SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
[ ] 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 1-14827
EDUCATIONAL VIDEO CONFERENCING, INC.
(Exact name of small business as
specified in its charter)
Delaware 06-1488212
(State of other jurisdiction
(IRS Employer Identification No.)
of incorporation of organization)
35 East Grassy Sprain Road, Yonkers, NY 10710
(Address of principal executive offices)
(914) 395-3501
(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (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 issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes__ No X
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,347,243 shares of common
stock as of May 1, 1999.
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheet as of March 31, 1999 (unaudited) and as of
December 31, 1998 (audited)...................................................3
Statement of Operations for the three months ended March
31, 1999 and 1998 (unaudited).................................................4
Statement of Cash Flows for the three months ended March
31, 1999 and 1998 (unaudited).................................................5
Notes to Financial Statements.................................................6
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EDUCATIONAL VIDEO CONFERENCING, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited) (audited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 13,256,615 $ 914,700
Accounts receivable, net of allowance for
doubtful accounts of $40,000 and $35,000,
respectively 318,333 226,776
Prepaid expenses 114,064 80,846
------- ------
Total current assets 13,689,012 1,222,322
---------- ---------
Property and equipment, net 1,598,558 1,405,150
--------- ---------
Deferred Income Tax Asset,
net of valuation allowance -- --
Other assets 6,632 7,832
Deferred offering costs 900,000
----------- ----------
Total $15,294,202 $3,535,304
=========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and $258,063 $920,643
-------- --------
accrued expenses
Total current liabilities 258,063 920,643
-------- --------
Stockholders' Equity:
Preferred stock - $.0001 par value;
authorized 1,000,000 shares, none issued
Common Stock - $.0001 par value;
authorized 20,000,000 shares, issued and
outstanding 4,347,243 shares and
3,008,909 shares, respectively 435 301
Additional paid-in capital 19,463,691 6,064,920
Accumulated deficit (4,427,987) (3,450,560)
----------- -----------
Stockholders' equity 15,036,139 2,614,661
----------- -----------
Total liabilities and
stockholders' equity $15,294,202 $3,535,304
=========== ===========
</TABLE>
See Notes to Financial Statements.
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EDUCATIONAL VIDEO CONFERENCING, INC.
STATEMENT OF OPERATIONS
Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
(unaudited) (unaudited)
Net revenue $147,521 $ 33,361
Interest 56,851 4,382
-------- --------
Total revenue 204,372 37,743
-------- --------
Operating expenses:
Cost of sales 58,458 50,326
Salaries and benefits 533,909 237,062
Marketing, brochures and
student registration costs 244,627 34,681
Professional fees 31,090 22,642
Interest and financing
costs -- 46,714
Depreciation 83,845 54,770
Other 229,870 53,212
-------- --------
Operating expenses 1,181,799 499,407
--------- --------
Net loss $(977,427) $(461,664)
========== ==========
Basic loss per common share $ (0.28) $ (0.20)
Weighted-average number of
common shares outstanding 3,537,594 2,341,056
See Notes to Financial Statements.
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EDUCATIONAL VIDEO CONFERENCING, INC.
STATEMENT OF CASH FLOWS
Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
(unaudited) (unaudited)
Cash flows from operating activities
Net loss $(977,427) $(461,664)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 83,845 54,770
Amortization of debt issue costs 30,715
Allowance for doubtful accounts 5,000
Changes in operating assets and liabilities:
Increase in accounts receivable (96,557) (17,361)
Increase in prepaid expenses (33,218) (9,762)
(Increase) decrease in other assets 1,200 (2,330)
Decrease in accounts payable and
accrued expenses (662,580) (216,973)
---------- ---------
Net cash used in operating
activities (1,679,737) (622,605)
---------- ---------
Cash flows used in investing
activity--purchase of property and
equipment (277,253) (28,173)
---------- --------
Cash flows from financing activities:
Net proceeds from issuance of
common stock 13,398,905 987,502
Decrease in deferred offering costs 900,000 --
---------- -------
Net cash provided by
financing activities 14,298,905 987,502
---------- -------
Net increase in cash
and cash equivalents 12,341,915 336,724
Cash and cash equivalents at
beginning of period 914,700 127,279
---------- -------
Cash and cash equivalents at
end of period $13,256,615 $464,003
=========== ========
Supplemental disclosure of cash flow
information:
Cash paid during the
period of interest -- --
See Notes to Financial Statements.
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EDUCATIONAL VIDEO CONFERENCING, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note 1 - Business and Basis of Presentation
Educational Video Conferencing, Inc. ("EVC") delivers accredited college courses
and degree programs, as well as professional development, corporate training and
other programs, to corporations and others by means of interactive video
conferencing systems. Interactive video conferencing systems allow the
instructor to see, hear and interact with students as the students see, hear and
interact with the instructor and other students at multiple locations. EVC
provides access to education providers and the marketing and administrative
services necessary to recruit, enroll and deliver courses and programs to them.
EVC receives a fee based on tuition payments received by the education provider,
typically after completion of courses.
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the requirements of Item 310(b) of Regulation S-B. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The financial statements reflect all
adjustments (consisting of normal recurring adjustments) which, in the opinion
of management, are necessary for a fair presentation of the results for the
periods shown.
EVC's results of operations for the interim periods are not necessarily
indicative of the results expected for the full fiscal year or for any future
period and should be read in conjunction with the audited financial statements
of EVC as of December 31, 1998 and for the year then ended and the notes thereto
in the prospectus dated February 23, 1999 that was included in EVC's
Registration Statement filed on Form SB-2 (Registration No. 333-66085).
The information in this report gives effect to a one-for-two reverse split of
the common stock effective February 22, 1999.
Note 2 - Initial Public Offering
See Item 3 of Part II for information about EVC's initial public offering
("IPO").
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Note 3 - Earnings Per Share
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per
Share, requires dual presentation of basic earnings per share ("EPS") and
diluted EPS on the face of all statements for all entities with complex capital
structures. Basic EPS is computed as net earnings divided by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares issuable
through stock-based compensation including stock options, restricted stock
awards, warrants and other convertible securities. Diluted EPS is not presented
since the effect would be antidilutive.
Note 4 - Income Taxes
No provision for income taxes has been made for all periods presented since EVC
had net operating losses. These net operating losses have resulted in a deferred
tax asset at March 31, 1999. Due to the uncertainty regarding the ultimate
amount of income tax benefits to be derived from EVC's net operating losses, EVC
has recorded a valuation allowance for the entire amount of the deferred tax
asset at March 31, 1999.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following information should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements and notes thereto for the year ended December 31, 1998
included in EVC's prospectus dated February 23, 1999 and in conjunction with the
financial statements and notes thereto for the three months ended March 31, 1999
and 1998 included in Item 1 of this report.
First Quarter Developments
EVC signed a multi-year agreement with Lockheed Martin Corporation that gives
EVC the ability to offer and deliver courses to employees of the more than 50
Lockheed Martin' companies located throughout the United States. Course
offerings will include engineering, management, marketing, economics, finance,
accounting, computer science and human resources, as well as degree programs.
EVC and the individual Lockheed Martin companies will co-market courses and
programs to each company's employees. EVC had already begun delivering courses
to employees of Lockheed Martin Michoud Space Systems at its New Orleans
facility.
EVC entered into a multi-year agreement with Kaplan Educational Centers, Inc.
that gives EVC the ability to offer and deliver Kaplan SAT and GMAT test
preparation courses and K-12 after- school programs, as well as insurance and
securities training and licensing preparation comes given by Dearborn, a unit of
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Kaplan's Professional division. EVC expects to begin delivering Kaplan/Dearborn
courses in the second and third quarters of 1999.
EVC began offering and delivering courses to Rochester, New York residents under
EVC's multi-year agreement with the Rochester City School District. EVC is
offering:
o Rochester teachers access to Master's Degrees in Education and
post-Master's courses, and staff development courses and
programs.
o Rochester high school seniors access to accredited college
courses, which may be transferable to college and universities of
their choice, as well as SAT preparation programs from Kaplan.
o Rochester students enrolled in kindergarten through 12th grade
access to academic enhancement programs and courses from Kaplan,
Computer City software courses and others.
As a result of the success of a pilot church outreach program where community
members took courses delivered by EVC from Mercy College to the First Church of
God in Queens, NY, EVC has expanded its course offerings to a second church, The
Community Church of Nazarene, in Queens, New York. The tuition of participating
students is fully funded by federal and state programs.
Three Months Ended March 31, 1999 (First Quarter of 1999)
Compared with Three Months Ended March 31, 1998 (First Quarter of 1998)
Net revenues increased to $147,521 in the first quarter of 1999 from $ 33,361 in
the first quarter of 1998 primarily due to the increase in student enrollments.
Interest income was $56,851 in the first quarter of 1999 compared to $ 4,382 in
the first quarter of 1998 as a result of the investment of net proceeds from the
IPO.
Cost of sales increased to $58,458 in the first quarter of 1999 from $50,326 in
the first quarter of 1998 primarily due to the cost of the increased
communication usage associated with operating EVC's multi-point conferencing
units, which enable live, interactive multimedia communications between three or
more end points.
Salaries and benefits increased to $533,509 in the first quarter of 1999 from
$237,062 in the first quarter of 1998 primarily due to the increase in EVC's
personnel to 29 employees from 14 employees. The 15 additional employees are
engaged: 3 in operations, 2 in enrollment management, 5 in recruiting, 4 in
sales and 1 in development and training.
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Marketing, brochures and student registrations costs increased to $244,627 in
the first quarter of 1999 from $34,681 in the first quarter of 1998 primarily as
a result of the additional costs of marketing EVC's services to more potential
students, including under EVC's recent agreement with the Rochester City School
District.
Interest and financing costs of $46,714 in the first quarter of 1998 relate to
various private placements that occurred in 1997.
Depreciation increased to $83,845 in the first quarter of 1999 from $54,770 in
the first quarter of 1998 as the result of approximately $700,000 of new
computer and video conferencing equipment purchases.
Other expenses increased to $229,870 in the first quarter of 1999 from $53,212
in the first quarter of 1998 primarily due to additional space, communications,
postage, insurance, computer, travel and entertainment costs incurred to support
EVC's growth.
Seasonality. EVC expects that revenues for its third quarter will be
substantially lower than other quarters because it anticipates substantially
lower student enrollment during June, July and August.
Liquidity and Capital Resources
The gross proceeds from sales by EVC of its common stock in the IPO was
approximately $16,060,000 and the net proceeds received by EVC was approximately
$13,399,000.
Capital expenditures increased to $277,253 in the first quarter in 1999 from
$28,173 in the first quarter of 1998 due to the purchase of additional video
conferencing equipment required at EVC's education providers (two teacher
stations) and at sites where EVC's video conferenced programs are offered (17
student room stations). EVC has no capital commitments. EVC will continue to use
its cash resources as needed to implement the plan of operations described in
its IPO prospectus.
EVC anticipates, based on current plans and assumptions relating to its
operations, that the proceeds from its IPO will be sufficient to satisfy its
cash requirements for at least the next 10 months. After that, EVC expects to
require additional funding in order to grow. If, however, EVC is underestimating
its cash requirements, EVC will require additional debt or equity financing
sooner. There can be no assurance that any such required debt or equity
financing will be available on acceptable terms.
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Year 2000 Compliance
The year 2000 problem is the result of a widespread programming technique that
causes computer systems to identify a date based on the last two numbers of a
year, with the assumption that the first two numbers of the year are "19." As a
result, the year 2000 would be stored as "00," causing computers to incorrectly
interpret the year as 1900. Left uncorrected, the year 2000 problem may cause
information technology systems (e.g. computer databases) and non-information
systems (e.g. elevators) to produce incorrect data or cease operating
completely.
EVC uses recent releases of "off the shelf" software applications and
operational programs that are certified by the manufacturers to be year 2000
compliant. EVC has contingency plans to deal with unanticipated year 2000
problems including backing up its database and financial and accounting records
and alternative ways of handling scheduling problems resulting from failures of
its multi-point conferencing unit.
EVC has been advised by its education providers that they are year 2000
compliant and that they have contingency plans in place to at least back up
their accounting and financial records.
Publicly available information obtained by EVC about its corporate customers and
telecommunications providers indicates they are making significant efforts to be
year 2000 compliant and are also developing contingency plans to deal with
unanticipated problems.
At this time, EVC fully expects to be year 2000 compliant and believes that its
education providers and corporate customers and its significant vendors have
taken, or are taking, the steps necessary to be in compliance by the year 2000.
Nevertheless, significant uncertainties remain about the affect on EVC of third
parties who are not year 2000 compliant.
Forward-Looking Statements and Risk Factors
This Form 10-Q contains forward-looking statements that are based on
management's beliefs, as well as assumptions made by, and information currently
available to, management. When used in this document, the words "anticipate,"
"estimate," "expect," "will," "could," "may," and similar words are intended to
identify forward-looking statements. Such statements reflect EVC's current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions, including, but not limited to, the risk that EVC currently
relies on a limited number of education providers for courses and corporations
and other entities for students, the risk that there may not be sufficient
demand for EVC's services and the other specific risk factors described in EVC's
IPO prospectus, beginning on page 5. Should one or more of these risks or
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uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated by these
forward-looking statements. EVC undertakes no obligation to update these
forward- looking statements and information.
PART II
OTHER INFORMATION
Item 3. Changes in Securities and Use of Proceeds
EVC completed its IPO in the first quarter of 1999 pursuant to a Registration
Statement on Form S-B (Registration No. 333-66085) that was declared effective
on February 22, 1999. Prime Charter Ltd. was the managing underwriter and the
IPO price was $12.00 per share of common stock. A total of 1,338,334 shares of
common stock, $.0001 par value, were registered and sold for the account of EVC,
including 138,334 shares sold upon exercise of the underwriters' over-allotment
option.
An additional 41,666 shares of common stock were registered and sold, upon
exercise of the over-allotment option, for the account of EVC's three executive
officers: Dr. Arol I. Buntzman, chairman of the board and chief executive
officer: 27,439 shares; Dr. John J. McGrath, president and director: 11,854
shares and Richard Goldenberg, chief financial officer and director: 2,373
shares.
The gross proceeds of the IPO from sales of common stock for the account of EVC
was approximately $16,060,000 and the net IPO proceeds received by EVC was
approximately $13,399,000, after payment of underwriting discounts and
commissions and other offering expenses totaling $2,660,969. Through March 31,
1999, the net proceeds had been used as follows:
Cash and investment grade obligations $13,105,0001
Purchasing and installing video conferencing 136,000
equipment
Marketing 130,000
Hiring and training additional personnel 28,000
-----------
$13,399,000
===========
- ---------------
1 At March 31, 1999. Cash in non-interest bearing accounts was $55,000.
Item 6. Exhibits and Reports on Form 8-K
The exhibits filed as a part of this report are listed in the accompanying
Exhibit Index.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
EDUCATIONAL VIDEO CONFERENCING, INC.
Dated: May 13, 1999 By: /s/Richard Goldenberg
---------------------
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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EDUCATIONAL VIDEO CONFERENCING, INC.
EXHIBIT INDEX
3.1.1 - Certificate of Amendment to Certificate of Incorporation
3.2 - Amended and Restated By-Laws
10.11 - Lease Agreement between Educational Video Conferencing, Inc.
and Realty Co. (doing business as Royal Realty dated as of
December 15, 1998).
10.31 - Agreement between the Rochester City School District and
Educational Video Conferencing, Inc. dated December 22,
1998.
10.32 - National Agreement between Lockheed Martin Corporation and
Educational Video Conferencing, Inc. dated as of February
17, 1999.
+10.33 - Educational Provider Agreement between Kaplan Educational
Centers, Inc. and Educational Video Conferencing, Inc. dated
March 25, 1999.
27 - Financial Data Schedule
- ------------------
+ Confidential treatment has been requested with respect to the redacted
portions of this exhibit.
