or an Affiliate;
(b) Accounts with respect to which goods are placed on consignment,
guaranteed sale, bill-and-hold, repurchase or return, or other
terms by reason of which the payment of the Account Debtor may be
conditional; (c) Accounts arising from invoices for deposits, and
rebills of amounts previously credited to the extent of credits
issued more than fifteen (15) days prior to such rebill; (d)
Accounts with respect to which the Account Debtor is not domiciled
in the United States of America unless such Account is fully
secured by an irrevocable letter of credit acceptable to the Bank
and assigned to the Bank; (e) Accounts with respect to which the
sale is on an installment sale, lease or other extended payment
basis; (f) Accounts with respect to which the Account Debtor is a
Federal, state, local or foreign governmental authority unless such
governmental authority is the United States of America or any
department, agency or instrumentality of the United States, and
Assessment or Proudfoot, as the case may be, complies with the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 203
et seq.); (g) all Accounts owing by any Account Debtor if
seventy-five (75%) percent or more of the Accounts due from such
Account Debtor are deemed not to be Eligible Accounts hereunder;
(h) Accounts with respect to which the Account Debtor is a
Subsidiary of, Affiliate of, or has common officers or directors
with the Borrower or a Guarantor; (i) Accounts with respect to
which the Bank does not for any reason have a perfected first
priority Lien; (j) Accounts with respect to which Assessment or
Proudfoot, as the case may be, is liable to the Account Debtor for
goods sold or services rendered by the Account Debtor to Assessment
or Proudfoot, as the case may be, to the extent of Assessment's or
Proudfoot's existing or potential liability to such Account Debtor;
(k) Accounts with respect to which the Account Debtor has disputed
any liability, or the Account Debtor has made any claim with
respect to any other Account due to Assessment or Proudfoot or the
Account is otherwise subject to any right of setoff, deduction,
breach of warranty or other defense, dispute or counterclaim by the
Account Debtor; (l) that portion of any Accounts representing late
fees, service charges or interest but only to the extent of such
portion; (m) Accounts of an Account Debtor where the Account Debtor
is located in New Jersey or Minnesota unless Assessment or
Proudfoot, as the case may be, (1) with respect to such state, has
received a Certificate of Authority to do business and is in good
standing in such state, or (2) has filed a Notice of Business
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<PAGE>
Activities Report with the New Jersey Division of Taxation or the
Minnesota Department of Revenue, as applicable, for the then
current year; (n) Accounts owed by any Account Debtor which is
insolvent or is the subject of an insolvency proceeding; (o) that
portion of any Accounts represented by contract rights, documents,
instruments, chattel paper or general intangibles; and (p) any and
all Accounts of an Account Debtor whose creditworthiness is not
satisfactory to the Bank in its sole and reasonable credit judgment
based on information available to the Bank. References to
percentages of all Accounts are based on dollar amount of Accounts,
and not number of Accounts.
"Environmental Laws" shall mean any Federal, state or local
------------------
statute or regulation relating to hazardous or toxic wastes or
substances or the removal thereof.
"ERISA" shall mean the Employee Retirement Income Security
-----
Act of 1974, as amended from time to time.
"Event of Default" shall mean any of the events specified in
----------------
Section 8, provided that any requirement for the giving of notice,
the lapse of time, or both, or any other condition, has been
satisfied.
"GAAP" shall mean generally accepted accounting
----
principles applied in a manner consistent with that employed in the
preparation of the financial statements described in Section 3.1.
"Governmental Authority" shall mean any nation or government,
----------------------
any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing.
"Guarantees" shall mean the guarantees to be executed by the
----------
Guarantors on the Bank's standard form.
"Guarantors" shall mean Assessment, Proudfoot, C3 Solutions
----------
Incorporated and each entity required to guarantee pursuant to
Section 5.9 hereof.
"Indebtedness" shall mean, with respect to any Person, (a)
------------
all obligations of such Person for borrowed money or with respect
to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations of such Person for the deferred
purchase price of property or services, except current accounts
payable arising in the ordinary course of business and not overdue
beyond such period as is commercially reasonable for such Person's
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<PAGE>
business, (d) all obligations of such Person under conditional sale
or other title retention agreements relating to property purchased
by such Person, (e) all payment obligations of such Person with
respect to interest rate or currency protection agreements, (f) all
obligations of such Person as an account party under any letter of
credit or in respect of bankers acceptances, (g) all obligations of
any third party secured by property or assets of such Person
(regardless of whether or not such Person is liable for repayment
of such obligations), (h) all guarantees of such Person and (i) the
redemption price of all redeemable preferred stock of such Person,
but only to the extent that such stock is redeemable at the option
of the holder or requires sinking fund or similar payments at any
time prior to the Termination Date.
"Letter of Credit" or "Letters of Credit" shall mean stand-by
---------------- -----------------
letters of credit issued by the Bank pursuant to Section 2.4 hereof for the
account of Assessment and the existing stand-by letters of credit
previously issued by the Bank and listed on Schedule I hereto.
"Lien" shall mean any mortgage, pledge, security interest,
----
hypothecation, assignment, deposit arrangement, encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction).
"Loan Documents" shall mean this Agreement and each
--------------
document, agreement and instrument executed in connection herewith
or pursuant hereto together with each document, agreement and
instrument made by the Borrower or any Guarantor with or in favor
of or owing to the Bank.
"Obligations" shall have the meaning set forth in Section
-----------
9.1.
"Permitted Acquisition" shall mean an acquisition by the
---------------------
Borrower by merger, consolidation or by purchase of a voting
majority of the stock of another Person or the purchase of all or
substantially all of the assets of another Person (or of a division
or other operating component of another Person) (an "Acquisition")
which, except as otherwise provided below, shall be subject to the
Bank's approval in all respects. The Bank's prior approval of an
Acquisition shall not be required for an Acquisition of a business
directly related to the business conducted by the Borrower on the
date hereof provided that prior to and after giving effect to such
Acquisition, the Borrower is in compliance with all provisions of
this Agreement including, without limitation, Section 6 and Section
-5-
<PAGE>
7.1 hereof. No more than two Acquisitions shall be permitted in
any one fiscal year of the Borrower.
"Permitted Acquisition Loan Sublimit" shall mean $5,000,000.
-----------------------------------
"Permitted Acquisition Loans" shall mean those Revolving
---------------------------
Credit Loans used to finance Permitted Acquisitions.
"Person" shall mean any individual, corporation,
------
partnership, joint venture, trust, unincorporated organization or
any juridical entity, or a government or state or any agency or
political subdivision thereof.
"Plan" shall mean any plan described in Section 4021(a) of
----
ERISA in respect of which the Borrower is an "employer" as defined
in Section 3(5) of ERISA.
"Post Default Rate" shall mean at any time a rate of interest
-----------------
equal to four percent (4%) per annum in excess of the rate that
would then be applicable to the Revolving Credit Loans.
"Prime Rate" shall mean the variable per annum rate of
----------
interest so designated from time to time by the Bank as its prime
rate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer.
"Proudfoot" shall mean Proudfoot Reports Incorporated, a New
---------
York corporation.
"Proudfoot Loan Sublimit" shall mean $500,000.00.
-----------------------
"Proudfoot Loans" shall mean those Revolving Credit Loans
---------------
used by the Borrower to make loans to Proudfoot, which loans will
be used by Proudfoot for working capital purposes.
"Real Property" shall mean any real property owned or leased
-------------
by the Borrower or any of its Subsidiaries or any Guarantor or any
of its Subsidiaries.
"Reportable Event" shall mean any of the events set forth in
----------------
Section 4043(b) of ERISA or the regulations thereunder.
"Requirements of Law" shall mean as to any Person, the
-------------------
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any
of its property is subject.
-6-
<PAGE>
"Revolving Credit Loan" shall mean a Loan made pursuant to
---------------------
Section 2.1 hereof.
"Revolving Credit Note" shall mean the Note referred to in
---------------------
Section 2.2 hereof.
"Security Agreement" shall mean, collectively, the Security
------------------
Agreements referred to in Section 9.2 hereof on the Bank's standard
form.
"Specified Person" shall mean either the Borrower or any of
----------------
its Subsidiaries or any Guarantor or any of its Subsidiaries.
"Subsidiary" or "Subsidiaries" of any Person shall mean any
---------- ------------
corporation or corporations of which the Person alone, or the
Person and/or one or more of its Subsidiaries, owns, directly or
indirectly, at least a majority of the securities having ordinary
voting power for the election of directors.