13
CERTIFICATE OF AMENDMENT TO
CERTIFICATE OF INCORPORATION OF
EDUCATIONAL VIDEO CONFERENCING, INC.
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware (the "GCL"), Educational Video Conferencing, Inc., a Delaware
corporation (the "Corporation"), does hereby certify as follows:
1. The Certificate of Incorporation is amended by striking Article FOURTH
and inserting in lieu thereof the following:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 21,000,000 shares, consisting
of:
(a) 20,000,000 shares of common stock, par value $0.0001; and
(b) 1,000,000 shares of preferred stock, par value $0.0001.
The Board of Directors of the Corporation (the "Board") is expressly
authorized to fix by resolution or resolutions the designations and the
powers (including voting powers), preferences and rights, and the
qualifications, limitations, or restrictions permitted by Section 151 of
the General Corporation Law of the State of Delaware in respect of any
class or classes of stock or any series of any class of stock of the
Corporation which may be desired but which shall not be fixed by this
Certificate of Incorporation. Such grant of authority includes the power to
specify the number of shares in any series.
At the effective time (the "Effective Time") of this Certificate of
Amendment, all outstanding shares of the Corporation's common stock shall
be automatically combined at the rate of one-for-two (the "Reverse Split")
without the necessity of any further action on the part of the holders
thereof or the Corporation; provided, however, that the Corporation shall,
through its transfer agent, exchange certificates representing common stock
outstanding immediately prior to the Reverse Split (the "Existing Common")
for new certificates representing the appropriate number of shares of
common stock resulting from the Reverse Split ("New Common"). No fractional
shares, but only whole shares of New Common, shall be issued to any holder
of any number of shares which, when divided by two, does not result in a
whole number. In lieu of any fractional share, the Corporation has arranged
for its transfer agent to issue one additional full share of the
Corporation's common stock.
The par value of the common stock shall remain as otherwise provided
in this Article FOURTH and shall not be modified as a result of the Reverse
Split. From and after the Effective Time, certificates representing shares
of Existing Common shall represent only the right of the holders thereof to
receive New Common, including, as provided herein, for any fractional
shares of Existing Common.
- 1 -
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From and after the Effective Time, the term "New Common" as used in
this Article FOURTH shall mean common stock as provided in this Certificate
of Incorporation."
2. The Certificate of Incorporation is amended by striking Article SIXTH
and inserting in lieu thereof the following:
"SIXTH: The number of directors constituting the entire Board shall be
as fixed from time to time by vote of a majority of the entire Board;
provided, however, that the number of directors shall not be reduced so as
to shorten the term of any director at the time in office, and, provided
further, that the number of directors constituting the entire Board shall
be five until otherwise fixed by a majority of the entire Board.
The Board shall be divided into three classes, as nearly equal in
number as the then total number of directors constituting the entire Board
permits, with the term of office of one class expiring each year.
At the first annual meeting of stockholders following the Effective
Time, the terms of office of the directors of the first class shall expire.
At the second annual meeting of stockholders following the Effective Time,
the terms of office of the directors of the second class shall expire. At
the third annual meeting of stockholders following the Effective Time, the
terms of office of the directors of the third class shall expire. Any
vacancies in the Board for any reason, and any directorships resulting from
any increase in the number of directors, may be filled by the Board, acting
by a majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and until their
successors shall be elected and qualified. Subject to the foregoing, at
each annual meeting of stockholders, the successors to the class of
directors whose term shall then expire shall be elected to hold office for
a term expiring at the third succeeding annual meeting."
Any director may be removed, with or without cause, by the holders of
66-2/3% of the shares then entitled to vote at any election of directors.
Such removal may not be effected by written consent of stockholders."
3. The Certificate of Incorporation is amended by striking Article TWELFTH
and inserting in lieu thereof the following:
"TWELFTH: The Corporation expressly elects to be governed by Section
203 of the General Corporation Law of the State of Delaware."
4. By the resolution duly adopted by the Board by unanimous written
consent, the foregoing amendments were declared to be advisable and directed to
be submitted for the consideration of the stockholders of this Corporation,
pursuant to Section 242 of the GCL, and, thereafter, such amendments were
approved by written consent of the holders of a majority of the outstanding
stock entitled to vote thereon and prompt notice was given, pursuant to Section
228 of the GCL, to those stockholders of this Corporation entitled to vote
thereon who did not so approve such amendments by written consent.
- 2 -
<PAGE>
5. The Effective Time of this Certificate of Amendment shall be the date
and hour of its filing by the Secretary of State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to its Certificate of Incorporation to be executed by a duly
authorized officer this 22 day of February, 1999.
/s/ DR. AROL I. BUNTZMAN
---------------------------------------------
Dr. Arol I. Buntzman, Chairman
and Chief Executive Officer
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AMENDED AND RESTATED BY-LAWS*
OF
EDUCATIONAL VIDEO CONFERENCING, INC.
ARTICLE I
---------
Stockholders
------------
Section 1.1. Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors on such date and at such place as shall be
fixed from time to time by the Board of Directors. Any other proper business may
be transacted at the annual meeting.
Section 1.2. Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, or by a
committee of the Board of Directors that has been duly designated by the Board
of Directors and whose powers and authority, as expressly provided in a
resolution of the Board of Directors, include the power to call such meetings.
Special meetings of stockholders may also be called by the holders of shares
entitled to cast not less than 20 percent of the votes at the meeting, provided
written notice of such stockholders' intention to call a special meeting of
stockholders, addressed to the attention of the chairman and chief executive
officer of the corporation, at the corporation's principal executive offices, is
received by the corporation not les than 30 days prior to the date such
stockholders mail notice of the meeting to the stockholders entitled to such
notice. Such special meetings may not be called by any other person or persons.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the certificate of incorporation or
these by-laws, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. If
any notice addressed to a stockholder at the address of that stockholder
appearing on the records of the corporation is returned to the corporation by
the United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice to the stockholder at that
address, then all future notices or reports shall be deemed to have been duly
given without further mailing if the same shall be available to the stockholder
on written demand of the stockholder at the principal executive office of the
corporation for a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
- --------------------
*As of February 22, 1999.
<PAGE>
Section 1.4. Adjournments. Any meeting of stockholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days or, if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. Except as otherwise provided by law, the certificate
of incorporation or these by-laws, at each meeting of stockholders the presence
in person or by proxy of the holders of shares of stock having a majority of the
votes which could be cast by the holders of all outstanding shares of stock
entitled to vote at the meeting shall be necessary and sufficient to constitute
a quorum. In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner provided in
Section 1.4 of these by-laws until a quorum shall attend. Shares of its own
stock belonging to the corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided over
by the Chairman of the Board, or, in his or her absence, by the Vice Chairman of
the Board, if any, or in his or her absence by the President, or in his or her
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his or her absence the chairman of the meeting
may appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Except as otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question.
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by delivering
a proxy in accordance with applicable law bearing a later date to the Secretary
of the corporation.
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<PAGE>
Voting at meetings of stockholders need not be by written ballot and,
unless otherwise required by law, need not be conducted by inspectors of
election unless so determined by the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote thereon which are present in person or by proxy
at such meeting.
At all meetings of stockholders for the election of directors a plurality
of the votes cast shall be sufficient to elect directors. All other elections
and questions shall, unless otherwise provided by law, the certificate of
incorporation or these by-laws, be decided by the vote of the holders of shares
of stock having a majority of the votes which could be cast by the holders of
all shares of stock outstanding and entitled to vote thereon.
Section 1.8. Fixing Date for Determination of Stockholders of Record. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any fights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
days prior to such other action.
If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action of the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
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<PAGE>
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
Upon the willful neglect or refusal of the directors to produce such a list
at any meeting for the election of directors, they shall be ineligible for
election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list of stockholders or the books of
the corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.10. Action By Consent of Stockholders. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered by hand or by certified or registered mail, return receipt requested)
to the corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of minutes of
stockholders are recorded.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Section 1.11. Conduct of Meetings. The Board of Directors of the
corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (1) the establishment of an agenda
or order of business for the meeting; (2) rules and procedures for maintaining
order at the meeting and the safety of those present; (3) limitations on
attendance at or participation in the meeting to stockholders of record of the
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<PAGE>
corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (4) restrictions on entry to the
meeting after the time fixed for the commencement thereof; and (5) limitations
on the time allotted to questions or comments by participants. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.
ARTICLE II
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Board of Directors
------------------
Section 2.1. Number; Qualifications. The Board of Directors shall consist
of one or more members, the number thereof to be determined from time to time by
resolution of the Board of Directors. Directors need not be stockholders.
Section 2.2. Election; Resignation; Removal; Vacancies. The Board of
Directors shall initially consist of the persons named as directors by the
incorporator, and each director so elected shall hold office until the first
annual meeting of stockholders or until his or her successor is elected and
qualified.
Except as otherwise provided in the certificate of incorporation, at the
first annual meeting of stockholders and at each annual meeting thereafter, the
stockholders shall elect directors each of whom shall hold office for a term of
one year or until his or her successor is elected and qualified. Any director
may resign at any time upon written notice to the corporation.
Any newly created directorship or any vacancy occurring in the Board of
Directors for any cause may be filled by a majority of the remaining members of
the Board of Directors, although such majority is less than a quorum, or by a
plurality of the votes cast at a meeting of stockholders, and each director so
elected shall hold office until the expiration of the term of office of the
director whom he or she has replaced or until his or her successor is elected
and qualified.
Section 2.3. Regular Meetings. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware and at such
times as the Board of Directors may from time to time determine, and if so
determined notices thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place within or without the State of Delaware
whenever called by the Chairman of the Board, President, any Vice President, the
Secretary, or by any two members of the Board of Directors. Notice of a special
meeting of the Board of Directors shall be given by the person or persons
calling the meeting at least twenty-four hours before the special meeting.
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<PAGE>
Section 2.5. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the whole Board of Directors shall constitute a
quorum for the transaction of business. Except in cases in which the certificate
of incorporation or these by-laws otherwise provide, the vote of a majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or, in his or her absence by the
Vice Chairman of the Board, if any, or in his or her absence by the President,
or in their absence by a chairman chosen at the meeting. The Secretary shall act
as secretary of the meeting but, in his absence, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise restricted by
the certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or such committee.
ARTICLE III
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Committees
----------
Section 3.1. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of the
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.
Any such committee, to the extent permitted by law and to the extent
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it.
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<PAGE>
Section 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
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Officers
--------
Section 4.1. Executive Officers; Election; Term of Office; Resignation;
Removal; Vacancies. The Board of Directors shall elect a Chairman of the Board,
a President, a Chief Financial Officer and a Secretary, and it may, if it so
determines, choose a Vice Chairman of the Board from among its members. The
Board of Directors may also choose one or more Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers. Any
number of offices may be held by the same person.
Each such officer shall hold office until the first meeting of the Board of
Directors after the annual meeting of stockholders next succeeding his election,
and until his successor is elected and qualified or until his earlier
resignation or removal.
Any officer may resign at any time upon written notice to the corporation.
The Board of Directors may remove any officer with or without cause at any
time, but such removal shall be without prejudice to the contractual rights of
such officer, if any, with the corporation.
Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers of the
corporation shall have such powers and duties in the management of the
corporation as may be prescribed in a resolution by the Board of Directors or
any employment agreements approved by resolution of the Board of Directors and,
to the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board of Directors. The Board of Directors may
require any officer, agent or employee to give security for the faithful
performance of his duties.
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<PAGE>
ARTICLE V
---------
Stock
-----
Section 5.1. Certificates. Every holder of stock shall be entitled to have
a certificate signed by or in the name of the corporation by the Chairman of the
Board or Vice Chairman of the Board, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the corporation certifying the number of shares owned
by such stockholder in the corporation. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
Section 5.2. Lost Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
----------
Indemnification
---------------
Section 6.1. Right to Indemnification. The corporation shall, to the
maximum extent and in the manner permitted by the General Corporation Law of the
State of Delaware and the corporation's certificate of incorporation indemnify
and hold harmless any person against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed action, suit,
or proceeding in which such person was or is a party or is threatened to be made
a party by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation.
The Board of Directors is expressly authorized to enter into
indemnification agreements, with such persons as the Board of Directors deems
appropriate, to effectuate the rights set forth in this Article VI and in the
corporation's certificate of incorporation.
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<PAGE>
ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
Section 7.2. Seal. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 7.4. Interested Directors; Quorum. No contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
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<PAGE>
Section 7.5. Form of Records. Any records maintained by the corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time.
Section 7.6. Amendment of By-Laws. These by-laws may be altered or
repealed, and new bylaws made, by the Board of Directors, but the stockholders
may make additional by-laws and may alter and repeal any by-laws whether adopted
by them or otherwise.
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STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease, made as of this 15th day of December 1998, between GCS
REALTY CO.,d/b/a ROYAL REALTY COMPANY, 55 East Grassy Sprain Road, Yonkers, New
York 10710,party of the first part, hereinafter referred to as OWNER, and
Educational Video Conferencing, Inc., 35 East Grassy Sprain Road, Suite #201,
Yonkers, New York 10701, party of the second part, hereinafter referred to as
TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
Suite #200 (1628 s.f.) and Suite #210 (845 s.f.) in the building known as 35
East Grassy Sprain Road in the City of Yonkers, State of New York, for the term
of four (4) years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the 15th day of December nineteen hundred
and ninety-seven, and to end on the 31st day of August Two Thousand and two,
both dates inclusive, at an annual rental rate of
See Rent rider annexed hereto and made a part hereof
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues public and private, at the time of
payment, in equal monthly installments in advance on the first day of each month
during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first monthly installment(s) on the execution hereof (unless this lease
be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent: 1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy: 2. Tenant shall use and occupy demised premises for general office
use and for no other purpose.
<PAGE>
Tenant 3. Tenant shall make no changes in or to the
Alterations: demised premises of any nature without Owner's
prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved in each instance by Owner. Tenant shall,
before making any alterations, additions, installments or improvements, at its
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval thereof and shall deliver promptly duplicates of all such
permits, approvals and certificates to Owner and Tenant agrees to carry and will
cause Tenant's contractors and sub-contractors to carry such workman's
compensation, general liability, personal and property damage insurance as Owner
may require. If any mechanic's lien is filed against the demised premises, or
the building of which the same forms a part, for work claimed to have been done
for, or materials furnished to Tenant, whether or not done pursuant to this
article, the same shall be discharged by Tenant within thirty days thereafter,
at Tenant's expense, by payment or filing the bond required by law. All fixtures
and all paneling, partitions, railings and like installations, installed in the
premises at any time, either by Tenant or by Owner on Tenant' s behalf, shall,
upon installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the premises by Tenant prior to
the expiration of the lease, at Tenant's expense. Nothing in this Article shall
be construed to give Owner title to or to prevent Tenant's removal of trade
fixtures, moveable office furniture and equipment, but upon removal of any such
from the premises or upon removal of other installations as may be required by
Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed, by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or may be removed from
the premises by Owner, at Tenant's expense.