"Tangible Net Worth" shall mean the sum of capital surplus,
------------------
earned surplus and capital stock minus deferred charges,
intangibles and treasury stock, all determined in accordance with
GAAP.
"Termination Date" shall mean September 30, 1999 or, if such
----------------
date is not a Business Day, the Business Day next succeeding such
date.
1.2 Accounting Terms. As used herein and in any certificate or
----------------
other document made or delivered pursuant hereto, accounting terms
not specifically defined herein shall have the respective meanings
given to them under GAAP.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT.
------------------------------
2.1 Commitment. Subject to the terms and conditions hereof,
----------
the Bank agrees to make revolving credit loans to the Borrower (the
"Revolving Credit Loans") and to issue Letters of Credit, for the
account of Assessment from time to time during the Commitment
Period provided that the Aggregate Outstandings shall not exceed
the lesser of (i) $10,000,000 or (ii) (y) if no Permitted
Acquisition Loans are outstanding, the Borrowing Base or (z) if
Permitted Acquisition Loans are outstanding, the sum of Borrowing
Base and the Collateral Requirement (but only to the extent of and
not in excess of the amount of the Permitted Acquisition Loans).
The Commitment will be subject to the following sublimits: (i)
Proudfoot Loans shall not exceed the Proudfoot Loan Sublimit at any
one time outstanding; (ii) Letters of Credit shall not exceed
$1,260,000 in aggregate stated amount; and (iii) Permitted
-7-
<PAGE>
Acquisition Loans shall not exceed $4,000,000 with respect to any
one Permitted Acquisition and shall not exceed the Permitted
Acquisition Loan Sublimit in the aggregate in any one fiscal year
of the Borrower. During the Commitment Period the Borrower may use
the Commitment for obtaining Revolving Credit Loans by borrowing,
paying, prepaying in whole or in part and reborrowing on a
revolving basis, all in accordance with the terms and conditions
hereof.
2.2 Revolving Credit Note. The Revolving Credit Loans made by the
---------------------
Bank to the Borrower pursuant to Section 2.1 hereof shall be
evidenced by a promissory note of the Borrower substantially in the
form of Exhibit A hereto with appropriate insertions (the
"Revolving Credit Note"), payable to the order of the Bank and
representing the obligation of the Borrower to pay the lesser of
(a) the amount of the Commitment or, (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Bank to
the Borrower, with interest thereon as hereinafter prescribed. The
Revolving Credit Note shall (i) be dated the date of this
Agreement, (ii) be stated to mature on the Termination Date and
(iii) bear interest with respect to the unpaid principal balance
thereof from time to time outstanding at a rate per annum equal to
the Prime Rate (which interest rate will change when and as the
Prime Rate changes). Interest shall be computed on the basis of a
360-day year for actual days elapsed and shall be payable on the
first day of each month commencing with the first such date
following the date of the making of a Revolving Credit Loan and on
the Termination Date. After any stated or accelerated maturity,
the Revolving Credit Note shall bear interest at the rate set forth
in Section 2.9(b) hereof.
2.3 Procedure for Borrowing. The Borrower may borrow under the
-----------------------
Commitment during the Commitment Period on any Business Day by
giving the Bank irrevocable notice of a request for a Revolving
Credit Loan hereunder not less than one nor more than five Business
Days before a proposed borrowing, setting forth (i) the amount of
the Loan request, which shall not be less than $100,000, (ii) the
requested borrowing date, (iii) whether a Proudfoot Loan, an
Assessment Loan or a Permitted Acquisition Loan and (iv) if a
Permitted Acquisition, evidence of compliance with the Collateral
Requirement if the Aggregate Outstandings would be in excess of the
Borrowing Base after giving effect to such Permitted Acquisition
Loan. Such notice shall be written (including, without limitation,
via facsimile transmission) and shall be sufficient if received by
1:00 p.m. on the date on which such notice is to be given. If any
such request is sent by facsimile it shall be confirmed in writing
sent by the Borrower to the Bank within two Business Days
thereafter. Unless notification is otherwise furnished by the
Borrower to the Bank (in a manner consistent with the requirements
of this Section 2.3), Revolving Credit Loans will be made by
-8-
<PAGE>
credits to the Borrower's demand deposit account maintained with
the Bank.
2.4 Standby Letters of Credit.
-------------------------
(a) Subject to the limitations of Section 2.1 hereof and
as herein provided, the Borrower may from time to time during the
Commitment Period, upon one day's notice, request the issuance by
the Bank of Letters of Credit for the account of Assessment.
(i) Letter of Credit Fees. The Borrower agrees to pay
---------------------
for the issuance of each Letter of Credit (A) the Bank's customary
charge on the issuance of each Letter of Credit, (B) a fee equal to
1.5% of the amount drawn thereunder (provided, however, that such
fee shall be not less than $250.00) and payable at the time of such
drawing, and (C) any other standard fees and commissions routinely
charged in connection therewith.
(ii) Reimbursement. In the event the Bank makes
-------------
payment to the beneficiary of any Letter of Credit in accordance
with the terms thereof, the Borrower agrees to reimburse the Bank
therefor on the same day such payment is made, all as more fully
set forth in, and subject to the terms and conditions of, any
applicable Letter of Credit Application and Agreement and/or
Continuing Agreement for the Issuance of Standby Letters of Credit,
each of which agreements is fully incorporated herein by reference
thereto.
2.5 Commitment Fee. As additional compensation for the
--------------
Commitment on the revolving basis provided for herein, the Borrower
agrees to pay the Bank a commitment fee for the Commitment Period
at the rate of 1/4 of 1% per annum on the average daily unused
portion of the Commitment hereunder. Such commitment fee shall be
payable quarterly, on the last day of each March, June, September
and December during the Commitment Period, commencing September 30,
1997, and on the Termination Date. If the Borrower so fails to pay
any such amount to the Bank the obligations to make such payment
shall bear interest from such date not paid when due at the Post
Default Rate. The obligation to so pay interest shall not be
construed so as to waive the requirement to pay the commitment fees
as hereinabove set forth.
2.6 Regulatory Changes in Capital Requirements. If any existing or
------------------------------------------
future law, regulation or guideline or the interpretation thereof
by any court or administrative or governmental authority charged
with the administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of
any such authority, imposes, modifies, deems applicable or results
in the application of, any capital maintenance, capital ratio or
similar requirement against loan commitments made by the Bank (or
participations therein) or the Bank in anticipation of the
-9-
<PAGE>
effectiveness of any capital maintenance, capital ratio or similar
requirement takes reasonable action to enable itself to comply
therewith, and the result thereof is to impose upon the Bank or
increase any capital requirement applicable as a result of the
making or maintenance of the Commitment or participations therein
(which imposition of or increase in capital requirements may be
determined by the Bank's reasonable allocation of the aggregate of
such capital impositions or increases) then, upon demand by the
Bank, the Borrower shall immediately pay to the Bank from time to
time as specified by the Bank additional commitment fees which
shall be sufficient to compensate the Bank for such impositions of
or increases in capital requirements, together with interest on
each such amount from the date demanded until payment in full
thereof at the Post Default Rate. A certificate setting forth in
reasonable detail the amounts necessary to compensate the Bank as
a result of any imposition of or increase in capital requirements
submitted by the Bank to the Borrower shall be conclusive, absent
manifest error or bad faith, as to the amount thereof. For
purposes of this Section 2.6, (a) in calculating the amount
necessary to compensate the Bank for any imposition of or increase
in capital requirements, the Bank shall be deemed to be entitled to
a rate of return on capital (after Federal, state and local taxes)
of fifteen percent (15%) per annum, and (b) all references to the
"Bank" shall be deemed to include any participant in the
Commitment.
2.7 Termination or Reduction of Commitment. The Borrower shall have
--------------------------------------
the right, upon not less than three Business Days' irrevocable
written notice, to terminate the Commitment or, from time to time,
to reduce the amount of the Commitment, provided that (a) any such
reduction (i) shall be in the minimum amount of $100,000 or a
multiple thereof, (ii) shall reduce permanently the amount of the
Commitment then in effect, and (iii) shall be accompanied by
prepayment of the Revolving Credit Loans outstanding to the extent,
if any, that the Loans then outstanding exceed the amount of the
Commitment as then reduced, together with accrued interest on the
amount so prepaid to and including the dates of each such
prepayment and payment of any unpaid commitment fee then accrued
hereunder, and (b) any such termination of the Commitment shall be
accompanied by prepayment in full of the Revolving Credit Loans
and all obligations in respect of Letters of Credit outstanding and
together with accrued interest thereon to and including the date of
prepayment and the payment of any unpaid commitment fee then
accrued hereunder.