Maintenance 4. Tenant shall, throughout the term of this lease,
and take good care of the demised premises and the
Repairs: fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised
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<PAGE>
premises or any other part of the building and the systems and equipment hereof,
whether requiring structural or nonstructural repairs caused by or resulting
from carelessness, omission, neglect or improper conduct of Tenant, Tenant's
subtenants, agents, employees, invitees or licensees, or which arise out of any
work, labor, service or equipment done for or supplied to Tenant or any
subtenant or arising out of the installation, use or operation of the property
or equipment of Tenant or any subtenant. Tenant shall also repair all damage to
the building and the demised premises caused by the moving of Tenant's fixtures,
furniture and equipment. Tenant shall promptly make, at Tenant's expense, all
repairs in and to the demised premises for which Tenant is responsible, using
only the contractor for the trade or trades in question, selected from a list of
at least two contractors per trade submitted by Owner. Any other repairs in or
to the building or e facilities and systems thereof for which Tenant is
responsible shall be performed by Owner at the Tenant's expense. Owner shall
maintain in good working order and repair the exterior and the structural
portions of the building, including the structural portions of its demised
premises, and the public portions of the building interior and the building
plumbing, electrical, heating and ventilating systems (to the extent such
systems presently exist) serving the demised premises. *Tenant agrees to give
prompt notice of any defective condition in the premises for which Owner may be
responsible hereunder. There shall be no allowance to Tenant for diminution of
rental value and no liability on the part of Owner by reason of inconvenience,
annoyance or injury to business arising from Owner or others making repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. It is specifically agreed that Tenant shall not be entitled to any
setoff or reduction of rent by reason of any failure of Owner to comply with the
covenants of this or any other article of this Lease. Tenant agrees that Tenant'
s sole remedy at law in such instance will be by way of an action for damages
for breach of contract. The provisions of this Article 4 shall not apply in the
case of fire or other casualty which are dealt with in Article 9 hereof.
Window 5. Tenant will not clean nor require, permit, suffer
Cleaning: or allow any window in the demised premises to be
cleaned from the outside in violation of Section 202
of the Labor Law or any other applicable law or of the Rules of the Board of
- --------
* In order to enable the air-condition system to function properly Tenant shall
keep all windows closed and shall lower and close window covering when necessary
because of the of the sun's position. Tenant shall comply with all regulations
and requirements Landlord may establish for the functioning and protection of
the HVAC system.
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<PAGE>
Requirements 6. Prior to the commencement of the lease term, if
of Law, Tenant is then in possession, and at all
Fire Insurance, thereafter, Tenant, at Tenant's sole cost and
Floor Loads: expense, shall promptly comply with all present
and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules and regulations of the New York Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order or
duty upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's use or manner of use thereof, (including Tenant's
permitted use) or, with respect to the building if arising out of Tenant's use
or manner of use of the premises or the building (including the use permitted
under the lease). Nothing herein shall require Tenant to make structural repairs
or alterations unless Tenant has, by its manner of use of the demised premises
or method of operation therein, violated any such laws, ordinances, orders,
rules, regulations or requirements with respect thereto. Tenant may, after
securing Owner to Owner's satisfaction against all damages, interest, penalties
and expenses, including, but not limited to, reasonable attorney's fees, by cash
deposit or by surety bond in an amount and in a company satisfactory to Owner,
contest and appeal any such laws, ordinances, orders, rules, regulations or
requirements provided same is done with all reasonable promptness and provided
such appeal shall not subject Owner to prosecution for a criminal offense or
constitute a default under any lease or mortgage under which Owner may be
obligated, or cause the demised premises or any part thereof to be condemned or
vacated. Tenant shall not do or permit any act or thing to be done in or to the
demised premises which is contrary to law, or which will invalidate or be in
conflict with public liability, fire or other policies of insurance at any time
carried by or for the benefit of Owner with respect to the demised premises or
the building of which the demised premises form a part, or which shall or might
subject Owner to any liability or responsibility to any person or for property
damage. Tenant shall not keep anything in the demised premises except as now or
hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire
Insurance Rating Organization or other authority having jurisdiction, and then
only in such manner and such quantity so as not to increase the rate for fire
insurance applicable to the building, nor use the premises in a manner which
will increase the insurance rate for the building or any property located
therein over that in effect prior to the commencement of Tenant's occupancy.
Tenant shall pay all costs, expenses, fines, penalties, or damages, which may be
imposed upon Owner by reason of Tenant's failure to comply with the provisions
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<PAGE>
of this article and if by reason of such failure the fire insurance rate shall,
at the beginning of this lease or at any time thereafter, be higher than it
otherwise would be, then Tenant shall reimburse Owner, as additional rent
hereunder, for that portion of all fire insurance premiums thereafter paid by
Owner which shall have been charged because of such failure by Tenant. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" of rate for the building or demised premises issued by the New York
Fire Insurance Exchange, or other body making fire insurance rates applicable to
said premises shall be conclusive evidence of the facts therein stated and of
the several items and charges in the fire insurance rates then applicable to
said premises. Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which it was designed to
carry and which is allowed by law. Owner reserves the right to prescribe the
weight and position of all safes, business machines and mechanical equipment.
Such installations shall be placed and maintained by Tenant, at Tenant's
expense, in settings sufficient, in Owner's judgement, to absorb and prevent
vibration, noise and annoyance.
Subordination: 7. This lease is subject and subordinate to all
ground or underlying leases and to all
mortgages which may now or hereafter affect such leases or the real property of
which demised premises are a part and to all renewals, modifications,
consolidations, replacements and extensions of any such underlying leases and
mortgages. This clause shall be self-operative and no further instrument of
subordination shall be required by any ground or underlying lessor or by any
mortgagee, affecting any lease or the real property of which the demised
premises are a part. In confirmation of such subordination, Tenant shall from
time to time execute promptly any certificate that Owner may request.
Property Loss 8. Owner or its agents shall not be liable for any
Damage, Reimbursement damage to property of Tenant or of others
Indemnity: entrusted to employees of the building, nor for loss
of or damage to any property of Tenant by theft or
otherwise, nor for any injury or damage to persons or property resulting from
any cause of whatsoever nature, unless caused by or due to the negligence of
Owner, its agents, servants or employees. Owner or its agents will not be liable
for any such damage caused by other tenants or persons in, upon or about said
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, darkened or bricked up (or permanently closed, darkened or bricked up,
if required by law) for any reason whatsoever including, but not limited to
Owner's own acts, Owner shall not be liable for any damage Tenant may sustain
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thereby and Tenant shall not be entitled to any compensation therefor nor
abatement or diminution of rent nor shall the same release Tenant from its
obligations hereunder nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Owner shall not be reimbursed by
insurance, including reasonable attorneys fees, paid, suffered or incurred as a
result of any breach by Tenant, Tenant's agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
carelessness, negligence or improper conduct of the Tenant, Tenant's agents,
contractors, employees, invitees or licensees. Tenant's liability under this
lease extends to the acts and omissions of any sub-tenant, and any agent,
contractor, employee, invitee or licensee of any sub-tenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, 9. (a) If the demised premises or any part
Fire and Other thereof shall be damaged by fire or other
Casualty: casualty, Tenant shall give immediate notice
thereof to Owner and this lease shall continue in
full force and effect except as hereinafter set forth. (b) If the demised
premises are partially damaged or rendered partially unusable by fire or other
casualty, the damages thereto shall be repaired by and at the expense of Owner
and the rent and other items of additional rent, until such repair shall be
substantially completed, shall be apportioned from the day following the
casualty according to the part of the premises which is usable. (c) If the
demised premises are totally damaged or rendered wholly, unusable by fire or
other casualty, then the rent and other items of additional rent as hereinafter
expressly provided shall be proportionately paid up to the time of the casualty
and thenceforth shall cease until the date when the premises shall have been
repaired and restored by Owner (or sooner reoccupied in part by Tenant then rent
shall be apportioned as provided in subsection (b)above), subject to Owner's
right to elect not to restore the same as hereinafter provided. (d) If the
demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall [Rider to be added if
necessary] not be more than 60 days after the giving of such notice, and upon
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the date specified in such notice the term of this lease shall expire as fully
and completely as if such date were the date set forth above for the termination
of this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice however, to Landlord's rights and remedies against Tenant
under the lease provisions in effect prior to such termination, and any rent
owing shall be paid up to such date and any payments of rent made by Tenant
which were on account of any period subsequent to such date shall be returned to
Tenant. Unless Owner shall serve a termination notice as provided for herein,
Owner shall make the repairs and restorations under the conditions of (b) and
(c) hereof, with all reasonable expedition, subject to delays due to adjustment
of insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's restoration by removing from
the premises as promptly as reasonably possible, all of Tenant's salvageable
inventory, and moveable equipment, furniture, and other property. Tenant's
liability or rent shall resume five (5) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability that may exist as a
result of damage from fire or other casualty. Notwithstanding the foregoing,
including Owner's obligation to restore under subparagraph (b) above, each party
shall look first to any insurance in its favor before making any claim against
the other party for recovery for loss or damage resulting from fire or other
casualty, and to the extent that such insurance is in force and collectible and
to the extent permitted by law, Owner and Tenant each hereby releases and waives
all right of recovery with respect to subparagraphs (b), (d), and (e) above,
against the other or any one claiming through or under each of them by way of
subrogation or otherwise. The release and waiver herein referred to shall be
deemed to include any loss or damage to the demised premises and/or to any
personal property, equipment, trade fixtures, goods and merchandise located
therein. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent, that such
waiver can be obtained only by the payment of additional premiums, then the
party benefiting from the waiver shall pay such premium within ten days after
written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that Owner
will not carry insurance on Tenant's furniture and/or furnishings or any
fixtures or equipment, improvements, or appurtenances removable by Tenant and
agrees that Owner will not be obligated to repair any damage thereto or replace
the same. (f) Tenant hereby waives the provisions of Section 227 of the Real
Property Law and agrees that the provisions of this article shall govern and
control in lieu thereof.
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Eminent 10. If the whole or any part of the demised
Domain: premises shall be acquired or condemned by Eminent
Domain for any public or quasi public use or
purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease and assigns to
Owner, Tenant's entire interest in any such award. Tenant shall have the right
to make an independent claim to the condemning authority for the value of
Tenant's moving expenses and personal property, trade fixtures and equipment,
provided Tenant is entitled pursuant to the terms of the lease to remove such
property, trade fixture and equipment at the end of the term and provided
further such claim does not reduce Owner's award.
Assignment, 11. Tenant, for itself, its heirs, distributees,
Mortgage, executors, administrators, legal representative,
Etc.: successor and assigns, expressly covenants that it
shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant or the
majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, undertenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric 12. Rates and conditions in respect to submetering
Current: or rent inclusion, as the case may be, to be added
in RIDER attached hereto. Tenant covenants and
agrees that at all times its use of electric current
shall not exceed the capacity of existing feeders to the building or the risers
or wiring installation and Tenant may not use any electrical equipment which, in
Owner's opinion, reasonably exercised, will overload such installations or
interfere with the use thereof by other tenants of the building. The change at
any time of the character of electric service shall in no wise make Owner liable
or responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
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Access to 13. Owner or Owner's agents shall have the right
Premises: (but shall not be obligated) to enter the demised
premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to the demised
premises or to any other portion of the building or which Owner may elect to
perform. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided they are concealed within the walls, floor, or ceiling. Owner
may, during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the demised
premises, Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property, such entry shall not render Owner
or its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all of Tenant's property therefrom Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder.
Vault, 14. No Vaults, vault space or area, whether or not
Vault Space, enclosed or covered, not within the property line of
Area: the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan,
or anything contained elsewhere in this lease to the contrary notwithstanding.
Owner makes no representation as to the location of the property line of the
building. All vaults and vault space and all such areas not within the property
line of the building, which Tenant may be permitted to use and/or occupy, is to
be used and/or occupied under a revocable license, and if any such license be
revoked, or if the amount of such space or area be diminished or required by any
federal, state or municipal authority or public utility, Owner shall not be
subject to any liability nor shall Tenant be entitled to any compensation or
diminution or abatement of rent, nor shall such revocation, diminution or
requisition be deemed constructive or actual eviction. Any tax, fee or charge of
municipal authorities for such vault or area shall be paid by Tenant.
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Occupancy: 15. Tenant will not at any time use or occupy the
demised premises in violation of the certificate of
occupancy issued for the building of which the demised premises are a part.
Tenant has inspected the premises and accepts them as is, subject to the riders
annexed hereto with respect to Owner's work, if any. In any event, Owner makes
no representation as to the condition of the premises and Tenant agrees to
accept the same subject to violations, whether or not of record.
Bankruptcy: 16. (a) Anything elsewhere in this lease to the
contrary notwithstanding, this lease may be can-
celled by Owner by the sending of a written notice to Tenant within a reasonable
time after the happening of any one or more of the following events: (1) the
commencement of a case in bankruptcy or under the laws of any state naming
Tenant as the debtor; or (2) the making by Tenant of an assignment or any other
arrangement for the benefit of creditors under any state statute. Neither Tenant
nor any person claiming through or under Tenant, or by reason of any statute or
order of court, shall thereafter be entitled to possession of the premises
demised but shall forthwith quit and surrender the premises. If this lease shall
be assigned in accordance with its terms, the provisions of this Article 16
shall be applicable only to the party then owning Tenant's interest in this
lease.
(b) it is stipulated and agreed that in the event of
the termination of this lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion of the
term demised and the fair and reasonable rental value of the demised premises
for the same period. In the computation of such damages the difference between
any installment of rent becoming due hereunder after the date of termination and
the fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof be re-let by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such re- letting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
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and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
Default: 17. (1) If Tenant defaults in fulfilling any of the
covenants of this lease other than the covenants for
the payment of rent or additional rent; or if the demised premises become vacant
or deserted; or if any execution or attachment shall be issued against Tenant or
any of Tenant's property whereupon the demised premises shall be taken or
occupied by someone other than Tenant; or if this lease be rejected under {}235
of Title 11 of the U.S. Code (bankruptcy code); or if Tenant shall fail to move
into or take possession of the premises within thirty (30) days after the
commencement of the term of this lease, then, in any one or more of such events,
upon Owner serving a written fifteen (15) days notice upon Tenant specifying the
nature of said default and upon the expiration of said fifteen (15) days, if
Tenant shall have failed to comply with or remedy such default, or if the said
default or omission complained of shall be of a nature that the same cannot be
completely cured or remedied within said fifteen (15) day period, and if Tenant
shall not have diligently commenced curing such default within such fifteen (15)
day period, and shall not thereafter with reasonable diligence and in good
faith, proceed to remedy or cure such default, then Owner may serve a written
five (5) days' notice of cancellation of this lease upon Tenant, and upon the
expiration of said five (5) days this lease and the term thereunder shall end
and expire as fully and completely as if the expiration of such five (5) day
period were the day herein definitely fixed for the end and expiration of this
lease and the term thereof and Tenant shall then quit and surrender the demised
premises to Owner but Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any of such events an Owner may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
Remedies of 18. In case of any such default, re-entry, expira-
Owner and tion and/or dispossess by summary proceedings or
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Waiver of otherwise, (a) the rent shall become due thereupon
Redemption: and be paid up to the time of such re-entry,
dispossess and/or expiration, (b) Owner may re-let
the premises or any part or parts thereof, either in the name of Owner or
otherwise, for a term or terms, which may at Owner's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of is lease and may grant concessions or free rent or charge a higher rental
than that in this lease, and/or (c) Tenant or the legal representatives of
Tenant shall also pay Owner as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and/or covenanted to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to
re-let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such expenses as Owner may incur in connection
with re-letting, such as legal expenses, reasonable attorneys' fees, brokerage,
advertising and for keeping the demised premises in good order or for preparing
the same for re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements, and/or decorations in the demised
premises as Owner, in Owner's sole judgement, considers advisable and necessary
for the purpose of re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Owner shall
in no event be liable in any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are re-let, for failure to
collect the rent thereof under such re-letting, and in no event shall Tenant be
entitled to receive any excess, if any, of such net rents collected over the
sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for
any cause, or in the event
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of Owner obtaining possession of demised premises, by reason of the violation by
Tenant of any of the covenants and conditions of this lease, or otherwise.
Fees and 19. If Tenant shall default in the observance or
Expenses: performance of any term or covenant on Tenant's
part to be observed or performed under or by virtue
of any of the terms or provisions in any article of this lease, after notice if
required and upon expiration of any applicable grace period if any, (except in
an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
makes any expenditures or recurs any obligations for the payment of money,
including but not limited to reasonable attorneys' fees, in instituting,
prosecuting or defending any action or proceeding, and prevails in any such
action or proceeding then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner, as damages.