2.8 Prepayment.
----------
(a) Voluntary. The Borrower may prepay any Revolving
Credit Loan in whole or in part without premium or penalty;
provided, however, that each partial prepayment on account of any
Revolving Credit Loan shall be in an amount not less than $100,000.
-10-
<PAGE>
Any amount prepaid on account of a Revolving Credit Loan may be
reborrowed in accordance with the provisions of Section 2.1 hereof.
(b) Mandatory. If, at any time, the Aggregate
---------
Outstandings exceed the Borrowing Base (except to the extent of
Permitted Acquisition Loans provided the sum of the Borrowing Base
and the Collateral Requirement to the extent of the amount of the
Permitted Acquisition Loans is met), within five Business Days of
the first day there exists such excess the Borrower shall make
payment to the Bank in an amount equal to such excess. Such
payment shall be applied to reduce the aggregate unpaid principal
balance of Revolving Credit Loans then outstanding. Each
prepayment shall be made together with payment of accrued interest
on the amount prepaid to and including the date of prepayment.
2.9 Payments.
--------
(a) All payments (including prepayments) to be made by
the Borrower on account of principal or interest with respect to
any Revolving Credit Loan or on account of fees or any other
obligations of the Borrower to the Bank hereunder shall be made to
the Bank at the office of the Bank set forth in Section 10.1 hereof
or at such other place as the Bank may from time to time designate
in writing in lawful money of the United States of America in
immediately available funds. The Borrower hereby authorizes and
directs the Bank to charge any account of the Borrower maintained
at any office of the Bank for any such payments. If any payment to
be so made hereunder, or under the Revolving Credit Note, becomes
due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day and, to the
extent permitted by applicable law, interest thereon shall be
payable at the then applicable rate during such extension.
(b) If all or a portion of the principal or interest of
any Revolving Credit Loan shall not be paid when due (whether at
the stated or any accelerated maturity of such Revolving Credit
Loan) or if any fee or other amount due hereunder shall not be paid
when due, all Revolving Credit Loans, and such interest, fee or
amount due hereunder, to the extent permitted by applicable law,
shall bear interest (payable on demand, and in any event on the
last day of each month, and computed daily on the basis of a 360-
day year for actual days elapsed). In no event, however, shall
interest payable hereunder be in excess of the maximum rate of
interest permitted under applicable law. The obligation to so pay
interest upon any reimbursement obligation of the Borrower to the
Bank shall not be construed so as to waive the requirement for
reimbursement on the same date that payment is made by the Bank as
set forth in this Agreement.
(c) The Borrower hereby expressly authorizes the Bank to
record on the schedule attached to the Revolving Credit Note the
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<PAGE>
amount and date of each Revolving Credit Loan, the rate of interest
thereon, the date and amount of each payment of principal and the
unpaid principal balance; provided, however, that the failure of
the Bank to make any such notation shall not in any manner affect
the obligation of the Borrower to repay any Loan in accordance with
the terms hereof. All such notations shall be presumed to be
correct.
2.10 Use of Proceeds. The proceeds of Revolving Credit Loans
---------------
shall be used by the Borrower to finance working capital of its
Subsidiaries, Assessment, to the extent of $10,000,000 and
Proudfoot, to the extent of the Proudfoot Loan Sublimit and to
finance Permitted Acquisitions to the extent of the Permitted
Acquisition Loan Sublimit.
SECTION 3. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Bank to enter into this Agreement and
to make the financial accommodations herein provided for, the
Borrower hereby covenants, represents and warrants to the Bank
that:
3.1 Financial Condition. The consolidated and consolidating
-------------------
balance sheets of the Borrower and its Subsidiaries as at 3/31/97,
and the related consolidated and consolidating statements of
income, retained earnings and cash flows for the fiscal year ended
on such date, certified by Coopers & Lybrand, copies of which
certified statements have heretofore been furnished to the Bank,
are complete and correct and present fairly the financial condition
of the Borrower and its Subsidiaries as at such date, for the
fiscal year then ended. Such certified financial statements,
including schedules and notes thereto, have been prepared in
accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries has any material contingent obligations, contingent
liabilities or liabilities for taxes, long-term leases or unusual
forward or long-term commitments, which are not reflected in the
foregoing certified statements or in the notes thereto. Since the
date of the aforementioned financial statements, there has been no
material adverse change in the business, operations, assets or
financial or other condition of the Borrower or any of its
Subsidiaries.
3.2 Corporate Existence; Compliance with the Law. The Borrower, each
--------------------------------------------
Guarantor and each of their Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has the corporate power and
authority and the legal right to own and operate its property, and
to conduct the business in which it is currently engaged, (c) is
duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership or operation of
-12-
<PAGE>
property or the conduct of its business require such qualification,
and (d) is in compliance with all Requirements of Law in all
material respects.
3.3 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
Borrower has the corporate power and authority and the legal right to make,
execute, deliver and perform its obligations under this Agreement,
its Security Agreement and the Revolving Credit Note, and to borrow
hereunder and has taken all necessary corporate action to authorize
the borrowings on the terms and conditions of this Agreement, its
Security Agreement and the Revolving Credit Note and to authorize
the execution, delivery and performance of this Agreement, its
Security Agreement and the Revolving Credit Note. No consent or
authorization of, filing with, or other act by or in respect of any
other Person (including stockholders and creditors of the Borrower)
or any Governmental Authority, is required in connection with the
borrowings hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement, its Security
Agreement or the Revolving Credit Note. This Agreement, its
Security Agreement and the Revolving Credit Note will be duly
executed and delivered on behalf of the Borrower and this
Agreement, its Security Agreement and the Revolving Credit Note,
when executed and delivered, will each constitute a legal, valid
and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally.
3.4 Power, Authorization, Enforceable Obligations of Guarantors. Each
-----------------------------------------------------------
Guarantor has the power and authority and the legal right to make,
deliver and perform its Guarantee and Security Agreement and the
transactions contemplated thereby and has taken all necessary
corporate action to authorize the execution, delivery and
performance of its Guarantee and Security Agreement. No consent or
authorization of, filing with, or other act by or in respect of any
other Person (including stockholders and creditors of the
Guarantors) or any Governmental Authority is required in connection
with the execution, delivery, performance, validity or
enforceability of such Guarantee or Security Agreement. Each
Guarantee and each Security Agreement has been duly executed and
delivered by the respective parties thereto, and each such document
constitutes a legal, valid and binding obligation of the respective
Guarantor enforceable against such Guarantor in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.
3.5 No Legal Bar. The execution, delivery and performance of
------------
this Agreement, the Security Agreement and the Revolving Credit
Note and the borrowings hereunder and the use of the proceeds
-13-
<PAGE>
thereof by the Borrower and the execution, delivery and performance
of the Guarantees and the Security Agreements by the Guarantors,
will not violate any Requirement of Law or any Contractual
Obligation of the Borrower or any Guarantor, and will not result
in, or require, the creation or imposition of any Lien on any of
its properties or revenues pursuant to any Requirement of Law or
Contractual Obligation except those in favor of the Bank provided
herein.
3.6 No Material Litigation. No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is
pending by or against any Specified Person or against any of their
properties or revenues (a) with respect to this Agreement, the
Security Agreements, the Revolving Credit Note, or the Guarantee or
any of the transactions contemplated hereby or thereby, or (b)
which is likely to have a material adverse effect on the business,
operations, property or financial or other condition of the
Borrower, any Guarantor or any of the respective Subsidiaries.
3.7 No Default. No Specified Person is in default under or
----------
with respect to any Contractual Obligation in any respect which
could be materially adverse to the business, operations, property
or financial or other condition of the Borrower, any Guarantor or
any of their respective subsidiaries, or which could materially and
adversely affect the ability of (i) the Borrower to perform its
obligations under this Agreement, its Security Agreement or the
Note or (ii) any Guarantor to perform its obligations under its
Guarantee or Security Agreement. No Default or Event of Default
has occurred and is continuing.
3.8 No Burdensome Restrictions. No Contractual Obligation of any
--------------------------
Specified Person and no Requirement of Law materially adversely
affects, or insofar as the Borrower may reasonably foresee may so
affect, the business, operations, property or financial or other
condition of any such Specified Person.
3.9 Taxes. The Borrower and the Guarantors have filed or
-----
caused to be filed all tax returns which to the knowledge of the
Borrower are required to be filed, and have paid all taxes shown to
be due and payable on said returns or on any assessments made
against them or any of their property.