Building 20. Owner shall have the right at any time without
Alterations the same constituting an eviction and without
Management: incurring liability to Tenant therefor to change
the arrangement and/or location of public entrances,
passageways, doors, doorways, corridors, elevators, stairs, toilets or other
public parts of the building and to change the name, number or designation by
which the building may be known. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or other
Tenants making any repairs in the building or any such alterations, additions
and improvements. Furthermore, Tenant shall not have any claim against Owner by
reason of Owner's imposition of such controls of the manner of access to the
building by Tenant's social or business visitors as the Owner may deem necessary
for the security of the building and its occupants.
No Repre- 21. Neither Owner nor Owner's agents have made
sentations any representations or promises with respect to the
by Owner: physical condition of the building, the land upon
which it is erected or the demised premises, the
rents, leases, expenses of operation or any other matter or thing
affecting or related to the premises except as herein expressly set
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forth and no rights, easements or licenses are acquired by Tenant by implication
or otherwise except as expressly set forth in the provisions of this lease.
Tenant has inspected the building and the demised premises and is thoroughly
acquainted with their condition and agrees to take the same "as is" and
acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
End of 22. Upon the expiration or other termination of the
Term: term of this lease, Tenant shall quit and surrender
to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet 23. Owner covenants and agrees with Tenant that
Enjoyment: upon Tenant paying the rent and additional rent and
observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject, nevertheless,
to the terms and conditions of this lease including, but not limited to, Article
31 hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure 24. If Owner is unable to give possession of the
to Give demised premises on the date of the commencement
Possession: of the term hereof, because of the holding-over
or retention of possession of any tenant,
undertenant or occupants or if the demised premises are located in a building
being constructed, because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact that a certificate
of occupancy has not been procured or for any other reason, Owner shall not be
subject to any liability for failure to give possession on said date and the
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validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Owner's inability to obtain possession or complete construction) until after
Owner shall have given Tenant written notice that the Owner is able to deliver
possession in condition required by this lease. If permission is given to Tenant
to enter into the possession of the demises premises or to occupy premises other
than the demised premises prior to the date specified as the commencement of the
term of this lease, Tenant covenants and agrees that such possession and/or
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease except the obligation to pay the fixed annual rent set
forth in the preamble to this lease. The provisions of this article are intended
to constitute "an express provision to the contrary" within the meaning of
Section 223-a of the New York Real Property Law.
No Waiver: 25. The failure of Owner to seek redress for viola-
tion of, or to insist upon the strict performance of
any covenant or condition of this lease or of any of the Rules or Regulations,
set forth or hereafter adopted by Owner, shall not prevent a subsequent act
which would have originally constituted a violation from having all the force
and effect of an original violation. The receipt by Owner of rent and/or
additional rent with knowledge of the breach of any covenant of this lease shall
not be deemed a waiver of such breach and no provision of this lease shall be
deemed to have been waived by Owner unless such waiver be in writing signed by
Owner. No payment by Tenant or receipt by Owner of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement of any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this lease provided. No act or thing done by Owner or Owner's
agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Waiver of 26. It is mutually agreed by and between Owner and
Trial by Tenant that the respective parties hereto shall and
Jury: they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal injury or
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property damage) on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Owner and Tenant, Tenant's use of
or occupancy of said premises, and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Owner
commences any proceeding or action for possession including a summary proceeding
for possession of the premises, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding including a counterclaim
under Article 4 except for statutory mandatory counterclaims.
Inability to 27. This Lease and the obligation of Tenant to pay
Perform: rent hereunder and perform all of the other
covenants and agreements hereunder on part of Tenant
to be performed shall in no wise be affected, impaired or excused because Owner
is unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures, or other materials if Owner is prevented or delayed from so doing by
reason of strike or labor troubles or any cause whatsoever including, but not
limited to, government preemption or restrictions or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions which have been or are affected, either
directly or indirectly, by war or other emergency.
Bills and 28. Except as otherwise in this lease provided, a
Notices: bill, statement, notice or communication which Owner
may desire or be required to give to Tenant, shall
be deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
[Rider to be added if necessary] building of which the demised premises form a
part or at the last known residence address or business address of Tenant or
left at any of the aforesaid premises addressed to Tenant, and the time of the
rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant
to Owner must be served by registered or certified mail addressed to Owner at
the address first hereinabove given or at such other address as Owner shall
designate by written notice.
Services 29. As long as Tenant is not in default under any
Provided by of the covenants of this lease beyond the applicable
Owners: grace period provided in this lease for the curing
of such defaults, Owner shall provide: (a) necessary
elevator facilities on business days from 8 a.m. to 6 p.m. and have
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one elevator subject to call at all other times; (b) heat to the demised
premises when and as required by law, on business days from 8 a.m. to 6 p.m.;
(c) water for ordinary lavatory purposes, but if Tenant uses or consumes water
for any other purposes or in unusual quantities (of which fact Owner shall be
the sole judge), Owner may install a water meter at Tenant's expense which
Tenant shall thereafter maintain at Tenant's expense in good working order and
repair to register such water consumption and Tenant shall pay for water
consumed as shown on said meter as additional rent as and when bills are
rendered; (d) cleaning service for the demised premises on business days at
Owner's expense provided that the same are kept in order by Tenant. If, however,
said premises are to be kept clean by Tenant, it shall be done at Tenant's sole
expense, in a manner reasonably satisfactory to Owner and no one other than
persons approved by Owner shall be permitted to enter said premises or the
building of which they are a part for such purpose. Tenant shall pay Owner the
cost of removal of any of Tenant's refuse and rubbish from the building; (e) If
the demised premises are serviced by Owner's air conditioning/cooling and
ventilating system, air conditioning/cooling will be furnished to tenant from
May 15th through September 30th on business days (Mondays through Fridays,
holidays excepted) from 8:00 a.m. to 6:00 p.m., and ventilation will be
furnished on business days during the aforesaid hours except when air
conditioning/cooling is being furnished as aforesaid. If Tenant requires air
conditioning/cooling or ventilation for more extended hours or on Saturdays,
Sundays or on holidays, as defined under Owner's contract with Operating
Engineers Local 94-94A, Owner will furnish the same at Tenant's expense. [RIDER
to be added in respect to rates and conditions for such additional service;] (f)
Owner reserves the right to stop services of the heating, elevators, plumbing,
air-conditioning, electric, power systems or cleaning or other services, if any,
when necessary by reason of accident or for repairs, alterations, replacements
or improvements necessary or desirable in the judgment of Owner for as long as
may be reasonably required by reason thereof. If the building of which the
demised premises are a part supplies manually Operated elevator service, Owner
at any time may substitute automatic control elevator service and proceed
diligently with alterations necessary therefor without in any wise affecting
this lease or the obligation of Tenant hereunder.
Captions: 30. The Captions are inserted only as a matter of
convenience and for reference and in no way define,
limit or describe the scope of this lease nor the intent of any provisions
thereof.
Definitions: 31. The term "office", or "offices", wherever used
in this lease, shall not be construed to mean
premises used as a store or stores, for the sale or display, at any time, of
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goods, wares or merchandise, of any kind, or as a restaurant, shop, booth,
bootblack or other stand, barber shop, or for other similar purposes or for
manufacturing. The term "Owner" means a landlord or lessor, and as used in this
lease means only the owner, or the mortgagee in possession, for the time being
of the land and building (or the owner of a lease of the building or of the land
and building) of which the demised premises form a part, so that in the event of
any sale or sales of said land and building or of said lease, or in the event of
a lease of said building, or of the land and building, the said Owner shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Owner hereunder, and it shall be deemed and construed without further agreement
between the parties or their successors in interest, or between the parties and
the purchaser, at any such sale, or the said lessee of the building, or of the
land and building, that the purchaser or the lessee of the building has assumed
and agreed to carry out any and all covenants and obligations of Owner,
hereunder. The words "re-enter" and "re-entry" as used in this lease are not
restricted to their technical legal meaning. The term "business days" as used in
this lease shall exclude Saturdays, Sundays and all days as observed by the
State or Federal Government as legal holidays and those designated as holidays
by the applicable building service union employees service contract or by the
applicable Operating Engineers contract with respect to HVAC service. Wherever
it is expressly provided in this lease that consent shall not be unreasonably
withheld, such consent shall not be unreasonably delayed.
Adjacent 32. If an excavation shall be made upon land
Excavation- adjacent to the demised premises, or shall be autho-
Shoring: rized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation,
license to enter upon the demised premises for the purpose of doing such work as
said person shall deem necessary to preserve the wall or the building of which
demised premises form a part from injury or damage and to support the same by
proper foundations without any claim for damages or indemnity against Owner, or
diminution or abatement of rent.
Rules and 33. Tenant and Tenant's servants, employees,
Regulations: agents, visitors, and licensees shall observe faith-
fully, and comply strictly with, the Rules and Regu-
lations and such other and further reasonable Rules and Regulations as Owner or
Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon
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the parties hereto. The right to dispute the reasonableness of any additional
Rule or Regulation upon Tenant's part shall be deemed waived unless the same
shall be asserted by service of a notice, in writing upon Owner within fifteen
(15) days after the giving of notice thereof. Nothing in this lease contained
shall be construed to impose upon Owner any duty or obligation to enforce the
Rules and Regulations or terms, covenants or conditions in any other lease, as
against any other tenant and Owner shall not be liable to Tenant for violation
of the same by any other tenant, its servants, employees, agents, visitors or
licensees.
Security: 34. Tenant has deposited with Owner the sum of
$ as security for the faithful
performance and observance by Tenant of the terms,
provisions and conditions of this lease; it is agreed that in the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent and additional rent,
Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which Tenant is in default or for any sum which Owner may
expend or may be required to expend by reason of Tenant's default in respect of
any of the terms, covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the re-letting of the premises, whether
such damages or deficiency accrued before or after summary proceedings or other
re-entry by Owner. In the event that Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this lease, the
security shall be returned to Tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the demised premises to Owner.
In the event of a sale of the land and building or leasing of the building, of
which the demised premises form a part, Owner shall have the right to transfer
the security to the vendee or lessee and Owner shall thereupon be released by
Tenant from all liability for the return of such security; and Tenant agrees to
look to the new Owner solely for the return of said security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made of
the security to [Space to be filled in or deleted] a new Owner. Tenant further
covenants that it will not assign or encumber or attempt to assign or encumber
the monies deposited herein as security and that neither Owner nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
Estoppel 35. Tenant, at any time, and from time to time, upon
Certificate: at least 10 days' prior notice by Owner, shall
execute, acknowledge and deliver to Owner, and/or
to any other person, firm or corporation specified by Owner, a statement
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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 modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by Owner under this Lease, and, if so, specifying each such default.
Successors 36. The covenants, conditions and agreements con-
and Assigns: tained in this lease shall bind and inure to the
benefit of Owner and Tenant and their respective
heirs, distributees, executors, administrators, successors, and except as
otherwise provided in this lease, their assigns. Tenant shall look only to
Owner's estate and interest in the land and building, for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
against Owner in the event of any default by Owner hereunder, and no other
property or assets of such Owner (or any partner, member, officer or director
thereof, disclosed or undisclosed), shall be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenant's remedies under or with
respect to this lease, the relationship of Owner and Tenant hereunder, or
Tenant's use and occupancy of the demised premises.
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[Space to be filled in or deleted.]
EXECUTED BY LANDLORD this ____ day of ________, 199
GCS REALTY CO., INC. d/b/a
ROYAL REALTY COMPANY
Attest: By:
--------------------------------
Print Name:
- --------------------- -------------------------
Title: Title:
--------------- ------------------------------
(CORPORATE SEAL)
EXECUTED BY TENANT THIS 5TH DAY OF APRIL, 1999
Attest/Witness By:
/s/ DR. AROL I. BUNTZMAN
- -------------------- ------------------------------
Print Name: Dr.Arol I. Buntzman
- --------------------- -------------------------
Title: Title: Chairman and CEO
--------------- ------------------------------
(CORPORATE SEAL)
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ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 ,
before me personally came ,
to me known, who being by me duly sworn, did depose and say that
he resides in ;
that he is the of
the corporation described in and which executed the foregoing
instrument, as OWNER; that he knows the seal of said corporation;
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.
---------------------------------
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 ,
before me personally came ,
to me known, who being by me duly sworn, did depose and say that
he resides in ;
that he is the of
the corporation described in and which executed the foregoing
instrument, as TENANT; that he knows the seal of said
corporation; 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.
---------------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of
On this day of , 19 ,
before me personally came
to be known and known to me to be the individual
described in and who, as OWNER, executed the foregoing instrument
and acknowledged to me that he
executed the same.
---------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this day of , 19 ,
before me personally came
to be known and known to me to be the individual
described in and who, as TENANT, executed the foregoing
instrument and acknowledged to me that he
executed the same.
---------------------------------
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<PAGE>
RIDER TO LEASE DATED December 15th 1997
BY AND BETWEEN
GCS REALTY CO.,INC. d/b/a ROYAL REALTY COMPANY, as Landlord
and
EDUCATIONAL VIDEO CONFERENCING, Inc., as Tenant
PREMISES: 35 East Grassy Sprain Road, Yonkers, N.Y.
37. If the provisions of this Rider conflict in any way with the
provisions of the printed form lease to which this Rider is attached, the
provisions of this Rider shall control.
38. This Lease constitutes the entire agreement between the parties
and any all prior understanding, representations, agreement and contracts,
written or oral, are merged herein, and no statement, representation, claim or
warranty not set forth herein shall be binding upon the party against whom the
same may be asserted.
39. The Tenant expressly covenant, represent, warrant and agree that
it shall use and occupy the demised premises for the express and limited uses in
this Lease specifically specified only and for no other use or purpose. The
Tenants make this covenant, warranty, representation and agreement knowing that
the Landlord is entering into this Lease in reliance thereon that such covenant,
warranty, representation and agreement is the essence of this agreement. In the
event of a breach or threatened breach by Tenants or anyone claiming under it of
this article, Landlord shall have the right of injunction and the right to
invoke any and all remedies under this lease and any remedies allowed at law or
equity by reason of such breach or threatened breach by Tenants.
40. The Tenant agrees to pay as rent in addition to the rent set forth
heretofore and hereafter in this lease, the following:
In the event there should be any increase in the amount of real
property taxes payable by the Landlord to any municipal government having power
to tax said premises, or any special assessments, on the entire premise during
any tax year commencing during any lease year of the term of this lease, over
the tax payable in the base year, the Tenant shall pay as additional rent, a
proportionate share of the amount of such increase, if any, during each lease
year of the term of this lease. Such additional rent shall be payable to the
Landlord within Thirty (30) days after demand by the Landlord. The term "Base
tax year" shall mean fiscal tax year 1998/99 for taxes payable on a fiscal year
basis, or calendar year 1998 for those payable on a calendar year basis. Tax
increases for the last year of this lease, shall be apportioned. The term "A
proportionate share of the amount of increase" for the purposes of this
paragraph shall mean such part of the increase obtained by multiplying the
increase by a fraction of which the numerator shall be the area in square feet
of the office space leased by Tenant, and the denominator shall be the area in
square feet of all rentable space in existence in the entire premises, including
Tenant's space, during the lease year in question. Basement space shall not be
included in the aforesaid computation. For the purpose of this paragraph, the %
shall be 4.8%.
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If landlord elects to add on to the building, the calculation
determining Tenant rent tax percentage in paragraph 40 shall be adjusted
accordingly to reflect the increase in the total square footage of the building.
If event of a reduction in real estate taxes applicable to the period
tenant is in occupancy and Tenant has paid its proportionate share of taxes as
provided herein Tenant shall be entitled to a rent tax rebate proportionate to
the percentage of space occupied by Tenant in the building during said period
less Tenant's proportionate share of legal fees, appraisals, administrative
expense and other costs and disbursements attributable to the tax reduction.