3.10 Federal Regulations. The Borrower is not engaged nor will it
-------------------
engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to
time hereafter in effect. No part of the proceeds of any Revolving
Credit Loans hereunder will be used for "purchasing" or "carrying"
"margin stock" as so defined or for any purpose which violates, or
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<PAGE>
which would be inconsistent with, the provisions of the Regulations
of such Board of Governors.
3.11 Environmental Matters.
---------------------
(a) To the best of the Borrower's knowledge, none of the
Real Property contains or has previously contained, any hazardous
or toxic waste or substances or underground storage tanks.
(b) To the best of the Borrower's knowledge, the Real
Property is in compliance with all applicable Federal, state and
local environmental standards and requirements affecting such Real
Property, and there are no environmental conditions which could
interfere with the continued use of the Real Property.
(c) Neither the Borrower nor any of its Subsidiaries nor
any Guarantor has received any notices of violations or advisory
action by regulatory agencies regarding environmental control
matters or permit compliance.
(d) To the best of the Borrower's knowledge, hazardous
waste has not been transferred from any of the Real Property to any
other locations which is not in compliance with all applicable
environmental laws, regulations or permit requirements.
(e) To the best of the Borrower's knowledge, with
respect to the Real Property, there are no proceedings,
governmental administrative actions or judicial proceedings pending
or contemplated under any Federal, state or local law regulating
the discharge of hazardous or toxic materials or substances into
the environment, to which the Borrower or any of its Subsidiaries
is named as a party.
SECTION 4. CONDITIONS PRECEDENT.
--------------------
4.1 Conditions of Initial Extension of Credit. The obligation of the
-----------------------------------------
Bank to make the initial extension of credit to the Borrower
hereunder is subject to the satisfaction of the following
conditions precedent:
(a) Revolving Credit Note. The Bank shall have received the
---------------------
Revolving Credit Note and the Letter of Credit Application and
Agreement conforming to the requirements hereof and duly executed
by the Borrower.
(b) Guarantees. The Bank shall have received the
----------
Guarantees duly executed by the Guarantors.
(c) Security Agreements. The Bank shall have received the
-------------------
Security Agreements from the Borrower and the Guarantors, together
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<PAGE>
with UCC-1 financing statements or UCC-3 amendments executed by
each such entity in all appropriate jurisdictions in favor of the
Bank.
(d) Borrowing Base Certificate. The Bank shall have received
--------------------------
and satisfactorily reviewed a Borrowing Base Certificate.
(e) Legal Opinion. The Bank shall have received a
-------------
favorable opinion of counsel to the Borrower and Guarantors
covering such matters incident to the transactions contemplated by
this Agreement as the Bank shall reasonably require.
(f) Certified Copies and Other Documents. The Bank shall have
------------------------------------
received such certificates and other documents relating to the
Borrower and the Guarantors with respect to the matters herein
contemplated as the Bank may reasonably request, including but not
limited to:
(i) With respect to the Borrower and each
Guarantor, its certificate of incorporation certified by the
Secretary of State of the Borrower's and each Guarantor's state of
incorporation;
(ii) With respect to the Borrower and each
Guarantor, certificates of good standing from the Secretary of
State of the Borrower's and each Guarantor's state of incorporation
and from each jurisdiction in which the Borrower and each Guarantor
does business;
(iii) An Officers' Certificate of the Borrower dated
the date of this Agreement certifying, (w) true and correct copies
of the by-laws and any amendments thereto of the Borrower as in
effect on the date of adoption of the resolutions referred to in
(x) of this subsection (iii), (x) true and correct copies of
resolutions adopted by the board of directors of the Borrower (1)
authorizing the Revolving Credit Loans from the Bank hereunder and
the execution, delivery and performance by the Borrower of this
Agreement and any other Loan Document executed in connection
herewith and the granting of the security interest as contemplated
by the Borrower's Security Agreement, (2) approving forms in
substantially execution form of this Agreement and the other Loan
Documents, and (3) authorizing officers of the Borrower to execute
and deliver this Agreement and the other Loan Documents and any
related documents, (y) the incumbency and specimen signatures of
the officers of the Borrower executing any documents delivered to
the Bank by the Borrower in connection with the Revolving Credit
Loans, and (z) the truth of the representations and warranties
contained in Section 3 hereof;
(iv) An Officers' Certificate of each Guarantor
dated the date of this Agreement certifying (v) true and correct
-16-
<PAGE>
copies of the by-laws and any amendments thereto of such Guarantor
as in effect on the date of adoption of the resolutions referred to
in (v) of this subsection (iv), (w) true and correct copies of the
resolutions adopted by the board of directors of such Guarantor (1)
authorizing the execution, delivery and performance by such
Guarantor of its Guarantee and Security Agreement and the granting
of the security interest as contemplated by such Guarantor's
Security Agreement, (2) approving forms in substantially execution
form of the Guarantee and the Security Agreement and (3)
authorizing officers of such Guarantor to execute and deliver its
Guarantee and Security Agreement and any related documents, (x)
true and correct copies of the consents of shareholders authorizing
such Guarantor's Guarantee and Security Agreement (y) the
incumbency and specimen signatures of the officers of the Guarantor
executing its Guarantee and Security Agreement and (z) the truth of
the representations and warranties contained in Section 3 hereof.
(g) Additional Matters. All other documents and legal
------------------
matters in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Bank
and its counsel.
4.2 Conditions to All Loans. The obligation of the Bank to make
-----------------------
any Revolving Credit Loan or to issue any Letter of Credit
(including the initial Loan and Letter of Credit) to be made by it
hereunder is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. The representations and
------------------------------
warranties made by the Borrower herein or which are contained in
any certificate, document or financial or other statement furnished
at any time under or in connection herewith, shall be correct on
and as of the borrowing date for such extension of credit as if
made on and as of such date.
(b) No Default or Event of Default. No Default or Event of
------------------------------
Default shall have occurred and be continuing on the date an
extension of credit is to be made or after giving effect to the
extension of credit to be made on such date.
(c) Compliance with Borrowing Base. After taking into account
------------------------------
the Revolving Credit Loan or extension of credit to be made, all
outstanding extensions of credit together with the requested
extension of credit shall not exceed the Borrowing Base (except to
the extent of Permitted Acquisition Loans).
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of each
such borrowing that the conditions in clauses (a), (b) and (c) of
this Section have been satisfied.
-17-
<PAGE>
SECTION 5. AFFIRMATIVE COVENANTS.
---------------------
The Borrower hereby agrees that, so long as the Commitment
remains in effect, the Revolving Credit Note or any Letter of
Credit remains or remain outstanding and unpaid, or any amount is
owing to the Bank hereunder, the Borrower will and will cause each
Specified Person as applicable to:
5.1 Corporate Existence and Qualification. Take the necessary steps
-------------------------------------
to preserve its corporate existence and its right to conduct
business in all states in which the nature of its business requires
qualification to do business.
5.2 Financial Information and Compliance Certificates.
-------------------------------------------------
(a) Keep its books of account in accordance with good
accounting practices and furnish to the Bank within 120 days after
the last day of each fiscal year, the 10-K of the Borrower and its
Subsidiaries and the consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries as at such last day of the
fiscal year and related consolidated and consolidating statements
of income, retained earnings and cash flows for such fiscal year
each prepared in accordance with GAAP consistently applied and
certified by Coopers & Lybrand or another firm of independent
certified public accountants satisfactory to the Bank; and within
60 days after the close of each of the first three quarters of each
fiscal year, the 10-Q of the Borrower and its Subsidiaries and the
consolidated balance sheets of the Borrower and its Subsidiaries,
and related consolidated statements of income and retained earnings
and cash flows of the Borrower and its Subsidiaries as of the last
day of and for such quarter and for the period of the fiscal year
ended as of the close of the particular quarter, all such quarterly
statements to be in reasonable detail, and certified by the chief
financial or accounting officer of the Borrower as having been
prepared in accordance with GAAP (subject to year-end adjustments).
The Borrower will also, with reasonable promptness, furnish such
other data as may be reasonably requested by the Bank and will at
all times and from time to time permit the Bank by or through any
of its officers, agents, employees, attorneys or accountants to
inspect and make extracts from such Borrower's books and records.