Said rebate shall be paid in a timely manner.
41. Tenant shall keep the premises in good, clean condition including
its use of the bathroom facilities. Tenant shall be responsible for and shall,
at its sole cost and expense, make all needed replacement of cracked or broken
glass, windows and doors, floor covering and hung ceiling for damages caused by
tenant. At the expiration of this lease, Tenant shall surrender the Premises in
good condition, reasonable wear and tear and loss by fire or other casualty
excepted and shall surrender all keys for the Premises to Landlord and shall
inform Landlord of all combinations of door locks which lead to and from the
demised premises. Upon moveout by Tenant, should the Premises require any
repairs which are the responsibility of Tenant hereunder, Landlord shall have
the right to make such repair at Tenant's sole cost.
42. Intentionally Deleted.
43. The common area plumbing facilities shall not be used for any
purpose other than that for which they are constructed, and no foreign substance
of any kind or grease or any materials containing grease, shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from a
violation of this provision shall be borne by Tenant, who shall, or whose
employees, agents or invitees shall have caused it.
44. Electric Current: Electricity is included in rent.
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General Conditions
------------------
1. Landlord shall not be liable to Tenant for any loss or damage or
expense which Tenant may sustain or incur if either the quantity or character of
electric service is changed or is no longer available or suitable for Tenant's
requirements.
2. Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to Tenant's floor(s)
or space (if less than an entire floor) or the capacity of the risers or wiring
installation in the building. Tenant agrees not to connect any additional
electrical equipment to the building electric distribution system, other than
lamps, typewriters, personal computers, video conferencing equipment, photocopy
machines, other small office machines which consume comparable amounts of
electricity, without Landlord's prior written consent. Any riser or risers to
supply Tenant's electrical requirements, upon written request of Tenant but
subject to the prior written approval of Landlord in each instance, will be
installed by Landlord, at Tenant's sole cost and expense, if the same are
reasonably deemed necessary by Landlord and will not cause permanent damage or
injury to the building or demised premises or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations, repairs or
expense or interfere with or disturb other tenants or occupants.
45. Landlord hereby reserves the right at any time to make alterations
or additions to and to build additional stories on the building in which the
premises are contained and to building adjoining the same. Landlord also
reserves the right to construct other buildings or improvements on the subject
premises from time to time and to make alterations thereof or additions thereto
and to build additional stories on any such building or buildings and to build
adjoining same, provided the use and occupancy of the demised premises are not
substantially impaired.
46. Tenant covenants to provide and keep in force during the term of
this lease for the benefit of Landlord and Tenant general liability policies of
insurance in standard form, protecting the Landlord against any liability
whatsoever, occasioned by and acts, or omissions of the Tenant, its agents,
representatives, or employees on or about the demised premises or any
appurtenances thereto. Such policies are to be written by good and solvent
insurance companies, satisfactory to Landlord in the amount of TWO MILLION
($2,000,000) DOLLARS for each occurrence and naming the Landlord as an
additional insured. Said policy shall provide for 20 days notice of cancellation
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to Landlord. Additionally, Tenant hereby agrees to waive any right sobrogation
of which it may have against the Landlord, and Tenant agrees to obtain said
provision in its insurance policy herein. A certificate of all such insurance
shall be delivered to the Landlord when procured. In case of default by the
Tenants in having such policies of insurance issued, Landlord may cause said
policies to be issued at the expense of the Tenant. On default by the Tenant of
the payment of any of the premiums on such policies when payment thereof shall
be due and payable, or shall be demanded by the Landlord whether said insurance
is procured by Landlord or by Tenant, Landlord may thereupon pay them and Tenant
agrees on demand to repay to the Landlord the monies so paid, together with
interest thereon at the rate of nine (9) percent per annum, from the date or
dates of payment, by Landlord, and upon the failure so to pay upon such demand,
the sum or sums so paid by Landlord with interest thereon at the rate of nine
(9) percent per annum and all costs and charges including attorney's fees and
other expenses shall be and are hereby declared to be rent payable on the rent
day next ensuing or at the option of the Landlord on any subsequent rent day,
and shall be collected as additional rent in the same manner and with the same
remedies as if it had been originally reserved hereunder.
47. Tenant shall not, without Landlord's prior written consent, keep
anything within the premises for any purpose which increases the insurance
premium cost or invalidates any insurance policy carried on the premises or
other part of the shopping center. Tenant shall pay as additional rental, upon
demand of Landlord, any such increased premium cost due to Tenant's use or
occupation of the premises. All property, including the property of others,
kept, stored, or maintained within the premises by Tenant shall be at the
Tenant's sole risk. Notwithstanding the above, in no event shall tenant be
permitted to store property of others at the demised premises for any reason.
48. The Landlord has not conveyed to the Tenant any rights in or to
the outer side of the outside walls of the building of which the demised
premises form a part, and the Tenant shall not display or erect any lettering,
signs, advertising, awnings or other projections or do any borings or cuttings,
stringing of wires or make any alterations, declarations, additions or
improvements in or to the outside of the demised premises, including the
windows, or in or to the building of which they form a part, without the prior
written consent of the Landlord.
49. Tenant shall procure, at its sole expense, any permits and
licenses and pay all fees required for the transaction of business in the
Premises and otherwise comply with all local, state, federal and applicable
laws, ordinances and governmental regulations, and pay all fines imposed for any
violations.
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50. The Tenant shall indemnify and hold harmless the Landlord from any
and all liability, damage, expense, cause of action, suits, claims, penalties or
judgments arising from injury to person or property or from loss of life or
property sustained by anyone whomsoever in and about said demised premises, or
any part thereof, or in or upon adjacent property or adjoining sidewalks and
streets of any and every nature and from any matter or thing growing out of the
alteration or repair of tenant's demised premises in the building now or at any
time hereafter, or any part thereof, and/or arising from any act or acts or
omission or omissions of the tenant or its use or occupation of the said demised
premises. The Tenant shall, at its own cost and expense, defend any and all
suits or actions which may be brought against the Landlord or in which the
Landlord may be impleaded with others upon any such above mentioned matter,
claim or claims and in the event of the failure of the Tenants so to do, the
Landlord (at its option, but without being obliged to do so) may at the cost and
expense of the tenants and upon proper written notice to the tenants defend any
and all such suits or actions and the Tenants shall satisfy, pay and discharge
any and all judgments that may be brought against the Landlord or in which the
Landlord may be impleaded with others and in the event of failure of the tenants
to pay the amount or amounts for which the Landlord shall become liable, as
aforesaid, the Landlord may pay the same and the amount or amounts so paid with
interest thereon, shall become due and payable by the Tenants as additional rent
with the next installment of rent which shall become due under this lease.
51. Landlord reserves the right to review and revise any insurance
coverage required to be supplied by the Tenant pursuant to this Lease, with
regard to the option period herein, provided such revised insurance limits are
consistent with insurance being requested at that time from other tenants in the
office building.
52. Landlord herewith represents that it presently has, and will
maintain in effect, a general liability insurance policy or policies with
coverage for bodily injury and property damage in the minimum amount of Two
Million ($2,000,000.00) Dollars, combined single limit. In the event of a claim
by Tenant against Landlord for any liability within the coverage of said policy
or policies, Tenant agrees that Landlord's liability shall be limited to
recovery out of the proceeds of said insurance policy or policies.
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53. Except as herein provided, Tenant shall have no power to do any
act or make any contract which may create or be the foundation for any lien upon
the reversion of Landlord, the premises herein demised or the building or
improvement of which said premises are a part. If any mechanics or other lien or
order for payment of money or any notice of intention to file a lien shall be
filed against the demised premises, or the building or improvement of which said
premises form a part, by reason of or arising out of any labor or material
furnished or alleged to have been furnished, or to be furnished to or for the
demised premises or any occupant thereof or for or by reason of any change,
alteration or the cost or expense thereof, or any contract relating thereto, or
against the interest of Landlord, Tenant at Landlord's direction shall cause the
same to be cancelled and discharged of record by bond or otherwise as allowed by
law at the expense of Tenant within ten (10) days after notice thereof; and
Tenant shall also defend on behalf of Landlord, at Tenant's sole cost and
expense, any action, suit or proceeding which may be brought thereon or for the
enforcement of such lien, liens, or orders, and Tenant will pay any damage and
satisfy and discharge any judgment entered thereon and save harmless Landlord
from any claim or damage resulting therefrom.
Any work performed at the demised premises by an outside contractor
must be performed with the prior written consent of the Landlord as well as
proper advance notice to the Landlord as to the scheduling of any such work.
Certificate of Insurance must be submitted to the office of the Landlord prior
to commencement of any work at the demised premises. The Certificate of
Insurance must set forth GCS Realty Co., Inc. d/b/a Royal Realty Company as an
additional insured.
54. All rental and additional rental shall be payable at the office of
the Landlord to the Landlord's designated agent, the Business Manager, currently
located at 55 East Grassy Sprain Rd., Yonkers, New York, without any set-off or
deduction whatsoever.
55. In the event that there is any dispute under the terms of this
lease (other than with regard to the payment of the rent reserved), or if there
is any disagreement as to its construction and effect, the parties hereto agree
that the tenant shall continue to pay the full fixed rental and additional
rental as hereinbefore provided without any offset or deduction whatsoever. The
tenant shall, under no circumstances, have the right of offset or counterclaim
with regard to the payment of fixed rent or any item of additional rent or to
withhold payment of all or any part thereof, all of which shall be due and
payable at once when due.
56. Rent payments, including additional rent, are due the first of
each month. If for any reason the payment is received later than the 10th of the
month, then a 10% late charge must accompany payment. If received later than the
15th of the month, then a 15% late charge must accompany the payment. If the
charge does not accompany the payment, then the Tenant will be deemed in arrears
the following month. The late charges will be considered as additional rent.
This provision shall also apply to any increase in the security as required by
this lease.
In the event that any check received for the payment of rent or
additional rent due under this lease is returned by the Tenant's bank for any
reason, insufficient or uncollected funds, then in that event, there shall be a
charge of $20.00 for any such returned check.
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57. If the Tenant shall at any time be in default hereunder, and if
the Landlord shall institute an action of summary proceeding against the Tenant
based upon such default, then the Tenant will reimburse the Landlord for the
expense of attorneys' fees and disbursements thereby incurred by the Landlord,
so far as the same are reasonable in amount. Also, so long as the Tenant shall
be a Tenant hereunder the amount of such expenses shall be deemed to be
"additional rent" hereunder and shall be due from the Tenant to the Landlord on
the first day of the month following the incurring of such respective expenses.
58. Intentionally Deleted.
59. Rent security will be increased and be payable on the first (1st)
day of each lease year in which the rent is increased so that the rent security
at all times will be equal to one months rent. Failure to pay the increase in
security as provided for herein when due shall be subject to the late payment
fees as provided in this lease.
At the termination of the lease, Landlord shall be entitled to deduct
from the security deposit, the Tenant's portion of the real estate taxes as
provided in Paragraph 40.
On execution of Lease, Tenant shall remit $2236.00 in additional
security on-hand will then total $4946.00 representing one month security.
60. Tenant shall not have the right to sublet all or part of the
demised premises. If the Tenant wishes to sublet the premises, the Tenant first
shall notify Landlord, in writing, specifying the name of the proposed
sub-tenant, the name and character of its business, the terms, including the
proposed rental charge, of the proposed sublease and current information as to
the financial responsibility and standing of the proposed sub-tenant and shall
provide Landlord with such other information as it reasonably requests. If the
proposed rent is greater than the base rent contained in this lease, the
landlord shall be entitled to receive 50% of any excess in rent above the base
rent. Tenant and the prospective sub-tenant shall execute an affidavit as to the
true rent. Any attempt to subvert this provision shall constitute a default
under the terms of this lease. Provided the Tenant complies with the above
requirements, the Landlord agrees not unreasonably to withhold its consent.
61. Any claim for brokerage commission for the leasing of the premises
shall be paid by the Tenant. In the event that there is any litigation
pertaining to broker's commission each of the parties shall be responsible for
their own legal fees and expenses in defense of any such action.
62. The failure of the Tenants to remove their fixtures or furniture
property at the termination of the term of this lease, or on Tenants otherwise
vacating the premises, shall be deemed an abandonment of said property at the
option of the Landlord.
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63. Landlord shall have the right to enter upon the Premises at any
reasonable time for the purpose of inspecting the same, or of making repairs to
the Premises, or of making repairs, alterations or additions to adjacent
premises, or of showing the Premises to prospective purchasers, lessees or
lenders. Use of the roof above the Premises is reserved to Landlord. Tenant
shall not be allowed on the roof without Landlord's prior written consent.
64. Upon the expiration or other termination of the term of this
lease, Tenant shall quit and surrender to Landlord the demises, broom clean, in
good order and condition, ordinary wear excepted.
65. Tenant agrees that Landlord may amend, modify, delete or add new
and additional reasonable rules and regulations for the demise and care of the
premises, the building of which the premises are a part, provided they do not
impair the right to use and occupy the premises as intended.
66. Landlord reserves the right to promulgate rules and regulations
with respect to parking area by Tenants, Tenants' employees, and Tenants'
customers.
67. The building, of which the demised premises forms a part, shall be
open from 7:00 a.m. to 7:00 p.m. from Monday through Friday and from 8:00 a.m.
to 1:00 p.m. on Saturdays, National Holidays excepted. For the purpose of this
paragraph, National Holidays shall be, New Year's Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Thanksgiving
Friday, and Christmas.
68. The Tenant shall notify the Landlord prior to moving in or moving
out of the demised premises or, in the event that the Tenant expects a large
delivery which would necessitate the use of the elevator, for proper preparation
of the elevator for such use. In all such events, the moving hours shall be
Monday - Friday, between the hours 8:00 - 4:00 only. There shall be no moving in
or moving out on weekends.
Any damages to the elevator and/or building premises, shall be the
direct responsibility of the Tenant, notwithstanding the fact that the Tenant
may utilize the services of a third party and/or moving company.
69. Tenant will not use any part of the premises for the generation,
transport, storage or treatment of any hazardous or toxic materials.
-30-
<PAGE>
70. Tenant shall comply with any recycling program imposed by any
municipalities having jurisdiction thereof.
71. (a) If, in connection with obtaining or renewing financing for the
Real Property, an institutional lender shall request modifications in this lease
as a condition to such financing, Tenant will not withhold, delay or defer its
consent thereto, provided that such modifications neither increase the monetary
obligations of Tenant nor decrease the size of the demised premises or the
services required to be provided by Landlord.
(b) Tenant agrees, within a reasonable time after being
requested, to submit such financial information as pertaining to monthly rental
and additional rent as may be reasonably required by Landlord's mortgagee(s).
72. Tenant acknowledges that possession of the demised premises must
be surrendered at the expiration or sooner termination of the term, time being
of the essence. Tenant shall indemnify, defend and save Landlord harmless
against all liabilities, obligations, damages, penalties, claims, costs, charges
and expenses, including reasonable attorney's fees and claims made by a
successor Tenant based upon the failure or refusal of Tenant to surrender the
demised premises in a timely fashion. The parties agree that the damage to
Landlord resulting from failure by Tenant to surrender possession of the demised
premises on a timely basis will be extremely substantial, will exceed the amount
of rent payable hereunder and will be impossible of accurate measurement. Tenant
shall pay Landlord, as liquidated damages for each month and for any portion of
a month during which Tenant holds over in the demised premises after expiration
or sooner termination of the term of this lease, a sum equal to 200% of the
average rent which was payable per month under this lease during the last 3
months of the term. Such liquidated damages shall not limit Tenant's
indemnification with respect to claims made by any succeeding Tenant founded
upon Tenant's failure or refusal to surrender the demised premises. Nothing
contained herein shall be deemed to authorize Tenant to remain in occupancy of
the demised premises after the expiration or sooner termination of the term. The
foregoing provisions of this paragraph are in addition to and do not affect
Landlord's rights of re-entry or any other rights of Landlord hereunder or as
otherwise provided by law.
73. Tenant shall not be permitted to maintain and operate a microwave
oven or any other cooking appliances or heating appliances at the demised
premises.
74. Tenant agrees to notify Landlord, in writing, within sixty (60)
days of the expiration of this lease as to whether or not Tenant intends to
renegotiate a new lease with the Landlord.
75. Landlord shall provide storage space in the basement area totaling
140 square feet in the basement at a cost of $116.67 per month.
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<PAGE>
RENT RIDER TO LEASE DATED DECEMBER 15, 1998
BY AND BETWEEN GCS REALTY CO., INC.
d/b/a ROYAL REALTY COMPANY
as Landlord, and
EDUCATIONAL VIDEO CONFERENCING, Inc.
as Tenant
The annual rent for Suite #200 (1628) and Suite #210 (845)shall be as follows:
- -----------------------------------------------------------------------------
From 09/01/97 to 08/31/98 at the rate of $21,504.96 per annum
($1,792.08 per month);
From 09/01/98 to 08/31/99 at the rate of $22,440.00 per annum
($1,870.00 per month);
From 09/01/99 to 08/31/00 at the rate of $23,375.04 per annum
($1,947.92 per month);
From 09/01/00 to 08/31/01 at the rate of $24,309.96 per annum
($2,025.83 per month);
From 09/01/01 to 08/31/02 at the rate of $25,245.00 per annum
($2,103.75 per month).
December 15, 1998-November 30, 1999 Annually $59,352.00
Monthly $4,946.00
December 01, 1999-November 30, 2000 Annually $61,824.96
Monthly $5,152.08
December 01, 2000-November 30, 2001 Annually $64,298.04
Monthly $5,358.17
December 01, 2001-August 21, 2002 Annually $66,771.00
Monthly $5,564.25
-32-
AGREEMENT BETWEEN EDUCATIONAL VIDEO CONFERENCING, INC.
AND ROCHESTER CITY SCHOOL DISTRICT, NEW YORK, FOR THE OFFERING
AND TRANSMITTAL OF INTERACTIVE TELEVIDEO COURSES
WITNESSETH
------------
AGREEMENT made this 22 day of December, 1998, between the Rochester City
School District (hereinafter referred to as "ROCHESTER"), located at 131 West
Broad Street, Rochester, New York 14614 and Educational Video Conferencing,
Inc., (hereinafter referred to as "EVC"), with offices located at 35 East Grassy
Sprain Road, Yonkers, New York 10710.
WHEREAS, ROCHESTER is a school district located in Rochester, New York
interested in providing access to and opportunities for higher education and
learning programs to employees, students and residents (hereinafter referred to
as "Stakeholders"), and
WHEREAS, EVC is a domestic corporation engaged in the business of
Interactive Televideo, and
WHEREAS, ROCHESTER and EVC wish to enter into a mutually beneficial
agreement whereby EVC will provide a grant to Rochester in the form of access to
EVC transmitted courses from accredited colleges, universities, training and
staff development organizations, and other educational providers or institutions
to the Stakeholders,
NOW, THEREFORE in consideration of $10.00 in good funds, as well as
the mutual covenants contained herein, the parties hereby agree as follows:
1. EVC shall, for the duration of this Agreement and any renewal
hereof transmit and offer to the ROCHESTER Stakeholders accredited undergraduate
and graduate college courses, degree and non-degree programs, along with
professional seminars, certification programs, licensing programs and other
programs (hereinafter collectively referred to as "The Program") offered by
accredited colleges and universities (including but not limited to Adelphi
University, Mercy College, the University of Notre Dame, Manhattan College and
The College of Insurance) through EVC, via Interactive Televideo/Distance
Learning (Hereinafter "ITV/DL"), to ROCHESTER sites, commencing with the Spring
Semester, 1999. In particular,
a.) EVC shall offer teachers in ROCHESTER access to Masters Degrees in
Education and post Masters courses, along with staff development courses and
programs.
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b.) EVC shall offer high school seniors in ROCHESTER access to
accredited college courses which may be transferable to colleges and
universities of their choice, subject to appropriate grades and official
transfer policies of the receiving institutions, as well as S.A.T. preparation
programs (subject to execution of a contract with Kaplan Learning Systems).
c.) EVC shall offer students enrolled in Kindergarten through Twelfth
Grades in ROCHESTER academic enhancement programs and courses (e.g. Kaplan
Learning Systems, Computer City Software courses, etc. subject to execution of
contracts).
2. ROCHESTER shall not be responsible for, nor shall it be permitted
to exercise control over any of the policies and procedures, academic or
administrative, of the various colleges, universities and other academic
providers; the participating institutions shall bear the entire burden and cost
of their own administrative functions, including but not limited to, admissions,
registration, academic advising, etc.
3. Rooms and Equipment
a.) ROCHESTER agrees to provide, at no cost to EVC, a minimum of four
(4) high school rooms to be selected by the Superintendent of Schools which are
capable of accommodating the video conferencing equipment and necessary
accessories (hereinafter referred to as "equipment"), as well as accommodating
the students enrolled in EVC sponsored classes. Any costs associated with
opening and closing such schools for access to The Program shall be the
responsibility of ROCHESTER. These costs include lighting, HVAC, and appropriate
furnishings. Said rooms shall be available to EVC Monday through Friday from
5:00 P.M. to 10:00 P.M. and Saturdays from 9:00 A.M. to 3:00 P.M. Said rooms
need not be dedicated space, and may be used by ROCHESTER for its own use when
EVC courses are not running.
b.) ROCHESTER shall be permitted to utilize EVC equipment when it is
not in use by EVC. ROCHESTER agrees to hold EVC harmless and indemnify EVC for
any loss or damages resulting from the use of this equipment by ROCHESTER.
ROCHESTER will be responsible for reimbursing EVC for any costs associated with
the repair or replacement of any equipment lost, damaged or stolen while in
ROCHESTER'S possession.
c.) EVC shall provide all telecommunications equipment necessary to
provide access for EVC courses to ITV/DL students at the four (4) ROCHESTER
schools. EVC shall also be responsible for installing and maintaining all
appropriate telephone lines for its equipment at the four (4) ROCHESTER schools
subject to the review and prior approval of the Directors of Facilities and
Management Information Systems. The provision, installation and maintenance of
such equipment and lines shall be at the sole expense of EVC. All
telecommunications costs shall be paid by EVC. All such equipment and associated
accessories shall be and remain the sole and exclusive property of EVC,
including but not limited to any and all patents, copyrights and trademarks, if
any, associated therewith, and shall be removable by EVC at its expense upon the
expiration or termination of the Agreement.
d.) ROCHESTER shall permit EVC, its employees and/or agents, such
access to the four (4) ROCHESTER schools as shall be reasonably necessary to the
installation and maintenance of any equipment and lines provided by EVC in
connection with this grant, as well as for the proper administration of the
program.
e.) EVC shall maintain all of the equipment and lines it provides in
proper working order and shall enter into service contracts with reliable
service companies (at EVC's expense) in order to ensure reasonably prompt and
proper maintenance and repair of said equipment and lines, including replacement
if necessary. However, EVC shall not be responsible for service or repair delays
or interruption of service caused by strikes, labor actions, power outages
(other than those limited to school locations alone), acts of God or other
matters beyond EVC's control.
f.) EVC reserves the right to remove its equipment and lines from any
school that does not have sixty (60) student course registrations in any
semester, and/or to direct students to another school location.
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<PAGE>
4. a.) EVC shall provide materials from the various colleges and
universities and other educational providers at no cost to ROCHESTER, including
but not limited to brochures, surveys, registration materials and videotapes. In
return, ROCHESTER will distribute the materials provided by EVC to its
employees, and also to its students not less than twice per semester for
students to take home to their parents.
b.) EVC shall be responsible for providing all marketing and other
promotional materials, subject to the review and approval of ROCHESTER'S
Superintendent.
c.) ROCHESTER shall permit EVC to conduct open houses and registration
meetings at such ROCHESTER locations as may be mutually agreed upon from time to
time, it being understood that these open houses and registration meetings are
to be scheduled at times and places convenient to ROCHESTER Stakeholders so as
to maximize potential registrations.
d.) ROCHESTER will enthusiastically cooperate with EVC in promoting
this EVC program to ROCHESTER Stakeholders.
5. The ROCHESTER stakeholders shall be charged the standard tuition
charges of the participating colleges, universities and other educational
providers, together with all appropriate standard fees. Tuition will be the
responsibility of the individuals taking classes. Students eligible for TAP and
PEL may receive federal and state funding along with other tuition assistance
that may be available from the colleges and universities thereby enabling many
economically disadvantaged residents of ROCHESTER the ability to attend college
on a full-time basis at no tuition cost. In no case shall ROCHESTER be
responsible for any tuition costs incurred by this program.
6. ROCHESTER acknowledges that by entering into this Agreement it will
be gaining access to certain technology, procedures and markets that are the
property and trade secrets of EVC. ROCHESTER agrees that, for the duration or
the Agreement and any extensions hereof, ROCHESTER will not disclose, directly
or indirectly, to any person, corporation or entity, any of the procedures
technology, software, hardware, etc., employed by EVC in providing Interactive
Computer or Televideo Communication services in connection herewith, and will
not knowingly grant access for any competitor or potential competitor to view,
examine, copy and/or photograph, any of the procedures (including training
manuals, if any), technology, equipment, software, etc., as referred to above,
without the prior written permission of EVC.
7. The tenure of this Grant shall be FIVE (5) YEARS from the date
first written above and shall automatically be extended for one (1) additional
year on the anniversary of the original execution.
In the event that either party should desire not to automatically
---
extend this grant, then the party so desiring must notify the other in writing
not less than ninety (90) days prior to the anniversary date of this Grant, in
which case this Grant shall only have FOUR (4) YEARS remaining in its term.
8. It is expressly agreed and understood that neither party shall be
liable for incidental, special or consequential damages for any breach or
violation of this Agreement.
9. The foregoing constitutes the entire agreement between the parties,
and any other agreements or representations, whether verbal or written, if not
contained herein, are voice, of no effect, and are not binding upon the parties.
3
<PAGE>
10. No valid modification, amendment, or deletion may be made to this
Agreement except in writing and executed by the parties in substantially the
same manner as this agreement.
11. Any and all notices required hereunder shall be by Certified Mail,
Return Receipt Requested, to each party's last known address and shall be deemed
given at the time of mailing.
12. If any portion of this agreement shall be found to be void,
voidable, or unenforceable, it shall not affect the validity of the remainder of
the agreement.
13. This agreement shall be binding on the respective parties' heirs,
successors, and assigns.
14. This agreement shall be construed in accordance with, and governed
by, the laws of the State of New York.
In witness whereof the parties have hereunto set their hands and seal
the date first appearing above.
EDUCATIONAL VIDEO CONFERENCING, INC.
By: /s/ JOHN J. MCGRATH
-----------------------------
Dr. John J. McGrath
President
ROCHESTER CITY SCHOOL DISTRICT
By: /s/ LOUIS S. KASH
----------------------------
Louis N. Kash
Counsel
4
National Agreement
Number SA-LMC-99-02
Between
LOCKHEED MARTIN CORPORATION
6801 ROCKLEDGE DRIVE
BETHESDA, MD 20817
And
EDUCATIONAL VIDEO CONFERENCING, INC.
35 East Grassy Sprain Road
Yonkers, New York 10710
This National Agreement entered into as of February 17, 1999 (the effective
date) is made by and between LOCKHEED MARTIN CORPORATION (herein called "LMC",
"Company", or the "CUSTOMER") and EDUCATIONAL VIDEO CONFERENCING, Inc. (herein
called "EVC", "Contractor", "Supplier", or "Seller") for the purpose of
establishing a program which will provide Lockheed Martin Corporation's
employees with access to college course, degree programs and learning programs
via Interactive Tele-video learning and Computer Based Distance Learning.
1. SCOPE
1.1. This National Agreement consists of this Agreement and the
following documents in their entirety:
1.1.1. Appendix A - Lockheed Martin Corporation Procurement
Locations
1.1.2. Appendix B - LMC General Provisions - Commercial
(CORPDOC-1, rev 1 dated 7/98)
1.2. This Agreement shall be applicable to all purchases and releases
placed by LMC procurement locations in APPENDIX A. Appendix A is
for reference only and may not include all LMC locations.
1.3. Should LMC acquire another business entity through merger or
acquisition, Supplier agrees to provide the terms and pricing of
this agreement and all rights specified herein to the merged or
acquired entity, its divisions, subsidiaries and affiliates.
1.4. Supplier agrees that it will sell the goods and/or services
covered by this Agreement, at the prices and terms and conditions
found herein, to those subcontractors of LMC whom LMC designates
in writing (Collateral Usage). All Collateral Usage sales by
Supplier shall be subject to its reasonable credit requirements,
and LMC will not incur any liability to Supplier as a result of
such sales.
1.5. No funds are obligated by this National Agreement. The extent of
LMC financial liability under this National Agreement shall be to
pay for services, materials, and supplies ordered and received by
a LMC location. LMC makes no guarantee, express or implied, as to
1
<PAGE>
the total amount of expenditures or the extent or frequency of
service, materials or supplies it will authorize or procure
hereunder.
1.6. LMC shall be entitled to order courses offered by EVC in
accordance with EVC's agreement with approved
universities/colleges and in accordance with LMC's Educational
Assistance Program.
1.7. The LMC Central Procurement Administrator will act as focal point
providing assistance whenever necessary.
2. TERM
2.1. This Agreement shall commence upon the effective date and shall be
for five (5) years and shall automatically be extended for one (1)
additional year on the anniversary of the original execution
unless terminated prior thereto upon 90 days written notice to the
other party.
2.2. LMC and Supplier may agree to extend this Agreement on an annual
basis for a term of five years. LMC shall provide intent to extend
this Agreement by providing written notice to the Supplier within
90 days from the expiration date. In case where the contract is
not renewed, this Agreement shall have four (4) years remaining in
its term.
3. PURCHASE ORDERS
3.1. Performance by Supplier of services under this Agreement will be
authorized only by the issuance of a Purchase Order /Release order
by an authorized Procurement Representative.
3.2. All orders must indicate the LMC/EVC Agreement Number SA-LMC-99-02
and will be forwarded to John McGrath, Ph.D. at: 35 East Grassy
Sprain Road, Suite 504, and Yonkers, New York 10710.
3.3. Each LMC location will be responsible for obligations arising from
its own purchase or release orders.
4. PRICING
4.1. LMC shall not incur any charges from EVC except those identified
below.
4.2. By prior approval of employees' manager, courses offered under
this program shall be deemed approved for reimbursement under
Lockheed Martin's Education Assistance Policy.
4.2.1. Lockheed Martin employees will be charged the standard
tuition charges of the respective college or universities
together will all appropriate college fees. The tuition
and fees shall be payable directly to the respective
college or university.
4.2.2. The purchase of required course books and materials with
the individual colleges and universities would be the
sole responsibility of LMC and /or its employees in
accordance with its Education Assistance Policy.
2
<PAGE>
4.3. EVC shall pay all telecommunications costs, including monthly
charges, associated with signal transport from any educational
provider to EVC's bridge.
4.4. LMC will pay all telecommunications costs including monthly
charges associated with signal transport from LMC's video
conferencing sites to EVC's bridge.
4.5. LMC shall be responsible for all HVAC, electricity, maintenance,
security (if applicable), and other costs associated with
providing such space to its employees.
4.6. To meet LMC's requirements, EVC shall compensate a student
coordinator (an LMC employee) who shall be trained in the
operation of the video conferencing room systems and desktop
computer video systems. EVC shall arrange and coordinate the
training of the LMC employee on the operation of the systems for
one (1) week prior to the start of each semester as well as during
the first week of each semester. In the event that, in its sole
discretion, EVC determines that certain locations or students
require further training, EVC shall provide such further training
by a coordinator as each individual case warrants.