(b) At the same time as it delivers the financial
statements called for by Section 5.2(a), deliver a certificate of
the chief financial officer of the Borrower evidencing a
computation of compliance with the provisions of Section 6 hereof
and stating that in each case except as disclosed in such
certificate, the person making such certificate has no knowledge of
any Default or Event of Default. Together with their delivery of
annual certified financial statements, the Borrower's certified
public accountant shall also deliver such a certificate, which
shall be addressed to the Borrower and the Bank.
-18-
<PAGE>
(c) Deliver to the Bank for Assessment and Proudfoot, an
accounts receivable agings accompanied by a Borrowing Base
Certificate indicating a computation of the Borrowing Base monthly
(not later than 15 days after the last day of each month) covering
the period ending the last day of the immediately preceding month.
(d) Deliver to the Bank within 15 days after the end of
each month for any month in which Permitted Acquisition Loans are
outstanding, a certificate in form and detail satisfactory to the
Bank evidencing compliance with the Collateral Requirement.
(e) Within 10 days of the chief financial officer of the
Borrower obtaining knowledge of any Default, if such Default is
then continuing, the Borrower shall furnish to the Bank a
certificate of the chief financial officer of the Borrower
setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto.
5.3 Insurance. Maintain insurance with responsible and
---------
reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same
general areas in which the Borrower operates and naming the Bank as
an additional insured and loss payee thereon as its interest may
appear.
5.4 Preservation of Properties; Compliance with Law. Maintain and
-----------------------------------------------
preserve all of its properties which are used or which are useful
in the conduct of its business in good working order and condition,
ordinary wear and tear excepted and comply with all Requirements of
Law.
5.5 Taxes. Duly pay and discharge all taxes or other claims
-----
which might become a lien upon any of its property except to the
extent that any thereof are being in good faith appropriately
contested with adequate reserves provided therefor.
5.6 Maintain Operating Accounts. Maintain all of its primary
---------------------------
operating accounts with the Bank.
5.7 Notice of Litigation. Promptly notify the Bank in writing of
--------------------
any litigation, legal proceeding or dispute affecting the Borrower
or any Subsidiary which is likely to have a material adverse effect
on the financial condition, properties or operations of the
Borrower or such Subsidiary, whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding,
however, any actions relating to workers' compensation claims or
negligence claims relating to use of motor vehicles, if fully
covered by insurance, subject to deductibles).
-19-
<PAGE>
5.8 Indemnity (Environmental Matters). Indemnify the Bank against
---------------------------------
any liability, loss, cost, damage, or expense (including, without
limitation, reasonable attorneys' fees) arising from (i) the
imposition or recording of a lien by any local, state, or Federal
government or governmental agency or authority pursuant to any
Cleanup Laws; (ii) claims of any private parties regarding
violations of Cleanup Laws; and (iii) costs and expenses
(including, without limitation, reasonable attorneys' fees and fees
incidental to the securing of repayment of such costs and expenses)
incurred by any Specified Person or the Bank with any statute,
regulation or order issued pursuant to any Cleanup Laws by any
local, state or Federal government or governmental agency or
authority.
5.9 New Subsidiaries. Cause any Subsidiary formed after the date
----------------
of this Agreement to execute and deliver to the Bank a Guarantee
and Security Agreement and obtain or cause to be obtained
resolutions authorizing same and shareholder consents thereto.
SECTION 6. FINANCIAL COVENANTS
-------------------
The Borrower hereby agrees that, so long as the commitment
remains in effect, the Revolving Credit Note or any Letter of
Credit remains or remain outstanding and unpaid, or any other
amount is owing to the Bank hereunder, the Borrower and its
Subsidiaries on a consolidated basis will:
6.1 Current Ratio. Maintain at all times a ratio of
-------------
consolidated current assets to consolidated current liabilities in
a proportion not less than 1.5 to 1.0 (consolidated current assets
and consolidated current liabilities to be determined in accordance
with GAAP).
6.2 Tangible Net Worth. Maintain at all times Tangible Net Worth
------------------
of not less than $1.00.
6.3 Net Worth. Maintain at all times net worth of not less
---------
than $13,000,000.
6.4 Debt to Worth Ratio. Maintain at all times a ratio of total
-------------------
consolidated liabilities to consolidated net worth less officer
loans receivable of not more than 1.7 to 1.0.
6.5 Minimum Working Capital. Maintain at all times an excess of
-----------------------
consolidated current assets over consolidated current liabilities
in an amount not less than $3,000,000.
-20-
<PAGE>
6.6 Interest Coverage Ratio. Maintain at all times a ratio of
-----------------------
consolidated earnings before interest and taxes to consolidated
interest expense of at least 5.0 to 1.0.
6.7 Minimum Cash Flow Coverage Ratio. Maintain as at the last day
--------------------------------
of each fiscal year, a ratio of earnings before interest, taxes,
depreciation and amortization for such fiscal year to interest
expense plus the current portion of long term debt of at least 1.5
to 1.0 ("long term debt" means indebtedness for borrowed money
which by its terms matures more than 12 months after the date
incurred or if maturing sooner, the maturity thereof may be
extended at the option of the debtor beyond such 12 month period).
6.8 No Loss. Realize for each fiscal year a net profit after
-------
taxes of at least $1.00.
SECTION 7. NEGATIVE COVENANTS.
------------------
The Borrower hereby agrees that, so long as the Commitment
remains in effect, the Revolving Credit Note or any Letter of
Credit remains or remain outstanding and unpaid, or any other
amount is owing to the Bank hereunder it will not, nor will it
permit any of its Subsidiaries or any Guarantor or any of its
Subsidiaries to, without the Bank's prior written consent:
7.1 Indebtedness for Borrowed Money. Incur, or permit to exist,
-------------------------------
any Indebtedness for borrowed money except (i) Indebtedness
incurred pursuant to borrowings hereunder and under any other loans
made by the Bank in its discretion to the Borrower or any
Subsidiary, (ii) Indebtedness existing on the date hereof and
reflected in the financial statements referred to in Section 3.1
hereof, (iii) purchase money Indebtedness securing liens permitted
by Section 7.4(iv) or other Indebtedness securing liens permitted
by Section 7.4(v) hereof and (iv) Indebtedness not otherwise
permitted under this Section 7.1 in an aggregate principal amount
not exceeding $200,000 at any one time outstanding.
7.2 Mergers, Acquisitions and Sales of Assets. Enter into any merger or
-----------------------------------------
consolidation or liquidate, windup or dissolve itself or sell,
transfer or lease or otherwise dispose of all or any substantial
part of its assets (other than sales of inventory and obsolescent
equipment in the ordinary course of business) or acquire by
purchase or otherwise the business or assets of, or stock of,
another business entity except (i) any Subsidiary may merge into or
consolidate with any other Subsidiary which is wholly-owned by the
Borrower and any Subsidiary which is wholly-owned by the Borrower
may merge with or consolidate into the Borrower provided that the
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<PAGE>
Borrower is the surviving corporation and (ii) Permitted
Acquisitions.
7.3 Loans; Investments. Lend or advance money, credit or
------------------
property to or invest in (by capital contribution, loan, purchase
or otherwise) any firm, corporation, or other Person except (i)
certificates of deposit of any banking institution with combined
capital and surplus of at least $200,000,000, (ii) accounts
receivable arising out of sales of inventory in the ordinary course
of business, (iii) Permitted Acquisitions, (iv) Assessment Loans,
(v) Proudfoot Loans, (vi) direct obligations of the United States
or any agency thereof with maturities of six months or less from
the date of acquisition, (vii) commercial paper of a domestic
issuer rated at least "A-2" by Standard & Poor's Corporation of
"P-2" by Moody's Investors Service, Inc. and (viii) repurchase
agreements collateralized by obligations of the type specified in
(vi) above.
7.4 Liens. Create, assume or permit to exist, any Lien on any
-----
of its property or assets now owned or hereafter acquired except
(i) Liens in favor of the Bank, (ii) other Liens incidental to the
conduct of its business or the ownership of its property and assets
which were not incurred in connection with the borrowing of money
or the obtaining of advances or credit and which do not materially
impair the use thereof in the operation of its business, (iii)
Liens for taxes or other governmental charges which are not
delinquent or which are being contested in good faith and for which
a reserve shall have been established in accordance with GAAP, (iv)
purchase - money liens or security interests on any property
hereafter acquired or the assumption of any lien or security
interest on property existing at the time of such acquisition or a
lien or security interest incurred in connection with any
conditional sale or other title retention agreement or a finance
lease provided that any property subject to any of the foregoing is
acquired by the Borrower or any Guarantor in the ordinary course of
their respective businesses and the lien or security interest on
any such property is created contemporaneously with such
acquisition and each such lien or security interest shall attach
only to the property so acquired and (v) Liens existing on the date
hereof and reflected on Schedule II attached hereto.