5. COURSES
5.1. LMC and EVC will agree which, if any, additional degrees,
programs, or courses of study will be offered ninety (90) days
prior to the beginning of any academic term. No courses will be
offered without LMC approval.
5.2. EVC shall offer undergraduate and graduate courses and programs in
Engineering, Management, Marketing, Economics, Finance,
Accounting, Computer Science and Human Resources to LMC from
accredited colleges and universities and other institutions of
higher learning.
6. EQUIPMENT
6.1. Courses will be via LMC's video conferencing room's
telecommunication network system or via video enabled desktop
computers.
6.2. If any site has ten or more registrations, than EVC will provide
and install with LMC's approval such additional room video
conferencing systems at no cost to LMC.
6.3. In the event that desk top computers are utilized, LMC will allow
EVC to video enable existing computers at mutually agreed upon
locations at no cost to LMC.
6.3.1. In the event that such locations do not have computers
capable of being video enabled and, if the student course
registration at said locations meets EVC projections each
said location, EVC will provide video enabled computers
to LMC's locations at no cost.
6.4. LMC shall grant EVC, its employees and/or agents, such access to
LMC facility as shall be reasonably necessary to the installation
and maintenance of any equipment provided by EVC in connection
with this Agreement as well as for property administration
contemplated hereunder at mutually agreed times subject to LMC's
security requirements.
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<PAGE>
6.5. All equipment installed by EVC in conjunction with this program
shall remain the sole property of EVC and, upon the expiration or
termination thereof, shall be immediately returned to EVC.
6.5.1. EVC shall maintain all of its equipment in proper working
order and shall enter into service contracts with
reliable service companies in order to ensure property
maintenance and repair of said equipment.
6.6. LMC shall be permitted to utilize EVC equipment when same is not
in use by EVC and agrees to hold EVC harmless and indemnify EVC
for any loss or damage resulting from the use of said equipment by
LMC; in addition, LMC agrees to immediately reimburse EVC for any
costs associated with the repair or replacement of any equipment
lost, damaged or stolen while in LMC's possession.
6.6.1. In addition, LMC agrees not to permit any other use,
other than by EVC, of its installed base of room systems,
during any regularly scheduled EVC class or course; LMC
further agrees to promptly repair or replace, as
necessary, any of LMC's equipment or systems which will
be utilized by EVC in delivering access to classes and
programs hereunder.
6.7. EVC shall on an annual basis perform a technology refresh to the
video conferencing room systems and telecommunications network
an/or desktop computers if required at no cost to LMC.
7. FACILITY
7.1. LMC will allow EVC to utilize its installed base of room systems
and telecommunications network to transmit courses to LMC at no
cost to EVC.
7.2. At the beginning of each semester, each business unit shall agree
upon a schedule of availability of rooms, but in any event, shall
not be less than Monday through Thursday from 5PM to 11PM, Friday
5PM to 8PM, and Saturday 9M to 3PM.
8. DISTRIBUTION OF MATERIAL/ENROLLMENT
8.1. This section becomes applicable when an LMC business unit agrees
to participate in this program.
8.2. The parties agree that they will cooperate with one another in
promoting the EVC program to LMC employees.
8.3. LMC will agree to distribute EVC's material in a way that will
provide maximum exposure.
8.4. LMC will allow EVC to utilize e-mail and other information
distribution systems to communicate with those employees who have
indicated interest in enrolling in LMC sponsored EVC courses.
4
<PAGE>
8.5. EVC agrees that it shall provide materials from the various
colleges and universities at no cost to LMC, including but not
limited to brochures, surveys, registration materials, and
videotapes.
8.6. To ensure employee's knowledge,LMC agrees to distribute the course
materials/information/registration forms provided by EVC not less
than two (2) times per year to its employees.
8.7. LMC consents to the use by EVC of standard college registration
forms, guarantee of payment forms, site location choice forms and
other necessary forms, and shall not unreasonably withhold
approval of other such forms as may be necessary to carry out the
intent of this agreement.
8.8. EVC shall be permitted to conduct open houses and registration
meetings at such LOCKHEED MARTIN locations as can be mutually
agreed upon from time to time, it being understood that said open
houses and registration events are to be scheduled at times and
places convenient to LOCKHEED MARTIN employees so as to maximize
potential registrations subject to LMC site requirements.
8.9. EVC shall be permitted to utilize LMC logos, trademarks, and
copyrighted materials for promotional pieces targeted at LOCKHEED
MARTIN employees subject to LMC policy.
8.10. LMC shall not be responsible for, nor shall it be permitted to
exercise control over any of the policies and procedures, academic
or administrative, of the various colleges and universities; the
colleges and universities shall bear the entire burden of their
own administrative functions, including but not limited to,
admissions, registration, academic advising, etc.
9. TERMS AND CONDITIONS
9.1. This Agreement and Purchase Orders placed under this Agreement
shall be governed by this Agreement and LMC General Provisions -
Commercial (Corpdoc-1, dated 7/98), APPENDIX B.
9.2. This National Agreement shall be construed, interpreted and
applied in accordance with the laws of the State of Maryland
excluding its choice of law rule.
10. PARTICIPATION
10.1. EVC authorizes LMC employees and on site subcontractors will be
allowed to participate in the college course, degree programs and
training programs in accordance with this National Agreement. Upon
LMC site request, EVC will extend this offer to LMC's employees
immediate family members.
10.2. LMC shall provide EVC with verification of its employees
participating in the college courses, degree programs, and
training programs.
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<PAGE>
11. INVOICE AND PAYMENT TERMS
11.1. The college/university shall invoice the employee for all tuition
and appropriate fees. The employee shall apply for tuition
assistance in accordance with Corporate Policy Statement and its
business unit's procedures.
11.2. LMC acknowledges that its employees who apply to EVC for deferred
payment may be required to execute a guarantee of payment to the
appropriate university from which will bind the individual
employee to pay for tuition, reimbursement/advancement.
12. USAGE REPORTS
12.1. EVC shall provide a usage report that identifies all participating
sites. At a minimum, the report shall include:
o the name of each participating site
o the name of the responsible training and development manager
o the number of participants (broken down by employee,
subcontractor, and family)
o the name of the courses
o the degree program being obtained
o the payment plan (prepayment or deferred)
o whether any EVS equipment has been installed.
Additionally, EVC shall provide a listing of each course delivered
by site, with the number of Lockheed Martin employees and the
final grade spread.
12.2. Reports should be forwarded within ten (10) working days from the
end of each semester to:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
Attention: Central Procurement
13. AMENDMENTS AND NOTICES
13.1. Sole authority to amend this Agreement on behalf of LMC and to
effect deviations by addition or deletion from Appendix B
specified herein rests with a LMC Central Procurement
Administrator, and no direction from such Administrator shall be
valid unless in writing.
13.2. All notices by LMC or Supplier shall be given in writing by mail
or fax to the following locations.
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<PAGE>
LOCKHEED MARTIN CORPORATION EDUCATIONAL VIDEO CONFERENCING, INC.
6801 Rockledge Drive 35 East Grassy Sprain Road
Suite 504
Bethesda, MD 20817 Yonkers, NY 10710
Attn: Ruth Bonchick Attn: John J. McGrath
TEL: 301-897-6920, FAX 301-897-6441 TEL:914-395-3501,FAX 914-395-3498
The Terms and Conditions of this Agreement are the exclusive agreement between
the parties for the services described herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LOCKHEED MARTIN CORPORATION EDUCATIONAL VIDEO CONFERENCING, INC
/s/ RALPH DE NINO 2/17/99 /s/ DR. JOHN J. MC GRATH 2/17/99
- ----------------------------------- ----------------------------------------
Signature Date Signature Date
Ralph DeNino Dr. John J. McGrath
- ----------------------------------- ----------------------------------------
Name Name
Director, Corporate Consolidated
Procurement Program President
- ----------------------------------- ----------------------------------------
Title Title
7
KAPLAN - EVC
EDUCATIONAL PROVIDER AGREEMENT
W I T N E S S E T H
This AGREEMENT is made this 23rd day of March 1999, by and between KAPLAN
EDUCATIONAL CENTERS, INC. with offices located at 888 Seventh Avenue, New York,
NY 10006-0001 (hereinafter "KAPLAN"), and EDUCATIONAL VIDEO CONFERENCING INC.,
(hereinafter "EVC"), with offices located at 35 East Grassy Sprain Road,
Yonkers, NY 10710.
WHEREAS, KAPLAN is a domestic corporation engaged in the business of,
among other things, providing test prep programs and training to corporations,
K-12 school districts and individuals, and
WHEREAS, EVC is a domestic corporation engaged in the business of
providing access to educational programs and training to corporations, K-12
school districts and individuals by way of Interactive Video Conferencing.
WHEREAS, KAPLAN and EVC wish to enter into a mutually beneficial
agreement whereby EVC will provide access to KAPLAN test prep programs and
training to EVC customers.
NOW, THEREFORE in consideration of $10.00 in good funds, as well as
the mutual covenants contained herein, the parties hereby agree as follows:
1. a) For the duration of this agreement and any renewal thereof, EVC
shall offer those Kaplan SAT and GMAT test preparation courses,K-12 programs
(e.g. staff development, tutoring, remedial, ESL, Regents test preparation) and
select Dearborn (a wholly-owned Kaplan subsidiary) Insurance and Securities
Training courses set forth on Exhibit A hereto (hereafter "Kaplan Courses") via
interactive video conferencing/distance learning (hereinafter "IVC/DL"),
commencing March 1999. With respect to any of the Dearborn insurance courses,
EVC expressly acknowledges that the offering thereof under this Agreement shall
at all times be subject to the specific course itself being approved and/or
licensed in the State in which it will be delivered. Prior to scheduling any
Dearborn insurance course offering set forth in Schedule A hereof in a
particular State, EVC shall first seek confirmation from Kaplan as to whether
such course may be delivered in that jurisdiction. Kaplan shall use its
reasonable efforts to obtain any necessary approvals, subject to Section 11
herein, for the offering of said Kaplan courses in the various jurisdictions
requested by EVC. Subject to mutual written agreement, additional courses may be
added. With the exception of the provision by EVC of STC courses to Merrill
Lynch in connection with the pilot test program entered into by EVC prior to the
execution of this Agreement (and thereafter without limitation solely in the
event that Merrill Lynch determines that it wishes to offer STC rather than
Kaplan programs after the conclusion of the pilot test program) and courses
currently offered by the College of Insurance, New York, New York, during the
term of this Agreement, Kaplan shall be the exclusive provider of courses set
forth in Exhibit A hereto on the EVC network. With respect to courses offered by
third parties on subjects other than those set forth in Schedule A hereto, in
the event that EVC wishes to deliver said other third party test preparation,
insurance or real estate courses through its EVC network, EVC shall first notify
Kaplan in writing of its desire to offer said courses and Kaplan shall have a
first right of negotiation in connection therewith. In the event that Kaplan and
EVC are unable to reach agreement on terms acceptable by both parties within
thirty (30) days of EVC's notice to Kaplan, or any longer period so agreed upon
by the parties, EVC shall be free to enter into agreement with the third party
provider without any liability to Kaplan. Notwithstanding the aforesaid
sentences, EVC expressly acknowledges that it shall not offer any course or
other materials supplied by The Princeton Review, Sylvan Learning Centers, STC
and/or Pictorial (or any successor, parent, affiliate or subsidiary thereof)
regardless of the platform or manner of delivery during the term of this
Agreement. In addition, Kaplan hereby agrees that it shall not deliver any of
the courses set forth in Schedule A hereto in two-way classroom video
teleconferencing format through any third party entity except EVC during the
term of this Agreement.
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b) For the purposes of this agreement, IVC/DL shall be defined as
live, interactive two way classroom based video conferencing via group IVC and
DVC systems, as the case may be, in which the student can see and hear the
professor/instructor and the professor/instructor can see and hear the
individual student.
c) Unless KAPLAN and EVC agree otherwise in writing, the minimum
class size for the offering of an IVC/DL course shall be 15 students and the
maximum shall be 40 students.
2. Equipment
a) EVC will provide up to four video conferencing teacher
stations, subject to registration demand, at mutually agreed upon Kaplan sites
to provide access for KAPLAN courses to IVC/DL students via group IVC and DVC
systems. Said teaching stations will be installed, maintained and paid for by
EVC and shall remain the exclusive property of EVC.
b) EVC will be responsible for the necessary maintenance and
prompt repair and/or replacement of IVC/DL equipment located at KAPLAN
locations. EVC agrees to make every reasonable effort to maintain said equipment
in good working order. However, EVC is not responsible for service or repair
delays or interruption of service caused by strikes, labor actions, power
outages (other than those limited to site locations alone), acts of God or other
matters beyond EVC's control. KAPLAN is responsible for necessary maintenance,
prompt repair or replacement of EVC Teacher Stations damaged during unauthorized
use or stolen.
c) KAPLAN will provide one room at up to four locations to be
equipped by EVC rooms, subject to registration demands, with videoconferencing
teacher stations in order to facilitate delivery of Kaplan/EVC IVC/DL courses.
Said room will be a minimum of 12 feet by 16 feet with adequate electricity,
lighting and HVAC.
d) Rooms at KAPLAN equipped with IVC/DL teaching stations do not
have to be dedicated rooms and may be used by KAPLAN for any function or purpose
so long as said rooms are not scheduled for Kaplan/EVC IVC/DL courses and said
Kaplan function/use does not interfere, nor conflict with, delivery of
Kaplan/EVC IVC/DL courses. EVC shall not utilize any Kaplan rooms for purposes
other than delivery of the Kaplan/EVC Courses.
e) Kaplan will grant EVC, its agents and subcontractors,
reasonable access to said rooms as is required for proper installation and
operation of the teacher stations, including, but not limited to, IVC/DL
equipment and telecommunication lines.
2
<PAGE>
3. Marketing
a) EVC shall develop and produce, in consultation with KAPLAN,
course-offering brochures promoting KAPLAN courses to be offered by EVC via
IVC/DL ("Kaplan/EVC Courses"). EVC will provide Kaplan with draft copy and
design for proposed brochures. EVC and Kaplan will mutually agree on the
content, description and presentation of Kaplan products featured in such
brochures. EVC shall be reimbursed, on a direct cost pass through basis, for
brochure development and production costs ("Marketing Costs") out of the gross
tuition revenue derived from Kaplan/EVC Courses, not to exceed 10% of such
revenue. Kaplan shall have no obligation to reimburse EVC for any portion of
said costs that exceed ten (10%) percent of net revenues derived from the
Kaplan/EVC Courses. For purposes of this Agreement, "net revenues" shall mean
gross revenues less adjustments under Section 13(e) herein. In addition, Kaplan
shall have the right to generate marketing materials for the promotion of the
Kaplan/EVC Courses. EVC and Kaplan will mutually agree on the content,
description and presentation of Kaplan products featured in any marketing
materials prepared by Kaplan. In the event that Kaplan exercises said right,
Kaplan shall be entitled to reduce any Marketing Costs reimbursement to EVC by
the cost of Kaplan's marketing development and production costs (calculated on a
direct cost pass through basis) not to exceed 5% of gross tuition revenue
derived from the Kaplan/EVC Courses provided that Kaplan spends an additional
dollar for every dollar of Marketing Costs reimbursed to EVC by Kaplan
hereunder.
b) Kaplan will provide EVC with copies of collateral material
describing each of the products that is to be featured in course-offering
brochures.
c) EVC will be responsible for costs of distributing said
Brochures to EVC customers and for EVC's costs for marketing, advertising and
promotion of EVC's offering of access to KAPLAN educational programs and
training to EVC customers and their employees.