7.5 Contingent Liabilities. Assume, endorse, be or become liable
----------------------
for or guarantee the obligations of any Person excluding, however,
the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business.
7.6 Dividends. Declare or pay any dividends on its capital
---------
stock (other than dividends payable solely in shares of its own
common stock), or purchase, redeem, retire or otherwise acquire any
of its capital stock at any time outstanding, except (i) any
Subsidiary wholly owned by the Borrower may declare and pay
-22-
<PAGE>
dividends to the Borrower and (ii) the Borrower may declare or pay
dividends or redeem stock provided that prior to and after giving
effect to such declaration or payment of dividends or redemption,
the Borrower is in compliance with all covenants contained in this
Agreement including, without limitation, the covenants contained in
Section 6 hereof.
7.7 Sales of Receivables; Sale - Leasebacks. Sell, discount or
---------------------------------------
otherwise dispose of notes, accounts receivable or other
obligations owing to the Borrower, with or without recourse, except
for the purpose of collection in the ordinary course of business;
or sell any asset pursuant to an arrangement to thereafter lease
such asset from the purchaser thereof.
7.8 Nature of Business. Materially alter the nature of its
------------------
business.
7.9 Stock of Subsidiaries. Sell or otherwise dispose of any
---------------------
Subsidiary (except in connection with a merger or consolidation of
a Subsidiary into the Borrower or another Subsidiary) or permit a
Subsidiary to issue any additional shares of its capital stock
except pro rata to its stockholders.
7.10 ERISA. (i) Terminate any Plan so as to result in any
-----
material liability to the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (the
"PBGC"), (ii) engage in or permit any person to engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1954, as amended)
involving any Plan which would subject a Borrower to any material
tax, penalty or other liability, (iii) incur or suffer to exist any
material "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, involving any Plan, or (iv)
allow or suffer to exist any event or condition, which presents a
material risk of incurring a material liability to the PBGC by
reason of termination of any Plan.
7.11 Accounting Changes. Make, or permit any Subsidiary to make
------------------
any change in their accounting treatment or financial reporting
practices except as required or permitted by GAAP in effect from
time to time.
7.12 Transactions with Affiliates. Except as otherwise specifically
----------------------------
set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any
property to, or enter into any other transaction, with any
Affiliate except in the ordinary course of business and at prices
and on terms not less favorable to it than those which would have
been obtained in an arm's-length transaction with a non-affiliated
third party.
-23-
<PAGE>
SECTION 8. EVENTS OF DEFAULT.
-----------------
Upon the occurrence and during the continuance of any of the
following events (each an Event of Default):
(a) The Borrower shall fail to pay any interest on or
principal of the Revolving Credit Note when due or shall fail to
pay any other amount payable hereunder including, without
limitation, amounts necessary to reimburse the Bank for a draw
under a Letter of Credit on the maturity thereof or as otherwise
required pursuant to Section 2; or the Borrower or any Guarantor
shall default under any other Loan Document; or
(b) Any representation or warranty made or deemed made
by the Borrower herein or which is contained in any certificate,
document or financial or other statement furnished at any time
under or in connection with this Agreement shall prove to have been
false in any material respect on or as of the date made or deemed
made; or
(c) The Borrower shall default in the observance or
performance of any covenant or provision contained in Section 6 or
7 hereof; or
(d) The Borrower shall default in the observance or
performance of any other provision contained in this Agreement and
such default shall continue unremedied for a period of 10 days
after written notice thereof is given to the Borrower by the Bank;
or
(e) Any Specified Person shall (i) default in any
payment of any indebtedness for borrowed money which indebtedness
exceeds $50,000.00 (other than the Revolving Credit Note) beyond
the period of grace, if any, provided in the instrument or
agreement under which such indebtedness was created; or (ii)
default in the observance or performance of any other agreement or
condition relating to any such indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto or
any other event shall occur or condition exist, in each case the
effect of which default or other event or condition is to cause or
permit the holder or holders of such indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause such
indebtedness to become due prior to its stated maturity; or
(f) (i) Any Specified Person shall commence any case,
proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
-24-
<PAGE>
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
assets, or any Specified Person shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced
against any Specified Person any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) there shall be commenced against
any Specified Person any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of any order for any such relief which
shall have not been vacated, discharged, or stayed or bonded
pending appeal within 20 days from the entry thereof; or (iv) any
Specified Person shall take any action in furtherance of, or
indicate its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii) or (iii) of this Section
8(f); or (v) any Specified Person shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) any Specified Person shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Plan, which
Reportable Event or institution of proceedings is, in the
reasonable opinion of the Bank, likely to result in the termination
of such Plan for purposes of Title IV of ERISA, and, in the case of
a Reportable Event, the continuance of such Reportable Event
unremedied for 10 days after notice of such Reportable Event
pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for 10 days after commencement
thereof, as the case may be, (iv) any Plan shall terminate for
purposes of Title IV of ERISA, and in each case in clauses (i)
through (iv) above, such event or condition could subject the
Borrower to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations or property of the
Borrower; or
(h) the rendition by any court of a final judgment in
excess of $100,000 against any Specified Person which shall not be
satisfactorily stayed, discharged, vacated or set aside within 60
days of the making thereof; or the attachment of any property of
any Specified Person which has not been released or provided for to
the reasonable satisfaction of the Bank within 60 days after the
making therefor; or
-25-
<PAGE>
(i) any Guarantee of any Guarantor shall cease to be in
full force and effect;
then, in any such event, any or all of the following actions may be
taken: (i) the Bank may, at its option, declare the Commitment to
be terminated forthwith, whereupon the Commitment and all
obligations to the Bank to make Revolving Credit Loans and issue
Letters of Credit shall immediately terminate; (ii) the Bank may,
at its option, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the
Revolving Credit Note and all reimbursement obligations with
respect to Letters of Credit to be due and payable and the same,
and all interest accrued thereon, shall forthwith become due and
payable without presentment, demand, protest or notice of any kind,
all of which are hereby waived, anything contained herein or in any
instrument evidencing the Revolving Credit Loans and/or Letters of
Credit to the contrary notwithstanding.
SECTION 9. COLLATERAL SECURITY
-------------------
9.1 General Loan and Collateral Agreement. As collateral security
-------------------------------------
for the payment of any and all sums owing under the Loan Documents,
in connection with the Letters of Credit and all other obligations,
direct or contingent, joint, several or independent, of the
Borrower now or hereafter existing due or to become due to, or held
or to be held by the Bank, whether created directly or acquired by
assignment or otherwise including, without limitation, any arising
under this Agreement (all of such obligations being hereinafter
collectively called the "Obligations"), the Borrower hereby grants
to the Bank a lien on and security interest in any and all deposits
or other sums at any time credited by or due from the Bank to the
Borrower, whether in regular or special depository accounts or
otherwise, and any and all monies, securities and other property of
the Borrower, and the proceeds thereof, now or hereafter held or
received by or in transit to the Bank from or for the Borrower,
whether for safekeeping, custody, pledge, transmission, collection
or otherwise, and any such deposits, sums, monies, securities and
other property, may at any time after the occurrence of any Event
of Default be set-off, appropriated and applied by the Bank against
any of the Obligations whether or not such Obligations are then due
or are secured by any collateral, or, if they are so secured,
whether or not such collateral held by the Bank is considered to be
adequate.
9.2 Additional Collateral Security. In addition to the collateral
------------------------------
described in Section 9.1 hereof, payment of the Obligations is also
secured by a first priority security interest in all personal
property of the Borrower and the Guarantors whether now owned or
hereafter acquired subject only to those liens listed on Schedule
II annexed hereto, as provided in a Security Agreement executed or
-26-
<PAGE>
to be executed and delivered by the Borrower and the Guarantors to
the Bank.
SECTION 10. MISCELLANEOUS.
-------------
10.1 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing
unless otherwise expressly provided herein and shall be deemed to
have been duly given or made when delivered by hand, or by telegram
or telecopy, or when deposited in the mail addressed as follows, or
to such address as may be hereafter notified in writing by the
respective parties hereto and any future holders of the Revolving
Credit Note:
The Borrower: ASI Solutions Incorporated
780 Third Avenue
New York, New York 10017
Attn: Mr. Michael Mele
Vice President
With a copy to: Koerner Silberberg & Weiner
112 Madison Avenue
New York, New York 10016
Attn: Bennett I. Weiner, Esq.