3
<PAGE>
4. Telecommunications Costs
a) EVC will be responsible for installing and maintaining
telecommunication transport lines (e.g. ISDN, T-1, POTS) for teaching stations
and for telecommunication signal transport for Kaplan/EVC IVC/DL courses from
EVC/KAPLAN Teacher Station sites to EVC's MCU Bridge and from EVC's MCU Bridge
to student sites, including all third party charges such as telephone, cable
and/or electricity charges incurred for the actual transmission of the courses
("Telecom Costs"). EVC shall be reimbursed for the costs of installing and
maintaining telecommunications transport lines and for Telecom Costs as
incurred, out of the gross revenue received by KAPLAN from Kaplan/EVC IVC/DL
Courses. Such cost reimbursement shall be on a direct cost pass through basis,
plus 8% for overhead, the total of which shall not exceed 15% of net revenues
derived from the Kaplan/EVC Courses.
5. Neither party shall utilize the other's name or any associated
names, trademarks, copyrights, etc., without prior written consent. Such
permission shall not be unreasonably withheld. Upon termination or expiration of
this Agreement, both parties shall immediately cease usage of the other party's
name, trademarks and copyrights.
6. EVC will provide, at no cost to KAPLAN, initial faculty development
reasonably required for the offering of KAPLAN educational programs and training
through EVC. Thereafter, KAPLAN faculty or personnel who have received said
initial training will train any new faculty or personnel.
7. KAPLAN shall be responsible for obtaining the services of all
faculty (i.e. program and course instructors) participating in Kaplan/EVC IVC/DL
Courses and providing additional delivery support as appropriate. KAPLAN shall
be liable for the cost of faculty's salary and benefits, if any. EVC assumes no
responsibility for any costs associated therewith.
8. EVC is solely responsible for arranging site locations at EVC
corporate and/or K-12 customer sites, if any, for IVC/DL students to participate
in KAPLAN courses. KAPLAN assumes no responsibility for obtaining or maintaining
said sites, nor for any rent or other costs associated therewith.
9. KAPLAN shall maintain academic control over all programs, training
and materials. However, KAPLAN acknowledges the expertise of EVC in delivering
IVC/DL courses and agrees to be receptive to EVC input as to modification of
course content and method of delivery consistent with required academic
standards. All classroom, course and program materials or other information
supplied by KAPLAN, and all rights and interests in said materials, will remain
the sole and exclusive property of KAPLAN. EVC is not responsible for
curriculum, course content, faculty qualifications, course materials or any
other aspect of the academic content of any programs and training offered
hereunder.
4
<PAGE>
10) KAPLAN hereby acknowledges that the IVC/DL programs are targeted
toward the non-traditional student market and therefore agrees to offer IVC/DL
courses at dates and times appropriate to the target market, but only between
the hours of 8:00 a.m. and 10:00 p.m., seven days per week, unless otherwise
mutually agreed upon. Scheduling of all Kaplan/IVC/DL Courses and training shall
be done on a first-come, first-serve basis and shall be subject to room
availability and must be scheduled not less than twenty-five days prior to the
date of the course. KAPLAN shall notify EVC prior to booking any EVC equipped
room outside of the twenty-five day period and EVC shall have twenty-four hours
to advise Kaplan as to whether or not it wishes to book the room for delivery of
Kaplan/IVC/DL courses. In the event that EVC books said room and fails to
utilize it for a Kaplan/IVC/DL course, and Kaplan is unable to re-use the room
for the given time period, Kaplan shall be entitled to $ 200.00 per each hour
booked from EVC. In the event that EVC wishes to book a room for a Kaplan/IVC/DL
course and no room is available at the time of booking, Kaplan shall use its
reasonable efforts to make its faculty for said course available to EVC at a
location specified by EVC in the New York metropolitan area.
11. KAPLAN is responsible for obtaining and/or maintaining all
certification and accreditation necessary to the offering of KAPLAN programs,
training and credits under applicable law. At such time as KAPLAN is notified of
the accreditation requirements of any party, individual, entity, or governing
body, KAPLAN shall be permitted six (6) months to meet and satisfy the
accreditation requirements. KAPLAN retains the right to elect not to satisfy the
accreditation requirements for any individual, entity, or governing body without
any liability to EVC, at which time KAPLAN must promptly notify EVC in writing
of its election not to become accredited, at which time, EVC may obtain a third
party that has the necessary accreditation, subject to paragraph 26. Should
KAPLAN lose its certification and/or accreditation at any time during the term
of this agreement or any renewal hereof, EVC shall have the right to cancel this
contract at the end of the semester in progress, if applicable, or immediately
if no semester is underway. At Kaplan's request, EVC shall provide reasonable
assistance to Kaplan in furtherance of any application or satisfaction of
accreditation requirements associated with the provision of the Kaplan/EVC
Courses.
12. Administrative Functions
a) KAPLAN shall be responsible for all of its own administrative
and overhead functions and costs (including but not limited to personnel costs,
security, admissions, academic advising, registration, financial aid, etc.)
associated with the offering of IVC/DL courses through EVC. It is understood by
and between the parties that EVC personnel will be able to register students at
EVC offices subject to the academic and administrative policies and procedures
of KAPLAN.
b) KAPLAN will provide all necessary administrative forms,
applications, catalogues, etc., and written instructions to EVC in advance of
marketing courses to any organization and it is understood by the parties that
EVC is merely a conduit and assumes no liability whatever for the accuracy or
correctness of the information in said forms provided by KAPLAN nor for return
of any of the aforesaid documents to KAPLAN.
5
<PAGE>
13. Fees; Incentive Compensation.
a) All payments for KAPLAN/EVC IVC/DL Courses shall be made to
KAPLAN or if so directed by Kaplan, to Dearborn.
b) KAPLAN shall pay to EVC, on the 25th day of each month, [ * ]
percent of net tuition revenue (i.e. gross tuition revenue less only Telecom
Costs and Brochure Costs reimbursed to EVC and all Marketing Costs set off by
Kaplan pursuant to Section 3 (a) and any adjustments pursuant to Section13(e)
herein) actually collected by Kaplan the previous month from or on behalf of any
student registered for and attending KAPLAN from EVC/Kaplan IVC/DL courses.
c) Unless otherwise agreed, students enrolled in EVC/Kaplan
IVC/DL courses will pay Kaplan's standard published retail prices for Kaplan
courses and the prices set forth in Dearborn's rate card supplied to EVC from
time to time for Dearborn courses. Any and all discounts to the aforesaid prices
shall be at Kaplan's sole discretion and shall not be offered to any EVC/Kaplan
student without the prior written consent of Kaplan or Dearborn, whichever is
applicable. Kaplan may charge students additional reasonable fees for
supplemental materials (e.g. course material, books, CD-ROM) normally charged to
students enrolled in such courses. EVC will not participate in revenue generated
from said additional fees charged for supplemental course material.
d) Commencing March 1999 and continuing on the 25th day of every
month thereafter, KAPLAN will supply EVC with a list of all students who have
registered for KAPLAN courses through EVC, including as available, each
student's name, address, telephone number, social security number, registration
and payment status.
e) Monthly , KAPLAN will issue a statement of adjustments or
which credits or adjustments have been made necessary by an EVC student having
dropped a course, etc. KAPLAN will be entitled to a credit for any such
adjustments. All courses that are taught by KAPLAN shall be compliant with
KAPLAN's current standard cancellation policy. (For cancellation policy see
exhibit "A").
f) As incentive and additional compensation to Kaplan or the
sales force of any of its subsidiaries to sell the Kaplan/EVC courses via
ITV/DL, it is agreed that Kaplan or Dearborn, whichever is applicable, may pay a
commission to its sales force equal to ten percent (10%) of the revenue derived
from any contract obtained through the efforts of said sales force, the terms of
which are acceptable to Kaplan and EVC, for delivery by EVC of Kaplan/EVC
courses. Said commissions shall be deducted from gross revenue when determining
net revenue in accordance with the provisions of Paragraph 13(b). In the event
that EVC sells additional services to any of the aforesaid customers and prior
to the said sale by Kaplan these customers were not EVC customers, EVC shall pay
to Kaplan or its designee, a commission equal to one percent (1%) of EVC's net
revenue received from said additional services over the next two semesters.
* Confidential portion
6
<PAGE>
14. KAPLAN Public Relations Department will provide reasonable
cooperation with EVC in promoting KAPLAN IVC/DL course offerings. Neither party
shall issue any press releases or other promotional materials pertaining to this
agreement or the parties' rights and obligations hereunder without the prior
written approval of the other party, which shall not be unreasonably withheld or
delayed. Notwithstanding the aforesaid sentence, either party may issue a press
release or other promotional materials containing information about the other
party, this agreement and/or the rights or obligations hereunder which does not
focus solely or substantially on this Agreement or the rights and obligations of
the parties hereunder without prior written approval of the other party if such
information to be used about the other party is substantially similar to
information that has previously received written approval by that party.
15. KAPLAN and EVC will, whenever possible, cooperate in applying for
and obtaining, any grants, awards, stipends, fellowships, etc., which are
mutually beneficial to the parties.
16. KAPLAN and EVC will assign at least one internal management person
who at all times will act as liaison between KAPLAN and EVC.
17. Term of Agreement
a) This agreement shall be effective as of the first date written
above and shall continue in full force and effect for a period of five (5) years
unless otherwise terminated earlier as provided herein. Thereafter, this
agreement may be renewed for subsequent terms upon the written agreement of the
parties. Notwithstanding the above, either party may terminate this Agreement on
or after the expiration of three (3) years from the date hereof upon six months
prior written notice to other party.
b) The parties hereby acknowledge the necessity for allowing
IVC/DL students continuity and ongoing access to courses and programs.
c) The terms and conditions of the Non-Disclosure Agreement
entered into by and between Kaplan and EVC on September 18, 1998 is hereby
incorporated by reference.
d) Except as otherwise provided in Section 1 (a) herein, Kaplan
retains the right to offer IVC/DL courses on its own, or with other partners.
Kaplan agrees that for the duration of this agreement and any extensions hereof,
as well as for a period of one (1) year immediately following termination or
expiration thereof, Kaplan will not offer two-way classroom based IVC/DL courses
to EVC's customers that Kaplan has provided services to under this agreement
except through EVC.
18. Damages Limitation
a) It is expressly agreed and understood that neither party shall
be liable for incidental, special or consequential damages for any breach or
violation of this agreement.
7
<PAGE>
19. Representations; Warranties; and Indemnification. Both parties
agree to indemnify and hold each other harmless from and against any and all
claims, damages, liabilities or other actions which arise out of their negligent
acts or omissions or, with respect to EVC, any claim of infringement or
unauthorized usage of any of its technology, software or other materials used in
connection with the provision of the services hereunder. This provision shall
expressly survive termination or expiration of this Agreement.
20. No valid modification, amendment, or deletion may be made to this
agreement except in writing and executed by the parties in substantially the
same manner as this agreement.
21. Any and all notices required hereunder shall be by Certified Mail,
Return Receipt Requested, to each party's last known address and shall be deemed
given at the time of mailing.
22. If any portion of this agreement shall be found to be void,
voidable or unenforceable, it shall not effect the validity of the remainder of
the agreement.
23. This agreement shall be binding on the respective parties' heirs,
successors, and assigns.
24. During the term hereof and for a period of two (2) years from the
date of termination or expiration of this Agreement, neither party shall
solicit, directly or indirectly, or hire any officer or employee of the other
party whether as an agent, employee, officer, director, representative or
consultant. As used herein, the terms "officer" and "employee" shall include any
entity controlled, controlling or controlled by an officer or director of the
party against whom enforcement is sought. The terms of this paragraph shall
survive termination or expiration of this Agreement and shall be fully
enforceable by the non-breaching party in any court of competent jurisdiction,
whether at law or in equity.
25. Reimbursement procedure for marketing and telecommunication costs
shall be made in accordance with Exhibit B herein as the same may be amended
from time to time in writing by the parties.
8
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed on the date written above.
EDUCATIONAL VIDEO CONFERENCING, INC.
By:/s/ Arol I. Buntzman
---------------------------------
Arol I. Buntzman, Ed.D.,
Chairman and CEO
KAPLAN EDUCATIONAL CENTERS, INC.
By: /s/ Robert Greenberg
-------------------------------
Name: Robert Greenberg
Title: Executive Vice President
9
<PAGE>
Exhibit A
- ---------
Securities Insurance (licensing) CE
- ---------- --------------------- --
Series 6 Life and Health Asset Allocations
Series 7 Life Designing Financial Strategies
Series 24 Health Public Communications
Series 63 Mutual Funds Basics and Beyond (Level 100)
Series 65 Mutual Funds Case Study (Level 200)
Insurance Continuing Education Classes
- ----------------------------------------
Annuities (level 200)
Disability Income Insurance (level 200)
Ethics for the Insurance Professional (level 200)
Introduction of Group Insurance (level 200)
Home Service Agent (level 100)
Individual and Family Markets (level 200)
Introduction to Life Underwriting (level 100)
Long-Term Care (level 100)
Principle of Health & Disability Insurance (level 100)
Total Needs Selling (level 200)
Variable Contracts (level 200)
Regents Workshops
- -----------------
Biology
Math I
Math II
SAT I
- -----
GMAT
- ----
/s/ AIB
10
<PAGE>
Exhibit B
REIMBURSEMENT PROCESS RELATED TO MARKEING COSTS REFERRED TO IN PARAGRAPH 3a AND
TELECOMMUNICATIONS COSTS REFERRED TO IN PARAGRAPH 4a
1) Marketing Costs
Marketing Costs paid for by EVC pursuant to Paragraph 3a, are costs that will
bring in future revenue. These costs will accumulate on the books of EVC and EVC
will share this information with Kaplan monthly. Until such time as revenue is
generated pursuant to this agreement, these costs belong exclusively to EVC.
As revenues (as described in 13c of agreement), are generated monthly, a maximum
of 10% of that revenue will be used to reimburse EVC for the marketing costs
that are described above. If the reimbursement in any month does not cover the
Marketing Costs, the balance not yet reimbursed will be carried forward until
the next month. Any such balance carried forward and subsequently reimbursed may
be reduced dollar for dollar by Kaplan's marketing development and production
costs subject to the terms of Paragraph 3 a) of this agreement. If the agreement
is terminated, and there is a balance of Marketing Costs on the books of EVC,
this is to be considered EVC's cost of doing business.
2) Telecom Costs
Telecom Costs which have been paid directly by EVC pursuant to Paragraph 4a, are
costs that will bring in future revenue. Costs will accumulate on the books of
EVC and EVC will share this information with Kaplan monthly. Until such time as
revenue is generated pursuant to this agreement, these costs belong exclusively
to EVC.
As revenues (as described in 13c of agreement), are generated monthly, a maximum
of 15% of that revenue will be used to reimburse EVC for the Telecomm Costs. If
the reimbursement generated in any month does not cover the Telecom Costs, the
balance not yet reimbursed will be carried forward until the next month. If the
agreement is terminated, and there is a balance of Telecom Costs on the books of
EVC, this is to be considered EVC's cost of doing business.
/s/ AIB
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND THE
BALANCE SHEET FOR THE PERIOD THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 13,256,615
<SECURITIES> 0
<RECEIVABLES> 358,333
<ALLOWANCES> (40,000)
<INVENTORY> 0
<CURRENT-ASSETS> 13,689,012
<PP&E> 1,682,403
<DEPRECIATION> (83,845)
<TOTAL-ASSETS> 15,294,202
<CURRENT-LIABILITIES> 258,063
<BONDS> 0
0
0
<COMMON> 435
<OTHER-SE> 15,035,704
<TOTAL-LIABILITY-AND-EQUITY> 15,294,202
<SALES> 147,521
<TOTAL-REVENUES> 204,372
<CGS> 58,458
<TOTAL-COSTS> 1,181,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (977,427)
<INCOME-TAX> 0
<INCOME-CONTINUING> (977,427)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (977,427)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