The Bank: Fleet Bank, N.A.
300 Broad Hollow Road
Melville, New York 11747
Attn: Ms. Shari Delouya
Vice President
10.2 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right.
10.3 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the
Revolving Credit Note.
10.4 Payment of Expenses; Examination.
--------------------------------
(a) The Borrower agrees to pay or reimburse the Bank for
all its costs and expenses incurred in connection with (a) the
enforcement or preservation of any rights under this Agreement or
-27-
<PAGE>
the Revolving Credit Note or any other instrument or agreement
entered into in connection herewith or therewith including, without
limitation, the reasonable fees and disbursements of attorneys for
the Bank, and (b) any claim or action threatened, made or brought
against the Bank arising out of or relating to any extent to this
Agreement, the Security Agreements, the Revolving Credit Note or
Loan Documents or any instrument or agreement entered into in
connection with the transactions contemplated hereby or thereby if
the Bank prevails in any such action or proceeding or the Borrower
makes payment to the Bank on account of any sums demanded by it
prior to the disposition of any such action or proceeding or in
settlement thereof.
(b) The Borrower agrees that at any time and from time
to time the Bank may conduct, at the Borrower's expense, an
examination of the Borrower's books and records. The obligations
set forth in this Section 10.4 shall be in addition to any other
obligations or liabilities of the Borrower to the Bank hereunder or
at common law or otherwise. The provisions of this Section 10.4
shall survive the payment of the Revolving Credit Note and the
termination of this Agreement.
10.5 WAIVER OF JURY TRIAL, SET-OFF AND COUNTERCLAIM. THE
----------------------------------------------
BORROWER AND THE BANK IN ANY LITIGATION (WHETHER OR NOT ARISING OUT OF OR
RELATING TO THIS AGREEMENT) IN WHICH THEY SHALL BE ADVERSE PARTIES WAIVE THE
RIGHT OF TRIAL BY JURY AND THE BORROWER WAIVES THE RIGHT TO INTERPOSE ANY SET-
OFF OR COUNTERCLAIM OF ANY KIND OR DESCRIPTION IN ANY SUCH LITIGATION.
10.6 WAIVER OF AUTOMATIC STAY. THE BORROWER AGREES THAT, IN THE
------------------------
EVENT THAT THE BORROWER, ANY GUARANTOR OR ANY OF THE PERSONS OR PARTIES
CONSTITUTING THE BORROWER OR A GUARANTOR SHALL (i) FILE WITH ANY BANKRUPTCY
COURT OF COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER TITLE
11 OF THE U.S. CODE, AS AMENDED ("BANKRUPTCY CODE"), (ii) BE THE SUBJECT OF ANY
ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE, (iii) FILE OR BE THE SUBJECT
OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER
RELIEF FOR DEBTORS, (iv) HAVE SOUGHT OR CONSENT TO OR ACQUIESCED IN THE
APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (v) BE THE
SUBJECT OF ANY ORDER, JUDGMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT
JURISDICTION APPROVING A PETITION FILED AGAINST SUCH PARTY FOR ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT
OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR RELIEF TO DEBTORS, THE BANK SHALL
THEREUPON BE ENTITLED AND THE BORROWER IRREVOCABLY CONSENTS TO IMMEDIATE AND
UNCONDITIONAL RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE
BANKRUPTCY CODE, OR OTHERWISE, ON OR AGAINST THE
-28-
<PAGE>
EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO THE BANK AS PROVIDED
FOR HEREIN, IN ANY NOTE, OTHER LOAN DOCUMENTS DELIVERED IN CONNECTION HEREWITH
AND AS OTHERWISE PROVIDED BY LAW, AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
RIGHT TO OBJECT TO SUCH RELIEF AND WILL NOT CONTEST ANY MOTION BY THE BANK
SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE BORROWER WILL COOPERATE WITH THE
BANK, IN ANY MANNER REQUESTED BY THE BANK, IN ITS EFFORTS TO OBTAIN RELIEF FROM
ANY SUCH STAY OR OTHER PROHIBITION.
10.7 Modification and Waiver. No modification or waiver of, or
-----------------------
with respect to any provision of this Agreement or any document or
instrument delivered in connection therewith shall be effective
unless and until it shall be in writing and signed by the Bank and
the Borrower, and then such modification or waiver shall be
effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Borrower in any case
shall, of itself, entitle it to any other or further notice or
demand in similar or other circumstances.
10.8 Successor and Assigns. This Agreement shall be binding upon
---------------------
and inure to the benefit of the Borrower, the Bank, all future
holders of the Note and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights under this Agreement without the prior written consent of
the Bank. The term "Bank" as used herein shall be deemed to
include the Bank and its successors, endorsees and assigns.
10.9 Governing Law; Consent to Jurisdiction. This Agreement, the Notes
--------------------------------------
and any documents and instruments delivered in connection herewith
and therewith and the rights and duties of the parties hereunder
and thereunder shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York and the
Borrower consents to the jurisdiction of the courts of the State of
New York in any action brought to enforce any rights of the Bank
under this Agreement and any document or instrument related hereto.
10.10 Entire Agreement. This Agreement and any other agreements,
----------------
documents and instruments executed and delivered pursuant to or in
connection with the Obligations contain the entire agreement
between the parties relating to the subject matter hereof and
thereof. The Borrower expressly acknowledges that the Bank has not
made and the Borrower is not relying on any oral representations,
agreements or commitments of the Bank or any officer, employee,
agent or representative thereof.
10.11 Interest Adjustment. Notwithstanding anything to the contrary
-------------------
contained in this Agreement or the Revolving Credit Note, the rate
of interest payable on the Revolving Credit Note shall never exceed
the maximum rate of interest permitted under applicable law. If at
any time the rate of interest otherwise prescribed herein shall
-29-
<PAGE>
exceed such maximum rate, and such prescribed rate is thereafter below such
maximum rate, the prescribed rate shall be increased to the maximum rate for
such period of time as is required so that the total amount of interest received
by the Bank is that which would have been received by the Bank except for the
operation of the first sentence of this Section 10.11.
10.12 Counterparts. This Agreement may be signed in any number
------------
of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
-30-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be duly executed and delivered by their proper and
duly authorized officer as of the day and year first above written.
ASI SOLUTIONS INCORPORATED
By: /s/ Eli Salig
-----------------------
Eli Salig
President
FLEET BANK, N.A.
By: /s/ Gary K. Anderson
-----------------------
Gary K. Anderson
Senior Vice President
-31-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On the 22nd day of July, 1997, before me personally came
Eli Salig, to me known, who, being by me duly sworn, did depose and
say that he resides at 145 West 67th Street, New York, New York
10023; that he is the President of ASI SOLUTIONS INCORPORATED, the
corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the
board of directors of said corporation.
/s/ Bennett I. Weiner
__________________________
Notary Public
(STAMP)
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 23rd day of July, 1997, before me personally came
Gary K. Anderson, to me known, who, being by me duly sworn, did
depose and say that he resides at c/o 300 Broad Hollow Road,
Melville, New York 11747; that he is a Senior Vice President of
FLEET BANK, N.A., the banking institution described in and which
executed the foregoing document and that he signed his name thereto
by authority of such banking institution.
/s/ Theresa Mady-Grove
____________________________
Notary Public
(STAMP)
-32-
<PAGE>
SCHEDULE I
----------
(Letters of Credit)
Letter of Credit # LS 1047384 in the stated amount of $508,500
expiring 7/31/97 in favor of 780 Third Avenue Associates.
-33-
<PAGE>
SCHEDULE II
-----------
Liens on Property Held by Proudfoot Reports Incorporated
Lien File Number: 215779
Secured Party: Eaton Financial Corporation
Secured Assets: Leased Telephone equipment, furniture
File Date: October 15, 1992
State/County: New York State
Lien File Number: 022691
Secured Party: Cheshire County Savings Bank
Secured Assets: Leased Computer equipment
File Date: February 1, 1993
State/County: New York State
Lien File Number: 049851
Secured Party: Wellington Leasing Ltd.
Secured Assets: Leased Computer Equipment
File Date: March 8, 1993
State/County: New York State
Lien File Number: 164496
Secured Party: European American Bank
Secured Assets: Leased Computer equipment
File Date: August 14, 1995
State/County: New York State
Lien File Number: 9218411
Secured Party: Eaton Financial Corp.
Secured Assets: Leased Telephone equipment, Furniture
File Date: December 18, 1992
State/County: Nassau County
Lien File Number: 936913
Secured Party: Cheshire County Savings Bank
Secured Assets: Leased Computer Equipment
File Date: April 26, 1993
State/County: Nassau County
Lien File Number: 938584
Secured Party: Wellington Leasing Ltd.
Secured Assets: Leased Computer Equipment
File Date: May 12,1993
State/County: Nassau County
-34-
<PAGE>
Liens on Property Held by Assessment Systems Incorporated
(Name has been Changed to Assessment Solutions Incorporated)
------------------------------------------------------------
Lien File Number: 192158
Secured Party: Siemens Credit Corporation
Secured Assets: Leased Computer equipment, furniture
File Date: September 27, 1996
State/County: New York State
Lien File Number: 96PN49539
Secured Party: Fleet Capital Corporation
Secured Assets: Specific Equipment
File Date: November 13, 1996
State/County: New York County
Lien File Number: 96PN13823
Secured Party: Fleet Capital Corporation (by partial assignment from Fleet
Bank, N.A.)
Secured Assets: Specific Equipment
Date: November 13, 1996
State/County: New York County
Lien File Number: 9622261057
Secured Party: European American Bank
Secured Assets: Leased Computer equipment, furniture
File Date: August 6, 1996
State/County: California
Lien File Number: 236236
Secured Party: Fleet Capital Credit Corporation (by partial assignment from
Fleet Bank, N.A.)
Secured Assets: Specific Equipment
File Date: November 10, 1993
State/County: New York State
Lien File Number: 054853
Secured Party: Fleet Capital Credit Corporation (by partial assignment from
Fleet Bank, N.A.)
Secured Assets: Specific Equipment
File Date: March 18, 1996
State/County: New York State
Lien File Number: 215771
Secured Party: Fleet Capital Credit Corporation
Secured Assets: Specific Equipment
File Date: October 31, 1996
State/County: New York State
-35-
<PAGE>
EXHIBIT A
---------
FORM OF REVOLVING CREDIT NOTE
-----------------------------
REVOLVING CREDIT NOTE
---------------------
$10,000,000 Melville, New York _________, 1997
ASI SOLUTIONS INCORPORATED, a Delaware corporation (the "Borrower"), for
value received, hereby promises to pay to the order of FLEET BANK, N.A. (the
"Bank") on September 30, 1999, at the office of the Bank specified in Section
10.1 of the Loan Agreement dated as of , between the Borrower and the Bank, as
amended from time to time (as so amended the "Agreement"; terms defined in the
Agreement shall have their defined meanings when used in this Note), in lawful
money of the United States of America and in immediately available funds the
principal amount of TEN MILLION AND 00/100 ($10,000,000.00) DOLLARS or, if less
than such principal amount, the aggregate unpaid principal amount of all Loans
made by the Bank to the Borrower pursuant to Section 2.1 of the Agreement. The
Borrower further promises to pay interest at said office in like money on the
unpaid principal balance of this Note from time to time outstanding at an annual
rate as selected by the Borrower pursuant to the terms of Section 2 of the
Agreement. Interest shall be computed on the basis of a 360-day year for actual
days elapsed and shall be payable as provided in the Agreement. All Loans made
by the Bank pursuant to subsection 2.1 of the Agreement and payments of the
principal thereon may be endorsed by the holder of this Note on the schedule
annexed hereto, to which the holder may add additional pages. The aggregate net
unpaid amount of Loans set forth in such schedule shall be presumed to be the
principal balance hereof. After the stated or any accelerated maturity hereof,
this Note shall bear interest at a rate as set forth in the Agreement, payable
on demand, but in no event in excess of the maximum rate of interest permitted
under applicable law.
This Note is the Revolving Credit Note referred to in the Agreement, and
is entitled to the benefits thereof and may be prepaid, and is required to be
prepaid, in whole or in part (subject to the indemnity provided in the
Agreement) as provided therein. This Note is secured by the collateral described
in each Security Agreement.
Upon the occurrence of any one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid on this Note may be declared
to be immediately due and payable as provided in the Agreement.
This Note shall be construed in accordance with and governed by the laws
of the State of New York.
ASI SOLUTIONS INCORPORATED
By:
-----------------------
Name/Title
Exhibit A-1
<PAGE>
SCHEDULE OF LOANS AND PAYMENT OF PRINCIPAL
TO REVOLVING CREDIT NOTE DATED AS OF , 1997
---------------
ASI SOLUTIONS INCORPORATED
TO
FLEET BANK, N.A.
Amount and Last Day Balance
Type Interest of Interest Principal Remaining Notation
Date of Loan Rate Period Paid Unpaid Made By
Exhibit A-2
<PAGE>
EXHIBIT B
---------
FORM OF BORROWING BASE CERTIFICATE
----------------------------------
____________, 1997
To: Fleet Bank, N.A. (the "Bank") under a certain Loan Agreement dated , 1997
(the "Loan Agreement"), by and between the Bank and ASI Solutions
Incorporated (the "Borrower").
Terms used in this certificate shall have the same meaning as ascribed
thereto in the Loan Agreement.
The undersigned officers of the Borrower certify that the information
furnished herein as of , 19 as to Eligible Accounts
--------------
Receivable of Assessment and Proudfoot is true and correct and that as of
the date hereof no Event of Default, or event which after notice or lapse
of time or both would be an Event of Default exists under the Loan
Agreement.
If no Permitted Acquisition Loans
I. Computation of Borrowing Base
A. Eligible Accounts Receivable $________
B. 75% of Line A $________
II. A. Aggregate principal balance of
Proudfoot Loans outstanding (not
to exceed $500,000) $________
B. Aggregate principal amount of
Assessment Loans outstanding $________
C. Aggregate stated amount of
Letters of Credit (not to exceed
$1,260,000) $________
D. Aggregate Outstandings (except
Permitted Acquisition Loans)
(Line A + Line B + Line C) $________
III. Commitment Available or Amount Due
A. If line I(B) is greater than
II(D), Commitment Available
(up to $10,000,000) $________
B. If line II(D) is greater than
I(B), Amount Due $________
Exhibit B-1
<PAGE>
If Permitted Acquisition Loans
------------------------------
I. Computation of Borrowing Base
A. Eligible Accounts Receivable $________
B. 75% of Line A $________
II. A. Aggregate principal balance of
Proudfoot Loans outstanding (not
to exceed $500,000) $________
B. Aggregate principal amount of
Assessment Loans outstanding $________
C. Aggregate principal balance of
Letters of Credit (not to exceed
$1,260,000) $________
D. Aggregate Outstandings (except
Permitted Acquisition Loans)
(Line A + Line B + Line C) $________
III. A. Aggregate Permitted Acquisition
Loans $________
B. Collateral Requirement for Line
III(A) (not to exceed line III(A)) $________
C. Line III(A) - Line III(B) $___________
IV. Commitment Available or Amount Due
A. If Line I(B) is greater than II
(D), Commitment Available (up to
$10,000,000) $___________
B. If Line II(D) is greater than
I(B), Amount Due + Line III(C) $___________
ASI SOLUTIONS INCORPORATED
By:
---------------------
Name:
Title:
Exhibit B-2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1997
<PERIOD-START> APR-01-1997 APR-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1996
<CASH> 6,459,710 (44,460)
<SECURITIES> 0 0
<RECEIVABLES> 4,509,420 2,767,549
<ALLOWANCES> 21,913 24,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,301,836 2,847,024
<PP&E> 4,105,587 1,660,236
<DEPRECIATION> 1,408,544 1,018,565
<TOTAL-ASSETS> 15,848,390 5,015,581
<CURRENT-LIABILITIES> 2,076,380 2,059,869
<BONDS> 0 0
0 0
0 0
<COMMON> 64,252 46,252
<OTHER-SE> 13,208,227 2,762,148
<TOTAL-LIABILITY-AND-EQUITY> 15,848,390 5,015,581
<SALES> 6,700,275 3,911,416
<TOTAL-REVENUES> 6,700,275 3,911,416
<CGS> 3,444,723 1,742,145
<TOTAL-COSTS> 6,021,862 3,105,625
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 7,500 0
<INTEREST-EXPENSE> 9,732 26,637
<INCOME-PRETAX> 740,645 779,154
<INCOME-TAX> 322,575 366,982
<INCOME-CONTINUING> 418,070 412,172
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 418,070 412,172
<EPS-PRIMARY> 0.07 0.09
<EPS-DILUTED> 0 0
</TABLE>
